Medical Properties Trust, Inc. (NYSE: MPW)

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REGISTRATION NO. 333-121883

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 2005.

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

AMENDMENT NO. 2 TO

FORM S-11
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES
---------------------
MEDICAL PROPERTIES TRUST, INC.
(Exact name of registrant as specified in its governing instruments)
1000 URBAN CENTER DRIVE, SUITE 501, BIRMINGHAM, ALABAMA 35242
(205) 969-3755
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

EDWARD K. ALDAG, JR.
CHAIRMAN, PRESIDENT, CHIEF EXECUTIVE OFFICER AND SECRETARY
MEDICAL PROPERTIES TRUST, INC.
1000 URBAN CENTER DRIVE, SUITE 501, BIRMINGHAM, ALABAMA 35242
(205) 969-3755
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

WITH A COPY TO:

THOMAS O. KOLB
B.G. MINISMAN, JR.
BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, PC
SUITE 1600
420 20TH STREET NORTH
BIRMINGHAM, ALABAMA 35203
(205) 328-0480

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this registration statement becomes effective.

If any securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ] ____________

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ] ____________

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ] ____________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]

CALCULATION OF REGISTRATION FEE

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- -------------------------------------------------------------------------------------------------------------------
TITLE OF SECURITIES PROPOSED MAXIMUM AGGREGATE
BEING REGISTERED OFFERING PRICE(1) AMOUNT OF REGISTRATION FEE(2)
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Common Stock, $.001 par value.................. $252,585,728 $29,729
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, on the
basis of $9.94 per share, the average of the high and low prices of the
Common Stock as quoted on the New York Stock Exchange on September 27, 2005.

(2) Previously paid.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

The information in this prospectus is not complete and may be changed. The
selling stockholders cannot sell any of the securities described in this
prospectus until the registration statement that we have filed to cover the
securities has become effective under the rules of the Securities and Exchange
Commission. This prospectus is not an offer to sell the securities, nor is it a
solicitation of an offer to buy the securities, in any state where an offer or
sale of the securities is not permitted.

Filed pursuant to Rule 424(b)(4)
Registration No. 333-119957

SUBJECT TO COMPLETION, DATED SEPTEMBER 30, 2005

PROSPECTUS

25,411,039 SHARES OF COMMON STOCK

(MEDICAL PROPERTIES TRUST LOGO)

This prospectus relates to 25,411,039 shares of common stock of Medical
Properties Trust, Inc. that the selling stockholders named in this prospectus
may offer for resale from time to time. The registration of these shares does
not necessarily mean the selling stockholders will offer or sell all or any of
these shares of common stock. We will not receive any of the proceeds from the
sale of any shares of common stock by the selling stockholders, but will incur
expenses in connection with the offering.

The selling stockholders from time to time may offer and resell the shares
held by them directly or through agents or broker-dealers on terms to be
determined at the time of sale. To the extent required, the names of any agent
or broker-dealer and applicable commissions or discounts and any other required
information with respect to any particular offer will be set forth in a
prospectus supplement that will accompany this prospectus. A prospectus
supplement also may add, update or change information contained in this
prospectus.

Our common stock is listed on the New York Stock Exchange under the symbol
"MPW." The last reported sales price on September 28, 2005 was $10.00.

SEE "RISK FACTORS" BEGINNING ON PAGE 17 OF THIS PROSPECTUS FOR THE MOST
SIGNIFICANT RISKS RELEVANT TO AN INVESTMENT IN OUR COMMON STOCK, INCLUDING,
AMONG OTHERS:

- We were formed in August 2003 and have a limited operating history; our
management has a limited history of operating a REIT and a public company
and may therefore have difficulty in successfully and profitably operating
our business.

- We may be unable to acquire or develop the facilities we have under letter
of commitment or contract or facilities we have identified as potential
candidates for acquisition or development as quickly as we expect or at
all, which could harm our future operating results and adversely affect
our ability to make distributions to our stockholders.

- Our real estate investments will be concentrated in net-leased healthcare
facilities, making us more vulnerable economically than if our investments
were more diversified across several industries or property types.

- Our facilities and properties under development are currently leased to
six tenants, four of which were recently organized and have limited or no
operating histories, and the failure of any of these tenants to meet its
obligations to us, including payment of rent, payment of commitment and
other fees and repayment of loans we have made or intend to make to them,
would have a material adverse effect on our revenues and our ability to
make distributions to our stockholders.

- Development and construction risks, including delays in construction,
exceeding original estimates and failure to obtain financing, could
adversely affect our ability to make distributions to our stockholders.

- Reductions in reimbursement from third-party payors, including Medicare
and Medicaid, could adversely affect the profitability of our tenants and
hinder their ability to make rent or loan payments to us.

- The healthcare industry is heavily regulated and existing and new laws or
regulations, changes to existing laws or regulations, loss of licensure or
certification or failure to obtain licensure or certification could result
in the inability of our tenants to make lease or loan payments to us.

- Loss of our tax status as a REIT would have significant adverse
consequences to us and the value of our common stock.

- Our loans to Vibra could be recharacterized as equity, in which case our
rental income from Vibra would not be qualifying income under the REIT
rules and we could lose our REIT status.

- Common stock eligible for future sale, including, subject to certain
lock-up agreements which expire over the next three months, up to
25,411,039 shares of common stock that may be resold by our existing
stockholders upon effectiveness of the resale registration statement of
which this prospectus is a part, may result in increased selling which may
have an adverse effect on our stock price.

---------------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS SEPTEMBER , 2005.

TABLE OF CONTENTS

SUMMARY...................................... 1
Our Company.................................. 1
Our Portfolio................................ 2
Competitive Strengths........................ 7
Summary Risk Factors......................... 8
Market Opportunity........................... 9
Our Target Facilities........................ 9
Our Formation Transactions................... 10
Our Structure................................ 11
Registration Rights and Lock-Up Agreements... 12
Selling Stockholders.........................
Restrictions on Ownership of Our Common
Stock...................................... 13
Distribution Policy.......................... 13
Tax Status................................... 13
Summary Financial Information................ 14
RISK FACTORS................................. 17
Risks Relating to Our Business and Growth
Strategy................................... 17
Risks Relating to Real Estate Investments.... 25
Risks Relating to the Healthcare Industry.... 30
Risks Relating to Our Organization and
Structure.................................. 33
Tax Risks Associated With Our Status as a
REIT....................................... 36
Risks Relating to an Investment in Our Common
Stock...................................... 38
A WARNING ABOUT FORWARD LOOKING STATEMENTS... 41
USE OF PROCEEDS.............................. 42
CAPITALIZATION............................... 43
DISTRIBUTION POLICY.......................... 44
SELECTED FINANCIAL INFORMATION............... 45
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS................................. 47
OUR BUSINESS................................. 57
Our Company.................................. 57
Market Opportunity........................... 59
Our Target Facilities........................ 61
Underwriting Process......................... 62
Asset Management............................. 63
Our Formation Transactions................... 64
Our Operating Partnership.................... 65
MPT Development Services, Inc. .............. 66
Depreciation................................. 66
Our Leases................................... 66
Environmental Matters........................ 67
Competition.................................. 68
Healthcare Regulatory Matters................ 68
Insurance.................................... 73
Employees.................................... 73
Legal Proceedings............................ 74
OUR PORTFOLIO................................ 74
Our Current Portfolio........................ 74
Our Pending Acquisitions and Developments.... 93
Our Acquisition and Development Pipeline..... 99
MANAGEMENT................................... 102
Our Directors and Executive Officers......... 102
Corporate Governance -- Board of Directors
and Committees............................. 104
Limited Liability and Indemnification........ 106
Director Compensation........................ 107
Executive Compensation....................... 108
Employment Agreements........................ 108
Benefit Plans................................ 111
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION.............................. 113
MARKET PRICE OF OUR COMMON STOCK............. 113
PRINCIPAL STOCKHOLDERS....................... 114
SELLING STOCKHOLDERS......................... 115
REGISTRATION RIGHTS AND LOCK-UP AGREEMENTS... 125
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS............................... 127
INVESTMENT POLICIES AND POLICIES WITH RESPECT
TO CERTAIN ACTIVITIES...................... 129
DESCRIPTION OF CAPITAL STOCK................. 133
Authorized Stock............................. 133
Common Stock................................. 133
Preferred Stock.............................. 134
Power to Increase Authorized Stock and Issue
Additional Shares of Our Common Stock and
Preferred Stock............................ 134
Restrictions on Ownership and Transfer....... 134
Transfer Agent and Registrar................. 136
MATERIAL PROVISIONS OF MARYLAND LAW AND OF
OUR CHARTER AND BYLAWS..................... 137
The Board of Directors....................... 137
Business Combinations........................ 137
Control Share Acquisitions................... 138
Maryland Unsolicited Takeovers Act........... 139
Amendment to Our Charter..................... 139
Dissolution of Our Company................... 139
Advance Notice of Director Nominations and
New Business............................... 139
Indemnification and Limitation of Directors'
and Officers' Liability.................... 140
PARTNERSHIP AGREEMENT........................ 142
Management of Our Operating Partnership...... 142
Transferability of Interests................. 142
Capital Contribution......................... 143
Redemption Rights............................ 143
Distributions................................ 144
Allocations.................................. 145
Term......................................... 145
Tax Matters.................................. 145
UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS............................. 146
Taxation of Our Company...................... 146
Requirements for Qualification............... 148
Other Tax Consequences....................... 162
Income Taxation of the Partnerships and Their
Partners................................... 163
PLAN OF DISTRIBUTION......................... 165
LEGAL MATTERS................................ 167
EXPERTS...................................... 168
WHERE YOU CAN FIND MORE INFORMATION.......... 168
INDEX TO FINANCIAL STATEMENTS................ F-1

SUMMARY

The following summary highlights information contained elsewhere in this
prospectus. You should read the entire prospectus, including "Risk Factors" and
our financial statements and pro forma financial information and related notes
appearing elsewhere in this prospectus, before making a decision to invest in
our common stock. In this prospectus, unless the context suggests otherwise,
references to "MPT," "the company," "we," "us" and "our" mean Medical Properties
Trust, Inc., including our operating partnership, MPT Operating Partnership,
L.P., its general partner and our wholly-owned limited liability company,
Medical Properties Trust, LLC, as well as our other direct and indirect
subsidiaries.

OUR COMPANY

We are a self-advised real estate company that acquires, develops and
leases healthcare facilities providing state-of-the-art healthcare services. We
lease our facilities to healthcare operators pursuant to long-term net-leases,
which require the tenant to bear most of the costs associated with the property.
From time to time, we also make loans to our tenants and other parties. We were
formed in August 2003 and completed a private placement of our common stock in
April 2004 in which we raised net proceeds of approximately $233.5 million.
Shortly after completion of our private placement, we began to acquire our
current portfolio of 13 facilities, consisting of nine facilities that are in
operation and four facilities that are under development. We acquired six
operating facilities in July and August of 2004 for an aggregate purchase price
of $127.4 million, including acquisition costs, from Care Ventures, Inc. We also
made loans of approximately $49.1 million to the new tenant of these facilities.
One of the loans has been repaid and the remaining loan has a principal balance
of approximately $41.4 million. We acquired one operating facility in February
2005 for a purchase price of $28.0 million from Prime A Investments, LLC. In
June 2005 we acquired a long-term acute care hospital for a purchase price of
$11.5 million from Covington Healthcare Properties, L.L.C. and a rehabilitation
hospital for a purchase price of $20.8 million from Vibra Healthcare, LLC.

We focus on acquiring and developing rehabilitation hospitals, long-term
acute care hospitals, regional and community hospitals, women's and children's
hospitals, skilled nursing facilities and ambulatory surgery centers as well as
other specialized single-discipline and ancillary facilities. We believe that
these types of facilities will capture an increasing share of expenditures for
healthcare services. We believe that our strategy for acquisition and
development of these types of net-leased facilities, which generally require a
physician's order for patient admission, distinguishes us as a unique investment
alternative among real estate investment trusts, or REITs.

We believe that the U.S. healthcare delivery system is becoming
decentralized and is evolving away from the traditional "one stop," large-scale
acute care hospital. We believe that this change is the result of a number of
trends, including increasing specialization and technological innovation within
the healthcare industry and the desire of both physicians and patients to
utilize more convenient facilities. We also believe that demographic trends in
the U.S., including, in particular, an aging population, will result in
continued growth in the demand for healthcare services, which in turn will lead
to an increasing need for a greater supply of modern healthcare facilities. In
response to these trends, we believe that healthcare operators increasingly
prefer to conserve their capital for investment in operations and new
technologies rather than investing in real estate and, therefore, increasingly
prefer to lease, rather than own, their facilities. Given these trends and the
size, scope and growth of this dynamic industry, we believe that there are
significant opportunities to acquire and develop net-leased healthcare
facilities at attractive, risk-adjusted returns.

We believe that our management's ability to combine traditional real estate
investment expertise with an understanding of healthcare operations enables us
to successfully implement our strategy.

We have made an election to be taxed as a REIT under the Internal Revenue
Code, or the Code, commencing with our taxable year that began on April 6, 2004
and ended on December 31, 2004.

Our principal executive offices are located at 1000 Urban Center Drive,
Suite 501, Birmingham, Alabama 35242. Our telephone number is (205) 969-3755.
Our Internet address is www.medicalpropertiestrust.com. The information on our
website does not constitute a part of this prospectus.

OUR PORTFOLIO

OUR CURRENT PORTFOLIO OF FACILITIES

Our current portfolio of facilities consists of 13 healthcare facilities,
nine of which are in operation and four of which are under development. Four
rehabilitation hospitals and two long-term acute care hospitals that are in
operation were acquired in 2004 and are leased to subsidiaries of Vibra
Healthcare, LLC, or Vibra, formerly known as Highmark Healthcare, LLC, a
recently formed specialty healthcare provider with operations in six states. We
refer to these facilities in this prospectus as the Vibra Facilities. A seventh
facility in operation, a community hospital which has an integrated medical
office building, is leased to Desert Valley Hospital, Inc., or DVH. We refer to
this facility in this prospectus as the Desert Valley Facility. Another facility
in operation, a long-term acute care hospital facility, is leased to Gulf States
Long Term Acute Care of Covington, L.L.C., or Gulf States of Covington. We refer
to this facility in this prospectus as the Covington Facility. Our ninth
facility in operation, a rehabilitation hospital, is leased to Northern
California Rehabilitation Hospital, LLC, a Vibra subsidiary. We refer to this
facility in this prospectus as the Redding Facility. All of the leases for the
hospitals currently in operation have initial terms of 15 years.

Two of the facilities under development are a community hospital, which we
refer to in this prospectus as the West Houston Hospital, and an adjacent
medical office building, which we refer to in this prospectus as the West
Houston MOB, and are leased to Stealth, L.P., or Stealth, a recently organized
healthcare facility operator with no current operations. We refer to the West
Houston Hospital and the West Houston MOB together in this prospectus as the
West Houston Facilities. The initial lease term for the West Houston Hospital
began when construction commenced in July 2004 and will end 15 years after
completion of construction. The initial lease term for the West Houston MOB
began when construction commenced in July 2004 and will end 10 years after
completion of construction. We target completion of construction of the West
Houston MOB and the West Houston Hospital for October 2005. Our third facility
under development is a women's hospital with an integrated medical office
building, which we refer to in this prospectus as the Bucks County Facility, and
is leased to Bucks County Oncoplastic Institute, LLC, or BCO, a recently
organized healthcare facility operator. The initial lease term for the Bucks
County Facility will begin when construction commences and will end 15 years
after completion of construction. We target completion of construction for the
Bucks County Facility for August 2006. With respect to our fourth facility under
development, we have entered into a ground sublease with, and an agreement to
provide a construction loan to, North Cypress Medical Center Operating Company,
Ltd., or North Cypress, a recently-organized healthcare facility operator, for
the development of a community hospital. The facility will be developed on
property in which we currently have a ground lease interest. We refer to this
facility in this prospectus as the North Cypress Facility. We expect to acquire
the land we are ground leasing after the hospital has been partially completed.
Upon completion of construction, subject to certain limited conditions, we will
purchase the facility for an amount equal to the cost of construction and lease
the facility to the operator for a 15 year lease term. In the event we do not
purchase the facility, the ground sublease will continue and the construction
loan will become due. In that event, we expect to seek to convert the
construction loan to a 15 year term loan secured by the facility. We anticipate
the North Cypress Facility will be completed in December 2006. The leases for
all of the facilities in our current portfolio provide for contractual base rent
and an annual rent escalator. The leases for the Vibra Facilities and the Bucks
County Facility also provide for "percentage rent," which means that, in
addition to base rent, we will receive periodic rent payments based on an agreed
percentage of the tenant's gross revenue.

The following tables set forth information, as of June 30, 2005, regarding
our current portfolio of facilities:

Operating Facilities 2005 2006
2004 CONTRACTUAL CONTRACTUAL
NUMBER OF ANNUALIZED BASE BASE
LOCATION TYPE TENANT BEDS(1) BASE RENT RENT(2) RENT(2)
- -------- ----------------- -------------- --------- ----------- -------------- ---------------

Bowling Green,
Kentucky............... Rehabilitation Vibra
hospital Healthcare,
LLC(4) 60 $ 3,916,695 $ 4,294,990 $ 4,790,118
Marlton, New
Jersey(5).............. Rehabilitation(6) Vibra
hospital Healthcare,
LLC(4) 76 3,401,791 3,730,354 4,160,390
Victorville,
California(7).......... Community Desert Valley
hospital/medical Hospital, Inc.
office building 83 -- 2,341,004 2,856,000
New Bedford,
Massachusetts.......... Long-term Vibra
acute care Healthcare,
hospital LLC(4) 90 2,262,979 2,426,320 2,767,624
Redding,
California(8).......... Rehabilitation Vibra
hospital Healthcare,
LLC(4) 88 -- 950,250(9) 1,913,949(9)

Fresno, California...... Rehabilitation Vibra
hospital Healthcare,
LLC(4) 62 1,914,829 2,099,773 2,341,835
Covington, Louisiana.... Long-term acute Gulf States
care hospital Long-Term
Acute Care of
Covington,
L.L.C. 58 -- 674,188 1,224,537
Thornton, Colorado...... Rehabilitation Vibra
hospital Healthcare,
LLC(4) 117 870,377 933,200 1,064,471
Kentfield, California... Long-term Vibra
acute care Healthcare,
hospital LLC(4) 60 783,339 858,998 958,024
--- ----------- ----------- -----------
TOTAL................... -- -- 694 $13,150,010 $18,309,077 $22,076,948
=== =========== =========== ===========

Operating Facilities
GROSS
PURCHASE LEASE
LOCATION PRICE(3) EXPIRATION
- -------- ------------ ---------------

Bowling Green,
Kentucky...............
$ 38,211,658 July 2019
Marlton, New
Jersey(5)..............
32,267,622 July 2019
Victorville,
California(7)..........
28,000,000 February 2020
New Bedford,
Massachusetts..........
22,077,847 August 2019
Redding,
California(8)..........
20,750,000 June 2020
Fresno, California......
18,681,255 July 2019
Covington, Louisiana....
11,500,000 June 2020
Thornton, Colorado......
8,491,481 August 2019
Kentfield, California...
7,642,332 July 2019
------------
TOTAL................... $187,622,195 --
============

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(1) Based on the number of licensed beds.

(2) Based on leases in place as of the date of this prospectus.

(3) Includes acquisition costs.

(4) The tenant in each case is a separate, wholly-owned subsidiary of Vibra
Healthcare, LLC.

(5) Our interest in this facility is held through a ground lease on the
property. The purchase price shown for this facility does not include our
payment obligations under the ground lease, the present value of which we
have calculated to be $920,579. The calculation of the base rent to be
received from Vibra for this facility takes into account the present value
of the ground lease payments.

(6) Thirty of the 76 beds are pediatric rehabilitation beds operated by HBA
Management, Inc.

(7) At any time after February 28, 2007, the tenant has the option to purchase
the facility at a purchase price equal to the sum of (i) the purchase price
of the facility, and (ii) that amount determined under a formula that would
provide us an internal rate of return of 10% per year, increased by 2% of
such percentage each year, taking into account all payments of base rent
received by us.

(8) Our interest in this facility is held in part through a ground lease on the
property. During the term of the ground lease, the tenant will pay the
ground lease rent directly to the ground lessor or, at our request,
directly to us.

(9) Of the $20,750,000 million purchase price for this facility, payment of
$2.0 million is being deferred pending completion, to our satisfaction, of
a conversion of certain beds at the facility to long-term acute care beds
and an additional $750,000 of the purchase price is being deferred and will
be paid out of a special reserve account to cover the cost of renovations.
The 2005 contractual base rent and the 2006 contractual base rent are
calculated based on a purchase price of $18.0 million.

Facilities Under
Development

2004 2005 2006 PROJECTED
NUMBER OF ANNUALIZED CONTRACTUAL CONTRACTUAL DEVELOPMENT
LOCATION TYPE TENANT BEDS(1) BASE RENT BASE RENT BASE RENT COST(2)
- -------- ----------------- -------------- --------- ----------- -------------- --------------- ------------

Houston, Texas....... Community North Cypress
hospital Medical Center
Operating
Company, Ltd. 64 $ -- $ --(3) $ --(3) $ 64,028,000
Houston, Texas....... Community
hospital(5) Stealth, L.P. 105(6) -- 772,196(7) 4,749,005(7) 43,099,310
Bensalem,
Pennsylvania........ Women's Bucks County
hospital/medical Oncoplastic
office Institute, LLC 30 -- --(10) 1,627,820(10) 38,000,000
building(9)
Houston, Texas....... Medical office
building(12) Stealth, L.P. n/a -- 503,130(7) 2,049,415(7) 20,855,119
--- ----------- ----------- ----------- ------------
TOTAL................ -- -- 199 $ -- $ 1,275,326 $ 8,426,240 $165,982,429
=== =========== =========== =========== ============

LEASE
LOCATION EXPIRATION
- -------- -----------------

Houston, Texas.......
(4)
Houston, Texas.......
October 2020(8)
Bensalem,
Pennsylvania........
August 2021(11)
Houston, Texas.......
October 2015(13)
TOTAL................ --

- ---------------

(1) Based on the number of proposed beds.

(2) Includes acquisition costs.

(3) During construction of the North Cypress Facility, interest will accrue on
the construction loan at a rate of 10.5%. The interest accruing during the
construction period will be added to the principal balance of the
construction loan. In addition, during the term of the ground sublease,
North Cypress will pay us monthly ground sublease rent in an annual amount
equal to our ground lease rent plus 10.5% of funds advanced by us under the
construction loan.

(4) Expected to be completed in December 2006. If we purchase the facility upon
completion of construction, we will lease it back to North Cypress for an
initial term of 15 years.

(5) Expected to be completed in October 2005.

(6) Seventy-one of the 105 beds will be acute care beds operated by Stealth,
L.P. and the remaining 34 beds will be long-term acute care beds operated
by Triumph Southwest, L.P.

(7) Based on leases in place as of the date of this prospectus, estimated total
development costs and estimated dates of completion. Assumes completion of
construction in October 2005 for the West Houston Hospital and in August
2005 for the West Houston MOB. Does not include rents that accrue during
the construction period and are payable over the remaining lease term
following the completion of construction.

(8) Following completion, the lease term will extend for a period of 15 years.
At any time during the term of the lease, the tenant has the right to
terminate the lease and purchase the community hospital from us at a
purchase price equal to the greater of (i) that amount determined under a
formula which would provide us an internal rate of return of at least 18%
or (ii) appraised value assuming the lease is still in place.

(9) Expected to be completed in August 2006.

(10) Based on the lease in place as of the date of this prospectus, estimated
total development costs and estimated date of completion. Assumed
completion of construction in August 2006.

(11) Following completion, the lease term will extend for a period of 15 years.

(12) Expected to be completed in October 2005.

(13) Following completion, the lease term will extend for a period of 10 years.
At any time during the term of the lease, the tenant has the right to
terminate the lease and purchase the medical office building from us at a
purchase price equal to the greater of (i) that amount determined under a
formula which would provide us an internal rate of return of at least 18%
or (ii) appraised value assuming the lease is still in place.

OUR CURRENT LOANS AND FEES RECEIVABLE

At the time we acquired the Vibra Facilities, we made a secured acquisition
loan to Vibra, the parent entity of our current tenants in those facilities, to
enable Vibra to acquire the healthcare operations at these locations. The
principal balance of this loan is approximately $41.4 million and is to be
repaid over 15 years. Payment of the acquisition loan is secured by pledges of
membership interests in Vibra and its subsidiaries. In addition, we have
obtained guaranty agreements from Brad E. Hollinger, the principal owner of
Vibra, Vibra Management, LLC and Senior Real Estate Holdings, LLC, D/B/A The
Hollinger Group, or The Hollinger Group, that obligate them to make loan
payments in the event that Vibra fails to do so. However, we do not believe that
these parties have sufficient financial resources to satisfy a material portion
of the loan obligations. Mr. Hollinger's guaranty is limited to $5.0 million,
and Vibra Management, LLC and The Hollinger Group do not have substantial
assets. Vibra pays interest on this loan at an annual rate of 10.25% with
interest only for the first three years and the principal balance amortizes over
the remaining 12 year period. The acquisition loan may be prepaid at any time
without penalty. In connection with the Vibra transactions, Vibra agreed to pay
us commitment fees of approximately $1.5 million. We also made secured loans
totaling approximately $6.2 million to Vibra and its subsidiaries for working
capital purposes. The commitment fees were paid, and the working capital loans
were repaid, on February 9, 2005.

On June 9, 2005, in connection with our proposed acquisition of a long-term
acute care hospital located in Denham Springs, Louisiana, which we refer to as
the Denham Springs Facility, we made a loan of $6.0 million to Denham Springs
Healthcare Properties, L.L.C., $500,000 of which is to be held in escrow. The
loan accrues interest at a rate of 10.5% per year, subject to escalation, and
provides for monthly payments of interest only with a final balloon payment on
the fifteenth anniversary of the loan. The loan may be prepaid at any time
without penalty. The loan is guaranteed by Gulf States Long Term Acute Care of
Denham Springs, L.L.C., Team Rehab, L.L.C. and Gulf States Health Services, Inc.
As security for the loan, Denham Springs Healthcare Properties, L.L.C. granted
us a first mortgage on the Denham Springs Facility and assigned to us all its
right, title and interest in and to all leases associated with the Denham
Springs Facility. The loan is also cross-defaulted with the lease relating to
the Covington Facility. We have an agreement to purchase the Denham Springs
Facility for a price equal to the amount of the loan, subject to our
satisfaction with the results of our review of an environmental condition at the
property.

In connection with the development of the West Houston Facilities, Stealth
has agreed to pay us a commitment fee of approximately $932,125, to be paid over
15 years following completion of the West Houston Hospital. The commitment fee
is based on a percentage of total development costs and may be adjusted upon
completion of construction of the West Houston Facilities based on actual
development costs. We have agreed to make a working capital loan to Stealth of
up to $1.62 million, to be repaid over 15 years. No funds have been borrowed by
Stealth to date under the working capital loan. The promissory notes evidencing
the loan and commitment fee provide for interest at an annual rate of 10.75% and
are unsecured, but the promissory notes are cross-defaulted with our related
facility leases with Stealth. Stealth is obligated to pay us a project
inspection fee for construction coordination services of $100,000 in the case of
the West Houston Hospital and $50,000 in the case of the adjacent West Houston
MOB. These fees are to be paid, with interest at the rate of 10.75% per year,
over a 15 year period beginning on the date that the West Houston Hospital is
completed, which we expect to be in October 2005. The obligation to pay these
fees is evidenced by promissory notes and is unsecured, but the promissory notes
are cross-defaulted with our related facility leases with Stealth. Any of the
fees or the working capital loan may be prepaid at any time without penalty,
except that a minimum prepayment of $500,000 is required for the working capital
loan.

In connection with our development of the Bucks County Facility, BCO has
agreed to pay us a commitment fee of $345,000. The commitment fee is to be paid
interest only beginning with the first calendar month following the completion
of construction, with a balloon payment 15 years later. BCO is also obligated to
pay us a $75,000 construction inspection fee, which will be paid interest only
beginning with the first calendar month following the completion of
construction, with a balloon payment 15 years later. Interest on these fees is
set at 10.75% per annum. We also loaned BCO approximately $4.0 million, the loan
proceeds of which we hold in a separate account as security for repayment of the
loan and BCO's obligations under the lease. This loan is to be repaid no later
than the date BCO receives a certificate of occupancy for the Bucks County
Facility, and bears interest at the rate of 20% per annum, which interest is due
monthly. The obligation to pay these fees is unsecured and the obligation to
repay the loan is secured by the loan proceeds which we hold in a separate
account. The promissory notes evidencing the fees and the loan are cross
defaulted with our lease with BCO. These fees and loans may be prepaid at any
time without penalty.

OUR PENDING ACQUISITIONS AND DEVELOPMENTS

We intend to expand our portfolio by acquiring or developing additional
net-leased healthcare facilities that we have under contract or letter of
commitment and consider to be probable acquisitions or developments as of the
date of this prospectus, which we refer to in this prospectus as our Pending
Acquisition and Development Facilities. Under the terms of the contracts or
letters of commitment relating to these facilities, we expect the leases for
each of these facilities to provide for contractual base rent and an annual rent
escalator. The letters of commitment constitute agreements of the parties to
consummate the acquisition or development transactions and enter into leases on
the terms set forth in the letters of commitment subject to the satisfaction of
certain conditions, including the execution of mutually-

acceptable definitive agreements. The following tables contain information
regarding our Pending Acquisition and Development Facilities:

Operating Facilities

YEAR ONE
NUMBER OF CONTRACTUAL LOAN LEASE
LOCATION TYPE TENANT BEDS(1) INTEREST AMOUNT EXPIRATION
- -------- ----------- ---------------- --------- ----------- ----------- --------------

Hammond, Louisiana*(2)................... Long-term Hammond 40 $ 840,000(3) $ 8,000,000 June 2021
acute care Rehabilitation
hospital Hospital, LLC
Denham Springs, Louisiana(4)............. Long-term Gulf States 59 630,000(5) 6,000,000 October 2020
acute care Long Term Acute
hospital Care of Denham
Springs, L.L.C.
-- ---------- -----------
TOTAL.................................... -- -- 99 $1,470,000 $14,000,000 --
== ========== ===========

- ---------------

* Under letter of commitment.
(1) Based on the number of licensed beds.
(2) On April 1, 2005, we entered into a letter of commitment with Hammond
Healthcare Properties, LLC, or Hammond Properties, and Hammond
Rehabilitation Hospital, LLC, or Hammond Hospital, pursuant to which we
have agreed to lend Hammond Properties $8.0 million and have agreed to a
put-call option pursuant to which, during the 90 day period commencing on
the first anniversary of the date of the loan closing, we expect to
purchase from Hammond Properties a long-term acute care hospital located in
Hammond, Louisiana for a purchase price between $10.3 million and $11.0
million. If we purchase the facility, we will lease it back to Hammond
Hospital for an initial term of 15 years. The lease would be a net lease
and would provide for contractual base rent and, beginning January 1, 2007,
an annual rent escalator.
(3) Based on one year contractual interest at the rate of 10.5% per year on the
$8.0 million mortgage loan to Hammond Properties. We expect to exercise our
option to purchase the Hammond Facility in 2006. For the one year period
following our purchase of the facility, contractual base rent would equal
$1,079,925, based on 10.5% of an estimated purchase price of $10,285,000.
(4) On June 9, 2005, we entered into a definitive purchase, sale and loan
agreement, pursuant to which we loaned Denham Springs Healthcare
Properties, L.L.C. $6.0 million and agreed to purchase the Denham Springs
Facility for a purchase price of $6.0 million, subject to our satisfaction
with the results of our review of an environmental condition at the
property. If we purchase the facility, the loan will be cancelled and we
will lease the facility to Gulf States Long Term Acute Care of Denham
Springs, L.L.C. for an initial term of 15 years. The lease would be a net
lease and would provide for contractual base rent and, beginning on January
1, 2006, an annual rent escalator. If we do not purchase the Denham Springs
Facility, the $6.0 million loan would remain outstanding.

(5) Based on one year contractual interest at the rate of 10.5% per year on the
$6.0 million loan to Denham Springs Healthcare Properties, L.L.C. We expect
to purchase the Denham Springs Facility during October 2005. For the one
year period following our purchase of the facility, contractual base rent
would equal 10.5% of the purchase price of $6.0 million, plus an annual
rent escalator beginning on January 1, 2006.

Development Facility

ANNUAL
MINIMUM PROJECTED
NUMBER OF INCREASE IN DEVELOPMENT LEASE
LOCATION TYPE TENANT BEDS(1) RENT COST EXPIRATION
- -------- ---- --------------- --------- ----------- ------------ ----------

Bloomington, Indiana*.......................... Community Monroe 32 2.5%(2) 32,000,000 (3)
hospital Hospital, LLC

- ---------------

* Under letter of commitment.

(1) Based on the number of proposed beds.

(2) The annual rent increase is the greater of 2.5% and any change in the
Consumer Price Index, or CPI.

(3) We expect that this lease will have a 15 year term commencing on the date
that construction of the facility is completed.

OUR ACQUISITION AND DEVELOPMENT PIPELINE

We have also identified a number of opportunities to acquire or develop
additional healthcare facilities. In some cases, we are actively negotiating
agreements or letters of intent with the owners or prospective tenants. In other
instances, we have only identified the potential opportunity and had preliminary
discussions with the owner or prospective tenant. We cannot assure you that we
will complete any of these potential acquisitions or developments.

OUR DEBT

We employ leverage in our capital structure in amounts we determine from
time to time. At present, we intend to limit our debt to approximately 50-60% of
the aggregate cost of our facilities, although we may exceed those levels from
time to time. We expect our borrowings to be a combination of long-term,
fixed-rate, non-recourse mortgage loans, variable-rate secured term and
revolving credit facilities, and other fixed and variable-rate short to
medium-term loans.

In December 2004, we borrowed $75.0 million from Merrill Lynch Capital
under a loan agreement with a term of three years for acquisition and
development of additional facilities and other working capital

needs. The loan bears interest at one month LIBOR (3.86% at September 29, 2005)
plus 300 basis points. The loan is secured by our interests in the Vibra
Facilities and requires us to comply with certain financial covenants. We had
$40.4 million outstanding under this loan as of the date of this prospectus. We
have executed a term sheet with Merrill Lynch Capital providing for a senior
secured revolving credit facility of up to $100.0 million with a term of four
years, with one 12-month extension option, to refinance the outstanding amount
under our existing loan agreement with Merrill Lynch Capital and for general
corporate purposes. If we enter into this facility, during the term of the loan
we will have the right to increase the amount available under the facility by an
amount up to $75.0 million, subject to no event of default continuing or
occurring at the time of our request to increase the amount. We cannot assure
you that we will enter into this facility on these terms or at all.

We have also entered into construction loan agreements with Colonial Bank
pursuant to which we can borrow up to $43.4 million to fund construction costs
for the West Houston Facilities being developed in Houston, Texas. Each
construction loan has a term of up to 18 months and an option on our part to
convert the loan to a 30-month term loan upon completion of construction of the
West Houston Facility securing that loan. The loans are secured by mortgages on
the West Houston Facilities, as well as assignments of rents and leases on those
facilities, and require us to comply with certain financial covenants. The loans
bear interest at one month LIBOR plus 225 basis points during the construction
period and one month LIBOR plus 250 basis points thereafter. The Colonial Bank
loans are cross-defaulted. As of the date of this prospectus, we have made no
borrowings under the Colonial Bank loans.

COMPETITIVE STRENGTHS

We believe that the following competitive strengths will enable us to
execute our business strategy successfully:

- Experienced Management Team. Our management team's experience enables us
to offer innovative acquisition and net-lease structures that we believe
will appeal to a variety of healthcare operators. We believe that our
management's depth of experience in both traditional real estate
investment and healthcare operations positions us favorably to take
advantage of the available opportunities in the healthcare real estate
market.

- Comprehensive Underwriting Process. Our underwriting process focuses on
both real estate investment and healthcare operations. Our acquisition
and development selection process includes a comprehensive analysis of a
targeted healthcare facility's profitability, cash flow, occupancy and
patient and payor mix, financial trends in revenues and expenses,
barriers to competition, the need in the market for the type of
healthcare services provided by the facility, the strength of the
location and the underlying value of the facility, as well as the
financial strength and experience of the tenant and the tenant's
management team. Through our detailed underwriting of healthcare
acquisitions, which includes an analysis of both the underlying real
estate and ongoing or expected healthcare operations at the property, we
expect to deliver attractive risk-adjusted returns to our stockholders.

- Active Asset Management. We actively monitor the operating results of
our tenants by reviewing periodic financial reporting and operating data,
as well as visiting each facility and meeting with the management of our
tenants on a regular basis. Integral to our asset management philosophy
is our desire to build long-term relationships with our tenants and,
accordingly, we have developed a partnering approach which we believe
results in the tenant viewing us as a member of its team.

- Favorable Lease Terms. We lease our facilities to healthcare operators
pursuant to long-term net-lease agreements. A net-lease requires the
tenant to bear most of the costs associated with the property, including
property taxes, utilities, insurance and maintenance. Our current
net-leases are for terms of at least 10 years, provide for annual base
rental increases and, in the case of the Vibra Facilities, percentage
rent. Similarly, we anticipate that our future leases will generally
provide for base rent with annual escalators, tenant payment of operating
costs and, when feasible and in compliance with applicable healthcare
laws and regulations, percentage rent.

- Diversified Portfolio Strategy. We focus on a portfolio of several
different types of healthcare facilities in a variety of geographic
regions. We also intend to diversify our tenant base as we acquire and
develop additional healthcare facilities.

- Access to Investment Opportunities. We believe our network of
relationships in both the real estate and healthcare industries provides
us access to a large volume of potential acquisition and development
opportunities. The net proceeds of our initial public offering will
enhance our ability to capitalize on these and other investment
opportunities.

- Local Physician Investment. When feasible and in compliance with
applicable healthcare laws and regulations, we expect to offer physicians
an opportunity to invest in the facilities that we own, thereby
strengthening our relationship with the local physician community.

SUMMARY RISK FACTORS

You should carefully consider the matters discussed in the section "Risk
Factors" beginning on page 17 prior to deciding whether to invest in our common
stock. Some of these risks include:

- We may be unable to acquire or develop the Pending Acquisition and
Development Facilities or facilities we have identified as potential
candidates for acquisition or development as quickly as we expect or at
all, which could harm our future operating results and adversely affect
our ability to make distributions to our stockholders.

- We expect to continue to experience rapid growth and may not be able to
adapt our management and operational systems to integrate the net-leased
facilities we have acquired and are developing or those that we expect to
acquire and develop without unanticipated disruption or expense.

- Our real estate investments will be concentrated in net-leased healthcare
facilities, making us more vulnerable economically than if our
investments were more diversified across several industries or property
types.

- Failure by our tenants or other parties to whom we make loans to repay
loans currently outstanding or loans we are obligated to make, or to pay
us commitment and other fees that they are obligated to pay, in an
aggregate amount of approximately $114.1 million, would have a material
adverse effect on our revenues and our ability to make distributions to
our stockholders.

- Our facilities and properties under development are currently leased to
only six tenants, four of which were recently organized and have limited
or no operating histories, and the failure of any of these tenants to
meet its obligations to us, including payment of rent, payment of
commitment and other fees and repayment of loans we have made or intend
to make to them, would have a material adverse effect on our revenues and
our ability to make distributions to our stockholders.

- The healthcare industry is heavily regulated and existing and new laws or
regulations, changes to existing laws or regulations, loss of licensure
or certification or failure to obtain licensure or certification could
result in the inability of our tenants to make lease or loan payments to
us.

- Our use of debt financing will subject us to significant risks, including
foreclosure and refinancing risks and the risk that debt service
obligations will reduce the amount of cash available for distribution to
our stockholders. We have entered into loan agreements pursuant to which
we may borrow up to $117.5 million, $40.4 million of which was
outstanding as of the date of this prospectus. Our charter and other
organizational documents do not limit the amount of debt we may incur.

- Provisions of Maryland law, our charter and our bylaws may prevent or
deter changes in management and third-party acquisition proposals that
you may believe to be in our best interest, depress our stock price or
cause dilution.

- We depend on key personnel, the loss of any one of whom could threaten
our ability to operate our business successfully.

- Loss of our tax status as a REIT would have significant adverse
consequences to us and the value of our common stock.

- Our loans to Vibra could be recharacterized as equity, in which case our
rental income from Vibra would not be qualifying income under the REIT
rules and we could lose our REIT status.

- Common stock eligible for future sale, including, subject to certain
lock-up agreements which expire over the next three months, up to
25,411,039 shares that may be resold by our existing stockholders upon
effectiveness of the resale registration statement of which this
prospectus is a part, may result in increased selling which may have an
adverse effect on our stock price.

MARKET OPPORTUNITY

According to the United States Department of Commerce, Bureau of Economic
Analysis, healthcare is one of the largest industries in the U.S., and was
responsible for approximately 15.3% of U.S. gross domestic product in 2003.
Healthcare spending has consistently grown at rates greater than overall
spending growth and inflation. We expect this trend to continue. According to
the United States Department of Health and Human Services, Centers for Medicare
and Medicaid Services, or CMS, healthcare expenditures are projected to increase
by more than 7% in 2004 and 2005 to $1.8 trillion and $1.9 trillion,
respectively, and are expected to reach $3.1 trillion by 2012.

To satisfy this growing demand for healthcare services, a significant
amount of new construction of healthcare facilities has been undertaken, and we
expect significant construction of additional healthcare facilities in the
future. In 2003 alone, $24.5 billion was spent on the construction of healthcare
facilities, according to CMS. This represented more than a 9% increase over the
$22.4 billion in healthcare construction spending for 2002. We believe that a
significant part of this healthcare construction spending was for the types of
facilities that we target.

OUR TARGET FACILITIES

The market for healthcare real estate is extensive and includes real estate
owned by a variety of healthcare operators. We focus on acquiring, developing
and net leasing to healthcare operators facilities that are designed to address
what we view as the latest trends in healthcare delivery methods. These
facilities include:

- Rehabilitation Hospitals: Rehabilitation hospitals provide inpatient and
outpatient rehabilitation services for patients recovering from multiple
traumatic injuries, organ transplants, amputations, cardiovascular
surgery, strokes, and complex neurological, orthopedic, and other
conditions. In addition to Medicare certified rehabilitation beds,
rehabilitation hospitals may also operate Medicare certified skilled
nursing, psychiatric, long-term or acute care beds. These hospitals are
often the best medical alternative to traditional acute care hospitals
where under the Medicare prospective payment system there is pressure to
discharge patients after relatively short stays.

- Long-term Acute Care Hospitals: Long-term acute care hospitals focus on
extended hospital care, generally at least 25 days, for the
medically-complex patient. Long-term acute care hospitals have arisen
from a need to provide care to patients in acute care settings, including
daily physician observation and treatment, before they are able to move
to a rehabilitation hospital or return home. These facilities are
reimbursed in a manner more appropriate for a longer length of stay than
is typical for an acute care hospital.

- Regional and Community Hospitals: We define regional and community
hospitals as general medical/surgical hospitals whose practicing
physicians generally serve a market specific area, whether urban,
suburban or rural. We intend to limit our ownership of these facilities
to those with market, ownership, competitive or technological
characteristics that provide barriers to entry for potential competitors.

- Women's and Children's Hospitals: These hospitals serve the specialized
areas of obstetrics and gynecology, other women's healthcare needs,
neonatology and pediatrics. We anticipate substantial development of
facilities designed to meet the needs of women and children and their
physicians as a result of the decentralization and specialization trends
described above.

- Ambulatory Surgery Centers: Ambulatory surgery centers are freestanding
facilities designed to allow patients to have outpatient surgery, spend a
short time recovering at the center, then return home to complete their
recoveries. Ambulatory surgery centers offer a lower cost alternative to
general hospitals for many surgical procedures in an environment that is
more convenient for both patients and physicians. Outpatient procedures
commonly performed include those related to gastrointestinal, general
surgery, plastic surgery, ear, nose and throat/audiology, as well as
orthopedics and sports medicine.

- Other Single-Discipline Facilities: The decentralization and
specialization trends in the healthcare industry are also creating
demands and opportunities for physicians to practice in hospital
facilities in which the design, layout and medical equipment are
specifically developed, and healthcare professional staff are educated,
for medical specialties. These facilities include heart hospitals,
ophthalmology centers, orthopedic hospitals and cancer centers.

- Medical Office Buildings: Medical office buildings are office and clinic
facilities occupied and used by physicians and other healthcare providers
in the provision of healthcare services to their patients. The medical
office buildings that we target generally are or will be master-leased
and adjacent to or integrated with our other targeted healthcare
facilities.

- Skilled Nursing Facilities. Skilled nursing facilities are healthcare
facilities that generally provide more comprehensive services than
assisted living or residential care homes. They are primarily engaged in
providing skilled nursing care for patients who require medical or
nursing care or rehabilitation services. Typically these services involve
managing complex and serious medical problems such as wound care, coma
care or intravenous therapy. They offer both short and long-term care
options for patients with serious illnesses and medical conditions.
Skilled nursing facilities also provide rehabilitation services that are
typically utilized on a short-term basis after hospitalization for injury
or illness.

OUR FORMATION TRANSACTIONS

The following is a summary of our formation transactions:

- Our operating partnership, MPT Operating Partnership, L.P., was formed in
September 2003. Our wholly-owned subsidiary, Medical Properties Trust,
LLC, is the sole general partner of our operating partnership. We
currently own all of the limited partnership interests in our operating
partnership.

- MPT Development Services, Inc., a Delaware corporation that we formed in
January 2004, operates as our wholly-owned taxable REIT subsidiary.

- In April 2004 we completed a private placement of 25,300,000 shares of
common stock at an offering price of $10.00 per share. Friedman,
Billings, Ramsey & Co., Inc., which served as a lead underwriter in our
initial public offering, acted as the initial purchaser and sole
placement agent. The total net proceeds to us, after deducting fees and
expenses of the offering, were approximately $233.5 million. The net
proceeds of our private placement, together with borrowed funds, have
been or will be used to acquire our current portfolio of 13 facilities
and properties under development, consisting of nine facilities that are
in operation and four that are under development, lend funds to one of
our tenants and to an affiliate of one of our prospective tenants, repay
debt, pay pre-offering operating expenses and for working capital. Thus
far we have utilized approximately $187.6 million to acquire our nine
existing facilities, have loaned $47.6 million to Vibra to acquire the
operations at the Vibra Facilities and for working capital purposes, $6.2
million of which has been repaid, have funded approximately $51.3 million
of a projected total of approximately $63.1 million of development costs
for the West Houston Facilities and $8.8 million of a projected total of
$38.0 million of development costs for the Bucks County Facility and have
advanced $9.7 million pursuant to the North Cypress construction loan.

- On July 13, 2005, we completed an initial public offering of 12,066,823
shares of common stock, priced at $10.50 per share. Of these shares of
common stock, 701,823 shares were sold by selling stockholders and
11,365,000 shares were sold by us. Friedman, Billings, Ramsey & Co., Inc.
served as the sole book-running manager and J.P. Morgan Securities Inc.
served as co-lead manager for the offering. Wachovia Capital Markets, LLC
and Stifel, Nicolaus & Company, Incorporated served as co-managers for
the offering. The underwriters exercised an option to purchase an
additional 1,810,023 shares of common stock to cover over-allotments on
August 5, 2005. We raised net proceeds of approximately $125.7 million
pursuant to the offering, after deducting the underwriting discount and
offering expenses.

OUR STRUCTURE

We conduct our business through a traditional umbrella partnership REIT, or
UPREIT, in which our facilities are owned by our operating partnership, MPT
Operating Partnership, L.P., and limited partnerships, limited liability
companies or other subsidiaries of our operating partnership. Through our
wholly-owned limited liability company, Medical Properties Trust, LLC, we are
the sole general partner of our operating partnership and we presently own all
of the limited partnership units of our operating partnership. In the future, we
may issue limited partnership units to third parties from time to time in
connection with facility acquisitions or developments. In addition, we may sell
equity interests in subsidiaries of our operating partnership in connection with
facility acquisitions or developments.

MPT Development Services, Inc., our taxable REIT subsidiary, is authorized
to engage in development, management, lending, including but not limited to
acquisition and working capital loans to our tenants, and other activities that
we are unable to engage in directly under applicable REIT tax rules. The
following chart illustrates our structure upon completion of our initial public
offering:

(CHART)
- ---------------

(1) We own and in the future expect to own interests in our facilities through
wholly owned or majority owned subsidiaries of our operating partnership,
MPT Operating Partnership, L.P. Our operating partnership is a limited
partner of MPT West Houston MOB, L.P. and MPT West Houston Hospital, L.P.,
which own, respectively, the West Houston MOB and the West Houston Hospital.
MPT West Houston MOB, LLC and MPT West Houston Hospital, LLC, both of which
are wholly-owned by our operating partnership, are, respectively, the
general partners of these entities. Physicians and others associated with
our tenant or subtenants of the West Houston MOB own approximately 24% of
the aggregate equity interests in MPT West Houston MOB, L.P. Stealth, the
tenant of the West Houston Hospital, owns a 6% limited partnership interest
in MPT West Houston Hospital, L.P.

REGISTRATION RIGHTS AGREEMENT

In connection with a registration rights agreement we entered into in April
2004 with the purchasers of common stock in our April 2004 private placement, we
agreed to file the registration statement of which this prospectus is a part.

LOCK-UP AGREEMENTS AND RESALE BLACKOUT PERIODS

Lock-up Agreements. All of our directors and executive officers agreed to
be bound by lock-up agreements that prohibit these holders from selling or
otherwise disposing of any of our common stock or securities convertible into
our common stock that they own or acquire until January 4, 2006, subject to
limited exceptions. Friedman, Billings, Ramsey & Co., Inc., on behalf of the
underwriters of our initial public offering, may, in its discretion, release all
or any portion of the common stock subject to the lock-up

agreements with our directors and executive officers at any time and without
notice or stockholder approval. Friedman, Billings, Ramsey & Co., Inc. and its
affiliates are subject to a lock-up agreement that expires on October 12, 2005.

Resale Blackout Periods We will be permitted to suspend the use, from time
to time, of this prospectus (and therefore suspend sales of common stock under
this prospectus) for periods, referred to as "blackout periods," if a majority
of the independent members of our board of directors determines in good faith
that it is in our best interests to suspend the use and we provide selling
stockholders written notice of the suspension. The cumulative blackout periods
in any rolling 12-month period may not exceed an aggregate of 90 days and
furthermore may not exceed 60 days in any rolling 90-day period.

RESTRICTIONS ON OWNERSHIP OF OUR COMMON STOCK

The Code imposes limitations on the concentration of ownership of REIT
shares. Our charter generally prohibits any stockholder from actually or
constructively owning more than 9.8% of our outstanding shares of common stock.
The ownership limitation in our charter is more restrictive than the
restrictions on ownership of our common stock imposed by the Code. Our board
may, in its sole discretion, waive this ownership limitation with respect to
particular stockholders if our board is presented with evidence satisfactory to
it that the ownership will not then or in the future jeopardize our status as a
REIT.

DISTRIBUTION POLICY

We intend to distribute to our stockholders each year all or substantially
all of our REIT taxable income so as to avoid paying corporate income tax and
excise tax on our REIT income and to qualify for the tax benefits afforded to
REITs under the Code. The actual amount and timing of distributions, if any,
will be at the discretion of our board of directors and will depend upon our
actual results of operations and a number of other factors discussed in the
section "Distribution Policy."

The table below is a summary of our distributions.

DISTRIBUTION PER SHARE
DECLARATION DATE RECORD DATE DATE OF DISTRIBUTION OF COMMON STOCK
- ---------------- ----------- -------------------- ----------------------

August 18, 2005 September 15, 2005 September 29, 2005 $0.17
May 19, 2005 June 20, 2005 July 14, 2005 $0.16
March 4, 2005 March 16, 2005 April 15, 2005 $0.11
November 11, 2004 December 16, 2004 January 11, 2005 $0.11
September 2, 2004 September 16, 2004 October 11, 2004 $0.10

The two distributions declared in 2004, aggregating $0.21 per share, were
comprised of approximately $0.13 per share in ordinary income and $0.08 per
share in return of capital. For federal income tax purposes, our distributions
were limited in 2004 to our tax basis earnings and profits of $0.13 per share.
Accordingly, for tax purposes, $0.08 per share of the distributions we paid in
January 2005 will be treated as a 2005 distribution; the tax character of this
amount, along with that of the April 15, 2005, July 14, 2005 and September 29,
2005 distributions, will be determined subsequent to determination of our 2005
taxable income.

TAX STATUS

As long as we maintain our REIT status, we will generally not incur federal
income tax on our income to the extent that we distribute this income to our
stockholders. However, we will be subject to tax at normal corporate rates on
net income or capital gains not distributed to stockholders. Moreover, our
taxable REIT subsidiary will be subject to federal and state income taxation on
its taxable income.

SUMMARY FINANCIAL INFORMATION

You should read the following pro forma and historical information in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our historical and pro forma consolidated
financial statements and related notes thereto included elsewhere in this
prospectus.

The following table sets forth our summary financial and operating data on
an historical and pro forma basis. Our summary historical balance sheet
information as of December 31, 2004, and the historical statement of operations
and other data for the year ended December 31, 2004, have been derived from our
historical financial statements audited by KPMG LLP, independent registered
public accounting firm, whose report with respect thereto is included elsewhere
in this prospectus. The historical balance sheet information as of June 30, 2005
and the historical statement of operations and other data for the six months
ended June 30, 2005 have been derived from our unaudited historical balance
sheet as of June 30, 2005 and from our unaudited statement of operations for the
six months ended June 30, 2005 included elsewhere in this prospectus. The
unaudited historical financial statements include all adjustments, consisting of
normal recurring adjustments, that we consider necessary for a fair presentation
of our financial condition and results of operations as of such dates and for
such periods under accounting principles generally accepted in the U.S.

The unaudited pro forma consolidated balance sheet data as of June 30, 2005
are presented as if completion of our initial public offering and completion of
our probable acquisitions had occurred on June 30, 2005.

The unaudited pro forma consolidated statement of operations and other data
for the six months ended June 30, 2005 are presented as if acquisition of the
Desert Valley Facility, the Covington Facility and the Redding Facility,
completion of our initial public offering and completion of our probable
acquisitions had occurred on January 1, 2005, and our December 31, 2004
unaudited pro forma consolidated statement of operations are presented as if our
acquisition of the current portfolio of facilities (the six Vibra Facilities,
the Desert Valley Facility, the Covington Facility and the Redding Facility),
our making of the Vibra loans, completion of our initial public offering and
completion of our probable acquisitions had occurred on January 1, 2004. The pro
forma information does not give effect to any of our facilities under
development or probable development transactions. The pro forma information is
not necessarily indicative of what our actual financial position or results of
operations would have been as of the dates or for the periods indicated, nor
does it purport to represent our future financial position or results of
operations.

FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 2005 DECEMBER 31, 2004
------------------------- -------------------------
PRO FORMA HISTORICAL PRO FORMA HISTORICAL
----------- ----------- ----------- -----------

OPERATING INFORMATION:
Revenues
Rent income......................... $14,629,750 $11,393,116 $27,360,679 $ 8,611,344
Interest income from loans.......... 2,329,189 2,329,189 5,037,049 2,282,115
----------- ----------- ----------- -----------
Total revenues...................... 16,958,939 13,722,305 32,397,728 10,893,459
Operating expenses
Depreciation and amortization....... 2,533,665 1,816,403 5,072,811 1,478,470
General and administrative.......... 3,165,877 3,165,877 5,057,284 5,057,284
Total operating expenses............ 5,699,542 4,982,280 10,902,444 7,214,601
Operating income.................... 11,259,397 8,740,025 21,495,284 3,678,858
Net other income (expense).......... (800,280) (800,280) 897,491 897,491
Net income............................. 10,459,117 7,939,745 22,392,775 4,576,349
Net income per share, basic............ 0.27 0.30 0.69 0.24
Net income per share, diluted.......... 0.26 0.30 0.69 0.24
Weighted average shares outstanding --
basic............................... 39,459,836 26,096,813 32,673,856 19,310,833
Weighted average shares outstanding --
diluted............................. 39,468,867 26,105,844 32,675,657 19,312,634

AS OF
AS OF JUNE 30, 2005 DECEMBER 31, 2004
------------------------------------ -----------------
PRO FORMA HISTORICAL HISTORICAL
------------ ------------ -----------------

BALANCE SHEET INFORMATION:
Gross investment in real estate assets......... $254,436,964 $238,151,964 $151,690,293
Net investment in real estate.................. 251,142,091 234,857,091 150,211,823
Construction in progress....................... 50,529,769 50,529,769 24,318,098
Cash and cash equivalents...................... 141,578,197 34,357,866 97,543,677
Loans receivable............................... 42,498,111 48,498,111 50,224,069(1)
Total assets................................... 448,878,440 333,744,392 306,506,063
Total debt..................................... 73,204,167 73,204,167 56,000,000
Total liabilities.............................. 94,760,052 98,946,430 73,777,619
Total stockholders' equity..................... 351,980,888 232,660,462 231,728,444
Total liabilities and stockholders' equity..... 448,878,440 333,744,392 306,506,063

FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 2005 DECEMBER 31, 2004
-------------------------- ---------------------------
PRO FORMA HISTORICAL PRO FORMA HISTORICAL
----------- ------------ ----------- -------------

OTHER INFORMATION:
Funds from operations(2)............ $12,992,782 $ 9,756,148 $27,465,586 $ 6,054,819
Cash Flows:
Provided by operating
activities..................... 3,468,751 9,918,898
Used for investing activities.... (80,265,755) (195,600,642)
Provided by financing
activities..................... 13,611,373 283,125,421

- ---------------

(1) Includes $1.5 million in commitment fees payable to us by Vibra.

methodology for calculating funds from operations utilized by other equity
REITs and, accordingly, may not be comparable to such other REITs. FFO does
not represent amounts available for management's discretionary use because
of needed capital replacement or expansion, debt service obligations, or
other commitments and uncertainties, nor is it indicative of funds available
to fund our cash needs, including our ability to make distributions. Funds
from operations should not be considered as 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 FFO to net income for the
six months ended June 30, 2005 and for the year ended December 31, 2004 on an
actual and pro forma basis.

FOR THE SIX MONTHS FOR THE YEAR ENDED
ENDED JUNE 30, 2005 DECEMBER 31, 2004
--------------------------- ---------------------------
PRO FORMA HISTORICAL PRO FORMA HISTORICAL
------------ ------------ ------------ ------------

FUNDS FROM OPERATIONS:
Net income................................................. $10,459,117 $7,939,745 $22,392,775 $4,576,349
Depreciation and amortization.............................. 2,533,665 1,816,403 5,072,811 1,478,470
----------- ---------- ----------- ----------
Funds from operations...................................... $12,992,782 $9,756,148 $27,465,586 $6,054,819
=========== ========== =========== ==========

RISK FACTORS

An investment in our common stock involves a number of risks. Before making
an investment decision, you should carefully consider all of the risks described
below and the other information contained in this prospectus. If any of the
risks discussed in this prospectus actually occurs, our business, financial
condition and results of operations could be materially adversely affected. If
this were to occur, the value of our common stock could decline and you may lose
all or part of your investment.

RISKS RELATING TO OUR BUSINESS AND GROWTH STRATEGY

WE WERE FORMED IN AUGUST 2003 AND HAVE A LIMITED OPERATING HISTORY; OUR
MANAGEMENT HAS A LIMITED HISTORY OF OPERATING A REIT AND A PUBLIC COMPANY AND
MAY THEREFORE HAVE DIFFICULTY IN SUCCESSFULLY AND PROFITABLY OPERATING OUR
BUSINESS.

We have only recently been organized and have a limited operating history.
We are subject to the risks generally associated with the formation of any new
business, including unproven business models, untested plans, uncertain market
acceptance and competition with established businesses. Our management has
limited experience in operating a REIT and a public company. Therefore, you
should be especially cautious in drawing conclusions about the ability of our
management team to execute our business plan.

WE MAY NOT BE SUCCESSFUL IN DEPLOYING THE NET PROCEEDS OF OUR INITIAL PUBLIC
OFFERING FOR THEIR INTENDED USES AS QUICKLY AS WE INTEND OR AT ALL, WHICH COULD
HARM OUR CASH FLOW AND ABILITY TO MAKE DISTRIBUTIONS TO OUR STOCKHOLDERS.

Upon completion of our initial public offering, we experienced a capital
infusion from the net offering proceeds, which we have used or intend to use to
develop additional net-leased facilities and to make a loan to an affiliate of
one of our prospective tenants. If we are unable to use the net proceeds in this
manner, we will have no specific designated use for a substantial portion of the
net proceeds from our initial public offering. In that case, or in the event we
allocate a portion of the net proceeds to other uses during the pendency of the
developments, you would be unable to evaluate the manner in which we invest the
net proceeds or the economic merits of the assets acquired with the proceeds. We
may not be able to invest this capital on acceptable terms or timeframes, or at
all, which may harm our cash flow and ability to make distributions to our
stockholders.

WE MAY BE UNABLE TO ACQUIRE OR DEVELOP THE PENDING ACQUISITION AND DEVELOPMENT
FACILITIES, WHICH COULD HARM OUR FUTURE OPERATING RESULTS AND ADVERSELY AFFECT
OUR ABILITY TO MAKE DISTRIBUTIONS TO OUR STOCKHOLDERS.

Our future success depends in large part on our ability to continue to grow
our business through the acquisition or development of additional facilities. We
cannot assure you that we will acquire or develop any of the Pending Acquisition
and Development Facilities on the terms described, or at all, because each of
these transactions is subject to a variety of conditions, including, in the case
of facilities under contract, our satisfactory completion of due diligence and
the satisfaction of customary closing conditions, including the obtaining of any
required government approvals and consents and, in the case of facilities under
letters of commitment, execution of mutually-acceptable definitive agreements,
our satisfactory completion of due diligence, receipt of appraisals and other
third-party reports, receipt of government and third-party approvals and
consents, approval by our board of directors and other customary closing
conditions. In addition, our development of one of the Pending Acquisition and
Development Facilities is dependent upon our proposed tenant's completion of the
acquisition of the property on which the facilities are to be built from the
current owner. We have incurred losses of approximately $600,000 in connection
with acquisitions that we were unable to complete, consisting primarily of legal
fees, costs of third-party reports and travel expenses. If we are unsuccessful
in completing the acquisition or development of additional facilities in the
future, we will incur similar costs without achieving corresponding revenues,
our future operating results

will not meet expectations and our ability to make distributions to our
stockholders will be adversely affected.

WE MAY NOT CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY OUR OTHER ARRANGEMENTS,
WHICH COULD ADVERSELY AFFECT OUR ABILITY TO MAKE DISTRIBUTIONS TO OUR
STOCKHOLDERS.

We have entered into letter agreements with DVH to fund a $20.0 million
expansion of the Desert Valley Facility and with DSI to fund $50.0 million of
acquisitions and development facilities. Our funding of the expansion of the
Desert Valley Facility is subject to receipt of a development agreement from DVH
which we may not receive until February 28, 2006. DVH is not obligated to
present us with a development agreement, and, if it does not, we have no
obligation to provide funding to DVH for the expansion. If we enter into a
development agreement, we may not begin construction on the expansion for
several months after that time and the expansion could take up to approximately
one year to complete. Any acquisition or development of facilities pursuant to
the DSI commitment is subject to DSI's identification, and our approval, of
acquisition or development facilities. DSI is not required to identify
facilities for acquisition or development and, if it does not, we have no
obligation to provide funding to DSI. We have also entered into an arrangement
with DVH to purchase a hospital facility in Sherman Oaks, California for a
purchase price of approximately $20.0 million, with funding for a $5.0 million
expansion. We have also entered into an arrangement with Prime Healthcare to
acquire a hospital facility in California for an approximate amount of $25.0
million, subject to DVH's acquisition of the facility. Each of these
arrangements is subject to a number of additional conditions. Thus we may not
engage in any of these transactions in the near future, or at all, and may not
in the near future, or ever, generate any revenues from these arrangements.

WE MAY BE UNABLE TO ACQUIRE OR DEVELOP ANY OF THE FACILITIES WE HAVE IDENTIFIED
AS POTENTIAL CANDIDATES FOR ACQUISITION OR DEVELOPMENT, WHICH COULD HARM OUR
FUTURE OPERATING RESULTS AND ADVERSELY AFFECT OUR ABILITY TO MAKE DISTRIBUTIONS
TO OUR STOCKHOLDERS.

We have identified numerous other facilities that we believe would be
suitable candidates for acquisition or development; however, we cannot assure
you that we will be successful in completing the acquisition or development of
any of these facilities. Consummation of any of these acquisitions or
developments is subject to, among other things, the willingness of the parties
to proceed with a contemplated transaction, negotiation of mutually acceptable
definitive agreements, satisfactory completion of due diligence and satisfaction
of customary closing conditions. If we are unsuccessful in completing the
acquisition or development of additional facilities in the future, our future
operating results will not meet expectations and our ability to make
distributions to our stockholders will be adversely affected.

WE EXPECT TO CONTINUE TO EXPERIENCE RAPID GROWTH AND MAY NOT BE ABLE TO ADAPT
OUR MANAGEMENT AND OPERATIONAL SYSTEMS TO INTEGRATE THE NET-LEASED FACILITIES WE
HAVE ACQUIRED AND ARE DEVELOPING OR THOSE THAT WE MAY ACQUIRE OR DEVELOP IN THE
FUTURE WITHOUT UNANTICIPATED DISRUPTION OR EXPENSE.

We are currently experiencing a period of rapid growth. We cannot assure
you that we will be able to adapt our management, administrative, accounting and
operational systems, or hire and retain sufficient operational staff, to
integrate and manage the facilities we have acquired and are developing and
those that we may acquire or develop. Our failure to successfully integrate and
manage our current portfolio of facilities or any future acquisitions or
developments could have a material adverse effect on our results of operations
and financial condition and our ability to make distributions to our
stockholders.

WE MAY BE UNABLE TO ACCESS CAPITAL, WHICH WOULD SLOW OUR GROWTH.

Our business plan contemplates growth through acquisitions and developments
of facilities. As a REIT, we are required to make cash distributions which
reduces our ability to fund acquisitions and developments with retained
earnings. We are dependent on acquisition financings and access to the capital
markets for cash to make investments in new facilities. Due to market or other
conditions, there will be times when we will have limited access to capital from
the equity and debt markets. During such periods,

virtually all of our available capital will be required to meet existing
commitments and to reduce existing debt. We may not be able to obtain additional
equity or debt capital or dispose of assets, on favorable terms, if at all, at
the time we need additional capital to acquire healthcare properties on a
competitive basis or to meet our obligations. Our ability to grow through
acquisitions and developments will be limited if we are unable to obtain debt or
equity financing, which could have a material adverse effect on our results of
operations and our ability to make distributions to our stockholders.

DEPENDENCE ON OUR TENANTS FOR RENT MAY ADVERSELY IMPACT OUR ABILITY TO MAKE
DISTRIBUTIONS TO OUR STOCKHOLDERS.

We expect to qualify as a REIT and, accordingly, as a REIT operating in the
healthcare industry, we are not permitted by current tax law to operate or
manage the businesses conducted in our facilities. Accordingly, we rely almost
exclusively on rent payments from our tenants for cash with which to make
distributions to our stockholders. We have no control over the success or
failure of these tenants' businesses. Significant adverse changes in the
operations of any facility, or the financial condition of any tenant, could have
a material adverse effect on our ability to collect rent payments and,
accordingly, on our ability to make distributions to our stockholders. Facility
management by our tenants and their compliance with state and federal healthcare
laws could have a material impact on our tenants' operating and financial
condition and, in turn, their ability to pay rent to us. Failure on the part of
a tenant to comply materially with the terms of a lease could give us the right
to terminate our lease with that tenant, repossess the applicable facility,
cross default certain other leases with that tenant and enforce the payment
obligations under the lease. However, we then would be required to find another
tenant-operator.

The transfer of most types of healthcare facilities is highly regulated,
which may result in delays and increased costs in locating a suitable
replacement tenant. The sale or lease of these properties to entities other than
healthcare operators may be difficult due to the added cost and time of
refitting the properties. If we are unable to re-let the properties to
healthcare operators, we may be forced to sell the properties at a loss due to
the repositioning expenses likely to be incurred by non-healthcare purchasers.
Alternatively, we may be required to spend substantial amounts to adapt the
facility to other uses. There can be no assurance that we would be able to find
another tenant in a timely fashion, or at all, or that, if another tenant were
found, we would be able to enter into a new lease on favorable terms. Defaults
by our tenants under our leases may adversely affect the timing of and our
ability to make distributions to our stockholders.

FAILURE BY OUR TENANTS OR OTHER PARTIES TO WHOM WE MAKE LOANS TO REPAY LOANS
CURRENTLY OUTSTANDING OR LOANS WE ARE OBLIGATED TO MAKE, OR TO PAY US COMMITMENT
OR OTHER FEES THAT THEY ARE OBLIGATED TO PAY, IN AN AGGREGATE AMOUNT OF
APPROXIMATELY $118.5 MILLION, WOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
REVENUES AND OUR ABILITY TO MAKE DISTRIBUTIONS TO OUR STOCKHOLDERS.

In connection with the acquisition of the Vibra Facilities, our taxable
REIT subsidiary made a secured loan to Vibra of approximately $41.4 million to
acquire the operations at the Vibra Facilities. Payment of this loan is secured
by pledges of equity interests in Vibra and its subsidiaries that are tenants of
ours. All leases and other agreements between us, or our affiliates, on the one
hand, and the tenant and Mr. Hollinger, or their affiliates, on the other hand,
including leases for the Vibra Facilities, the lease for the Redding Facility
and the Vibra loan, are cross-defaulted. If Vibra defaulted on this loan, our
primary recourse would be to foreclose on the equity interests in Vibra and its
affiliates. This recourse may be impractical because of limitations imposed by
the REIT tax rules on our ability to own these interests.

Failure to adhere to these limitations could cause us to lose our REIT status.
We have obtained guaranty agreements for the Vibra loan from Mr. Hollinger,
Vibra Management, LLC and The Hollinger Group that obligate them to make loan
payments in the event that Vibra fails to do so. However, we do not believe that
these parties have sufficient financial resources to satisfy a material portion
of the loan obligations. Mr. Hollinger's guaranty is limited to $5.0 million and
Vibra Management, LLC and The Hollinger Group do not have substantial assets.
Vibra has entered into a $17.0 million credit facility with Merrill Lynch, and
that loan is secured by an interest in Vibra's receivables. There was
approximately $10.7 million outstanding under the facility on June 30, 2005. At
March 31, 2005, Vibra was not in compliance with a facility rent coverage
covenant under its Merrill Lynch credit facility. The Merrill Lynch credit
facility documents were subsequently amended to retroactively change the rent
coverage covenant from a by-facility rent coverage to a consolidated rent
coverage calculation, so that Vibra was in compliance with the amended covenant
at March 31, 2005. Our loan is subordinate to Merrill Lynch with respect to
Vibra's receivables.

On June 9, 2005, in connection with our proposed acquisition of the Denham
Springs Facility, we made a loan of $6.0 million to Denham Springs Healthcare
Properties, L.L.C., $500,000 of which is to be held in escrow.

We have also agreed to make a working capital loan to Stealth of up to
$1.62 million, although no amounts have been loaned to date. Stealth also owes
us commitment and other fees of approximately $1.1 million. Payment of these
fees and loan amounts is unsecured. We have also agreed to make a construction
loan to North Cypress for approximately $64.0 million to fund the construction
of a community hospital in Houston, Texas, secured by the hospital improvements,
$9.7 million of which has been loaned to North Cypress as of the date of this
prospectus. BCO owes us commitment and other fees of $420,000. BCO also owes us
approximately $4.0 million in connection with a loan we made to BCO, the loan
proceeds of which we have retained in a separate bank account as security for
BCO's loan repayment obligations and its obligations under the lease for the
Bucks County Facility. We are dependent upon the ability of Vibra, Denham
Springs Healthcare Properties, L.L.C., North Cypress and BCO to repay these
loans and fees, and their failure to meet these obligations would have a
material adverse effect on our revenues and our ability to make distributions to
our stockholders.

ACCOUNTING RULES MAY REQUIRE CONSOLIDATION OF ENTITIES IN WHICH WE INVEST AND
OTHER ADJUSTMENTS TO OUR FINANCIAL STATEMENTS.

The Financial Accounting Standards Board, or FASB, issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities, an
interpretation of Accounting Research Bulletin No. 51 (ARB No. 51)," in January
2003, and a further interpretation of FIN 46 in December 2003 (FIN 46-R, and
collectively FIN 46). FIN 46 clarifies the application of ARB No. 51,
"Consolidated Financial Statements," to certain entities in which equity
investors do not have the characteristics of a controlling financial interest or
do not have sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support from other parties, referred
to as variable interest entities. FIN 46 generally requires consolidation by the
party that has a majority of the risk and/or rewards, referred to as the primary
beneficiary. FIN 46 applies immediately to variable interest entities created
after January 31, 2003. Under certain circumstances, generally accepted
accounting principles may require us to account for loans to thinly capitalized
companies such as Vibra as equity investments. The resulting accounting
treatment of certain income and expense items may adversely affect our results
of operations, and consolidation of balance sheet amounts may adversely affect
any loan covenants.

THE BANKRUPTCY OR INSOLVENCY OF OUR TENANTS UNDER OUR LEASES COULD SERIOUSLY
HARM OUR OPERATING RESULTS AND FINANCIAL CONDITION.

Four of our tenants, North Cypress, Stealth, BCO and Vibra are, and some of
our prospective tenants may be, newly organized, have limited or no operating
history and may be dependent on loans from us to acquire the facility's
operations and for initial working capital. Any bankruptcy filings by or
relating to one of our tenants could bar us from collecting pre-bankruptcy debts
from that tenant or their property, unless we receive an order permitting us to
do so from the bankruptcy court. A tenant bankruptcy could delay

our efforts to collect past due balances under our leases and loans, and could
ultimately preclude collection of these sums. If a lease is assumed by a tenant
in bankruptcy, we expect that all pre-bankruptcy balances due under the lease
would be paid to us in full. However, if a lease is rejected by a tenant in
bankruptcy, we would have only a general unsecured claim for damages. Any
secured claims we have against our tenants may only be paid to the extent of the
value of the collateral, which may not cover any or all of our losses. Any
unsecured claim we hold against a bankrupt entity may be paid only to the extent
that funds are available and only in the same percentage as is paid to all other
holders of unsecured claims. We may recover none or substantially less than the
full value of any unsecured claims, which would harm our financial condition.

OUR FACILITIES AND PROPERTIES UNDER DEVELOPMENT ARE CURRENTLY LEASED TO ONLY SIX
TENANTS, FOUR OF WHICH WERE RECENTLY ORGANIZED AND HAVE LIMITED OR NO OPERATING
HISTORIES, AND FAILURE OF ANY OF THESE TENANTS AND THE GUARANTORS OF THEIR
LEASES TO MEET THEIR OBLIGATIONS TO US WOULD HAVE A MATERIAL ADVERSE EFFECT ON
OUR REVENUES AND OUR ABILITY TO MAKE DISTRIBUTIONS TO OUR STOCKHOLDERS.

Our existing facilities and the properties we have under development are
currently leased to Vibra, DVH, Gulf States, North Cypress, BCO and Stealth or
their subsidiaries. If any of our tenants were to experience financial
difficulties, the tenant may not be able to pay its rent. Vibra, North Cypress,
BCO and Stealth were recently organized, have limited or no operating histories
and Vibra was dependent on us for an aggregate amount of $47.6 million in loans
to acquire operations at the Vibra Facilities, for the funds to purchase the
Redding Facility which it sold to us at the same time that it purchased that
facility and for its initial working capital needs. As of June 30, 2005, Vibra
had total assets of approximately $80.6 million (of which approximately $29.8
million was goodwill and other intangible assets), total liabilities of
approximately $87.0 million, a deficit in owner's capital of approximately $6.5
million, and for the six months ended June 30, 2005 had a loss from operations
of approximately $3.7 million and a net loss of approximately $2.6 million.
Stealth has provided to us unaudited financial statements reflecting that, as of
March 31, 2005, it had tangible assets of approximately $5.8 million, including
cash of approximately $4.4 million, liabilities of approximately $269,000 and
owners' equity of approximately $5.5 million. Stealth will have substantial
pre-opening and start-up costs upon completion of construction of its
facilities. We cannot assure you that, should Stealth's equity be insufficient
to cover its costs, it could access additional debt or equity financing. Each
lease for the Vibra Facilities is guaranteed by Brad E. Hollinger, chief
executive officer of The Hollinger Group, Vibra, Vibra Management, LLC and The
Hollinger Group. The lease for the Redding Facility is guaranteed by Vibra,
Vibra Management, LLC and The Hollinger Group. However, we do not believe that
these parties have sufficient financial resources to satisfy a material portion
of the total lease obligations. Mr. Hollinger has not guaranteed the Redding
Facility lease and Mr. Hollinger's guaranty of the leases for the Vibra
Facilities is limited to $5.0 million, Vibra Management, LLC and The Hollinger
Group do not have substantial assets, and Vibra's assets are substantially
comprised of the operations at the Vibra Facilities and at the Redding Facility.
DVH has provided to us unaudited financial statements reflecting that, as of
March 31, 2005, it had tangible assets of approximately $21.6 million,
liabilities of approximately $17.6 million and stockholders' equity of
approximately $4.0 million, and for the three months ended March 31, 2005, had
net income of approximately $4.0 million. The lease for the Desert Valley
Facility is guaranteed by Desert Valley Health System, Inc., Desert Valley
Medical Group, Inc. and Prime A Investments, LLC. Desert Valley Health System,
Inc. has provided to us audited financial statements showing that, as of
December 31, 2004, it had consolidated tangible assets of approximately $40.5
million, consolidated liabilities of approximately $31.4 million, and
consolidated tangible net worth of approximately $9.1 million and for the year
ended December 31, 2004, had consolidated net income of approximately $3.9
million. The lease for the Covington Facility is guaranteed by Gulf States and
Team Rehab, L.L.C., or Team Rehab. Gulf States has provided to us unaudited
financial statements reflecting that, as of December 31, 2004, it had tangible
assets of approximately $11.1 million, liabilities of approximately $9.3 million
and stockholders' equity of approximately $1.8 million, and for the year ended
December 31, 2004 had net income of approximately $2.0 million. Team Rehab has
provided to us unaudited financial statements reflecting that, as of December
31, 2004, it had tangible assets of approximately $21.3 million, liabilities of
approximately

$9.2 million and owner's equity of approximately $12.1 million, and for the year
ended December 31, 2004 had net income of approximately $1.7 million. North
Cypress is newly formed and has had no significant operations to date. The
ground sublease and the facility leases related to the North Cypress Facility
require that, as of the commencement date of each lease, the tenant shall have
received from its equity owners at least $15.0 million in cash equity. Until the
necessary letter of credit in an amount equal to one year's base rent is posted,
our lease for the Buck's County Facility is guaranteed to the extent of $5.0
million by 14 guarantors. Six of these guarantors have pledged cash, cash
equivalents or marketable securities equivalent to their maximum guaranty
limits. Eight of the guarantors have delivered financial statements which we
believe reflect the necessary financial wherewithal to satisfy their guaranty
obligations. Guarantors of our leases with DVH and Gulf States may not have
sufficient assets for us to recover amounts due to us under those leases. The
failure of our tenants and their guarantors to meet their obligations to us
would have a material adverse effect on our revenues and our ability to make
distributions to our stockholders.

OUR BUSINESS IS HIGHLY COMPETITIVE AND WE MAY BE UNABLE TO COMPETE SUCCESSFULLY.

We compete for development opportunities and opportunities to purchase
healthcare facilities with, among others:

- private investors;

- healthcare providers, including physicians;

- other REITs;

- real estate partnerships;

- financial institutions; and

- local developers.

Many of these competitors have substantially greater financial and other
resources than we have and may have better relationships with lenders and
sellers. Competition for healthcare facilities from competitors, including other
REITs, may adversely affect our ability to acquire or develop healthcare
facilities and the prices we pay for those facilities. If we are unable to
acquire or develop facilities or if we pay too much for facilities, our revenue
and earnings growth and financial return could be materially adversely affected.
Certain of our facilities and additional facilities we may acquire or develop
will face competition from other nearby facilities that provide services
comparable to those offered at our facilities and additional facilities we may
acquire or develop. Some of those facilities are owned by governmental agencies
and supported by tax revenues, and others are owned by tax-exempt corporations
and may be supported to a large extent by endowments and charitable
contributions. Those types of support are not available to our facilities and
additional facilities we may acquire or develop. In addition, competing
healthcare facilities located in the areas served by our facilities and
additional facilities we may acquire or develop may provide healthcare services
that are not available at our facilities and additional facilities we may
acquire or develop. From time to time, referral sources, including physicians
and managed care organizations, may change the healthcare facilities to which
they refer patients, which could adversely affect our rental revenues.

OUR USE OF DEBT FINANCING WILL SUBJECT US TO SIGNIFICANT RISKS, INCLUDING
REFINANCING RISK AND THE RISK OF INSUFFICIENT CASH AVAILABLE FOR DISTRIBUTION TO
OUR STOCKHOLDERS.

Our charter and other organizational documents do not limit the amount of
debt we may incur. We have targeted our debt level at up to approximately 50-60%
of our aggregate facility acquisition and development costs. However, we may
modify our target debt level at any time without stockholder or board of
director approval. We cannot assure you that our use of financial leverage will
prove to be beneficial. In December 2004 we borrowed $75.0 million from Merrill
Lynch Capital under a loan agreement. We have also entered into construction
loan agreements with Colonial Bank pursuant to which

we can borrow up to $43.4 million. As of the date of this prospectus, we had
$40.4 million of long-term debt outstanding. We have executed a term sheet with
Merrill Lynch Capital providing for a senior secured revolving credit facility
of up to $100.0 million with a term of four years, with one 12-month extension
option, to refinance the outstanding amount under our existing loan agreement
with Merrill Lynch Capital and for general corporate purposes. We will have the
right to increase the amount available under the facility by an amount up to
$75.0 million.

We may borrow from other lenders in the future, or we may issue corporate
debt securities in public or private offerings. The loans from Merrill Lynch
Capital and Colonial Bank are secured by the Vibra Facilities and the West
Houston Facilities, respectively. Some of our other borrowings in the future may
be secured by additional facilities we may acquire or develop. In addition, in
connection with debt financing from Merrill Lynch Capital and Colonial Bank we
are, and in connection with other debt financing in the future we may be,
subject to covenants that may restrict our operations. We cannot assure you that
we will be able to meet our debt payment obligations or restrictive covenants
and, to the extent that we cannot, we risk the loss of some or all of our
facilities to foreclosure. In addition, debt service obligations will reduce the
amount of cash available for distribution to our stockholders.

We anticipate that much of our debt will be non-amortizing and payable in
balloon payments. Therefore, we will likely need to refinance at least a portion
of that debt as it matures. There is a risk that we may not be able to refinance
then-existing debt or that the terms of any refinancing will not be as favorable
as the terms of the then-existing debt. If principal payments due at maturity
cannot be refinanced, extended or repaid with proceeds from other sources, such
as new equity capital or sales of facilities, our cash flow may not be
sufficient to repay all maturing debt in years when significant balloon payments
come due. Additionally, we may incur significant penalties if we choose to
prepay the debt.

FAILURE TO HEDGE EFFECTIVELY AGAINST INTEREST RATE CHANGES MAY ADVERSELY AFFECT
OUR RESULTS OF OPERATIONS AND OUR ABILITY TO MAKE DISTRIBUTIONS TO OUR
STOCKHOLDERS.

As of the date of this prospectus, we had approximately $40.4 million in
variable interest rate debt. We may seek to manage our exposure to interest rate
volatility by using interest rate hedging arrangements that involve risk,
including the risk that counterparties may fail to honor their obligations under
these arrangements, that these arrangements may not be effective in reducing our
exposure to interest rate changes and that these arrangements may result in
higher interest rates than we would otherwise have. Moreover, no hedging
activity can completely insulate us from the risks associated with changes in
interest rates. Failure to hedge effectively against interest rate changes may
materially adversely affect results of operations and our ability to make
distributions to our stockholders.

MOST OF OUR CURRENT TENANTS HAVE, AND PROSPECTIVE TENANTS MAY HAVE, AN OPTION TO
PURCHASE THE FACILITIES WE LEASE TO THEM WHICH COULD DISRUPT OUR OPERATIONS.

Most of our current tenants have, and some prospective tenants will have,
the option to purchase the facilities we lease to them. At the expiration of
each lease for the Vibra Facilities, each tenant will have the option to
purchase the facility at a purchase price equal to the greater of (i) the
appraised value of the facility, determined assuming the lease is still in
place, or (ii) the purchase price we paid for the facility, including
acquisition costs, increased by 2.5% per year from the date of purchase. At any
time after February 28, 2007, so long as DVH, and its affiliates are not in
default under any lease with us or any of the leases with its subtenants, DVH
will have the option, upon 90 days' prior written notice, to purchase the Desert
Valley Facility at a purchase price equal to the sum of (i) the purchase price
of the facility, and (ii) that amount determined under a formula that would
provide us an internal rate of return of 10% per year, increased by 2% of such
percentage each year, taking into account all payments of base rent received by
us. These same purchase rights also apply if we provide DVH with notice of the
exercise of our right to change management as a result of a default, provided
DVH gives us notice within five days following receipt of such notice. If during
the term of the lease we receive from the previous owner or any of its
affiliates, a written offer to purchase the Desert Valley Facility and we are
willing to accept the offer, so long as DVH and its affiliates are not in
default under any lease with us or any of the subleases with its subtenants, we
must first present the offer to DVH and allow DVH the right to purchase the
facility upon

the same price, terms and conditions as set forth in the offer; however, if the
offer is made after February 28, 2007, in lieu of exercising its right of first
refusal, DVH may exercise its option to purchase as provided above. So long as
Gulf States is not in default under any lease with us or in default under any
sublease, Gulf States will have the option to purchase the Covington Facility
(i) at the expiration of the initial term and each extension term of the lease,
to be exercised by 60 days' written notice prior to the expiration of the
initial term and each extension term, and (ii) within five days of written
notification from us exercising our right to terminate the engagement of the
tenant's or its affiliate's management company as the management company for the
facility as a result of an event of default under the lease. The purchase price
for the Covington Facility purchase options will be equal to the greater of (i)
the appraised value of the facility based on a 15 year lease in place, or (ii)
the purchase price paid by us for the Covington Facility, increased annually by
an amount equal to the greater of (A) 2.5% per annum from the date of the lease,
or (B) the rate of increase in the CPI on each January 1. If we elect to
purchase the North Cypress Facility upon completion of construction, at the
expiration of the facility lease the tenant will have the option, so long as no
event of default has occurred, to purchase our interest in the property leased
pursuant to the facility lease at a purchase price equal to the greater of (i)
the appraised value of the leased property or (ii) the purchase price paid by us
to tenant pursuant to the purchase and sale agreement relating to the hospital
improvements plus our interest in any capital additions funded by us, as
increased by the amount equal to the greater of (A) 2.5% from the date of the
facility lease execution or (B) the rate of increase in the CPI as of each
January 1 which has passed during the lease term; provided that in no event
shall the purchase price be less than the fair market value of the property
leased. After the first full 12 month period after construction of the West
Houston MOB and the West Houston Hospital, respectively, as long as Stealth is
not in default under either of its leases with us or any of the leases with its
physician subtenants, it has the right to purchase the West Houston MOB or the
West Houston Hospital at a price equal to the greater of (i) that amount
determined under a formula that would provide us an internal rate of return of
at least 18% and (ii) the appraised value based on a 15 year lease in place.
Upon written notice to us within 90 days of the expiration of the applicable
lease, as long as Stealth is not in default under either of its leases with us
or any of the leases with its physician subtenants, Stealth will have the option
to purchase the West Houston MOB or the West Houston Hospital at a price equal
to the greater of (i) the total development costs (including any capital
additions funded by us, but excluding any capital additions funded by Stealth)
increased by 2.5% per year, and (ii) the appraised value based on a 15 year
lease in place. The Stealth leases also provide that under certain limited
circumstances, Stealth will have the right to present us with a choice of one
out of three proposed exchange facilities to be substituted for the leased
facility. At the expiration of the lease for the Bucks County Facility, BCO will
have the option, upon 60 days prior written notice, to purchase the facility at
a purchase price equal to the greater of (i) the appraised value of the
facility, which assumes the lease remains in effect for 15 years, or (ii) the
total development costs, including any capital additions funded by us, as
increased by an amount equal to the greater of (A) 2.5% per annum from the date
of the lease, or (B) the rate of increase in the CPI on each January 1. If we do
not approve a change of control transaction involving BCO, BCO will also have
the option, exercisable for 30 days after our failure to approve the change of
control, to purchase the facility at the greater of (i) the above formula for
the end-of-lease-term purchase option or (ii) an amount that would provide us an
internal rate of return of 13%.

All of our arrangements which provide or will provide tenants the option to
purchase the facilities we lease to them are subject to regulatory requirements
that such purchases be at fair market value. We cannot assure you that the
formulas we have developed for setting the purchase price will yield a fair
market value purchase price. Any purchase not at fair market value may present
risks of challenge from healthcare regulatory authorities.

In the event our tenants and prospective tenants determine to purchase the
facilities they lease either during the lease term or after their expiration,
the timing of those purchases will be outside of our control and we may not be
able to re-invest the capital on as favorable terms, or at all. Any of these
purchases would disrupt our cash flow by eliminating lease payments from these
tenants. Our inability to effectively manage the turn-over of our facilities
could materially adversely affect our ability to execute our business plan and
our results of operations.

PROPERTY OWNED IN LIMITED LIABILITY COMPANIES AND PARTNERSHIPS IN WHICH WE ARE
NOT THE SOLE EQUITY HOLDER MAY LIMIT OUR ABILITY TO ACT EXCLUSIVELY IN OUR
INTERESTS.

We own, and in the future expect to own, interests in our facilities
through wholly or majority owned subsidiaries of our operating partnership.
Stealth, L.P., the tenant of our West Houston Hospital, owns a 6% limited
partnership interest in MPT West Houston Hospital, L.P., which owns the West
Houston Hospital. Physicians and others associated with our tenant or subtenants
of the West Houston MOB own approximately 24% of the aggregate equity interests
in MPT West Houston MOB, L.P., the entity that owns our West Houston MOB. We may
offer limited liability company and limited partnership interests to tenants,
subtenants and physicians in the future. Investments in partnerships, limited
liability companies or other entities with co-owners may, under certain
circumstances, involve risks not present were a co-owner not involved, including
the possibility that partners or other co-owners might become bankrupt or fail
to fund their share of required capital contributions. Partners or other
co-owners may have economic or other business interests or goals that are
inconsistent with our business interests or goals, and may be in a position to
take actions contrary to our policies or objectives. Such investments may also
have potential risks pertaining to healthcare regulatory compliance,
particularly when partners or other co-owners are physicians, and of impasses on
major decisions, such as sales or mergers, because neither we nor our partners
or other co-owners would have full control over the partnership, limited
liability company or other entity. Disputes between us and our partners or other
co-owners may result in litigation or arbitration that would increase our
expenses and prevent our officers and directors from focusing their time and
effort on our business. Consequently, actions by or disputes with our partners
or other co-owners might result in subjecting facilities owned by the
partnership, limited liability company or other entity to additional risk. In
addition, we may in certain circumstances be liable for the actions of our
partners or other co-owners. The occurrence of any of the foregoing events could
have a material adverse effect on our results of operations and our ability to
make distributions to our stockholders.

TERRORIST ATTACKS, SUCH AS THE ATTACKS THAT OCCURRED IN NEW YORK AND WASHINGTON,
D.C. ON SEPTEMBER 11, 2001, U.S. MILITARY ACTION AND THE PUBLIC'S REACTION TO
THE THREAT OF TERRORISM OR MILITARY ACTION COULD ADVERSELY AFFECT OUR RESULTS OF
OPERATIONS AND THE MARKET ON WHICH OUR COMMON STOCK WILL TRADE.

There may be future terrorist threats or attacks against the United States
or U.S. businesses. These attacks may directly impact the value of our
facilities through damage, destruction, loss or increased security costs. Losses
due to wars or terrorist attacks may be uninsurable, or insurance may not be
available at a reasonable price. More generally, any of these events could cause
consumer confidence and spending to decrease or result in increased volatility
in the United States and worldwide financial markets and economies.

RISKS RELATING TO REAL ESTATE INVESTMENTS

OUR REAL ESTATE INVESTMENTS ARE AND WILL CONTINUE TO BE CONCENTRATED IN
NET-LEASED HEALTHCARE FACILITIES, MAKING US MORE VULNERABLE ECONOMICALLY THAN IF
OUR INVESTMENTS WERE MORE DIVERSIFIED.

We have acquired and are developing and expect to continue acquiring and
developing net-leased healthcare facilities. We are subject to risks inherent in
concentrating investments in real estate. The risks resulting from a lack of
diversification become even greater as a result of our business strategy to
invest in net-leased healthcare facilities. A downturn in the real estate
industry could materially adversely affect the value of our facilities. A
downturn in the healthcare industry could negatively affect our tenants' ability
to make lease or loan payments to us and, consequently, our ability to meet debt
service obligations or make distributions to our stockholders. These adverse
effects could be more pronounced than if we diversified our investments outside
of real estate or outside of healthcare facilities.

OUR NET-LEASED FACILITIES AND TARGETED NET-LEASED FACILITIES MAY NOT HAVE
EFFICIENT ALTERNATIVE USES, WHICH COULD IMPEDE OUR ABILITY TO FIND REPLACEMENT
TENANTS IN THE EVENT OF TERMINATION OR DEFAULT UNDER OUR LEASES.

All of the facilities in our current portfolio are and all of the
facilities we acquire or develop in the future will be net-leased healthcare
facilities. If we or our tenants terminate the leases for these facilities or if
these tenants lose their regulatory authority to operate these facilities, we
may not be able to locate suitable replacement tenants to lease the facilities
for their specialized uses. Alternatively, we may be required to spend
substantial amounts to adapt the facilities to other uses. Any loss of revenues
or additional capital expenditures occurring as a result could have a material
adverse effect on our financial condition and results of operations and could
hinder our ability to meet debt service obligations or make distributions to our
stockholders.

ILLIQUIDITY OF REAL ESTATE INVESTMENTS COULD SIGNIFICANTLY IMPEDE OUR ABILITY TO
RESPOND TO ADVERSE CHANGES IN THE PERFORMANCE OF OUR FACILITIES AND HARM OUR
FINANCIAL CONDITION.

Real estate investments are relatively illiquid. Our ability to quickly
sell or exchange any of our facilities in response to changes in economic and
other conditions will be limited. No assurances can be given that we will
recognize full value for any facility that we are required to sell for liquidity
reasons. Our inability to respond rapidly to changes in the performance of our
investments could adversely affect our financial condition and results of
operations.

DEVELOPMENT AND CONSTRUCTION RISKS COULD ADVERSELY AFFECT OUR ABILITY TO MAKE
DISTRIBUTIONS TO OUR STOCKHOLDERS.

We are developing a community hospital and an adjacent medical office
building in Houston, Texas, which we expect to complete in 2005, developing a
women's hospital and integrated medical office building in Bensalem,
Pennsylvania which we expect to be completed in August 2006 and financing the
development of a community hospital in Houston, Texas which we expect to be
completed in December 2006. We have entered into letters of commitment and
contracts to develop properties in the future. Our development and related
construction activities may subject us to the following risks:

- we may have to compete for suitable development sites;

- our ability to complete construction is dependent on there being no
title, environmental or other legal proceedings arising during
construction;

- we may be subject to delays due to weather conditions, strikes and other
contingencies beyond our control;

- we may be unable to obtain, or suffer delays in obtaining, necessary
zoning, land-use, building, occupancy healthcare regulatory and other
required governmental permits and authorizations, which could result in
increased costs, delays in construction, or our abandonment of these
projects;

- we may incur construction costs for a facility which exceed our original
estimates due to increased costs for materials or labor or other costs
that we did not anticipate; and

- we may not be able to obtain financing on favorable terms, which may
render us unable to proceed with our development activities.

We expect to fund these development projects over time. Additionally, the
time frame required for development and construction of these facilities means
that we may have to wait years for a significant cash return. Because we are
required to make cash distributions to our stockholders, if the cash flow from
operations or refinancings is not sufficient, we may be forced to borrow
additional money to fund distributions. We cannot assure you that we will
complete our current construction projects on time or within budget or that
future development projects will not be subject to delays and cost overruns.
Risks associated with our development projects may reduce anticipated rental
revenue which could affect the timing of, and our ability to make, distributions
to our stockholders.

OUR FACILITIES MAY NOT ACHIEVE EXPECTED RESULTS OR WE MAY BE LIMITED IN OUR
ABILITY TO FINANCE FUTURE ACQUISITIONS, WHICH MAY HARM OUR FINANCIAL CONDITION
AND OPERATING RESULTS AND OUR ABILITY TO MAKE THE DISTRIBUTIONS TO OUR
STOCKHOLDERS REQUIRED TO MAINTAIN OUR REIT STATUS.

Acquisitions and developments entail risks that investments will fail to
perform in accordance with expectations and that estimates of the costs of
improvements necessary to acquire and develop facilities will prove inaccurate,
as well as general investment risks associated with any new real estate
investment. We anticipate that future acquisitions and developments will largely
be financed through externally generated funds such as borrowings under credit
facilities and other secured and unsecured debt financing and from issuances of
equity securities. Because we must distribute at least 90% of our REIT taxable
income, excluding net capital gain, each year to maintain our qualification as a
REIT, our ability to rely upon income from operations or cash flow from
operations to finance our growth and acquisition activities will be limited.
Accordingly, if we are unable to obtain funds from borrowings or the capital
markets to finance our acquisition and development activities, our ability to
grow would likely be curtailed, amounts available for distribution to
stockholders could be adversely affected and we could be required to reduce
distributions, thereby jeopardizing our ability to maintain our status as a
REIT.

Newly-developed or newly-renovated facilities do not have the operating
history that would allow our management to make objective pricing decisions in
acquiring these facilities (including facilities that may be acquired from
certain of our executive officers, directors and their affiliates). The purchase
prices of these facilities will be based in part upon projections by management
as to the expected operating results of the facilities, subjecting us to risks
that these facilities may not achieve anticipated operating results or may not
achieve these results within anticipated time frames.

IF WE SUFFER LOSSES THAT ARE NOT COVERED BY INSURANCE OR THAT ARE IN EXCESS OF
OUR INSURANCE COVERAGE LIMITS, WE COULD LOSE INVESTMENT CAPITAL AND ANTICIPATED
PROFITS.

We have purchased general liability insurance (lessor's risk) that provides
coverage for bodily injury and property damage to third parties resulting from
our ownership of the healthcare facilities that are leased to and occupied by
our tenants. Our leases generally require our tenants to carry general
liability, professional liability, loss of earnings, all risk, and extended
coverage insurance in amounts sufficient to permit the replacement of the
facility in the event of a total loss, subject to applicable deductibles.
However, there are certain types of losses, generally of a catastrophic nature,
such as earthquakes, floods, hurricanes and acts of terrorism, that may be
uninsurable or not insurable at a price we or our tenants can afford. Inflation,
changes in building codes and ordinances, environmental considerations and other
factors also might make it impracticable to use insurance proceeds to replace a
facility after it has been damaged or destroyed. Under such circumstances, the
insurance proceeds we receive might not be adequate to restore our economic
position with respect to the affected facility. If any of these or similar
events occur, it may reduce our return from the facility and the value of our
investment.

CAPITAL EXPENDITURES FOR FACILITY RENOVATION MAY BE GREATER THAN ANTICIPATED AND
MAY ADVERSELY IMPACT RENT PAYMENTS BY OUR TENANTS AND OUR ABILITY TO MAKE
DISTRIBUTIONS TO STOCKHOLDERS.

Facilities, particularly those that consist of older structures, have an
ongoing need for renovations and other capital improvements, including periodic
replacement of furniture, fixtures and equipment. Although our leases require
our tenants to be primarily responsible for the cost of such expenditures,
renovation of facilities involves certain risks, including the possibility of
environmental problems, construction cost overruns and delays, uncertainties as
to market demand or deterioration in market demand after commencement of
renovation and the emergence of unanticipated competition from other facilities.
All of these factors could adversely impact rent and loan payments by our
tenants, could have a material adverse effect on our financial condition and
results of operations and could adversely effect our ability to make
distributions to our stockholders.

ALL OF OUR HEALTHCARE FACILITIES ARE SUBJECT TO PROPERTY TAXES THAT MAY INCREASE
IN THE FUTURE AND ADVERSELY AFFECT OUR BUSINESS.

Our facilities are subject to real and personal property taxes that may
increase as property tax rates change and as the facilities are assessed or
reassessed by taxing authorities. Our leases generally provide that the property
taxes are charged to our tenants as an expense related to the facilities that
they occupy. As the owner of the facilities, however, we are ultimately
responsible for payment of the taxes to the government. If property taxes
increase, our tenants may be unable to make the required tax payments,
ultimately requiring us to pay the taxes. If we incur these tax liabilities, our
ability to make expected distributions to our stockholders could be adversely
affected.

OUR PERFORMANCE AND THE PRICE OF OUR COMMON STOCK WILL BE AFFECTED BY RISKS
ASSOCIATED WITH THE REAL ESTATE INDUSTRY.

Factors that may adversely affect the economic performance and price of our
common stock include:

- changes in the national, regional and local economic climate, including
but not limited to changes in interest rates;

- local conditions such as an oversupply of, or a reduction in demand for,
rehabilitation hospitals, long-term acute care hospitals, ambulatory
surgery centers, medical office buildings, specialty hospitals, skilled
nursing facilities, regional and community hospitals, women's and
children's hospitals and other single-discipline facilities.

- attractiveness of our facilities to healthcare providers and other types
of tenants; and

- competition from other rehabilitation hospitals, long-term acute care
facilities, medical office buildings, outpatient treatment facilities,
ambulatory surgery centers and specialty hospitals, skilled nursing
facilities, regional and community hospitals, women's and children's
hospitals and other single-discipline facilities.

AS THE OWNER AND LESSOR OF REAL ESTATE, WE ARE SUBJECT TO RISKS UNDER
ENVIRONMENTAL LAWS, THE COST OF COMPLIANCE WITH WHICH AND ANY VIOLATION OF WHICH
COULD MATERIALLY ADVERSELY AFFECT US.

Our operating expenses could be higher than anticipated due to the cost of
complying with existing and future environmental and occupational health and
safety laws and regulations. Various environmental laws may impose liability on
a current or prior owner or operator of real property for removal or remediation
of hazardous or toxic substances. Current or prior owners or operators may also
be liable for government fines and damages for injuries to persons, natural
resources and adjacent property. These environmental laws often impose liability
whether or not the owner or operator knew of, or was responsible for, the
presence or disposal of the hazardous or toxic substances. The cost of complying
with environmental laws could materially adversely affect amounts available for
distribution to our stockholders and could exceed the value of all of our
facilities. In addition, the presence of hazardous or toxic substances, or the
failure of our tenants to properly dispose of or remediate such substances,
including medical waste generated by physicians and our other healthcare
tenants, may adversely affect our tenants or our ability to use, sell or rent
such property or to borrow using such property as collateral which, in turn,
could reduce our revenue and our financing ability. We have obtained on all
facilities we have acquired and are developing and intend to obtain on all
future facilities we acquire Phase I environmental assessments. However, even if
the Phase I environmental assessment reports do not reveal any material
environmental contamination, it is possible that material environmental
liabilities may exist of which we are unaware.

In April 2003, Stealth, which then owned the property on which the West
Houston Facilities are being constructed, arranged for a Phase I environmental
assessment to be performed. The assessor recommended further investigation based
on field screening of soil samples collected during a geotechnical
investigation. Accordingly, the tenant arranged for a Phase II environmental
soil sampling to be performed in June 2003 to assess shallow soils for the
presence of petroleum hydrocarbons and volatile organic

compounds. Based on the findings of this sampling, the tenant was advised that
no further tests were warranted and that the property was suitable for the
proposed development.

In April 2005, we arranged for a Phase I environmental assessment to be
performed at the Denham Springs Facility. The assessor recommended further soil
and groundwater sampling due to the property's previous use as a hospital that
involved X-ray and photochemical developing activities. Accordingly, we arranged
for a Phase II environmental soil and groundwater sampling. On May 19, 2005, we
received a Phase II report which concluded that one groundwater sample was at or
exceeded Louisiana Department of Environmental Quality (LDEQ) Numerical Acute
and Chronic Criteria standards for several metals. Concentrations of metals in
the soil samples were either below quantification limits or below LDEQ
regulatory guidelines. Based on this sampling, we were advised to present the
findings to LDEQ for review and determination. We were also advised that
additional action or investigation may be required by the agency. New sampling
and analysis was forwarded to LDEQ in July 2005 and on September 15, 2005, LDEQ
confirmed that no additional action is necessary at this time.

Although the leases for our facilities generally require our tenants to
comply with laws and regulations governing their operations, including the
disposal of medical waste, and to indemnify us for certain environmental
liabilities, the scope of their obligations may be limited. We cannot assure you
that our tenants would be able to fulfill their indemnification obligations and,
therefore, any violation of environmental laws could have a material adverse
affect on us. In addition, environmental and occupational health and safety laws
constantly are evolving, and changes in laws, regulations or policies, or
changes in interpretations of the foregoing, could create liabilities where none
exists today.

COSTS ASSOCIATED WITH COMPLYING WITH THE AMERICANS WITH DISABILITIES ACT OF 1993
MAY ADVERSELY AFFECT OUR FINANCIAL CONDITION AND OPERATING RESULTS.

Under the Americans with Disabilities Act of 1993, all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. While our facilities are generally in
compliance with these requirements, a determination that we are not in
compliance with the Americans with Disabilities Act of 1993 could result in
imposition of fines or an award of damages to private litigants. In addition,
changes in governmental rules and regulations or enforcement policies affecting
the use and operation of the facilities, including changes to building codes and
fire and life-safety codes, may occur. If we are required to make substantial
modifications at our facilities to comply with the Americans with Disabilities
Act of 1993 or other changes in governmental rules and regulations, this may
have a material adverse effect on our financial condition and results of
operations and could adversely affect our ability to make distributions to our
stockholders.

OUR FACILITIES MAY CONTAIN OR DEVELOP HARMFUL MOLD OR SUFFER FROM OTHER AIR
QUALITY ISSUES, WHICH COULD LEAD TO LIABILITY FOR ADVERSE HEALTH EFFECTS AND
COSTS OF REMEDIATING THE PROBLEM.

When excessive moisture accumulates in buildings or on building materials,
mold growth may occur, particularly if the moisture problem remains undiscovered
or is not addressed over a period of time. Some molds may produce airborne
toxins or irritants. Indoor air quality issues can also stem from inadequate
ventilation, chemical contamination from indoor or outdoor sources and other
biological contaminants such as pollen, viruses and bacteria. Indoor exposure to
airborne toxins or irritants above certain levels can be alleged to cause a
variety of adverse health effects and symptoms, including allergic or other
reactions. As a result, the presence of significant mold or other airborne
contaminants at any of our facilities could require us to undertake a costly
remediation program to contain or remove the mold or other airborne contaminants
from the affected facilities or increase indoor ventilation. In addition, the
presence of significant mold or other airborne contaminants could expose us to
liability from our tenants, employees of our tenants and others if property
damage or health concerns arise.

OUR INTERESTS IN FACILITIES THROUGH GROUND LEASES EXPOSE US TO THE LOSS OF THE
FACILITY UPON BREACH OR TERMINATION OF THE GROUND LEASE AND MAY LIMIT OUR USE OF
THE FACILITY.

We have acquired interests in two of our facilities, at least in part, and
one facility under development, by acquiring leasehold interests in the land on
which the facility is or the facility under development will be located rather
than an ownership interest in the property, and we may acquire additional
facilities in the future through ground leases. As lessee under ground leases,
we are exposed to the possibility of losing the property upon termination, or an
earlier breach by us, of the ground lease. Ground leases may also restrict our
use of facilities. Our current ground lease in Marlton, New Jersey limits use of
the property to operation of a 76 bed rehabilitation hospital. Our current
ground lease for the Redding Facility limits use of the property to operation of
a hospital offering the following services: skilled nursing; physical
rehabilitation; occupational therapy; speech pathology; social services;
assisted living; day health programs; long-term acute care services; psychiatric
services; geriatric clinic services; outpatient services related to the
foregoing service categories; and other post-acute services. These restrictions
and any similar future restrictions in ground leases will limit our flexibility
in renting the facility and may impede our ability to sell the property.

RISKS RELATING TO THE HEALTHCARE INDUSTRY

REDUCTIONS IN REIMBURSEMENT FROM THIRD-PARTY PAYORS, INCLUDING MEDICARE AND
MEDICAID, COULD ADVERSELY AFFECT THE PROFITABILITY OF OUR TENANTS AND HINDER
THEIR ABILITY TO MAKE RENT PAYMENTS TO US.

Sources of revenue for our tenants and operators may include the federal
Medicare program, state Medicaid programs, private insurance carriers and health
maintenance organizations, among others. Efforts by such payors to reduce
healthcare costs will likely continue, which may result in reductions or slower
growth in reimbursement for certain services provided by some of our tenants. In
addition, the failure of any of our tenants to comply with various laws and
regulations could jeopardize their ability to continue participating in
Medicare, Medicaid and other government-sponsored payment programs.

The healthcare industry continues to face various challenges, including
increased government and private payor pressure on healthcare providers to
control or reduce costs. We believe that our tenants will continue to experience
a shift in payor mix away from fee-for-service payors, resulting in an increase
in the percentage of revenues attributable to managed care payors, government
payors and general industry trends that include pressures to control healthcare
costs. Pressures to control healthcare costs and a shift away from traditional
health insurance reimbursement have resulted in an increase in the number of
patients whose healthcare coverage is provided under managed care plans, such as
health maintenance organizations and preferred provider organizations. In
addition, due to the aging of the population and the expansion of governmental
payor programs, we anticipate that there will be a marked increase in the number
of patients reliant on healthcare coverage provided by governmental payors.
These changes could have a material adverse effect on the financial condition of
some or all of our tenants, which could have a material adverse effect on our
financial condition and results of operations and could negatively affect our
ability to make distributions to our stockholders.

THE HEALTHCARE INDUSTRY IS HEAVILY REGULATED AND EXISTING AND NEW LAWS OR
REGULATIONS, CHANGES TO EXISTING LAWS OR REGULATIONS, LOSS OF LICENSURE OR
CERTIFICATION OR FAILURE TO OBTAIN LICENSURE OR CERTIFICATION COULD RESULT IN
THE INABILITY OF OUR TENANTS TO MAKE LEASE PAYMENTS TO US.

The healthcare industry is highly regulated by federal, state and local
laws, and is directly affected by federal conditions of participation, state
licensing requirements, facility inspections, state and federal reimbursement
policies, regulations concerning capital and other expenditures, certification
requirements and other such laws, regulations and rules. In addition,
establishment of healthcare facilities and transfers of operations of healthcare
facilities are subject to regulatory approvals not required for establishment of
or transfers of other types of commercial operations and real estate. Sanctions
for failure to comply with these regulations and laws include, but are not
limited to, loss of or inability to obtain licensure, fines and

loss of or inability to obtain certification to participate in the Medicare and
Medicaid programs, as well as potential criminal penalties. The failure of any
tenant to comply with such laws, requirements and regulations could affect its
ability to establish or continue its operation of the facility or facilities and
could adversely affect the tenant's ability to make lease payments to us which
could have a material adverse effect on our financial condition and results of
operations and could negatively affect our ability to make distributions to our
stockholders. In addition, restrictions and delays in transferring the
operations of healthcare facilities, in obtaining new third-party payor
contracts including Medicare and Medicaid provider agreements, and in receiving
licensure and certification approval from appropriate state and federal agencies
by new tenants may affect our ability to terminate lease agreements, remove
tenants that violate lease terms, and replace existing tenants with new tenants.
Furthermore, these matters may affect new tenants ability to obtain
reimbursement for services rendered, which could adversely affect their ability
to pay rent to us and to pay principal and interest on their loans from us.

ADVERSE TRENDS IN HEALTHCARE PROVIDER OPERATIONS MAY NEGATIVELY AFFECT OUR LEASE
REVENUES AND OUR ABILITY TO MAKE DISTRIBUTIONS TO OUR STOCKHOLDERS.

We believe that the healthcare industry is currently experiencing:

- changes in the demand for and methods of delivering healthcare services;

- changes in third-party reimbursement policies;

- significant unused capacity in certain areas, which has created
substantial competition for patients among healthcare providers in those
areas;

- continuing pressure by private and governmental payors to reduce payments
to providers of services; and

- increased scrutiny by federal and state authorities of billing, referral
and other practices.

These factors may adversely affect the economic performance of some or all
of our tenants and, in turn, our revenues. Accordingly, these factors could have
a material adverse effect on our financial condition and results of operations
and could negatively affect our ability to make distributions to our
stockholders.

OUR TENANTS ARE SUBJECT TO FRAUD AND ABUSE LAWS, THE VIOLATION OF WHICH BY A
TENANT MAY JEOPARDIZE THE TENANT'S ABILITY TO MAKE LEASE AND LOAN PAYMENTS TO
US.

The federal government and numerous state governments have passed laws and
regulations that attempt to eliminate healthcare fraud and abuse by prohibiting
business arrangements that induce patient referrals or the ordering of specific
ancillary services. In addition, the Balanced Budget Act of 1997 strengthened
the federal anti-fraud and abuse laws to provide for stiffer penalties for
violations. Violations of these laws may result in the imposition of criminal
and civil penalties, including possible exclusion from federal and state
healthcare programs. Imposition of any of these penalties upon any of our
tenants could jeopardize any tenant's ability to operate a facility or to make
lease and loan payments, thereby potentially adversely affecting us.

In the past several years, federal and state governments have significantly
increased investigation and enforcement activity to detect and eliminate fraud
and abuse in the Medicare and Medicaid programs. In addition, legislation has
been adopted at both state and federal levels which severely restricts the
ability of physicians to refer patients to entities in which they have a
financial interest. It is anticipated that the trend toward increased
investigation and enforcement activity in the area of fraud and abuse, as well
as self-referrals, will continue in future years and could adversely affect our
prospective tenants and their operations, and in turn their ability to make
lease and loan payments to us.

We cannot assure you that we will meet all the conditions for the safe
harbor for space rental in structuring lease arrangements involving facilities
in which local physicians are investors and tenants, and it is unlikely that we
will meet all conditions for the safe harbor in those instances in which
percentage rent

is contemplated and we have physician investors. In addition, federal
regulations require that our tenants with purchase options pay fair market value
purchase prices for facilities in which we have physician investment. We cannot
assure you that all of our purchase options will be at fair market value. Any
purchase not at fair market value may present risks of challenge from healthcare
regulatory authorities.

Vibra has accepted, and prospective tenants may accept, an assignment of
the previous operator's Medicare provider agreement. Vibra and other
new-operator tenants that take assignment of Medicare provider agreements might
be subject to federal or state regulatory, civil and criminal investigations of
the previous owner's operations and claims submissions. While we conduct due
diligence in connection with the acquisition of such facilities, these types of
issues may not be discovered prior to purchase. Adverse decisions, fines or
recoupments might negatively impact our tenants' financial condition.

CERTAIN OF OUR LEASE ARRANGEMENTS MAY BE SUBJECT TO FRAUD AND ABUSE OR PHYSICIAN
SELF-REFERRAL LAWS.

Local physician investment in our operating partnership or our subsidiaries
that own our facilities could subject our lease arrangements to scrutiny under
fraud and abuse and physician self-referral laws. Under the federal Ethics in
Patient Referrals Act of 1989, or Stark Law, and regulations adopted thereunder,
if our lease arrangements do not satisfy the requirements of an applicable
exception, that noncompliance could adversely affect the ability of our tenants
to bill for services provided to Medicare beneficiaries pursuant to referrals
from physician investors and subject us and our tenants to fines, which could
impact their ability to make lease and loan payments to us. On March 26, 2004,
CMS issued Phase II final rules under the Stark Law, which, together with the
2001 Phase I final rules, set forth CMS' current interpretation and application
of the Stark Law prohibition on referrals of designated health services, or DHS.
These rules provide us additional guidance on application of the Stark Law
through the implementation of "bright-line" tests, including additional
regulations regarding the indirect compensation exception, but do not eliminate
the risk that our lease arrangements and business strategy of physician
investment may violate the Stark Law. Finally, the Phase II rules implemented an
18-month moratorium on physician ownership or investment in specialty hospitals
imposed by the Medicare Prescription Drug, Improvement, and Modernization Act of
2003. Although the moratorium imposed by the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 expired on June 8, 2005, a bill
introduced in the Senate essentially would make the moratorium on physician
ownership or investment in specialty hospitals permanent with limited
exceptions. If enacted, the law would have a retroactive effective date of June
8, 2005. We intend to use our good faith efforts to structure our lease
arrangements to comply with these laws; however, if we are unable to do so, this
failure may restrict our ability to permit physician investment or, where such
physicians do participate, may restrict the types of lease arrangements into
which we may enter, including our ability to enter into percentage rent
arrangements.

STATE CERTIFICATE OF NEED LAWS MAY ADVERSELY AFFECT OUR DEVELOPMENT OF
FACILITIES AND THE OPERATIONS OF OUR TENANTS.

Certain healthcare facilities in which we invest may also be subject to
state laws which require regulatory approval in the form of a certificate of
need prior to initiation of certain projects, including, but not limited to, the
establishment of new or replacement facilities, the addition of beds, the
addition or expansion of services and certain capital expenditures. State
certificate of need laws are not uniform throughout the United States and are
subject to change. We cannot predict the impact of state certificate of need
laws on our development of facilities or the operations of our tenants.

In addition, certificate of need laws often materially impact the ability
of competitors to enter into the marketplace of our facilities. Finally, in
limited circumstances, loss of state licensure or certification or closure of a
facility could ultimately result in loss of authority to operate the facility
and require re-licensure or new certificate of need authorization to
re-institute operations. As a result, a portion of the value of the facility may
be related to the limitation on new competitors. In the event of a change in the
certificate of need laws, this value may markedly decrease.

RISKS RELATING TO OUR ORGANIZATION AND STRUCTURE

PROVISIONS OF MARYLAND LAW, OUR CHARTER AND OUR BYLAWS MAY PREVENT OR DETER
CHANGES IN MANAGEMENT AND THIRD-PARTY ACQUISITION PROPOSALS THAT YOU MAY BELIEVE
TO BE IN YOUR BEST INTEREST, DEPRESS OUR STOCK PRICE OR CAUSE DILUTION.

Our charter contains ownership limitations that may restrict business
combination opportunities, inhibit change of control transactions and reduce the
value of our stock. To qualify as a REIT under the Code, no more than 50% in
value of our outstanding stock, after taking into account options to acquire
stock, may be owned, directly or indirectly, by five or fewer persons during the
last half of each taxable year, other than our first REIT taxable year. Our
charter generally prohibits direct or indirect ownership by any person of more
than 9.8% in value or in number, whichever is more restrictive, of outstanding
shares of any class or series of our securities, including our common stock.
Generally, common stock owned by affiliated owners will be aggregated for
purposes of the ownership limitation. Any transfer of our common stock that
would violate the ownership limitation will be null and void, and the intended
transferee will acquire no rights in such stock. Instead, such common stock will
be designated as "shares-in-trust" and transferred automatically to a trust
effective on the day before the purported transfer of such stock. The
beneficiary of that trust will be one or more charitable organizations named by
us. The ownership limitation could have the effect of delaying, deterring or
preventing a change in control or other transaction in which holders of common
stock might receive a premium for their common stock over the then-current
market price or which such holders otherwise might believe to be in their best
interests. The ownership limitation provisions also may make our common stock an
unsuitable investment vehicle for any person seeking to obtain, either alone or
with others as a group, ownership of more than 9.8% of either the value or
number of the outstanding shares of our common stock. Our board of directors, in
its sole discretion, may waive or modify, subject to limitations, the ownership
limit with respect to one or more stockholders if it is satisfied that ownership
in excess of their limit will not jeopardize our status as a REIT. See
"Description of Capital Stock -- Restrictions on Ownership and Transfer."

Certain provisions of Maryland law may limit the ability of a third party
to acquire control of our company. Certain provisions of the Maryland General
Corporation Law, or the MGCL, could have the effect of inhibiting a third party
from making a proposal to acquire us or of impeding a change of control under
circumstances that otherwise could provide the holders of shares of our common
stock with the opportunity to realize a premium over the then-prevailing market
price of such shares, including:

- "business combination" provisions that, subject to limitations, prohibit
certain business combinations between us and an "interested stockholder"
(defined generally as a person who beneficially owns 10% or more of the
voting power of our shares or an affiliate thereof) for five years after
the most recent date on which the stockholder becomes an interested
stockholder, and thereafter imposes special appraisal rights and special
stockholder voting requirements on these combinations; and

- "control share" provisions that provide that "control shares" of our
company (defined as shares which, when aggregated with other shares
controlled by the stockholder, entitle the stockholder to exercise one of
three increasing ranges of voting power in electing directors) acquired
in a "control share acquisition" (defined as the direct or indirect
acquisition of ownership or control of "control shares") have no voting
rights except to the extent approved by our stockholders by the
affirmative vote of the holders of at least two-thirds of all the votes
entitled to be cast on the matter, excluding all interested shares.

We have opted out of these provisions of the MGCL pursuant to provisions in
our charter. However, we may, by amendment to our charter with approval of our
stockholders, opt in to the business combination and control share provisions of
the MGCL in the future.

Additionally, Title 8, Subtitle 3 of the MGCL permits our board of
directors, without stockholder approval and regardless of what is currently
provided in our charter and our amended and restated bylaws, or bylaws, to
implement takeover defenses, some of which (for example, a classified board) we
do not

presently have. These provisions may have the effect of inhibiting a third party
from making an acquisition proposal for our company or of delaying, deferring or
preventing a change of control of our company under circumstances that otherwise
could provide the holders of our common stock with the opportunity to realize a
premium over the then-current market price of our common stock.

Maryland law does not impose heightened standards on directors in takeover
situations. The MGCL provides that an act of a director relating to or affecting
an acquisition or potential acquisition of control of a corporation may not be
subject to a higher duty or greater scrutiny than is applied to any other act of
a director. Therefore, directors of a Maryland corporation are not required to
act in the same manner as directors of a Delaware corporation in takeover
situations.

Our charter and bylaws contain provisions that may impede third-party
acquisition proposals that may be in your best interests. Our charter and
bylaws also provide that our directors may only be removed by the affirmative
vote of the holders of two-thirds of our stock, that stockholders are required
to give us advance notice of director nominations and new business to be
conducted at our annual meetings of stockholders and that special meetings of
stockholders can only be called by our president, our board of directors or the
holders of at least 25% of stock entitled to vote at the meetings. These and
other charter and bylaw provisions may delay or prevent a change of control or
other transaction in which holders of our common stock might receive a premium
for their common stock over the then-current market price or which such holders
otherwise might believe to be in their best interests.

Our board of directors may issue additional shares that may cause dilution
and could deter change of control transactions that you may believe to be in
your best interest. Our charter authorizes our board, without stockholder
approval, to:

- issue up to 10,000,000 shares of preferred stock, having preferences,
conversion or other rights, voting powers, restrictions, limitations as
to distribution, qualifications, or terms or conditions of redemption as
determined by the board;

- amend the charter to increase or decrease the aggregate number of shares
of capital stock or the number of shares of stock of any class or series
that we have the authority to issue;

- cause us to issue additional authorized but unissued shares of common
stock or preferred stock; and

- classify or reclassify any unissued shares of common or preferred stock
by setting or changing in any one or more respects, from time to time
before the issuance of such shares, the preferences, conversion or other
rights and other terms of such classified or reclassified shares,
including the issuance of additional shares of common stock or preferred
stock that have preference rights over the common stock with respect to
dividends, liquidation, voting and other matters.

WE DEPEND ON KEY PERSONNEL, THE LOSS OF ANY ONE OF WHOM MAY THREATEN OUR ABILITY
TO OPERATE OUR BUSINESS SUCCESSFULLY.

We depend on the services of Edward K. Aldag, Jr., William G. McKenzie,
Emmett E. McLean, R. Steven Hamner and Michael G. Stewart to carry out our
business and investment strategy. If we were to lose any of these executive
officers, it may be more difficult for us to locate attractive acquisition
targets, complete our acquisitions and manage the facilities that we have
acquired or are developing. Additionally, as we expand, we will continue to need
to attract and retain additional qualified officers and employees. The loss of
the services of any of our executive officers, or our inability to recruit and
retain qualified personnel in the future, could have a material adverse effect
on our business and financial results.

WE MAY EXPERIENCE CONFLICTS OF INTEREST WITH OUR OFFICERS AND DIRECTORS, WHICH
COULD RESULT IN OUR OFFICERS AND DIRECTORS ACTING OTHER THAN IN OUR BEST
INTEREST.

As described below, our officers and directors may have conflicts of
interest in connection with their duties to us and the limited partners of our
operating partnership and with allocation of their time between our business and
affairs and their other business interests. In addition, from time to time, we
may acquire

or develop facilities in transactions involving prospective tenants in which our
directors or officers have an interest. In transactions of this nature, there
will be conflicts between our interests and the interests of the director or
officer involved, and that director or officer may be in a position to influence
the terms of those transactions.

In the event we purchase properties from executive officers or directors in
exchange for units of limited partnership in our operating partnership, the
interests of those persons with the interests of the company may conflict. Where
a unitholder has unrealized gains associated with his limited partnership
interests in our operating partnership, these holders may incur adverse tax
consequences in the event of a sale or refinancing of those properties.
Therefore the interest of these executive officers or directors of our company
could be different from the interests of the company in connection with the
disposition or refinancing of a property. Conflicts of interest with our
officers and directors could result in our officers and directors acting other
than in our best interest.

OUR EXECUTIVE OFFICERS HAVE AGREEMENTS THAT PROVIDE THEM WITH BENEFITS IN THE
EVENT THEIR EMPLOYMENT IS TERMINATED BY US WITHOUT CAUSE, BY THE EXECUTIVE FOR
GOOD REASON, OR UNDER CERTAIN CIRCUMSTANCES FOLLOWING A CHANGE OF CONTROL
TRANSACTION THAT YOU MAY BELIEVE TO BE IN YOUR BEST INTEREST.

We have entered into agreements with certain of our executive officers that
provide them with severance benefits if their employment is terminated by us
without cause, by them for good reason (which includes, among other reasons,
failure to be elected to the board for Mr. Aldag and failure to have their
agreements automatically renewed for Messrs. Aldag, McLean, Hamner, McKenzie and
Stewart), or under certain circumstances following a change of control of our
company. Certain of these benefits and the related tax indemnity could prevent
or deter a change of control of our company that might involve a premium price
for our common stock or otherwise be in the best interests of our stockholders.

THE VICE CHAIRMAN OF OUR BOARD OF DIRECTORS, WILLIAM G. MCKENZIE, HAS OTHER
BUSINESS INTERESTS THAT MAY HINDER HIS ABILITY TO ALLOCATE SUFFICIENT TIME TO
THE MANAGEMENT OF OUR OPERATIONS, WHICH COULD JEOPARDIZE OUR ABILITY TO EXECUTE
OUR BUSINESS PLAN.

Our employment agreement with the vice chairman of our board of directors,
Mr. McKenzie, permits him to continue to own, operate and control facilities
that he owned as of the date of his employment agreement and requires that he
only provide a limited amount of his time per month to our company. In addition,
the terms of Mr. McKenzie's employment agreement permit him to compete against
us with respect to these previously owned healthcare facilities.

ALL MANAGEMENT RIGHTS ARE VESTED IN OUR BOARD OF DIRECTORS AND OUR STOCKHOLDERS
HAVE LIMITED RIGHTS.

Our board of directors is responsible for our management and strategic
business direction, and management is responsible for our day-to-day operations.
Our major policies, including our policies with respect to REIT qualification,
acquisitions and developments, leasing, financing, growth, operations, debt
limitation and distributions, are determined by our board of directors. Our
board of directors may amend or revise these and other policies from time to
time without a vote of our stockholders. Investment and operational policy
changes could adversely affect the market price of our common stock and our
ability to make distributions to our stockholders.

THE ABILITY OF OUR BOARD OF DIRECTORS TO REVOKE OUR REIT STATUS WITHOUT
STOCKHOLDER APPROVAL MAY CAUSE ADVERSE CONSEQUENCES TO OUR STOCKHOLDERS.

Our charter provides that our board of directors may revoke or otherwise
terminate our REIT election, without the approval of our stockholders, if it
determines that it is no longer in our best interest to continue to qualify as a
REIT. If we cease to be a REIT, we would become subject to federal income tax on
our taxable income and would no longer be required to distribute most of our
taxable income to our stockholders, which may have adverse consequences on total
return to our stockholders.

OUR RIGHTS AND THE RIGHTS OF OUR STOCKHOLDERS TO TAKE ACTION AGAINST OUR
DIRECTORS AND OFFICERS ARE LIMITED.

Maryland law provides that a director or officer has no liability in that
capacity if he or she performs his or her duties in good faith, in a manner he
or she reasonably believes to be in our best interests and with the care that an
ordinarily prudent person in a like position would use under similar
circumstances. In addition, our charter eliminates our directors' and officers'
liability to us and our stockholders for money damages except for liability
resulting from actual receipt of an improper benefit in money, property or
services or active and deliberate dishonesty established by a final judgment and
which is material to the cause of action. Our bylaws and indemnification
agreements require us to indemnify our directors and officers for liability
resulting from actions taken by them in those capacities to the maximum extent
permitted by Maryland law. As a result, we and our stockholders may have more
limited rights against our directors and officers than might otherwise exist
under common law. In addition, we may be obligated to fund the defense costs
incurred by our directors and officers. See "Certain Provisions of Maryland Law
and of Our Charter and Bylaws -- Indemnification and Limitation of Directors'
and Officers' Liability." Directors may be removed with or without cause by the
affirmative vote of the holders of two-thirds of the votes entitled to be cast
in the election of directors.

OUR UPREIT STRUCTURE MAY RESULT IN CONFLICTS OF INTEREST BETWEEN OUR
STOCKHOLDERS AND THE HOLDERS OF OUR OPERATING PARTNERSHIP UNITS.

We are organized as an UPREIT, which means that we hold our assets and
conduct substantially all of our operations through an operating limited
partnership, and may in the future issue limited partnership units to third
parties. Persons holding operating partnership units would have the right to
vote on certain amendments to the partnership agreement of our operating
partnership, as well as on certain other matters. Persons holding these voting
rights may exercise them in a manner that conflicts with the interests of our
stockholders. Circumstances may arise in the future, such as the sale or
refinancing of one of our facilities, when the interests of limited partners in
our operating partnership conflict with the interests of our stockholders. As
the general partner of our operating partnership, we have fiduciary duties to
the limited partners of our operating partnership that may conflict with
fiduciary duties our officers and directors owe to our stockholders. These
conflicts may result in decisions that are not in your best interest.

THROUGH A WHOLLY-OWNED SUBSIDIARY, WE ARE THE GENERAL PARTNER OF OUR OPERATING
PARTNERSHIP AND OUR OPERATING PARTNERSHIP, THROUGH WHOLLY-OWNED SUBSIDIARIES, IS
THE GENERAL PARTNER OF OTHER SUBSIDIARIES WHICH OWN OUR FACILITIES AND, SHOULD
ANY OF THESE WHOLLY-OWNED GENERAL PARTNERS BE DISREGARDED, THEN WE OR OUR
OPERATING PARTNERSHIP COULD BECOME LIABLE FOR THE DEBTS AND OTHER OBLIGATIONS OF
OUR SUBSIDIARIES BEYOND THE AMOUNT OF OUR INVESTMENT.

Through our wholly-owned subsidiary, Medical Properties Trust, LLC, we are
the sole general partner of our operating partnership, and also currently own
100% of the limited partnership interests in the operating partnership. In
addition, our operating partnership, through other wholly-owned subsidiaries, is
the general partner of other subsidiaries which own our facilities. If any of
our wholly-owned subsidiaries which act as general partner were disregarded, we
would be liable for the debts and other obligations of the subsidiaries that own
our facilities. In such event, if any of these subsidiaries were unable to pay
their debts and other obligations, we would be liable for such debts and other
obligations beyond the amount of our investment in these subsidiaries. These
obligations could include unforeseen contingent liabilities.

TAX RISKS ASSOCIATED WITH OUR STATUS AS A REIT

LOSS OF OUR TAX STATUS AS A REIT WOULD HAVE SIGNIFICANT ADVERSE CONSEQUENCES TO
US AND THE VALUE OF OUR COMMON STOCK.

We believe that we qualify as a REIT for federal income tax purposes and
have elected to be taxed as a REIT under the federal income tax laws commencing
with our taxable year that began on April 6, 2004 and ended on December 31,
2004. Our qualification as a REIT depends on our ability to meet various
requirements concerning, among other things, the ownership of our outstanding
common stock, the

nature of our assets, the sources of our income and the amount of our
distributions to our stockholders. The REIT qualification requirements are
extremely complex, and interpretations of the federal income tax laws governing
qualification as a REIT are limited. Accordingly, there is no assurance that we
will be successful in operating so as to qualify as a REIT. At any time, new
laws, regulations, interpretations or court decisions may change the federal tax
laws relating to, or the federal income tax consequences of, qualification as a
REIT. It is possible that future economic, market, legal, tax or other
considerations may cause our board of directors to revoke the REIT election,
which it may do without stockholder approval.

If we lose or revoke our REIT status, we will face serious tax consequences
that will substantially reduce the funds available for distribution because:

- we would not be allowed a deduction for distributions to stockholders in
computing our taxable income; therefore we would be subject to federal
income tax at regular corporate rates and we might need to borrow money
or sell assets in order to pay any such tax;

- we also could be subject to the federal alternative minimum tax and
possibly increased state and local taxes; and

- unless we are entitled to relief under statutory provisions, we also
would be disqualified from taxation as a REIT for the four taxable years
following the year during which we ceased to qualify.

As a result of all these factors, a failure to achieve or a loss or
revocation of our REIT status could have a material adverse effect on our
financial condition and results of operations and would adversely affect the
value of our common stock.

FAILURE TO MAKE REQUIRED DISTRIBUTIONS WOULD SUBJECT US TO TAX.

In order to qualify as a REIT, each year we must distribute to our
stockholders at least 90% of our REIT taxable income, excluding net capital
gain. To the extent that we satisfy the distribution requirement, but distribute
less than 100% of our taxable income, we will be subject to federal corporate
income tax on our undistributed income. In addition, we will incur a 4%
nondeductible excise tax on the amount, if any, by which our distributions in
any year are less than the sum of:

- 85% of our ordinary income for that year;

- 95% of our capital gain net income for that year; and

- 100% of our undistributed taxable income from prior years.

We intend to pay out our income to our stockholders in a manner that
satisfies the distribution requirement and avoids corporate income tax and the
4% excise tax. We may be required to make distributions to stockholders at
disadvantageous times or when we do not have funds readily available for
distribution. Differences in timing between the recognition of income and the
related cash receipts or the effect of required debt amortization payments could
require us to borrow money or sell assets to pay out enough of our taxable
income to satisfy the distribution requirement and to avoid corporate income tax
and the 4% excise tax in a particular year. In the future, we may borrow to pay
distributions to our stockholders and the limited partners of our operating
partnership. Any funds that we borrow would subject us to interest rate and
other market risks.

WE WILL PAY SOME TAXES AND THEREFORE MAY HAVE LESS CASH AVAILABLE FOR
DISTRIBUTION TO OUR STOCKHOLDERS.

We will be required to pay some U.S. federal, state and local taxes on the
income from the operations of our taxable REIT subsidiary, MPT Development
Services, Inc. A taxable REIT subsidiary is a fully taxable corporation and may
be limited in its ability to deduct interest payments made to us. In addition,
we will be subject to a 100% penalty tax on certain amounts if the economic
arrangements among our tenants, our taxable REIT subsidiary and us are not
comparable to similar arrangements among unrelated parties. To the extent that
we are or our taxable REIT subsidiary is required to pay U.S. federal, state or
local taxes, we will have less cash available for distribution to stockholders.

COMPLYING WITH REIT REQUIREMENTS MAY CAUSE US TO FOREGO OTHERWISE ATTRACTIVE
OPPORTUNITIES.

To qualify as a REIT for federal income tax purposes, we must continually
satisfy tests concerning, among other things, the sources of our income, the
nature and diversification of our assets, the amounts we distribute to our
stockholders and the ownership of our stock. In order to meet these tests, we
may be required to forego attractive business or investment opportunities.
Overall, no more than 20% of the value of our assets may consist of securities
of one or more taxable REIT subsidiaries, and no more than 25% of the value of
our assets may consist of securities that are not qualifying assets under the
test requiring that 75% of a REIT's assets consist of real estate and other
related assets. Further, a taxable REIT subsidiary may not directly or
indirectly operate or manage a healthcare facility. For purposes of this
definition a "healthcare facility" means a hospital, nursing facility, assisted
living facility, congregate care facility, qualified continuing care facility,
or other licensed facility which extends medical or nursing or ancillary
services to patients and which is operated by a service provider that is
eligible for participation in the Medicare program under Title XVIII of the
Social Security Act with respect to the facility. Thus, compliance with the REIT
requirements may limit our flexibility in executing our business plan.

OUR LOAN TO VIBRA COULD BE RECHARACTERIZED AS EQUITY, IN WHICH CASE OUR RENTAL
INCOME FROM VIBRA WOULD NOT BE QUALIFYING INCOME UNDER THE REIT RULES AND WE
COULD LOSE OUR REIT STATUS.

In connection with the acquisition of the Vibra Facilities, our taxable
REIT subsidiary made a loan to Vibra in an aggregate amount of approximately
$41.4 million to acquire the operations at the Vibra Facilities. Our taxable
REIT subsidiary also made a loan of approximately $6.2 million to Vibra and its
subsidiaries for working capital purposes, which has been paid in full. The
acquisition loan bears interest at an annual rate of 10.25%. Our operating
partnership loaned the funds to our taxable REIT subsidiary to make these loans.
The loan from our operating partnership to our taxable REIT subsidiary bears
interest at an annual rate of 9.25%.

The Internal Revenue Service, or IRS, may take the position that the loans
to Vibra should be treated as equity interests in Vibra rather than debt, and
that our rental income from Vibra should not be treated as qualifying income for
purposes of the REIT gross income tests. If the IRS were to successfully treat
the loans to Vibra as equity interests in Vibra, Vibra would be a "related party
tenant" with respect to our company and the rent that we receive from Vibra
would not be qualifying income for purposes of the REIT gross income tests. As a
result, we could lose our REIT status. In addition, if the IRS were to
successfully treat the loans to Vibra as interests held by our operating
partnership rather than by our taxable REIT subsidiary and to treat the loans as
other than straight debt, we would fail the 10% asset test with respect to such
interests and, as a result, could lose our REIT status, which would subject us
to corporate level income tax and adversely affect our ability to make
distributions to our stockholders.

RISKS RELATING TO AN INVESTMENT IN OUR COMMON STOCK

THE MARKET PRICE AND TRADING VOLUME OF OUR COMMON STOCK MAY BE VOLATILE.

On July 13, 2005, we completed an initial public offering of our common
stock, which is listed on the New York Stock Exchange. While there has been
significant trading in our common stock since the initial public offering, we
cannot assure you that an active trading market in our common stock will be
sustained. Even if active trading of our common stock continues, the market
price of our common stock may be highly volatile and be subject to wide
fluctuations. In addition, the trading volume in our common stock may fluctuate
and cause significant price variations to occur. If the market price of our
common stock declines significantly, you may be unable to resell your shares at
or above your purchase price.

We cannot assure you that the market price of our common stock will not
fluctuate or decline significantly in the future. Some of the factors that could
negatively affect our share price or result in fluctuations in the price or
trading volume of our common stock include:

- actual or anticipated variations in our quarterly operating results or
distributions;

- changes in our funds from operations or earnings estimates or publication
of research reports about us or the real estate industry;

- increases in market interest rates that lead purchasers of our shares of
common stock to demand a higher yield;

- changes in market valuations of similar companies;

- adverse market reaction to any increased indebtedness we incur in the
future;

- additions or departures of key management personnel;

- actions by institutional stockholders;

- speculation in the press or investment community; and

- general market and economic conditions.

BROAD MARKET FLUCTUATIONS COULD NEGATIVELY IMPACT THE MARKET PRICE OF OUR COMMON
STOCK.

In addition, the stock market has experienced extreme price and volume
fluctuations that have affected the market price of many companies in industries
similar or related to ours and that have been unrelated to these companies'
operating performances. These broad market fluctuations could reduce the market
price of our common stock. Furthermore, our operating results and prospects may
be below the expectations of public market analysts and investors or may be
lower than those of companies with comparable market capitalizations, which
could lead to a material decline in the market price of our common stock.

FUTURE SALES OF COMMON STOCK MAY HAVE ADVERSE EFFECTS ON OUR STOCK PRICE.

We cannot predict the effect, if any, of future sales of common stock, or
the availability of shares for future sales, on the market price of our common
stock. Sales of substantial amounts of common stock, or the perception that
these sales could occur, may adversely affect prevailing market prices for our
common stock. We may issue from time to time additional common stock or units of
our operating partnership in connection with the acquisition of facilities and
we may grant additional demand or piggyback registration rights in connection
with these issuances. Sales of substantial amounts of common stock or the
perception that these sales could occur may adversely effect the prevailing
market price for our common stock. In addition, the sale of these shares could
impair our ability to raise capital through a sale of additional equity
securities.

YOU SHOULD NOT RELY ON LOCK-UP AGREEMENTS TO LIMIT THE NUMBER OF SHARES OF
COMMON STOCK SOLD INTO THE MARKET.

All of our directors and executive officers are bound by lock-up agreements
that prohibit these holders from selling or otherwise disposing of any of our
common stock or securities convertible into our common stock that they own or
acquire until January 4, 2006, subject to limited exceptions. Friedman,
Billings, Ramsey & Co., Inc., on behalf of the underwriters of our initial
public offering, may, in its discretion, release all or any portion of the
common stock subject to the lock-up agreements with our directors and executive
officers, at any time and without notice or stockholder approval. There are no
present agreements between the underwriters and us or any of our executive
officers, directors or stockholders releasing them or us from these lock-up
agreements. However, we cannot predict the circumstances or timing under which
Friedman, Billings, Ramsey & Co., Inc. may waive these restrictions.

Upon expiration or waiver of the restrictions under the lock-up agreements,
up to approximately 4.1 million shares of our common stock will be available for
sale into the market, subject only to applicable securities rules and
regulations, which could reduce the market price for our common stock.

AN INCREASE IN MARKET INTEREST RATES MAY HAVE AN ADVERSE EFFECT ON THE MARKET
PRICE OF OUR SECURITIES.

One of the factors that investors may consider in deciding whether to buy
or sell our securities is our distribution rate as a percentage of our price per
share of common stock, relative to market interest rates. If market interest
rates increase, prospective investors may desire a higher distribution or
interest rate on our securities or seek securities paying higher distributions
or interest. The market price of our common stock likely will be based primarily
on the earnings that we derive from rental income with respect to our facilities
and our related distributions to stockholders, and not from the underlying
appraised value of the facilities themselves. As a result, interest rate
fluctuations and capital market conditions can affect the market price of our
common stock. In addition, rising interest rates would result in increased
interest expense on our variable-rate debt, thereby adversely affecting cash
flow and our ability to service our indebtedness and make distributions.

A WARNING ABOUT FORWARD LOOKING STATEMENTS

We make forward-looking statements in this prospectus that are subject to
risks and uncertainties. These forward-looking statements include information
about possible or assumed future results of our business, financial condition,
liquidity, results of operations, plans and objectives. Statements regarding the
following subjects, among others, are forward-looking by their nature:

- our business strategy;

- our projected operating results;

- our ability to acquire or develop net-leased facilities;

- availability of suitable facilities to acquire or develop;

- our ability to enter into, and the terms of, our prospective leases;

- our ability to use effectively the proceeds of our initial public
offering;

- our ability to obtain future financing arrangements;

- estimates relating to, and our ability to pay, future distributions;

- our ability to compete in the marketplace;

- market trends;

- projected capital expenditures; and

- the impact of technology on our facilities, operations and business.

The forward-looking statements are based on our beliefs, assumptions and
expectations of our future performance, taking into account all information
currently available to us. These beliefs, assumptions and expectations can
change as a result of many possible events or factors, not all of which are
known to us. If a change occurs, our business, financial condition, liquidity
and results of operations may vary materially from those expressed in our
forward-looking statements. You should carefully consider these risks before you
make an investment decision with respect to our common stock, along with, among
others, the following factors that could cause actual results to vary from our
forward-looking statements:

- the factors referenced in this prospectus, including those set forth
under the sections captioned "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations;" "Our
Business" and "Our Portfolio;"

- general volatility of the capital markets and the market price of our
common stock;

- changes in our business strategy;

- changes in healthcare laws and regulations;

- availability, terms and development of capital;

- availability of qualified personnel;

- changes in our industry, interest rates or the general economy; and

- the degree and nature of our competition.

When we use the words "believe," "expect," "may," "potential,"
"anticipate," "estimate," "plan," "will," "could," "intend" or similar
expressions, we are identifying forward-looking statements. You should not place
undue reliance on these forward-looking statements. We are not obligated to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.

USE OF PROCEEDS

We will not receive any proceeds from the sale by the selling stockholders
of the shares of common stock offered by this prospectus.

CAPITALIZATION

The following table sets forth:

- our actual capitalization as of June 30, 2005; and

- our pro forma capitalization, as adjusted to give effect to the sale of
shares of common stock in our initial public offering at a public
offering price of $10.50 per share, our payment of a distribution of
$0.16 per share of common stock on July 14, 2005 to stockholders of
record on June 20, 2005 and our payment of a distribution of $0.17 per
share on September 29, 2005 to stockholders of record on September 15,
2005.

AS OF
JUNE 30, 2005
---------------------------
PRO FORMA,
HISTORICAL AS ADJUSTED
------------ ------------

LONG TERM DEBT.............................................. $ 73,204,167 $ 73,204,167
MINORITY INTERESTS.......................................... 2,137,500 2,137,500
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value, 10,000,000 shares
authorized; no shares issued and outstanding........... -- --
Common stock, $0.001 par value, 100,000,000 shares
authorized; 26,082,862 shares issued and outstanding at
June 30, 2005; 39,445,885 shares issued and
outstanding, as adjusted............................... 26,083 39,446(1)
Additional paid in capital............................. 233,678,165 361,753,969
Accumulated deficit.................................... (1,043,786) (9,812,527)
------------ ------------
Total stockholders' equity........................... 232,660,462 351,980,888
------------ ------------
Total capitalization................................. $308,002,129 $427,322,555
============ ============

- ---------------

(1) Includes 106,000 shares of restricted common stock awarded to our founders
on July 14, 2005 and 82,000 shares of restricted common stock awarded to our
employees in April 2005 under our equity incentive plan. Excludes (i)
100,000 shares of common stock issuable upon the exercise of stock options
granted to our independent directors under our equity incentive plan,
options for 46,664 shares of which are vested; (ii) 35,000 shares of common
stock issued in July 2005 pursuant to the exercise of a vested warrant
granted to an unaffiliated third party; (iii) 5,000 shares of common stock
issuable in October 2007 and 7,500 shares of common stock issuable in March
2008 pursuant to deferred stock units awarded under our equity incentive
plan to our independent directors; (iv) 490,680 shares of restricted common
stock awarded to our executive officers and directors on August 18, 2005 and
(v) 2,052 shares of common stock available for future awards under our
equity incentive plan.

DISTRIBUTION POLICY

We intend to make regular quarterly distributions to our stockholders so
that we distribute each year all or substantially all of our REIT taxable
income, if any, so as to avoid paying corporate level income tax and excise tax
on our REIT income and to qualify for the tax benefits accorded to REITs under
the Code. In order to maintain our status as a REIT, we must distribute to our
stockholders an amount at least equal to 90% of our REIT taxable income,
excluding net capital gain. See "United States Federal Income Tax
Considerations." The distributions will be authorized by our board of directors
and declared by us based upon a number of factors, including:

- our actual results of operations;

- the rent received from our tenants;

- the ability of our tenants to meet their other obligations under their
leases and their obligations under their loans from us;

- debt service requirements;

- capital expenditure requirements for our facilities;

- our taxable income;

- the annual distribution requirement under the REIT provisions of the
Code; and

- other factors that our board of directors may deem relevant.

To the extent not inconsistent with maintaining our REIT status, we may
retain accumulated earnings of our taxable REIT subsidiaries in those
subsidiaries. Our ability to make distributions to our stockholders will depend
on our receipt of distributions from our operating partnership.

The table below is a summary of our distributions. We cannot assure you
that we will have cash available for future quarterly distributions at these
levels, or at all. See "Risk Factors."

DISTRIBUTION PER SHARE
DECLARATION DATE RECORD DATE DATE OF DISTRIBUTION OF COMMON STOCK
- ---------------- ----------- -------------------- ----------------------

SELECTED FINANCIAL INFORMATION

The following table sets forth our selected financial and operating data on
an historical and pro forma basis. Our selected historical balance sheet
information as of December 31, 2004, and the historical statement of operations
and other data for the year ended December 31, 2004, have been derived from our
historical financial statements audited by KPMG LLP, independent registered
public accounting firm, whose report with respect thereto is included elsewhere
in this prospectus. The historical balance sheet information as of June 30, 2005
and the historical statement of operations and other data for the six months
ended June 30, 2005 have been derived from our unaudited historical balance
sheet as of June 30, 2005 and from our unaudited statement of operations for the
six months ended June 30, 2005 included elsewhere in this prospectus. The
unaudited historical financial statements include all adjustments, consisting of
normal recurring adjustments, that we consider necessary for a fair presentation
of our financial condition and results of operations as of such dates and for
such periods under accounting principles generally accepted in the U.S.

The unaudited pro forma consolidated balance sheet data as of June 30,
2005, are presented as if completion of our initial public offering and
completion of our probable acquisitions had occurred on June 30, 2005.

The unaudited pro forma consolidated statement of operations and other data
for the six months ended June 30, 2005 are presented as if our acquisition of
the Desert Valley Facility, the Covington Facility and the Redding Facility,
completion of our initial public offering and completion of our probable
acquisitions had occurred on January 1, 2005, and our December 31, 2004
unaudited pro forma consolidated statement of operations are presented as if our
acquisition of the current portfolio of facilities (the six Vibra Facilities,
the Desert Valley Facility, the Covington Facility and the Redding Facility),
our making of the Vibra loans, completion of our initial public offering and
completion of our probable acquisitions had occurred on January 1, 2004. The pro
forma information does not give effect to any of our facilities under
development or probable development transactions. The pro forma information is
not necessarily indicative of what our actual financial position or results of
operations would have been as of the dates or for the periods indicated, nor
does it purport to represent our future financial position or results of
operations.

FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 2005 DECEMBER 31, 2004
-------------------------- -------------------------
PRO FORMA HISTORICAL PRO FORMA HISTORICAL
----------- ----------- ----------- -----------

OPERATING INFORMATION:
Revenues
Rent income............................ $14,629,750 $11,393,116 $27,360,679 $ 8,611,344
Interest income from loans............. 2,329,189 2,329,189 5,037,049 2,282,115
----------- ----------- ----------- -----------
Total revenues......................... 16,958,939 13,722,305 32,397,728 10,893,459
Operating expenses
Depreciation and amortization.......... 2,533,665 1,816,403 5,072,811 1,478,470
General and administrative............. 3,165,877 3,165,877 5,057,284 5,057,284
Total operating expenses............... 5,699,542 4,982,280 10,902,444 7,214,601
Operating income....................... 11,259,397 8,740,025 21,495,284 3,678,858
Net other income (expense)............. (800,280) (800,280) 897,491 897,491
Net income............................... 10,459,117 7,939,745 22,392,775 4,576,349
Net income per share, basic.............. 0.27 0.30 0.69 0.24
Net income per share, diluted............ 0.26 0.30 0.69 0.24
Weighted average shares
outstanding -- basic................... 39,459,836 26,096,813 32,673,856 19,310,833
Weighted average shares
outstanding -- diluted................. 39,468,867 26,105,844 32,675,657 19,312,634

AS OF
AS OF JUNE 30, 2005 DECEMBER 31, 2004
---------------------------- -----------------
PRO FORMA HISTORICAL HISTORICAL
------------ ------------ -----------------

BALANCE SHEET INFORMATION:
Gross investment in real estate assets.......... $254,436,964 $238,151,964 $151,690,293
Net investment in real estate................... 251,142,091 234,857,091 150,211,823
Construction in progress........................ 50,529,769 50,529,769 24,318,098
Cash and cash equivalents....................... 141,578,197 34,357,866 97,543,677
Loans receivable................................ 42,498,111(1) 48,498,111 50,224,069(1)
Total assets.................................... 448,878,440 333,744,392 306,506,063
Total debt...................................... 73,204,167 73,204,167 56,000,000
Total liabilities............................... 94,760,052 98,946,430 73,777,619
Total stockholders' equity...................... 351,980,888 232,660,462 231,728,444
Total liabilities and stockholders' equity...... 448,878,440 333,744,392 306,506,063

OTHER INFORMATION:
Funds from operations(2).............. $12,992,782 $ 9,756,148 $27,465,586 $ 6,054,819
Cash Flows:
Provided by operating activities.... 3,468,571 9,918,898
Used for investing activities....... (80,265,755) (195,600,642)
Provided by financing activities.... 13,611,373 283,125,421

- ---------------

(1) Includes $1.5 million in commitment fees payable to us by Vibra.

(2) Funds from operations, or FFO, represents net income (computed in accordance
with GAAP), excluding gains (or losses) from sales of property, plus real
estate related depreciation and amortization (excluding amortization of loan
origination costs) and after adjustments for unconsolidated partnerships and
joint ventures. Management considers funds from operations a useful
additional measure of performance for an equity REIT because it facilitates
an understanding of the operating performance of our properties without
giving effect to real estate depreciation and amortization, which assumes
that the value of real estate assets diminishes predictably over time. Since
real estate values have historically risen or fallen with market conditions,
we believe that funds from operations provides a meaningful supplemental
indication of our performance. We compute funds from operations in
accordance with standards established by the Board of Governors of the
National Association of Real Estate Investment Trusts, or NAREIT, in its
March 1995 White Paper (as amended in November 1999 and April 2002), which
may differ from the methodology for calculating funds from operations
utilized by other equity REITs and, accordingly, may not be comparable to
such other REITs. FFO does not represent amounts available for management's
discretionary use because of needed capital replacement or expansion, debt
service obligations, or other commitments and uncertainties, nor is it
indicative of funds available to fund our cash needs, including our ability
to make distributions. Funds from operations should not be considered as 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 FFO to net income for the
six months ended June 30, 2005 and for the year ended December 31, 2004 on an
actual and pro forma basis.

FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 2005 DECEMBER 31, 2004
-------------------------- ------------------------
PRO FORMA HISTORICAL PRO FORMA HISTORICAL
----------- ---------- ----------- ----------

FUNDS FROM OPERATIONS:
Net income........................................... $10,459,117 $7,939,745 $22,392,775 $4,576,349
Depreciation and amortization........................ 2,533,665 1,816,403 5,072,811 1,478,470
----------- ---------- ----------- ----------
Funds from operations................................ $12,992,782 $9,756,148 $27,465,586 $6,054,819
=========== ========== =========== ==========

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

We were recently formed and did not commence revenue generating operations
until June 2004. Please see "Risk Factors -- Risks Relating to Our Business and
Growth Strategy" for a discussion of risks relating to our limited operating
history. The following discussion should be read in conjunction with our audited
financial statements and the related notes thereto included elsewhere in this
prospectus.

OVERVIEW

We were incorporated under Maryland law on August 27, 2003 primarily for
the purpose of investing in and owning net-leased healthcare facilities. Our
existing tenants are, and our prospective tenants will generally be, hospital
operating companies and other healthcare providers that use substantial real
estate assets in their operations. We offer financing for these operators' real
estate through 100% lease financing and generally seek lease terms of at least
10 years with a series of shorter renewal terms at the option of our tenants; we
also intend to include annual contractual rental rate increases that in the
current market range from 1.5% to 3.0%. Our existing portfolio escalators range
from 2.0% to 2.5%. In addition to the base rent, our leases generally require
our tenants to pay all operating costs and expenses associated with the
facility.

We conduct substantially all of our operations through our operating
partnership. We own all of the membership interests in the sole general partner
of our operating partnership and thereby control the operating partnership. At
present, we also own 100% of the limited partnership interests, although we may
issue units of limited partnership in exchange for interests in healthcare
facilities from time to time in the future. Sellers of healthcare facilities who
receive limited partnership units of our operating partnership in exchange for
interests in their facilities may be able to defer recognition of any gain that
would be recognized in a cash sale until such time that they redeem the
operating partnership units. Upon their election to redeem their units, we may
redeem them either for cash or shares of our common stock on a one-for-one
basis. In addition, we may sell equity interests in subsidiaries of our
operating partnership in connection with the acquisition or development of
facilities.

Whenever we issue shares of our common stock for cash, we are obligated to
contribute any net proceeds we receive from the sale of the stock to our
operating partnership and our operating partnership is, in turn, obligated to
issue an equivalent number of limited partnership units to us. Our operating
partnership distributes the income it generates from its operations to us. In
turn, we expect to distribute a substantial majority of the amounts we receive
from our operating partnership to our stockholders in the form of quarterly cash
distributions. We intend to qualify as a REIT for federal tax purposes, thereby
generally avoiding federal and state corporate income taxes on most of the
earnings that we distribute to our stockholders.

We conduct business operations in one segment. We acquire and develop
healthcare facilities and lease the facilities to healthcare operating companies
under long-term net leases. At December 31, 2004 our real estate and loan assets
comprised approximately 49% and 16%, respectively, of our total assets. We do
not expect our loan assets to exceed this level in the future. Our lending
business is important to our overall business strategy for two primary reasons:
(1) it provides opportunities to make income-earning investments that yield
attractive risk-adjusted returns in an industry in which our management has
expertise, and (2) by making debt capital available to certain qualified
operators, we believe we create for our company a competitive advantage over
other buyers of, and financing sources for, healthcare facilities.

We currently own five rehabilitation hospitals and two long-term acute care
hospitals that are leased to affiliates of a single operating company, one
community hospital with an integrated medical office building leased to another
operating company and one long-term acute care hospital leased to another
operating company. We are also developing a community hospital and an adjacent
medical office building that are leased to a single operating company, and a
women's hospital with an integrated medical office building that is leased to a
separate operating company. In addition, we have entered into a ground sublease
with, and an agreement to provide a construction loan to, a recently organized
healthcare facility operator for the development of a community hospital on
property in which we currently have a ground

lease interest. We expect to acquire the land we are ground leasing after the
hospital has been partially completed. Upon completion of construction, subject
to certain limited conditions, we will purchase the facility for an amount equal
to the cost of construction and lease the facility to the operator. In the event
we do not purchase the facility, the ground sublease will continue and the
construction loan will become due. In that event, we expect to seek to convert
the construction loan to a 15 year term loan secured by the facility. We have
also made and in the future may make loans to our tenants to facilitate the
acquisition of healthcare businesses and for working capital and have made and
from time to time may make construction or mortgage loans to facility owners or
other parties.

Our revenues are derived from rents we earn pursuant to the lease
agreements we have with our tenants and from interest income from loans we make
to our tenants and other facility owners. Our tenants operate in the healthcare
industry, generally providing medical, surgical and rehabilitative 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 in is generally positive for efficient operators. However, our tenants'
operations are subject to economic, regulatory and market conditions that may
affect their profitability. Accordingly, we monitor certain key factors, changes
to which we believe may provide early indications of conditions that may affect
the level of risk in our lease and loan portfolio.

Key factors that we consider in underwriting prospective tenants and in
monitoring the performance of existing tenants include the following:

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

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

- trends in the source of our tenants' revenue, including the relative mix
of Medicare, Medicaid/MediCal, commercial insurance, and private pay
patients;

- the effect of evolving healthcare regulations on our tenants'
profitability

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

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

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

- reductions in reimbursements from Medicare, state healthcare programs and
commercial insurance providers that may reduce our tenants' profitability
and our lease rates; and

- competition from other financing sources.

CRITICAL ACCOUNTING POLICIES

In order to prepare financial statements in conformity with accounting
principles generally accepted in the United States, we must make estimates about
certain types of transactions and account balances. We believe that our
estimates of the amount and timing of lease revenues, credit losses, fair values
and periodic depreciation of our real estate assets, stock compensation expense,
and the effects of any derivative and hedging activities will have significant
effects on our financial statements. Each of these items involves estimates that
require us to make judgments that are subjective in nature. We intend to rely on
our experience, collect historical data and current market data, and develop
relevant assumptions in order to arrive at what we believe to be reasonable
estimates. Under different conditions or assumptions, materially different
amounts could be reported related to the accounting policies described below. In
addition, application of these accounting policies involves the exercise of
judgments on the use of

assumptions as to future uncertainties and, as a result, actual results could
materially differ from these estimates. Our accounting estimates will include
the following:

Revenue Recognition. Our revenues, which are comprised largely of rental
income, include rents that each tenant pays in accordance with the terms of its
respective lease reported on a straight-line basis over the initial term of the
lease. Since some of our leases provide for rental increases at specified
intervals, straight-line basis accounting requires us to record as an asset, and
include in revenues, unbilled rent that we will only receive if the tenant makes
all rent payments required through the expiration of the term of the lease.
Accordingly, our management must determine, in its judgment, to what extent the
unbilled rent receivable applicable to each specific tenant is collectible. We
will review each tenant's unbilled rent receivable on a quarterly basis and take
into consideration the tenant's payment history, the financial condition of the
tenant, business conditions in the industry in which the tenant operates and
economic conditions in the area in which the facility is located. In the event
that the collectibility of unbilled rent with respect to any given tenant is in
doubt, we are required to record an increase in our allowance for uncollectible
accounts or record a direct write-off of the specific rent receivable, which
would have an adverse effect on our net income for the year in which the reserve
is increased or the direct write-off is recorded and would decrease our total
assets and stockholders' equity.

We make loans to our tenants and from time to time may make construction or
mortgage loans to facility owners or other parties. We recognize interest income
on loans as earned based upon the principal amount outstanding. These loans are
generally secured by interests in real estate, receivables, equity interests of
a tenant or corporate and individual guarantees. As with unbilled rent
receivables, our management must also periodically evaluate loans to determine
what amounts may not be collectible. Accordingly, a provision for losses on
loans receivable is recorded when it becomes probable that the loan will not be
collected in full. The provision is an amount which reduces the loan to its
estimated net receivable value based on a determination of the eventual amounts
to be collected either from the debtor or from the collateral, if any. At that
time, we discontinue recording interest income on the loan to the tenant.

Investments in Real Estate. We record investments in real estate at cost,
and capitalize improvements and replacements when they extend the useful life or
improve the efficiency of the asset. To the extent that we incur costs of
repairs and maintenance, we expense those costs as incurred. We compute
depreciation using the straight-line method over the estimated useful life of 40
years for buildings and improvements, five to seven years for equipment and
fixtures and the shorter of the useful life or the remaining lease term for
tenant improvements and leasehold interests.

We are required to make subjective assessments as to the useful lives of
our facilities for purposes of determining the amount of depreciation expense to
record on an annual basis with respect to our investments in real estate
improvements. These assessments have a direct impact on our net income because,
if we were to shorten the expected useful lives of our investments in real
estate improvements, we would depreciate these investments over fewer years,
resulting in more depreciation expense and lower net income on an annual basis.

We have adopted Statement of Financial Accounting Standards (SFAS) No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, which
establishes a single accounting model for the impairment or disposal of
long-lived assets including discontinued operations. SFAS No. 144 requires that
the operations related to facilities that have been sold or that we intend to
sell be presented as discontinued operations in the statement of operations for
all periods presented, and facilities we intend to sell be designated as "held
for sale" on our balance sheet.

When circumstances such as adverse market conditions indicate a possible
impairment of the value of a facility, we will review the recoverability of the
facility's carrying value. The review of recoverability will be based on our
estimate of the future undiscounted cash flows, excluding interest charges,
expected to result from the facility's use and eventual disposition. Our
forecast of these cash flows will consider factors such as expected future
operating income, market and other applicable trends and residual value, as well
as the effects of leasing demand, competition and other factors. If impairment
exists due to the inability to

recover the carrying value of a facility, an impairment loss will be recorded to
the extent that the carrying value exceeds the estimated fair value of the
facility. We will be required to make subjective assessments as to whether there
are impairments in the values of our investments in real estate.

Purchase Price Allocation. We record above-market and below-market
in-place lease values, if any, for the facilities we own which are based on the
present value (using an interest rate which reflects the risks associated with
the leases acquired) of the difference between (i) the contractual amounts to be
paid pursuant to the in-place leases and (ii) management's estimate of fair
market lease rates for the corresponding in-place leases, measured over a period
equal to the remaining non-cancelable term of the lease. We amortize any
resulting capitalized above-market lease values as a reduction of rental income
over the remaining non-cancelable terms of the respective leases. We amortize
any resulting capitalized below-market lease values (presented in the
accompanying balance sheet as value of assumed lease obligations) as an increase
to rental income over the initial term and any fixed-rate renewal periods in the
respective leases. Because our strategy to a large degree involves the
origination of long term lease arrangements at market rates, we do not expect
the above-market and below-market in-place lease values to be significant for
many of our anticipated transactions.

We measure the aggregate value of other intangible assets to be acquired
based on the difference between (i) the property valued with existing in-place
leases adjusted to market rental rates and (ii) the property valued as if
vacant. Management's estimates of value are expected to be made using methods
similar to those used by independent appraisers (e.g., discounted cash flow
analysis). Factors considered by management in its analysis include an estimate
of carrying costs during hypothetical expected lease-up periods considering
current market conditions, and costs to execute similar leases. We also consider
information obtained about each targeted facility as a result of our
pre-acquisition due diligence, marketing and leasing activities in estimating
the fair value of the tangible and intangible assets acquired. In estimating
carrying costs, management also includes real estate taxes, insurance and other
operating expenses and estimates of lost rentals at market rates during the
expected lease-up periods, which we expect to range primarily from six to 18
months, depending on specific local market conditions. Management also estimates
costs to execute similar leases including leasing commissions, legal and other
related expenses to the extent that such costs are not already incurred in
connection with a new lease origination as part of the transaction.

The total amount of other intangible assets to be acquired, if any, is
further allocated to in-place lease values and customer relationship intangible
values based on management's evaluation of the specific characteristics of each
prospective tenant's lease and our overall relationship with that tenant.
Characteristics to be considered by management in allocating these values
include the nature and extent of our existing business relationships with the
tenant, growth prospects for developing new business with the tenant, the
tenant's credit quality and expectations of lease renewals, including those
existing under the terms of the lease agreement, among other factors.

We expect to amortize the value of in-place leases, if any, to expense over
the initial term of the respective leases, which we expect to range primarily
from 10 to 15 years. The value of customer relationship intangibles is amortized
to expense over the initial term and any renewal periods in the respective
leases, but in no event will the amortization period for intangible assets
exceed the remaining depreciable life of the building. Should a tenant terminate
its lease, the unamortized portion of the in-place lease value and customer
relationship intangibles would be charged to expense.

Accounting for Derivative Financial Investments and Hedging Activities. We
expect to account for our derivative and hedging activities, if any, using SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities, as
amended by SFAS No. 137 and SFAS No. 149, which requires all derivative
instruments to be carried at fair value on the balance sheet.

Derivative instruments designated in a hedge relationship to mitigate
exposure to variability in expected future cash flows, or other types of
forecasted transactions, are considered cash flow hedges. We expect to formally
document all relationships between hedging instruments and hedged items, as well
as our risk-management objective and strategy for undertaking each hedge
transaction. We plan to review

periodically the effectiveness of each hedging transaction, which involves
estimating future cash flows. Cash flow hedges, if any, will be accounted for by
recording the fair value of the derivative instrument on the balance sheet as
either an asset or liability, with a corresponding amount recorded in other
comprehensive income within stockholders' equity. Amounts will be reclassified
from other comprehensive income to the income statement in the period or periods
the hedged forecasted transaction affects earnings. Derivative instruments
designated in a hedge relationship to mitigate exposure to changes in the fair
value of an asset, liability, or firm commitment attributable to a particular
risk, such as interest rate risk, are considered fair value hedges under SFAS
No. 133. We are not currently a party to any derivatives contracts.

Variable Interest Entities. In January 2003, the FASB issued FASB
Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities. In
December 2003, the FASB issued a revision to FIN 46, which is termed FIN 46R.
FIN 46R clarifies the application of Accounting Research Bulletin No. 51,
Consolidated Financial Statements and provides guidance on the identification of
entities for which control is achieved through means other than through voting
rights and how to determine when and which business enterprise should
consolidate such an entity. This model for consolidation applies to an entity in
which either (1) the equity investors (if any) do not have a controlling
financial interest or (2) the equity investment at risk is insufficient to
finance that entity's activities without receiving additional subordinated
financial support from other parties. We periodically evaluate the terms of our
relationships with our tenants and borrowers to determine whether we are
required to consolidate any tenants or borrowers.

Stock Based Compensation. We currently apply the intrinsic value method to
account for the issuance of stock options under our equity incentive plan in
accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees. In
this regard, we anticipate that a substantial portion of our options will be
granted to individuals who are our officers or directors. Accordingly, because
the grants are expected to be at exercise prices that represent fair value of
the stock at the date of grant, we do not currently record any expense related
to the issuance of these options under the intrinsic value method. If the actual
terms vary from the expected, the impact to our compensation expense could
differ.

In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment,"
which is a revision of SFAS No. 123, "Accounting for Stock Based Compensation."
SFAS No. 123(R) establishes standards for the accounting for transactions in
which an entity exchanges it equity instruments for goods or services. The
Statement focuses primarily on accounting for transactions in which an entity
obtains employee services in share-based payment transactions. SFAS No. 123(R)
requires that the fair value of such equity instruments be recognized as expense
in the historical financial statements as services are performed. Prior to SFAS
No. 123(R), only certain pro forma disclosures of fair value were required. SFAS
No. 123(R) becomes effective for public companies with their first annual
reporting period that begins after June 15, 2005. For non-public companies, the
standard becomes effective for their first fiscal year beginning after December
15, 2005. We are currently evaluating the impact of SFAS No. 123(R) on our
financial position and results of operations. However, we do not expect that
SFAS No. 123(R) will have a material effect on our financial position and
results of operations. Our existing equity incentive plan allows for stock-based
awards to be in the form of options, restricted stock, restricted stock units
and deferred stock units. The impact of SFAS No. 123(R) will also be affected by
the types of stock-based awards that our board of directors chooses to grant.

DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table summarizes known material contractual obligations
associated with investing and financing activities as of December 31, 2004:

LESS THAN 2-3 4-5 AFTER
CONTRACTUAL OBLIGATIONS 1 YEAR YEARS YEARS 5 YEARS TOTAL
- ----------------------- ----------- ----------- -------- ---------- -----------

Construction contracts....................... $32,077,264 $ -- $ -- $ -- $32,077,264
Operating lease commitments.................. 275,106 685,728 712,080 2,200,532 3,873,446
Long-term debt............................... 2,566,663 53,433,337 -- -- 56,000,000
----------- ----------- -------- ---------- -----------
Total:..................................... $34,919,033 $54,119,065 $712,080 $2,200,532 $91,950,710
=========== =========== ======== ========== ===========

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. While we believe
net income available to common stockholders as defined by GAAP is the most
appropriate measure, our management considers FFO an appropriate supplemental
measure given its wide use by and relevance to investors and analysts. 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 assume that the value of real estate
diminishes predictably over time.

As defined by the National Association of Real Estate Investment Trusts, or
NAREIT, FFO represents net income (loss) (computed in accordance with GAAP),
excluding gains (losses) on sales of real estate, plus real estate related
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. We compute FFO in accordance with the NAREIT
definition. FFO should not be viewed as a substitute measure of our company's
operating performance since it does not reflect either depreciation and
amortization costs or the level of capital expenditures and leasing costs
necessary to maintain the operating performance of our properties, which are
significant economic costs that could materially impact our results of
operations.

The following table presents a reconciliation of FFO to net income for the
six months ended June 30, 2005 and for the year ended December 31, 2004 on an
actual and pro forma basis.

FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 2005 DECEMBER 31, 2004
------------------------ ------------------------
PRO FORMA HISTORICAL PRO FORMA HISTORICAL
----------- ---------- ----------- ----------

Funds from operations:
Net income...................... $10,459,117 $7,939,745 $22,392,775 $4,576,349
Depreciation and amortization... 2,533,665 1,816,403 5,072,811 1,478,470
----------- ---------- ----------- ----------
Funds from operations........... $12,992,782 $9,756,148 $27,465,586 $6,054,819
=========== ========== =========== ==========

RESULTS OF OPERATIONS

The results of our historical operations are generated substantially by
investments we have made since we completed our private offering and raised
approximately $233.0 million in common equity in the second quarter of 2004. We
are also in the process of developing additional healthcare facilities that have
not yet begun generating revenue, and we expect to acquire additional existing
healthcare facilities in the foreseeable future. Accordingly, we expect that
future results of operations will vary materially from our historical results.

THREE MONTHS ENDED JUNE 30, 2005 COMPARED TO THREE MONTHS ENDED JUNE 30, 2004

Net income for the three months ended June 30, 2005 was $4,379,811 compared
to a net loss of $1,069,892 in the three months ended June 30, 2004. We
completed our private offering of common equity early in the second quarter of
2004, prior to which we had no revenues and limited operations. At June 30, 2004
we had eight employees, no operating properties and one development property in
the early stages of

construction. Our activities in the second quarter of 2004 were concentrated in
evaluating potential acquisitions and negotiating the purchase of properties.
Accordingly, we do not believe that comparison of 2005's second quarter to the
same quarter in 2004 provides significant relevant information about possible
future trends or results of operations.

Revenue of $7,241,777 in the three months ended June 30, 2005 was comprised
of rents (85%) and fee and interest income from loans (15%). All of this revenue
was derived from properties that we acquired since July 1, 2004. During this
three month period, we received percentage rents of approximately $604,000.
These percentage rents occurred due to an increase in patient census at the
Vibra Facilities from the first quarter of 2005 to the second quarter. Also, the
Desert Valley -- Victorville facility, which we acquired on February 28, 2005,
provided a full three months of rent revenue. Interest income from loans was
affected due to Vibra paying down approximately $7.3 million of principal, Vibra
accounted for 87% of our gross revenues during this period. We intend to focus
our acquisition efforts to achieve a greater diversity of tenants in the
near-term and foreseeable future.

Depreciation and amortization during in the three months ended June 30,
2005 was attributable to properties that we acquired since July 1, 2004.

General and administrative expenses in the three months ended June 30,
2005, which totaled $1,415,067, were comprised primarily of compensation of
approximately $1.0 million, with the balance made up primarily of legal, office
and other administrative expenses.

Other income of $358,214 in the three months ended June 30, 2005 consisted
of interest and dividends, primarily from the temporary investment of the net
proceeds of our April 2004 private placement and proceeds from debt.

Interest expense in the three months ended June 30, 2005 was $831,117.
Capitalized interest of $608,378 was recorded in the three months, primarily on
the West Houston medical office building and community hospital construction
projects.

SIX MONTHS ENDED JUNE 30, 2005 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2004.

Net income for the six months ended June 30, 2005 was $7,939,745 compared
to a net loss of $1,563,618 in the six months ended June 30, 2004.

At June 30, 2004, we had eight employees, no operating properties and one
development property in the early stages of construction. Our activities in the
first six months of 2004 were primarily evaluating potential acquisitions and
negotiating the purchase of properties. Accordingly, we do not believe that
comparison of the first six months of 2005 to the same period in 2004 provides
significant relevant information about possible future trends or results of
operations.

Revenue of $13,722,305 in the six months ended June 30, 2005 was comprised
of rents (84%) and fee and interest income from loans (16%), all of which was
derived from investments made since July 1, 2004. During this six month period,
we received percentage rents of approximately $999,000 from Vibra. Our receipt
of percentage rents is dependent upon that tenant reaching certain revenue
levels, and there is no assurance that our tenant will continue to achieve this
revenue level. Our largest tenant, Vibra, accounted for 87% of our revenues
during this period. We intend to focus our acquisition efforts to achieve a
greater diversity of tenants in the near-term and foreseeable future.

Depreciation and amortization in the six months ended June 30, 2005 was
attributable to properties that we acquired since July 1, 2004.

General and administrative expenses in the six months ended June 30, 2005,
which totaled $3,165,877, were comprised primarily of compensation of
approximately $1.8 million, with the balance made up primarily of legal and
other professional fees, occupancy costs for our headquarters office and other
administrative expenses.

Other income of $741,986 in the six months ended June 30, 2005 consisted of
interest and dividends, primarily from the temporary investment of the net
proceeds of our April 2004 private placement and proceeds from long-term debt.

Interest expense in the six months ended in June 30, 2005 was $1,542,266,
net of capitalized interest. Capitalized interest of approximately $1,003,779
was recorded in the six months primarily on the West Houston medical office
building and community hospital construction projects.

YEAR ENDED DECEMBER 31, 2004

Net income for the year ended December 31, 2004 was $4,576,349. Revenue,
which was $10,893,459, was comprised primarily of rents (79%) and interest from
loans (21%). Interest and dividends, primarily from the temporary investment of
the net proceeds of our April 2004 private placement, totaled $930,260. We
completed our private placement of common stock in April 2004 and received
proceeds, net of offering costs and fees, of approximately $233.5 million.
Expenses during the year, which totalled $7,214,601, were comprised primarily of
compensation of $3,700,442, depreciation and amortization of $1,517,530, other
general and administrative expenses of $1,336,897 and approximately $585,345 of
costs associated with unsuccessful acquisitions. These costs, which consisted
primarily of legal fees, costs of third party reports and travel, related to a
portfolio of five facilities that were subject to a letter of intent with a
prospective operator. During the second quarter of 2004, we declined to pursue
the acquisition.

INCEPTION (AUGUST 27, 2003) THROUGH DECEMBER 31, 2003

Our net loss for the period from inception (August 27, 2003) through
December 31, 2003 was $1,023,276. Included in this loss is approximately
$423,000 in accrued expenses that were incurred by Medical Properties Trust, LLC
prior to August 27, 2003 and assumed by us in connection with our formation.
These constitute all of the expenses of this company. We had no revenues during
this period and substantially all of the expenses that comprised our net loss
from inception through December 31, 2003 are related to start-up activities,
including business development, identification of acquisition possibilities,
legal, accounting, and consulting. We do not consider the results of our
operations in this period to be meaningful with respect to an analysis of our
expected operations.

LIQUIDITY AND CAPITAL RESOURCES

Our principal liquidity needs are to (i) provide for normal operating
expenses, (ii) fund the costs of acquiring and developing facilities, and (iii)
make distributions to our stockholders. We believe that these needs will be
partially satisfied by cash on hand and cash flows provided by operating and
financing activities. In addition, we expect that our primary source of external
financing for the near future will be debt secured by our real estate assets and
additional offerings of equity.

As of September 23, 2005, we had approximately $108.0 million in cash and
temporary liquid investments. We expect to close a $100.0 million secured
revolving credit facility which will replace our existing $75.0 million term
loan (with a present balance of approximately $40.4 million) thereby providing
us with approximately $59.0 million in additional borrowing availability. In
addition, we have approximately $43.0 million available under a
construction/term facility with a bank. We expect to use these resources over
the next 12 months for completion of development projects currently under
construction and acquisition of additional existing facilities and for
development projects.

We have definitive agreements to fund the following development projects
and acquisitions (in millions):

ORIGINAL REMAINING
COMMITMENT EXPENDED COMMITMENT
---------- -------- ----------

North Cypress community hospital........................... $ 64.0 $ 2.1 $ 61.9
West Houston community hospital and medical office
building................................................. 63.9 45.8 18.1
Bucks County women's hospital and medical office
building................................................. 38.0 2.2 35.8
------ ----- ------
Total...................................................... $165.9 $50.1 $115.8
====== ===== ======

We have letters of commitment or other arrangements to acquire or develop
additional facilities with an aggregate cost of $93.0 million. These
transactions are subject to various contingencies that must be satisfied before
definitive agreements could be executed. Accordingly, there is no assurance that
these transactions will be consummated.

We intend to utilize various types of debt to finance a portion of the
costs to complete our proposed development facilities and acquire and develop
additional facilities. We expect this debt will include long-term, fixed-rate
mortgage loans, variable-rate term loans, secured revolving lines of credit and
construction financing facilities. We believe we will be able generally to
finance up to approximately 50-60% of the cost of our healthcare facilities;
however, there is no assurance that we will be able to obtain or maintain those
levels of debt on our portfolio of real estate assets on favorable terms in the
future. Our ratio of debt to stockholders' equity at June 30, 2005 was 32% as
compared to 24% at December 31, 2004.

INVESTING ACTIVITIES

In the first six months of 2005 we acquired three new healthcare facilities
for a total cost of $64.5 million. Our cash outlays for these properties totaled
$56.5 million, which is net of contingent payments and facility improvement
reserves. We also invested $26.4 million in our developments, primarily the West
Houston community hospital and medical office building. In addition, we made
loan advances, net of contingent payments, of $4.9 million. In February 2005,
Vibra reduced the principal amount of its loans from us by $7.7 million.

DISTRIBUTION POLICY

We expect to qualify as a REIT for federal income tax purposes and have
elected to be taxed as a REIT commencing with our taxable year that began on
April 6, 2004 and ended on December 31, 2004. To qualify as a REIT, we must meet
a number of organizational and operational requirements, including a requirement
that we distribute at least 90% of our REIT taxable income, excluding net
capital gain, to our stockholders. It is our current intention to comply with
these requirements, elect REIT status and maintain such status going forward.
See "United States Federal Income Tax Considerations."

The table below is a summary of our distributions.

DECLARATION DATE RECORD DATE DATE OF DISTRIBUTION DISTRIBUTION PER SHARE
- ---------------- ----------- -------------------- ----------------------

2005 and September 29, 2005 distributions, will be determined subsequent to
determination of our 2005 taxable income.

We intend to pay to our stockholders, within the time periods prescribed by
the Code, all or substantially all of our annual taxable income, including
taxable gains from the sale of real estate and recognized gains on the sale of
securities. It is our policy to make sufficient cash distributions to
stockholders in order for us to maintain our status as a REIT under the Code and
to avoid corporate income and excise tax on undistributed income.

INFLATION

Our leases contain provisions designed to mitigate the adverse impact of
inflation. These provisions generally increase rental rates during the terms of
the leases either at fixed rates or indexed escalations (based on the CPI or
other measures). In addition, all of our existing leases, and we intend that
most of our new leases will, require the tenant to pay the operating expenses of
the facility, including common area maintenance costs, real estate taxes and
insurance. This may reduce our exposure to increases in costs and operating
expenses resulting from inflation. However, if inflation rates exceed the
contractual rental increases, our results of operations may be adversely
affected, and inflation may also adversely impact our revenue from any leases
that do not contain escalation provisions.

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. In pursuing our
business plan, we expect that the primary market risk to which we will be
exposed is interest rate risk.

We may be exposed to the effects of interest rate changes primarily as a
result of long-term debt used to maintain liquidity and to fund expansion of our
portfolio and operations. Our interest rate risk-management objectives will be
to limit the impact of interest rate changes on earnings and cash flows and to
lower overall borrowing costs. To achieve our objectives, we will borrow
primarily at fixed rates or variable rates with the lowest margins available
and, in some cases, with the ability to convert variable rates to fixed rates.
We may also enter into derivative financial instruments such as interest rate
swaps and caps in order to mitigate our interest rate risk on a related
financial instrument. We do not intend to enter into derivative transactions for
speculative purposes.

In addition to changes in interest rates, the value of our facilities will
be subject to fluctuations based on changes in local and regional economic
conditions and changes in the ability of our tenants to generate profits, all of
which may affect our ability to refinance our debt if necessary.

OUR BUSINESS

OUR COMPANY

We are a self-advised real estate company that acquires, develops and
leases healthcare facilities providing state-of-the-art healthcare services. We
lease our facilities to healthcare operators pursuant to long-term net-leases,
which require the tenant to bear most of the costs associated with the property.
From time to time, we also make loans to our tenants. We believe that the United
States healthcare delivery system is becoming decentralized and is evolving away
from the traditional "one stop," large-scale acute care hospital. We believe
that this change is the result of a number of trends, including increasing
specialization and technological innovation and the desire of both physicians
and patients to utilize more convenient facilities. We also believe that
demographic trends in the United States, including in particular an aging
population, will result in continued growth in the demand for healthcare
services, which in turn will lead to an increasing need for a greater supply of
modern healthcare facilities. In response to these trends, we believe that
healthcare operators increasingly prefer to conserve their capital for
investment in operations and new technologies rather than investing in real
estate and, therefore, increasingly prefer to lease, rather than own, their
facilities. Given these trends and the size, scope and growth of this dynamic
industry, we believe there are significant opportunities to acquire and develop
net-leased healthcare facilities that are integral components of local
healthcare delivery systems.

Our strategy is to lease the facilities that we acquire or develop to
experienced healthcare operators pursuant to long-term net-leases. We focus on
acquiring and developing rehabilitation hospitals, long-term acute care
hospitals, ambulatory surgery centers, cancer hospitals, women's and children's
hospitals, skilled nursing facilities and regional and community hospitals, as
well as other specialized single-discipline facilities and ancillary facilities.
We believe that these types of facilities will capture an increasing share of
expenditures for healthcare services. We believe that our strategy for
acquisition and development of these types of net-leased facilities, which
generally require a physician's order for patient admission, distinguish us as a
unique investment alternative among REITs.

Our management team has extensive experience in acquiring, owning,
developing, managing and leasing healthcare facilities; managing investments in
healthcare facilities; acquiring healthcare companies; and managing real estate
companies. Our management team also has substantial experience in healthcare
operations and administration, which includes many years of service in executive
positions for hospitals and other healthcare providers, as well as in physician
practice management and hospital/physician relations. Therefore, in addition to
understanding investment characteristics and risk levels typically important to
real estate investors, our management understands the changing healthcare
delivery environment, including changes in healthcare regulations, reimbursement
methods and patient demographics, as well as the technological innovations and
other advances in healthcare delivery generally. We believe that this experience
gives us the specialized knowledge necessary to select attractively-located
net-leased facilities, underwrite our tenants, analyze facility-level operations
and understand the issues and potential problems that may affect the healthcare
industry generally and the tenant service area and facility in particular. We
believe that our management's experience in healthcare operations and real
estate management and finance will enable us to take advantage of numerous
attractive opportunities to acquire, develop and lease healthcare facilities.

We completed a private placement of our common stock in April 2004 in which
we raised net proceeds of approximately $233.5 million. Shortly after completion
of our private placement, we began to acquire our current portfolio of 13
facilities, consisting of nine facilities that are in operation and four
facilities that are under development. Five of the facilities that are in
operation are rehabilitation hospitals, three are long-term acute care hospitals
and one is a community hospital with an integrated medical office building. Two
of the facilities under development are a community hospital and an adjacent
medical office building. Our third facility under development is a women's
hospital with an integrated medical office building. With respect to our fourth
facility under development, we have entered into a ground sublease with, and an
agreement to provide a construction loan to, North Cypress for the development
of a community hospital. The facility will be developed on property in which we
currently have a ground lease

interest. We expect to acquire the land we are ground leasing after the hospital
has been partially completed. Upon completion of construction, subject to
certain limited conditions, we will purchase the facility for an amount equal to
the cost of construction and lease the facility to the operator for a 15 year
lease term. In the event we do not purchase the facility, the ground sublease
will continue and the construction loan will become due. In that event, we
expect to seek to convert the construction loan to a 15 year term loan secured
by the facility.

We completed an initial public offering of our common stock in July 2005 in
which, with the overallotment option that was exercised in August 2005, we
raised net proceeds of approximately $125.7 million. With the net proceeds of
our initial public offering, along with our available cash and cash equivalents,
we intend to expand our portfolio of facilities by acquiring or developing
additional net-leased healthcare facilities.

We employ leverage in our capital structure in amounts determined from time
to time by our board of directors. At present, we intend to limit our debt to
approximately 50-60% of the aggregate costs of our facilities, although we may
temporarily exceed those levels from time to time. We expect our borrowings to
be a combination of long-term, fixed-rate, non-recourse mortgage loans,
variable-rate secured term and revolving credit facilities, and other fixed and
variable-rate short to medium-term loans.

In December 2004 we borrowed $75.0 million from Merrill Lynch under a loan
agreement which has a term of three years. We have used a portion of the loan
proceeds for acquisition of our current portfolio of facilities and plan to use
additional loan proceeds for acquisition and development of additional
facilities and other working capital needs. The loan bears interest at one month
LIBOR (3.86% at September 29, 2005) plus 300 basis points. We had $74.1 million
outstanding under this loan as of March 31, 2005. The loan is secured by our
interests in the Vibra Facilities. The loan with Merrill Lynch includes
financial covenants requiring us to meet an interest coverage ratio (ratio of
our earnings before interest, taxes, depreciation and amortization to interest
expense) of 2 to 1, a fixed charge coverage ratio (ratio of earnings before
interest, taxes, depreciation and amortization to the sum of total debt service,
assumed capital expenditures pertaining to the Vibra Facilities, income taxes
and preferred dividends) greater than 1.65 to 1, a net debt to total asset
valuation ratio (ratio of total net debt to the product of nine and the sum of
net income, interest expense, depreciation and amortization minus management
fees not exceeding 1% of net revenue and $300 per licensed bed per annum) not
greater than 70%, and, for each Vibra Facility, a base rent coverage ratio
(ratio of earnings of the applicable lessee of the Vibra Facility before
interest, taxes, depreciation, amortization, rent and management fees to base
rent payable by the lessee) equal to or greater than 1.25 to 1 and to maintain
minimum tangible net worth of at least $200 million. As of the date of this
prospectus, we are in compliance with all material financial covenants under our
loan with Merrill Lynch.

We have executed a term sheet with Merrill Lynch Capital providing for a
senior secured revolving credit facility of up to $100.0 million with a term of
four years, with one 12-month extension option, to refinance the outstanding
amount under our existing loan agreement with Merrill Lynch Capital and for
general corporate purposes. During the term of the loan, we will have the right
to increase the amount available under the facility by an amount up to $75.0
million, subject to no event of default continuing or occurring at the time of
such increase. Merrill Lynch will syndicate that increase in the amount to be
available under the facility on a best efforts basis, and no lender will be
required to increase its commitment to facilitate the increase in the amount
available under the facility.

The facility will initially be secured by our interests in the Vibra
Facilities, or the borrowing base properties. The maximum availability under the
facility will be equal to 65% of the collateral value of the borrowing base
properties. The facility will bear interest at one month LIBOR plus up to 275
basis points depending on the amount of the facility leveraged. We expect the
facility with Merrill Lynch to include financial covenants requiring us to
maintain a maximum total leverage ratio (ratio of consolidated indebtedness to
gross asset value) of 65%, a minimum consolidated fixed charge coverage ratio of
1.65 to 1 and to maintain minimum tangible net worth equal to $200.0 million
plus 75% of net proceeds from any additional equity issuances. Execution of this
credit facility is subject to Merrill Lynch's underwriting and

credit approval and completion of acceptable legal documentation. Accordingly,
there is no assurance that we will enter into this facility on these terms, or
at all.

We have also entered into construction loan agreements with Colonial Bank
pursuant to which we can borrow up to $43.4 million to fund construction costs
for our West Houston Facilities. Each construction loan has a term of 18 months
and an option on our part to convert the loan to a 30-month term loan upon
completion of construction of the West Houston Facility securing that loan. The
construction loans are secured by mortgages on the West Houston Facilities, as
well as assignments of rents and leases on those facilities. The terms of the
construction loan agreements prevent us from allowing the net operating income
of the facility used as collateral for any calendar quarter to be less than 1.25
times the principal and interest payments then due and payable under the
promissory note for the designated period until the loan is paid in full. In the
event that our net operating income falls below the minimum debt service
requirement, we must prepay a portion of the principal balance of the promissory
note so that the debt service requirement is satisfied and maintained within 10
days of our non-compliance. The construction loans bear interest at the one
month LIBOR plus 225 basis points during the construction period and one month
LIBOR plus 250 basis points thereafter. The Colonial Bank loans are
cross-defaulted. As of the date of this prospectus, we have made no borrowings
under the Colonial Bank loans.

MARKET OPPORTUNITY

According to the United States Department of Commerce, Bureau of Economic
Analysis, healthcare is one of the largest industries in the United States, and
was responsible for approximately 15.3% of United States gross domestic product
in 2003. Healthcare spending has consistently grown at rates greater than
overall spending growth and inflation. As the chart below reflects, healthcare
expenditures are projected to increase by more than 7% in 2004 and 2005 to $1.8
trillion and $1.9 trillion, respectively, and are expected to reach $3.1
trillion by 2012.

(GRAPH)

We believe that the fundamental reasons for this growth in the demand for
healthcare services include the aging and growth of the United States
population, the advances in medical technology and treatments, and the increase
in life expectancy. As illustrated by the chart below, the projected compound
annual growth rate (or CAGR), from 2000 to 2030 of the population of senior
citizens is three times the rate projected for the total United States
population. This demographic trend is projected to result in an increase in the
percentage of United States citizens who are age 65 or older from 12.4% in 2000
to 19.6% in 2030.

(GRAPH)
Source: United States Bureau of the Census

To satisfy this growing demand for healthcare services, there is a
significant amount of new construction of healthcare facilities. In 2003 alone,
$24.5 billion was spent on the construction of healthcare facilities, according
to CMS. This represented more than a 9% increase over the $22.4 billion in
healthcare construction spending for 2002. The following chart reflects the
growth and expected growth in healthcare construction expenditures over the
period that began in 1990 and ends in 2012:

(GRAPH)

We believe that the United States healthcare delivery system is evolving
away from reliance on the traditional "one-stop," large-scale acute care
hospital to one that relies on specialty hospitals and healthcare facilities
that focus on single disciplines. We believe that there will be an increasing
demand for more accessible, specialized and technologically-advanced healthcare
delivery services as the population grows and ages. We own and have targeted for
acquisition and development net-leased healthcare facilities

providing state-of-the-art healthcare services because we believe these types of
facilities represent the future of healthcare delivery.

We believe that United States healthcare operators are in the early stages
of a long-term evolution from a model that favors ownership of healthcare
facilities to one that favors long-term net leasing of these facilities. We see
two primary reasons for this:

- First, in our experience, financial arrangements such as bond financing
gave non-profit healthcare providers access to inexpensive capital,
usually at 100% of the building cost. However, budget constraints on
local governments and tighter underwriting standards have greatly reduced
the availability of this very inexpensive capital.

- Second, in our experience, healthcare providers were reimbursed on
cost-based reimbursement plans (calculated in part by reference to a
provider's total cost in plant and equipment) which provided no incentive
for healthcare providers to make efficient use of their capital. With the
evolution of the prospective payment reimbursement system, which
reimburses healthcare providers for specific procedures or diagnoses and
thus rewards the most efficient providers, healthcare providers are no
longer assured of returns on investments in non-revenue producing assets
such as the real estate where they operate. Accordingly, in recent years,
healthcare providers have begun to convert their owned facilities to
long-term lease arrangements thereby accessing substantial amounts of
previously unproductive capital to invest in high margin operations and
assets.

In summary, the following market trends have shaped our investment
strategy:

- Decentralization: We believe that healthcare services are increasingly
delivered through smaller, more accessible facilities that are designed
for specific treatments and medical conditions and that are located near
physicians and their patients. Based upon our experience, more healthcare
services are delivered in specialized facilities than in acute care
hospitals.

- Specialization: In our experience, the percentage of physicians and
other healthcare professionals who practice in a recognized specialty or
subspecialty has been increasing for many years. We believe that this
creates opportunities for development of additional specialized
healthcare facilities as advances in technologies and recognition of new
practice specialties result in new treatments for difficult medical
conditions.

- Convenient Patient Care: We believe that healthcare service providers
are increasingly seeking to provide specific services in a single
location for the convenience of both patients and physicians. These
single-discipline centers are primarily located in suburban areas, near
patients and physicians, as opposed to the traditional urban hospital
setting.

- Aging Population: We believe that demographic trends in the United
States, including in particular an aging population, will result in
continued growth in the demand for healthcare services, which in turn
will lead to an increasing need for a greater supply of modern healthcare
facilities.

- Use of Capital: We believe that healthcare operators increasingly prefer
to conserve their capital for investment in their operations and for new
technologies rather than investing it in real estate.

OUR TARGET FACILITIES

The market for healthcare real estate is extensive and includes real estate
owned by a variety of healthcare operators. We focus on acquiring and developing
those net-leased facilities that are specifically designed to reflect the latest
trends in healthcare delivery methods. These facilities include:

Medicare certified skilled nursing, psychiatric, long-term, or acute care
beds. These hospitals are often the best medical alternative to
traditional acute care hospitals where under the Medicare prospective
payment system there is pressure to discharge patients after relatively
short stays.

- Regional and Community Hospitals: We define regional and community
hospitals as general medical/surgical hospitals whose practicing
physicians generally serve a market specific area, whether urban,
suburban or rural. We intend to limit our ownership of these facilities
to those with market, ownership, competitive and technological
characteristics that provide barriers to entry for potential competitors.

- Medical Office Buildings: Medical office buildings are office and clinic
facilities occupied and used by physicians and other healthcare providers
in the provision of outpatient healthcare services to their patients. The
medical office buildings that we target generally are or will be
master-leased and adjacent to or integrated with our other targeted
healthcare facilities.

- Skilled Nursing Facilities: Skilled nursing facilities are healthcare
facilities that generally provide more comprehensive services than
assisted living or residential care homes. They are primarily engaged in
providing skilled nursing care for patients who require medical or
nursing care or rehabilitation services. Typically these services involve
managing complex and serious medical problems such as wound care, coma
care or intravenous therapy. They offer both short and long-term care
options for patients with serious illness and medical conditions. Skilled
nursing facilities also provide rehabilitation services that are
typically utilized on a short-term basis after hospitalization for injury
or illness.

UNDERWRITING PROCESS

Our real estate and loan underwriting process focuses on healthcare
operations and real estate investment. This process is described in a written
policy that requires, among other things, completion of specific elements of due
diligence at the appropriate stages, including appraisals, engineering
evaluations and environmental assessments, all provided by qualified and
independent third parties. All of our executive officers are involved in the
acquisition and due diligence process.

Our acquisition and development selection process includes a comprehensive
analysis of the targeted healthcare facility's profitability, financial trends
in revenues and expenses, barriers to competition, the need in the market for
the type of healthcare services provided by the facility, the strength of the
location and the underlying value of the facility, as well as the financial
strength and experience of the prospective tenant and the tenant's management
team. We also analyze the operating history of the specific facility, including
the facility's earnings, cash flow, occupancy and patient and payor mix, in
order to evaluate its financial and operating strength.

When we identify an attractive acquisition or development opportunity based
on historical operations and market conditions, we determine the financial value
of a potential long-term net-lease arrangement based on our target long-term
net-lease capitalization rates, which currently range from 9.5% to 11%, and
fixed charge coverage ratios. We compare that financial value to the replacement
costs that we estimate by consulting with major healthcare construction
contractors, engaging construction engineers or facility assessment consultants
as appropriate, and reviewing recent cost studies. In addition, our due
diligence process includes obtaining and evaluating title, environmental and
other customary third-party reports. In certain instances we have acquired or
may acquire a facility from a tenant or proposed tenant at a purchase price in
excess of what our tenant or proposed tenant recently paid or expects to pay for
that same facility. The investment committee of our board of directors has the
authority to approve acquisitions or developments of facilities that exceed
$10.0 million.

We seek to build tenant relationships with healthcare operators that we
believe are positioned to prosper in the changing healthcare environment. We
seek tenant relationships with operators who, based on our financial and
operating analyses, have demonstrated the ability to manage in good and bad
economic conditions. In certain cases, we lend funds to prospective tenants to
assist them with their acquisition of the operations at the facilities that we
intend to acquire and lease to them and for initial working capital needs. See
"Our Portfolio -- Our Current Portfolio of Facilities." In these instances,
where feasible and in compliance with applicable healthcare laws and
regulations, we seek to obtain percentage rents based on the prospective
tenant's revenues in addition to our base rent. Through our detailed
underwriting of healthcare operations and real estate, we expect to deliver
attractive risk-adjusted returns to our stockholders.

ASSET MANAGEMENT

We actively monitor our facilities, including reviewing periodic financial
reporting and operating data, as well as visiting each facility and meeting with
the management of our tenants on a regular basis. Integral to our asset
management philosophy is our desire to build long-term relationships with the
tenants and, accordingly, we have developed a partnering approach which we
believe results in the tenant viewing us as a member of its team. We understand
that in order to maximize the value of our investments, our tenants must
prosper. Therefore, we expect to work closely with our tenants throughout the
terms of our leases in order to foster a long-term working relationship and to
maximize the possibility of new business opportunities. For example, we and our
prospective tenants typically conduct due diligence in a coordinated manner and
share with each other the results of our respective due diligence
investigations. During the lease term, we conduct joint evaluations of local
facility operations and participate in discussions about strategic plans that
may ultimately require our approval pursuant to the terms of our lease
agreements. Our chief executive officer, chief financial officer and chief
operating officer also communicate frequently with their counterparts at our
tenants in order to maintain knowledge about changing regulatory and business
conditions. We believe this knowledge equips us to anticipate changes in our
tenants' operations in sufficient time to strategically and financially plan
for, rather than react to, changing conditions.

In addition to our ongoing analyses of our tenants' operations, our
management team actively monitors and researches each healthcare segment in
which we own and lease facilities in order to help us recognize changing
economic, market and regulatory conditions. Our senior management is not only
involved in the underwriting of each asset upon acquisition or development, but
is also involved in the asset management process during the entire period in
which we own the facility.

OUR FORMATION TRANSACTIONS

The following is a summary of our formation transactions:

- We were formed as a Maryland corporation on August 27, 2003 to succeed to
the business of Medical Properties Trust, LLC, a Delaware limited
liability company, which was formed by certain of our founders in
December 2002. In connection with our formation, we issued our founders
1,630,435 shares of our common stock in exchange for nominal cash
consideration, the membership interests of Medical Properties Trust, LLC
were transferred to us and Medical Properties Trust, LLC became our
wholly-owned subsidiary. Upon its formation in September 2003, our
operating partnership assumed certain obligations of Medical Properties
Trust, LLC. Upon completion of our private placement in April 2004,
1,108,527 shares of the 1,630,435 shares of common stock held by our
founders were redeemed and they now collectively hold 1,047,088 shares of
our common stock. Our founders agreed to the redemption of a portion of
their shares of our common stock for nominal consideration primarily in
order to facilitate the completion of our April 2004 private placement.

- Our operating partnership, MPT Operating Partnership, L.P., was formed in
September 2003. Through our wholly-owned subsidiary, Medical Properties
Trust, LLC, we are the sole general partner of our operating partnership.
We currently own all of the limited partnership interests in our
operating partnership.

- MPT Development Services, Inc., a Delaware corporation that we formed in
January 2004, operates as our wholly-owned taxable REIT subsidiary.

- In April 2004 we completed a private placement of 25,300,000 shares of
common stock at an offering price of $10.00 per share. Friedman,
Billings, Ramsey & Co., Inc. acted as the initial purchaser and sole
placement agent. The total net proceeds to us, after deducting fees and
expenses of the offering, were approximately $233.5 million. The net
proceeds of our private placement, together with borrowed funds, have
been or will be used to acquire our current portfolio of 13 facilities,
consisting of nine facilities that are in operation and four that are
under development, repay debt, pay pre-offering operating expenses and
for working capital. Thus far we have utilized approximately $187.6
million to acquire our nine existing facilities, have loaned $47.6
million to Vibra to acquire the operations at the Vibra Facilities and
for working capital purposes, $6.2 million of which has been repaid, have
made a mortgage loan of $6.0 million to an affiliate of one of our
prospective tenants, have funded $51.3 million of a projected total of
$63.1 million of development costs for the West Houston Facilities and
$8.8 million of a projected total of $38.0 million of development costs
for the Bucks County Facility and have advanced $9.7 million pursuant to
the North Cypress construction loan.

- On July 13, 2005, we completed an initial public offering of 12,066,823
shares of common stock, priced at $10.50 per share. Of these shares of
common stock, 701,823 shares were sold by selling stockholders and
11,365,000 shares were sold by us. Friedman, Billings, Ramsey & Co., Inc.
served as the sole book-running manager and J.P. Morgan Securities Inc.
served as co-lead manager for the offering. Wachovia Capital Markets, LLC
and Stifel, Nicolaus & Company, Incorporated served as co-managers for
the offering. The underwriters exercised an option to purchase an
additional 1,810,023 shares of common stock to cover over-allotments on
August 5, 2005. We raised net proceeds of approximately $125.7 million
pursuant to the offering after deducting the underwriting discount and
offering expenses.

Edward K. Aldag, Jr., William G. McKenzie, Emmett E. McLean, R. Steven
Hamner and James P. Bennett may be considered our founders. Mr. Aldag is serving
as chairman of our board of directors and as our president and chief executive
officer. Mr. McKenzie is serving as our vice chairman of the board. Mr. McLean
is serving as our executive vice president, chief operating officer, treasurer
and assistant secretary. Mr. Hamner is serving as our executive vice president
and chief financial officer. Mr. Bennett formerly was an owner, officer,
director of and consultant to the company's predecessor, Medical Properties
Trust, LLC, but has not been affiliated with us since August 2003.

OUR OPERATING PARTNERSHIP

We own our facilities and conduct substantially all of our business through
our operating partnership, MPT Operating Partnership, L.P., and its
subsidiaries. MPT Operating Partnership, L.P. is a Delaware limited partnership
organized by us in September 2003. Our wholly-owned limited liability company,
Medical Properties Trust, LLC, serves as the sole general partner of, and holds
a 1% interest in, our operating partnership. We also currently own all of the
limited partnership interests in our operating partnership, constituting a 99%
partnership interest, but may issue limited partnership units from time to time
in connection with facility acquisitions and developments. Where permitted by
applicable law, we intend to sell equity interests in subsidiaries of our
operating partnership in connection with, or subsequent to, the acquisition and
development of facilities.

Holders of limited partnership units of our operating partnership, other
than us, would be entitled to redeem their partnership units for shares of our
common stock on a one-for-one basis, subject to adjustments for stock splits,
dividends, recapitalizations and similar events. At our option, in lieu of
issuing shares of common stock upon redemption of limited partnership units, we
may redeem the partnership units tendered for cash in an amount equal to the
then-current value of the shares of common stock. Holders of limited partnership
units would be entitled to receive distributions equivalent to the dividends we
pay to holders of our shares of common stock. As the sole owner of the general
partner of our operating partnership, we have the power to manage and conduct
our operating partnership's business, subject to the limitations described in
the first amended and restated agreement of limited partnership of our operating
partnership. See "Partnership Agreement."

MPT Operating Partnership, L.P. is a limited partner of MPT West Houston
MOB, L.P. and MPT West Houston Hospital, L.P., which respectively own the
Houston medical office building and the Houston community hospital in our
portfolio which are under development. MPT West Houston MOB, LLC and MPT West
Houston Hospital, LLC, our wholly-owned subsidiaries, are the respective general
partners of these entities. Physicians and others associated with our tenant or
subtenants of the West Houston MOB own approximately 24% of the aggregate equity
interests in MPT West Houston MOB, L.P. Stealth, L.P., the tenant of the Houston
community hospital under development and an entity majority-owned by physicians,
owns a 6% limited partnership interest in MPT West Houston Hospital, L.P.

In general, the management and control of the limited partnerships or
limited liability companies that own our properties, such as MPT West Houston
MOB, L.P. and MPT West Houston Hospital, L.P., rests with our operating
partnership or its subsidiaries. The limited partners or other minority owners
in these entities will not participate in the management or control of the
business of the partnership or other entity. Although the partnership agreements
or limited liability company agreements for future limited partnerships or
limited liability companies may vary, our current limited partnership agreements
require approval of the limited partners holding a majority of the units in the
partnership other than the general partner and its affiliates to:

- amend the partnership agreement in a manner that would:

- adversely affect the financial or other rights of the limited partners
who are not affiliates of the general partner or positively affect the
financial rights or other rights of the general partner or reduce the
general partner's obligations and responsibilities under the limited
partnership agreement;

- impose on the limited partners who are not affiliates of the general
partner any obligation to make additional capital contributions to the
partnership;

- adversely affect the rights of certain limited partners without
similarly affecting the rights of other limited partners;

- merge, consolidate or combine with another entity; or

- determine the terms and the amount of consideration payable for any
issuances of additional partnership units to our operating partnership,
the general partner or any of their respective affiliates.

In general, each partner or other equity owner will share in the
partnership's profits, losses and available cash flow pro rata based upon his
percentage interest in the partnership. We may hold properties we develop or
acquire in the future through structures similar to the structure through which
we hold the West Houston Facilities.

MPT DEVELOPMENT SERVICES, INC.

MPT Development Services, Inc., our taxable REIT subsidiary, was
incorporated in January 2004 as a Delaware corporation. MPT Development
Services, Inc. is authorized to provide third-party facility planning, project
management, medical equipment planning and implementation services, medical
office building management services, lending services, including but not limited
to acquisition and working capital loans to our tenants, and other services that
neither we nor our operating partnership can undertake directly under applicable
REIT tax rules. Overall, no more than 20% of the value of our assets may consist
of securities of one or more taxable REIT subsidiaries, and no more than 25% of
the value of our assets may consist of securities that are not qualifying assets
under the test requiring that 75% of a REIT's assets consist of real estate and
other related assets. Further, a taxable REIT subsidiary may not directly or
indirectly operate or manage a healthcare facility. For purposes of this
definition a "healthcare facility" means a hospital, nursing facility, assisted
living facility, congregate care facility, qualified continuing care facility,
or other licensed facility which extends medical or nursing or ancillary
services to patients and which is operated by a service provider that is
eligible for participation in the Medicare program under Title XVIII of the
Social Security Act with respect to the facility.

MPT Development Services, Inc. will pay federal, state and local income
taxes at regular corporate rates on its taxable income. MPT Development
Services, Inc. has made, and from time to time may make, loans to tenants or
prospective tenants to assist them with the acquisition of the operations at
facilities leased or to be leased to them and for initial working capital needs.
There are currently approximately $41.4 million in such loans outstanding. See
"Our Portfolio -- Our Current Portfolio of Facilities."

DEPRECIATION

Generally, the federal tax basis for our facilities used to determine
depreciation for federal income tax purposes will be our acquisition costs for
such facilities. To the extent facilities are acquired with units of our
operating partnership or its subsidiaries, we will acquire a carryover basis in
the facilities. For federal income tax purposes, depreciation with respect to
the real property components of our facilities, other than land, generally will
be computed using the straight-line method over a useful life of 40 years, for a
depreciation rate of 2.50% per year.

OUR LEASES

The leases for our facilities are "net" leases with terms requiring the
tenant to pay all ongoing operating and maintenance expenses of the facility,
including property, casualty, general liability and other insurance coverages,
utilities and other charges incurred in the operation of the facilities, as well
as real estate taxes, ground lease rent and the costs of capital expenditures,
repairs and maintenance. Our leases also provide that our tenants will indemnify
us for environmental liabilities. Our current leases range from 11 to 16 years
and provide for annual rent escalation and, in the case of the Vibra Facilities
and the Bucks County Facility, percentage rent. Our leases require periodic
reports and financial statements from our tenants. In addition, our leases
contain customary default, termination, and subletting and assignment
provisions. See "Our Portfolio -- Our Current Portfolio of Facilities." We
anticipate that our future leases will have similar terms, including percentage
rent where feasible and in compliance with applicable healthcare laws and
regulations.

ENVIRONMENTAL MATTERS

Under various federal, state and local environmental laws and regulations,
a current or previous owner, operator or tenant of real estate may be required
to investigate and clean up hazardous or toxic substances or petroleum product
releases or threats of releases at such property and may be held liable to a
government entity or to third parties for property damage and for investigation,
clean-up and monitoring costs incurred by such parties in connection with the
actual or threatened contamination, including substances currently unknown, that
may have been released on the real estate. These laws may impose clean-up
responsibility and liability without regard to fault, or whether or not the
owner, operator or tenant knew of or caused the presence of the contamination.
The liability under these laws may be joint and several for the full amount of
the investigation, clean-up and monitoring costs incurred or to be incurred or
actions to be undertaken, although a party held jointly and severally liable
might be able to obtain contributions from other identified, solvent,
responsible parties of their fair share toward these costs. Investigation,
clean-up and monitoring costs may be substantial and can exceed the value of the
property. The presence of contamination, or the failure to properly remediate
contamination, on a property may adversely affect the ability of the owner,
operator or tenant to sell or rent that property or to borrow funds using such
property as collateral and may adversely impact our investment in that property.
In addition, if hazardous substances are located on or released from our
properties, we could incur substantial liabilities through a private party
personal injury claim, a property damage claim by an adjacent property owner, or
claims by a governmental entity or others for other damages, such as natural
resource damages. This liability may be imposed under environmental laws or
common-law principles.

Federal regulations require building owners and those exercising control
over a building's management to identify and warn, via signs and labels, of
potential hazards posed by workplace exposure to installed asbestos-containing
materials and potentially asbestos-containing materials in their building. The
regulations also set forth employee training, record keeping and due diligence
requirements pertaining to asbestos-containing materials and potentially
asbestos-containing materials. Government entities can assess significant fines
for violation of these regulations. Building owners and those exercising control
over a building's management may be subject to an increased risk of personal
injury lawsuits by workers and others exposed to asbestos-containing materials
and potentially asbestos-containing materials as a result of these regulations.
The regulations may affect the value of a building containing
asbestos-containing materials and potentially asbestos-containing materials in
which we have invested. Federal, state and local laws and regulations also
govern the removal, encapsulation, disturbance, handling and disposal of
asbestos-containing materials and potentially asbestos-containing materials when
such materials are in poor condition or in the event of construction,
remodeling, renovation or demolition of a building. Such laws and regulations
may impose liability for improper handling or a release to the environment of
asbestos-containing materials and potentially asbestos-containing materials and
may provide for fines to, and for third parties to seek recovery from, owners or
operators of real property for personal injury or improper work exposure
associated with asbestos-containing materials and potentially
asbestos-containing materials.

Prior to closing any facility acquisition, we obtain Phase I environmental
assessments in order to attempt to identify potential environmental concerns at
the facilities. These assessments will be carried out in accordance with an
appropriate level of due diligence and will generally include a physical site
inspection, a review of relevant federal, state and local environmental and
health agency database records, one or more interviews with appropriate
site-related personnel, review of the property's chain of title and review of
historic aerial photographs and other information on past uses of the property.
We may also conduct limited subsurface investigations and test for substances of
concern where the results of the Phase I environmental assessments or other
information indicates possible contamination or where our consultants recommend
such procedures.

While we may purchase many of our facilities on an "as is" basis, we intend
for all of our purchase contracts to contain an environmental contingency
clause, which permits us to reject a facility because of any environmental
hazard at the facility.

COMPETITION

We compete in acquiring and developing facilities with financial
institutions, institutional pension funds, real estate developers, other REITs,
other public and private real estate companies and private real estate
investors. Among the factors adversely affecting our ability to compete are the
following:

- we may have less knowledge than our competitors of certain markets in
which we seek to purchase or develop facilities;

- many of our competitors have greater financial and operational resources
than we have; and

- our competitors or other entities may determine to pursue a strategy
similar to ours.

To the extent that we experience vacancies in our facilities, we will also
face competition in leasing those facilities to prospective tenants. The actual
competition for tenants varies depending on the characteristics of each local
market. Virtually all of our facilities operate in a competitive environment,
and patients and referral sources, including physicians, may change their
preferences for a healthcare facilities from time to time.

HEALTHCARE REGULATORY MATTERS

The following discussion describes certain material federal healthcare laws
and regulations that may affect our operations and those of our tenants.
However, the discussion does not address state healthcare laws and regulations,
except as otherwise indicated. These state laws and regulations, like the
federal healthcare laws and regulations, could affect our operations and those
of our tenants. Moreover, the discussion relating to reimbursement for
healthcare services addresses matters that are subject to frequent review and
revision by Congress and the agencies responsible for administering federal
payment programs. Consequently, predicting future reimbursement trends or
changes is inherently difficult.

Ownership and operation of hospitals and other healthcare facilities are
subject, directly and indirectly, to substantial federal, state and local
government healthcare laws and regulations. Our tenants' failure to comply with
these laws and regulations could adversely affect their ability to meet their
lease obligations. Physician investment in us or in our facilities also will be
subject to such laws and regulations. We intend for all of our business
activities and operations to conform in all material respects with all
applicable laws and regulations.

Anti-Kickback Statute. 42 U.S.C. sec.1320a-7b(b), or the Anti-Kickback
Statute, prohibits, among other things, the offer, payment, solicitation or
acceptance of remuneration directly or indirectly in return for referring an
individual to a provider of services for which payment may be made in whole or
in part under a federal healthcare program, including the Medicare or Medicaid
programs. Violation of the Anti-Kickback Statute is a crime and is punishable by
criminal fines of up to $25,000 per violation, five years imprisonment or both.
Violations may also result in civil sanctions, including civil penalties of up
to $50,000 per violation, exclusion from participation in federal healthcare
programs, including Medicare and Medicaid, and additional monetary penalties in
amounts treble to the underlying remuneration.

The Anti-Kickback Statute defines the term "remuneration" very broadly and,
accordingly, local physician investment in our facilities could trigger scrutiny
of our lease arrangements under the Anti-Kickback Statute. In addition to
certain statutory exceptions, the Office of Inspector General of the Department
of Health and Human Services, or OIG, has issued "Safe Harbor Regulations" that
describe practices that will not be considered violations of the Anti-Kickback
Statute. These include a safe harbor for space rental arrangements which
protects payments made by a tenant to a landlord under a lease arrangement
meeting certain conditions. We intend to use our commercially reasonable efforts
to structure lease arrangements involving facilities in which local physicians
are investors and tenants so as to satisfy, or meet as closely as possible, the
conditions for the safe harbor for space rental. We cannot assure you, however,
that we will meet all the conditions for the safe harbor, and it is unlikely
that we will meet all conditions for the safe harbor in those instances in which
percentage rent is contemplated and we have physician investors. In addition,
federal regulations require that our tenants with purchase options pay fair
market value purchase prices for facilities in which we have physician
investment. We intend our lease

agreement purchase option prices to be fair market value; however, we cannot
assure you that all of our purchase options will be at fair market value. Any
purchase not at fair market value may present risks of challenge from healthcare
regulatory authorities. The fact that a particular arrangement does not fall
within a statutory exception or safe harbor does not mean that the arrangement
violates the Anti-Kickback Statute. The statutory exception and Safe Harbor
Regulations simply provide a guaranty that qualifying arrangements will not be
prosecuted under the Anti-Kickback Statute. The implication of the Anti-
Kickback Statute could limit our ability to include local physicians as
investors or tenants or restrict the types of leases into which we may enter if
we wish to include such physicians as investors having direct or indirect
ownership interests in our facilities.

Federal Physician Self-Referral Statute. Any physicians investing in our
company or its subsidiary entities could also be subject to the Ethics in
Patient Referrals Act of 1989, or the Stark Law (codified at 42 U.S.C.
sec. 1395nn). Unless subject to an exception, the Stark Law prohibits a
physician from making a referral to an "entity" furnishing "designated health
services" paid by Medicare or Medicaid if the physician or a member of his
immediate family has a "financial relationship" with that entity. A reciprocal
prohibition bars the entity from billing Medicare or Medicaid for any services
furnished pursuant to a prohibited referral. Financial relationships are defined
very broadly to include relationships between a physician and an entity in which
the physician or the physician's family member has (i) a direct or indirect
ownership or investment interest that exists in the entity through equity, debt
or other means and includes an interest in an entity that holds a direct or
indirect ownership or investment interest in any entity providing designated
health services; or (ii) a direct or indirect compensation arrangement with the
entity.

The Stark Law as originally enacted in 1989 only applied to referrals for
clinical laboratory tests reimbursable by Medicare. However, the law was amended
in 1993 and 1994 and, effective January 1, 1995, became applicable to referrals
for an expanded list of designated health services reimbursable under Medicare
or Medicaid.

The Stark Law specifies a number of substantial sanctions that may be
imposed upon violators. Payment is to be denied for Medicare claims related to
designated health services referred in violation of the Stark Law. Further, any
amounts collected from individual patients or third-party payors for such
designated health services must be refunded on a timely basis. A person who
presents or causes to be presented a claim to the Medicare program in violation
of the Stark Law is also subject to civil monetary penalties of up to $15,000
per claim, civil money penalties of up to $100,000 per arrangement and possibly
even exclusion from participation in the Medicare and Medicaid programs.

Final regulations applicable only to physician referrals for clinical
laboratory services were published in August 1995. A proposed rule applicable to
physician referrals for all designated health services was published in January
1998. In January 2001, CMS published the "Phase I" final rule, which finalized a
significant portion of the 1998 proposed rule. On March 26, 2004, CMS issued the
second phase of its final regulations addressing physician referrals to entities
with which they have a financial relationship (the "Phase II" rule). The Phase
II rule addresses and interprets a number of exceptions for ownership and
compensation arrangements involving physicians, including the exceptions for
space and equipment rentals and the exception for indirect compensation
arrangements. The Phase II rule also includes exceptions for physician ownership
and investment, including physician ownership of rural providers and hospitals.
The new regulation revised the hospital ownership exception to reflect the
18-month moratorium that began December 8, 2003 on physician ownership or
investment in specialty hospitals, which was enacted in Section 507 of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003. The
Phase II rule became effective on July 26, 2004. Although the 18-month
moratorium imposed by Section 507 of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 expired on June 8, 2005, a bill
introduced in the Senate essentially would make the moratorium permanent with
limited exceptions. If enacted, the law would have a retroactive effective date
of June 8, 2005.

In those cases where physicians invest in our subsidiaries or our
facilities, we intend to fashion our lease arrangements with healthcare
providers to meet the applicable indirect compensation exceptions

under the Stark Law, however, no assurance can be given that our leases will
satisfy these Stark Law exception requirements. Unlike the Anti-kickback Statute
Safe Harbor Regulations, a financial arrangement which implicates the Stark Law
must meet the requirements of an applicable exception to avoid a violation of
the Stark Law. This may lead to obstacles in permitting local physicians to
invest in our facilities or restrict the types of lease arrangements we may
enter into if we wish to include such physicians as investors.

State Self-Referral Laws. In addition to the Anti-Kickback Statute and the
Stark Law, state anti-kickback and self-referral laws could limit physician
ownership or investment in us, restrict the types of leases we may enter into if
such physician investment is permitted or require physician disclosure of our
ownership or financial interest to patients prior to referrals.

Recent Regulatory and Legislative Developments. Medicare Part A pays for
hospital inpatient operating and capital related costs associated with acute
care hospital inpatient stays on a prospective basis. Pursuant to this inpatient
prospective payment system, or IPPS, CMS categorizes each patient case according
to a list of diagnosis-related groups, or DRGs. Each DRG has an assigned payment
that is based upon the expected amount of hospital resources necessary to treat
a patient in that DRG. On August 12, 2005, CMS published a Final Rule for IPPS
for fiscal year 2006. The Final Rule includes a 3.7% increase in payment rates,
a number of changes to the DRGs and enhancements to the voluntary quality
reporting program. Hospitals are required to submit certain clinical data on ten
(10) quality measures in order to receive full payment for fiscal year 2006. CMS
expects aggregate payments to IPPS hospitals to increase by $3.3 billion over
the previous year.

On August 1, 2003, CMS published the fiscal year 2004 Final Rule for
inpatient rehabilitation facilities, or IRFs. Under the Final Rule, all IRFs
have received an increase in their prospective payment system rate for fiscal
year 2004 due to an across the board 3.2% IRF market basket increase. On August
15, 2005, CMS published the fiscal year 2006 Final Rule for inpatient
rehabilitation facilities, or IRFs. The Final Rule adopts a number of
refinements to the IRF prospective payment system, including an across-the-board
1.9% decrease in the standard payment amount based on evidence that coding
increases instead of increases in patient acuity have led to increased payments
to IRFs. The Final Rule also includes a 3.6% market basket increase and
increases from 19.1% to 21.3% the payment rate adjustment for IRFs located in
rural areas. Further, the Final Rule reduces the outlier threshold for cases
with unusually high costs from $11,211 to $5,132. In addition, the Final Rule
contains policy changes including the adoption of new labor market area
definitions which are based on the new Core Based Statistical Areas announced by
the Office of Management and Budget, or OMB, late in 2000. These increases are
expected to benefit those tenants of ours who operate IRFs. These increases
benefit those tenants of ours who operate IRFs.

On May 7, 2004, CMS issued a Final Rule to revise the classification
criterion, commonly known as the "75 percent rule," used to classify a hospital
or hospital unit as an IRF. The compliance threshold is used to distinguish an
IRF from an acute care hospital for purposes of payment under the Medicare IRF
prospective payment system. The Final Rule implements a three-year period to
analyze claims and patient assessment data to determine whether CMS will
continue to use a compliance threshold that is lower than 75% or not. For cost
reporting periods beginning on or after July 1, 2004, and before July 1, 2005,
the compliance threshold will be 50% of the IRF's total patient population. The
compliance threshold will increase to 60% of the IRF's total patient population
for cost reporting periods beginning on or after July 1, 2005 and before July 1,
2006, to 65% for cost reporting periods beginning on or after July 1, 2006 and
before July 1, 2007, and to 75% for cost reporting periods after July 1, 2007.
On July 14, 2005, Senators Rick Santorum and Ben Nelson introduced legislation
in response to the Final Rule entitled "Preserving Patient Access to Inpatient
Rehabilitation Hospitals Act of 2005." The legislation seeks to limit the scope
of the Final Rule so that additional research may be conducted on the clinical
criteria for reimbursement of IRFs. The bill would implement the compliance and
enforcement threshold at 50 percent for two years and apply retroactively to
facilities that lost their IRF status and payments on or after July 1, 2005, if
such facilities are in compliance with the 50 percent threshold. We do not know
whether the legislation will be passed.

On December 8, 2003, President Bush signed into law the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003, or the Act, which
contains sweeping changes to the federal health insurance program for the
elderly and disabled. The Act includes provisions affecting program payment for
inpatient and outpatient hospital services. In total, the Congressional Budget
Office estimates that hospitals will receive $24.8 billion over ten years in
additional funding due to the Act.

Rural hospitals, which may include regional or community hospitals, one of
our targeted types of facilities, will benefit most from the reimbursement
changes in the Act. Some examples of these reimbursement changes include (i)
providing that payment for all hospitals, regardless of geographic location,
will be based on the same, higher standardized amount which was previously
available only for hospitals located in large urban areas, (ii) reducing the
labor share of the standardized amount from 71% to 62% for hospitals with an
applicable wage index of less than 1.0, (iii) giving hospitals the ability to
seek a higher wage index based on the number of hospital employees who take
employment out of the county in which the hospital is located with an employer
in a neighboring county with a higher wage index, and (iv) improving critical
access hospital program conditions of participation requirements and
reimbursement. Medicare disproportionate share hospital, or DSH, payment
adjustments for hospitals that are not large urban or large rural hospitals will
be calculated using the DSH formula for large urban hospitals, up to a 12% cap
in 2004 for all hospitals other than rural referral centers, which are not
subject to the cap. The Act provides that sole community hospitals, as defined
in 42 U.S.C. sec. 1395 ww(d)(5)(D)(iii), located in rural areas, rural hospitals
with 100 or fewer beds, and certain cancer and children's hospitals shall
receive Transitional Outpatient Payments, or TOPs, such that these facilities
will be paid as much under the Medicare outpatient prospective payment system,
or OPPS, as they were paid prior to implementation of OPPS. As of January 1,
2004 all TOPs for community mental health centers and all other hospitals were
otherwise discontinued. The "hold harmless" TOPs provided for under the Act will
continue for qualifying rural hospitals for services furnished through December
31, 2005 and for sole community hospitals for cost reporting periods beginning
on or after January 1, 2004 and ending on December 31, 2005. Hold harmless TOPs
payments continue permanently for cancer and children's hospitals.

The Act also requires CMS to provide supplemental payments to acute care
hospitals that are located more than 25 road miles from another acute care
hospital and have low inpatient volumes, defined to include fewer than 800
discharges per fiscal year, effective on or after October 1, 2004. Total
supplemental payments may not exceed 25% of the otherwise applicable prospective
payment rate.

Finally, the Act assures inpatient hospitals that submit certain quality
measure data a full inflation update equal to the hospital market basket
percentage increase for fiscal years 2005 through 2007. The market basket
percentage increase refers to the anticipated rate of inflation for goods and
services used by hospitals in providing services to Medicare patients. For
fiscal year 2005, the market basket percentage increase for hospitals paid under
the inpatient prospective payment system is 3.3%. For those inpatient hospitals
that do not submit such quality data, the Act provides for an update of market
basket minus 0.4 percentage points.

The Act also imposed an 18 month moratorium limiting the availability of
the "whole hospital exception," or Whole Hospital Exception, under the Stark Law
for specialty hospitals and prohibited physicians investing in rural specialty
hospitals from invoking an alternative Stark Law exception for physician
ownership or investment in rural providers. The moratorium began upon enactment
of the Act and expired June 8, 2005. Under the Whole Hospital Exception, the
Stark Law permits a physician to refer a Medicare or Medicaid patient to a
hospital in which the physician has an ownership or investment interest so long
as the physician maintains staff privileges at the hospital and the physician's
ownership or investment interest is in the hospital as a whole, rather than a
subdivision of the facility. Following expiration of the moratorium, CMS issued
a statement that it will not issue provider agreements for new specialty
hospitals or authorize initial state surveys of new specialty hospitals while it
undertakes a review of its procedures for enrolling such facilities in the
Medicare program. CMS anticipates completing this review by January 2006. The
suspension on enrollment does not apply to specialty hospitals that submitted

enrollment applications prior to June 9, 2005 or requested an advisory opinion
about the applicability of the moratorium.

On May 11, 2005, Senators Charles Grassley and Max Baucus introduced a
bill, known as the Hospital Fair Competition Act of 2005 (S.1002), that if
enacted would become effective retroactively as of June 8, 2005 and essentially
make permanent the prohibition on physician referrals to specialty hospitals in
which the physician has an ownership or investment interest. Specialty hospitals
are defined to mean a hospital subject to the inpatient prospective payment
system that is located outside of Puerto Rico, which was neither in operation
nor under development as of November 18, 2003, and is primarily or exclusively
engaged in treating patients with cardiac or orthopedic conditions, undergoing
surgery or receiving any other specialized category of services that the
Secretary designates. The proposed prohibition would not apply to specialty
hospitals in operation or under development as of November 18, 2003, but would
limit additional facility expansion and investment in such "grandfathered"
specialty hospitals and would also apply to all new specialty hospitals. The
bill was referred to the Senate Committee on Finance on May 11, 2005. We cannot
predict whether the bill will be passed.

Any acquisition or development of specialty hospitals must comply with the
current application and interpretation of the Stark Law and, if enacted, the
provisions of the Hospital Fair Competition Act of 2005. CMS may clarify or
modify its definition of specialty hospital, which may result in physicians who
own interests in our tenants being forced to divest their ownership. Although
the specialty hospital moratorium under the Act limited, and the proposed
Hospital Fair Competition Act of 2005 would limit physician ownership or
investment in "specialty hospitals" as defined by CMS, they not limit a
physician's ability to hold an ownership or investment interest in facilities
which may be leased to hospital operators or other healthcare providers,
assuming the lease arrangement conforms to the requirements of an applicable
exception under the Stark Law. We intend to structure all of our leases,
including leases containing percentage rent arrangements, to comply with
applicable exceptions under the Stark Law and to comply with the Anti-kickback
Statute. We believe that strong arguments can be made that percentage rent
arrangements, when structured properly, should be permissible under the Stark
Law and the Anti-kickback law; however, these laws are subject to continued
regulatory interpretation and there can be no assurance that such arrangements
will continue to be permissible. Accordingly, although we do not currently have
any percentage rent arrangements where physicians own an interest in our
facilities, we may be prohibited from entering into percentage rent arrangements
in the future where physicians own an interest in our facilities. In the event
we enter into such arrangements at some point in the future and later find the
arrangements no longer comply with the Stark Law or Anti-Kickback Statute, we or
our tenants may be subject to penalties under the statutes.

The California Department of Health Services recently adopted regulations,
codified as Sections 70217, 70225 and 70455 of Title 22 of the California Code
of Regulations, or CCR, which establish minimum, specific, numerical licensed
nurse-to-patient ratios for specified units of general acute care hospitals.
These regulations are effective January 1, 2004. The minimum staffing ratios set
forth in 22 CCR 70217(a) co-exist with existing regulations requiring that
hospitals have a patient classification system in place. 22 CCR, 70053.2 and
70217. The licensed nurse-to-patient ratios constitute the minimum number of
registered nurses, licensed vocational nurses, and, in the case of psychiatric
units, licensed psychiatric technicians, who shall be assigned to direct patient
care and represent the maximum number of patients that can be assigned to one
licensed nurse at any one time. Over the past several years many hospitals have,
in response to managed care reimbursement contracts, cut costs by reducing their
licensed nursing staff. The California Legislature responded to this trend by
requiring a minimum number of licensed nurses at the bedside. Due to this new
regulatory requirement, any acute care facilities we target for acquisition or
development in California may be required to increase their licensed nursing
staff or decrease their admittance rates as a result. Governor Schwarzenegger
issued two emergency regulations in an attempt to suspend the ratios in
emergency rooms and delay for three years staffing requirements in general
medical units. However, this action was appealed and on June 7, 2005, the
Superior Court overturned the two emergency regulations. The Schwarzenegger
administration may appeal this ruling.

On May 7, 2004, CMS issued a Final Rule to update the annual payment rates
for the Medicare prospective payment system for services provided by long term
care hospitals. The rule increased the Medicare payment rate for long-term care
hospitals by 3.1% starting July 1, 2004. On May 6, 2005, CMS issued a Final Rule
to update the annual payment rates for 2006. Beginning July 1, 2005, the
Medicare payment rate for long-term care hospitals will increase by 3.4% for
patient discharges through June 30, 2006. Medicare expects aggregate payment to
these hospitals to increase by $169 million during the 2006 long-term care
hospital rate year compared with the 2005 rate year. Long-term care hospitals,
one of the types of facilities we are targeting, are defined generally as
hospitals that have an average Medicare inpatient length of stay greater than 25
days. In addition, the final rule contains policy changes including the adoption
of new labor market area definitions for long-term care hospitals which are
based on the new Core Based Statistical Areas announced by the Office of
Management and Budget, or OMB, late in 2000.

The Balanced Budget Act of 1997, or BBA, mandated implementation of a
prospective payment system for skilled nursing facilities. Under this
prospective payment system, and for cost reporting periods beginning on or after
July 1, 1998, skilled nursing facilities are paid a prospective payment rate
adjusted for case mix and geographic variation in wages formulated to cover all
costs, including routine, ancillary and capital costs. In 1999 and 2000 the BBA
was refined to provide for, among other revisions, a 20% add-on for 12 high
acuity non-therapy Resource Utilization Grouping categories, or RUG categories,
and a 6.7% add-on for all 14 rehabilitation RUG categories. These categories may
expire when CMS releases its refinements to the current RUG payment system. On
August 4, 2005, CMS published a Final Rule updating skilled nursing facility
payment rates for fiscal year 2006. The Final Rule eliminates the temporary
add-on payments that Congress directed in the Balanced Budget Refinement Act of
1999 and introduces nine (9) new payment categories. The Final Rule also
permanently increases rates for all RUGs to reflect variations in non-therapy
ancillary costs. Further, fiscal year 2006 payment rates include a market basket
update increase of 3.1%, a slight increase over what had been anticipated in the
Proposed Rule. In addition, the Final Rule contains policy changes including the
adoption of new labor market area definitions which are based on the new Core
Based Statistical Areas announced by the Office of Management and Budget, or
OMB, late in 2000.

In addition to the legislation and regulations discussed above, on January
12, 2005, the Medicare Payment Advisory Committee, or MedPAC, made extensive
recommendations to Congress and the Secretary of HHS including proposing
revisions to DRG payments to more fully capture differences in severity of
illnesses in an attempt to more equally pay for care provided at general acute
care hospitals as compared to specialty hospitals. Furthermore, MedPAC made
significant recommendations regarding paying healthcare providers relative to
their performance and to the outcomes of the care they provided. MedPAC
recommendations have historically provided strong indications regarding future
directions of both the regulatory and legislative process.

INSURANCE

EMPLOYEES

We employ 17 full-time employees and one part-time employee as of the date
of this prospectus. We anticipate hiring approximately five to 10 additional
full-time employees during the next 12 months, commensurate with our growth. We
believe that our relations with our employees are good. None of our employees is
a member of any union.

LEGAL PROCEEDINGS

We are not involved in any material litigation nor, to our knowledge, is
any material litigation pending or threatened against us.

OUR PORTFOLIO

OUR CURRENT PORTFOLIO

Our current portfolio of facilities consists of 13 healthcare facilities,
nine of which are in operation and four of which are under development. The
Vibra Facilities consist of four rehabilitation hospitals and two long-term
acute care hospitals. The Desert Valley Facility is a community hospital with an
integrated medical office building. The Covington Facility is a long-term acute
care hospital facility. The Redding Facility is a rehabilitation hospital. All
of the leases for the hospitals currently in operation have initial terms of 15
years. Two of the facilities under development are the West Houston Hospital and
the adjacent West Houston MOB that is master-leased by the tenant of the
hospital. The initial lease term for the West Houston Hospital began when
construction commenced in July 2004 and will end 15 years after completion of
construction. The initial lease term for the West Houston MOB began when
construction commenced in July 2004 and will end 10 years after completion of
construction. Construction of the West Houston MOB is projected to be completed
in August 2005 and construction of the West Houston Hospital is projected to be
completed in October 2005. Our third facility under development is the Bucks
County Facility. The initial lease term for the Bucks County Facility will begin
when construction commences and will end 15 years after completion of
construction. We target completion of construction for the Bucks County Facility
for August 2006. With respect to the fourth facility under development, we have
entered into a ground sublease with, and an agreement to provide a construction
loan to, North Cypress for the development of a community hospital. The facility
will be developed on property in which we currently have a ground lease
interest. We expect to acquire the land we are ground leasing after the hospital
has been partially completed. Upon completion of construction, subject to
certain limited conditions, we will purchase the facility for an amount equal to
the cost of construction and lease the facility to the operator for a 15 year
lease term. In the event we do not purchase the facility, the ground sublease
will continue and the construction loan will become due. In that event, we
expect to seek to convert the construction loan to a 15 year term loan secured
by the facility. We anticipate the North Cypress Facility will be completed in
December 2006. The leases for all of the facilities in our current portfolio
provide for contractual base rent and an annual rent escalator. The leases for
the Vibra Facilities and the Bucks County Facility also provide for percentage
rent based on an agreed percentage of the tenants' gross revenue. The following
tables set forth information, as of June 30, 2005, regarding our current
portfolio of facilities:

Bowling Green,
Kentucky............... Rehabilitation Vibra
hospital Healthcare,
LLC(4) 60 $ 3,916,695 $ 4,294,990 $ 4,790,118
Marlton, New
Jersey(5).............. Rehabilitation(6) Vibra
hospital Healthcare,
LLC(4) 76 3,401,791 3,730,354 4,160,390
Victorville,
California(7).......... Community Desert Valley
hospital/medical Hospital, Inc. 83 -- 2,341,004 2,856,000
office building
New Bedford,
Massachusetts.......... Long-term Vibra
acute care Healthcare,
hospital LLC(4) 90 2,262,979 2,426,320 2,767,624
Redding,
California(8).......... Rehabilitation Vibra
hospital Healthcare,
LLC(4) 88 -- 950,250(9) 1,913,949(9)

Operating Facilities
GROSS
PURCHASE LEASE
LOCATION PRICE(3) EXPIRATION
- -------- ------------ ---------------

Bowling Green,
Kentucky...............

$ 38,211,658 July 2019
Marlton, New
Jersey(5)..............

32,267,622 July 2019
Victorville,
California(7)..........
28,000,000 February 2020

New Bedford,
Massachusetts..........

22,077,847 August 2019
Redding,
California(8)..........

20,750,000 June 2020

Operating Facilities
GROSS
PURCHASE LEASE
LOCATION PRICE(3) EXPIRATION
- -------- ------------ ---------------

Fresno, California......
18,681,255 July 2019
Covington, Louisiana....
11,500,000 June 2020
Thornton, Colorado......
8,491,481 August 2019
Kentfield, California...
7,642,332 July 2019
------------
TOTAL................... $187,622,195 --
============

- ---------------

(1) Based on the number of licensed beds.

(2) Based on leases in place as of the date of this prospectus.

(3) Includes acquisition costs.

(4) The tenant in each case is a separate, wholly-owned subsidiary of Vibra
Healthcare, LLC.

(6) Thirty of the 76 beds are pediatric rehabilitation beds operated by HBA
Management, Inc.

Facilities Under Development
2004 2005 2006 PROJECTED
NUMBER OF ANNUALIZED CONTRACTUAL CONTRACTUAL DEVELOPMENT
LOCATION TYPE TENANT BEDS(1) BASE RENT BASE RENT BASE RENT COST(2)
- -------- ----------------- -------------- --------- ----------- -------------- --------------- ------------

Houston, Texas....... Community North Cypress
hospital Medical Center
Operating
Company, Ltd. 64 $ -- $ --(3) $ --(3) $ 64,028,000
Houston, Texas....... Community
hospital(5) Stealth, L.P. 105(6) -- 772,196(7) 4,749,005(7) 43,099,310
Bensalem, Women's Bucks County
Pennsylvania hospital/medical Oncoplastic
office Institute, LLC 30 -- --(10) 1,627,820(10) 38,000,000
building(9)
Houston, Texas....... Medical office
building(12) Stealth, L.P. n/a -- 503,130(7) 2,049,415(7) 20,855,119
--- ----------- ----------- ----------- ------------
TOTAL................ -- -- 199 $ -- $ 1,275,326 $ 8,426,240 $165,982,429
=== =========== =========== =========== ============

Facilities Under Deve

LEASE
LOCATION EXPIRATION
- -------- -----------------

Houston, Texas.......
(4)
Houston, Texas.......
October 2020(8)
Bensalem,
Pennsylvania
August 2021(11)
Houston, Texas.......
October 2015(13)
TOTAL................ --

- ---------------

(1) Based on the number of proposed beds.

(2) Includes acquisition costs.

(4) Expected to be completed in December 2006. If we purchase this facility
upon completion of construction, we will lease it back to North Cypress for
an initial term of 15 years.

(5) Expected to be completed in October 2005.

(6) Seventy-one of the 105 beds will be acute care beds operated by Stealth,
L.P. and the remaining 34 beds will be long-term acute care beds operated
by Triumph Southwest, L.P.

MOB. Does not include rents that accrue during the construction period and
are payable over the remaining lease term following the completion of
construction.

(9) Expected to be completed in August 2006.

(10) Based on the lease in place as of the date of this prospectus, estimated
total development costs and estimated date of completion. Assumes
completion of construction in August 2006.

(11) Following completion, the lease term will extend for a period of 15 years.

(12) Expected to be completed in October 2005.

VIBRA FACILITIES AND LOANS

General. We own or ground lease the six Vibra Facilities located in
Bowling Green, Kentucky; Marlton, New Jersey; Fresno, California; Kentfield,
California; Thornton, Colorado; and New Bedford, Massachusetts. We acquired
these facilities from Care Ventures, Inc., an unaffiliated third party, in July
and August 2004 for an aggregate purchase price of approximately $127.4 million,
including acquisition costs. The purchase price was arrived at through
arms-length negotiations with Care Ventures, Inc., based upon our analysis of
various factors. These factors included the demographics of the area in which
the facility is located, the capabilities of the tenant to operate the facility,
healthcare spending trends in the geographic area, the structural integrity of
the facility, governmental regulatory trends which may impact the services
provided by the tenant, and the financial and economic returns which we require
for making an investment. The Vibra Facilities are leased to subsidiaries of
Vibra. Our leases of the Vibra Facilities require the tenant to carry customary
insurance which is adequate to satisfy our underwriting standards.

Vibra is an affiliate of The Hollinger Group. Vibra has been recently
formed and had engaged in no meaningful operations prior to entering into the
leases for the Vibra Facilities in July and August 2004. The principals of The
Hollinger Group have extensive experience in developing, acquiring, managing and
operating specialty healthcare facilities and senior care facilities. Mr.
Hollinger, the principal owner of Vibra and the founder and chief executive
officer of The Hollinger Group, has 18 years experience in all phases of senior
care and healthcare activities. For financial information respecting Vibra and
its subsidiaries, see the audited financial statements included elsewhere in
this prospectus.

Vibra Loans and Fees Receivable. At the time we acquired the Vibra
Facilities, MPT Development Services, Inc., our taxable REIT subsidiary, made a
loan of approximately $41.4 million to Vibra to acquire the operations at these
locations. We refer to this loan as the acquisition loan. The acquisition loan
accrues interest at the rate of 10.25% per year and is to be repaid over 15
years with interest only for the first three years and the principal balance
amortizing over the remaining 12 year period. The acquisition loan may be
prepaid at any time without penalty. In connection with the Vibra transactions,
Vibra agreed to pay us commitment fees of approximately $1.5 million. MPT
Development Services, Inc. also made secured loans totaling approximately $6.2
million to Vibra and its subsidiaries for working capital purposes. The
commitment fees were paid, and the working capital loans were repaid, on
February 9, 2005.

As security for the acquisition loan, Vibra has pledged to us all of its
interests in each of the tenants of the Vibra Facilities, and Mr. Hollinger has
pledged to us his entire interest in Vibra. In addition, Mr. Hollinger, The
Hollinger Group and Vibra Management, LLC, another affiliate of Mr. Hollinger,
have guaranteed the repayment of the acquisition loan; however, The Hollinger
Group and Vibra Management, LLC do not have substantial assets and the liability
of Mr. Hollinger under his guaranty is limited to $5.0 million. See "-- Lease
Guaranties and Security."

Vibra has entered into a $17.0 million credit facility with Merrill Lynch,
and that loan is secured by an interest in Vibra's receivables related to the
Vibra Facilities. There was approximately $10.7 million outstanding under the
facility on June 30, 2005. Our loan to Vibra is subordinate to Merrill Lynch
with respect to Vibra's receivables. At March 31, 2005, Vibra was not in
compliance with a facility rent

coverage covenant under its Merrill Lynch credit facility. The Merrill Lynch
credit facility documents were subsequently amended to retroactively change the
rent coverage covenant from a by facility rent coverage to a consolidated rent
coverage calculation, such that Vibra was in compliance with the amended
covenant at March 31, 2005.

Leases. Each lease for the Vibra Facilities provides that, so long as the
acquisition loan is outstanding, after January 1, 2005, and beginning with the
calendar month after the month in which aggregate gross revenues for the Vibra
Facilities exceed a revenue threshold, the tenant will pay, in addition to base
rent, percentage rent in an amount equal to 2% of revenues for the preceding
month. Each calendar month thereafter during the term of each lease, the
percentage rent will be decreased pro rata based on the amount of the principal
reduction of the acquisition loan during the previous calendar month; however,
the percentage rent will not be decreased below 1% of revenues.

On March 31, 2005, the leases for the Vibra Facilities were amended to
provide (i) that the testing of certain financial covenants will be deferred
until the quarter beginning July 1, 2006 and ending September 30, 2006, (ii)
that these same financial covenants will be tested on a consolidated basis for
all of the Vibra Facilities, (iii) that the reduction in the rate of percentage
rent will be made on a monthly rather than annual basis and (iv) that Vibra will
escrow insurance premiums and taxes related to the Vibra Facilities at our
request. Prior to execution of this amendment, Vibra did not meet the fixed
charge coverage ratios required by the lease agreements for the Vibra
Facilities. One covenant required that each Vibra Facility maintain a ratio of
earnings before interest expense, income tax expense, depreciation expense,
amortization expense and base rent (EBITDAR) to total debt payments plus base
rent, measured at the end of each quarter, in excess of 125%. The second
covenant required that each Vibra Facility maintain a ratio of EBITDAR to base
rent, measured at the end of each quarter, in excess of 150%. In the event that
either ratio for any Vibra Facility was below the required level for two
consecutive fiscal quarters, an event of default would have occurred.

Capital Improvements. The tenant under each lease for the Vibra Facilities
is responsible for all capital expenditures required to keep the facility in
compliance with applicable laws and regulations. Beginning on July 1, 2005, each
tenant was required to begin making quarterly deposits into a capital
improvement reserve account for the particular facility in the amount of $1,500
per bed per year, except that the first deposit will be pro-rated based on
one-half of a year. On each January 1 thereafter, the payment of $1,500 per bed
per year into the capital improvement reserve will be increased by 2.5%. All
capital expenditures made in each year during the term of the lease will be
funded first from the capital improvement reserve, and the tenant is required to
pay into its respective capital improvement reserve such funds as necessary for
all replacements and repairs.

Lease and Loan Guaranties and Security. We have obtained guaranty
agreements from Mr. Hollinger, Vibra, Vibra Management, LLC and The Hollinger
Group that obligate them to make loan and lease payments in the event that Vibra
or the tenants for the Vibra Facilities fail to do so. We believe that these
agreements are important elements of our underwriting of newly-formed healthcare
operating companies because they create incentives for their owners and
managements to successfully operate our tenants. However, we do not believe that
these parties have sufficient financial resources to satisfy a material portion
of the total lease or loan obligations. Mr. Hollinger's guaranty is limited to
$5.0 million, Vibra Management, LLC and The Hollinger Group do not have
substantial assets and Vibra's assets are substantially comprised of operations
at the Vibra Facilities. The guaranties of Vibra, Vibra Management and The
Hollinger Group relating to the leases for the Vibra Facilities and the Vibra
loan are of equal priority with the guaranties relating to the lease for the
Redding Facility.

Each lease for the Vibra Facilities is cross-defaulted with all other
leases and other agreements between us, or our affiliates, on the one hand, and
the tenant and Mr. Hollinger, or their affiliates, on the other hand, including
the lease for the Redding Facility and the Vibra loan. In addition, Vibra has
pledged to us all of its interests in each of the tenants, and Mr. Hollinger has
pledged to us his interest in Vibra. As security for the leases for the Vibra
Facilities, each of the tenants for the Vibra Facilities has granted us a
security interest in all personal property, other than receivables, located at
the Vibra Facilities. The

management fees that the tenants for the Vibra Facilities pay to Vibra
Management, LLC are subordinated to the rents payable to us under the leases for
the Vibra Facilities.

We have included the audited and unaudited consolidated financial
statements for Vibra Healthcare, LLC as of and for the year ended December 31,
2004 and as of and for the six months ended June 30, 2005. We believe that the
financial statements of Vibra Healthcare, LLC are the most meaningful financial
information respecting the ability of Vibra to make the lease and loan payments
which it is obligated to make to us. We do not believe that historical financial
information on the Vibra Facilities prior to our acquisition of those facilities
would be meaningful because the facilities had three different owners in the
year prior to our acquisition. Also during that time, the owners did not lease
those facilities to lessees but operated the facilities themselves, and the
facilities were not operated in the same manner as they are currently being
operated. We also believe that the financial statements of the guarantors
provide limited financial information due to the limited resources which those
guarantors possess. We do not believe the financial statements of the Vibra
guarantors other than Vibra would be helpful to prospective investors.
Therefore, we have provided the financial statements of Vibra Healthcare, LLC,
which includes consolidated financial information on the actual lessees of the
Vibra Facilities and the parent entity, which is one of the guarantors of the
leases and the borrower under the Vibra loan.

Purchase Option. At the expiration of each lease for the Vibra Facilities,
each tenant will have the option to purchase the facility at a purchase price
equal to the greater of (i) the appraised value of the facility, determined
assuming the lease is still in place, or (ii) the purchase price we paid for the
facility, including acquisition costs, increased by 2.5% per annum from the date
of purchase.

Depreciation and Real Estate Taxes. The following table sets forth
information, as of December 31, 2004, regarding the depreciation and real estate
taxes for the Vibra Facilities:

DEPRECIATION
FEDERAL TAX BASIS -------------------------------------- 2004 REAL ESTATE
------------------------ ANNUAL -----------------
LAND BUILDINGS RATE METHOD LIFE IN YEARS TAXES RATE
---------- ----------- ------ ------------- ------------- --------- -----

Bowling Green, KY...... $3,070,000 $35,141,658 2.5% Straight-line 40 $ 24,750 0.07%
Thornton, CO........... 2,130,000 6,361,481 2.5% Straight-line 40 186,188 2.18%
Fresno, CA............. 1,550,000 17,131,255 2.5% Straight-line 40 102,359 0.61%
Kentfield, CA.......... 2,520,000 5,122,332 2.5% Straight-line 40 91,201 1.28%
Marlton, NJ............ -- 32,267,622 2.5% Straight-line 40 321,903 1.00%
New Bedford, NJ........ 1,400,000 20,677,847 2.5% Straight-line 40 251,476 1.14%

BOWLING GREEN, KENTUCKY

General. This facility, licensed for 60 beds, is an approximately 62,500
gross square foot rehabilitation hospital located in Bowling Green, Kentucky,
which is approximately 60 miles from Nashville, Tennessee. Construction of the
facility was completed in 1992. We acquired a fee simple interest in this
facility on July 1, 2004 for a purchase price of approximately $38.2 million
including acquisition costs.

Lease. This facility is 100% leased to 1300 Campbell Lane Operating
Company, LLC, a wholly-owned subsidiary of Vibra, pursuant to a 15-year
net-lease with the tenant responsible for all costs of the facility, including,
but not limited to, taxes, utilities, insurance and maintenance. The tenant has
three options to renew for five years each. Beginning on July 1, 2005, the per
annum base rent is equal to 12.23% of the purchase price, including acquisition
costs. On January 1, 2006 and on each January 1 thereafter, the base rent will
be increased by 2.5%.

MARLTON, NEW JERSEY

General. This facility, licensed for 76 beds, is an approximately 89,139
gross square foot rehabilitation hospital located in Marlton, New Jersey, which
is approximately 15 miles from Philadelphia, Pennsylvania. Construction of the
facility was completed in 1994. We acquired a ground lease interest in

this facility on July 1, 2004 for a purchase price of approximately $32.3
million including acquisition costs. We ground lease the property on which the
facility is located from Virtua West Jersey Health System, a New Jersey
non-profit corporation, pursuant to a ground lease dated July 15, 1993. The
initial term of the ground lease expires in 2030. We have the right to renew the
ground lease for an additional term of 35 years upon the satisfaction of certain
conditions as set forth in the ground lease.

Lease. This facility is 100% leased to 92 Brick Road Operating Company,
LLC, a wholly-owned subsidiary of Vibra, pursuant to a 15 year net-lease with
the tenant responsible for all costs of the facility, including, but not limited
to, taxes, utilities, insurance and maintenance. The tenant has three options to
renew for five years each. Beginning on July 1, 2005, the per annum base rent is
equal to 12.23% of the purchase price, including acquisition costs. On January
1, 2006 and on each January 1 thereafter, the base rent will be increased by
2.5%.

HBA Management, Inc., or HBA, has subleased the entire third floor of the
hospital facility, approximately 26,896 square feet, for the operation of a
30-bed pediatric comprehensive rehabilitation unit and related office use,
together with certain fixtures, furnishings and equipment located in the
subleased premises. The current term of the sublease expires on August 31, 2013.
HBA has the option to extend the sublease term for two additional terms of five
years each. Base annual rent due under the sublease through September 30, 2005
is approximately $1,112,980 per annum, with adjustments annually thereafter. In
addition to base annual rent, HBA is required to pay its proportionate share of
all reimbursable expenses.

FRESNO, CALIFORNIA

General. This facility, licensed for 62 beds, is an approximately 78,258
gross square foot rehabilitation hospital located in Fresno, California.
Construction of the facility was completed in 1990. We acquired a fee simple
interest in this facility on July 1, 2004 for approximately $18.7 million
including acquisition costs.

Lease. This facility is 100% leased to 7173 North Sharon Avenue Operating
Company, LLC, a wholly-owned subsidiary of Vibra, pursuant to a 15 year
net-lease with the tenant responsible for all costs of the facility, including,
but not limited to, taxes, utilities, insurance and maintenance. The tenant has
three options to renew for five years each. Beginning on July 1, 2005, the per
annum base rent is equal to 12.23% of the purchase price, including acquisition
costs. On January 1, 2006 and on each January 1 thereafter, the base rent will
be increased by 2.5%.

THORNTON, COLORADO

General. This facility is an approximately 141,388 gross square foot
rehabilitation hospital located in Thornton, Colorado, which is approximately 10
miles from Denver, Colorado. The facility is licensed for 70 rehabilitation
beds, 24 long-term care beds and 23 psychiatric beds. Construction of the
original facility was completed in 1962 with additions completed as recently as
1975. We acquired a fee simple interest in this facility on August 17, 2004 for
a purchase price of approximately $8.5 million including acquisition costs.

Lease. This facility is 100% leased to 8451 Pearl Street Operating
Company, LLC, a wholly-owned subsidiary of Vibra, pursuant to a 15 year
net-lease with the tenant responsible for all costs of the facility, including,
but not limited to, taxes, utilities, insurance and maintenance. The tenant has
three options to renew for five years each. Beginning on August 17, 2005, the
per annum base rent is equal to 12.23% of the purchase price, including
acquisition costs. On January 1, 2006 and on each January 1 thereafter, the base
rent will be increased by 2.5%.

NEW BEDFORD, MASSACHUSETTS

General. This facility, licensed for 90 beds, is an approximately 70,657
gross square foot long-term acute care hospital located in New Bedford,
Massachusetts, which is approximately 45 miles from Boston, Massachusetts.
Construction of the original facility was completed in 1942 with additions
completed as

recently as 1995. We acquired a fee simple interest in this facility on August
17, 2004 for a purchase price of approximately $22.0 million including
acquisition costs.

Lease. This facility is 100% leased to 4499 Acushnet Avenue Operating
Company, LLC, a wholly-owned subsidiary of Vibra, pursuant to a 15 year
net-lease with the tenant responsible for all costs of the facility, including,
but not limited to, taxes, utilities, insurance and maintenance. The tenant has
three options to renew for five years each. Beginning on August 17, 2005, the
per annum base rent is equal to 12.23% of the purchase price, including
acquisition costs. On January 1, 2006 and on each January 1 thereafter, the base
rent will be increased by 2.5%.

KENTFIELD, CALIFORNIA

General. This facility, licensed for 60 beds, is an approximately 43,500
gross square foot long-term acute care hospital located in Kentfield,
California, which is approximately 15 miles from San Francisco, California.
Construction of the facility was completed in 1963 with the last renovations in
1988. We acquired a fee simple interest in this facility on July 1, 2004 for a
purchase price of approximately $7.6 million including acquisition costs.

Lease. This facility is 100% leased to 1125 Sir Francis Drake Boulevard
Operating Company, LLC, a wholly-owned subsidiary of Vibra, pursuant to a 15
year net-lease with the tenant responsible for all costs of the facility,
including, but not limited to, taxes, utilities, insurance and maintenance. The
tenant has three options to renew for five years each. Beginning on July 1,
2005, the per annum base rent is equal to 12.23% of the purchase price,
including acquisition costs. On January 1, 2006 and on each January 1
thereafter, the base rent will be increased by 2.5%.

REDDING FACILITY

General. On June 30, 2005, Ocadian Care Centers, LLC, or Ocadian, assigned
a long-term ground lease for land located in Redding, California to Northern
California Rehabilitation Hospital, LLC, a subsidiary of Vibra. On the same
date, Ocadian sold the facility located on the land, which we refer to in this
prospectus as the Redding Facility, to the Vibra subsidiary, subject to the
ground lease. Also on June 30, 2005, the Vibra subsidiary assigned this ground
lease interest to us and we purchased the Redding Facility. On the same date, we
subleased the land and leased the Redding Facility back to the Vibra subsidiary.
The term of the ground lease expires on November 16, 2075. See "Lease" below for
more detail. The Vibra subsidiary has subleased the operations and the right to
occupy the Redding Facility back to Ocadian during a transition term until the
Vibra subsidiary obtains certain healthcare licenses necessary to operate the
Redding Facility. The Vibra subsidiary will manage the facility on behalf of
Ocadian during this transition term. Upon receipt of the healthcare licenses,
the sublease and management agreement between the Vibra subsidiary and Ocadian
will terminate. The Vibra subsidiary expects this sublease and management
arrangement to continue for about 30 to 60 days from the date of this
prospectus.

The Redding Facility contains approximately 70,000 square feet of space and
is currently licensed for a total of 88 beds including 14 acute care beds, 24
rehabilitation beds and 50 skilled nursing beds. The Vibra subsidiary intends to
convert a portion of the Redding Facility's licensed skilled nursing, general
acute care and rehabilitation beds to long-term acute care beds.

Our purchase price for assignment of the ground lease interest and for the
Redding Facility was $20,750,000 million; however, payment of $2.0 million of
the purchase price is being deferred pending completion, to our satisfaction, of
the conversion of certain beds to long-term acute care beds, and an additional
$750,000 of the purchase price is being deferred and will be paid out of a
special reserve account to pay for renovations. The Vibra subsidiary used and
will use the proceeds from the concurrent sale and assignment to us to acquire
the Redding Facility and the operations at the facility, upgrade equipment, make
certain renovations, convert certain beds to long-term acute care beds and for
working capital. The purchase price for the Redding Facility was arrived at
through arms-length negotiations based upon our analysis of various factors,
including the demographics of the area in which the facility is located,

the capability of the tenant to operate the facility, healthcare spending trends
in the geographic area, the structural integrity of the facility, governmental
regulatory trends which may impact the services provided by the tenant, and the
financial and economic returns which we require for making an investment.

The Redding Facility is owned by MPT of Redding, LLC. Currently, our
operating partnership owns all of the membership interests in this limited
liability company; however, we have agreed, subject to applicable healthcare
regulations, to offer up to 20% of the interests in the limited liability
company to local physicians and other persons.

Lease. The Redding Facility is 100% leased to Northern California
Rehabilitation Hospital, LLC, a Vibra subsidiary, for a 15-year term, with three
options to renew for five years each. The lease is a net-lease with the tenant
responsible for all costs of the facility, including, but not limited to, taxes,
utilities, insurance and maintenance. Currently, the annual base rent is equal
to 10.5% per year of the purchase price actually paid. On each January 1,
beginning on January 1, 2006, the base rent will be increased by an amount equal
to the greater of (A) 2.5% per year of the prior year's base rent, or (B) the
percentage by which the CPI on January 1 shall have increased over the CPI in
effect on the then just previous January 1. The lease requires the tenant to pay
an annual inspection fee of $5,000. The annual inspection fee will increase by
2.5% each January 1 during the lease term. The lease also requires the tenant to
carry customary insurance which is adequate to satisfy our underwriting
standards.

Reserve for Extraordinary Repairs. Beginning on January 1, 2006, the
tenant will be required to make deposits into a reserve account equal to $1,500
per bed, increasing on each subsequent January 1 by the greater of 2.5% or the
increase in CPI for the previous year. Any amounts drawn from the reserve would
be replenished 1/12th of the amount drawn per month, until completely
replenished.

Lease Guaranty and Security. The lease is guaranteed by Vibra, Vibra
Management, LLC and The Hollinger Group, and is cross-defaulted with all other
leases and other agreements between us, or our affiliates, on the one hand, and
the tenant and Mr. Hollinger, or their affiliates, on the other hand, including
the leases for the Vibra Facilities and the Vibra loan. The guaranties of Vibra,
Vibra Management and The Hollinger Group of the lease for the Redding Facility
are of equal priority with the guaranties relating to the leases for the Vibra
Facilities and the Vibra loan. We believe that these agreements are important
elements of our underwriting of newly-formed healthcare operating companies
because they create incentives for their owners and managements to successfully
operate our tenants. However, we do not believe that these parties have
sufficient financial resources to satisfy a material portion of the total lease
obligations. We have included the audited and unaudited consolidated financial
statements for Vibra Healthcare, LLC as of and for the year ended December 31,
2004 and as of and for the six months ended June 30, 2005, respectively.

In addition, as security for the lease, the tenant has granted us a
security interest in all personal property other than receivables, and subject
to the prior lien of any purchase money lender, with respect to tangible
personal property, located at and to be located at the facility, and an
assignment of rents and leases. The tenant has also made a cash deposit with us
in an amount equal to three months' base rent under the lease.

Commitment Fee. We received a commitment fee equal to 0.5% of the purchase
price.

Depreciation and Real Estate Taxes. The following table sets forth
information, as of June 30, 2005, regarding the depreciation and real estate
taxes for the Redding Facility:

FEDERAL TAX BASIS DEPRECIATION 2004 REAL ESTATE
------------------- --------------------------- LIFE ----------------
LAND BUILDINGS ANNUAL RATE METHOD IN YEARS TAXES RATE
----- ----------- ----------- ------------- -------- -------- -----

Redding, California........... $ -- $20,750,000 2.5% Straight-line 40 $49,681 1.1%

DESERT VALLEY FACILITY

General. On February 28, 2005, we acquired a fee simple interest in the
Desert Valley Facility located in Victorville, California, which is
approximately 75 miles from Los Angeles, California. The

approximately 122,140 square foot community hospital facility, built in 1994, is
licensed for 83 beds and has an integrated medical office building comprising
approximately 50,000 square feet. We acquired the facility from Prime A
Investments, LLC, an unaffiliated third party, for a purchase price of
approximately $28.0 million. The purchase price was determined through
arms-length negotiations with Prime A Investments, LLC based upon our analysis
of various factors. These factors included the demographics of the area in which
the facility is located, the capability of the tenant to operate the facility,
healthcare spending trends in the geographic area, the structural integrity of
the facility, governmental regulatory trends which may impact the services
provided by the tenant, and the financial and economic returns which we require
for making an investment.

Lease. This facility is 100% leased to DVH, an affiliate of Prime A
Investments, LLC. The principals of DVH have experience in developing,
acquiring, managing and operating acute care hospital facilities. The lease is a
15 year net-lease with the tenant responsible for all costs of the facility,
including, but not limited to, taxes, utilities, insurance and maintenance. DVH
has three options to renew for five years each. Currently, the annual base rent
is equal to 10% of the purchase price, or the annual rate of $2.8 million. On
January 1, 2006, and on each January 1 thereafter, the base rent will be
increased by an amount equal to the greater of (i) 2% per year of the prior
year's base rent or (ii) the percentage by which the CPI as published by the
United States Department of Labor, Bureau of Labor Statistics on January 1 shall
have increased over the CPI figure in effect on the immediately preceding
January 1, annualized based on the highest annual rate effective during the
preceding year if the previous year's base rent is for a partial year. The lease
requires DVH to carry customary insurance which is adequate to satisfy our
underwriting standards.

DVH has subleased approximately 40,110 square feet of space in the medical
office portion of the facility to its affiliate, Desert Valley Medical Group,
Inc., or DVMG, for office use. The DVMG lease requires DVMG to pay rent of
$50,138 per month, to be adjusted commencing on January 1, 2006 by changes in
the CPI. The DVMG sublease expires on December 31, 2011. DVH has also subleased
approximately 500 square feet of space in the facility to Network
Pharmaceuticals, Inc. for the operation of a pharmacy. The pharmacy sublease
requires the tenant to pay rent of $2,000 per month. The pharmacy sublease
currently expires on May 15, 2007, subject to the pharmacy's option to renew for
a term of 10 years.

Lease Guaranties and Security. The Desert Valley lease is guaranteed by
Prime A Investments, L.L.C., Desert Valley Health System, Inc. and Desert Valley
Medical Group, Inc. The guaranty is an absolute and irrevocable guaranty. The
lease is cross-defaulted with any other leases between us or any of our
affiliates and DVH, any guarantor and any of their affiliates. In addition, as
security for the lease, DVH has granted us a security interest in all personal
property, other than receivables, located at the Desert Valley Facility, subject
to purchase money liens on equipment. Desert Valley Hospital, Inc. has provided
to us unaudited financial statements reflecting that, as of March 31, 2005, it
had tangible assets of approximately $21.6 million, liabilities of approximately
$17.6 million and stockholders' equity of approximately $4.0 million, and for
the three months ended March 31, 2005, had net income of approximately $4.0
million.

Desert Valley Health System, Inc., the parent of DVH and a guarantor of the
lease, has provided to us audited financial statements showing that, as of
December 31, 2004, it had consolidated tangible assets of approximately $40.5
million, consolidated liabilities of approximately $31.4 million, and
consolidated tangible net worth of approximately $9.1 million and for the year
ended December 31, 2004, had consolidated net income of approximately $3.9
million.

Reserve for Extraordinary Repairs. DVH is responsible for all maintenance
and repairs and all extraordinary repairs required to keep the facility in
compliance with all applicable laws and regulations and as required under the
lease. DVH is required to make quarterly deposits into a reserve account in the
amount of $2,500 per bed per year. Beginning on January 1, 2006 and on each
January 1 thereafter, the payment of $2,500 per bed per year into the
improvement reserve will be increased by 2%. All

extraordinary repair expenditures made in each year during the term of the lease
are to be funded first from the reserve, and DVH is to pay into the reserve such
funds as necessary for all extraordinary repairs.

Purchase Options. At any time after February 28, 2007, so long as DVH and
its affiliates are not in default under any lease with us or any of the leases
with its subtenants, DVH will have the option, upon 90 days' prior written
notice, to purchase the facility at a purchase price equal to the sum of (i) the
purchase price of the facility, and (ii) that amount determined under a formula
that would provide us an internal rate of return of 10% per year, increased by
2% of such percentage each year, taking into account all payments of base rent
received by us. These same purchase rights also apply if we provide DVH with
notice of the exercise of our right to change management as a result of a
default, provided DVH gives us notice within five days following receipt of such
notice. If during the term of the lease we receive from the previous owner or
any of its affiliates a written offer to purchase the Desert Valley Facility and
we are willing to accept the offer, so long as DVH and its affiliates are not in
default under any lease with us or any of the subleases with its subtenants, we
must first present the offer to DVH and allow DVH the right to purchase the
facility upon the same price, terms and conditions as set forth in the offer;
however, if the offer is made after February 28, 2007, in lieu of exercising its
right of first refusal, DVH may exercise its option to purchase as provided
above.

Depreciation and Real Estate Taxes. The following table sets forth
information, as of December 31, 2004, regarding the depreciation and real estate
taxes for the Desert Valley Facility:

FEDERAL TAX BASIS DEPRECIATION 2004 REAL ESTATE
------------------------ --------------------------- LIFE -----------------
LAND BUILDINGS ANNUAL RATE METHOD IN YEARS TAXES RATE
---------- ----------- ----------- ------------- -------- --------- -----

Victorville,
California........... $2,000,000 $26,000,000 2.5% Straight-line 40 $289,905 1.07%

Facility Expansion. We have also entered into a letter agreement with DVH
pursuant to which, subject to certain conditions, we have agreed to fund up to
$20.0 million for the purpose of expanding our Desert Valley Facility. Subject
to DVH providing us a development agreement, which it is not obligated to do, we
have agreed to begin funding and DVH has agreed to begin drawing funds before
February 28, 2006, in accordance with a disbursement schedule to be provided in
the development agreement at the time of the first draw. Upon receipt and
approval of the development agreement, DVH is obligated to pay us a fee in cash
equal to 0.5% of the maximum amount that can be funded. This fee will be
adjusted following the full and final funding of the expansion to a sum equal to
0.5% of the actual amount funded. Except for any adjustments to the fee that may
result from funding less than the maximum amount, the fee is non-refundable. If
DVH fails to provide a development agreement to us by February 28, 2006, we will
have no further liability or obligation to provide the funding. The $20.0
million expansion amount will be treated as a capital addition under the lease
and, accordingly, as such expansion costs are funded, the annual rent payable
under the lease will increase by an amount equal to the then-current lease rate
multiplied by the amount of expansion cost incurred. Such additional rent will
continue to be payable for the remaining term of the lease. For purposes of the
repurchase options contained in the lease, the purchase price will be increased
by the total cost of the addition. DVH is not obligated to present us with a
development agreement, and, if it does not, we have no obligation to provide
funding to DVH for the expansion. We will not generate any revenues from this
transaction unless and until we and DVH execute a definitive development
agreement and DVH begins drawing the committed funds.

COVINGTON, LOUISIANA

General. On June 9, 2005, we acquired a fee simple interest in a long-term
acute care facility located in Covington, Louisiana, which is approximately 35
miles from New Orleans, Louisiana. The purchase agreement also provided for us
to make a $6.0 million loan to Denham Springs Healthcare Properties, L.L.C., as
well as our prospective purchase of a long-term acute facility in Denham
Springs, Louisiana. We acquired the facility in Covington, Louisiana, which we
refer to as the Covington Facility, from Covington Healthcare Properties,
L.L.C., an unaffiliated third party. The Covington Facility contains
approximately 43,250 square feet of space and is licensed for 58 beds.

The purchase price for the Covington Facility was $11.5 million. This
purchase price was arrived at through arms-length negotiations based upon our
analysis of various factors. These factors included the demographics of the area
in which the facility is located, the capability of the tenant to operate the
facility, healthcare spending trends in the geographic area, the structural
integrity of the facility, governmental regulatory trends which may impact the
services provided by the tenant, and the financial and economic returns which we
require for making an investment.

The Covington Facility is owned by MPT of Covington, L.L.C. Currently, our
operating partnership owns all of the membership interests in this limited
liability company; however, we have agreed that, subject to applicable
healthcare regulations, we will offer up to 30% of the equity interests in this
limited liability company to local physicians.

Lease. The Covington Facility is 100% leased to Gulf States Long Term
Acute Care of Covington, L.L.C. for a 15-year term, with three options to renew
for five years each. The lease is a net-lease with the tenant responsible for
all costs of the facility, including, but not limited to, taxes, utilities,
insurance, maintenance and capital improvements. Currently, the annual base rent
is equal to 10.5% of the purchase price plus any costs and charges that may be
capitalized. On each January 1, the base rent will increase by an amount equal
to the greater of (A) 2.5% per year of the prior year's base rent, or (B) the
percentage by which the CPI for November shall have increased over the CPI in
effect for the then just previous November; provided, however, on January 1,
2006, the adjustment shall be prorated. The lease requires the tenant to carry
customary insurance which is adequate to satisfy our underwriting standards.

Lease Guaranty and Security. The lease is guaranteed by Gulf States and
Team Rehab. The lease is cross-defaulted with our loan agreement with Denham
Springs Healthcare Properties, L.L.C. and will be cross-defaulted with our lease
of the Denham Springs Facility if we purchase that facility. In addition, as
security for the lease, the tenant has granted us a security interest in all
personal property, other than receivables and operating licenses, located and to
be located at the facility. Pursuant to the lease, the tenant has obtained and
delivered to us an unconditional and irrevocable letter of credit, naming us
beneficiary, in an amount equal to $598,500. At such time as the operations in
the facility have generated EBITDAR coverage of at least two times the base rent
for eight consecutive fiscal quarters, the letter of credit may be reduced to an
amount equal to three months of the base rent then in effect. If, however, after
satisfying the conditions necessary to reduce the letter of credit to three
months' base rent, EBITDAR coverage subsequently drops below two times base rent
for two consecutive fiscal quarters, the amount of the letter of credit is to be
increased to six months' base rent.

Gulf States has provided to us unaudited financial statements reflecting
that, as of December 31, 2004, it had tangible assets of approximately $11.1
million, liabilities of approximately $9.3 million and stockholders' equity of
approximately $1.8 million, and for the year ended December 31, 2004 had net
income of approximately $2.0 million. Team Rehab has provided to us unaudited
financial statements reflecting that, as of December 31, 2004, it had tangible
assets of approximately $21.3 million, liabilities of approximately $9.2 million
and owner's equity of approximately $12.1 million, and for the year ended
December 31, 2004 had net income of approximately $1.7 million.

The lease requires that, as of the commencement date of the lease and at
all times during the lease term, the tenant and its affiliates, Team Rehab, Gulf
States and Gulf States of Denham Springs, L.L.C., will maintain an aggregate net
worth of $9.0 million.

Repair and Replacement Reserve. The tenant is responsible for all
maintenance, repairs and capital improvements at the facility. To secure this
obligation, the tenant has deposited with us $34,000 in a regular reserve
account. In addition, the tenant has deposited with us $150,247 in a special
reserve account for immediate repairs, which repairs are to be undertaken as
soon as practicable. In the event amounts in the regular reserve are utilized,
the tenant must replenish the reserve to the $34,000 level.

Purchase Options. The lease provides that so long as the tenant is not in
default under the lease, our lease for the Denham Springs Facility, if we
purchase that facility, or any sublease, and no event has occurred which with
the giving of notice or the passage of time or both would constitute such a
default,

the tenant will have the option to purchase the facility (i) at the expiration
of the initial term and each extension term of the lease, to be exercised by 60
days' written notice prior to the expiration of the initial term and each
extension term, and (ii) within five days of written notification from us
exercising our right to terminate the engagement of the tenant's or its
affiliate's management company as the management company for the facility as a
result of an event of default under the lease. The purchase price for those
options shall be equal to the greater of (i) the appraised value of the
facility, assuming the lease remains in effect for 15 years and not taking into
account any purchase options contained therein, or (ii) the purchase price paid
by us for the facility, increased annually by an amount equal to the greater of
(A) 2.5% per year from the date of the lease, or (B) the rate of increase in the
CPI on each January 1.

Commitment Fee. We received a commitment fee at the closing of the
purchase of the Covington Facility of $90,000.

Depreciation and Real Estate Taxes. The following table sets forth
information, as of December 31, 2004, regarding the depreciation and real estate
taxes for the Covington Facility:

FEDERAL TAX BASIS DEPRECIATION 2004 REAL ESTATE
---------------------- --------------------------- LIFE ----------------
LAND BUILDINGS ANNUAL RATE METHOD IN YEARS TAXES RATE
-------- ----------- ----------- ------------- -------- -------- -----

Covington, Louisiana..... $821,429 $10,678,571 2.5% Straight-line 40 $36,625 0.32%

DENHAM SPRINGS LOAN

Loan. On June 9, 2005 we made a loan of $6.0 million to Denham Springs
Healthcare Properties, L.L.C., $500,000 of which is to be held in escrow until
the resolution of certain environmental issues related to the facility. The loan
accrues interest at a rate of 10.5% per year, adjusted each January 1 by an
amount equal to the greater of (i) 2.5% or (ii) the percentage by which the CPI
increases from November to November, provided that the increase in CPI for 2005
is to be prorated. The loan is to be repaid over 15 years with interest only
during the 15 years and a balloon payment due and payable at the expiration of
the 15 years. The loan may be prepaid at any time without penalty.

Loan Guaranty and Security. The loan is guaranteed by Gulf States Long
Term Acute Care of Denham Springs, L.L.C., Team Rehab, L.L.C. and Gulf States.
As security for the loan, Denham Springs Healthcare Properties, L.L.C. granted
us a first mortgage on the facility and assigned to us all its right, title and
interest in and to all leases associated with the facility. The loan is also
cross-defaulted with the lease for the Covington Facility.

Lease. As a condition to the loan, Denham Springs Healthcare Properties,
L.L.C., the owner of the facility, terminated its existing lease with Gulf
States Long Term Acute Care of Denham Springs, L.L.C. and entered into a new
15-year net-lease with Gulf States Long Term Acute Care of Denham Springs,
L.L.C., with three options to renew for five years each. Under the lease, the
tenant is responsible for all costs of the facility, including, but not limited
to, taxes, utilities, insurance, maintenance and capital improvements. Beginning
on June 9, 2005, the annual base rent is equal to 10.5% of the purchase price,
including any costs or charges that may be capitalized. The lease provides that
on each January 1 during the term of the lease, the base rent will be increased
by an amount equal to the greater of (i) 2.5% per annum of the prior year's base
rent, or (ii) the percentage by which the CPI on November 1 shall have increased
over the CPI figure in effect on the then just previous November 1, provided
that the CPI adjustment for 2005 is to be prorated. The loan agreement among us,
Denham Springs Healthcare Properties, L.L.C. and Gulf States Long Term Acute
Care of Denham Springs, L.L.C. entitles us to receive all reports and other
correspondence under this lease during the loan term.

Repair and Replacement Reserve. The lease provides that the tenant, on the
commencement date of the lease, is required to deposit $56,000 into a reserve
account, as security for the tenant's obligation to make certain repairs under
the lease. The tenant is also required under the lease to make a deposit of
$398,590 into a special reserve account for use in making certain immediate
repairs to the facility, which are to be made as soon as practicable. Under the
lease, the landlord and tenant both acknowledge that we are holding both
deposits in connection with our loan.

Sale/Leaseback. The purchase agreement provides that, upon favorable
resolution of the environmental issues described below, we will purchase the
facility for a purchase price of $6.0 million, which will be paid, in whole or
in part, by delivering the note evidencing the loan marked "paid-in-full" and
releasing to Denham Springs Healthcare Properties, L.L.C. the remaining balance
of all funds escrowed under the loan. We expect to enter into a lease with
substantially the same terms as the lease for the Covington Facility with Gulf
States Long Term Acute Care of Denham Springs, L.L.C at closing.

In April 2005, we arranged for a Phase I environmental assessment to be
performed at the Denham Springs Facility. The assessor recommended further soil
and groundwater sampling due to the property's previous use as a hospital that
involved X-ray and photochemical developing activities. Accordingly, we arranged
for a Phase II environmental soil and groundwater sampling. On May 19, 2005, we
received a Phase II report which concluded that one groundwater sample was at or
exceeded Louisiana Department of Environmental Quality (LDEQ) Numerical Acute
and Chronic Criteria standards for several metals. Concentrations of metals in
the soil samples were either below quantification limits or below LDEQ
regulatory guidelines. Based on this sampling, we were advised to present the
findings to LDEQ for review and determination. New sampling and analysis was
forwarded to LDEQ in July 2005 and on September 15, 2005, LDEQ confirmed that no
additional action is necessary at this time.

Commitment Fee. We received a commitment fee at closing in the amount of
$60,000.

NORTH CYPRESS FACILITY

General. On June 13, 2005, we closed a series of transactions, effective
as of June 1, 2005, with North Cypress, an unaffiliated third party, pursuant to
which North Cypress is to develop a community hospital in Houston, Texas. We
ground lease two parcels of land, the hospital tract and the parking area tract,
from the owners of those tracts pursuant to two separate ground leases. Also, we
and the owner of the hospital tract entered into a purchase and sale agreement
pursuant to which we can acquire the hospital tract for approximately $4.7
million. We then subleased the hospital tract and the parking area tract to
North Cypress, which sublease requires North Cypress to construct the hospital
improvements. We refer to this sublease as the ground sublease. The ground
sublease has a term of 99 years. We agreed to make a construction loan, secured
by the hospital improvements, to North Cypress for approximately $64.0 million,
the amount necessary for construction of the improvements, with interest at
10.5% per annum, which interest is deferred and added to the principal balance
of the loan during the construction period, and for a term ending upon
completion of construction. Subject to certain limited conditions, we will
purchase from and lease to North Cypress the hospital improvements upon
completion pursuant to a second purchase and sale agreement and a
post-construction lease. In the event we do not purchase the improvements upon
completion of construction, the ground sublease will continue and the
construction loan will become due. In that event, we expect to seek to convert
the construction loan to a 15 year term loan with interest at 10.5% per annum,
secured by a mortgage on the hospital improvements. If we purchase the
improvements, the ground sublease will terminate and be replaced with the
post-construction lease, which is a lease of the hospital tract, the land, the
hospital improvements and a sublease of the parking area tract. We refer to this
lease as the facility lease.

Commitment Fee. In connection with the transaction, North Cypress paid us
a commitment fee in the amount of $640,280, $100,000 of which was paid in cash
and $540,280 of which was added to the principal balance of the construction
loan.

Leases. We entered into two ground leases, one for the hospital tract and
one for a parking area tract, with the current owners of that land. We then
ground subleased the two tracts to North Cypress. If we purchase the hospital
tract, the ground lease for the hospital tract will terminate. If we purchase
the hospital improvements at the end of the construction term, the ground
sublease will terminate and be replaced by the facility lease which will have a
term of 15 years with three options to renew for five years each. The ground
sublease and the facility lease are each a net-lease with the tenant responsible
for all costs of the facility, including, but not limited to, all rent and other
costs and expenses due and payable under the ground lease, taxes, utilities,
insurance, maintenance and capital improvements. Rent pursuant to

the ground sublease during the construction period is a monthly amount equal to
the sum of (A) the product of (i) 10.5% multiplied by (ii) the total amount of
funds disbursed under the construction loan as of the date this payment is due
divided by 12 plus (B) the sum of all rents paid under the ground leases.
Subsequent to the completion of construction of the hospital improvements, base
rent under the ground sublease will be an amount equal to 10.5% multiplied by
the total amount of funds disbursed under the construction loan plus the sum of
all rents paid pursuant to the ground leases. The facility lease requires the
tenant to pay monthly rent in an annual amount equal to 10.5% multiplied by the
total amount of the funds disbursed under the construction loan plus the sum of
all rents paid pursuant to the ground leases. On January 1, 2006, and on each
January 1 thereafter, the base rent will increase by an amount equal to the
greater of (A) 2.5% per year of the prior year's base rent, excluding the ground
lease rent component, or (B) the percentage by which the CPI on January 1 shall
have increased over the CPI figure in effect on the then just previous January
1. The leases require the tenant to carry customary insurance which is adequate
to satisfy our underwriting standards. The facility lease requires the tenant to
pay us, commencing on the commencement date of the facility lease and on each
January 1 during the term thereof, an amount equal to $7,500 to cover the cost
of the physical inspections of the facility, which fee will, on each January 1,
be increased by 2.5% per annum. In addition to this ongoing inspection fee, the
MPT lender is entitled to receive an inspection fee of $75,000 to cover the
lender's inspection costs during the construction period.

Capital Improvement Reserve. The ground sublease and the facility lease
require the tenant, beginning on the date that construction of the facility has
been completed, to make annual deposits into a reserve account in the amount of
$2,500 per bed per year. These leases also provide that on each January 1
thereafter, the payment of $2,500 per bed per year into the capital improvement
reserve will be increased by 2.5%.

Capital Contributions and Net Worth Covenant. The ground sublease and the
facility lease require that, as of the commencement date of each lease, the
tenant shall have received from its equity owners at least $15.0 million in cash
equity. So long as tenant maintains the consolidated net worth required under
each lease, such cash equity may be used for acquisition, pre-opening and
operating expenses of the facility and shall not be distributed to tenant's
equity owners. The ground sublease and the facility sublease contain net worth
covenants which tenant must satisfy.

Security. The tenant must deliver to us upon execution of the ground
sublease a security deposit in the approximate amount of $6.7 million. The
security deposit can be cash or a letter of credit. At the execution of the
facility lease the security deposit amount shall be equal to 10.5% times the
total development costs of the hospital improvements. At the time that the
operations from the facility have sustained EBITDAR coverage of at least two
times the then current base rent for two consecutive fiscal years, the amount of
the security deposit can be reduced by one half.

Management. North Cypress is newly formed and has had no significant
operations to date. North Cypress has executed a contract with Surgical
Development Partners, LLC, a hospital management company, to manage the
day-to-day operations of the hospital, including staffing, scheduling, billing
and collections, governmental compliance and relations, and other functions.
Surgical Development Partners, LLC has made a substantial equity investment in
North Cypress. We have the right to require North Cypress to replace the
management company under certain conditions.

Purchase Options. Pursuant to the terms of the facility lease, so long as
no event of default has occurred, at the expiration of the facility lease the
tenant will have the option to purchase our interest in the property leased
pursuant to the facility lease at a purchase price equal to the greater of (i)
the fair market value of the leased property or (ii) the purchase price paid by
us to tenant pursuant to the purchase and sale agreement relating to the
hospital improvements plus our interest in any capital additions funded by us,
as increased by the amount equal to the greater of (A) 2.5% from the date of the
facility lease execution or (B) the rate of increase in the CPI as of each
January 1 which has passed during the lease term; provided no event shall the
purchase price be less than the fair market value of the property leased.

Sale Proceeds Distributions or Syndication. The facility lease also
provides that if during the term of the facility lease we sell our interest in
the property, then the net sales proceeds from the sales shall be distributed as
follows: (A) to us in the amount equal to the purchase price paid by us to the
tenant pursuant to the purchase and sale agreement relating to the hospital
improvements plus an amount which will provide us with an internal rate of
return of 15% and (B) the balance of the net proceeds shall be divided equally
between us and the tenant. In addition, subject to applicable healthcare
regulations, we will offer to tenant and any physician which owns an interest in
tenant the opportunity to purchase up to an aggregate 49% of the limited
partnership interest in MPT of North Cypress, L.P., our subsidiary that owns the
property. The right to purchase is applicable during the period which is not
less than six months or more than nine months subsequent to the commencement
date of the facility lease. The price for the limited partnership interest shall
be determined on the basis of the historical cost of our assets.

WEST HOUSTON FACILITIES

General. In June 2004, we entered into agreements with Stealth and GPMV to
develop the West Houston Hospital and the adjacent West Houston MOB in Houston,
Texas. We have engaged GPMV to develop the 105 bed, 121,884 gross square foot
West Houston Hospital. Seventy-one beds will be acute care beds to be operated
by Stealth and 34 will be long-term acute care beds to be operated by Triumph
Southwest, L.P., or Triumph, a tenant of Stealth. We have engaged a third-party
developer to develop the adjacent 120,000 gross square foot West Houston MOB on
the property. Pursuant to the agreements with Stealth and GPMV, we have formed
two Delaware limited partnerships, MPT West Houston Hospital, L.P., or the
hospital limited partnership, which will own the West Houston Hospital, and MPT
West Houston MOB, L.P., or the MOB limited partnership, which will own the
adjoining West Houston MOB. Stealth will be required to maintain insurance that
is adequate to satisfy our underwriting standards.

West Houston GP, L.P., an affiliate of GPMV, holds a 25% general
partnership interest in Stealth. The limited partners of Stealth, which
currently hold a 75% interest, consist of 85 physicians. The sole business of
Stealth is the operation of the West Houston Hospital offering multi-specialty
services and the West Houston MOB. Because those facilities are still in the
construction phase, Stealth has had no meaningful operations to date. Our
operating partnership owns an approximate 94% limited partnership interest in
the hospital limited partnership and Stealth owns an approximate 6% limited
partnership interest. MPT West Houston Hospital, LLC, a wholly-owned limited
liability company of our operating partnership, owns the 0.1% general
partnership interest in the hospital limited partnership. Currently, our
operating partnership owns approximately 76% of the limited partnership
interests in the MOB limited partnership and MPT West Houston MOB, LLC, a
wholly-owned subsidiary of our operating partnership, owns the 0.1% general
partnership interest. Physicians and others associated with our tenant or
subtenants of the West Houston MOB own approximately 24% of the aggregate equity
interests in the MOB limited partnership.

The hospital limited partnership and MOB limited partnership each own a fee
simple interest in the undeveloped land on which the facilities are being
constructed, as well as adjacent undeveloped land. In addition, Stealth has an
option, exercisable until November 2010, to reacquire approximately 14.5 acres
of land owned by the hospital limited partnership, which land is located
adjacent to the land on which the facilities are being constructed. The option
price for this parcel is equal to the original cost, plus any amounts
subsequently paid by us with respect to this parcel. Stealth also has a right of
first offer, exercisable until November 2010, to purchase this parcel should we
determine to sell it to a third party. In consideration for Stealth's agreement
to limit the term of the foregoing option and right of first offer, we have
agreed to pay Stealth up to $3.5 million, upon its request and in $500,000
increments. Any additional amounts paid will be included in total development
costs and will increase the rental payable to us accordingly. We have no further
obligation to honor any payment requests after August 31, 2006.

In connection with the development of the West Houston Facilities, we are
entitled to a commitment fee of approximately $932,125. This fee is to be paid
15 years from the date of completion of the hospital facility, with interest
thereon at the rate of 10.75% per year, and is unsecured but is cross-defaulted
with

the leases we have with Stealth at the West Houston Facilities. Stealth is to
commence making monthly interest payments beginning the first month after
completion of the West Houston Hospital.

In addition, MPT Development Services, Inc., our taxable REIT subsidiary,
has agreed to make a working capital loan to Stealth in an amount up to $1.62
million. To date, no funds have been drawn by Stealth. This loan is to be repaid
15 years from the date of completion of the West Houston Hospital, with interest
at the rate of 10.75% per year, and is unsecured but cross-defaulted with the
leases we have with Stealth at the West Houston Facilities. The loans are not
guaranteed. The leases contain certain debt coverage ratio and other financial
covenants, the default of which would constitute a default under the loans.
Stealth is obligated to commence making monthly interest payments beginning the
first month after completion of the West Houston Hospital. Either the fee or the
working capital loan may be prepaid at any time without penalty, except that a
minimum prepayment of $500,000 is required for the working capital loan.

If either we or Stealth determine in good faith, after consultation with
healthcare counsel, that healthcare law prohibitions or restrictions require the
physician-limited partners to divest their ownership interests in Stealth, we
have agreed to issue up to $6 million of limited partnership interests in the
hospital limited partnership to Stealth to be used as part of the consideration
to completely redeem the physician-limited partners' ownership interests in
Stealth. We have agreed to lend Stealth the $6 million to purchase the limited
partnership interests in the hospital limited partnership, which loan would
accrue interest at the rate of not less than 10.75% per year, and would be paid
over 10 years. If this transaction is necessary, we do not expect it to occur
prior to the end of the second quarter of 2005.

Development Agreements. The hospital limited partnership has agreed to pay
GPMV a development fee of approximately $700,000, a construction management fee
not to exceed $200,000, and a contingent funds fee of approximately $450,000.
The MOB limited partnership has agreed to pay the developer of the West Houston
MOB a development fee of approximately $550,000, a construction management fee
of $300,000, and a contingent funds fee of approximately $350,000. Upon the
completion of the development of the facilities, we will obtain independent
as-built appraisals of the facilities.

Stealth is obligated to pay MPT Development Services, Inc., our taxable
REIT subsidiary, a project inspection fee for construction coordination services
of $100,000 in the case of the West Houston Hospital and $50,000 in the case of
the adjacent West Houston MOB. These fees are to be paid, with interest at the
rate of 10.75% per year, over a 15 year period beginning on the date that the
West Houston Hospital is completed. The total development costs for the
facilities, including acquisition cost, development services fee, commitment
fee, project management fee, and construction costs, are estimated to be $42.6
million for the hospital facility and $20.5 million for the medical office
building. Construction, which commenced in July 2004, is expected to be
completed in October 2005 for the West Houston Hospital and for the adjacent
West Houston MOB. During the construction period, we will advance funds pursuant
to requests made in accordance with the terms of the development agreements
between us and the developers. We have agreed to fund 100% of the total
development costs for the West Houston Hospital and the adjacent West Houston
MOB. Our agreement with Stealth provides that $17,006,803 of this funding will
be in the form of an equity contribution for the West Houston Hospital, with the
remaining funding being in the form of debt, and for the adjoining West Houston
MOB, our agreement with Stealth provides that $5.0 million of the funding will
be in the form of an equity contribution or subordinated debt, with the
remaining funding being in the form of debt. If we obtain third-party
construction financing, the debt portion of the development costs will be
provided by the third-party lender.

Leases. We are leasing the facilities to Stealth during the construction
phase with rent accruing until the completion dates and the accrued rent to be
paid over the remaining lease term once the facilities are completed. Following
the completion dates, the lease term will extend for a period of 15 years for
the West Houston Hospital and 10 years for the West Houston MOB. Stealth will
have three options to renew each lease for a period of five years each. On
January 1, 2006 and on each January 1 thereafter, the base rent for the West
Houston Hospital will increase 2.5% and the base rent for the West Houston MOB
will increase 2.0%. The leases are net-leases with Stealth responsible for all
costs and expenses associated with

the operation, maintenance and repair of the facilities. Triumph has subleased
an entire floor of the West Houston Hospital in order to operate 34 long-term
acute care beds. The sublease is for a term of 180 months following the
completion of the construction of the West Houston Hospital. The sublease grants
to Triumph options to extend the term of the sublease for three additional
periods of five years each. The sublease requires Triumph to pay rent in an
amount equal to 12% of all rent and other charges payable by Stealth to us under
our lease with Stealth, with certain exclusions. The sublease provides that
Stealth's obligations under the sublease are conditioned upon the execution of a
guaranty by Triumph HealthCare of Texas, L.L.C. and Triumph HealthCare, L.L.P.
The sublease grants Stealth the right to relocate Triumph to a new facility to
be constructed adjacent to and attached to the West Houston Hospital. In order
to exercise the relocation right, Stealth must give Triumph at least 270 days'
notice prior to the date of such relocation. Triumph must vacate the subleased
premises on or before the relocation date specified in the notice from Stealth,
which cannot be earlier than 270 days after the date of the relocation notice.

Triumph has subleased 9,726 square feet of net rentable area in the West
Houston MOB for use as a medical office exclusively for the practice of
medicine, the operation of a medical office and the provision of related
administrative services, or medical related use. The sublease is for a term of
120 months following the earlier of the date of final completion of the
leasehold improvements, or the date on which Triumph commences business in the
subleased premises. The sublease grants to Triumph options to extend the term of
the sublease for four additional periods of five years each. The sublease
requires Triumph to pay annual base rent for years one through ten calculated at
$20 per net rentable square foot. Beginning on the first anniversary of the
lease and on each anniversary date thereafter, base rent is increased to an
amount equal to 1.02 times or 102% of the base rent payable in the previous
year. The lease also requires Triumph to pay its pro rata share of annual
operating expenses, taxes and insurance relating to the West Houston MOB. The
sublease provides that Stealth's obligations under the sublease are conditioned
upon the execution of a guaranty by Triumph HealthCare of Texas, L.L.C. and
Triumph HealthCare, L.L.P. The West Houston MOB sublease with Triumph also runs
concurrently with Stealth's lease with us. In the event our lease with Stealth
is terminated, the sublease on the hospital with Triumph is also terminated.

Purchase Option. After the first full 12 month period after construction
of each of the West Houston Facilities is completed, as long as Stealth is not
in default under either of its leases with us or any of the leases with its
physician subtenants, Stealth has the right to purchase the West Houston MOB and
the West Houston Hospital at a purchase price equal to the greater of (i) that
amount determined under a formula that would provide us an internal rate of
return of at least 18% or (ii) the appraised value based on a 15 year lease in
place. To arrive at the appraised value, each of the parties chooses an
appraiser. If the appraisals obtained are not materially different, (meaning a
10% or more variance), 50% of the sum of each appraised value is used as the
option price. If the two appraisals are materially different, then the two
appraisers appoint a third appraiser and the appraiser's valuation which differs
greatest from the other two appraisers is excluded and 50% of the sum of the two
remaining determinations is used as the option price. The costs of the appraisal
process are borne equally by the parties. Upon written notice to us within 90
days of the expiration of the applicable lease, as long as Stealth is not in
default under either of its leases with us or any of the leases with its
physician subtenants, Stealth will have the option to purchase the West Houston
MOB or the West Houston Hospital at a price equal to the greater of (i) the
total development costs (including any capital additions funded by us, but
excluding any capital additions funded by Stealth) increased by 2.5% per year,
or (ii) the appraised value based on a 15 year lease in place. To arrive at the
appraised value, each of the parties chooses an appraiser. If the appraisals
obtained are not materially different, (meaning a 10% or more variance), 50% of
the sum of each appraised value is used as the option price. If the two
appraisals are materially different, then the two appraisers appoint a third
appraiser and the appraiser's valuation which differs greatest from the other
two appraisers is excluded and 50% of the sum of the two remaining
determinations is used as the option price. The costs of the appraisal process
are borne equally by the parties.

The leases also provide that under certain limited circumstances, the
tenant will have the right to present us with a choice of one out of three
proposed exchange facilities to be substituted for the leased facility. The
tenant will have the right to propose substitute facilities, if not in default,
at any time prior to

the expiration of the term, if (i) in the good faith judgment of the tenant the
facility becomes uneconomic or unsuitable for its primary intended use, (ii)
there is an eviction or interference caused by any claim of paramount title, or
(iii) if for other prudent business reasons, the tenant desires to terminate the
lease. The tenant will have the obligation to substitute facilities if it has
discontinued use of the facility for a period in excess of one year, and we have
not exercised our right to terminate the lease. Each proposed substitution
facility must: (i) provide us with an annual return on our equity in such
facility, or yield, substantially equivalent to our yield from the original
facility (ii) provide us with rent with a substantially equivalent yield taking
into account any cash adjustment paid or received by us and any other relevant
factors, and (iii) have a fair market value in an amount equal to the fair
market value of the original facility, taking into account any cash adjustment
paid or received by us. If we elect to consummate the exchange, the existing
lease would terminate and the parties would enter into a new lease for the
substituted facility. If we elect not to proceed with the exchange, the tenant
would have the right to terminate the lease and purchase the leased facility for
appraised value, determined assuming the lease is still in place.

Right of First Offer to Purchase. At any time during the term of the
applicable lease for either of the West Houston Facilities, as long as Stealth
is not in default under either of its leases with us or any of the leases with
its physician subtenants, we are required to notify Stealth if we intend to sell
either facility to a third party. If Stealth wishes to offer to purchase the
facility, it must notify us in writing within 15 days, setting forth the terms
and conditions of the proposed purchase. If we accept Stealth's offer, Stealth
must close the purchase within 45 days of the date of our acceptance.

Security. The leases for the West Houston Facilities are cross-defaulted
and are guaranteed by West Houston G.P., L.P. and West Houston Joint Ventures,
Inc., affiliates of Stealth. To secure its performance of its lease obligations
under the West Houston Hospital lease, Stealth has obtained a certificate of
deposit in the amount of $1,905,234, of which we are the beneficiary. The
sublease between Stealth and Triumph requires Triumph to obtain a certificate of
deposit in the amount of $400,000 to secure the performance of its obligations
under its sublease with Stealth. However, subject to execution of definitive
agreements, we, Stealth and Triumph have agreed that Triumph shall obtain and
deliver to us a $400,000 letter of credit, in lieu of the certificate of
deposit, to be held by us. The sublease has been assigned to us as collateral
security for Stealth's performance under its lease. Under the lease and the
sublease, each of Stealth and Triumph, respectively, are required to give us a
security interest in these certificates of deposit and to enter into control
agreements with us and the issuing banks which provide that the banks will
follow our instructions regarding the certificates of deposit. Once the West
Houston Hospital commences operations, Stealth is required to substitute a
letter of credit in the amount of $1,905,234 in place of the $1,905,234
certificate of deposit; and on May 1, 2005, the sublease required that Triumph
substitute a letter of credit in the amount of $1.0 million in place of the
$400,000 certificate of deposit. Triumph has not yet made this substitution. The
lease further provides that the Stealth letter of credit may be released in two
increments of 50% of the total amount of the letter of credit over a 2 year
period following the date on which Stealth generates a total rent (excluding
additional charges) coverage from EBITDAR of at least 200% for 12 consecutive
months.

Stealth has provided to us unaudited financial statements reflecting that,
as of March 31, 2005, it had tangible assets of approximately $5.8 million,
including cash of approximately $4.4 million, liabilities of approximately
$269,000 and owners' equity of approximately $5.5 million. Neither of the
guarantors has any substantial assets, other than its interest in Stealth.

Capital Improvements. Stealth is responsible for all capital expenditures
required to keep the West Houston Facilities in compliance with applicable laws
and regulations. Beginning on January 1, 2005, Stealth will make monthly
deposits into a capital improvement reserve in the amount of $3,000 per year in
the case of the West Houston MOB and $2,500 per bed per annum in the case of the
West Houston Hospital. On each January 1 thereafter, the payment into the
capital improvement reserve will be increased by 2.0% in the case of the West
Houston MOB and by 2.25% in the case of the West Houston Hospital. All capital
expenditures made in each year during the term of the lease will be funded first
from the capital improvement reserve, and the tenant will pay into its
respective capital improvement reserve such funds as necessary for all
replacements and repairs.

Depreciation and Real Estate Taxes. The following table sets forth
information, as of December 31, 2004, regarding the estimated depreciation and
real estate taxes for the Houston Facilities:

ESTIMATED DEPRECIATION ESTIMATED
FEDERAL TAX BASIS -------------------------------------- 2005 REAL ESTATE
------------------------ ANNUAL -----------------
LAND BUILDINGS RATE METHOD LIFE IN YEARS TAXES RATE
---------- ----------- ------ ------------- ------------- ---------- ----

West Houston
Hospital............. $8,400,000 $34,200,000 2.5% Straight-line 40 $1,324,860 3.11%
West Houston MOB....... 1,800,000 18,700,000 2.5 Straight-line 40 637,550 3.11

BENSALEM, PENNSYLVANIA

General. On September 16, 2005, we acquired a fee simple interest in 15
acres of land located in Bucks County, Pennsylvania, which is approximately 15
miles from Philadelphia, Pennsylvania, for a purchase price of approximately
$5.4 million pursuant to an agreement with Glenview Corporate Center Limited
Partnership. On the same date, we entered into an agreement with Bucks County
Oncoplastic Institute, LLC, or BCO, and DSI Facility Development, LLC, or the
developer, each an unaffiliated third party, to develop a women's hospital
facility with an integrated medical office building on the land. The total
development costs to develop the facility, including the cost of the land, are
estimated at approximately $38.0 million. To date, including the acquisition
costs of the land, we have incurred approximately $8.8 million of the total
development costs.

Lease. We have formed a Delaware limited partnership, MPT of Bucks County,
L.P., to own the facility. We have entered into a lease with BCO for both the
land and the improvements. The lease will extend for the construction term and
15 years thereafter with BCO having two five-year renewal options and a third
option to renew the lease until August 15, 2035. The lease is a net-lease with
BCO responsible for all costs of the facility, including, but not limited to,
taxes, utilities, insurance and maintenance. The lease will require BCO to pay
monthly rent in a per annum amount equal to 10.75% multiplied by the total
amount of the funds disbursed under the development agreement. The lease
provides that on January 1, 2007, and on each January 1 thereafter, the base
rent will be increased by an amount equal to the greater of (A) 2.5% per annum
of the prior year's base rent, or (B) the percentage by which the CPI has
increased over the CPI figure in effect on the previous January 1. The lease
further provides that, upon completion of construction, and beginning with the
calendar month after the completion date, BCO will pay, in addition to base
rent, percentage rent in an amount equal to 1.75% of revenues for the preceding
month. The lease also requires BCO to carry customary insurance which is
adequate to satisfy our underwriting standards. The lease requires BCO to pay us
on January 1, 2006 an amount equal to $7,500 to cover the cost of the physical
inspections of the facility, which fee will, beginning on January 1, 2007, and
continuing on each January 1 thereafter, be increased by 2.5% per annum. In
addition to the inspection fee, the total development costs also include a fee
equal to $75,000 to cover our inspection of the facility during the construction
period. We loaned BCO the funds for this fee, which loan bears interest at a
rate of 10.75%.

Capital Improvement Reserve. The lease requires BCO to be responsible for
all maintenance and repairs and all extraordinary repairs required to keep the
facility in compliance with all applicable laws and regulations and as required
under the lease. The lease will also require BCO, beginning on the completion of
construction of the facility, to make annual deposits into a reserve account in
the amount of $2,500 per bed per year. The lease provides that beginning on the
first January 1 after the completion of construction, the payment of $2,500 per
bed per year into the improvement reserve will be increased by 2.5%. The lease
provides that all extraordinary repair expenditures made in each year during the
term of the lease will be funded first from the reserve, and that BCO will pay
into the reserve such funds as necessary for all extraordinary repairs.

Development Agreements. We have agreed to pay DSI Facility Development,
LLC, an affiliate of BCO, a developer fee of $515,000, a construction management
fee of $687,500 and a developer bonus based upon the cost savings if the
facility is completed for less than the estimated total development costs.

Security. As security for the lease, BCO has granted us a security
interest in all personal property, other than receivables, located and to be
located at the facility, which security interest is subject to any lien of any
purchase money equipment lender. The lease requires BCO to obtain and deliver to
us an unconditional and irrevocable letter of credit from a bank acceptable to
us, naming us beneficiary thereunder, in an amount equal to one year's base rent
under the lease. BCO substituted a cash deposit for the letter of credit, which
we will continue to hold until a certificate of occupancy is issued, and we
loaned BCO the funds for this cash deposit, which loan bears interest at the
rate of 20% per annum. At the time the letter of credit is delivered, we will
retain the cash deposit and it shall be applied toward the promissory note. As a
condition to closing and as a continuing covenant under the lease, BCO is
required to achieve a tangible net worth of $5.0 million, which may be satisfied
by an equity injection, operating earnings or approved line of credit. Until BCO
satisfies such covenant, our lease for the Buck's County Facility is guaranteed
to the extent of $5.0 million by 14 guarantors. Six of these guarantors have
pledged cash, cash equivalents or marketable securities equivalent to their
maximum guaranty limits. Eight of the guarantors have delivered financial
statements which we believe reflect the necessary financial wherewithal to
satisfy their guaranty obligations. The lease will be cross-defaulted to any
other lease or agreement between the parties. BCO is newly formed and has had no
significant operations to date.

Purchase Options. The lease provides that so long as BCO is not in default
under any lease with us or any of the leases with its subtenants, at the
expiration of the lease BCO will have the option, upon 60 days prior written
notice, to purchase the facility at a purchase price equal to the greater of (i)
the appraised value of the facility, which assumes the lease remains in effect
for 15 years, or (ii) the total development costs, including any capital
additions funded by us, as increased by an amount equal to the greater of (A)
2.5% per annum from the date of the lease, or (B) the rate of increase in the
CPI on each January 1. If we do not approve a change of control transaction
involving BCO, BCO shall also have the option, exercisable for 30 days after our
failure to approve the change of control, to purchase the facility at the
greater of (i) the above formula for the end-of-lease-term purchase option or
(ii) an amount that would provide us an internal rate of return of 13%.

Commitment Fee. At closing, BCO executed a promissory note in favor of us
for the $345,000 commitment fee, which note bears interest at a rate of 10.75%
and is payable interest only with a balloon payment approximately 15 years
following completion of construction.

OUR PENDING ACQUISITIONS AND DEVELOPMENTS

We intend to expand our portfolio by acquiring or developing our Pending
Acquisition and Development Facilities, which we consider to be probable
acquisitions or developments as of the date of this prospectus, under the terms
of the contacts or letters of commitment relating to these facilities. The
leases for each of these facilities will provide for contractual base rent and
an annual rent escalator. The letters of commitment constitute agreements of the
parties to consummate the acquisition or development transactions and enter into
leases on the terms set forth in the letters of commitment subject to the
satisfaction of certain conditions, including the execution of
mutually-acceptable definitive agreements. The following tables contain
information regarding our Pending Acquisition and Development Facilities as of
the date of this prospectus:

Operating Facilities

YEAR ONE
NUMBER OF CONTRACTUAL LOAN LEASE
LOCATION TYPE TENANT BEDS(1) INTEREST AMOUNT EXPIRATION
- -------- ----------- ---------------- --------- ----------- ----------- -------------

Hammond, Louisiana*(2).................... Long-term Hammond 40 $ 840,000(3) $ 8,000,000 June 2021
acute care Rehabilitation
hospital Hospital, LLC
Denham Springs, Louisiana(4).............. Long-term Gulf States 59 630,000(5) 6,000,000 October 2020
acute care Long Term Acute
hospital Care of Denham
Springs, L.L.C.
-- ---------- -----------
TOTAL..................................... -- -- 99 $1,470,000 $14,000,000 --
== ========== ===========

- ---------------

* Under letter of commitment.

(1) Based on the number of licensed beds.
(2) On April 1, 2005, we entered into a letter of commitment with Hammond
Healthcare Properties, LLC, or Hammond Properties, and Hammond
Rehabilitation Hospital, LLC, or Hammond Hospital, pursuant to which we
have agreed to lend Hammond Properties $8.0 million and have agreed to a
put-call option pursuant to which, during the 90 day period commencing on
the first anniversary of the date of the loan closing, we expect to
purchase from Hammond Properties a long-term acute care hospital located in
Hammond, Louisiana for a purchase price between $10.3 million and $11.0
million. If we purchase the facility, we will lease it back to Hammond
Hospital for an initial term of 15 years. The lease would be a net lease
and would provide for contractual base rent and, beginning January 1, 2007,
an annual rent escalator.
(3) Based on one year contractual interest at the rate of 10.5% per year on the
$8.0 million mortgage loan to Hammond Properties. We expect to exercise our
option to purchase the Hammond Facility in 2006. For the one year period
following our purchase of the facility, contractual base rent would equal
$1,079,925, based on 10.5% of an estimated purchase price of $10,285,000.
(4) On June 9, 2005, we entered into a definitive purchase, sale and loan
agreement, pursuant to which we loaned Denham Springs Healthcare
Properties, L.L.C. $6.0 million and agreed to purchase the Denham Springs
Facility for a purchase price of $6.0 million, subject to our satisfaction
with the results of our review of an environmental condition at the
property of certain conditions. If we purchase the facility, the loan will
be cancelled and we will lease the facility to Gulf States Long Term Acute
Care of Denham Springs, L.L.C. for an initial term of 15 years. The lease
would be a net lease and would provide for contractual base rent and,
beginning on January 1, 2006, an annual rent escalator. If we do not
purchase the Denham Springs Facility, the $6.0 million loan would remain
outstanding.

Development Facility

ANNUAL
MINIMUM PROJECTED
NUMBER OF INCREASE IN DEVELOPMENT LEASE
TYPE TENANT BEDS(1) RENT COST EXPIRATION
---- --------------- --------- ----------- ----------- ----------

Bloomington, Indiana*........................... Community Monroe 32 2.5%(2) 32,000,000 (3)
hospital Hospital, LLC
=== ===========

- ---------------

* Under letter of commitment.

(1) Based on the number of proposed beds.

(2) The annual rent increase is the greater of 2.5% and any change in the CPI.

(3) We expect that this lease will have a 15 year term commencing on the date
that construction of the facility is completed.

DENHAM SPRINGS, LOUISIANA

General. On June 9, 2005, we entered into a definitive purchase, sale and
loan agreement, or purchase agreement, relating to the acquisition of the
Covington Facility and the making of a $6.0 million loan to Denham Springs
Healthcare Properties, L.L.C., an unrelated third party. The purchase agreement
also provides for the purchase and leaseback of the Denham Springs Facility, for
a purchase price of $6.0 million and on substantially the same terms as applied
to our purchase of the Covington Facility. Our purchase of the Denham Springs
Facility is subject to the favorable resolution of the environmental issues
discussed above. The Denham Springs Facility is located in Denham Springs,
Louisiana, which is approximately 10 miles from Baton Rouge, Louisiana. The
Denham Springs Facility contains approximately 36,000 square feet of space and
is licensed for 59 beds.

The purchase price for the Denham Springs Facility was arrived at through
arms-length negotiations based upon our analysis of various factors, including
the demographics of the area in which the facility is located, the capability of
the tenant to operate the facility, healthcare spending trends in the geographic
area, the structural integrity of the facility, governmental regulatory trends
which may impact the services provided by the tenant, and the financial and
economic returns which we require for making an investment.

We have formed a Delaware limited liability company, MPT of Denham Springs,
L.L.C., which made the $6.0 million loan and, upon closing of the prospective
purchase, would own the Denham Springs Facility. Our operating partnership
currently owns all of the membership interests in this liability company;
however, at some point following closing of the prospective purchase, we have
agreed, subject to applicable healthcare regulations, to offer up to 30% of the
interests in this limited liability company to local physicians.

Lease. At the time we purchase the Denham Springs Facility, we will lease
100% of the facility to Gulf States Long Term Acute Care of Denham Springs,
L.L.C. for a 15-year term, with three options to renew for five years each. The
lease will be a net-lease with the tenant responsible for all costs of the
facility, including, but not limited to, taxes, utilities, insurance,
maintenance and capital improvements. The lease will require the tenant to pay
base rent in an amount equal to 10.5% per annum of the purchase

price plus any costs and charges that may be capitalized. On each January 1, the
base rent will be increased by an amount equal to the greater of (A) 2.5% per
annum of the prior year's base rent, or (B) the percentage by which the CPI on
November 1 shall have increased over the CPI in effect on the immediately
preceding November 1; provided, however, on January 1, 2006, the adjustment
shall be prorated. The lease will also require the tenant to carry customary
insurance which is adequate to satisfy our underwriting standards.

Guaranty, Security. We expect the lease to be guaranteed by Gulf States
and Team Rehab. As security for the lease, the tenant will grant us a security
interest in all personal property, other than receivables and operating
licenses, located and to be located at the facility. The lease will be cross-
defaulted with the lease for the Covington facility. We expect the lease will
also require the tenant to obtain and deliver to us an unconditional and
irrevocable letter of credit from a bank acceptable to us, naming us beneficiary
thereunder, in an amount equal to $315,000, and will provide that at such time
as the operations in the facility have generated EBITDAR coverage of at least
two times the base rent for eight consecutive fiscal quarters, the letter of
credit may be reduced to an amount equal to three months of the base rent then
in effect. If, however, after satisfying the conditions necessary to reduce the
letter of credit to three months' base rent, EBITDAR coverage subsequently drops
below two times base rent for two consecutive fiscal quarters, the letter of
credit will be increased to six months' base rent. Currently, we have a $315,000
letter of credit from Hibernia Bank that secures our $6.0 million loan to Denham
Springs Healthcare Properties, L.L.C. Upon purchase of the Denham Springs
Facility, this letter of credit will be changed to secure the obligations of
Gulf States Long Term Acute Care of Denham Springs, L.L.C. under the lease.

The lease for the Denham Springs Facility will require that, as of the
commencement date of the lease and at all times during the lease, the tenant and
its affiliates, Team Rehab, Gulf States and Gulf States Long Term Acute Care of
Covington, L.L.C., will maintain an aggregate net worth of $9.0 million.

Repair and Replacement Reserve. The tenant will be responsible for all
repairs, maintenance and capital improvements to the facility. To secure this
obligation, the tenant will deposit with us the sum of $56,000 in a regular
reserve account and the sum of $398,590 in a special reserve account for
immediate repairs. Currently, we are holding these amounts in connection with
our $6.0 million loan to Denham Springs Healthcare Properties, L.L.C. Upon
purchase of the Denham Springs Facility, these amounts will be held by us to
secure the tenant's repair obligations under the lease. In the event amounts in
the regular reserve are utilized, the tenant will be required to replenish the
reserve to restore it to the $56,000 level.

Purchase Options. The lease will provide that so long as the tenant is not
in default, and no event has occurred which with the giving of notice or the
passage of time or both would constitute a default under the lease, the lease
for the Covington Facility, or any sublease, the tenant will have the option to
purchase the facility (i) at the expiration of the initial term and each
extension term of the lease, to be exercised by 60 days' written notice prior to
the expiration of the initial term and each extension term, and (ii) within five
days of written notification from us exercising our right to terminate the
engagement of the tenant's or its affiliate's management company as the
management company for the facility as a result of an event of default under the
lease. The option purchase price shall be equal to the greater of (i) the
appraised value of the facility, assuming the lease remains in effect for 15
years and not taking into account any purchase options contained therein, or
(ii) the purchase price paid by us for the facility, increased annually by an
amount equal to the greater of (A) 2.5% per annum from the date of the lease, or
(B) the rate of increase in the CPI on each January 1.

HAMMOND, LOUISIANA

General. On April 1, 2005, we entered into a letter of commitment with
Hammond Healthcare Properties, LLC, the current owner of the property, or
Hammond Properties, and Hammond Rehabilitation Hospital, LLC, the current tenant
of the property, or Hammond Hospital, both unaffiliated third parties, to
provide a mortgage loan to Hammond Properties and enter into a put-call option
arrangement relating to our purchase of the facility from Hammond Properties and
our leaseback of the facility to Hammond Hospital or its affiliates.

The facility is a long-term acute care hospital located in Hammond,
Louisiana, which is approximately 45 miles from New Orleans, Louisiana. The
facility contains approximately 23,835 square feet of space and is licensed for
40 beds.

The letter of commitment provides that, under the mortgage loan
transaction, we will lend to Hammond Properties the sum of $8.0 million, which
will bear interest at the rate of 10.5% per year and be payable interest only on
a monthly basis with a balloon payment due and payable at the expiration of the
put-call option period described below or, if the put-call option is exercised,
at closing of our purchase of the facility. The letter of commitment provides
that the loan will be secured by a first mortgage on the facility and by the
other collateral and guaranteed as described below.

The letter of commitment provides that, at the time of the mortgage loan
closing, we will enter into a put-call option agreement with Hammond Properties
providing that either party will have the option, exercisable within 90 days
following the one year anniversary of the loan closing, to cause the purchase
and sale of the facility, subject to applicable conditions, for a purchase price
of the greater of (i) $10,285,714 or (ii) the quotient determined by dividing
the annual rental payments by .105 (but not to exceed $11.0 million). The
purchase price was arrived at through arm's-length negotiations based upon our
analysis of various factors, including the demographics of the area in which the
facility is located, the capability of the tenant to operate the facility,
healthcare spending in the geographic area, the structural integrity of the
facility, governmental regulatory trends which may impact the services provided
by the facility, and the financial and economic returns which we require for
making an investment.

If the put-call option is exercised, we will form a Delaware limited
liability company, MPT of Hammond, LLC, which will own the facility. Initially,
our operating partnership will own all of the membership interests in this
limited liability company; however, the letter of commitment provides that, at
some point following closing, we have agreed, subject to applicable healthcare
regulations, to offer up to 30% of the interests in this limited liability
company to local physicians.

Lease. The letter of commitment provides that, if the put-call option is
exercised, we will lease 100% of the facility to Hammond Hospital or its
affiliate for a 15-year term, with three options to renew for five years each.
The letter of commitment provides that the lease will be a net-lease with the
tenant responsible for all costs of the facility, including, but not limited to,
taxes, utilities, insurance, maintenance and capital improvements. The letter of
commitment provides that the lease will require the tenant to pay base rent in
an amount equal to 10.50% per annum of the purchase price plus any costs and
charges that may be capitalized, which base rent will be payable in monthly
installments. The letter of commitment provides that, on each January 1
beginning January 1, 2007, the base rent will be increased by an amount equal to
the greater of (A) 2.5% per annum of the prior year's base rent, or (B) the
percentage by which the CPI on January 1 shall have increased over the CPI
figure in effect on the then just previous January 1. The letter of commitment
provides that the lease will require the tenant to carry customary insurance
which is adequate to satisfy our underwriting standards.

Repair and Replacement Reserve. The letter of commitment provides that the
tenant, commencing on the date we purchase the facility, will make annual
deposits into a reserve account. We expect that the lease will provide that on
each January 1 following the date we purchase the facility, the payment into the
reserve account will be increased, and that all extraordinary repair
expenditures made in each year during the term of the lease will be funded first
from the reserve, and the tenant will pay into the reserve such funds as
necessary for all extraordinary repairs.

Security. The letter of commitment provides that, as security for the
mortgage loan and the lease, Hammond Properties or the tenant, as the case may
be, will grant us a security interest in all personal property, other than
receivables, located and to be located at the facility. The letter of commitment
requires Hammond Properties and the tenant to obtain and deliver to us an
unconditional and irrevocable letter of credit from a bank acceptable to us,
naming us beneficiary thereunder, in an amount equal to six months' debt service
or base rent under the lease, as the case may be, and that at such time as the
operations in the facility have generated EBITDAR coverage of at least two times
the base rent for eight consecutive fiscal quarters, the letter of credit may be
reduced to an amount equal to three months of the base rent then in effect. If,
however, after satisfying the conditions necessary to reduce the letter of
credit to three months' base rent, EBITDAR coverage subsequently drops below two
times base rent for two consecutive fiscal quarters, the letter of credit will
be increased to six months' base rent. The letter of commitment provides that
the lease will be cross-defaulted with any other lease or agreement between the
parties. The letter of commitment provides that the loan and lease will be
jointly and severally guaranteed by Hammond Properties, certain affiliates of
Hammond Properties and Gulf States Health Services, Inc. For information about
the financial condition of Gulf States Health Services, Inc., see the
description of the Covington and Denham Springs facilities above.

Purchase Options. The letter of commitment provides that the lease will
provide that so long as the tenant is not in default, and no event has occurred
which with the giving of notice or the passage of time or both would constitute
a default under its (and its affiliates) leases with us or any of our affiliates
or any of the leases with its subtenants, the tenant will have the option to
purchase the facility at the expiration of the initial term and each extension
term of the lease. The letter of commitment provides that the purchase price
shall be equal to the greater of (i) the appraised value of the facility,
assuming the lease remains in effect for 15 years and not taking into account
any purchase options contained therein, or (ii) the purchase price paid by us
for the facility, increased annually by an amount equal to the greater of (A)
2.5% per annum from the date of the lease, or (B) the rate of increase in the
CPI on each January 1. The parties will agree upon the notice and closing
periods applicable to these purchase options.

Net Worth Covenant. The letter of commitment provides that the loan and
lease documents will require that, as of the loan closing and throughout the
loan and lease terms, Hammond Properties, Hammond Hospital and Gulf States
Health Services, Inc. must maintain an aggregate tangible net worth in an amount
to be mutually agreed upon with us.

Commitment Fee. The letter of commitment provides that we will be entitled
to a commitment fee at the closing of the loan equal to $80,000, $25,000 of
which has already been paid. The letter of commitment further provides that we
will be entitled to a commitment fee at the closing of the sale transaction
equal to 1% of the purchase price, less the amount of all commitment fees
previously paid.

BLOOMINGTON, INDIANA

General. On February 28, 2005, we entered into a letter of commitment with
Monroe Hospital Operating Company, or Monroe Hospital, to develop a community
hospital in Bloomington, Indiana, which is approximately 50 miles from
Indianapolis, Indiana. The letter of commitment provides that we will enter into
a contract with Monroe Hospital or one of its affiliates to, among other things,
purchase the land. We intend to enter into a development agreement with an
affiliate of Monroe Hospital to develop the facility. The land is currently
owned by Southern Indiana Medical Park II, LLC, an entity owned by two members
and directors of Monroe Hospital. Southern Indiana Medical Park II, LLC and
Monroe Hospital have entered into a letter of intent relating to the purchase of
the land. The total development costs to develop the facility, including the
cost of the land, will be approximately $32.0 million.

Lease. We have formed a Delaware limited liability company, MPT of
Bloomington, LLC, which will own the facility. The letter of commitment provides
that, at the time we purchase the land, we will ground lease 100% of the land
and all improvements to be constructed thereon to Monroe Hospital for the
construction period. Following construction, the lease will continue for a term
of 15 years with three options to renew for five years each. The letter of
commitment provides that the lease will be a net-lease

with the tenant responsible for all costs of the facility, including, but not
limited to, taxes, utilities, insurance, maintenance and capital improvements.
The letter of commitment provides that the lease will require the tenant to pay
monthly rent in a per annum amount equal to 10.50% multiplied by the purchase
price of the land and the total amount of the funds disbursed under the
development agreement. During the construction period, the rent will be deferred
and will be paid after the construction period over the 15 year lease term. The
letter of commitment also provides that on January 1, 2007, and on each January
1 thereafter, the base rent will be increased by an amount equal to the greater
of (A) 2.5% per annum of the prior year's base rent, or (B) the percentage by
which the CPI on January 1 shall have increased over the CPI figure in effect on
the then just previous January 1. The letter of commitment provides that the
lease will also require the tenant to carry customary insurance which is
adequate to satisfy our underwriting standards, and require the tenant to pay us
on the commencement date of the lease an amount equal to $5,000 to cover the
cost of the physical inspections of the facility, which fee will, beginning on
January 1, 2006, and continuing on each January 1 thereafter, be increased by
2.5% per annum. The letter of commitment provides that the lease will be
cross-defaulted with any other lease between us and the tenant or its
affiliates.

Repair and Replacement Reserve. The letter of commitment provides that the
lease will require the tenant, beginning on the completion of construction of
the facility, to make annual deposits into a reserve account in the amount of
$2,500 per bed per year. The letter of commitment also provides that the lease
will require that beginning on the first January 1 after the completion of
construction, and on each January 1 thereafter, the payment of $2,500 per bed
per year into the improvement reserve will be increased by 2.5%.

Security. The letter of commitment provides that, as security for the
lease, the tenant will grant us a security interest in all personal property,
other than receivables, located and to be located at the facility. The letter of
commitment requires the tenant to obtain and deliver to us an unconditional and
irrevocable letter of credit from a bank acceptable to us, naming us beneficiary
thereunder, in an amount equal to one year's base rent under the lease, and
provide that at such time as the operations in the facility generated EBITDAR
coverage of at least two times the base rent for two consecutive fiscal years,
the letter of credit may be reduced to an amount equal to six months of the base
rent then in effect. The letter of commitment provides that the lease will be
cross-defaulted to any other lease or agreement between the parties.

Monroe Hospital is newly formed and has had no significant operations to
date. The development transaction is conditioned upon Monroe Hospital receiving
equity contributions of at least $9.0 million and maintaining sufficient
tangible net worth to absorb reasonable costs and expenses, including our lease
payments, during the start-up period. Monroe Hospital has executed a contract
with Surgical Development Partners, LLC, a hospital management company, to
manage the day-to-day operations of the hospital, including staffing,
scheduling, billing and collections, governmental compliance and relations, and
other functions. Surgical Development Partners, LLC intends to make a
substantial equity investment in Monroe Hospital. The letter of commitment
provides that we will have the right to require Monroe Hospital to replace the
management company under certain conditions.

Purchase Options. The letter of commitment provides that the lease will
provide that so long as Monroe Hospital is not in default under any lease with
us or any of the leases with its subtenants, at the expiration of the lease
Monroe Hospital will have the option, upon 60 days prior written notice, to
purchase the facility at a purchase price equal to the greater of (i) the
appraised value of the facility, which assumes the lease remains in effect for
15 years, or (ii) the total development costs, including any capital additions
funded by us, as increased by an amount equal to the greater of (A) 2.5% per
annum from the date of the lease, or (B) the rate of increase in the CPI on each
January 1.

Development Agreement. We have agreed to pay Monroe Hospital Development,
LLC, an affiliate of Surgical Development Partners, LLC, a developer fee of
approximately $850,000 and an additional amount to be agreed upon for post
construction development services.

Commitment Fee. The letter of commitment provides that we are entitled to
a commitment fee at closing equal to 0.5% of $32.0 million if closing occurs
before June 1, 2005, less the sum of $100,000

which we have already received as a commitment fee, and that we may increase the
commitment fee if closing occurs after May 31, 2005. We will also be entitled to
receive at closing the sum of $50,000 as a construction fee.

We cannot assure you that we will acquire or develop any of the Pending
Acquisition and Development Facilities on the terms described in this prospectus
or at all, because each of these transactions is subject to a variety of
conditions, including, in the case of the Pending Acquisition and Development
Facility under contract, our satisfactory completion of due diligence, receipt
of appraisals and other third party reports, obtaining of government and third
party approvals and consents, our proposed tenant's acquisition of the property
on which facilities are to be built, as well as other customary closing
conditions and, in the case of the transactions under letters of commitment,
negotiation and execution of mutually-acceptable definitive agreements, our
satisfactory completion of due diligence, receipt of appraisals that support the
purchase price set forth in the commitment letter and other third party reports,
obtaining of government and third party approvals and consents, approval by our
board of directors, and in certain cases the acquisition of the property on
which the facility is to be constructed from the current owner, as well as
satisfaction of customary closing conditions.

OUR ACQUISITION AND DEVELOPMENT PIPELINE

We have also entered into the following arrangements which, because of the
various contingencies that must be satisfied before these transactions can be
completed, we do not consider to be probable acquisitions or developments as of
the date of this prospectus.

DIVERSIFIED SPECIALTY INSTITUTES, INC. ACQUISITION AND DEVELOPMENT FUNDING

General. On March 3, 2005, we entered into a letter agreement with
Diversified Specialty Institutes, Inc., or DSI. An affiliate of DSI is the
proposed tenant of the women's hospital and medical office building in Bensalem,
Pennsylvania that we have contracted with to develop and leaseback. The letter
agreement provides that, subject to DSI identifying facilities for acquisition
or development, which it is not required to do, and subject to certain other
conditions set forth in the letter agreement, we have agreed to make available
to DSI or its affiliates acquisition and development funding in the total amount
of $50.0 million to be used to finance the potential future acquisition or
development of healthcare facilities, in each case subject to our due diligence
and approval. The arrangement will remain outstanding until March 2, 2006, and
be available to finance any acquisition facility or development facility that is
subject to definitive agreements as of March 2, 2006, notwithstanding that the
closing or completion of the acquisition facility or development facility may
not have occurred as of March 2, 2006. We have agreed that the definitive
documents relating to the arrangement must close by October 31, 2005.

DSI is not required to identify facilities for acquisition or development
and, if it does not, we have no obligation to provide funding to DSI. If funds
are drawn from the arrangement to fund an acquisition or development facility,
as applicable, we expect to enter into definitive documents with DSI. With
respect to any development facility, we expect to enter into a development
agreement with a developer, which may be an affiliate of DSI, to develop the
development facility.

Commitment Fee. The letter agreement provides that we are entitled to a
fee equal to 1% of the aggregate purchase price or development costs of any
facilities we acquire pursuant to this arrangement, $100,000 of which was paid
when the letter agreement was signed. The remainder of the fee will be due and
payable at the closing of future projects, with the fee on each project being
equal to 1% of that project's purchase price. We have agreed to give DSI a
credit on future payments of fees for the $100,000 paid at the execution of the
letter agreement.

Lease. We expect to form a Delaware limited liability company or a limited
partnership to own each facility acquired or developed pursuant to the
commitment. The letter of commitment provides that, at the time of our purchase
of any acquisition or development facility, we intend to lease back to the
applicable tenant 100% of the land and all improvements, including improvements
to be constructed in the case of a development facility, for a 15-year term,
with three options to renew for five years each, so long as the options are
exercised at least six months prior to the expiration of the lease or the
applicable extended

term. The letter of commitment provides that each lease will be a net-lease with
the tenant responsible for all costs of the facility, including, but not limited
to, taxes, utilities, insurance and maintenance.

For each development facility, the letter agreement provides that the
tenant will pay monthly rent during the construction period in a per year amount
equal to 10.75% multiplied by the total amount of the funds disbursed under the
development agreement. The letter agreement also provides that the lease
relating to a development facility to require the tenant to pay, following the
completion of construction of the facility, base rent in an amount equal to
10.75% per year of the total development costs, payable in monthly installments.
For an acquisition facility, we expect the lease to require the tenant to pay us
base rent equal to 10.75% of the purchase price of the facility. The letter
agreement provides that each lease will provide that commencing on the first
January 1 following the commencement of the lease with respect to an acquisition
facility, and on the first January 1 following the construction completion date
with respect to a development facility, and on each January 1 thereafter, the
base rent will be increased by an amount equal to the greater of (A) 2.5% per
year of the prior year's base rent, or (B) the percentage by which the CPI on
January 1 has increased over the CPI figure in effect on the then just previous
January 1. The letter of commitment also provides that each lease for an
acquisition facility and a development facility will require the tenant to carry
customary insurance which is adequate to satisfy our underwriting standards.

The letter agreement provides that each lease will require the tenant to
pay us on the commencement date of the lease an amount equal to $7,500 to cover
the cost of the physical inspections of the facility. The letter agreement also
provides that this inspection fee will increase at the rate of 2.5% per year
starting on the first January 1 following the commencement date of the lease, in
the case of an acquisition facility, or the completion date, in the case of a
development facility. In addition to the inspection fee, we also expect the
tenant to pay us a fee equal to $75,000 per development facility to cover our
inspection of the development facility during the construction period.

Capital Improvement Reserve. The letter agreement provides that each lease
will require, commencing on the date that construction has been completed with
respect to a development facility, or on the date of commencement of the lease
with respect to an acquisition facility, the tenant to make annual deposits into
a reserve account in the amount of $2,500 per bed per year. The letter agreement
also provides that each lease is expected to provide that on each January 1
thereafter, the payment of $2,500 per bed per year into the improvement reserve
will be increased by 2.5%. We expect that the lease will require all
extraordinary repair expenditures made in each year during the term of the lease
will be funded first from the reserve, and the tenant will pay into the reserve
such funds as necessary for all extraordinary repairs.

Security. The letter agreement provides that, as security for each lease,
the tenant will grant us a security interest in all personal property, other
than receivables, located and to be located at the facility. The letter
agreement provides that each lease will be cross-defaulted with any other leases
between the tenant, or its affiliates, and us, or our affiliates. The letter
agreement provides that each lease will require the tenant to obtain and deliver
to us an unconditional and irrevocable letter of credit from a bank acceptable
to us, naming us beneficiary thereunder, in an amount equal to one year's base
rent under the lease.

The letter agreement provides that each lease will require that, as of the
commencement date of the lease, the tenant to have a tangible net worth of no
less than $5.0 million in cash equity or shall have access to a working capital
line of no less than $5.0 million that is personally guaranteed by Dr.
Tannenbaum and such other persons as may be approved by us.

Purchase Options. The letter agreement provides that each lease will
provide that so long as tenant is not in default, and no event has occurred
which with the giving of notice or the passage of time or both would constitute
a default under its, and its affiliates, leases with us or any of our affiliates
or any of the leases with its subtenants, at the expiration of the initial term
of the lease, and at the expiration of each extended term thereafter, upon at
least 60 days' prior written notice, tenant will have the option to purchase the
facility at a purchase price equal to the greater of (i) the appraised value of
the facility, or, in the case of a development facility (ii) the total
development costs (including any capital additions

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funded by us), as increased by an amount equal to the greater of (A) 2.5% per
year from the date of the lease, or (B) the rate of increase in the CPI on each
January 1, or, in the case of an acquisition facility, (ii) the amount of (A)
the purchase price paid for the facility, including costs of third party
reports, legal fees and all other acquisition costs.

ADDITIONAL ARRANGEMENTS

On May 3, 2005 we entered into an arrangement with Prime Healthcare
Services, LLC or Prime Healthcare, an affiliate of DVH, to purchase a hospital
facility in California for a purchase price of $25.0 million, subject to
adjustment based on an appraisal that we intend to obtain. The transaction is
subject to Prime Healthcare's acquisition of the facility from the current owner
and a number of other conditions. Prime Healthcare has not yet entered into an
agreement or letter of intent to purchase the facility from the current owner
and we cannot assure you that it will be able to acquire the facility. If we
purchase the facility from Prime Healthcare, we will lease it back to an
affiliate of Prime Healthcare for a term of 15 years with three renewal options
of five years each. The lease will require the tenant to pay base rent in an
amount equal to 10% of the purchase price, which rent shall increase each year
by the greater of 2.0% or the increase in CPI from the prior year. The letter of
commitment provides that, as security for the tenant's obligations under the
lease, DHV, Desert Valley Hospital, Inc. and Desert Valley Medical Group, Inc.
will guaranty the lease and the tenant will grant us a security interest in all
of its personal property except accounts receivable. We have been paid a fee of
$150,000 as consideration for entering into this arrangement. The lease will be
cross-defaulted with all other leases and other agreements between us or our
affiliates, on the one hand, and the tenant or its affiliates, on the other
hand.

On July 26, 2005, we entered into a letter of commitment with DVH to
purchase a hospital facility located in Sherman Oaks, California for a purchase
price of $20.0 million, subject to adjustment based on an appraisal of the
facility. The letter of commitment also provides that we will make available to
DVH $5.0 million for expansion of the facility. The transaction is subject to
DVH's acquisition of the facility from the current owner. If we purchase the
facility, we will lease it back to DVH, or an affiliate of DVH, for a period of
15 years with three five-year renewal options. The lease will require the tenant
to pay base rent in an amount equal to 10.5% of the purchase price, which rent
shall be increased to include, on a pro rated basis, 10.5% of any amounts
financed by us for the expansion of the facility. The rent shall also increase
annually by the greater of 2.0% or the increase in CPI from the prior year. The
letter of commitment provides that, as security for the tenant's obligations
under the lease, DVH, Desert Valley Hospital, Inc. and Desert Valley Medical
Group, Inc. will guaranty the lease and the tenant will grant us a security
interest in all its personal property, except for accounts receivable. The lease
will also be cross-defaulted with all other leases and other agreements between
us or our affiliates, on one hand, and the lessee or its affiliates on the other
hand. As consideration for entering into this arrangement, DVH has paid us a
commitment fee of $100,000. The letter of commitment provides that DVH will pay
us an additional $25,000 commitment fee upon the execution of a development
agreement in connection with the expansion of the facility.

We cannot assure you that we will acquire or develop any of the facilities
in our acquisition and development pipeline on the terms described in this
prospectus or at all, because each of these transactions is subject to a variety
of conditions, including negotiation and execution of mutually-acceptable
definitive agreements, our satisfactory completion of due diligence, receipt of
appraisals that support the purchase price set forth in the letter agreements
and other third party reports, obtaining of government and third party approvals
and consents, approval by our board of directors, and in certain cases our
proposed tenants' acquisition of the facility from the current owner, as well as
satisfaction of customary closing conditions.

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MANAGEMENT

OUR DIRECTORS AND EXECUTIVE OFFICERS

Our business and affairs are managed under the direction of our board of
directors, which consists of eight members, three of whom are members of our
senior management team and five of whom our board of directors has determined to
be independent in accordance with the listing standards established by the New
York Stock Exchange, or NYSE. Each director is elected to serve until the next
annual meeting of stockholders and until his successor is elected and qualified.
The current terms of our present directors will expire at our 2005 annual
meeting of stockholders. The following table sets forth certain information
regarding our executive officers and directors:

NAME AGE POSITION
- ---- --- --------

Edward K. Aldag, Jr. ..................... 41 Chairman of the Board, President and Chief
Executive Officer
R. Steven Hamner.......................... 48 Director, Executive Vice President and
Chief Financial Officer
William G. McKenzie....................... 47 Vice Chairman of the Board
Emmett E. McLean.......................... 50 Executive Vice President, Chief Operating
Officer, Treasurer and Assistant Secretary
Michael G. Stewart........................ 50 Executive Vice President, General Counsel
and Secretary
Virginia A. Clarke........................ 46 Director
G. Steven Dawson.......................... 47 Director
Bryan L. Goolsby.......................... 54 Director
Robert E. Holmes, Ph.D. .................. 63 Director*
L. Glenn Orr, Jr. ........................ 65 Director

- ------------------------

* Mr. Holmes has been designated as our lead independent director.

The following is a summary of certain biographical information concerning
our directors and executive officers:

Edward K. Aldag, Jr. is one of our founders and has served as our president
and chief executive officer since August 2003, and as chairman of the board
since March 2004. Mr. Aldag served as our vice chairman of the board from August
2003 until March 2004 and as our secretary from August 2003 until March 2005.
Prior to that, Mr. Aldag served as an executive officer and director with our
predecessor from its inception in August 2002 until August 2003. From 1986 to
2001, Mr. Aldag managed two private real estate companies, Guilford Capital
Corporation and Guilford Medical Properties, Inc., that had aggregate assets
valued at more than $500 million. Mr. Aldag played an integral role in the
formation of investor groups, structuring the financing, and closing the
transactions. Guilford Medical Properties, Inc. owned numerous rehabilitation
hospitals across the country and net-leased them to four different national
healthcare providers. Mr. Aldag served as president and a member of the board of
directors of Guilford Medical Properties, Inc. from its inception until selling
his interest in the company in 2001. Mr. Aldag was the president and a member of
the board of directors of Guilford Capital Corporation from 1998 to 2001 and
from 1990 to 1998 served as executive vice president, chief operating officer
and a member of the board of directors. Mr. Aldag received his B.S. in Commerce
& Business from the University of Alabama with a major in corporate finance.

R. Steven Hamner is one of our founders and has served as our executive
vice president and chief financial officer since September 2003 and as a
director since February 2005. In August and September 2003, Mr. Hamner served as
our executive vice president and chief accounting officer. From October 2001
through March 2004, he was the managing director of Transaction Analysis LLC, a
company that provided interim and project-oriented accounting and consulting
services to commercial real estate owners

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and their advisors. From June 1998 to September 2001, he was vice president and
chief financial officer of United Investors Realty Trust, a publicly-traded
REIT. For the 10 years prior to becoming an officer of United Investors Realty
Trust, he was employed by the accounting and consulting firm of Ernst & Young
LLP and its predecessors. Mr. Hamner received a B.S. in Accounting from
Louisiana State University. Mr. Hamner is a certified public accountant.

William G. McKenzie is one of our founders and has served as the vice
chairman of our board of directors since September 2003. Mr. McKenzie has served
as a director since our formation and served as the executive chairman of our
board of directors in August and September 2003. From May 2003 to August 2003,
he was an executive officer and director of our predecessor. From 1998 to the
present, Mr. McKenzie has served as president, chief executive officer and a
board member of Gilliard Health Services, Inc., a privately-held owner and
operator of acute care hospitals. From 1996 to 1998, he was executive vice
president and chief operating officer of the Mississippi Hospital
Association/Diversified Services, Inc. and the Health Insurance Exchange, a
mutual company and HMO. From 1994 to 1996, Mr. McKenzie was senior vice
president of Managed Care and executive vice president of Physician Solutions,
Inc., a subsidiary of Vaughan HealthCare, a private healthcare company in
Alabama. From 1981 to 1994, Mr. McKenzie was hospital administrator and chief
financial officer and held other management positions with several private acute
care organizations. Mr. McKenzie received a Masters of Science in Health
Administration from the University of Colorado and a B.S. in Business
Administration from Troy State University. He has served in numerous capacities
with the Alabama Hospital Association.

Emmett E. McLean is one of our founders and has served as our executive
vice president, chief operating officer and treasurer since September 2003. Mr.
McLean has served as assistant secretary since April 2004. In August and
September 2003, Mr. McLean also served as our chief financial officer. Mr.
McLean was one of our directors from September 2003 until April 2004. From June
to September, 2003, Mr. McLean served as executive vice president, chief
financial officer, and treasurer and board member of our predecessor. From 2000
to 2003, Mr. McLean was a private investor and, for part of that period, served
as a consultant to a privately held company. From 1995 to 2000, Mr. McLean
served as senior vice president -- development, secretary, treasurer and a board
member of PsychPartners, L.L.C., a healthcare services and practice management
company. From 1992 to 1994, he was senior vice president, chief financial
officer and secretary of Diagnostic Health Corporation, a healthcare services
company. From 1984 to 1992, he worked for Dean Witter Reynolds, Inc., now Morgan
Stanley, and Smith Barney, now Citigroup, in the corporate finance departments
of their respective investment banking businesses. From 1977 to 1982, Mr. McLean
worked as a commercial banker for SunTrust Banks, Inc. Mr. McLean received an
MBA from the University of Virginia and a B.A. in Economics from The University
of North Carolina.

Michael G. Stewart has served as our general counsel since October 2004 and
as our executive vice president and secretary since March 2005. Prior to October
2004, Mr. Stewart worked as a private investor, healthcare consultant and
novelist. He advised physician and surgery groups on emerging healthcare issues
for four years before publishing three novels. From 1993 until 1995, he served
as vice president and general counsel of Complete Health Services, Inc., a
managed care company, and its successor corporation, United Healthcare of the
South, a division of United Healthcare, Inc. (NYSE: UNH). Mr. Stewart was
engaged in the private practice of law between 1988 and 1993. Mr. Stewart holds
a J.D. degree from Cumberland School of Law of Samford University and a B.S. in
Business Administration from Auburn University.

Virginia A. Clarke has served as a member of our board of directors since
February 2005. Ms. Clarke has been a search consultant in the global executive
search firm of Spencer Stuart & Associates since 1997. Ms. Clarke was with DHR
International, an executive search firm, during 1996. Prior to that, Ms. Clarke
spent 10 years in the real estate investment management business with La Salle
Partners and Prudential Real Estate Investors, where her activities included
asset management, portfolio management, capital raising and client service, and
two years with First National Bank of Chicago. Ms. Clarke is a member of the
Pension Real Estate Association. Ms. Clarke graduated from the University of
California at

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Davis and received a master's degree in management from the J.L. Kellogg
Graduate School of Management at Northwestern University.

G. Steven Dawson has served as a member of our board of directors since
April 2004. He is currently a private investor and serves on the boards of five
other real estate investment trusts in addition to his service for us, as
follows: American Campus Communities (NYSE: ACC), AmREIT, Inc. (AMEX: AMY),
Desert Capital REIT (a non-listed public mortgage company), Sunset Financial
Resource, Inc. (NYSE: SFO), and Trustreet Properties, Inc. (NYSE: TSY). Mr.
Dawson is chairman of the audit committees for each of these companies except
Sunset Financial Resource, Inc. and Trustreet Properties, Inc. From July 1990 to
September 2003, he was chief financial officer and senior vice president-finance
of Camden Property Trust (NYSE: CPT) and its predecessors, a REIT engaged in the
development, ownership, management, financing and sale of multi-family
properties throughout the southern United States. Mr. Dawson is involved in
various charitable, non-profit and educational organizations, including serving
on the board of His Grace Foundation, a charity providing services to the
families of children in the Bone Marrow Transplant Unit of Texas Children's
Hospital, and as a member of the Real Estate Roundtable at the Mays Graduate
School of Business at Texas A&M University. Mr. Dawson received a degree in
business from Texas A&M University.

Bryan L. Goolsby has served as a member of our board of directors since
February 2005. Mr. Goolsby is the managing partner of the law firm Locke Liddell
& Sapp LLP. Mr. Goolsby is an associate board member of the Board of Governors
of the National Association of Real Estate Investment Trusts. He is also a
member of the National Multi-Family Housing Association and the Pension Real
Estate Association, and an associate board member of the Edwin L. Cox School of
Business at Southern Methodist University. He serves as a director of Desert
Capital REIT, Inc. and AmREIT, Inc. Mr. Goolsby received a J.D. degree from the
University of Texas, and is a Certified Public Accountant.

Robert E. Holmes, Ph.D., has served as a member of our board of directors
since April 2004. Mr. Holmes, our lead independent director, is the Dean and
Professor of Management of the School of Business at the University of Alabama
at Birmingham, positions he has held since 1999. From 1995 to 1999, he was Dean
of the Olin Graduate School of Business at Babson College in Wellesley,
Massachusetts. Prior to that, he was Dean of the James Madison University
College of Business in Harrisonburg, Virginia for 12 years. He is the author of
more than 20 scholarly publications, is past president of the Southern Business
Administration Association, and is actively involved in the International
Association for Management Education. Mr. Holmes received a bachelor's degree
from the University of Texas at Austin, an MBA from University of North Texas,
and received his Ph.D. from the University of Arkansas with an emphasis on
management strategy.

L. Glenn Orr, Jr. has served as a member of our board of directors since
February 2005. Mr. Orr has been president and chief executive officer of The Orr
Group, which provides investment banking and consulting services for
middle-market companies, since 1995. Prior to that, he was chairman of the board
of directors, president and chief executive officer of Southern National
Corporation from 1990 until its merger with Branch Banking & Trust in 1995. Mr.
Orr is member of the board of directors, chairman of the governance/compensation
committee and a member of the executive committee of Highwoods Properties, Inc.
(NYSE: HIW). He is also a member of the boards of directors of General Parts,
Inc., Village Tavern, Inc. and Broyhill Management Fund, Inc. Mr. Orr previously
served as president and chief executive officer of Forsyth Bank and Trust Co.,
president of Community Bank in Greenville, South Carolina and president of the
North Carolina Bankers Association. He is a trustee of Wake Forest University.

CORPORATE GOVERNANCE -- BOARD OF DIRECTORS AND COMMITTEES

Our board of directors has adopted a code of ethics and business conduct
relating to the conduct of our business by our employees, officers and
directors, and has also adopted corporate governance guidelines to assist the
board of directors in the administration of its duties. Our corporate governance
guidelines and the listing standards of the NYSE require that a majority of the
members of our board of directors be

104

independent. Board members are recommended for nomination by our ethics,
nominating and corporate governance committee. Nominations must satisfy the
standards established by that committee for membership on our board of
directors.

Our directors generally meet quarterly or more frequently if necessary. The
directors are regularly kept informed about our business at meetings of the
board of directors and its committees and through supplemental reports and
communications. Our independent directors meet regularly in executive sessions
without the presence of any corporate officers. Mr. Holmes has been selected by
the board of directors to serve as lead independent director and in that
capacity presides at meetings of the non-management directors, coordinates the
preparation for meetings of the board of directors with our chief executive
officer, and serves as the liaison between the board of directors and our chief
executive officer.

Our board of directors has established audit, compensation, ethics,
nominating and corporate governance and investment committees, the principal
functions and membership of which are briefly described below. The charters of
the audit, compensation and ethics, nominating and corporate governance
committees, along with our code of ethics and business conduct and our corporate
governance guidelines, are available on our website at
www.medicalpropertiestrust.com. Information on our website should not be
considered a part of this prospectus.

In February 2005, we expanded the size of our board of directors from seven
to 11 directors and elected four new directors, Messrs. Goolsby, Hamner and Orr
and Ms. Clarke. In connection with the election of these new directors, our
board reconstituted our audit, compensation and ethics, nominating and corporate
governance committees and established the investment committee of our board. On
April 6, 2005, three of our independent directors who had become members of our
board in April 2004 resigned as directors.

AUDIT COMMITTEE

Our board of directors has established an audit committee, which is
comprised of three independent directors, Messrs. Dawson and Orr and Ms. Clarke.
Mr. Dawson serves as the chairperson of the audit committee and also serves on
the audit committees of three other public companies. Our board of directors has
determined that Mr. Dawson's service on the audit committees of other public
companies does not impair his ability to serve on our audit committee. The audit
committee oversees (i) our accounting and financial reporting processes; (ii)
the integrity and audits of our financial statements; (iii) our compliance with
legal and regulatory requirements; (iv) the qualifications and independence of
our independent auditors; and (v) the performance of our internal and
independent auditors. The audit committee also:

- has sole authority to appoint or replace our independent auditors;

- has sole authority to approve in advance all audit and non-audit services
by our independent auditors;

- monitors compliance of our employees with our standards of business
conduct and conflict of interest policies; and

- meets at least quarterly with our senior executive officers, internal
audit staff and our independent auditors in separate executive sessions.

The specific functions and responsibilities of the audit committee are set
forth in the audit committee's charter. Our board of directors has determined
that each of the members of the audit committee is financially literate, as such
term is interpreted by our board of directors. In addition, our board of
directors has determined that Mr. Dawson qualifies as an "audit committee
financial expert" under the current SEC regulations. Our management has primary
responsibility for the financial statements and internal control over financial
reporting. The audit committee engages an independent registered public
accounting firm to conduct an annual audit of the Company's financial statements
in accordance with the standards of the Public Company Accounting Oversight
Board.

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COMPENSATION COMMITTEE

Our board of directors has established a compensation committee, which is
comprised of three independent directors, Messrs. Dawson, Goolsby and Orr. Mr.
Orr serves as the chairperson of the compensation committee. The principal
functions of the compensation committee are to:

- evaluate the performance of our executive officers;

- review and approve the compensation for our executive officers;

- review and make recommendation to the board with respect to our incentive
compensation plans and equity-based plans; and

- administer our equity incentive plan.

The compensation committee also reviews and approves corporate goals and
objectives relevant to the chief executive officer's compensation, evaluates the
chief executive officer's performance in light of those goals and objectives,
and establishes the chief executive officer's compensation levels based on its
evaluation. The compensation committee has the authority to retain and terminate
any compensation consultant to be used to assist in the evaluation of the
compensation of the chief executive officer or any other executive officer or
director. The specific functions and responsibilities of the compensation
committee are set forth in more detail in the compensation committee's charter.

ETHICS, NOMINATING AND CORPORATE GOVERNANCE COMMITTEE

Our board of directors has established an ethics, nominating and corporate
governance committee. Membership of the committee is comprised of three
independent directors, Messrs. Dawson, Goolsby and Holmes. Mr. Holmes serves as
the chairperson of this committee. The ethics, nominating and corporate
governance committee is responsible for, among other things, recommending the
nomination of qualified individuals to become directors, recommending the
composition of committees of our board, periodically reviewing the board's
performance and effectiveness as a body, recommending proposed changes to the
board of directors, and periodically reviewing our corporate governance
guidelines and policies. The specific functions and duties of the ethics,
nominating and corporate governance committee are set forth in the committee's
charter.

INVESTMENT COMMITTEE

Our board of directors has established an investment committee. Membership
of the committee is comprised of all of our current directors. Mr. Aldag serves
as the chairperson of this committee. The investment committee is authorized to,
among other things, consider and take action with respect to all acquisitions,
developments and leasing of healthcare facilities in which our aggregate
investment will exceed $10.0 million.

VACANCIES ON OUR BOARD OF DIRECTORS

Any director may resign at any time and may be removed with or without
cause by the stockholders upon the affirmative vote of the holders of at least
two-thirds of all of our common stock outstanding and entitled to vote generally
for the election of directors. Unless filled by a vote of the stockholders in
the event a director is removed as permitted by Maryland law, a vacancy created
by death, resignation, removal, adjudicated incompetence or other incapacity of
a director may be filled by a vote of a majority of the remaining directors
although less than a quorum. Vacancies created by an increase in the number of
directors must be filled by a vote of majority of the entire board.

LIMITED LIABILITY AND INDEMNIFICATION

The MGCL permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholder for money damages except for liability resulting
from actual receipt of an improper benefit or profit in money, property or
services or active and
106

deliberate dishonesty established by a final judgment as being material to the
cause of action. Our charter limits the personal liability of our directors and
officers for money damages to the fullest extent permitted under Maryland law.

The MGCL requires a corporation, unless its charter provides otherwise,
which our charter does not, to indemnify a director or officer who has been
successful on the merits or otherwise, in the defense of any proceeding to which
he or she is made a party by reason of his or her service in that capacity. See
"Certain Provisions of Maryland Law and of Our Charter and
Bylaws -- Indemnification and Limitation of Directors' and Officers' Liability."

We maintain a directors and officers liability insurance policy. We have
also entered into indemnification agreements with each of our directors and
executive officers, which we refer to in this context as indemnitees. The
indemnification agreements provide that we will, to the fullest extent permitted
by Maryland law, indemnify and defend each indemnitee against all losses and
expenses incurred as a result of his current or past service as our director or
officer, or incurred by reason of the fact that, while he was our director or
officer, he was serving at our request as a director, officer, partners,
trustee, employee or agent of a corporation, partnership, joint venture, trust,
other enterprise or employee benefit plan. We have agreed to pay expenses
incurred by an indemnitee before the final disposition of a claim provided that
he provides us with a written affirmation that he has met the standard of
conduct required for indemnification and a written undertaking to repay the
amount we pay or reimburse if it is ultimately determined that he has not met
the standard of conduct required for indemnification. We are to pay expenses
within 20 days of receiving the indemnitee's written request for such an
advance. Indemnitees are entitled to select counsel to defend against
indemnifiable claims.

The general effect to investors of any arrangement under which any person
who controls us or any of our directors, officers or agents is insured or
indemnified against liability is a potential reduction in distributions to our
stockholders resulting from our payment of premiums associated with liability
insurance and payment of indemnifiable expenses and losses.

The SEC takes the position that indemnification against liabilities arising
under the Securities Act is against public policy and unenforceable. As a
result, indemnification of our directors and officers may not be allowed for
liabilities arising from or out of a violation of state or federal securities
laws.

DIRECTOR COMPENSATION

As compensation for serving on our board of directors, each of our
independent directors receives an annual fee of $20,000 and an additional $1,000
for each board of directors meeting attended. In addition, each independent
director is paid $1,000 for attendance at each meeting of a committee on which
he serves. Committee chairmen receive an additional $5,000 per year except that
the audit committee chairman receives an additional $10,000 per year. In
addition, we reimburse our directors for their reasonable out-of-pocket expenses
incurred in attending board of directors and committee meetings. Directors who
are also officers or employees of our company receive no additional compensation
for their service as directors. At the time of each annual meeting of our
stockholders following his or her election to the board of directors, each
independent director will receive 2,000 shares of our common stock, restricted
as to transfer for three years, or a comparable number of deferred stock units.
Our compensation committee may change the compensation of our independent
directors in its discretion.

Upon joining our board of directors, each independent director received a
non-qualified option to purchase 20,000 shares of our common stock with an
exercise price of $10.00 per share. One-third of these options vested upon
grant. One-half of the remaining options will vest on each of the first and
second anniversaries of the date of grant. In addition to this option to
purchase stock, each of our independent directors has been awarded 2,500
deferred stock units, which represent the right to receive 2,500 shares of
common stock at no cost in October 2007 for Messrs. Dawson and Holmes and 2,500
shares of common stock at no cost in March 2008 for Ms. Clarke and Messrs.
Goolsby and Orr.

107

EXECUTIVE COMPENSATION

The following table sets forth the compensation paid or earned by our chief
executive officer and our other executive officers for 2003 and 2004:

OTHER ANNUAL ALL OTHER
NAME AND POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION
- ----------------- ---- -------- -------- ------------ ------------

Edward K. Aldag, Jr. ........................... 2004 $350,000 $350,000 $50,462(1) $30,769(2)
Chairman, Chief Executive 2003 145,833(3) 145,833 10,492(4) 9,249(5)
Officer and President
Emmett E. McLean................................ 2004 $250,000 $250,000 $24,385(6) $15,385(2)
Executive Vice President, 2003 104,167(3) 104,167 -- 10,896(7)
Chief Operating Officer, Treasurer and
Assistant Secretary
R. Steven Hamner................................ 2004 $250,000 $250,000 $24,385(6) $15,385(2)
Executive Vice President 2003 104,167(3) 104,167 -- 5,918(8)
and Chief Financial Officer
William G. McKenzie............................. 2004 $175,000 $175,000 $ -- $ --
Vice Chairman of the Board 2003 72,917(3) 72,917 -- --
Michael G. Stewart.............................. 2004 $ 43,527(9) $ 42,188 $ 1,700(10)
Executive Vice President, 2003 -- -- -- --
Secretary and General Counsel

- ---------------

(1) Represents a $12,000 automobile allowance and $25,000 payable to Mr. Aldag
to reimburse him for the cost of tax preparation and financial planning
services and $13,462 to reimburse Mr. Aldag for his tax liabilities
associated with such payment.

(2) Represents reimbursement for life insurance premiums of $20,000 for Mr.
Aldag and $10,000 for each of Messrs. McLean and Hamner and reimbursement
of $10,769 for Mr. Aldag and $5,385 for each of Messrs. McLean and Hamner
for tax liabilities associated with such premium reimbursements, but does
not include any matching contributions under the 401(k) plan that we expect
to adopt in 2004.

(3) For the partial year period from our inception in August 2003 until
December 31, 2003.

(4) Represents a $7,000 automobile allowance and $3,492 payable to Mr. Aldag to
reimburse him for the cost of tax preparation and financial planning
services.

(5) Represents reimbursement for life insurance premiums of $9,249.

(6) Represents a $9,000 automobile allowance and $10,000 for the named
executive officers to reimburse them for the cost of tax preparation
services and $5,385 for the named executive officers to reimburse them for
their tax liabilities associated with such tax preparation cost
reimbursement.

(7) Represents reimbursement for life insurance premiums of $10,896.

(8) Represents reimbursement for life insurance premiums of $5,918.

(9) For the partial year period from October 25, 2004, Mr. Stewart's date of
hire, to December 31, 2004. Had Mr. Stewart been employed for the full year
2004, he would have been entitled to a base salary of $225,000 during 2004.
Mr. Stewart's employment agreement was amended effective April 28, 2005.
The amended employment agreement provides for an annual base salary of
$250,000.

(10) Represents automobile allowance.

EMPLOYMENT AGREEMENTS

We have employment agreements with each of the named executive officers.
These employment agreements provide the following annual base salaries: Edward
K. Aldag, Jr., $350,000; Emmett E. McLean, $250,000; R. Steven Hamner, $250,000;
Michael G. Stewart, $250,000; and William G. McKenzie, $175,000. The base
salaries for Messrs. Aldag, McLean and Hamner were increased by 5% effective
January 1, 2005. On each January 1 hereafter, each of the executive officers is
to receive a minimum increase in his base salary equal to the increase in the
Consumer Price Index. These agreements provide that the executive officers,
other than Mr. McKenzie, agree to devote substantially all of their business
time to our operation. The employment agreement for each of the named executive
officers is for a three year term which is automatically extended at the end of
each year within such term for an additional one year period, unless either
party gives notice of non-renewal as provided in the agreement. These employment
agreements permit us to terminate each executive's employment with appropriate
notice for or without "cause." "Cause" is generally defined to mean:

- conviction of, or the entry of a plea of guilty or nolo contendere to, a
felony (excluding any felony relating to the negligent operation of a
motor vehicle or a conviction or plea of guilty or nolo contendere
arising under a statutory provision imposing per se criminal liability
due to the position

108

held by the executive with us, provided the act or omission of the
executive or officer with respect to such matter was not taken or omitted
to be taken in contravention of any applicable policy or directive of the
board of directors);

- a willful breach of the executive's duty of loyalty which is materially
detrimental to us;

- a willful failure to perform or adhere to explicitly stated duties that
are consistent with the executive's employment agreement, or the
reasonable and customary guidelines of employment or reasonable and
customary corporate governance guidelines or policies, including, without
limitation, the business code of ethics adopted by the board of
directors, or the failure to follow the lawful directives of the board of
directors provided such directives are consistent with the terms of the
executive's employment agreement, which continues for a period of 30 days
after written notice to the executive; and

- gross negligence or willful misconduct in the performance of the
executive's duties.

Each of the named executive officers has the right under his employment
agreement to resign for "good reason." The following constitute good reason
under the employment agreements: (i) the employment agreement is not
automatically renewed by the company; (ii) the termination of certain incentive
compensation programs; (iii) the termination or diminution of certain employee
benefit plans, programs or material fringe benefits (other than for Mr.
McKenzie); (iv) the relocation of our principal office outside of a 100 mile
radius of Birmingham, Alabama (in the case of Mr. Aldag); or (v) our breach of
the employment agreement which continues uncured for 30 days. In addition, in
the case of Mr. Aldag, the following constitute good reason: (i) his removal
from the board of directors without cause or his failure to be nominated or
elected to the board of directors; or (ii) any material reduction in duties,
responsibilities or reporting requirements, or the assignment of any duties,
responsibilities or reporting requirements that are inconsistent with his
positions with us.

The executive employment agreements provide a monthly car allowance of
$1,000 for Mr. Aldag and $750 for each of Messrs. McLean, Hamner and Stewart.
Messrs. Aldag, McLean, Hamner and Stewart are also reimbursed for the cost of
tax preparation and financial planning services, up to $25,000 annually for Mr.
Aldag and $10,000 annually for each of Messrs. McLean, Hamner and Stewart. We
also reimburse each executive for the income tax he incurs on the receipt of
these tax preparation and financial planning services. In addition, the
employment agreements provide for annual paid vacation of six weeks for Mr.
Aldag and three weeks for Messrs. McLean, Hamner and Stewart and various other
customary benefits. The employment agreements also provide that Mr. Aldag will
receive up to $20,000 per year in reimbursement for life insurance premiums,
which amount is to increase annually based on the increase in the CPI for such
year, and that Messrs. McLean, Hamner and Stewart will receive up to $10,000 per
year in reimbursement for life insurance premiums which amount is to increase
annually based on the increase in the CPI for such year. We also reimburse each
executive for the income tax he incurs on the receipt of these premium
reimbursements.

We have the right to obtain a key man life insurance policy for the benefit
of the company on the life of each of our executives with a death benefit equal
to the death benefit of such executive's whole life policy.

The employment agreements referred to above provide that the executive
officers are eligible to receive the same benefits, including medical insurance
coverage and retirement plan benefits in a 401(k) plan to the same extent as
other similarly situated employees, and such other benefits as are commensurate
with their position. Participation in employee benefit plans is subject to the
terms of said benefit plans as in effect from time to time.

If the named executive officer's employment ends for any reason, we will
pay accrued salary, bonuses and incentive payments already determined, and other
existing obligations. In addition, if we terminate the named executive officer's
employment without cause or if any of them terminates his employment for good
reason, we will be obligated to pay (i) a lump sum payment of severance equal to
the sum of (x) the product of three and the sum of the salary in effect at the
time of termination plus the average cash bonus
109

(or the highest cash bonus, in the case of Mr. Aldag) paid to such executive
during the preceding three years, grossed up for taxes in the case of Mr. Aldag,
and (y) the incentive bonus prorated for the year in which the termination
occurred, (ii) other than for Mr. McKenzie, the cost of the executive's
continued participation in the company's benefit and welfare plans (other than
the 401(k) plan) for a three year period (or for a five year period in the case
of Mr. Aldag), and (iii) certain other benefits as provided for in the
employment agreement. Additionally, in the event of a termination by us for any
reason other than cause or by the executive for good reason, all of the options
and restricted stock granted to the executive will become fully vested, and the
executive will have whatever period remains under the options in which to
exercise all vested options.

In the event of a termination of the employment of our executives as a
result of death, then in addition to the accrued salary, bonus and incentive
payments due to them, they shall become fully vested in their options and
restricted stock, and their respective beneficiaries will have whatever period
remains under the options to exercise such options. In addition, the executives
would be entitled to their prorated incentive bonuses.

In the event the employment of our executives ends as a result of a
termination by us for cause or by the executives without good reason, then in
addition to the accrued salary, bonuses and incentive payments due to them, the
executives would be entitled to exercise their vested stock options pursuant to
the terms of the grant, but all other unvested options and restricted stock
would be forfeited.

Upon a change of control, the named executive officers will become fully
vested in their options and restricted stock and will have whatever period
remains under the option in which to exercise their options. In addition, if any
executive's employment is terminated by us for cause or by the executive without
good reason in connection with a change of control, the executive will be
entitled to receive an amount equal to the largest cash compensation paid to the
executive for any twelve month period during his tenure multiplied by three. In
general terms, a change of control occurs:

- if a person, entity or affiliated group (with certain exceptions)
acquires more than 50% of our then-outstanding voting securities;

- if we merge into or complete a share exchange, consolidation or other
business combination transaction with another entity unless the holders
of our voting stock immediately prior to the merger have at least 50% of
the combined voting power of the securities in the merged entity or its
parent; or

- upon the liquidation, dissolution, sale or disposition of all or
substantially all of our assets such that after that transaction the
holders of our voting stock immediately prior to the transaction own less
than 50% of the voting securities of the acquiror or its parent.

If payments become due as a result of a change in control and the excise
tax imposed by Code Section 4999 applies, the terms of the employment agreements
require us to gross up the amount payable to the executive by the amount of this
excise tax plus the amount of income and other taxes due as a result of the
gross up payment.

For an 18 month period after termination of an executive's employment for
any reason other than (i) termination by us without cause or (ii) termination by
the executive for good reason, each of the executives under these employment
agreements has agreed not to compete with us by working with or investing in,
subject to certain limited exceptions, any enterprise engaged in a business
substantially similar to our business as it was conducted during the period of
the executive's employment with us.

The employment agreements provide that these named executive officers are
eligible to participate in our equity incentive plan, as described in the
section below titled "Equity Incentive Plan." The employment agreements also
provide that the named executive officers are eligible to receive annual bonuses
under our bonus policy. See "Annual Incentive Bonus Policy."

110

BENEFIT PLANS

ANNUAL INCENTIVE BONUS POLICY

Our compensation committee has adopted an incentive bonus policy for 2005.
This policy provides that our executive officers will receive cash bonuses of
not less than 40% nor more than 100% of their base salaries for 2005 if certain
targets or objectives are met. At the election of the executive officer, any
portion of the bonus for 2005 may be taken in our common stock. Our compensation
committee will reevaluate the incentive bonus policy for our executive officers
on an annual basis, subject to those provisions in our executive officers'
employment agreements that provide that the executives will receive not less
than 40% nor more than 100% of their base salaries under the policy. In
addition, the compensation committee may approve any additional bonus awards to
any executive officer.

401(K) PLAN

Our board of directors has approved the adoption of a Section 401(k) plan
covering our eligible employees. The plan will be a safe harbor plan providing
that each participant must complete one year of service before becoming eligible
for profit sharing contributions, we will match each dollar, dollar for dollar
for the first 3%, then 50% for each dollar of the next 2%, of each participant's
salary, participants' elective contributions and safe harbor contributions will
be fully vested when made, and profit sharing contributions will vest over six
years.

EQUITY INCENTIVE PLAN

We have adopted the Amended and Restated Medical Properties Trust, Inc.
2004 Equity Incentive Plan, or equity incentive plan, for the purpose of
attracting and retaining directors, executive officers and other key employees
and consultants, including officers and employees of our operating partnership.
The equity incentive plan provides that the aggregate number of shares of common
stock as to which awards can be made pursuant to the equity incentive plan is
791,180. On April 25, 2005, our compensation committee awarded 82,000 shares of
restricted stock to Mr. Stewart and certain non-management employees. The shares
awarded to the non-management employees will vest 20% per year over five years
beginning on July 7, 2006, provided they remain our employees. On October 6,
2004, our compensation committee awarded 106,000 shares of restricted stock to
Messrs. Aldag, Hamner, McKenzie and McLean effective July 14, 2005. The shares
granted to Messrs. Aldag, Hamner, McKenzie, McLean and Stewart vest at a rate of
8.33% per quarter beginning on September 30, 2005, so long as each executive
officer remains an employee of ours. In addition, upon a change in control or if
any of these executive officers is terminated for certain reasons, the shares
will vest 100%. On August 18, 2005, our compensation committee awarded 490,680
shares of restricted stock to our executive officers and members of our board of
directors. These shares vest at a rate of 8.33% per quarter beginning on
September 30, 2005, so long as each executive officer remains an employee of
ours and each director remains a member of our board of directors. In addition,
upon a change in control or if any of the executive officers is terminated for
certain reasons, or a director dies or becomes permanently disabled, the shares
will vest 100%. As of the date of this prospectus, there remain 2,052 shares
available for awards under the equity incentive plan. The compensation committee
recommended to the board of directors, and the board of directors has approved
and recommended that our stockholders approve an amendment to the equity
incentive plan at our October 12, 2005 annual meeting to increase by 3,900,000
the number of shares of common stock available under the plan.

Awards. The equity incentive plan authorizes the issuance of options to
purchase shares of common stock, restricted stock awards, restricted stock
units, deferred stock units, stock appreciation rights and performance units.
The equity incentive plan contains an award limit on the maximum number of
shares of common stock that may be awarded to an individual in any fiscal year
of 300,000 shares.

Vesting. Our compensation committee will determine the vesting of options
and restricted stock and restricted stock units granted under the equity
incentive plan, subject to any different vesting provisions agreed upon in a
participant's employment agreement. In addition, our compensation committee will
111

establish a standard vesting schedule for options, restricted stock and
restricted stock units subject to any different vesting schedule which is agreed
upon in a participant's employment or award agreement.

Options. Each option granted pursuant to the equity incentive plan is
designated at the time of grant as either an option intended to qualify as an
incentive stock option under Section 422 of the Code, referred to as a qualified
incentive option, or as an option that is not intended to so qualify, referred
to as a non-qualified option. The equity incentive plan authorizes our
compensation committee to grant incentive stock options for common stock in an
amount and at an exercise price to be determined by it, provided that the price
cannot be less than 100% of the fair market value of the common stock on the
date on which the option is granted. If an incentive stock option is granted to
a 10% stockholder, additional requirements will apply to the option. The
exercise price of non-qualified options will be equal to 100% of the fair market
value of common stock on the date the option is granted unless otherwise
determined by our compensation committee. The exercise price for any option is
generally payable in cash or, in certain circumstances, by the surrender, at the
fair market value on the date on which the option is exercised, of shares of our
common stock having a value equal to the exercise price. The equity incentive
plan provides that exercise may be delayed or prohibited if it would adversely
affect our status as a REIT. In addition, the equity incentive plan permits
optionholders to exercise their options prior to the date on which the options
will vest, subject to Committee action. In such case, the optionholder will,
upon payment for the shares, receive restricted stock having vesting terms on
transferability that are identical to the vesting terms under the original
option and subject to repurchase by us while the restrictions on vesting are in
effect.

In connection with certain extraordinary events, the compensation committee
may make adjustments in the aggregate number and kind of shares of capital stock
reserved for issuance, the number and kind of shares of capital stock covered by
outstanding awards and the exercise prices specified therein as may be
determined to be appropriate.

Restricted Stock. The equity incentive plan also provides for the grant of
restricted stock awards. A restricted stock award is an award of shares of
common stock that is subject to restrictions on transferability and other
restrictions, if any, as our compensation committee may impose at the date of
grant. Shares of restricted common stock are subject to vesting as our
compensation committee may approve or as may otherwise be agreed upon in a
participant's employment or other award agreement. The restrictions may lapse
separately or in combination at the times and under the circumstances, including
without limitation, a specified period of employment or the satisfaction of
pre-established criteria, in installments or otherwise, as our compensation
committee may determine. Except to the extent restricted under the award
agreement, a participant granted shares of restricted stock will have all of the
rights of a stockholder, including, without limitation, the right to vote and
the right to receive dividends on the restricted stock.

Restricted Stock Units and Deferred Stock Units. Under the equity
incentive plan, the compensation committee may award restricted stock units and
deferred stock units, each for the duration that it determines in its
discretion. Each restricted stock unit and each deferred stock unit is
equivalent in value to one share of common stock and entitles the participant
receiving the award to receive one share of common stock for each restricted
stock unit at the end of the vesting period applicable to such restricted stock
unit and for each deferred stock unit at the end of the deferral period.
Participants are not required to pay any additional consideration in connection
with the settlement of restricted stock units or deferred stock units. A holder
of restricted stock units or deferred stock units has no voting rights, right to
receive cash distributions or other rights as a stockholder until shares of
common stock are issued to the holder in settlement of the stock units. However,
participants holding restricted stock units or deferred stock units will be
entitled to receive dividend equivalents with respect to any payment of cash
dividends on an equivalent number of shares of common stock. Such dividend
equivalents will be credited in the form of additional stock units.

Performance Units. The equity incentive plan also provides for the grant
of performance shares and performance units. Holders of performance units will
be entitled to receive payment in cash or shares of our common stock (or in some
combination of cash and shares) if the performance goals established by

112

the compensation committee are achieved or the awards otherwise vest. Each
performance unit will have an initial value established by the compensation
committee. The compensation committee will set performance objectives, and such
performance objectives may be based upon the achievement of company-wide,
divisional or individual goals.

Stock Appreciation Rights. The equity incentive plan also authorizes our
compensation committee to grant stock appreciation rights. Stock appreciation
rights are awards that give the recipient the right to receive an amount equal
to (1) the number of shares exercised under the right, multiplied by (2) the
amount by which our stock price exceeds the exercise price. Payment may be in
cash, in shares of our common stock with equivalent value, or in some
combination, as determined by the administrator. The compensation committee will
determine the exercise price, vesting schedule and other terms and conditions of
stock appreciation rights; however, stock appreciation rights expire under the
same rules that apply to stock options.

Administration of the Plan. The equity incentive plan is administered by
our compensation committee. Mr. Aldag is to make recommendations to the
compensation committee as to which consultants, employees, and executive
officers, other than himself, will be eligible to participate, subject to
compensation committee review and approval. The compensation committee, in its
absolute discretion, will determine the effect of all matters and questions
relating to an employee's termination of employment, subject to the
participant's employment agreement.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

There are no compensation committee interlocks and none of our employees
participates on the compensation committee.

MARKET PRICE OF OUR COMMON STOCK

Our common stock is listed on the NYSE under the symbol "MPW." The
following table shows the high and low sales prices for our common stock since
our common stock became eligible for trading on the NYSE:

HIGH SALES LOW SALES
PRICE PRICE
----------- -----------

July 8, 2005 to September 29, 2005.......................... $11.20 $9.62

Before our common stock was listed on the New York Stock Exchange, shares
of our common stock were eligible for trading in the Private Offering, Resales
and Trading through Automated Linkages Market of the National Association of
Securities Dealers, Inc., or the PORTAL Market. Individuals and institutions
that sold shares of our common stock before our common stock was listed on the
New York Stock Exchange were not obligated to report their sales to the PORTAL
Market. Therefore, the last sales price that was reported on the PORTAL Market
may not have been reflective of sales of our common stock that occurred and were
not reported. The table below reflects the high and low prices for trades of our
shares on the PORTAL Market known to us for each of the periods indicated.

HIGH SALES LOW SALES
PRICE PRICE
----------- -----------

April 6, 2004 to June 30, 2004.............................. $10.50 $10.00
July 1, 2004 to September 30, 2005.......................... 10.00 10.00
October 1, 2004 to December 31, 2004........................ 10.25 10.00
January 1, 2005 to March 31, 2005........................... 10.25 10.00
April 1, 2005 to May 25, 2005............................... 10.25 10.00

113

PRINCIPAL STOCKHOLDERS

The following table sets forth the beneficial ownership of our common stock
as of August 31, 2005 by (i) each of our directors, (ii) each of our executive
officers, (iii) all of our directors and executive officers as a group and (iv)
each person known to us who is the beneficial owner of more than 5% of our
common stock. The SEC has defined "beneficial" ownership of a security to mean
the possession, directly or indirectly, of voting power or investment power. A
stockholder is also deemed to be, as of any date, the beneficial owner of all
securities that such stockholder has the right to acquire within 60 days after
that date through (a) the exercise of any option, warrant or right, (b) the
conversion of a security, (c) the power to revoke a trust, discretionary account
or similar arrangement, or (d) the automatic termination of a trust,
discretionary account or similar arrangement. Each beneficial owner named in the
table has the sole voting and investment power with respect to all of the shares
of our common stock shown as beneficially owned by such person, except as
otherwise set forth in the notes to the table. Unless otherwise indicated, the
address of each named beneficial owner is Medical Properties Trust, Inc., 1000
Urban Center Drive, Suite 501, Birmingham, Alabama, 35242.

PERCENTAGE OF
NUMBER OF SHARES ALL SHARES OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED COMMON STOCK(1)
- ------------------------ ------------------ ---------------

Edward K. Aldag, Jr.................................. 499,022(2) 1.25%
R. Steven Hamner..................................... 199,022(3) *
William G. McKenzie.................................. 150,022(4) *
Emmett E. McLean..................................... 199,022(5) *
Michael G. Stewart................................... 50,000(6) *
Virginia A. Clarke................................... 24,166(7) *
G. Steven Dawson..................................... 50,833(8) *
Bryan L. Goolsby..................................... 24,166(7) *
Robert E. Holmes, Ph.D. ............................. 31,833(8) *
L. Glenn Orr, Jr. ................................... 24,166(7) *
All executive officers and directors as a group (10
persons)........................................ 1,300,752(9) 3.25%
Friedman Billings Ramsey Group, Inc.................. 2,842,959(10) 7.11%
1001 Nineteenth St. North
Arlington, Virginia 22209
Jeffrey L. Feinberg.................................. 2,399,300(11) 6.00%
c/o JLF Asset Management, L.L.C.
2775 Via de la Valle, Suite 204
Del Mar, CA 92014

- ---------------

* Represents less than 1% of the number of shares of common stock outstanding.

(1) Based on 39,969,065 shares of common stock outstanding as of August 31,
2005. Shares of common stock that are deemed to be beneficially owned by a
stockholder within 60 days after August 31, 2005 are deemed outstanding for
purposes of computing such stockholder's percentage ownership but are not
deemed outstanding for the purpose of computing the percentage ownership of
any other stockholder.

(2) Includes 217,805 shares of restricted common stock.

(3) Includes 125,218 shares of restricted common stock.

(4) Includes 52,342 shares of restricted common stock.

(5) Includes 93,815 shares of restricted common stock.

(6) Includes 50,000 shares of restricted common stock.

(7) Includes 6,666 shares of common stock issuable upon exercise of a vested
stock option and 17,500 shares of restricted common stock.

(8) Includes 13,333 shares of common stock issuable upon exercise of a vested
stock option and 17,500 shares of restricted common stock.

(9) See notes (1)-(8) above.

(10) Includes 1,795,571 shares of common stock owned directly by Friedman,
Billings, Ramsey Group, Inc., the parent company of Friedman, Billings,
Ramsey & Co., Inc., 52,388 shares owned directly by Friedman, Billings,
Ramsey & Co., Inc. and 995,000 shares held by various investment funds over
which Friedman, Billings, Ramsey Group, Inc., through a wholly-owned
indirect subsidiary, exercises shared investment and voting power.

(11) Based on a Schedule 13G filed on July 25, 2005. Includes shares of common
stock held by Jeffrey L. Feinberg, individually, JLF Partners I., L.P., JLF
Partners II, L.P. and JLF Offshore Fund, Ltd. to which JLF Asset
Management, L.L.C. serves as the management company and/or investment
manager. Jeffrey L. Feinberg is the managing member of JLF Asset
Management, L.L.C. Jeffrey L. Feinberg and JLF Asset Management, L.L.C.
share investment and voting power over these shares of common stock.

114

The 521,908 shares of our common stock held by our founders that were
issued in connection with our formation, which excludes the 36,000 shares in the
aggregate that they purchased in our April 2004 private placement, vested on
July 7, 2005.

SELLING STOCKHOLDERS

The following table sets forth the beneficial ownership of our common stock
by the selling stockholders as of June 30, 2005 and the number of shares that
may be offered for resale by this prospectus. The percentages of all shares of
common stock beneficially owned before and after resale of the shares of common
stock by the selling stockholders is based on 39,969,065 shares of common stock
outstanding as of August 31, 2005. The SEC has defined "beneficial" ownership of
a security to mean the possession, directly or indirectly, of voting power
and/or investment power. A stockholder is also deemed to be, as of any date, the
beneficial owner of all securities that the stockholder has the right to acquire
within 60 days after that date through (a) the exercise of any option, warrant
or right, (b) the conversion of a security, (c) the power to revoke a trust,
discretionary account or similar arrangement, or (d) the automatic termination
of a trust, discretionary account or similar arrangement. Except as otherwise
noted, the beneficial owners named in the table have sole voting and investment
power with respect to all shares of our common stock shown as beneficially owned
by them, subject to community property laws, where applicable.

The selling stockholders may offer all, a portion or none of the shares
owned by them and covered by this prospectus. In preparing the table below, we
have assumed that the selling stockholders will sell all of the common stock
covered by this prospectus. Shares of common stock may also be sold by donees,
pledgees or other transferees or successors in interest of the selling
stockholders. Except as described below, to our knowledge, none of the selling
stockholders has had a material relationship with us or any of our affiliates
within the past three years.

Any selling stockholder that is identified as a broker-dealer will be
deemed to be an "underwriter" within the meaning of Section 2(11) of the
Securities Act, unless such selling stockholder obtained the stock as
compensation for services. In addition, any affiliate of a broker-dealer will be
deemed to be an "underwriter" within the meaning of Section 2(11) of the
Securities Act, unless such selling stockholder purchased in the ordinary course
of business and, at the time of its purchase of the stock to be resold, did not
have any agreements or understandings, directly or indirectly, with any person
to distribute the stock. As a result, any profits on the sale of the common
stock by selling stockholders who are deemed to be "underwriters" and any
discounts, commissions or concessions received by any such broker-dealers who
are deemed to be "underwriters" will be deemed to be underwriting discounts and
commissions under the Securities Act. Selling stockholders who are deemed to be
"underwriters" will be subject to prospectus delivery requirements of the
Securities Act and to certain statutory liabilities, including, but not limited
to, those under Sections 11, 12 and 17 of the Securities Act and Rule 10b-5
under the Exchange Act.

MAXIMUM BENEFICIAL OWNERSHIP
NUMBER OF PERCENTAGE OF AFTER RESALE OF SHARES
NUMBER OF SHARES OF ALL SHARES OF OF COMMON STOCK(1)
SHARES OF COMMON STOCK COMMON STOCK -------------------------
COMMON STOCK OFFERED BY THIS BENEFICIALLY NUMBER OF
BENEFICIALLY PROSPECTUS FOR OWNED BEFORE SHARES OF
SELLING STOCKHOLDER OWNED RESALE RESALE(2) COMMON STOCK PERCENTAGE
- ------------------- ------------ --------------- ------------- ------------ ----------

Unaffiliated(3)
Aetna Services, Inc. Small Cap
Equity(4)........................ 25,800 25,800 * 0 *
AG Arb Partners, L.P.(5)........... 88,000 88,000 * 0 *
AG CNG Fund, L.P.(5)............... 45,000 45,000 * 0 *
AG Funds, L.P.(5).................. 50,000 50,000 * 0 *
AG MM, L.P.(5)..................... 28,000 28,000 * 0 *
AG Princess, L.P.(5)............... 22,000 22,000 * 0 *

115

AG Super Fund, L.P.(5)............. 275,000 275,000 * 0 *
Allan Rothstein.................... 5,000 5,000 * 0 *
Atlas Capital(6)................... 150,000 150,000 * 0 *
Anita U. Schorsch(5)............... 1,000 1,000 * 0 *
Anthony Bruno and Kathleen Bruno
JTWROS........................... 1,000 1,000 * 0 *
Anthony V. Bruno and Christina S.
Bruno JTWROS..................... 1,000 1,000 * 0 *
Arkansas Teachers Retirement
System(4)........................ 45,000 45,000 * 0 *
Augustus V.L. Brokaw III TTEE
Augustus V.L. Brokaw III
Revocable Trust Dated
10/14/1993(9).................... 1,300 1,300 * 0 *
Australian Retirement
Fund -- Global Small Companies
Portfolio(7)..................... 42,300 42,300 * 0 *
Axia Offshore Parters, Ltd. ....... 31,874 31,874 * 0 *
Axia Partners, L.P. ............... 16,460 16,460 * 0 *
Axia Partners Qualified, L.P. ..... 66,412 66,412 * 0 *
Alpha US Sub Fund I, LLC........... 8,254 8,254 * 0 *
Bel Air Opportunistic Fund,
L.P.(8).......................... 40,000 40,000 * 0 *
Bert Fingerhut Roth IRA............ 5,000 5,000 * 0 *
Bill Ham(9)........................ 20,000 20,000 * 0 *
Bill Ham -- IRA Rollover(9)........ 8,000 8,000 * 0 *
Black Foundation(9)................ 1,800 1,800 * 0 *
Bonnie Paley Minzer Revocable
Trust............................ 1,000 1,000 * 0 *
Boston Partners Asset Management,
LLC.............................. 769,500 769,500 1.9% 0 *
Brian C. Porter(10)................ 334 334 * 0 *
Burke F. Hayes(10)................. 334 334 * 0 *
Caroline Hicks Roth IRA............ 2,500 2,500 * 0 *
Carrhae & Co.(13).................. 36,250 36,250 * 0 *
Case Western Reserve
University(7).................... 16,200 16,200 * 0 *
Central States Southeast &
Southwest Areas Pension
Fund(13)......................... 57,250 57,250 * 0 *
Charles Affron and Mirella Affron
JTWROS........................... 1,000 1,000 * 0 *
Charles F. Wedel................... 2,000 2,000 * 0 *
Clearpond & Co.(12)................ 525,500 525,500 1.3% 0 *
Connection Machine Services,
Inc.(8).......................... 4,000 4,000 * 0 *
Continental Casualty Company(5).... 100,000 100,000 * 0 *
Cotran Investments, Ltd. .......... 50,000 50,000 * 0 *
Cynthia Rothstein.................. 5,000 5,000 * 0 *
Daniel W. Huthwaite & Constance R.
Huthwaite........................ 2,250 2,250 * 0 *

116

David M. Golush.................... 4,600 4,600 * 0 *
David A. Todd(9)................... 5,200 5,200 * 0 *
Delaware Dividend Income Fund, a
Series of Delaware Group Equity
Funds(11)........................ 19,700 19,700 * 0 *
Delaware Investments Dividend and
Income Fund, Inc.(11)............ 35,000 35,000 * 0 *
Delaware Investments Global
Dividend and Income Fund,
Inc.(11)......................... 9,400 9,400 * 0 *
Dennis M. Langley.................. 50,000 50,000 * 0 *
DNB NOR Globalspar (I)............. 172,105 172,105 * 0 *
DNB NOR Globalspar (II)............ 481,895 481,895 1.2% 0 *
Donald P. and Jean M. McDougall.... 2,250 2,250 * 0 *
Dorothy S. Rasplicka............... 2,450 2,450 * 0 *
Douglas Woloshin................... 2,000 2,000 * 0 *
Emergency Services Superannuation
Board -- Global Smaller Companies
Portfolio(7)..................... 29,300 29,300 * 0 *
Emily L. Todd(9)................... 6,500 6,500 * 0 *
Endeavor Capital Offshore Fund,
Ltd.(12)......................... 180,700 180,700 * 0 *
Endeavor Capital Partners,
L.P.(12)......................... 60,700 60,700 * 0 *
Endeavor Capital Partners II,
L.P.(12)......................... 12,300 12,300 * 0 *
Eric J. Gaaserud(10)............... 334 334 * 0 *
Evan L. Julber..................... 14,900 14,900 * 0 *
Evelyn Berry Spousal Rollover
IRA(13).......................... 1,525 1,525 * 0 *
First Financial Fund, Inc.(7)...... 419,500 419,500 1.0% 0 *
Francesca V. Ozdoba Pension &
Profit Sharing Plan.............. 1,000 1,000 * 0 *
Francis and Cynthia O'Connor(10)... 7,214 7,214 * 0 *
Fred G. Neuwirth................... 2,500 2,500 * 0 *
Friedman, Billings, Ramsey & Co.,
Inc.(14)......................... 52,388 52,388 * 0 *
FBR Ashton Income Fund, LLC(15).... 50,000 50,000 * 0 *
FBR Ashton Limited
Partnership(15).................. 500,000 500,000 1.25% 0 *
FBR Ashton Special Situations Fund,
L.P.(15)......................... 445,000 445,000 1.11% 0 *
Friedman Billings Ramsey Group,
Inc.(15)......................... 1,795,571 1,795,571 4.5% 0 *
Frorer Partners, L.P.(16).......... 25,000 25,000 * 0 *
GLG Partners (Financials Fund)..... 290,000 220,000 * 70,000 *
Goldman Sachs Asset Management
Foundation....................... 3,175 3,175 * 0 *

117

Goldman Sachs Asset Management,
L.P.(7).......................... 112,000 112,000 * 0 *
Goldman Sachs JB Were Investment
Management Pty., Ltd.(7)......... 3,000 3,000 * 0 *
Greenlight Capital, L.P. .......... 165,600 165,600 * 0 *
Greenlight Capital Offshore,
Ltd. ............................ 598,000 598,000 1.5% 0 *
Greenlight Capital Qualified,
L.P. ............................ 469,600 469,600 1.2% 0 *
Greenlight Reinsurance, Ltd. ...... 185,000 185,000 * 0 *
Guggenheim Portfolio Company III,
LLC(12).......................... 33,100 33,100 * 0 *
Henry Ripp IRA..................... 2,000 2,000 * 0 *
Hillel & Elaine Weinberger......... 10,000 10,000 * 0 *
Indiana State Teachers Retirement
Fund(4).......................... 41,900 41,900 * 0 *
Iprofile -- US Equity Pool(5)...... 1,500 1,500 * 0 *
Institutional Benchmarks Master
Fund, Ltd.(17) .................. 3,562 3,562 * 0 *
Invesco Perpetual Asset
Management....................... 220,000 220,000 * 0 *
Investors of America, L.P.(5)...... 301,400 301,400 * 0 *
J&S Black F.L.P.(9)................ 5,900 5,900 * 0 *
J. Rock Tonkel, Jr.(10)............ 1,666 1,666 * 0 *
JB Were Global Small Companies
Fund(7).......................... 203,500 203,500 * 0 *
Jack Sear, Trustee of Jack Sear
Revocable Trust.................. 1,000 1,000 * 0 *
Jack Barish........................ 5,000 5,000 * 0 *
James V. Kimsey.................... 10,000 10,000 * 0 *
James Locke and Susan Locke Tenants
by their Entirety(5)............. 8,000 8,000 * 0 *
James C. Neuhauser(10)........... 1,666 1,666 0 *
Jay Rasplicka...................... 5,450 5,450 * 0 *
Jean C. Brokaw TTEE Jean C. Brokaw
Revocable Trust Dated
10/14/1993(9).................... 1,300 1,300 * 0 *
Jed Hart........................... 2,500 2,500 * 0 *
Jeffrey & Stacey Feinberg(18)...... 354,000 354,000 * 0 *
Jeffrey C. Kahn.................... 500 500 * 0 *
Jeffry L. Lacy(9).................. 1,800 1,800 * 0 *
Jody Irwin, Separate Property(9)... 2,600 2,600 * 0 *
JLF Partners I, L.P.(18)........... 697,901 697,901 1.7% 0 *
JLF Partners II, L.P.(18).......... 45,279 45,279 * 0 *
JLF Offshore Deferred
Account(18)...................... 300,000 300,000 * 0 *
JLF Offshore Fund, Ltd.(18)........ 1,002,120 1,002,120 2.5% 0
John A. Hartford Foundation
Inc.(13)......................... 11,250 11,250 * 0 *

118

John A. Johnston & Robin L.
Johnston......................... 1,000 1,000 * 0 *
John Angelo, Michael Gordon, Fred
Berger TTEES of the AG Sav & Inv
Plan FBO Jed A. Hart............. 2,500 2,500 * 0 *
John Black, IRA Rollover(9)........ 3,800 3,800 * 0 *
John William Edgemond.............. 3,000 3,000 * 0 *
John F. Syburg..................... 1,000 1,000 * 0 *
Judith S. Roth..................... 5,000 5,000 * 0 *
John M. Reeves..................... 3,000 3,000 * 0 *
Julian E. Gillespie and Heather A.
Gillespie(10).................... 4,000 4,000 * 0 *
Kayne Anderson REIT Fund,
L.P.(5).......................... 125,000 125,000 * 0 *
Kristin Junkin IRA................. 1,500 1,500 * 0 *
Lawrence Chimerine................. 400 400 * 0 *
LG&E Energy Corp.(4)............... 12,300 12,300 * 0 *
Liebro Partners LLC................ 3,000 3,000 * 0 *
Louis Scowcroft Peery Charitable
Foundation....................... 1,800 1,800 * 0 *
Lucie Wray Todd(9)................. 10,000 10,000 * 0 *
Lupa Family Partners, L.P.(19)..... 38,910 38,910 * 0 *
Lyxor/Third Point Fund
Limited(20)...................... 109,128 109,128 * 0 *
M&M Arbitrage LLC(17).............. 19,973 19,973 * 0 *
M&M Arbitrage Fund II, LLC(17)..... 21,520 21,520 * 0 *
M&M Arbitrage Offshore Ltd.(17) ... 53,122 53,122 * 0 *
Magnolia Charitable Trust, Emily L.
Todd and David A. Todd,
TTEEs(9)......................... 4,300 4,300 * 0 *
Marcy A. Newberger Revocable
Trust............................ 2,250 2,250 * 0 *
Mary L.G. Theroux, Trustee Mary
L.G. Theroux Charitable Remainder
Unitrust 5-14-96(9).............. 6,200 6,200 * 0 *
Mary L.G. Theroux, TTEE of the Mary
L.G. Theroux Revocable Living
Trust U/A 9/30/68(9)............. 4,800 4,800 * 0 *
Maritime Life Discovery Fund(7).... 40,600 40,600 * 0 *
Mark Bruno and Martha Bruno
JTWROS........................... 1,000 1,000 * 0 *
Mark J. Roach...................... 1,000 1,000 * 0 *
Martin Hirschhorn.................. 10,000 10,000 * 0 *
Massachusetts Pension Reserves
Investment Management Board REIT
Portfolio(7)..................... 103,900 103,900 * 0 *
Mavian, LLC........................ 575 575 * 0 *
Mercury Real Estate Advisors LLC... 34,000 34,000 * 0 *

119

Miami University Endowment(13)..... 1,675 1,675 * 0 *
Miami University Foundation(13).... 2,000 2,000 * 0 *
Michael A. Claggett, IRA
Rollover(9)...................... 1,000 1,000 * 0 *
Michael C. Bruno................... 5,000 5,000 * 0 *
Millennium Partners, L.P.(21)...... 2,200,000 1,500,000 5.5% 700,000 1.8%
Murray Gorin....................... 5,000 5,000 * 0 *
Munder Real Estate Equity
Investment Fund(22).............. 104,400 104,400 * 0 *
Mutual of America Institutional
Funds, Inc. All American
Fund(5).......................... 3,940 3,940 * 0 *
Mutual of America Institutional
Funds, Inc. Aggressive Equity
Fund(5).......................... 5, 740 5,740 * 0 *
Mutual of America Investment
Corporation All American
Fund(5).......................... 34,720 34,720 * 0 *
Mutual of America Investment
Corporation Aggressive Equity
Fund(5).......................... 130,600 130,600 * 0 *
NCR Pension Trust-REIT Concentrated
Sector Portfolio(7).............. 45,400 45,400 * 0 *
Neese Family Equity Investments
Ltd.(13)......................... 2,250 2,250 * 0 *
Nutmeg Partners, L.P.(5)........... 60,000 60,000 * 0 *
Optimix Investment Management
Limited.......................... 17,000 17,000 * 0 *
Pacific Credit Corp.(7)............ 8,000 8,000 * 0 *
Pennant Offshore Partners
Ltd.(23)......................... 374,850 374,850 * 0 *
Pennant Onshore Partners,
L.P.(23)......................... 80,080 80,080 * 0 *
Pennant Onshore Qualified,
L.P.(23)......................... 245,070 245,070 * 0 *
Peter A. Gallagher................. 2,250 2,250 * 0 *
Peter A. Kirsch.................... 300 300 * 0 *
Phillip Caplan(10)................. 3,667 3,667 * 0 *
PHS Bay Colony Fund, L.P.(5)....... 22,000 22,000 * 0 *
PHS Patriot Fund, L.P.(5).......... 10,000 10,000 * 0 *
Pinnacle Oil Company............... 10,000 10,000 * 0 *
Pitney Bowes Pension Plan(4)....... 16,700 16,700 * 0 *
Prudential Real Estate Securities
Fund(6)(7)....................... 36,100 36,100 * 0 *
Public Employees' Retirement System
of Mississippi-REIT
Portfolio(7)..................... 33,500 33,500 * 0 *
PWB Value Partners, L.P. .......... 387,666 387,666 * 0 *
Quota Rabbico N.V.(18)............. 48,424 48,424 * 0 *
Ralph Pasture Pension Plan......... 2,000 2,000 * 0 *
Raytheon Master Pension Trust- Real
Estate Hedged Portfolio(7)....... 60,500 60,500 * 0 *

120

The Real Estate Investment Trust
Series(11)....................... 849,735 849,735 2.1% 0 *
The Real Estate Investment Trust
Portfolio(11).................... 587,165 587,165 1.5% 0 *
The Real Estate Investment Trust II
Portfolio(11).................... 66,800 66,800 * 0 *
Realty Enterprise Fund LLC(5)...... 30,000 30,000 * 0 *
Retail Employees Superannuation
Trust(7)......................... 55,100 55,100 * 0 *
Retirement Plan for Hospital
Employees(4)..................... 10,000 10,000 * 0 *
Richard Feinberg................... 7,500 7,500 * 0 *
Robert Feinberg.................... 5,000 5,000 * 0 *
Richard A. Kraemer & Gail G.
Kraemer -- TIC................... 10,000 10,000 * 0 *
Richard J. Hendrix(10)............. 5,333 5,333 * 0 *
Ron Clarke, IRA Rollover(9)........ 500 500 * 0 *
Royal Capital Management/ Seneca
Capital Managed Account.......... 7,900 7,900 * 0 *
Royal Capital Value Fund, Ltd. .... 220,700 220,700 * 0 *
Royal Capital Value Fund, LP....... 52,200 52,200 * 0 *
Royal Capital Value Fund (QP),
LP............................... 504,200 504,200 1.3% 0 *
SAC Strategic Investments,
LLC(12).......................... 73,200 73,200 * 0 *
Sarah P. Fleischer Family Trust No.
1................................ 2,500 2,500 * 0 *
Satellite Fund I, L.P. ............ 1,770 1,770 * 0 *
Satellite Fund II, L.P. ........... 23,230 23,230 * 0 *
SCCM Financial Inc. ............... 3,000 3,000 * 0 *
SEI Institutional Trust Small Cap
Fund(7).......................... 55,500 55,500 * 0 *
SEI Institutional Investments Trust
Small Cap Fund(7)................ 128,000 128,000 * 0 *
SEI Institutional Managed Trust
Real Estate Fund(7).............. 11,400 11,400 * 0 *
SEI Institutional Managed Trust
Small Cap Growth Fund(7)......... 169,000 169,000 * 0 *
SEI Institutional Managed Trust
Small Cap Value Fund(7).......... 39,400 39,400 * 0 *
SEI US Small Companies Fund(7)..... 14,700 14,700 * 0 *
Seligman Global Fund Series, Inc.-
Global Smaller Companies
Fund(7).......................... 73,200 73,200 * 0 *
Small Capitalization Equity
Fund(4).......................... 9,000 9,000 * 0 *
Small Capitalization Equity Fund
Collective Trust(4).............. 41,600 41,600 * 0 *
Steven H. Goldberg(10)............. 2,214 2,214 * 0 *

121

Steven Rothstein................... 5,000 5,000 * 0 *
Steven Vartan...................... 500 500 * 0 *
SVS Asset Management, LLC(13)...... 1,275 1,275 * 0 *
TALVEST Global Small Cap Fund(7)... 24,400 24,400 * 0 *
Telstra Super Pty LTD-Super Global
Smaller Companies(7)............. 35,600 35,600 * 0 *
Terrebonne Investors (Bermuda)
L.P.(7).......................... 21,300 21,300 * 0 *
Terrebonne Partners, L.P.(7)....... 18,600 18,600 * 0 *
Texas County and District
Retirement System-REIT(7)........ 182,300 182,300 * 0 *
The Church Pension Fund -- Real
Estate Securities Portfolio(7)... 30,900 30,900 * 0 *
Third Point Partners, L.P.(20)..... 174,945 174,945 * 0 *
Third Point Ultra, Ltd.(20)........ 48,634 48,634 * 0 *
Third Point Offshore Fund
Ltd.(20)......................... 357,208 357,208 * 0 *
Third Point Resources Ltd.(20)..... 32,320 32,320 * 0 *
Third Point Resources L.P.(20)..... 27,765 27,765 * 0 *
Thomas B. Parsons.................. 1,000 1,000 * 0 *
Timothy B. Matz and Jane F. Matz
JTWROS(5)........................ 5,000 5,000 * 0 *
Timothy P. O'Brien(10)............. 3,334 3,334 * 0 *
Thomas D. & Elizabeth G. Eckert.... 20,000 20,000 * 0 *
Tombstone Limited Partnership...... 20,000 20,000 * 0 *
United Capital Management, Inc. ... 20,000 20,000 * 0 *
University of Delaware(7).......... 18,600 18,600 * 0 *
Vantagepoint Aggressive
Opportunities Fund(7)............ 176,000 176,000 * 0 *
Vestal Venture Capital............. 63,000 63,000 * 0 *
Wellington Management Portfolios
(Dublin)-Global Smaller Companies
Equity(7)........................ 36,000 36,000 * 0 *
Wichita Retirement Systems(4)...... 9,900 9,900 * 0 *
William A. Hazel Revocable Trust... 4,500 4,500 * 0 *
William & Flora Hewlette
Foundation-Real Estate Securities
Portfolio(7)..................... 23,800 23,800 * 0 *
William S. McLeod BSSC Master Def.
Contrib. P/S Plan................ 2,000 2,000 * 0 *
Wray & Todd Interests, Ltd.(9)..... 15,000 15,000 * 0 *
WTC-CIP Real Asset Portfolio(7).... 49,200 49,200 * 0 *
WTC-CTF Real Asset Portfolio(7).... 153,600 153,600 * 0 *
Y&H Soda Fountain(13).............. 5,475 5,475 * 0 *
Yaupon Fund LTD.................... 5,042 5,042 * 0 *
Yaupon Partners LP................. 19,958 19,958 * 0 *

122

York Capital Management,
L.P.(24)......................... 24,452 24,452 * 0 *
York Credit Opportunities Fund,
L.P.(24)......................... 90,000 90,000 * 0 *
York Investment Limited(24)........ 195,548 195,548 * 0 *
SUBTOTAL:.......................... 21,612,032 20,842,032 54.1% 770,000 1.8%
Affiliated Stockholders............
Charles Carpenter and Laura L.
Pitts(25)........................ 2,000 2,000 * 0 *
Edward K. Aldag, Jr.(26)........... 281,217 281,217 * 0 *
Emmett E. McLean(27)............... 105,207 105,207 * 0 *
G. Steven Dawson(28)............... 20,000 20,000 * 0 *
Keith T. Ghezzi(29)................ 5,000 5,000 * 0 *
Michael G. Stewart(30)............. 30,000 30,000 * 0 *
Patricia W. Green(31).............. 1,000 1,000 * 0 *
Richard S. Hamner -- IRA
Rollover(32)..................... 2,000 2,000 * 0 *
R. Steven and Glenda R. Hamner
JTWROS(32)....................... 71,804 71,804 * 0 *
Robert E. Holmes, PhD.(28)......... 1,000 1,000 * 0 *
William G. McKenzie(33)............ 97,680 97,680 * 0 *
SUBTOTAL:.......................... 616,908 616,908 1.5% 0 *
Other Selling Stockholders(34)..... 3,280,276 4,050,276 8.3% 0 *
TOTAL:............................. 25,411,039 25,411,039 63.6% 770,000 1.8%

- ---------------

* Holdings represent less than 1% of all shares of common stock outstanding.

(1) Assumes that each named selling stockholder sells all of the shares of our
common stock that it holds that are covered by this prospectus and neither
acquires nor disposes of any other shares of common stock, or right to
purchase other shares of common stock subsequent to the date as of which it
provided information to us regarding its holdings. Because the selling
stockholders are not obligated to sell all or any portion of the shares of
our common stock shown as offered by them, we cannot estimate the actual
number of shares of our common stock that will be held by any selling
stockholder upon completion of this offering.

(2) Based on 39,969,065 shares of common stock outstanding as of August 31,
2005.

(3) Except as otherwise indicated in Note 14, holders of our shares of common
stock that are unaffiliated with us were subject to lock-up agreements that
expired on September 6, 2005.

(4) This selling stockholder is an affiliate of a broker-dealer. The selling
stockholder represented that it purchased the shares in the ordinary course
of business and, at the time of purchase of the shares to be resold, the
selling stockholder did not have any agreement or understandings, directly,
or indirectly, with any person to distribute the shares. ING Investment
Management Co. has sole voting power and sole investment power over the
shares of common stock held by this stockholder. William E. Bartol is a
Vice President of ING Investment Management Co., and in that role exercises
voting and investment power over the shares of common stock held by this
stockholder.

(5) This selling stockholder is an affiliate of a broker-dealer. The selling
stockholder represented that it purchased the shares in the ordinary course
of business and, at the time of purchase of the shares to be resold, the
selling stockholder did not have any agreement or understandings, directly,
or indirectly, with any person to distribute the shares.

(6) Atlas Capital Management, L.P. is the general partner of Atlas Capital (QP)
L.P. Atlas Capital, LP. and Atlas Capital Offshore Fund, Ltd. are the
general partners of Atlas Capital Master Fund, L.P. The shares of common
stock held by Atlas Capital (QP) L.P. and Atlas Capital Master Fund, L.P.
are being presented on a group basis.

(7) This selling stockholder is an affiliate of a broker-dealer. The selling
stockholder represented that it purchased the shares in the ordinary course
of business and, at the time of purchase of the shares to be resold, the
selling stockholder did not have any agreement or understandings, directly,
or indirectly, with any person to distribute the shares. Wellington
Management Company, LLP is an investment adviser registered under the
Investment Advisers Act of 1940, as amended ("Wellington"). In its capacity
as an investment adviser, Wellington is deemed to share beneficial
ownership over the shares of common stock held by this stockholder, and
shares investment discretion and voting power over such shares.

(8) This selling stockholder is an affiliate of a broker-dealer. The selling
stockholder represented that it purchased the shares in the ordinary course
of business and, at the time of purchase of the shares to be resold, the
selling stockholder did not have any agreement or understandings, directly,
or indirectly, with any person to distribute the shares. Bel Air Investment
Advisors LLC has sole voting power and sole investment power with respect
to the shares of common stock held by this stockholder. Michael Powers is a
Portfolio Manager of Bel Air Investment Advisors LLC, and in that role
exercises voting and investment power over the shares of common stock held
by this stockholder.

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(9) Roger E. King, President of King Investment Advisors, Inc. is the
investment advisor for this stockholder and has voting power over the
shares of common stock held by this stockholder.

(10) This selling stockholder is an employee of Friedman, Billings, Ramsey &
Co., Inc., a broker-dealer. The selling stockholder represented to us that
it obtained the shares in the ordinary course of business and, at the time
of purchase of the shares to be resold, the selling stockholder did not
have any agreement or understandings, directly, or indirectly, with any
person to distribute the shares. Friedman, Billings, Ramsey & Co., Inc.
served as the initial purchaser and placement agent for our April 2004
private placement. In addition, Friedman, Billings, Ramsey & Co., Inc.
served as the sole book-running manager of our initial public offering.

(11) This selling stockholder is an affiliate of a broker-dealer. The selling
stockholder represented that it purchased the shares in the ordinary course
of business and, at the time of purchase of the shares to be resold, the
selling stockholder did not have any agreement or understandings, directly,
or indirectly, with any person to distribute the shares. Delaware
Management Business Trust has sole voting power with respect to the shares
of common stock held by this stockholder. Delaware Management Holdings,
Inc. is the parent of Delaware Management Business Trust. Delaware
Management Holdings, Inc. is a subsidiary of Lincoln National Corporation,
a public company.

(12) This selling stockholder is an affiliate of a broker-dealer. The selling
stockholder represented that it purchased the shares in the ordinary course
of business and, at the time of purchase of the shares to be resold, the
selling stockholder did not have any agreement or understandings, directly,
or indirectly, with any person to distribute the shares. Endeavour Capital
Advisors has investment discretion over the shares of common stock held by
this stockholder. Endeavor Capital Advisors has advised us that no one
individual exercises voting and investment power over the shares of common
stock held by this stockholder.

(13) This selling stockholder is an affiliate of a broker-dealer. The selling
stockholder represented that it purchased the shares in the ordinary course
of business and, at the time of purchase of the shares to be resold, the
selling stockholder did not have any agreement or understandings, directly,
or indirectly, with any person to distribute the shares. Wasatch Advisors
has sole voting power and sole investment power over the shares of common
stock held by this stockholder. John Mazanec is a Portfolio Manager of
Wasatch Advisors, and in that role exercises voting and investment power
over the shares of commons stock held by this stockholder.

(14) This selling stockholder is a registered broker-dealer, and received these
shares as compensation for financial advisory services. Friedman, Billings,
Ramsey & Co., Inc. served as the initial purchaser and placement agent for
our April 2004 private placement. In addition, Friedman, Billings, Ramsey &
Co., Inc. served as the sole book-running manager of our initial public
offering. Friedman, Billings, Ramsey & Co., Inc. is subject to a lock-up
agreement that expires on October 12, 2005. Eric Billings is the Chairman
and Chief Executive Officer of Friedman, Billings, Ramsey & Co., and in
that role exercises voting and investment power over the shares of common
stock held by this stockholder.

(15) This selling stockholder is an affiliate of a broker-dealer. The selling
stockholder represented to us that it purchased the shares in the ordinary
course of business and, at the time of purchase of the shares to be resold,
the selling stockholder did not have any agreement or understandings,
directly or indirectly, with any person to distribute the shares. Eric
Billings is the Chairman and Chief Executive Officer of Friedman Billings
Ramsey Group, Inc., and in that role exercises voting and investment power
over the shares of common stock held by this stockholder.

(16) Peter Frorer is the general partner of Frorer Partners, L.P., and has sole
voting power and sole investment power with respect to the shares of common
stock held by Frorer Partners, L.P.

(17) Sole voting and investment power is held by Mangan & McColl Partners, LLC.
John F. Mangan, Jr. is the Managing Member of Mangan & McColl Partners, and
in that role exercises voting and investment power over the shares of
common stock held by this stockholder.

(18) JLF Asset Management, L.L.C. serves as the management company and/or
investment manager to JLF Partners I, L.P., JLF Partners II, L.P. JLF
Offshore Deferred Account and JLF Offshore Fund, Ltd. Jeffrey L. Feinberg
is the managing member of JLF Asset Management, L.L.C.

(19) Blavin & Company, Inc. has sole voting power and sole investment power over
the shares of common stock held by this stockholder. Paul Blavin is the
Chief Executive Officer of Blavin & Company, Inc., and in that role
exercises voting and investment power over the shares of common stock held
by this stockholder.

(20) Third Point LLC is the investment manager for Third Point Partners, L.P.,
Third Point Ultra, Ltd., Third Point Offshore Fund Ltd., Third Point
Resources Ltd., Third Point Resources, L.P. and Lyxor/Third Point Fund
Limited. Daniel S. Loeb is the Managing Member of Third Point LLC, and in
that role exercises voting and investment power over the shares of common
stock held by this stockholder.

(21) This selling stockholder is an affiliate of a broker-dealer. The selling
stockholder represented that it purchased the shares in the ordinary course
of business and, at the time of purchase of the shares to be resold, the
selling stockholder did not have any agreement or understandings, directly,
or indirectly, with any person to distribute the shares. The 2,200,000
shares of common stock beneficially owned by this stockholder includes
700,000 shares of common stock held by its affiliate, Millenco, L.P. The
general partner of this stockholder is Millennium Management, L.L.C., a
Delaware limited liability company ("Millennium Management"). Millennium
Management may be deemed to have voting control and investment discretion
over securities owned by this stockholder. Israel A. Englander is the
managing member of Millennium Management, and may be deemed to be the
beneficial owner of any shares deemed to be owned by Millennium Management.
This stockholder has advised us that the foregoing should not be construed
as an admission by either Millennium Management or Mr. Englander as to
beneficial ownership of the shares of common stock owned by this
stockholder.

(22) This selling stockholder is an affiliate of a broker-dealer. The selling
stockholder represented that it purchased the shares in the ordinary course
of business and, at the time of purchase of the shares to be resold, the
selling stockholder did not have any agreement or understandings, directly,
or indirectly, with any person to distribute the shares. Munder Capital
Management, an affiliate of Comerica Securities, Inc., is the investment
adviser to Munder Real Estate Equity Investment Fund and Munder Micro-Cap
Equity Fund.

(23) Pennant Capital Management, LLC serves as the management company to Pennant
Onshore Partners, L.P., Pennant Offshore Partners, Ltd, and Pennant Onshore
Qualified, L.P. Alan Fournier is the Managing Member of Pennant Capital
Management, and in that role exercises voting and investment power over the
shares of common stock held by this stockholder.

(24) The shares held by this stockholder are registered in the street name of
its custodian Bear Stearns.

(25) Mr. Pitts was a member of our board of directors from April 2004 until
April 2005.

(26) Mr. Aldag is our Chairman, President and Chief Executive Officer.

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(27) Mr. McLean is our Executive Vice President, Chief Financial Officer and
Treasurer.

(28) Mr. Dawson and Mr. Holmes are members of our board of directors.

(29) Dr. Ghezzi was a member of our board of directors from March 2004 until
April 2005.

(30) Mr. Stewart is our Executive Vice President, General Counsel and Secretary.

(31) Joseph V. Green, the spouse of this stockholder, was a member of our board
of directors from April 2004 until April 2005.

(32) Mr. Hamner is our Executive Vice President and Chief Financial Officer and
a member of our board of directors.

(33) Mr. McKenzie is our Vice Chairman of the Board of Directors.

(34) The number of shares of common stock included in these columns represents
shares of common stock owned by stockholders who have not yet been
specifically identified. Only those selling stockholders specifically
identified above may sell their shares pursuant to this prospectus.
Information concerning other stockholders who wish to become selling
stockholders will be set forth in amendments to the registration statement
of which this prospectus forms a part or supplements to this prospectus
from time to time, if and when required.

REGISTRATION RIGHTS AND LOCK-UP AGREEMENTS

REGISTRATION RIGHTS AGREEMENT

At the time of our April 2004 private placement, we entered into a
registration rights agreement with Friedman, Billings, Ramsey & Co., Inc. and
various holders of our common stock. The summary of the registration rights
agreement is subject to and qualified in its entirety by reference to the
registration rights agreement, a copy of which is filed as an exhibit to the
registration statement of which this prospectus is a part. See "Where You Can
Find More Information."

Piggy-Back Rights. Under the terms of the registration rights agreement,
if we proposed to file a registration statement providing for the initial public
offering of shares of our common stock, the holders of our common stock
purchased in the April 2004 private placement had a right to include their
shares in that registration statement and participate in the initial public
offering, subject to certain limitations. Pursuant to the registration statement
relating to our initial public offering, we registered, and purchasers in our
April 2004 private placement sold, 701,823 shares of our common stock held by
them.

Demand Rights. Pursuant to the registration rights agreement, we also
agreed for the benefit of the holders of shares of common stock sold in our
April 2004 private placement or issued to Friedman, Billings, Ramsey & Co., Inc.
in connection with our April 2004 private placement, that we would, at our
expense, file with the SEC the resale registration statement of which this
prospectus is a part registering 24,859,131 shares of our common stock issued in
connection with our April 2004 private placement. Pursuant to the registration
rights agreement, we are required to pay most expenses in connection with the
registration of the shares of common stock purchased in the April 2004 private
placement. In addition, we will reimburse selling stockholders in an aggregate
amount of up to $50,000, for the fees and expenses of one counsel and one
accounting firm, as selected by Friedman, Billings, Ramsey & Co., Inc. for the
selling stockholders to review this registration statement. Each selling
stockholder participating in this offering will bear a proportionate share based
on the total number of shares of common stock sold in this offering of all
discounts and commissions payable to the underwriters, all transfer taxes and
transfer fees and any other expense of the selling stockholders not allocated to
us in the registration rights agreement.

In addition, we agreed to use our reasonable best efforts to cause this
resale registration statement to become effective under the Securities Act as
promptly as practicable after the filing and to maintain this resale
registration statement continuously effective under the Securities Act until the
first to occur of (1) such time as all of the shares of common stock covered by
this resale registration statement have been sold pursuant to the registration
statement or pursuant to Rule 144 (or any successor or analogous rule) under the
Securities Act, (2) such time as all of the common stock not held by affiliates
of us, and covered by this resale registration statement, are eligible for sale
pursuant to Rule 144(k) (or any successor or analogous rule) under the
Securities Act, (3) such time as the shares of common stock have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer have been delivered by us and subsequent public distribution of such
shares does not require registration, or (4) the second annual anniversary of
the initial effective date of this resale registration statement.

Notwithstanding the foregoing, we will be permitted, under limited
circumstances, to suspend the use, from time to time, of this prospectus, and
therefore suspend sales under the registration statement, for
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certain periods, referred to as "blackout periods," if a majority of the
independent directors of our board, in good faith, determines that we are in
compliance with the terms of the registration rights agreement, that it is in
our best interest to suspend the use of the registration statement, and:

- that the offer or sale of any registrable shares would materially impede,
delay or interfere with any material proposed acquisition, merger, tender
offer, business combination, corporate reorganization, consolidation or
similar material transaction;

- after the advice of counsel, sale of the registrable shares would require
disclosure of non-public material information not otherwise required to
be disclosed under applicable law; and

- disclosure would have a material adverse effect on us or on our ability
to close the applicable transaction.

In addition, we may effect a blackout if a majority of independent
directors of our board, in good faith, determines that we are in compliance with
the terms of the registration rights agreement, that it is in our best interest
to suspend the use of the registration statement, and, after advice of counsel,
that it is required by law, rule or regulation to supplement the registration
statement or file a post-effective amendment for the purposes of:

- including in the registration statement any prospectus required under
Section 10(a)(3) of the Securities Act;

- reflecting any facts or events arising after the effective date of the
registration statement that represents a fundamental change in
information set forth therein; or

- including any material information with respect to the plan of
distribution or change to the plan of distribution not set forth therein.

The cumulative blackout periods in any 12 month period commencing on the
closing of the offering may not exceed an aggregate of 90 days and furthermore
may not exceed 60 days in any 90 day period. We may not institute a blackout
period more than three times in any 12 month period. Upon the occurrence of any
blackout period, we are to use our reasonable best efforts to take all action
necessary to promptly permit resumed use of the registration statement.

If, among other matters, we fail to maintain the effectiveness of this
resale registration statement, or, if our board of directors suspends the
effectiveness of the resale registration statement in excess of the permitted
blackout periods described above, the holders of registrable shares (other than
our affiliates) will be entitled to receive liquidated damages from us for the
period during which such failures or excess suspensions are continuing. The
liquidated damages will accrue daily during the first 90 days of any such period
at a rate of $0.25 per registrable share per year and will escalate by $0.25 per
registrable share per year at the end of each 90 day period within any such
period up to a maximum rate of $1.00 per registrable share per year. The
liquidated damages will be payable quarterly, in arrears within ten days after
the end of each applicable quarter.

In connection with the registration of the shares sold in the April 2004
private placement, we agreed to use our reasonable best efforts to list our
common stock on the NYSE or the Nasdaq National Market and thereafter to
maintain the listing.

LOCK-UP AGREEMENTS

All of our directors and executive officers agreed to be bound by lock-up
agreements that prohibit these holders from selling or otherwise disposing of
any of our common stock or securities convertible into our common stock that
they own or acquire until January 4, 2006, subject to limited exceptions.
Friedman, Billings, Ramsey & Co., Inc., on behalf of the underwriters of our
initial public offering, may, in its discretion, release all or any portion of
the common stock subject to the lock-up agreements with our directors and
executive officers, at any time and without notice or stockholder approval.
Friedman, Billings, Ramsey & Co., Inc. and its affiliates are subject to a
lock-up agreement that expires on October 12, 2005.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

OUR FORMATION

We were formed as a Maryland corporation on August 27, 2003 to succeed to
the business of Medical Properties Trust, LLC, a Delaware limited liability
company, which was formed by certain of our founders in December 2002. In
connection with our formation, we issued our founders 1,630,435 shares of our
common stock in exchange for nominal cash consideration and the membership
interests of Medical Properties Trust, LLC. Upon completion of our private
placement in April 2004, 1,108,527 shares of the 1,630,435 shares of common
stock held by our founders were redeemed for nominal value and they now
collectively hold 557,908 shares of our common stock, including shares purchased
in our April 2004 private placement.

James P. Bennett was formerly an owner, officer, director and consultant of
the company's predecessor, Medical Properties Trust, LLC, but has not been
affiliated with us since August 2003. Our predecessor had a consulting agreement
with Mr. Bennett pursuant to which he was to be paid a monthly consulting fee,
certain fringe benefits and, under certain circumstances, a fee based upon the
completion of specified acquisition transactions. We believe we owe Mr. Bennett
$411,238. Mr. Bennett disputes this amount and has notified us that he believes
he is entitled to be paid consulting fees of approximately $1.6 million. On
August 26, 2005, Mr. Bennett filed a lawsuit against us, certain of our
directors, Friedman, Billings, Ramsey & Co., Inc. and KPMG LLP in the Circuit
Court of Jefferson County, Alabama, alleging, among other things, breach of
contract and tortious interference with a contract or business relationship, and
demanding compensatory and punitive damages in an unspecified amount. We intend
to vigorously defend against this lawsuit.

From time to time, we may acquire or develop facilities in transactions
involving prospective tenants in which our directors or executive officers have
an interest. In accordance with our written conflicts of interest policy, we do
not intend to engage in these transactions without the approval of a majority of
our disinterested directors.

OUR STRUCTURE

Conflicts of interest could arise in the future as a result of the
relationships between us and our affiliates, on the one hand, and our operating
partnership or any limited partner thereof, on the other. Our directors and
officers have duties to our company and our stockholders under applicable
Maryland law in connection with their management of our company. At the same
time, we, through our wholly owned subsidiary, have fiduciary duties, as a
general partner, to our operating partnership and to the limited partners under
Delaware law in connection with the management of our operating partnership. Our
duties, through our wholly owned subsidiary, as a general partner to our
operating partnership and its partners may come into conflict with the duties of
our directors and officers to our company and our stockholders. The partnership
agreement of our operating partnership requires us to resolve such conflicts in
favor of our stockholders.

Pursuant to Maryland law, a contract or other transaction between us and a
director or between us and any other corporation or other entity in which any of
our directors is a director or has a material financial interest is not void or
voidable solely on the grounds of such common directorship or interest, the
presence of such director at the meeting at which the contract or transaction is
authorized, approved or ratified or the counting of the director's vote in favor
thereof. However, such transaction will not be void or voidable only if:

- the material facts relating to the common directorship or interest and as
to the transaction are disclosed to our board of directors or a committee
of our board, and our board or committee authorizes, approves or ratifies
the transaction or contract by the affirmative vote of a majority of
disinterested directors, even if the disinterested directors constitute
less than a quorum;

127

- the material facts relating to the common directorship or interest and as
to the transaction are disclosed to our stockholders entitled to vote
thereon, and the transaction is authorized, approved or ratified by a
majority of the votes cast by the stockholders entitled to vote (other
than the votes of shares owned of record or beneficially by the
interested director); or

- the transaction or contract is fair and reasonable to us at the time it
is authorized, ratified or approved.

Furthermore, under Delaware law, where our operating partnership is formed,
we, acting through the general partner, have a fiduciary duty to our operating
partnership and, consequently, such transactions are also subject to the duties
of care and loyalty that we, as a general partner, owe to limited partners in
our operating partnership (to the extent such duties have not been eliminated
pursuant to the terms of the partnership agreement). Where appropriate, in the
judgment of the disinterested directors, our board of directors may obtain a
fairness opinion, or engage independent counsel to represent the interests of
non-affiliated security holders, although our board of directors will have no
obligation to do so.

RELATIONSHIP WITH ONE OF THE UNDERWRITERS OF OUR INITIAL PUBLIC OFFERING

On November 13, 2003, we entered into an engagement letter agreement with
Friedman, Billings, Ramsey & Co., Inc., one of the underwriters of our initial
public offering. The engagement letter gives Friedman, Billings, Ramsey & Co.,
Inc. the right to serve in the following capacities until April 2006:

- as our financial advisor with respect to any future mergers, acquisitions
or other business combinations;

- as the sole book running and lead underwriter or sole placement agent in
connection with any public or private offering of equity or any public
offering of debt securities; and

- as our agent in connection with the exercise of our warrants or options,
other than warrants or options held by management or by Friedman,
Billings, Ramsey & Co., Inc.

On March 31, 2004, we entered into a Purchase/Placement Agreement with
Friedman, Billings, Ramsey & Co., Inc., pursuant to which Friedman, Billings,
Ramsey & Co., Inc. acted as initial purchaser and sole placement agent for our
April 2004 private placement and received aggregate initial purchaser discounts
and placement fees of $17.7 million. In addition, we issued 260,954 shares of
our common stock to Friedman, Billings, Ramsey & Co., Inc. as payment for
financial advisory services. As of July 15, 2005, Friedman Billings Ramsey
Group, Inc., an affiliate of Friedman, Billings, Ramsey & Co., Inc.,
beneficially owned, directly or indirectly through affiliates, 2,868,857 shares
of our common stock or approximately 7.62% of our outstanding common stock. We
have an account with Friedman, Billings, Ramsey & Co., Inc. through which we
managed approximately $141.7 million of our cash and cash equivalents as of July
15, 2005.

OTHER RELATIONSHIPS

In December 2004 and January 2005, the law firm of Locke, Liddell & Sapp
LLP, of which Mr. Goolsby is a partner, provided certain legal services to our
Ethics, Nominating and Corporate Governance Committee.

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INVESTMENT POLICIES AND POLICIES
WITH RESPECT TO CERTAIN ACTIVITIES

The following is a discussion of our investment policies and our policies
with respect to certain other activities, including financing matters and
conflicts of interest. These policies may be amended or revised from time to
time at the discretion of our board of directors, without a vote of our
stockholders. Any change to any of these policies by our board of directors,
however, would be made only after a thorough review and analysis of that change,
in light of then-existing business and other circumstances, and then only if, in
the exercise of its business judgment, our board of directors believes that it
is advisable to do so in our and our stockholders' best interests. We cannot
assure you that our investment objectives will be attained.

INVESTMENTS IN REAL ESTATE OR INTERESTS IN REAL ESTATE

We conduct our investment activities through our operating partnership and
other subsidiaries. Our policy is to acquire or develop assets primarily for
current income generation. In general, our investment strategy consists of the
following elements:

- Integral Healthcare Real Estate: We acquire and develop net-leased
healthcare facilities providing state-of-the-art healthcare services. In
our experience, healthcare service providers, including physicians and
hospital operating companies, choose to remain in an established location
for relatively long periods since changing the location of their physical
facilities does not assure that other critical components of the
healthcare delivery system, such as laboratory support, access to
specialized equipment, patient referral sources, nursing and other
professional support, and patient convenience, will continue to be
available at the same level of quality and efficiency. Consequently, we
believe market conditions will remain favorable for long-term net-leased
healthcare facilities, and we do not presently expect high levels of
tenant turnover. Moreover, we believe that our partnering approach will
afford us the opportunity to play an integral role in the strategic
planning process for the financing of replacement facilities and the
development of alternative uses for existing facilities.

- Net-lease Strategy: Our healthcare facilities are leased to healthcare
operators pursuant to long-term net-lease agreements under which our
tenants are responsible for virtually all costs of occupancy, including
property taxes, utilities, insurance and maintenance. We believe an
important investment consideration is that our leases to healthcare
operators provide a means for us to participate in the anticipated growth
of the healthcare sector of the United States economy. Our leases
generally provide for either contractual annual rent increases ranging
from 1.0% to 3.0% and, where feasible and in compliance with applicable
healthcare laws and regulations, percentage rent. We expect that such
rental rate adjustments will provide us with significant internal growth.

- Diversified Investment Strategy: Our facilities and the Pending
Acquisition and Development Facilities are diversified geographically, by
service type within the healthcare industry and by types of operator. We
have invested and intend to invest in a portfolio of net-leased
healthcare facilities providing state-of-the-art healthcare services. Our
facilities and Pending Acquisition and Development Facilities include new
and established facilities, both small and large facilities, including
rehabilitation hospitals, long-term acute care hospitals, ambulatory
surgical centers, regional and community hospitals, medical office
buildings, skilled nursing facilities and specialized single-discipline
facilities. Our facilities are and we expect will continue to be located
across the country. In addition, our tenants and prospective tenants are
diversified across many healthcare service areas. Because of the expected
diversity of our facilities in terms of facility type, geographic
location and tenant, we believe that our financial performance is less
likely to be materially affected by changes in reimbursement or payment
rates by private or public insurers or by changes in local or regional
economies.

- Financing Strategy: We intend to employ leverage in our capital
structure in amounts we determine from time to time. At present, we
intend to limit our debt to approximately 50-60% of
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the aggregate costs of our facilities, although we may temporarily exceed
that level from time to time. We expect our borrowings to be a
combination of long-term, fixed-rate, non-recourse mortgage loans,
variable-rate secured term and revolving credit facilities, and other
fixed and variable-rate short to medium-term loans.

There are no limitations on the amount or percentage of our total assets
that may be invested in any one facility. Additionally, no limits have been set
on the concentration of investments in any one location or facility type or with
any one tenant. Our current policy requires the approval of the investment
committee of our board of directors for acquisitions or developments of
facilities which exceed $10.0 million.

We believe that adherence to the investment strategy outlined above will
allow us to achieve the following objectives:

- increase in our stock value through increases in the cash flows and
values of our facilities;

- achievement of long-term capital appreciation, and preservation and
protection of the value of our interest in our facilities; and

- providing regular cash distributions to our stockholders, a portion of
which may constitute a nontaxable return of capital because it will
exceed our current and accumulated earnings and profits, as well as
providing growth in distributions over time.

INVESTMENTS IN SECURITIES OF OR INTERESTS IN PERSONS PRIMARILY ENGAGED IN REAL
ESTATE ACTIVITIES AND OTHER ISSUERS

Generally speaking, we do not expect to engage in any significant
investment activities with other entities, although we may consider joint
venture investments with other investors or with healthcare service providers.
We may also invest in the securities of other issuers in connection with
acquisitions of indirect interests in facilities (normally general or limited
partnership interests in special purpose partnerships owning facilities). We may
in the future acquire some, all or substantially all of the securities or assets
of other REITs or similar entities where that investment would be consistent
with our investment policies and the REIT qualification requirements. There are
no limitations on the amount or percentage of our total assets that may be
invested in any one issuer, other than those imposed by the gross income and
asset tests that we must satisfy to qualify as a REIT. However, we do not
anticipate investing in other issuers of securities for the purpose of
exercising control or acquiring any investments primarily for sale in the
ordinary course of business or holding any investments with a view to making
short-term profits from their sale. In any event, we do not intend that our
investments in securities will require us to register as an "investment company"
under the Investment Company Act, and we intend to divest securities before any
registration would be required.

We do not intend to engage in trading, underwriting, agency distribution or
sales of securities of other issuers.

DISPOSITIONS

Although we have no current plans to dispose of any of our facilities, we
will consider doing so, subject to REIT qualification rules and prohibited
transaction tax, if our management determines that a sale of a facility would be
in our best interests based on the price being offered for the facility, the
operating performance of the facility, the tax consequences of the sale and
other factors and circumstances surrounding the proposed sale. In addition, our
tenants have, and we expect that some or all of our prospective tenants will
have, the option to acquire the facilities at the end of or, in some cases,
during the lease term.

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FINANCING POLICIES

We intend to employ leverage in our capital structure in amounts we
determine from time to time. At present, we intend to limit our debt to
approximately 50-60% of the aggregate costs of our facilities, although we may
temporarily exceed those levels from time to time. We expect our borrowings to
be a combination of long-term, fixed-rate, non-recourse mortgage loans,
variable-rate secured term and revolving credit facilities, and other fixed and
variable-rate short to medium-term loans. Our board of directors considers a
number of factors when evaluating our level of indebtedness and when making
decisions regarding the incurrence of indebtedness, including the purchase price
of facilities to be acquired, the estimated market value of our facilities and
the ability of particular facilities, and our company as a whole, to generate
cash flow to cover expected debt service.

Any of this indebtedness may be unsecured or may be secured by mortgages or
other interests in our facilities, and may be recourse, non-recourse or
cross-collateralized and, if recourse, that recourse may include our general
assets and, if non-recourse, may be limited to the particular facility to which
the indebtedness relates. In addition, we may invest in facilities subject to
existing loans secured by mortgages or similar liens on the facilities, or may
refinance facilities acquired on a leveraged basis. We may use the proceeds from
any borrowings for working capital, to purchase additional interests in
partnerships or joint ventures in which we participate, to refinance existing
indebtedness or to finance acquisitions, expansion, redevelopment of existing
facilities or development of new facilities. We may also incur indebtedness for
other purposes when, in the opinion of our board of directors, it is advisable
to do so. In addition, we may need to borrow to meet the taxable income
distribution requirements under the Code if we do not have sufficient cash
available to meet those distribution requirements.

LENDING POLICIES

We do not have a policy limiting our ability to make loans to persons other
than our executive officers. We may consider offering purchase money financing
in connection with the sale of facilities where the provision of that financing
will increase the value to be received by us for the facility sold. We may make
loans to joint ventures in which we may participate in the future. Although we
do not intend to engage in significant lending activities in the future, we have
and may in the future make acquisition and working capital loans to prospective
tenants as well as mortgage loans to other facility owners and other parties.
See "Summary -- Loans and Fees Receivable."

EQUITY CAPITAL POLICIES

Subject to applicable law, our board of directors has the authority,
without further stockholder approval, to issue additional shares of authorized
common stock and preferred stock or otherwise raise capital, including through
the issuance of senior securities, in any manner and on the terms and for the
consideration it deems appropriate, including in exchange for property. Existing
stockholders will have no preemptive right to additional shares issued in any
offering, and any offering might cause a dilution of investment. We may in the
future issue common stock in connection with acquisitions. We also may issue
limited partnership units in our operating partnership or equity interests in
other subsidiaries in connection with acquisitions of facilities or otherwise.

Our board of directors may authorize the issuance of preferred stock with
terms and conditions that could have the effect of delaying, deterring or
preventing a transaction or a change in control in us that might involve a
premium price for holders of our common stock or otherwise might be in their
best interests. Additionally, any shares of preferred stock could have dividend,
voting, liquidation and other rights and preferences that are senior to those of
our common stock.

We may, under certain circumstances, purchase our common stock in the open
market or in private transactions with our stockholders, if those purchases are
approved by our board of directors. Our board of directors has no present
intention of causing us to repurchase any shares, and any action would only be
taken in conformity with applicable federal and state laws and the applicable
requirements for qualifying as a REIT.
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In the future we may institute a dividend reinvestment plan, which would
allow our stockholders to acquire additional common stock by automatically
reinvesting their cash distributions. Shares would be acquired pursuant to the
plan at a price equal to the then prevailing market price, without payment of
brokerage commissions or service charges. Stockholders who do not participate in
the plan will continue to receive cash distributions as declared and paid.

CODE OF ETHICS AND CONFLICT OF INTEREST POLICY

We have adopted written policies that are intended to minimize actual or
potential conflicts of interest. However, we cannot assure you that these
policies will be successful in eliminating the influence of these conflicts. Our
code of ethics and business conduct, or code of ethics, requires our directors,
officers and employees to conduct themselves in a manner that avoids even the
appearance of a conflict of interest, and to discuss any transaction or
relationship that reasonably could be expected to give rise to a conflict of
interest with our code of ethics contact person. Our code of ethics also
addresses insider trading, company funds and property, corporate opportunities
and fair dealing.

In addition, we have adopted a policy that requires that all contracts and
transactions between us, our operating partnership or any of our subsidiaries,
on the one hand, and any of our directors or executive officers or any entity in
which such director or executive officer is a director or has a material
financial interest, on the other hand, must be approved by the affirmative vote
of a majority of our disinterested directors.

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DESCRIPTION OF CAPITAL STOCK

The following summary of the material provisions of our capital stock is
subject to and qualified in its entirety by reference to the Maryland general
corporation law, or MGCL, and our charter and bylaws. Copies of our charter and
bylaws are filed as exhibits to the registration statement of which this
prospectus is a part. We recommend that you review these documents. See "Where
You Can Find More Information."

AUTHORIZED STOCK

Our charter authorizes us to issue up to 100,000,000 shares of common
stock, par value $.001 per share, and 10,000,000 shares of preferred stock, par
value $.001 per share. As of the date of this prospectus, we have 39,969,065
shares of common stock issued and outstanding and no shares of preferred stock
issued and outstanding. Our charter authorizes our board of directors to
increase the aggregate number of authorized shares or the number of shares of
any class or series without stockholder approval. Under Maryland law,
stockholders generally are not liable for the corporation's debts or
obligations.

COMMON STOCK

All shares of our common stock offered hereby will be duly authorized,
fully paid and nonassessable. Subject to the preferential rights of any other
class or series of stock and to the provisions of our charter regarding the
restrictions on transfer of stock, holders of shares of our common stock are
entitled to receive dividends on such stock when, as and if authorized by our
board of directors out of funds legally available therefor and declared by us
and to share ratably in the assets of our company legally available for
distribution to our stockholders in the event of our liquidation, dissolution or
winding up after payment of or adequate provision for all known debts and
liabilities of our company, including the preferential rights on dissolution of
any class or classes of preferred stock.

Subject to the provisions of our charter regarding the restrictions on
transfer of stock, each outstanding share of our common stock entitles the
holder to one vote on all matters submitted to a vote of stockholders, including
the election of directors and, except as provided with respect to any other
class or series of stock, the holders of such shares will possess the exclusive
voting power. There is no cumulative voting in the election of our board of
directors. Our directors are elected by a plurality of the votes cast at a
meeting of stockholders at which a quorum is present.

Holders of shares of our common stock have no preference, conversion,
exchange, sinking fund, redemption or appraisal rights and have no preemptive
rights to subscribe for any securities of our company. Subject to the provisions
of our charter regarding the restrictions on transfer of stock, shares of our
common stock will have equal dividend, liquidation and other rights.

Under the MGCL, a Maryland corporation generally cannot dissolve, amend its
charter, merge, consolidate, sell all or substantially all of its assets, engage
in a share exchange or engage in similar transactions outside the ordinary
course of business unless approved by the corporation's board of directors and
by the affirmative vote of stockholders holding at least two-thirds of the
shares entitled to vote on the matter unless a lesser percentage (but not less
than a majority of all of the votes entitled to be cast on the matter) is set
forth in the corporation's charter. Our charter does not provide for a lesser
percentage for these matters. However, Maryland law permits a corporation to
transfer all or substantially all of its assets without the approval of the
stockholders of the corporation to one or more persons if all of the equity
interests of the person or persons are owned, directly or indirectly, by the
corporation. Because operating assets may be held by a corporation's
subsidiaries, as in our situation, this may mean that a subsidiary of a
corporation can transfer all of its assets without a vote of the corporation's
stockholders.

Our charter authorizes our board of directors to reclassify any unissued
shares of our common stock into other classes or series of classes of stock and
to establish the number of shares in each class or series and to set the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications or terms or
conditions of redemption for each such class or series.

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PREFERRED STOCK

Our charter authorizes our board of directors to classify any unissued
shares of preferred stock and to reclassify any previously classified but
unissued shares of any series. Prior to issuance of shares of each series, our
board of directors is required by the MGCL and our charter to set the terms,
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications and terms and
conditions of redemption for each such series. Thus, our board of directors
could authorize the issuance of shares of preferred stock with terms and
conditions which could have the effect of delaying, deferring or preventing a
change of control transaction that might involve a premium price for holders of
our common stock or which holders might believe to otherwise be in their best
interest. As of the date hereof, no shares of preferred stock are outstanding,
and we have no current plans to issue any preferred stock.

POWER TO INCREASE AUTHORIZED STOCK AND ISSUE ADDITIONAL SHARES OF OUR COMMON
STOCK AND PREFERRED STOCK

We believe that the power of our board of directors, without stockholder
approval, to increase the number of authorized shares of stock, issue additional
authorized but unissued shares of our common stock or preferred stock and to
classify or reclassify unissued shares of our common stock or preferred stock
and thereafter to cause us to issue such classified or reclassified shares of
stock will provide us with flexibility in structuring possible future financings
and acquisitions and in meeting other needs which might arise. The additional
classes or series, as well as the common stock, will be available for issuance
without further action by our stockholders, unless stockholder consent is
required by applicable law or the rules of any national securities exchange or
automated quotation system on which our securities may be listed or traded.

RESTRICTIONS ON OWNERSHIP AND TRANSFER

In order for us to qualify as a REIT under the Code, not more than 50% of
the value of the outstanding shares of our stock may be owned, actually or
constructively, by five or fewer individuals (as defined in the Code to include
certain entities) during the last half of a taxable year (other than the first
year for which an election to be a REIT has been made by us). In addition, if
we, or one or more owners (actually or constructively) of 10% or more of our
stock, actually or constructively owns 10% or more of a tenant of ours (or a
tenant of any partnership in which we are a partner), the rent received by us
(either directly or through any such partnership) from such tenant will not be
qualifying income for purposes of the REIT gross income tests of the Code. Our
stock must also be beneficially owned by 100 or more persons during at least 335
days of a taxable year of 12 months or during a proportionate part of a shorter
taxable year (other than the first year for which an election to be a REIT has
been made by us).

Our charter contains restrictions on the ownership and transfer of our
capital stock that are intended to assist us in complying with these
requirements and continuing to qualify as a REIT. The relevant sections of our
charter provide that, effective upon completion of our initial public offering
and subject to the exceptions described below, no person or persons acting as a
group may own, or be deemed to own by virtue of the attribution provisions of
the Code, more than (i) 9.8% of the number or value, whichever is more
restrictive, of the outstanding shares of our common stock or (ii) 9.8% of the
number or value, whichever is more restrictive, of the issued and outstanding
preferred or other shares of any class or series of our stock. We refer to this
restriction as the "ownership limit." The ownership limitation in our charter is
more restrictive than the restrictions on ownership of our common stock imposed
by the Code.

The ownership attribution rules under the Code are complex and may cause
stock owned actually or constructively by a group of related individuals or
entities to be owned constructively by one individual or entity. As a result,
the acquisition of less than 9.8% of our common stock (or the acquisition of an
interest in an entity that owns, actually or constructively, our common stock)
by an individual or entity could nevertheless cause that individual or entity,
or another individual or entity, to own constructively in excess of 9.8% of our
outstanding common stock and thereby subject the common stock to the ownership
limit.

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Our board of directors may, in its sole discretion, waive the ownership
limit with respect to one or more stockholders if it determines that such
ownership will not jeopardize our status as a REIT (for example, by causing any
tenant of ours to be considered a "related party tenant" for purposes of the
REIT qualification rules).

As a condition of our waiver, our board of directors may require an opinion
of counsel or IRS ruling satisfactory to our board of directors and
representations or undertakings from the applicant with respect to preserving
our REIT status.

In connection with the waiver of the ownership limit or at any other time,
our board of directors may decrease the ownership limit for all other persons
and entities; provided, however, that the decreased ownership limit will not be
effective for any person or entity whose percentage ownership in our capital
stock is in excess of such decreased ownership limit until such time as such
person or entity's percentage of our capital stock equals or falls below the
decreased ownership limit, but any further acquisition of our capital stock in
excess of such percentage ownership of our capital stock will be in violation of
the ownership limit. Additionally, the new ownership limit may not allow five or
fewer "individuals" (as defined for purposes of the REIT ownership restrictions
under the Code) to beneficially own more than 49.5% of the value of our
outstanding capital stock.

Our charter generally prohibits:

- any person from actually or constructively owning shares of our capital
stock that would result in us being "closely held" under Section 856(h)
of the Code; and

- any person from transferring shares of our capital stock if such transfer
would result in shares of our stock being beneficially owned by fewer
than 100 persons (determined without reference to any rules of
attribution).

Any person who acquires or attempts or intends to acquire beneficial or
constructive ownership of shares of our common stock that will or may violate
any of the foregoing restrictions on transferability and ownership will be
required to give notice immediately to us and provide us with such other
information as we may request in order to determine the effect of such transfer
on our status as a REIT. The foregoing provisions on transferability and
ownership will not apply if our board of directors determines that it is no
longer in our best interests to attempt to qualify, or to continue to qualify,
as a REIT.

Pursuant to our charter, if any purported transfer of our capital stock or
any other event would otherwise result in any person violating the ownership
limits or the other restrictions in our charter, then any such purported
transfer will be void and of no force or effect with respect to the purported
transferee or owner (collectively referred to hereinafter as the "purported
owner") as to that number of shares in excess of the ownership limit (rounded up
to the nearest whole share). The number of shares in excess of the ownership
limit will be automatically transferred to, and held by, a trust for the
exclusive benefit of one or more charitable organizations selected by us. The
trustee of the trust will be designated by us and must be unaffiliated with us
and with any purported owner. The automatic transfer will be effective as of the
close of business on the business day prior to the date of the violative
transfer or other event that results in a transfer to the trust. Any dividend or
other distribution paid to the purported owner, prior to our discovery that the
shares had been automatically transferred to a trust as described above, must be
repaid to the trustee upon demand for distribution to the beneficiary of the
trust and all dividends and other distributions paid by us with respect to such
"excess" shares prior to the sale by the trustee of such shares shall be paid to
the trustee for the beneficiary. If the transfer to the trust as described above
is not automatically effective, for any reason, to prevent violation of the
applicable ownership limit, then our charter provides that the transfer of the
excess shares will be void. Subject to Maryland law, effective as of the date
that such excess shares have been transferred to the trust, the trustee shall
have the authority (at the trustee's sole discretion and subject to applicable
law) (i) to rescind as void any vote cast by a purported owner prior to our
discovery that such shares have been transferred to the trust and (ii) to recast
such vote in accordance with the desires of the trustee acting for the benefit
of the beneficiary of

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the trust, provided that if we have already taken irreversible action, then the
trustee shall not have the authority to rescind and recast such vote.

Shares of our capital stock transferred to the trustee are deemed offered
for sale to us, or our designee, at a price per share equal to the lesser of (i)
the price paid by the purported owner for the shares (or, if the event which
resulted in the transfer to the trust did not involve a purchase of such shares
of our capital stock at market price, the market price on the day of the event
which resulted in the transfer of such shares of our capital stock to the trust)
and (ii) the market price on the date we, or our designee, accepts such offer.
We have the right to accept such offer until the trustee has sold the shares of
our capital stock held in the trust pursuant to the provisions discussed below.
Upon a sale to us, the interest of the charitable beneficiary in the shares sold
terminates and the trustee must distribute the net proceeds of the sale to the
purported owner and any dividends or other distributions held by the trustee
with respect to such capital stock will be paid to the charitable beneficiary.

If we do not buy the shares, the trustee must, within 20 days of receiving
notice from us of the transfer of shares to the trust, sell the shares to a
person or entity designated by the trustee who could own the shares without
violating the ownership limits. After that, the trustee must distribute to the
purported owner an amount equal to the lesser of (i) the net price paid by the
purported owner for the shares (or, if the event which resulted in the transfer
to the trust did not involve a purchase of such shares at market price, the
market price on the day of the event which resulted in the transfer of such
shares of our capital stock to the trust) and (ii) the net sales proceeds
received by the trust for the shares. Any proceeds in excess of the amount
distributable to the purported owner will be distributed to the beneficiary.

All persons who own, directly or by virtue of the attribution provisions of
the Code, more than 5% (or such other percentage as provided in the regulations
promulgated under the Code) of the lesser of the number or value of the shares
of our outstanding capital stock must give written notice to us within 30 days
after the end of each calendar year. In addition, each stockholder will, upon
demand, be required to disclose to us in writing such information with respect
to the direct, indirect and constructive ownership of shares of our stock as our
board of directors deems reasonably necessary to comply with the provisions of
the Code applicable to a REIT, to comply with the requirements or any taxing
authority or governmental agency or to determine any such compliance.

All certificates representing shares of our capital stock will bear a
legend referring to the restrictions described above.

These ownership limits could delay, defer or prevent a transaction or a
change of control of our company that might involve a premium price over the
then prevailing market price for the holders of some, or a majority, of our
outstanding shares of common stock or which such holders might believe to be
otherwise in their best interest.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is American Stock
Transfer and Trust Co.

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MATERIAL PROVISIONS OF MARYLAND LAW AND OF
OUR CHARTER AND BYLAWS

The following is a summary of certain provisions of Maryland law and of our
charter and bylaws. For a complete description, we refer you to the applicable
Maryland laws and to our charter and bylaws, copies of which are exhibits to the
registration statement of which this prospectus is a part. See "Where You Can
Find More Information."

THE BOARD OF DIRECTORS

Our charter and bylaws provide that the number of our directors is to be
established by our board of directors but may not be fewer than one nor more
than 15. Currently, our board is comprised of eight directors. Any vacancy,
other than one resulting from an increase in the number of directors, may be
filled, at any regular meeting or at any special meeting called for that
purpose, by a majority of the remaining directors, though less than a quorum.
Any vacancy resulting from an increase in the number of our directors must be
filled by a majority of the entire board of directors. A director elected to
fill a vacancy shall be elected to serve until the next election of directors
and until his successor shall be elected and qualified.

Pursuant to our charter, each member of our board of directors is elected
until the next annual meeting of stockholders and until his successor is
elected, with the current members' terms expiring at the annual meeting of
stockholders to be held in 2005. Holders of shares of our common stock have no
right to cumulative voting in the election of directors. Consequently, at each
annual meeting of stockholders, all of the members of our board of directors
will stand for election and our directors will be elected by a plurality of
votes cast. Directors may be removed with or without cause by the affirmative
vote of two-thirds of the votes entitled to be cast in the election of
directors.

BUSINESS COMBINATIONS

Maryland law prohibits "business combinations" between a Maryland
corporation and an interested stockholder or an affiliate of an interested
stockholder for five years after the most recent date on which the interested
stockholder becomes an interested stockholder. These business combinations
include a merger, consolidation, share exchange, or, in circumstances specified
in the statute, certain transfers of assets, certain stock issuances and
reclassifications. Maryland law defines an interested stockholder as:

- any person who beneficially owns 10% or more of the voting power of the
corporation's voting stock; or

- an affiliate or associate of the corporation who, at any time within the
two-year period prior to the date in question, was the beneficial owner
of 10% or more of the voting power of the then-outstanding voting stock
of the corporation.

A person is not an interested stockholder if the board of directors
approves in advance the transaction by which the person otherwise would have
become an interested stockholder. However, in approving the transaction, the
board of directors may provide that its approval is subject to compliance, at or
after the time of approval, with any terms and conditions determined by the
board of directors.

After the five year prohibition, any business combination between a
corporation and an interested stockholder generally must be recommended by the
board of directors and approved by the affirmative vote of at least:

- 80% of the votes entitled to be cast by holders of the then outstanding
shares of voting stock; and

- two-thirds of the votes entitled to be cast by holders of the voting
stock other than shares held by the interested stockholder with whom or
with whose affiliate the business combination is to be effected or shares
held by an affiliate or associate of the interested stockholder.

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These super-majority vote requirements do not apply if stockholders receive
a minimum price, as defined under Maryland law, for their shares in the form of
cash or other consideration in the same form as previously paid by the
interested stockholder for its shares.

The statute permits various exemptions from its provisions, including
business combinations that are approved by the board of directors before the
time that the interested stockholder becomes an interested stockholder.

As permitted by Maryland law, our charter includes a provision excluding
our company from these provisions of the MGCL and, consequently, the five-year
prohibition and the super-majority vote requirements will not apply to business
combinations between us and any interested stockholder of ours unless we later
amend our charter, with stockholder approval, to modify or eliminate this
exclusion provision. We believe that our ownership restrictions will
substantially reduce the risk that a stockholder would become an "interested
stockholder" within the meaning of the Maryland business combination statute.
There can be no assurance, however, that we will not opt into the business
combination provisions of the MGCL at a future date.

CONTROL SHARE ACQUISITIONS

The MGCL provides that "control shares" of a Maryland corporation acquired
in a "control share acquisition" have no voting rights except to the extent
approved at a special meeting by the affirmative vote of two-thirds of the votes
entitled to be cast on the matter. Shares owned by the acquiror or by officers
or directors who are our employees are excluded from shares entitled to vote on
the matter. "Control shares" are voting shares which, if aggregated with all
other shares previously acquired by the acquirer or in respect of which the
acquirer is able to exercise or direct the exercise of voting power except
solely by virtue of a revocable proxy, would entitle the acquirer to exercise
voting power in electing directors within one of the following ranges of voting
power: (i) one-tenth or more but less than one-third, (ii) one-third or more but
less than a majority, or (iii) a majority or more of all voting power. Control
shares do not include shares the acquiring person is then entitled to vote as a
result of having previously obtained stockholder approval. A "control share
acquisition" means the acquisition of control shares, subject to certain
exceptions.

A person who has made or proposes to make a control share acquisition, upon
satisfaction of certain conditions, including an undertaking to pay expenses,
may compel a corporation's board of directors to call a special meeting of
stockholders to be held within 50 days of demand to consider the voting rights
of the shares. If no request for a meeting is made, the corporation may itself
present the question at any stockholders meeting.

If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by Maryland law,
then, subject to certain conditions and limitations, the corporation may redeem
any or all of the control shares, except those for which voting rights have
previously been approved, for fair value determined, without regard to the
absence of voting rights for the control shares, as of the date of the last
control share acquisition by the acquirer or of any meeting of stockholders at
which the voting rights of such shares are considered and not approved. If
voting rights for control shares are approved at a stockholders meeting and the
acquirer becomes entitled to vote a majority of the shares entitled to vote,
then all other stockholders are entitled to demand and receive fair value for
their stock, or provided for in the "dissenters" rights provisions of the MGCL
may exercise appraisal rights. The fair value of the shares as determined for
purposes of such appraisal rights may not be less than the highest price per
share paid by the acquirer in the control share acquisition.

The control share acquisition statute does not apply (i) to shares acquired
in a merger, consolidation or share exchange if the corporation is a party to
the transaction or (ii) to acquisitions approved or exempted by the charter or
bylaws of the corporation.

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Our charter contains a provision exempting from the control share
acquisition statute any and all acquisitions by any person of our stock. There
can be no assurance that we will not opt into the control share acquisition
provisions of the MGCL in the future.

MARYLAND UNSOLICITED TAKEOVERS ACT

Maryland law also permits Maryland corporations that are subject to the
Exchange Act and have at least three outside directors to elect by resolution of
the board of directors or by provision in its charter or bylaws to be subject to
some corporate governance provisions that may be inconsistent with the
corporation's charter and bylaws. Under the applicable statute, a board of
directors may classify itself without the vote of stockholders. A board of
directors classified in that manner cannot be altered by amendment to the
charter of the corporation. Further, the board of directors may, by electing
into applicable statutory provisions and notwithstanding the charter or bylaws:

- provide that a special meeting of the stockholders will be called only at
the request of stockholders entitled to cast at least a majority of the
votes entitled to be cast at the meeting;

- reserve for itself the right to fix the number of directors;

- provide that a director may be removed only by the vote of the holders of
two-thirds of the stock entitled to vote;

- retain for itself sole authority to fill vacancies created by the death,
removal or resignation of a director; and

- provide that all vacancies on the board of directors may be filled only
by the affirmative vote of a majority of the remaining directors, in
office, even if the remaining directors do not constitute a quorum for
the remainder of the full term of the class of directors in which the
vacancy occurred.

A board of directors may implement all or any of these provisions without
amending the charter or bylaws and without stockholder approval. A corporation
may be prohibited by its charter or by resolution of its board of directors from
electing any of the provisions of the statute. We are not prohibited from
implementing any or all of these provisions. While certain of these provisions
are already addressed by our charter and bylaws, the law would permit our board
of directors to override further changes to the charter or bylaws. If
implemented, these provisions could discourage offers to acquire our stock and
could increase the difficulty of completing an offer.

AMENDMENT TO OUR CHARTER

Our charter may be amended only if declared advisable by the board of
directors and approved by the affirmative vote of the holders of at least
two-thirds of all of the votes entitled to be cast on the matter, except that
our board of directors is able, without stockholder approval, to amend our
charter to change our corporate name or the name or designation or par value of
any class or series of stock.

DISSOLUTION OF OUR COMPANY

A voluntary dissolution of our company must be declared advisable by a
majority of the entire board of directors and approved by the affirmative vote
of the holders of at least two-thirds of all of the votes entitled to be cast on
the matter.

ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS

Our bylaws provide that:

- with respect to an annual meeting of stockholders, the only business to
be considered and the only proposals to be acted upon will be those
properly brought before the annual meeting:

- pursuant to our notice of the meeting;

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- by, or at the direction of, a majority of our board of directors; or

- by a stockholder who is entitled to vote at the meeting and has complied
with the advance notice procedures set forth in our bylaws;

- with respect to special meetings of stockholders, only the business
specified in our company's notice of meeting may be brought before the
meeting of stockholders unless otherwise provided by law; and

- nominations of persons for election to our board of directors at any
annual or special meeting of stockholders may be made only:

- by, or at the direction of, our board of directors; or

- by a stockholder who is entitled to vote at the meeting and has complied
with the advance notice provisions set forth in our bylaws.

Generally, under our bylaws, a stockholder seeking to nominate a director
or bring other business before our annual meeting of stockholders must deliver a
notice to our secretary not later than the close of business on the 90th day nor
earlier than the close of business on the 120th day prior to the first
anniversary of the date of mailing of the notice to stockholders for the prior
year's annual meeting. For a stockholder seeking to nominate a candidate for our
board of directors, the notice must describe various matters regarding the
nominee, including name, address, occupation and number of shares of common
stock held, and other specified matters. For a stockholder seeking to propose
other business, the notice must include a description of the proposed business,
the reasons for the proposal and other specified matters.

INDEMNIFICATION AND LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY

The MGCL permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability
resulting from actual receipt of an improper benefit or profit in money,
property or services or active and deliberate dishonesty established by a final
judgment as being material to the cause of action. Our charter limits the
personal liability of our directors and officers for monetary damages to the
fullest extent permitted under current Maryland law, and our charter and bylaws
provide that a director or officer shall be indemnified to the fullest extent
required or permitted by Maryland law from and against any claim or liability to
which such director or officer may become subject by reason of his or her status
as a director or officer of our company. Maryland law allows directors and
officers to be indemnified against judgments, penalties, fines, settlements, and
expenses actually incurred in connection with any proceeding to which they may
be made a party by reason of their service on those or other capacities unless
the following can be established:

- the act or omission of the director or officer was material to the cause
of action adjudicated in the proceeding and was committed in bad faith or
was the result of active and deliberate dishonesty;

- the director or officer actually received an improper personal benefit in
money, property or services; or

- with respect to any criminal proceeding, the director or officer had
reasonable cause to believe his or her act or omission was unlawful.

The MGCL requires a corporation (unless its charter provides otherwise,
which our charter does not) to indemnify a director or officer who has been
successful on the merits or otherwise, in the defense of any claim to which he
or she is made a party by reason of his or her service in that capacity.

However, under the MGCL, a Maryland corporation may not indemnify for an
adverse judgment in a suit by or in the right of the corporation or for a
judgment of liability on the basis that personal benefit was improperly
received, unless in either case a court orders indemnification and then only for
expenses. In

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addition, the MGCL permits a corporation to advance reasonable expenses to a
director or officer upon the corporation's receipt of:

- a written affirmation by the director or officer of his or her good faith
belief that he or she has met the standard of conduct necessary for
indemnification by the corporation; and

- a written undertaking by the director or on the director's behalf to
repay the amount paid or reimbursed by the corporation if it is
ultimately determined that the director did not meet the standard of
conduct.

Our charter authorizes us to obligate ourselves to indemnify and our bylaws
do obligate us, to the fullest extent permitted by Maryland law in effect from
time to time, to indemnify and, without requiring a preliminary determination of
the ultimate entitlement to indemnification, pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to:

- any present or former director or officer who is made a party to the
proceeding by reason of his or her service in that capacity; or

- any individual who, while a director or officer of our company and at our
request, serves or has served another corporation, real estate investment
trust, partnership, joint venture, trust, employee benefit plan or any
other enterprise as a director, officer, partner or trustee of such
corporation, real estate investment trust, partnership, joint venture,
trust, employee benefit plan or other enterprise and who is made a party
to the proceeding by reason of his or her service in that capacity.

Our charter and bylaws also permit us to indemnify and advance expenses to
any person who served a predecessor of ours in any of the capacities described
above.

Our stockholders have no personal liability for indemnification payments or
other obligations under any indemnification agreements or arrangements. However,
indemnification could reduce the legal remedies available to us and our
stockholders against the indemnified individuals.

This provision for indemnification of our directors and officers does not
limit a stockholder's ability to obtain injunctive relief or other equitable
remedies for a violation of a director's or an officer's duties to us or to our
stockholders, although these equitable remedies may not be effective in some
circumstances.

In addition to any indemnification to which our directors and officers are
entitled pursuant to our charter and bylaws and the MGCL, our charter and bylaws
provide that, with the approval of our board of directors, we may indemnify
other employees and agents to the fullest extent permitted under Maryland law,
whether they are serving us or, at our request, any other entity.

We have entered into indemnification agreements with each of our directors
and executive officers, and we maintain a directors and officers liability
insurance policy. See "Management -- Limited Liability and Indemnification."

Insofar as the foregoing provisions permit indemnification of directors,
officers or persons controlling us for liability arising under the Securities
Act, we have been informed that, in the opinion of the SEC, this indemnification
is against public policy as expressed in the Securities Act and is therefore
unenforceable.

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PARTNERSHIP AGREEMENT

The following is a summary of the material terms of the first amended and
restated agreement of limited partnership of our operating partnership. This
summary is subject to and qualified in its entirety by reference to the first
amended and restated agreement of limited partnership of our operating
partnership, a copy of which is an exhibit to the registration statement of
which this prospectus is a part. See "Where You Can Find More Information."

MANAGEMENT OF OUR OPERATING PARTNERSHIP

MPT Operating Partnership, L.P., our operating partnership, was organized
as a Delaware limited partnership on September 10, 2003. The initial partnership
agreement was entered into on that date and amended and restated on March 1,
2004. Pursuant to the partnership agreement, as the owner of the sole general
partner of the operating partnership, Medical Properties Trust, LLC, we have,
subject to certain protective rights of limited partners described below, full,
exclusive and complete responsibility and discretion in the management and
control of the operating partnership. We have the power to cause the operating
partnership to enter into certain major transactions, including acquisitions,
dispositions, refinancings and selection of tenants, and to cause changes in the
operating partnership's line of business and distribution policies. However, any
amendment to the partnership agreement that would affect the redemption rights
of the limited partners or otherwise adversely affect the rights of the limited
partners requires the consent of limited partners, other than us, holding more
than 50% of the units of our operating partnership held by such partners.

TRANSFERABILITY OF INTERESTS

We may not voluntarily withdraw from the operating partnership or transfer
or assign our interest in the operating partnership or engage in any merger,
consolidation or other combination, or sale of substantially all of our assets,
in a transaction which results in a change of control of our company unless:

- we receive the consent of limited partners holding more than 50% of the
partnership interests of the limited partners, other than those held by
our company or its subsidiaries;

- as a result of such transaction, all limited partners will have the right
to receive for each partnership unit an amount of cash, securities or
other property equal in value to the greatest amount of cash, securities
or other property paid in the transaction to a holder of one share of our
common stock, provided that if, in connection with the transaction, a
purchase, tender or exchange offer shall have been made to and accepted
by the holders of more than 50% of the outstanding shares of our common
stock, each holder of partnership units shall be given the option to
exchange its partnership units for the greatest amount of cash,
securities or other property that a limited partner would have received
had it (i) exercised its redemption right (described below) and (ii)
sold, tendered or exchanged pursuant to the offer shares of our common
stock received upon exercise of the redemption right immediately prior to
the expiration of the offer; or

- we are the surviving entity in the transaction and either (i) our
stockholders do not receive cash, securities or other property in the
transaction or (ii) all limited partners receive for each partnership
unit an amount of cash, securities or other property having a value that
is no less than the greatest amount of cash, securities or other property
received in the transaction by our stockholders.

We also may merge with or into or consolidate with another entity if
immediately after such merger or consolidation (i) substantially all of the
assets of the successor or surviving entity, other than partnership units held
by us, are contributed, directly or indirectly, to the partnership as a capital
contribution in exchange for partnership units with a fair market value equal to
the value of the assets so contributed as determined by the survivor in good
faith and (ii) the survivor expressly agrees to assume all of our obligations
under the partnership agreement and the partnership agreement shall be amended
after any such merger or consolidation so as to arrive at a new method of
calculating the amounts payable upon

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exercise of the redemption right that approximates the existing method for such
calculation as closely as reasonably possible.

We also may (i) transfer all or any portion of our general partnership
interest to (A) a wholly-owned subsidiary or (B) a parent company, and following
such transfer may withdraw as general partner and (ii) engage in a transaction
required by law or by the rules of any national securities exchange or automated
quotation system on which our securities may be listed or traded.

CAPITAL CONTRIBUTION

We contributed to our operating partnership substantially all the net
proceeds of our April 2004 private placement as a capital contribution in
exchange for units of the operating partnership. The partnership agreement
provides that if the operating partnership requires additional funds at any time
in excess of funds available to the operating partnership from borrowing or
capital contributions, we may borrow such funds from a financial institution or
other lender and lend such funds to the operating partnership on the same terms
and conditions as are applicable to our borrowing of such funds. Under the
partnership agreement, we are obligated to contribute the proceeds of any
offering of shares of our company's stock as additional capital to the operating
partnership. We are authorized to cause the operating partnership to issue
partnership interests for less than fair market value if we have concluded in
good faith that such issuance is in both the operating partnership's and our
best interests. If we contribute additional capital to the operating
partnership, we will receive additional partnership units and our percentage
interest will be increased on a proportionate basis based upon the amount of
such additional capital contributions and the value of the operating partnership
at the time of such contributions. Conversely, the percentage interests of the
limited partners will be decreased on a proportionate basis in the event of
additional capital contributions by us. In addition, if we contribute additional
capital to the operating partnership, we will revalue the property of the
operating partnership to its fair market value, as determined by us, and the
capital accounts of the partners will be adjusted to reflect the manner in which
the unrealized gain or loss inherent in such property, that has not been
reflected in the capital accounts previously, would be allocated among the
partners under the terms of the partnership agreement if there were a taxable
disposition of such property for its fair market value, as determined by us, on
the date of the revaluation. The operating partnership may issue preferred
partnership interests, in connection with acquisitions of property or otherwise,
which could have priority over common partnership interests with respect to
distributions from the operating partnership, including the partnership
interests that our wholly-owned subsidiary owns as general partner.

REDEMPTION RIGHTS

Pursuant to Section 8.04 of the partnership agreement, the limited
partners, other than us, will receive redemption rights, which will enable them
to cause the operating partnership to redeem their limited partnership units in
exchange for cash or, at our option, shares of our common stock on a one-for-one
basis, subject to adjustment for stock splits, dividends, recapitalization and
similar events. Currently, we own 100% of the issued limited partnership units
of our operating partnership. Under Section 8.04 of our partnership agreement,
holders of limited partnership units will be prohibited from exercising their
redemption rights for 12 months after they are issued, unless this waiting
period is waived or shortened by our board of directors. Notwithstanding the
foregoing, a limited partner will not be entitled to exercise its redemption
rights if the delivery of common stock to the redeeming limited partner would:

- result in any person owning, directly or indirectly, common stock in
excess of the stock ownership limit in our charter;

- result in our shares of stock being owned by fewer than 100 persons
(determined without reference to any rules of attribution);

- result in our being "closely held" within the meaning of Section 856(h)
of the Code;

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- cause us to own, actually or constructively, 10% or more of the ownership
interests in a tenant of our or the partnership's real property, within
the meaning of Section 856(d)(2)(B) of the Code; or

- cause the acquisition of common stock by such redeeming limited partner
to be "integrated" with any other distribution of common stock for
purposes of complying with the registration provisions of the Securities
Act.

We may, in our sole and absolute discretion, waive any of these
restrictions.

With respect to the partnership units issuable in connection with the
acquisition or development of our facilities, the redemption rights may be
exercised by the limited partners at any time after the first anniversary of our
acquisition of these facilities; provided, however, unless we otherwise agree:

- a limited partner may not exercise the redemption right for fewer than
1,000 partnership units or, if such limited partner holds fewer than
1,000 partnership units, the limited partner must redeem all of the
partnership units held by such limited partner;

- a limited partner may not exercise the redemption right for more than the
number of partnership units that would, upon redemption, result in such
limited partner or any other person owning, directly or indirectly,
common stock in excess of the ownership limitation in our charter; and

- a limited partner may not exercise the redemption right more than two
times annually.

We currently hold all the outstanding interests in our operating
partnership and, accordingly, there are currently no units of our operating
partnership subject to being redeemed in exchange for shares of our common
stock. The number of shares of common stock issuable upon exercise of the
redemption rights will be adjusted to account for stock splits, mergers,
consolidations or similar pro rata stock transactions.

The partnership agreement requires that the operating partnership be
operated in a manner that enables us to satisfy the requirements for being
classified as a REIT, to avoid any federal income or excise tax liability
imposed by the Code (other than any federal income tax liability associated with
our retained capital gains) and to ensure that the partnership will not be
classified as a "publicly traded partnership" taxable as a corporation under
Section 7704 of the Code.

In addition to the administrative and operating costs and expenses incurred
by the operating partnership, the operating partnership generally will pay all
of our administrative costs and expenses, including:

- all expenses relating to our continuity of existence;

- all expenses relating to offerings and registration of securities;

- all expenses associated with the preparation and filing of any of our
periodic reports under federal, state or local laws or regulations;

- all expenses associated with our compliance with laws, rules and
regulations promulgated by any regulatory body; and

- all of our other operating or administrative costs incurred in the
ordinary course of business on behalf of the operating partnership.

DISTRIBUTIONS

The partnership agreement provides that the operating partnership will
distribute cash from operations, including net sale or refinancing proceeds, but
excluding net proceeds from the sale of the operating partnership's property in
connection with the liquidation of the operating partnership, at such time and
in such amounts as determined by us in our sole discretion, to us and the
limited partners in accordance with their respective percentage interests in the
operating partnership.

Upon liquidation of the operating partnership, after payment of, or
adequate provision for, debts and obligations of the partnership, including any
partner loans, any remaining assets of the partnership will be
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distributed to us and the limited partners with positive capital accounts in
accordance with their respective positive capital account balances.

ALLOCATIONS

Profits and losses of the partnership, including depreciation and
amortization deductions, for each fiscal year generally are allocated to us and
the limited partners in accordance with the respective percentage interests in
the partnership. All of the foregoing allocations are subject to compliance with
the provisions of Sections 704(b) and 704(c) of the Code and Treasury
regulations promulgated thereunder. The operating partnership expects to use the
"traditional method" under Section 704(c) of the Code for allocating items with
respect to contributed property acquired in connection with the offering for
which the fair market value differs from the adjusted tax basis at the time of
contribution.

TERM

The operating partnership will have perpetual existence, or until sooner
dissolved upon:

- our bankruptcy, dissolution, removal or withdrawal, unless the limited
partners elect to continue the partnership;

- the passage of 90 days after the sale or other disposition of all or
substantially all the assets of the partnership; or

- an election by us in our capacity as the owner of the sole general
partner of the operating partnership.

TAX MATTERS

Pursuant to the partnership agreement, the general partner is the tax
matters partner of the operating partnership. Accordingly, through our ownership
of the general partner of the operating partnership, we have authority to handle
tax audits and to make tax elections under the Code on behalf of the operating
partnership.

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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

This section summarizes the current material federal income tax
consequences to our company and to our stockholders generally resulting from the
treatment of our company as a REIT. Because this section is a general summary,
it does not address all of the potential tax issues that may be relevant to you
in light of your particular circumstances. Baker, Donelson, Bearman, Caldwell &
Berkowitz, P.C., or Baker Donelson, has acted as our counsel, has reviewed this
summary, and is of the opinion that the discussion contained herein fairly
summarizes the federal income tax consequences that are material to a holder of
shares of our common stock. The discussion does not address all aspects of
taxation that may be relevant to particular stockholders in light of their
personal investment or tax circumstances, or to certain types of stockholders
that are subject to special treatment under the federal income tax laws, such as
insurance companies, tax-exempt organizations (except to the limited extent
discussed in "-- Taxation of Tax-Exempt Stockholders"), financial institutions
or broker-dealers, and non-United States individuals and foreign corporations
(except to the limited extent discussed in "-- Taxation of Non-United States
Stockholders").

The statements in this section and the opinion of Baker Donelson, referred
to as the Tax Opinion, are based on the current federal income tax laws
governing qualification as a REIT. We cannot assure you that new laws,
interpretations of law or court decisions, any of which may take effect
retroactively, will not cause any statement in this section to be inaccurate.
You should be aware that opinions of counsel are not binding on the IRS, and no
assurance can be given that the IRS will not challenge the conclusions set forth
in those opinions.

This section is not a substitute for careful tax planning. We urge you to
consult your own tax advisors regarding the specific federal state, local,
foreign and other tax consequences to you, in light of your own particular
circumstances, of the purchase, ownership and disposition of shares of our
common stock, our election to be taxed as a REIT and the effect of potential
changes in applicable tax laws.

TAXATION OF OUR COMPANY

We were previously taxed as a subchapter S corporation. We revoked our
subchapter S election on April 6, 2004 and we have elected to be taxed as a REIT
under Sections 856 through 860 of the Code, commencing with our taxable year
that began on April 6, 2004 and ended on December 31, 2004. Our counsel has
opined that, for federal income tax purposes, we are and have been organized in
conformity with the requirements for qualification to be taxed as a REIT under
the Code commencing with our initial short taxable year ended December 31, 2004,
and that our current and proposed method of operations as described in this
prospectus and as represented to our counsel by us satisfies currently, and will
enable us to continue to satisfy in the future, the requirements for such
qualification and taxation as a REIT under the Code for future taxable years.
This opinion, however, is based upon factual assumptions and representations
made by us.

We believe that our proposed future method of operation will enable us to
continue to qualify as a REIT. However, no assurances can be given that our
beliefs or expectations will be fulfilled, as such qualification and taxation as
a REIT depends upon our ability to meet, for each taxable year, various tests
imposed under the Code as discussed below. Those qualification tests involve the
percentage of income that we earn from specified sources, the percentage of our
assets that falls within specified categories, the diversity of our stock
ownership, and the percentage of our earnings that we distribute. Baker Donelson
will not review our compliance with those tests on a continuing basis.
Accordingly, with respect to our current and future taxable years, no assurance
can be given that the actual results of our operation will satisfy such
requirements. For a discussion of the tax consequences of our failure to
maintain our qualification as a REIT, see "-- Failure to Qualify."

The sections of the Code relating to qualification and operation as a REIT,
and the federal income taxation of a REIT and its stockholders, are highly
technical and complex. The following discussion sets forth only the material
aspects of those sections. This summary is qualified in its entirety by the
applicable Code provisions and the related rules and regulations.
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We generally will not be subject to federal income tax on the taxable
income that we distribute to our stockholders. The benefit of that tax treatment
is that it avoids the "double taxation," or taxation at both the corporate and
stockholder levels, that generally results from owning stock in a corporation.
However, we will be subject to federal tax in the following circumstances:

- We are subject to the corporate federal income tax on taxable income,
including net capital gain, that we do not distribute to stockholders
during, or within a specified time period after, the calendar year in
which the income is earned.

- We are subject to the corporate "alternative minimum tax" on any items of
tax preference that we do not distribute or allocate to stockholders.

- We are subject to tax, at the highest corporate rate, on:

- net income from the sale or other disposition of property acquired
through foreclosure ("foreclosure property") that we hold primarily
for sale to customers in the ordinary course of business, and

- other non-qualifying income from foreclosure property.

- We are subject to a 100% tax on net income from sales or other
dispositions of property, other than foreclosure property, that we hold
primarily for sale to customers in the ordinary course of business.

- If we fail to satisfy the 75% gross income test or the 95% gross income
test, as described below under "-- Requirements for
Qualification -- Gross Income Tests," but nonetheless continue to qualify
as a REIT because we meet other requirements, we will be subject to a
100% tax on:

- the greater of (i) the amount by which we fail the 75% test, or (ii)
the excess of 90% (95% for taxable years beginning on and after
January 1, 2005) of our gross income over the amount of gross income
attributable to sources that qualify under the 95% test, multiplied by

- a fraction intended to reflect our profitability.

- If we fail to distribute during a calendar year at least the sum of: (i)
85% of our REIT ordinary income for the year, (ii) 95% of our REIT
capital gain net income for the year, and (iii) any undistributed taxable
income from earlier periods, then we will be subject to a 4% excise tax
on the excess of the required distribution over the amount we actually
distributed.

- If we fail to satisfy one or more requirements for REIT qualification
during a taxable year beginning on or after January 1, 2005, other than a
gross income test or an asset test, we will be required to pay a penalty
of $50,000 for each such failure.

- We may elect to retain and pay income tax on our net long-term capital
gain. In that case, a United States stockholder would be taxed on its
proportionate share of our undistributed long-term capital gain (to the
extent that we make a timely designation of such gain to the stockholder)
and would receive a credit or refund for its proportionate share of the
tax we paid.

- We may be subject to a 100% excise tax on certain transactions with a
taxable REIT subsidiary that are not conducted at arm's-length.

- If we acquire any asset from a "C corporation" (that is, a corporation
generally subject to the full corporate-level tax) in a transaction in
which the basis of the asset in our hands is determined by reference to
the basis of the asset in the hands of the C corporation, and we
recognize gain on the disposition of the asset during the 10 year period
beginning on the date that we acquired the asset, then the asset's
"built-in" gain will be subject to tax at the highest regular corporate
rate.

REQUIREMENTS FOR QUALIFICATION

To continue to qualify as a REIT, we must meet various (i) organizational
requirements, (ii) gross income tests, (iii) asset tests, and (iv) annual
distribution requirements.

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Organizational Requirements. A REIT is a corporation, trust or association
that meets each of the following requirements:

(1) it is managed by one or more trustees or directors;

(2) its beneficial ownership is evidenced by transferable stock, or by
transferable certificates of beneficial interest;

(3) it would be taxable as a domestic corporation, but for its
election to be taxed as a REIT under Sections 856 through 860 of the Code;

(4) it is neither a financial institution nor an insurance company
subject to special provisions of the federal income tax laws;

(5) at least 100 persons are beneficial owners of its stock or
ownership certificates (determined without reference to any rules of
attribution);

(6) not more than 50% in value of its outstanding stock or ownership
certificates is owned, directly or indirectly, by five or fewer
individuals, which the federal income tax laws define to include certain
entities, during the last half of any taxable year; and

(7) it elects to be a REIT, or has made such election for a previous
taxable year, and satisfies all relevant filing and other administrative
requirements established by the IRS that must be met to elect and maintain
REIT status.

We must meet requirements one through four during our entire taxable year
and must meet requirement five during at least 335 days of a taxable year of 12
months, or during a proportionate part of a taxable year of less than 12 months.
If we comply with all the requirements for ascertaining information concerning
the ownership of our outstanding stock in a taxable year and have no reason to
know that we violated requirement six, we will be deemed to have satisfied
requirement six for that taxable year. We do not have to satisfy requirements
five and six for our taxable year ending December 31, 2004. After the issuance
of common stock pursuant to our April 2004 private placement we had issued
common stock with enough diversity of ownership to satisfy requirements five and
six as set forth above. Our charter provides for restrictions regarding the
ownership and transfer of our shares of common stock so that we should continue
to satisfy these requirements. The provisions of our charter restricting the
ownership and transfer of our shares of common stock are described in
"Description of Capital Stock -- Restrictions on Ownership and Transfer."

For purposes of determining stock ownership under requirement six, an
"individual" generally includes a supplemental unemployment compensation
benefits plan, a private foundation, or a portion of a trust permanently set
aside or used exclusively for charitable purposes. An "individual," however,
generally does not include a trust that is a qualified employee pension or
profit sharing trust under the federal income tax laws, and beneficiaries of
such a trust will be treated as holding our shares in proportion to their
actuarial interests in the trust for purposes of requirement six.

A corporation that is a "qualified REIT subsidiary," or QRS, is not treated
as a corporation separate from its parent REIT. All assets, liabilities, and
items of income, deduction and credit of a QRS are treated as assets,
liabilities, and items of income, deduction and credit of the REIT. A QRS is a
corporation, all of the capital stock of which is owned by the REIT. Thus, in
applying the requirements described herein, any QRS that we own will be ignored,
and all assets, liabilities, and items of income, deduction and credit of such
subsidiary will be treated as our assets, liabilities, and items of income,
deduction and credit.

An unincorporated domestic entity, such as a partnership, that has a single
owner, generally is not treated as an entity separate from its parent for
federal income tax purposes. An unincorporated domestic entity with two or more
owners is generally treated as a partnership for federal income tax purposes. In
the case of a REIT that is a partner in a partnership that has other partners,
the REIT is treated as owning its proportionate share of the assets of the
partnership and as earning its allocable share of the gross income

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of the partnership for purposes of the applicable REIT qualification tests.
Thus, our proportionate share of the assets, liabilities and items of income of
our operating partnership and any other partnership, joint venture, or limited
liability company that is treated as a partnership for federal income tax
purposes in which we acquire an interest, directly or indirectly, is treated as
our assets and gross income for purposes of applying the various REIT
qualification requirements.

A REIT is permitted to own up to 100% of the stock of one or more "taxable
REIT subsidiaries." A taxable REIT subsidiary is a fully taxable corporation
that may earn income that would not be qualifying income if earned directly by
the parent REIT. The subsidiary and the REIT must jointly file an election with
the IRS to treat the subsidiary as a taxable REIT subsidiary. A taxable REIT
subsidiary will pay income tax at regular corporate rates on any income that it
earns. In addition, the taxable REIT subsidiary rules limit the deductibility of
interest paid or accrued by a taxable REIT subsidiary to its parent REIT to
assure that the taxable REIT subsidiary is subject to an appropriate level of
corporate taxation. Further, the rules impose a 100% excise tax on certain types
of transactions between a taxable REIT subsidiary and its parent REIT or the
REIT's tenants that are not conducted on an arm's-length basis. We may engage in
activities indirectly through a taxable REIT subsidiary as necessary or
convenient to avoid obtaining the benefit of income or services that would
jeopardize our REIT status if we engaged in the activities directly. In
particular, we would likely engage in activities through a taxable REIT
subsidiary if we wished to provide services to unrelated parties which might
produce income that does not qualify under the gross income tests described
below. We might also dispose of an unwanted asset through a taxable REIT
subsidiary as necessary or convenient to avoid the 100% tax on income from
prohibited transactions. See description below under "Prohibited Transactions."
A taxable REIT subsidiary may not operate or manage a healthcare facility. For
purposes of this definition a "healthcare facility" means a hospital, nursing
facility, assisted living facility, congregate care facility, qualified
continuing care facility, or other licensed facility which extends medical or
nursing or ancillary services to patients and which is operated by a service
provider which is eligible for participation in the Medicare program under Title
XVIII of the Social Security Act with respect to such facility. We have formed
and made a taxable REIT subsidiary election with respect to MPT Development
Services, Inc., a Delaware corporation formed in January 2004. We may form or
acquire one or more additional taxable REIT subsidiaries in the future. See
"Federal Income Tax Considerations -- Income Taxation of the Partnerships and
the Partners -- Taxable REIT Subsidiaries."

Gross Income Tests. We must satisfy two gross income tests annually to
maintain our qualification as a REIT. First, at least 75% of our gross income
for each taxable year must consist of defined types of income that we derive,
directly or indirectly, from investments relating to real property or mortgages
on real property or qualified temporary investment income. Qualifying income for
purposes of that 75% gross income test generally includes:

- rents from real property;

- interest on debt secured by mortgages on real property, or on interests
in real property;

- dividends or other distributions on, and gain from the sale of, shares in
other REITs;

- gain from the sale of real estate assets;

- income derived from the temporary investment of new capital that is
attributable to the issuance of our shares of common stock or a public
offering of our debt with a maturity date of at least five years and that
we receive during the one year period beginning on the date on which we
received such new capital; and

- gross income from foreclosure property.

Second, in general, at least 95% of our gross income for each taxable year
must consist of income that is qualifying income for purposes of the 75% gross
income test, other types of interest and dividends, gain from the sale or
disposition of stock or securities, income from certain hedging instruments or
any combination of these. Gross income from our sale of property that we hold
primarily for sale to customers

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in the ordinary course of business is excluded from both the numerator and the
denominator in both income tests. In addition, for taxable years beginning on
and after January 1, 2005, income and gain from "hedging transactions" that we
enter into to hedge indebtedness incurred or to be incurred to acquire or carry
real estate assets and that are clearly and timely identified as such also will
be excluded from both the numerator and the denominator for purposes of the 95%
gross income test (but not the 75% gross income test). The following paragraphs
discuss the specific application of the gross income tests to us.

Rents from Real Property. Rent that we receive from our real property will
qualify as "rents from real property," which is qualifying income for purposes
of the 75% and 95% gross income tests, only if the following conditions are met.

First, the rent must not be based in whole or in part on the income or
profits of any person. Participating rent, however, will qualify as "rents from
real property" if it is based on percentages of receipts or sales and the
percentages:

- are fixed at the time the leases are entered into;

- are not renegotiated during the term of the leases in a manner that has
the effect of basing rent on income or profits; and

- conform with normal business practice.

More generally, the rent will not qualify as "rents from real property" if,
considering the relevant lease and all the surrounding circumstances, the
arrangement does not conform with normal business practice, but is in reality
used as a means of basing the rent on income or profits. We have represented to
Baker Donelson that we intend to set and accept rents which are fixed dollar
amounts or a fixed percentage of gross revenue, and not determined to any extent
by reference to any person's income or profits, in compliance with the rules
above.

Second, we must not own, actually or constructively, 10% or more of the
stock or the assets or net profits of any tenant, referred to as a related party
tenant, other than a taxable REIT subsidiary. Failure to adhere to this
limitation would cause the rental income from the related party tenant to not be
treated as qualifying income for purposes of the REIT gross income tests. The
constructive ownership rules generally provide that, if 10% or more in value of
our stock is owned, directly or indirectly, by or for any person, we are
considered as owning the stock owned, directly or indirectly, by or for such
person. We do not own any stock or any assets or net profits of any tenant
directly. In addition, our charter prohibits transfers of our shares that would
cause us to own, actually or constructively, 10% or more of the ownership
interests in a tenant. We should not own, actually or constructively, 10% or
more of any tenant other than a taxable REIT subsidiary. We have represented to
counsel that we will not rent any facility to a related-party tenant. However,
because the constructive ownership rules are broad and it is not possible to
monitor continually direct and indirect transfers of our shares, no absolute
assurance can be given that such transfers or other events of which we have no
knowledge will not cause us to own constructively 10% or more of a tenant other
than a taxable REIT subsidiary at some future date. MPT Development Services,
Inc., our taxable REIT subsidiary, has made loans to Vibra Healthcare, LLC, the
parent entity of our tenants, in an aggregate amount of approximately $41.4
million to acquire the operations at certain facilities. MPT Development
Services, Inc. also made a loan of approximately $6.2 million to Vibra and its
subsidiaries for working capital purposes which was repaid in February 2005. We
believe that the loans to Vibra will be treated as debt rather than equity
interests in Vibra, and that our rental income from Vibra will be treated as
qualifying income for purposes of the REIT gross income tests. However, there
can be no assurance that the IRS will not take a contrary position. If the IRS
were to successfully treat the loans to Vibra as equity interests in Vibra,
Vibra would be a related party tenant with respect to our company, the rent that
we receive from Vibra would not be qualifying income for purposes of the REIT
gross income tests, and we could lose our REIT status. However, as stated above,
we believe that the loans to Vibra will be treated as debt rather than equity
interests in Vibra.

As described above, we currently own 100% of the stock of MPT Development
Services, Inc., a taxable REIT subsidiary, and may in the future own up to 100%
of the stock of one or more additional
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taxable REIT subsidiaries. Under an exception to the related-party tenant rule
described in the preceding paragraph, rent that we receive from a taxable REIT
subsidiary will qualify as "rents from real property" as long as (i) the taxable
REIT subsidiary is a qualifying taxable REIT subsidiary (among other things, it
does not operate or manage a healthcare facility), (ii) at least 90% of the
leased space in the facility is leased to persons other than taxable REIT
subsidiaries and related party tenants, and (iii) the amount paid by the taxable
REIT subsidiary to rent space at the facility is substantially comparable to
rents paid by other tenants of the facility for comparable space. If in the
future we receive rent from a taxable REIT subsidiary, we will seek to comply
with this exception.

Third, the rent attributable to the personal property leased in connection
with a lease of real property must not be greater than 15% of the total rent
received under the lease. The rent attributable to personal property under a
lease is the amount that bears the same ratio to total rent under the lease for
the taxable year as the average of the fair market values of the leased personal
property at the beginning and at the end of the taxable year bears to the
average of the aggregate fair market values of both the real and personal
property covered by the lease at the beginning and at the end of such taxable
year (the "personal property ratio"). With respect to each of our leases, we
believe that the personal property ratio generally will be less than 15%. Where
that is not, or may in the future not be, the case, we believe that any income
attributable to personal property will not jeopardize our ability to qualify as
a REIT. There can be no assurance, however, that the IRS would not challenge our
calculation of a personal property ratio, or that a court would not uphold such
assertion. If such a challenge were successfully asserted, we could fail to
satisfy the 75% or 95% gross income test and thus lose our REIT status.

Fourth, we cannot furnish or render noncustomary services to the tenants of
our facilities, or manage or operate our facilities, other than through an
independent contractor who is adequately compensated and from whom we do not
derive or receive any income. However, we need not provide services through an
"independent contractor," but instead may provide services directly to our
tenants, if the services are "usually or customarily rendered" in connection
with the rental of space for occupancy only and are not considered to be
provided for the tenants' convenience. In addition, we may provide a minimal
amount of "noncustomary" services to the tenants of a facility, other than
through an independent contractor, as long as our income from the services does
not exceed 1% of our income from the related facility. Finally, we may own up to
100% of the stock of one or more taxable REIT subsidiaries, which may provide
noncustomary services to our tenants without tainting our rents from the related
facilities. We do not intend to perform any services other than customary ones
for our tenants, other than services provided through independent contractors or
taxable REIT subsidiaries. We have represented to Baker Donelson that we will
not perform noncustomary services which would jeopardize our REIT status.

Finally, in order for the rent payable under the leases of our properties
to constitute "rents from real property," the leases must be respected as true
leases for federal income tax purposes and not treated as service contracts,
joint ventures, financing arrangements, or another type of arrangement. We
generally treat our leases with respect to our properties as true leases for
federal income tax purposes. We believe that our lease of the Desert Valley
Facility is a true lease; however, because of the nature of the lessee's
purchase option thereunder, there can be no assurance that the IRS would not
consider this lease a financing arrangement instead of a true lease for federal
income tax purposes. In that case, our income from the lease of the Desert
Valley Facility would be interest income rather than rent and would be
qualifying income for purposes of the 75% gross income test to the extent that
our "loan" does not exceed the fair market value of the real estate assets
associated with the Desert Valley Facility. All of the interest income from our
loan would be qualifying income for purposes of the 95% gross income test. We
believe that the characterization of the Desert Valley Facility lease as a
financing arrangement would not adversely affect our ability to qualify as a
REIT.

If a portion of the rent we receive from a facility does not qualify as
"rents from real property" because the rent attributable to personal property
exceeds 15% of the total rent for a taxable year, the portion of the rent
attributable to personal property will not be qualifying income for purposes of
either the 75% or 95% gross income test. If rent attributable to personal
property, plus any other income that is nonqualifying income for purposes of the
95% gross income test, during a taxable year exceeds 5% of our
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gross income during the year, we would lose our REIT status. By contrast, in the
following circumstances, none of the rent from a lease of a facility would
qualify as "rents from real property": (i) the rent is considered based on the
income or profits of the tenant; (ii) the tenant is a related party tenant or
fails to qualify for the exception to the related-party tenant rule for
qualifying taxable REIT subsidiaries; or (iii) we furnish more than a de minimis
amount of noncustomary services to the tenants of the facility, or manage or
operate the facility, other than through a qualifying independent contractor or
a taxable REIT subsidiary. In any of these circumstances, we could lose our REIT
status because we would be unable to satisfy either the 75% or 95% gross income
test.

Tenants may be required to pay, besides base rent, reimbursements for
certain amounts we are obligated to pay to third parties (such as a tenant's
proportionate share of a facility's operational or capital expenses), penalties
for nonpayment or late payment of rent or additions to rent. These and other
similar payments should qualify as "rents from real property."

Interest. The term "interest" generally does not include any amount
received or accrued, directly or indirectly, if the determination of the amount
depends in whole or in part on the income or profits of any person. However, an
amount received or accrued generally will not be excluded from the term
"interest" solely because it is based on a fixed percentage or percentages of
receipts or sales. Furthermore, to the extent that interest from a loan that is
based upon the residual cash proceeds from the sale of the property securing the
loan constitutes a "shared appreciation provision," income attributable to such
participation feature will be treated as gain from the sale of the secured
property.

Fee Income. We may receive various fees in connection with our operations.
The fees will be qualifying income for purposes of both the 75% and 95% gross
income tests if they are received in consideration for entering into an
agreement to make a loan secured by real property and the fees are not
determined by income and profits. Other fees are not qualifying income for
purposes of either gross income test. Any fees earned by MPT Development
Services, Inc., our taxable REIT subsidiary, will not be included for proposes
of the gross income tests. We anticipate that MPT Development Services, Inc.
will receive most of the management fees, inspection fees, and construction fees
in connection with our operations.

Prohibited Transactions. A REIT will incur a 100% tax on the net income
derived from any sale or other disposition of property, other than foreclosure
property, that the REIT holds primarily for sale to customers in the ordinary
course of a trade or business. We believe that none of our assets will be held
primarily for sale to customers and that a sale of any of our assets will not be
in the ordinary course of our business. Whether a REIT holds an asset "primarily
for sale to customers in the ordinary course of a trade or business" depends,
however, on the facts and circumstances in effect from time to time, including
those related to a particular asset. Nevertheless, we will attempt to comply
with the terms of safe-harbor provisions in the federal income tax laws
prescribing when an asset sale will not be characterized as a prohibited
transaction. We cannot assure you, however, that we can comply with the
safe-harbor provisions or that we will avoid owning property that may be
characterized as property that we hold "primarily for sale to customers in the
ordinary course of a trade or business." We may form or acquire a taxable REIT
subsidiary to hold and dispose of those facilities we conclude may not fall
within the safe-harbor provisions.

Foreclosure Property. We will be subject to tax at the maximum corporate
rate on any income from foreclosure property, other than income that otherwise
would be qualifying income for purposes of the 75% gross income test, less
expenses directly connected with the production of that income. However, gross
income from foreclosure property will qualify under the 75% and 95% gross income
tests. Foreclosure property is any real property, including interests in real
property, and any personal property incident to such real property acquired by a
REIT as the result of the REIT's having bid on the property at foreclosure, or
having otherwise reduced such property to ownership or possession by agreement
or process of law after actual or imminent default on a lease of the property or
on indebtedness secured by the property, or a "Repossession Action." Property
acquired by a Repossession Action will not be considered "foreclosure property"
if (i) the REIT held or acquired the property subject to a lease or securing

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indebtedness for sale to customers in the ordinary course of business or (ii)
the lease or loan was acquired or entered into with intent to take Repossession
Action or in circumstances where the REIT had reason to know a default would
occur. The determination of such intent or reason to know must be based on all
relevant facts and circumstances. In no case will property be considered
"foreclosure property" unless the REIT makes a proper election to treat the
property as foreclosure property.

Foreclosure property includes any qualified healthcare property acquired by
a REIT as a result of a termination of a lease of such property (other than a
termination by reason of a default, or the imminence of a default, on the
lease). A "qualified healthcare property" means any real property, including
interests in real property, and any personal property incident to such real
property which is a healthcare facility or is necessary or incidental to the use
of a healthcare facility. For this purpose, a healthcare facility means a
hospital, nursing facility, assisted living facility, congregate care facility,
qualified continuing care facility, or other licensed facility which extends
medical or nursing or ancillary services to patients and which, immediately
before the termination, expiration, default, or breach of the lease secured by
such facility, was operated by a provider of such services which was eligible
for participation in the Medicare program under Title XVIII of the Social
Security Act with respect to such facility.

However, a REIT will not be considered to have foreclosed on a property
where the REIT takes control of the property as a mortgagee-in-possession and
cannot receive any profit or sustain any loss except as a creditor of the
mortgagor. Property generally ceases to be foreclosure property at the end of
the third taxable year following the taxable year in which the REIT acquired the
property (or, in the case of a qualified healthcare property which becomes
foreclosure property because it is acquired by a REIT as a result of the
termination of a lease of such property, at the end of the second taxable year
following the taxable year in which the REIT acquired such property) or longer
if an extension is granted by the Secretary of the Treasury. This period (as
extended, if applicable) terminates, and foreclosure property ceases to be
foreclosure property on the first day:

- on which a lease is entered into for the property that, by its terms,
will give rise to income that does not qualify for purposes of the 75%
gross income test, or any amount is received or accrued, directly or
indirectly, pursuant to a lease entered into on or after such day that
will give rise to income that does not qualify for purposes of the 75%
gross income test;

- on which any construction takes place on the property, other than
completion of a building or any other improvement, where more than 10% of
the construction was completed before default became imminent; or

- which is more than 90 days after the day on which the REIT acquired the
property and the property is used in a trade or business which is
conducted by the REIT, other than through an independent contractor from
whom the REIT itself does not derive or receive any income. For this
purpose, in the case of a qualified healthcare property, income derived
or received from an independent contractor will be disregarded to the
extent such income is attributable to (i) a lease of property in effect
on the date the REIT acquired the qualified healthcare property (without
regard to its renewal after such date so long as such renewal is pursuant
to the terms of such lease as in effect on such date) or (ii) any lease
of property entered into after such date if, on such date, a lease of
such property from the REIT was in effect and, under the terms of the new
lease, the REIT receives a substantially similar or lesser benefit in
comparison to the prior lease.

Hedging Transactions. From time to time, we may enter into hedging
transactions with respect to one or more of our assets or liabilities. Our
hedging activities may include entering into interest rate swaps, caps, and
floors, options to purchase such items, and futures and forward contracts. For
taxable years beginning prior to January 1, 2005, any periodic income or gain
from the disposition of any financial instrument for these or similar
transactions to hedge indebtedness we incur to acquire or carry "real estate
assets" should be qualifying income for purposes of the 95% gross income test,
but not the 75% gross income test. For taxable years beginning on and after
January 1, 2005, income and gain from "hedging transactions" will be excluded
from gross income for purposes of the 95% gross income test (but not the 75%
gross income test). For those taxable years, a "hedging transaction" will mean
any transaction entered
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into in the normal course of our trade or business primarily to manage the risk
of interest rate or price changes, or currency fluctuations with respect to
borrowings made or to be made, or ordinary obligations incurred or to be
incurred, to acquire or carry real estate assets. We will be required to clearly
identify any such hedging transaction before the close of the day on which it
was acquired, originated, or entered into. Since the financial markets
continually introduce new and innovative instruments related to risk-sharing or
trading, it is not entirely clear which such instruments will generate income
which will be considered qualifying income for purposes of the gross income
tests. We intend to structure any hedging or similar transactions so as not to
jeopardize our status as a REIT.

Failure to Satisfy Gross Income Tests. If we fail to satisfy one or both
of the gross income tests for our 2004 taxable year, we nevertheless may qualify
as a REIT for that year if we qualify for relief under certain provisions of the
federal income tax laws. Those relief provisions generally will be available if:

- our failure to meet these tests is due to reasonable cause and not to
willful neglect;

- we attach a schedule of the sources of our income to our tax return; and

- any incorrect information on the schedule is not due to fraud with intent
to evade tax.

For taxable years beginning on and after January 1, 2005, those relief
provisions will be available if:

- our failure to meet those tests is due to reasonable cause and not to
willful neglect, and

- following our identification of such failure for any taxable year, a
schedule of the sources of our income is filed in accordance with
regulations prescribed by the Secretary of the Treasury.

We cannot with certainty predict whether any failure to meet these tests
will qualify for the relief provisions. As discussed above in "-- Taxation of
Our Company," even if the relief provisions apply, we would incur a 100% tax on
the gross income attributable to the greater of the amounts by which we fail the
75% and 95% gross income tests, multiplied by a fraction intended to reflect our
profitability.

Asset Tests. To maintain our qualification as a REIT, we also must satisfy
the following asset tests at the end of each quarter of each taxable year.

First, at least 75% of the value of our total assets must consist of:

- cash or cash items, including certain receivables;

- government securities;

- real estate assets, which includes interest in real property, leaseholds,
options to acquire real property or leaseholds, interests in mortgages on
real property and shares (or transferable certificates of beneficial
interest) in other REITs;

- stock in other REITs; and

- investments in stock or debt instruments attributable to the temporary
investment (i.e., for a period not exceeding 12 months) of new capital
that we raise through equity offerings or offerings of debt with at least
a five year term.

With respect to investments not included in the 75% asset class, we may not hold
securities of any one issuer (other than a taxable REIT subsidiary) that exceed
5% of the value of our total assets; nor may we hold securities of any one
issuer (other than a taxable REIT subsidiary) that represent more than 10% of
the voting power of all outstanding voting securities of such issuer, or more
than 10% of the value of all outstanding securities of such issuer.

In addition, we may not hold securities of one or more taxable REIT
subsidiaries that represent in the aggregate more than 20% of the value of our
total assets, irrespective of whether such securities may also be included in
the 75% asset class (e.g., a mortgage loan issued to a taxable REIT subsidiary).
Furthermore, no more than 25% of our total assets may be represented by
securities that are not included

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in the 75% asset class, but this requirement will necessarily be satisfied if
the 75% asset class requirement is satisfied.

For purposes of the 5% and 10% asset tests, the term "securities" does not
include stock in another REIT, equity or debt securities of a qualified REIT
subsidiary or taxable REIT subsidiary, mortgage loans that constitute real
estate assets, or equity interests in a partnership. The term "securities,"
however, generally includes debt securities issued by a partnership or another
REIT, except that for purposes of the 10% value test, the term "securities" does
not include:

- "Straight debt," defined as a written unconditional promise to pay on
demand or on a specified date a sum certain in money if (i) the debt is
not convertible, directly or indirectly, into stock, and (ii) the
interest rate and interest payment dates are not contingent on profits,
the borrower's discretion, or similar factors. "Straight debt" securities
do not include any securities issued by a partnership or a corporation in
which we or any controlled TRS (i.e., a TRS in which we own directly or
indirectly more than 50% of the voting power or value of the stock) holds
non-"straight debt" securities that have an aggregate value of more than
1% of the issuer's outstanding securities. However, "straight debt"
securities include debt subject to the following contingencies:

- a contingency relating to the time of payment of interest or principal,
as long as either (i) there is no change to the effective yield of the
debt obligation, other than a change to the annual yield that does not
exceed the greater of 0.25% or 5% of the annual yield, or (ii) neither
the aggregate issue price nor the aggregate face amount of the issuer's
debt obligations held by us exceeds $1 million and no more than 12
months of unaccrued interest on the debt obligations can be required to
be prepaid; and

- a contingency relating to the time or amount of payment upon a default
or prepayment of a debt obligation, as long as the contingency is
consistent with customary commercial practice;

- Any loan to an individual or an estate;

- Any "section 467 rental agreement," other than an agreement with a
related party tenant;

- Any obligation to pay "rents from real property";

- Any security issued by a state or any political subdivision thereof, the
District of Columbia, a foreign government of any political subdivision
thereof, or the Commonwealth of Puerto Rico, but only if the
determination of any payment thereunder does not depend in whole or in
part on the profits of any entity not described in this paragraph or
payments on any obligation issued by an entity not described in this
paragraph;

- Any security issued by a REIT;

- Any debt instrument of an entity treated as a partnership for federal
income tax purposes to the extent of our interest as a partner in the
partnership;

- Any debt instrument of an entity treated as a partnership for federal
income tax purposes not described in the preceding bullet points if at
least 75% of the partnership's gross income, excluding income from
prohibited transactions, is qualifying income for purposes of the 75%
gross income test described above in "-- Requirements for
Qualification -- Income Tests."

For purposes of the 10% value test, our proportionate share of the assets of a
partnership is our proportionate interest in any securities issued by the
partnership, without regard to securities described in the last two bullet
points above.

In connection with the acquisition of the facilities in our current
portfolio, MPT Development Services, Inc., our taxable REIT subsidiary, has made
loans to Vibra Healthcare, LLC, the parent entity of our tenants, in an
aggregate amount of approximately $41.4 million to acquire the operations at
those facilities. MPT Development Services, Inc. also made a loan of
approximately $6.2 million to Vibra and its subsidiaries for working capital
purposes which was repaid in February 2005. Those loans bear interest at

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an annual rate of 10.25%. Our operating partnership loaned the funds to MPT
Development Services, Inc. to make these loans. The loans from our operating
partnership to MPT Development Services, Inc. bear interest at an annual rate of
9.25%.

Baker Donelson is of the opinion that the loans to Vibra will be treated as
debt rather than equity interests in Vibra, and that our rental income from
Vibra will be treated as qualifying income for purposes of the REIT gross income
tests. However, there can be no assurance that the IRS will not take a contrary
position. If the IRS were to successfully treat the loans to Vibra as equity
interests in Vibra, Vibra would be a "related party tenant" with respect to our
company and the rent that we receive from Vibra would not be qualifying income
for purposes of the REIT gross income tests. As a result, we could lose our REIT
status. In addition, if the IRS were to successfully treat the loans to Vibra as
interests held by our operating partnership rather than by MPT Development
Services, Inc. and to treat the loans as other than straight debt, we would fail
the 10% asset test with respect to such interests and, as a result, could lose
our REIT status. Baker Donelson is of the opinion that the loans to Vibra will
be treated as straight debt for federal income tax purposes.

We will monitor the status of our assets for purposes of the various asset
tests and will manage our portfolio in order to comply at all times with such
tests. If we fail to satisfy the asset tests at the end of a calendar quarter,
we will not lose our REIT status if:

- we satisfied the asset tests at the end of the preceding calendar
quarter; and

- the discrepancy between the value of our assets and the asset test
requirements arose from changes in the market values of our assets and
was not wholly or partly caused by the acquisition of one or more
non-qualifying assets.

If we did not satisfy the condition described in the second item, above, we
still could avoid disqualification by eliminating any discrepancy within 30 days
after the close of the calendar quarter in which it arose.

In the event that, at the end of any calendar quarter in a taxable year
beginning on or after January 1, 2005, we violate the 5% or 10% test described
above, we will not lose our REIT status if (1) the failure is de minimis (up to
the lesser of 1% of our assets or $10 million) and (2) we dispose of assets or
otherwise comply with the asset tests within six months after the last day of
the quarter in which we identified the failure of the asset test. In the event
of a more than de minimis failure of the 5% or 10% tests, or a failure of the
other assets test, at the end of any calendar quarter in a taxable year
beginning on or after January 1, 2005, as long as the failure was due to
reasonable cause and not to willful neglect, we will not lose our REIT status if
we (1) dispose of assets or otherwise comply with the asset tests within six
months after the last day of the quarter in which we identified the failure of
the asset test and (2) pay a tax equal to the greater of $50,000 or 35% of the
net income from the nonqualifying assets during the period in which we failed to
satisfy the asset tests.

Distribution Requirements. Each taxable year, we must distribute
dividends, other than capital gain dividends and deemed distributions of
retained capital gain, to our stockholders in an aggregate amount not less than:

- the sum of:

- 90% of our "REIT taxable income," computed without regard to the
dividends-paid deduction or our net capital gain or loss, and

- 90% of our after-tax net income, if any, from foreclosure property,

- minus

- the sum of certain items of non-cash income.

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We must pay such distributions in the taxable year to which they relate, or
in the following taxable year if we declare the distribution before we timely
file our federal income tax return for the year and pay the distribution on or
before the first regular dividend payment date after such declaration.

We will pay federal income tax on taxable income, including net capital
gain, that we do not distribute to stockholders. In addition, we will incur a 4%
nondeductible excise tax on the excess of a specified required distribution over
amounts we actually distribute if we distribute an amount less than the required
distribution during a calendar year, or by the end of January following the
calendar year in the case of distributions with declaration and record dates
falling in the last three months of the calendar year. The required distribution
must not be less than the sum of:

- 85% of our REIT ordinary income for the year;

- 95% of our REIT capital gain income for the year; and

- any undistributed taxable income from prior periods.

We may elect to retain and pay income tax on the net long-term capital gain
we receive in a taxable year. See " -- Taxation of Taxable United States
Stockholders." If we so elect, we will be treated as having distributed any such
retained amount for purposes of the 4% excise tax described above. We intend to
make timely distributions sufficient to satisfy the annual distribution
requirements and to avoid corporate income tax and the 4% excise tax.

It is possible that, from time to time, we may experience timing
differences between the actual receipt of income and actual payment of
deductible expenses and the inclusion of that income and deduction of such
expenses in arriving at our REIT taxable income. For example, we may not deduct
recognized capital losses from our "REIT taxable income." Further, it is
possible that, from time to time, we may be allocated a share of net capital
gain attributable to the sale of depreciated property that exceeds our allocable
share of cash attributable to that sale. As a result of the foregoing, we may
have less cash than is necessary to distribute all of our taxable income and
thereby avoid corporate income tax and the excise tax imposed on certain
undistributed income. In such a situation, we may need to borrow funds or issue
additional shares of common or preferred stock.

Under certain circumstances, we may be able to correct a failure to meet
the distribution requirement for a year by paying "deficiency dividends" to our
stockholders in a later year. We may include such deficiency dividends in our
deduction for dividends paid for the earlier year. Although we may be able to
avoid income tax on amounts distributed as deficiency dividends, we will be
required to pay interest based upon the amount of any deduction we take for
deficiency dividends.

Recordkeeping Requirements. We must maintain certain records in order to
qualify as a REIT. In addition, to avoid paying a penalty, we must request on an
annual basis information from our stockholders designed to disclose the actual
ownership of our shares of outstanding capital stock. We intend to comply with
these requirements.

Failure to Qualify. If we failed to qualify as a REIT in any taxable year
and no relief provision applied, we would have the following consequences. We
would be subject to federal income tax and any applicable alternative minimum
tax at rates applicable to regular C corporations on our taxable income,
determined without reduction for amounts distributed to stockholders. We would
not be required to make any distributions to stockholders, and any distributions
to stockholders would be taxable as ordinary income to the extent of our current
and accumulated earnings and profits. Corporate stockholders could be eligible
for a dividends-received deduction if certain conditions are satisfied. Unless
we qualified for relief under specific statutory provisions, we would not be
permitted to elect taxation as a REIT for the four taxable years following the
year during which we ceased to qualify as a REIT.

For taxable years beginning on and after January 1, 2005, if we fail to
satisfy one or more requirements for REIT qualification, other than the gross
income tests and the asset tests, we could avoid disqualification if the failure
is due to reasonable cause and not to willful neglect and we pay a penalty of

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$50,000 for each such failure. In addition, there are relief provisions for a
failure of the gross income tests and asset tests, as described above in
"-- Income Tests" and "-- Asset Tests."

Taxation of Taxable United States Stockholders. As long as we qualify as a
REIT, a taxable "United States stockholder" will be required to take into
account as ordinary income distributions made out of our current or accumulated
earnings and profits that we do not designate as capital gain dividends or
retained long-term capital gain. A United States stockholder will not qualify
for the dividends-received deduction generally available to corporations. The
term "United States stockholder" means a holder of shares of common stock that,
for United States federal income tax purposes, is:

- a citizen or resident of the United States;

- a corporation or partnership (including an entity treated as a
corporation or partnership for United States federal income tax purposes)
created or organized under the laws of the United States or of a
political subdivision of the United States;

- an estate whose income is subject to United States federal income
taxation regardless of its source; or

- any trust if (i) a United States court is able to exercise primary
supervision over the administration of such trust and one or more United
States persons have the authority to control all substantial decisions of
the trust or (ii) it has a valid election in place to be treated as a
United States person.

Distributions paid to a United States stockholder generally will not
qualify for the new 15% tax rate for "qualified dividend income." The Jobs and
Growth Tax Relief Reconciliation Act of 2003 reduced the maximum tax rate for
qualified dividend income from 38.6% to 15% for tax years through 2008. Without
future congressional action, the maximum tax rate on qualified dividend income
will move to 35% in 2009 and 39.6% in 2011. Qualified dividend income generally
includes dividends paid by domestic C corporations and certain qualified foreign
corporations to most United States noncorporate stockholders. Because we are not
generally subject to federal income tax on the portion of our REIT taxable
income distributed to our stockholders, our dividends generally will not be
eligible for the new 15% rate on qualified dividend income. As a result, our
ordinary REIT dividends will continue to be taxed at the higher tax rate
applicable to ordinary income. Currently, the highest marginal individual income
tax rate on ordinary income is 35%. However, the 15% tax rate for qualified
dividend income will apply to our ordinary REIT dividends, if any, that are (i)
attributable to dividends received by us from non-REIT corporations, such as our
taxable REIT subsidiary, and (ii) attributable to income upon which we have paid
corporate income tax (e.g., to the extent that we distribute less than 100% of
our taxable income). In general, to qualify for the reduced tax rate on
qualified dividend income, a stockholder must hold our common stock for more
than 60 days during the 120-day period beginning on the date that is 60 days
before the date on which our common stock becomes ex-dividend.

Distributions to a United States stockholder which we designate as capital
gain dividends will generally be treated as long-term capital gain, without
regard to the period for which the United States stockholder has held its common
stock. We generally will designate our capital gain dividends as either 15%, 20%
or 25% rate distributions. A corporate United States stockholder, however, may
be required to treat up to 20% of certain capital gain dividends as ordinary
income.

We may elect to retain and pay income tax on the net long-term capital gain
that we receive in a taxable year. In that case, a United States stockholder
would be taxed on its proportionate share of our undistributed long-term capital
gain. The United States stockholder would receive a credit or refund for its
proportionate share of the tax we paid. The United States stockholder would
increase the basis in its shares of common stock by the amount of its
proportionate share of our undistributed long-term capital gain, minus its share
of the tax we paid.

A United States stockholder will not incur tax on a distribution in excess
of our current and accumulated earnings and profits if the distribution does not
exceed the adjusted basis of the United States stockholder's shares. Instead,
the distribution will reduce the adjusted basis of the shares, and any

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amount in excess of both our current and accumulated earnings and profits and
the adjusted basis will be treated as capital gain, long-term if the shares have
been held for more than one year, provided the shares are a capital asset in the
hands of the United States stockholder. In addition, any distribution we declare
in October, November, or December of any year that is payable to a United States
stockholder of record on a specified date in any of those months will be treated
as paid by us and received by the United States stockholder on December 31 of
the year, provided we actually pay the distribution during January of the
following calendar year.

Stockholders may not include in their individual income tax returns any of
our net operating losses or capital losses. Instead, these losses are generally
carried over by us for potential offset against our future income. Taxable
distributions from us and gain from the disposition of shares of common stock
will not be treated as passive activity income; stockholders generally will not
be able to apply any "passive activity losses," such as losses from certain
types of limited partnerships in which the stockholder is a limited partner,
against such income. In addition, taxable distributions from us and gain from
the disposition of common stock generally will be treated as investment income
for purposes of the investment interest limitations. We will notify stockholders
after the close of our taxable year as to the portions of the distributions
attributable to that year that constitute ordinary income, return of capital,
and capital gain.

Taxation of United States Stockholders on the Disposition of Shares of
Common Stock. In general, a United States stockholder who is not a dealer in
securities must treat any gain or loss realized upon a taxable disposition of
our shares of common stock as long-term capital gain or loss if the United
States stockholder has held the stocks for more than one year, and otherwise as
short-term capital gain or loss. However, a United States stockholder must treat
any loss upon a sale or exchange of common stock held for six months or less as
a long-term capital loss to the extent of capital gain dividends and any other
actual or deemed distributions from us which the United States stockholder
treats as long-term capital gain. All or a portion of any loss that a United
States stockholder realizes upon a taxable disposition of common stock may be
disallowed if the United States stockholder purchases other shares of our common
stock within 30 days before or after the disposition.

Capital Gains and Losses. The tax-rate differential between capital gain
and ordinary income for non-corporate taxpayers may be significant. A taxpayer
generally must hold a capital asset for more than one year for gain or loss
derived from its sale or exchange to be treated as long-term capital gain or
loss. The highest marginal individual income tax rate is currently 35%. The
maximum tax rate on long-term capital gain applicable to individuals is 15% for
sales and exchanges of assets held for more than one year and occurring on or
after May 6, 2003 through December 31, 2008. The maximum tax rate on long-term
capital gain from the sale or exchange of "section 1250 property" (i.e.,
generally, depreciable real property) is 25% to the extent the gain would have
been treated as ordinary income if the property were "section 1245 property"
(i.e., generally, depreciable personal property). We generally may designate
whether a distribution we designate as capital gain dividends (and any retained
capital gain that we are deemed to distribute) is taxable to non-corporate
stockholders at a 15% or 25% rate.

The characterization of income as capital gain or ordinary income may
affect the deductibility of capital losses. A non-corporate taxpayer may deduct
capital losses not offset by capital gains against its ordinary income only up
to a maximum of $3,000 annually. A non-corporate taxpayer may carry unused
capital losses forward indefinitely. A corporate taxpayer must pay tax on its
net capital gain at corporate ordinary-income rates. A corporate taxpayer may
deduct capital losses only to the extent of capital gains, with unused losses
carried back three years and forward five years.

Information Reporting Requirements and Backup Withholding. We will report
to our stockholders and to the IRS the amount of distributions we pay during
each calendar year and the amount of tax we withhold, if any. A stockholder may
be subject to backup withholding at a rate of up to 28% with respect to
distributions unless the holder:

- is a corporation or comes within certain other exempt categories and when
required, demonstrates this fact; or

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- provides a taxpayer identification number, certifies as to no loss of
exemption from backup withholding, and otherwise complies with the
applicable requirements of the backup withholding rules.

A stockholder who does not provide us with its correct taxpayer
identification number also may be subject to penalties imposed by the IRS. Any
amount paid as backup withholding will be creditable against the stockholder's
income tax liability. In addition, we may be required to withhold a portion of
capital gain distributions to any stockholders who fail to certify their
non-foreign status to us. For a discussion of the backup withholding rules as
applied to non-United States stockholders, see "Taxation of Non-United States
Stockholders."

Taxation of Tax-Exempt Stockholders. Tax-exempt entities, including
qualified employee pension and profit sharing trusts and individual retirement
accounts, referred to as pension trusts, generally are exempt from federal
income taxation. However, they are subject to taxation on their "unrelated
business taxable income." While many investments in real estate generate
unrelated business taxable income, the IRS has issued a ruling that dividend
distributions from a REIT to an exempt employee pension trust do not constitute
unrelated business taxable income so long as the exempt employee pension trust
does not otherwise use the shares of the REIT in an unrelated trade or business
of the pension trust. Based on that ruling, amounts we distribute to tax-exempt
stockholders generally should not constitute unrelated business taxable income.
However, if a tax-exempt stockholder were to finance its acquisition of common
stock with debt, a portion of the income it received from us would constitute
unrelated business taxable income pursuant to the "debt-financed property"
rules. Furthermore, social clubs, voluntary employee benefit associations,
supplemental unemployment benefit trusts and qualified group legal services
plans that are exempt from taxation under special provisions of the federal
income tax laws are subject to different unrelated business taxable income
rules, which generally will require them to characterize distributions they
receive from us as unrelated business taxable income. Finally, in certain
circumstances, a qualified employee pension or profit-sharing trust that owns
more than 10% of our shares of common stock must treat a percentage of the
dividends it receives from us as unrelated business taxable income. The
percentage is equal to the gross income we derive from an unrelated trade or
business, determined as if we were a pension trust, divided by our total gross
income for the year in which we pay the dividends. This rule applies to a
pension trust holding more than 10% of our shares only if:

- the percentage of our dividends which the tax-exempt trust must treat as
unrelated business taxable income is at least 5%;

- we qualify as a REIT by reason of the modification of the rule requiring
that no more than 50% of our shares of common stock be owned by five or
fewer individuals, which modification allows the beneficiaries of the
pension trust to be treated as holding shares in proportion to their
actual interests in the pension trust; and

- either of the following applies:

- one pension trust owns more than 25% of the value of our shares of
common stock; or

- a group of pension trusts individually holding more than 10% of the
value of our shares of common stock collectively owns more than 50% of
the value of our shares of common stock.

Taxation of Non-United States Stockholders. The rules governing United
States federal income taxation of nonresident alien individuals, foreign
corporations, foreign partnerships, and other foreign stockholders are complex.
This section is only a summary of such rules. We urge non-United States
stockholders to consult their own tax advisors to determine the impact of
federal, state, and local income tax laws on ownership of shares of common
stock, including any reporting requirements.

A non-United States stockholder that receives a distribution which (i) is
not attributable to gain from our sale or exchange of "United States real
property interests" (defined below) and (ii) we do not designate a capital gain
dividend (or retained capital gain) will recognize ordinary income to the extent
of our current or accumulated earnings and profits. A withholding tax equal to
30% of the gross amount of

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the distribution ordinarily will apply unless an applicable tax treaty reduces
or eliminates the tax. However, a non-United States stockholder generally will
be subject to federal income tax at graduated rates on any distribution treated
as effectively connected with the non-United States stockholder's conduct of a
United States trade or business, in the same manner as United States
stockholders are taxed on distributions. A corporate non-United States
stockholder may, in addition, be subject to the 30% branch profits tax. We plan
to withhold United States income tax at the rate of 30% on the gross amount of
any distribution paid to a non-United States stockholder unless:

- a lower treaty rate applies and the non-United States stockholder files
an IRS Form W-8BEN evidencing eligibility for that reduced rate with us;
or

- the non-United States stockholder files an IRS Form W-8ECI with us
claiming that the distribution is effectively connected income.

A non-United States stockholder will not incur tax on a distribution in
excess of our current and accumulated earnings and profits if the excess portion
of the distribution does not exceed the adjusted basis of the stockholder's
shares of common stock. Instead, the excess portion of the distribution will
reduce the adjusted basis of the shares. A non-United States stockholder will be
subject to tax on a distribution that exceeds both our current and accumulated
earnings and profits and the adjusted basis of its shares, if the non-United
States stockholder otherwise would be subject to tax on gain from the sale or
disposition of shares of common stock, as described below. Because we generally
cannot determine at the time we make a distribution whether or not the
distribution will exceed our current and accumulated earnings and profits, we
normally will withhold tax on the entire amount of any distribution at the same
rate as we would withhold on a dividend. However, a non-United States
stockholder may obtain a refund of amounts we withhold if we later determine
that a distribution in fact exceeded our current and accumulated earnings and
profits.

We must withhold 10% of any distribution that exceeds our current and
accumulated earnings and profits. We will, therefore, withhold at a rate of 10%
on any portion of a distribution not subject to withholding at a rate of 30%.

For any year in which we qualify as a REIT, a non-United States stockholder
will incur tax on distributions attributable to gain from our sale or exchange
of "United States real property interests" under the "FIRPTA" provisions of the
Code. The term "United States real property interests" includes interests in
real property and stocks in corporations at least 50% of whose assets consist of
interests in real property. Under the FIRPTA rules, a non-United States
stockholder is taxed on distributions attributable to gain from sales of United
States real property interests as if the gain were effectively connected with
the conduct of a United States business of the non-United States stockholder. A
non-United States stockholder thus would be taxed on such a distribution at the
normal capital gain rates applicable to United States stockholders, subject to
applicable alternative minimum tax and a special alternative minimum tax in the
case of a nonresident alien individual. A non-United States corporate
stockholder not entitled to treaty relief or exemption also may be subject to
the 30% branch profits tax on such a distribution. We must withhold 35% of any
distribution that we could designate as a capital gain dividend. A non-United
States stockholder may receive a credit against our tax liability for the amount
we withhold.

For taxable years beginning on and after January 1, 2005, for non-U.S.
stockholders of our publicly-traded shares, capital gain distributions that are
attributable to our sale of real property will not be subject to FIRPTA and
therefore will be treated as ordinary dividends rather than as gain from the
sale of a United States real property interest, as long as the non-U.S.
stockholder did not own more than 5% of the class of our stock on which the
distributions are made during the taxable year. As a result, non-U.S.
stockholders generally would be subject to withholding tax on such capital gain
distributions in the same manner as they are subject to withholding tax on
ordinary dividends.

A non-United States stockholder generally will not incur tax under FIRPTA
with respect to gain on a sale of shares of common stock as long as, at all
times, non-United States persons hold, directly or indirectly, less than 50% in
value of the outstanding common stock. We cannot assure you that this test

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will be met. In addition, a non-United States stockholder that owned, actually
or constructively, 5% or less of the outstanding common stock at all times
during a specified testing period will not incur tax under FIRPTA on gain from a
sale of common stock if the stock is "regularly traded" on an established
securities market. Any gain subject to tax under FIRPTA will be treated in the
same manner as it would be in the hands of United States stockholders subject to
alternative minimum tax, but under a special alternative minimum tax in the case
of nonresident alien individuals.

A non-United States stockholder generally will incur tax on gain from the
sale of common stock not subject to FIRPTA if:

- the gain is effectively connected with the conduct of the non-United
States stockholder's United States trade or business, in which case the
non-United States stockholder will be subject to the same treatment as
United States stockholders with respect to the gain; or

- the non-United States stockholder is a nonresident alien individual who
was present in the United States for 183 days or more during the taxable
year and has a "tax home" in the United States, in which case the
non-United States stockholder will incur a 30% tax on capital gains.

OTHER TAX CONSEQUENCES

Tax Aspects of Our Investments in the Operating Partnership. The following
discussion summarizes certain federal income tax considerations applicable to
our direct or indirect investment in our operating partnership and any
subsidiary partnerships or limited liability companies we form or acquire, each
individually referred to as a Partnership and, collectively, as Partnerships.
The following discussion does not cover state or local tax laws or any federal
tax laws other than income tax laws.

Classification as Partnerships. We are entitled to include in our income
our distributive share of each Partnership's income and to deduct our
distributive share of each Partnership's losses only if such Partnership is
classified for federal income tax purposes as a partnership (or an entity that
is disregarded for federal income tax purposes if the entity has only one owner
or member), rather than as a corporation or an association taxable as a
corporation. An organization with at least two owners or members will be
classified as a partnership, rather than as a corporation, for federal income
tax purposes if it:

- is treated as a partnership under the Treasury regulations relating to
entity classification (the "check-the-box regulations"); and

- is not a "publicly traded" partnership.

Under the check-the-box regulations, an unincorporated entity with at least
two owners or members may elect to be classified either as an association
taxable as a corporation or as a partnership. If such an entity does not make an
election, it generally will be treated as a partnership for federal income tax
purposes. We intend that each Partnership will be classified as a partnership
for federal income tax purposes (or else a disregarded entity where there are
not at least two separate beneficial owners).

A publicly traded partnership is a partnership whose interests are traded
on an established securities market or are readily tradable on a secondary
market (or a substantial equivalent). A publicly traded partnership is generally
treated as a corporation for federal income tax purposes, but will not be so
treated for any taxable year for which at least 90% of the partnership's gross
income consists of specified passive income, including real property rents,
gains from the sale or other disposition of real property, interest, and
dividends (the "90% passive income exception").

Treasury regulations, referred to as PTP regulations, provide limited safe
harbors from treatment as a publicly traded partnership. Pursuant to one of
those safe harbors, or private placement exclusion, interests in a partnership
will not be treated as readily tradable on a secondary market or the substantial
equivalent thereof if (i) all interests in the partnership were issued in a
transaction or transactions that were not required to be registered under the
Securities Act, and (ii) the partnership does not have more than 100 partners at
any time during the partnership's taxable year. For the determination of the
number of partners in a partnership, a person owning an interest in a
partnership, grantor trust, or S corporation that owns an interest in the
partnership is treated as a partner in the partnership only if (i) substantially
all of the value
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of the owner's interest in the entity is attributable to the entity's direct or
indirect interest in the partnership and (ii) a principal purpose of the use of
the entity is to permit the partnership to satisfy the 100-partner limitation.
Each Partnership should qualify for the private placement exclusion.

We have not requested, and do not intend to request, a ruling from the
Internal Revenue Service that the Partnerships will be classified as
partnerships for federal income tax purposes. If for any reason a Partnership
were taxable as a corporation, rather than as a partnership, for federal income
tax purposes, we likely would not be able to qualify as a REIT. See
"-- Requirements for Qualification -- Income Tests" and " -- Requirements for
Qualification -- Asset Tests." In addition, any change in a Partnership's status
for tax purposes might be treated as a taxable event, in which case we might
incur tax liability without any related cash distribution. See "-- Requirements
for Qualification -- Distribution Requirements." Further, items of income and
deduction of such Partnership would not pass through to its partners, and its
partners would be treated as stockholders for tax purposes. Consequently, such
Partnership would be required to pay income tax at corporate rates on its net
income, and distributions to its partners would constitute dividends that would
not be deductible in computing such Partnership's taxable income.

INCOME TAXATION OF THE PARTNERSHIPS AND THEIR PARTNERS

Partners, Not the Partnerships, Subject to Tax. A partnership is not a
taxable entity for federal income tax purposes. We will therefore take into
account our allocable share of each Partnership's income, gains, losses,
deductions, and credits for each taxable year of the Partnership ending with or
within our taxable year, even if we receive no distribution from the Partnership
for that year or a distribution less than our share of taxable income.
Similarly, even if we receive a distribution, it may not be taxable if the
distribution does not exceed our adjusted tax basis in our interest in the
Partnership.

Partnership Allocations. Although a partnership agreement generally will
determine the allocation of income and losses among partners, allocations will
be disregarded for tax purposes if they do not comply with the provisions of the
federal income tax laws governing partnership allocations. If an allocation is
not recognized for federal income tax purposes, the item subject to the
allocation will be reallocated in accordance with the partners' interests in the
partnership, which will be determined by taking into account all of the facts
and circumstances relating to the economic arrangement of the partners with
respect to such item. Each Partnership's allocations of taxable income, gain,
and loss are intended to comply with the requirements of the federal income tax
laws governing partnership allocations.

Tax Allocations With Respect to Contributed Properties. Income, gain,
loss, and deduction attributable to appreciated or depreciated property that is
contributed to a partnership in exchange for an interest in the partnership must
be allocated in a manner such that the contributing partner is charged with, or
benefits from, respectively, the unrealized gain or unrealized loss associated
with the property at the time of the contribution. Similar rules apply with
respect to property revalued on the books of a partnership. The amount of such
unrealized gain or unrealized loss, referred to as built-in gain or built-in
loss, is generally equal to the difference between the fair market value of the
contributed or revalued property at the time of contribution or revaluation and
the adjusted tax basis of such property at that time, referred to as a book-tax
difference. Such allocations are solely for federal income tax purposes and do
not affect the book capital accounts or other economic or legal arrangements
among the partners. The United States Treasury Department has issued regulations
requiring partnerships to use a "reasonable method" for allocating items with
respect to which there is a book-tax difference and outlining several reasonable
allocation methods. Our operating partnership generally intends to use the
traditional method for allocating items with respect to which there is a
book-tax difference.

Basis in Partnership Interest. Our adjusted tax basis in any partnership
interest we own generally will be:

- the amount of cash and the basis of any other property we contribute to
the partnership;

- increased by our allocable share of the partnership's income (including
tax-exempt income) and our allocable share of indebtedness of the
partnership; and

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- reduced, but not below zero, by our allocable share of the partnership's
loss, the amount of cash and the basis of property distributed to us, and
constructive distributions resulting from a reduction in our share of
indebtedness of the partnership.

Loss allocated to us in excess of our basis in a partnership interest will
not be taken into account until we again have basis sufficient to absorb the
loss. A reduction of our share of partnership indebtedness will be treated as a
constructive cash distribution to us, and will reduce our adjusted tax basis.
Distributions, including constructive distributions, in excess of the basis of
our partnership interest will constitute taxable income to us. Such
distributions and constructive distributions normally will be characterized as
long-term capital gain.

Depreciation Deductions Available to Partnerships. The initial tax basis
of property is the amount of cash and the basis of property given as
consideration for the property. A partnership in which we are a partner
generally will depreciate property for federal income tax purposes under the
modified accelerated cost recovery system of depreciation, referred to as MACRS.
Under MACRS, the partnership generally will depreciate furnishings and equipment
over a seven year recovery period using a 200% declining balance method and a
half-year convention. If, however, the partnership places more than 40% of its
furnishings and equipment in service during the last three months of a taxable
year, a mid-quarter depreciation convention must be used for the furnishings and
equipment placed in service during that year. Under MACRS, the partnership
generally will depreciate buildings and improvements over a 39 year recovery
period using a straight line method and a mid-month convention. The operating
partnership's initial basis in properties acquired in exchange for units of the
operating partnership should be the same as the transferor's basis in such
properties on the date of acquisition by the partnership. Although the law is
not entirely clear, the partnership generally will depreciate such property for
federal income tax purposes over the same remaining useful lives and under the
same methods used by the transferors. The partnership's tax depreciation
deductions will be allocated among the partners in accordance with their
respective interests in the partnership, except to the extent that the
partnership is required under the federal income tax laws governing partnership
allocations to use a method for allocating tax depreciation deductions
attributable to contributed or revalued properties that results in our receiving
a disproportionate share of such deductions.

Under recently enacted legislation, a first-year bonus depreciation of 50%
may be available for certain tenant improvements. In addition, certain qualified
leasehold improvement property placed in service before January 1, 2006 will be
depreciated over a 15-year recovery period using a straight method and a
half-year convention.

Sale of a Partnership's Property. Generally, any gain realized by a
Partnership on the sale of property held for more than one year will be
long-term capital gain, except for any portion of the gain treated as
depreciation or cost recovery recapture. Any gain or loss recognized by a
Partnership on the disposition of contributed or revalued properties will be
allocated first to the partners who contributed the properties or who were
partners at the time of revaluation, to the extent of their built-in gain or
loss on those properties for federal income tax purposes. The partners' built-in
gain or loss on contributed or revalued properties is the difference between the
partners' proportionate share of the book value of those properties and the
partners' tax basis allocable to those properties at the time of the
contribution or revaluation. Any remaining gain or loss recognized by the
Partnership on the disposition of contributed or revalued properties, and any
gain or loss recognized by the Partnership on the disposition of other
properties, will be allocated among the partners in accordance with their
percentage interests in the Partnership.

Our share of any Partnership gain from the sale of inventory or other
property held primarily for sale to customers in the ordinary course of the
Partnership's trade or business will be treated as income from a prohibited
transaction subject to a 100% tax. Income from a prohibited transaction may have
an adverse effect on our ability to satisfy the gross income tests for REIT
status. See "-- Requirements for Qualification -- Income Tests." We do not
presently intend to acquire or hold, or to allow any Partnership

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to acquire or hold, any property that is likely to be treated as inventory or
property held primarily for sale to customers in the ordinary course of our, or
the Partnership's, trade or business.

Taxable REIT Subsidiaries. As described above, we have formed and have
made a timely election to treat MPT Development Services, Inc. as a taxable REIT
subsidiary and may form or acquire additional taxable REIT subsidiaries in the
future. A taxable REIT subsidiary may provide services to our tenants and engage
in activities unrelated to our tenants, such as third-party management,
development, and other independent business activities.

We and any corporate subsidiary in which we own stock must make an election
for the subsidiary to be treated as a taxable REIT subsidiary. If a taxable REIT
subsidiary directly or indirectly owns shares of a corporation with more than
35% of the value or voting power of all outstanding shares of the corporation,
the corporation will automatically also be treated as a taxable REIT subsidiary.
Overall, no more than 20% of the value of our assets may consist of securities
of one or more taxable REIT subsidiaries, irrespective of whether such
securities may also qualify under the 75% assets test, and no more than 25% of
the value of our assets may consist of the securities that are not qualifying
assets under the 75% test, including, among other things, certain securities of
a taxable REIT subsidiary, such as stock or non-mortgage debt.

Rent we receive from our taxable REIT subsidiaries will qualify as "rents
from real property" as long as at least 90% of the leased space in the property
is leased to persons other than taxable REIT subsidiaries and related party
tenants, and the amount paid by the taxable REIT subsidiary to rent space at the
property is substantially comparable to rents paid by other tenants of the
property for comparable space. The taxable REIT subsidiary rules limit the
deductibility of interest paid or accrued by a taxable REIT subsidiary to us to
assure that the taxable REIT subsidiary is subject to an appropriate level of
corporate taxation. Further, the rules impose a 100% excise tax on certain types
of transactions between a taxable REIT subsidiary and us or our tenants that are
not conducted on an arm's-length basis.

A taxable REIT subsidiary may not directly or indirectly operate or manage
a healthcare facility. For purposes of this definition a "healthcare facility"
means a hospital, nursing facility, assisted living facility, congregate care
facility, qualified continuing care facility, or other licensed facility which
extends medical or nursing or ancillary services to patients and which is
operated by a service provider which is eligible for participation in the
Medicare program under Title XVIII of the Social Security Act with respect to
such facility.

State and Local Taxes. We and our stockholders may be subject to taxation
by various states and localities, including those in which we or a stockholder
transacts business, owns property or resides. The state and local tax treatment
may differ from the federal income tax treatment described above. Consequently,
stockholders should consult their own tax advisors regarding the effect of state
and local tax laws upon an investment in our common stock.

PLAN OF DISTRIBUTION

We are registering the resale of the shares of common stock offered by this
prospectus in accordance with the terms of a registration rights agreement that
we entered into with the selling stockholders in connection with our April 2004
private placement. We are also registering the resale of 521,908 shares of
common stock held by our founders, and 30,000 shares of restricted common stock
held by one of our executive officers who is not one of our founders. The
registration of these shares, however, does not necessarily mean that any of the
shares will be offered or sold by the selling stockholders or their respective
donees, pledgees or other transferees or successors in interest. We will not
receive any proceeds from the sale of the common stock offered by this
prospectus.

The sale of the shares of common stock by any selling stockholder,
including any donee, pledgee or other transferee who receives shares from a
selling stockholder, may be effected from time to time by selling them directly
to purchasers or to or through broker-dealers. In connection with any sale, a
broker-dealer may act as agent for the selling stockholder or may purchase from
the selling stockholder all or a

165

portion of the shares as principal. These sales may be made on the NYSE or other
exchanges on which our common stock is then traded, in the over-the-counter
market or in private transactions.

The shares may be sold in one or more transactions at:

- fixed prices;

- prevailing market prices at the time of sale;

- prices related to the prevailing market prices; or

- otherwise negotiated prices.

The shares of common stock may be sold in one or more of the following
transactions:

- ordinary brokerage transactions and transactions in which a broker-dealer
solicits purchasers;

- block trades (which may involve crosses or transactions in which the same
broker acts as an agent on both sides of the trade) in which a
broker-dealer may sell all or a portion of such shares as agent but may
position and resell all or a portion of the block as principal to
facilitate the transaction;

- purchases by a broker-dealer as principal and resale by the broker-dealer
for its own account pursuant to this prospectus;

- a special offering, an exchange distribution or a secondary distribution
in accordance with applicable rules promulgated by the National
Association of Securities Dealers, Inc. or stock exchange rules;

- sales "at the market" to or through a market maker or into an existing
trading market, on an exchange or otherwise, for the shares;

- sales in other ways not involving market makers or established trading
markets, including privately-negotiated direct sales to purchasers;

- any other legal method; and

- any combination of these methods.

In effecting sales, broker-dealers engaged by a selling stockholder may
arrange for other broker-dealers to participate. Broker-dealers will receive
commissions or other compensation from the selling stockholder in the form of
commissions, discounts or concessions. Broker-dealers may also receive
compensation from purchasers of the shares for whom they act as agents or to
whom they sell as principals or both. Compensation as to a particular
broker-dealer may be in excess of customary commissions and will be in amounts
to be negotiated.

The distribution of the shares of common stock also may be effected from
time to time in one or more underwritten transactions. Any underwritten offering
may be on a "best efforts" or a "firm commitment" basis. In connection with any
underwritten offering, underwriters or agents may receive compensation in the
form of discounts, concessions or commissions from the selling stockholders or
from purchasers of the shares. Underwriters may sell the shares to or through
dealers, and dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agents.

The selling stockholders have advised us that they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities, nor is there any
underwriter or coordinating broker-dealer acting in connection with any proposed
sale of shares by the selling stockholders. We will file a supplement to this
prospectus, if required, under Rule 424(b) under the Securities Act upon being
notified by the selling stockholders that any material arrangement has been
entered into with a broker-dealer for the sale of shares through a block

166

trade, special offering, exchange distribution or secondary distribution or a
purchase by a broker or dealer. This supplement will disclose:

- the name of the selling stockholders and of participating brokers and
dealers;

- the number of shares involved;

- the price at which the shares are to be sold;

- the commissions paid or the discounts or concessions allowed to the
broker-dealers, where applicable;

- that the broker-dealers did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus; and

- other facts material to the transaction.

The selling stockholders and any underwriters, or brokers-dealers or agents
that participate in the distribution of the shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any profit on the
sale of the shares by them and any discounts, commissions or concessions
received by any underwriters, dealers, or agents may be deemed to be
underwriting compensation under the Securities Act. Because the selling
stockholders may be deemed to be "underwriters" under the Securities Act, the
selling stockholders will be subject to the prospectus delivery requirements of
the Securities Act. The selling stockholders and any other person participating
in a distribution will be subject to the applicable provisions of the Exchange
Act and its rules and regulations. For example, the anti-manipulative provisions
of Regulation M may limit the ability of the selling stockholders or others to
engage in stabilizing and other market making activities.

We may be required to file a post-effective amendment to the registration
statement of which this prospectus is a part in order to include the names of
additional selling stockholders or make other required updates to this
prospectus. During the time required for filing, notice will be delivered to the
selling stockholders that sales of common stock covered by this prospectus will
not be permitted.

From time to time, the selling stockholders may pledge their shares of
common stock pursuant to the margin provisions of their customer agreements with
their brokers. Upon default by a selling stockholder, the broker may offer and
sell such pledged shares from time to time. Upon a sale of the shares, the
selling stockholders intend to comply with the prospectus delivery requirements
under the Securities Act by delivering a prospectus to each purchaser in the
transaction. We intend to file any amendments or other necessary documents in
compliance with the Securities Act that may be required in the event the selling
stockholders default under any customer agreement with brokers.

In order to comply with the securities laws of certain states, if
applicable, the shares of common stock may be sold only through registered or
licensed broker-dealers. We have agreed to pay all expenses incident to the
offering and sale of the shares, other than commissions, discounts and fees of
underwriters, broker-dealers or agents. We have agreed to indemnify the selling
stockholders against certain losses, claims, damages, actions, liabilities,
costs and expenses, including liabilities under the Securities Act.

The selling stockholders have agreed to indemnify us, our officers and
directors and each person who controls (within the meaning of the Securities
Act) or is controlled by us, against any losses, claims, damages, liabilities
and expenses arising under the securities laws in connection with this offering
with respect to written information furnished to us by the selling stockholders.

LEGAL MATTERS

The validity of the common stock and certain tax matters, including REIT
qualification and debt characterization, will be passed upon for us by Baker,
Donelson, Bearman, Caldwell & Berkowitz, P.C. The summary of legal matters
contained in the section of this prospectus under the heading "United States
Federal Income Tax Considerations" is based on the opinion of Baker Donelson.

167

EXPERTS

Our consolidated financial statements and the accompanying financial
statement schedule as of December 31, 2004, and 2003, and for the year ended
December 31, 2004 and for the period from inception (August 27, 2003) through
December 31, 2003, included herein, have been audited by KPMG LLP, independent
registered public accounting firm, as stated in their report included herein.

The consolidated financial statements of Vibra as of December 31, 2004 and
for the period from inception (May 14, 2004) through December 31, 2004 included
herein have been audited by Parente Randolph, LLC, independent registered public
accounting firm, as stated in their report included herein.

The independent registered public accounting firms have not examined,
compiled or otherwise applied procedures to any financial forecast, projection
or anticipated results presented herein and, accordingly, do not express an
opinion or any other form of assurance on such.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-11, including exhibits, schedules and amendments filed with,
or incorporated by reference in, this registration statement, under the
Securities Act with respect to the shares of our common stock to be sold in this
offering. This prospectus does not contain all of the information set forth in
the registration statement and exhibits and schedules to the registration
statement. For further information with respect to our company and the shares of
our common stock to be sold in this offering, reference is made to the
registration statement, including the exhibits to the registration statement.
Statements contained in this prospectus as to the contents of any contract or
other document referred to in, or incorporated by reference in, this prospectus
are not necessarily complete and, where that contract is an exhibit to the
registration statement, each statement is qualified in all respects by the
exhibit to which the reference relates. Copies of the registration statement,
including the exhibits and schedules to the registration statement, may be
examined without charge at the public reference room of the Securities and
Exchange Commission, 100 F Street, N.E., Room 1580, Washington, DC 20549.
Information about the operation of the public reference room may be obtained by
calling the Securities and Exchange Commission at 1-800-SEC-0300. Copies of all
or a portion of the registration statement can be obtained from the public
reference room of the Securities and Exchange Commission upon payment of
prescribed fees. Our Securities and Exchange Commission filings, including our
registration statement, are also available to you on the Securities and Exchange
Commission's website, www.sec.gov.

We are subject to the information and reporting requirements of the
Securities Exchange Act, and will file periodic reports, proxy statements and
will make available to our stockholders annual reports containing audited
financial information for each year, and quarterly reports for the first three
quarters of each fiscal year containing unaudited interim financial information.

168

INDEX TO FINANCIAL STATEMENTS

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Medical Properties Trust, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Balance Sheet as of June
30, 2005............................................... F-3
Unaudited Pro Forma Consolidated Statement of Operations
for the Six Months Ended June 30, 2005................. F-4
Unaudited Pro Forma Consolidated Statement of Operations
for the Year Ended December 31, 2004................... F-5
Notes to Unaudited Pro Forma Consolidated Financial
Statements............................................. F-6

HISTORICAL FINANCIAL INFORMATION
Medical Properties Trust, Inc. and Subsidiaries
Consolidated Balance Sheets as of June 30, 2005 and
December 31, 2004...................................... F-14
Consolidated Statements of Operations for the Three Months
Ended March 31, 2005 and March 31, 2004 and the Six
Months Ended June 30, 2005 and 2004.................... F-15
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2005 and March 31, 2004................. F-16
Notes to Consolidated Financial Statements................ F-17
Report of Independent Registered Public Accounting Firm... F-22
Consolidated Balance Sheets as of December 31, 2004 and
December 31, 2003...................................... F-23
Consolidated Statements of Operations for the Year Ended
December 31, 2004 and for the Period from Inception
(August 27, 2003) through December 31, 2003............ F-24
Consolidated Statements of Cash Flows for the Year Ended
December 31, 2004 and for the Period from Inception
(August 27, 2003) through December 31, 2003............ F-25
Consolidated Statements of Stockholders' Equity (Deficit)
for the Year Ended December 31, 2004 and for the Period
from Inception (August 27, 2003) through December 31,
2003................................................... F-26
Notes to Consolidated Financial Statements................ F-27
Schedule III -- Real Estate and Accumulated Depreciation.... F-38
Vibra Healthcare, LLC (formerly Highmark Healthcare, LLC)
Consolidated Balance Sheet as of June 30, 2005 and
December 31, 2004...................................... F-39
Consolidated Statements of Operations and Changes in
Partners' Deficit for the Three Months Ended March 31,
2005 and the Six Months Ended June 30, 2005............ F-40
Consolidated Statement of Cash Flows for the Six Months
Ended June 30, 2005.................................... F-41
Notes to Consolidated Financial Statements................ F-42
Report of Independent Registered Public Accounting Firm... F-54
Consolidated Balance Sheet as of December 31, 2004........ F-55
Consolidated Statements of Operations and Changes in
Partner's Capital for the Period from Inception (May
14, 2004) through December 31, 2004.................... F-56
Consolidated Statement of Cash Flows for the Period from
Inception (May 14, 2004) through December 31, 2004..... F-57
Notes to Consolidated Financial Statements................ F-58

F-1

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma consolidated financial information sets
forth:

- the historical financial information derived from our audited
consolidated financial statements for the year ended December 31, 2004
and the six months ended June 30, 2005 as adjusted to:

- give effect to acquisition of our facilities acquired and leased to
Vibra, Desert Valley and Gulf States as if we owned them from the
inception of each period presented;

- give effect to our loans made to Vibra;

- give effect to our probable acquisitions;

- give effect to our initial public offering; and

- our pro forma, unaudited consolidated balance sheet as of June 30, 2005
as adjusted for the effect of dividends, to give effect to our initial
portfolio, our probable acquisitions and our initial public offering.

This section contains forward-looking statements, which are projections of
future performance and the assumptions upon which the forward-looking statements
are based. Our actual results could differ materially from those expressed in
our forward-looking statements as a result of various risks, including those set
forth in "Risk Factors" and elsewhere in this prospectus. You should read the
information below along with all other financial information and analysis
presented in this prospectus, including the sections captioned "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our historical financial statements and related notes.

The unaudited pro forma consolidated financial information is presented for
informational purposes only. We do not expect that this information will reflect
our future results of operations or financial position. The unaudited pro forma
adjustments and eliminations are based on available information and upon
assumptions that we believe are reasonable. The unaudited pro forma financial
information assumes that the above described transactions were completed as of
June 30, 2005, for purposes of the unaudited pro forma consolidated balance
sheet and as of the first day of the period presented for purposes of the
unaudited pro forma consolidated statements of operations.

F-2

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Unaudited Pro Forma Consolidated Balance Sheet

June 30, 2005

PROBABLE
ACQUISITION
DIVIDENDS PRO FORMA TRANSACTIONS
DECLARED IN EFFECT OF ------------
MAY AND JULY 13, 2005 COMPLETED GULF STATES
HISTORICAL AUGUST 2005 IPO TRANSACTIONS HEALTH
------------ ------------- ------------- ------------ ------------

ASSETS
Real estate assets
Land......................... $ 13,491,429 $ -- $ -- $ 13,491,429 $ 1,163,214(3)
Buildings and improvements... 166,572,054 -- -- 166,572,054 14,492,378(3)
Construction in progress..... 50,529,769 50,529,769 --
Intangible lease assets...... 7,558,712 -- -- 7,558,712 629,408(3)
------------ ------------ ------------ ------------ ------------
Gross investment in real
estate assets........... 238,151,964 -- -- 238,151,964 16,285,000
Accumulated depreciation and
amortization............... (3,294,873) -- -- (3,294,873) --
------------ ------------ ------------ ------------ ------------
Net investment in real
estate assets........... 234,857,091 -- -- 234,857,091 16,285,000
Cash and cash equivalents...... 34,357,866 (10,981,119)(1) 128,486,450(2) 151,863,197 (10,285,000)(3)
Interest and rent receivable... 1,195,299 -- -- 1,195,299 --
Unbilled rent receivable....... 7,458,980 -- -- 7,458,980 --
Loans.......................... 48,498,111 -- -- 48,498,111 (6,000,000)(3)
Other assets................... 7,377,045 -- (2,371,283)(2) 5,005,762 --
------------ ------------ ------------ ------------ ------------
TOTAL ASSETS............... $333,744,392 $(10,981,119) $126,115,167 $448,878,440 $ --
============ ============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities
Long-term debt............... $ 73,204,167 $ -- $ -- $ 73,204,167 $ --
Accounts payable and accrued
expenses................... 11,596,030 (4,186,378)(1) 7,409,652
Deferred revenue............. 6,418,038 -- -- 6,418,038 --
Lease deposits............... 7,728,195 -- -- 7,728,195 --
------------ ------------ ------------ ------------ ------------
Total liabilities.......... 98,946,430 (4,186,378) -- 94,760,052 --
Minority interest.............. 2,137,500 -- -- 2,137,500 --
Stockholders' equity
Preferred stock,............. -- -- -- -- --
Common stock,................ 26,083 -- 13,363(2)(4) 39,446 --
Additional paid in capital... 233,678,165 -- 128,075,804(2)(4) 361,753,969 --
Accumulated deficit.......... (1,043,786) (6,794,741)(1) (1,974,000)(4) (9,812,527) --
------------ ------------ ------------ ------------ ------------
Total stockholders'
equity.................. 232,660,462 (6,794,741) 126,115,167 351,980,888 --
------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY.... $333,744,392 $(10,981,119) $126,115,167 $448,878,440 $ --
============ ============ ============ ============ ============

COMPANY
PRO FORMA
------------

ASSETS
Real estate assets
Land......................... $ 14,654,643
Buildings and improvements... 181,064,432
Construction in progress..... 50,529,769
Intangible lease assets...... 8,188,120
------------
Gross investment in real
estate assets........... 254,436,964
Accumulated depreciation and
amortization............... (3,294,873)
------------
Net investment in real
estate assets........... 251,142,091
Cash and cash equivalents...... 141,578,197
Interest and rent receivable... 1,195,299
Unbilled rent receivable....... 7,458,980
Loans.......................... 42,498,111
Other assets................... 5,005,762
------------
TOTAL ASSETS............... $448,878,440
============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities
Long-term debt............... $ 73,204,167
Accounts payable and accrued
expenses................... 7,409,652
Deferred revenue............. 6,418,038
Lease deposits............... 7,728,195
------------
Total liabilities.......... 94,760,052
Minority interest.............. 2,137,500
Stockholders' equity
Preferred stock,............. --
Common stock,................ 39,446
Additional paid in capital... 361,753,969
Accumulated deficit.......... (9,812,527)
------------
Total stockholders'
equity.................. 351,980,888
------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY.... $448,878,440
============

See accompanying notes to unaudited pro forma consolidated financial statements.
F-3

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Unaudited Pro Forma Consolidated Statement of Operations

For the Six Months Ended June 30, 2005

PROBABLE
COMPLETED ACQUISITION ACQUISITION
TRANSACTIONS TRANSACTIONS
------------------------------------ PRO FORMA ------------
DESERT GULF EFFECT OF GULF
VALLEY- STATES- VIBRA- COMPLETED STATES COMPANY
HISTORICAL VICTORVILLE COVINGTON REDDING TRANSACTIONS HEALTH PRO FORMA
----------- ----------- --------- ---------- ------------ ------------ -----------

REVENUES
Rent income.................... $11,393,116 $534,430(5) $555,667(6) $1,124,461(7) $13,607,674 $1,022,076(8) $14,629,750
Interest income from loans..... 2,329,189 -- -- -- 2,329,189 -- 2,329,189
----------- -------- -------- ---------- ----------- ---------- -----------
Total revenues............... 13,722,305 534,430 555,667 1,124,461 15,936,863 1,022,076 16,958,939
EXPENSES
Depreciation and
amortization................. 1,816,403 115,315(5) 125,261(6) 274,550(7) 2,331,529 202,136(8) 2,533,665
Property expenses.............. 60,726 -- -- -- 60,726 -- 60,726
General and administrative..... 3,105,151 -- -- -- 3,105,151 -- 3,105,151
----------- -------- -------- ---------- ----------- ---------- -----------
Total operating expenses..... 4,982,280 115,315 125,261 274,550 5,497,406 202,136 5,699,542
----------- -------- -------- ---------- ----------- ---------- -----------
Operating income......... 8,740,025 419,115 430,406 849,911 10,439,457 819,940 11,259,397
OTHER INCOME (EXPENSE)
Interest income................ 741,986 -- -- -- 741,986 -- 741,986
Interest expense............... (1,542,266) -- -- -- (1,542,266) -- (1,542,266)
----------- -------- -------- ---------- ----------- ---------- -----------
Net other expense............ (800,280) -- -- -- (800,280) -- (800,280)
----------- -------- -------- ---------- ----------- ---------- -----------
NET INCOME................. $ 7,939,745 $419,115 $430,406 $ 849,911 $ 9,639,177 $ 819,940 $10,459,117
=========== ======== ======== ========== =========== ========== ===========
NET INCOME PER
SHARE -- BASIC........... $ 0.30 $ 0.27
NET INCOME PER
SHARE -- DILUTED......... $ 0.30 $ 0.26
WEIGHTED AVERAGE SHARES
OUTSTANDING -- BASIC..... 26,096,813 39,459,836(9)
WEIGHTED AVERAGE SHARES
OUTSTANDING -- DILUTED... 26,105,844 39,468,867(9)

See accompanying notes to unaudited pro forma consolidated financial statements.
F-4

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2004

COMPLETED ACQUISITION TRANSACTIONS
---------------------------------------------------------------------
VIBRA DESERT VALLEY- GULF STATES- VIBRA-
HISTORICAL FACILITIES VICTORVILLE COVINGTON REDDING
----------- --------------- --------------- --------------- ---------------

REVENUES
Rent income.............. $ 8,611,344 $ 9,774,139(10) $3,228,104(11) $1,443,520(12) $2,259,422(13))
Interest income from
loans.................. 2,282,115 2,754,934(10) -- -- --
----------- ----------- ---------- ---------- ----------
Total revenues......... 10,893,459 12,529,073 3,228,104 1,443,520 2,259,422
EXPENSES
Depreciation and
amortization........... 1,478,470 1,660,526(10) 691,894(11) 285,484(12) 552,166(13)
Property expenses........ 93,502 93,502(10) -- -- --
General and
administrative......... 5,057,284 -- -- -- --
Costs of terminated
acquisitions........... 585,345 -- -- -- --
----------- ----------- ---------- ---------- ----------
Total operating
expense.............. 7,214,601 1,754,028 691,894 285,484 552,166
----------- ----------- ---------- ---------- ----------
Operating income..... 3,678,858 10,775,045 2,536,210 1,158,036 1,707,256
OTHER INCOME (EXPENSE)
Interest income.......... 930,260 -- -- -- --
Interest expense......... (32,769) -- -- -- --
----------- ----------- ---------- ---------- ----------
Net other income....... 897,491 -- -- -- --
----------- ----------- ---------- ---------- ----------
NET INCOME........... $ 4,576,349 $10,775,045 $2,536,210 $1,158,036 $1,707,256
=========== =========== ========== ========== ==========
NET INCOME PER
SHARE -- BASIC..... $ 0.24
NET INCOME PER
SHARE -- DILUTED... $ 0.24
WEIGHTED AVERAGE
SHARES
OUTSTANDING -- BASIC.. 19,310,833
WEIGHTED AVERAGE
SHARES
OUTSTANDING --
DILUTED............ 19,312,634

PROBABLE
ACQUISITION
PRO FORMA TRANSACTIONS
EFFECT OF ---------------
COMPLETED GULF STATES COMPANY
TRANSACTIONS HEALTH PRO FORMA
------------ --------------- ---------------

REVENUES
Rent income.............. $25,316,529 $2,044,150(14) $27,360,679
Interest income from
loans.................. 5,037,049 -- 5,037,049
----------- ---------- -----------
Total revenues......... 30,353,578 2,044,150 32,397,728
EXPENSES
Depreciation and
amortization........... 4,668,540 404,271(14) 5,072,811
Property expenses........ 187,004 -- 187,004
General and
administrative......... 5,057,284 -- 5,057,284
Costs of terminated
acquisitions........... 585,345 -- 585,345
----------- ---------- -----------
Total operating
expense.............. 10,498,173 404,271 10,902,444
----------- ---------- -----------
Operating income..... 19,855,405 1,639,879 21,495,284
OTHER INCOME (EXPENSE)
Interest income.......... 930,260 -- 930,260
Interest expense......... (32,769) -- (32,769)
----------- ---------- -----------
Net other income....... 897,491 -- 897,491
----------- ---------- -----------
NET INCOME........... $20,752,896 $1,639,879 $22,392,775
=========== ========== ===========
NET INCOME PER
SHARE -- BASIC..... $ 0.69
NET INCOME PER
SHARE -- DILUTED... $ 0.69
WEIGHTED AVERAGE
SHARES
OUTSTANDING -- BASIC.. 32,673,856(15)
WEIGHTED AVERAGE
SHARES
OUTSTANDING --
DILUTED............ 32,675,657(15)

See accompanying notes to unaudited pro forma consolidated financial statements.
F-5

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

ADJUSTMENTS FOR UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF JUNE 30,
2005

(1) Record the $0.16 per share distribution declared and accrued in May
2005, and paid in July 2005, and the $0.17 per share distribution declared in
August 2005, payable in September 2005.

Shares of common stock outstanding at June 30,
2005 and August, 2005......................... 26,082,862 39,292,885
Restricted shares issued to employees in April
2005.......................................... 82,000 676,180
----------- -----------
Total shares.................................... 26,164,862 39,969,065
Cash distribution per share..................... $ 0.16 $ 0.17
----------- -----------
Total cash distribution......................... $ 4,186,378 $ 6,794,741 $10,981,119
=========== =========== ===========

(2) Records the issuance of 13,175,023 common shares at a public offering
price of $10.50 per share less underwriting commission and other expenses,
calculated as follows:

Number of Shares Offered.................................... 13,175,023
Price per Share............................................. $ 10.50
------------
Gross Proceeds.............................................. $138,337,742
Less: Underwriting discounts, commissions and other
transaction costs......................................... (9,851,292)
------------
Net proceeds from offering.................................. $128,486,450
============
Common stock at par value................................... $ 13,175
Additional paid in capital.................................. 128,473,275
------------
Less: Deferred offering costs incurred through June 30,
2005...................................................... (2,371,283)
------------
Net proceeds after deducting offering costs................. $126,115,167
============

(3) Probable Acquisition: Records the acquisition of two Gulf States Health
facilities as though we acquired them on June 30, 2005. The Company has not
closed on the acquisition of these facilities, but the Company believes that the
acquisitions are probable.

COST TOTAL FOR GULF STATES
---------------------------- HEALTH PROBABLE
DENHAM SPRINGS HAMMOND ACQUISITIONS
-------------- ----------- ---------------------

Land................................... $ 428,571 $ 734,643 $ 1,163,214
Building............................... 5,339,532 9,152,846 14,492,378
Intangible lease assets................ 231,897 397,511 629,408
---------- ----------- -----------
Total cost............................. $6,000,000 $10,285,000 $16,285,000
========== =========== ===========

F-6

(4) Records compensation expense related to restricted stock awards for
106,000 shares made to senior management upon completion of our initial public
offering and for 82,000 shares made to other employees on April 25, 2005,
calculated by multiplying the number of shares awarded times the price per share
of common stock in our initial public offering:

Shares of common stock awarded.............................. 188,000
Price per share of common stock in our initial public
offering.................................................. $ 10.50
----------
Total value of shares awarded............................... $1,974,000
==========
Common stock at par value................................... $ 188
Additional paid in capital.................................. 1,973,812
----------
Pro forma adjustment to accumulated deficit................. $1,974,000
==========

No adjustment for this is shown in the accompanying pro forma statement of
operations since the impact is non-recurring as defined in Regulation S-X
210.11-02(b)(5).

ADJUSTMENTS FOR UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
SIX MONTHS ENDED JUNE 30, 2005:

(5) Completed Acquisition: Records six months of rent income for the Desert
Valley -- Victorville facility as though we owned it from January 1, 2005, to
June 30, 2005. This facility was acquired on February 28, 2005. Rent income is
based on the straight-line rent (as required by SFAS No. 13) in the lease
agreements between the Company and the lessee. Pro forma rent income for the
Desert Valley -- Victorville for the six months ended June 30, 2005 consists of
the following:

RENT
-----------

Annual rent income.......................................... $ 3,228,104
Rent income for six months of the first year................ 1,614,052
Historical rent for the period February 28 - June 30,
2005...................................................... (1,079,622)
-----------
Pro forma rent income....................................... $ 534,430
===========

Depreciation of buildings (straight line using a 40 year life) and
amortization of intangible lease assets (straight line using a fifteen year
life) for the six months ended June 30, 2005 as though the properties were
occupied on January 1, 2005.

HISTORICAL
DEPRECIATION AND
ANNUAL DEPRECIATION AND AMORTIZATION FOR PRO FORMA
DEPRECIATION AND AMORTIZATION FOR FEBRUARY 28 - DEPRECIATION AND
COST AMORTIZATION SIX MONTHS JUNE 30, 2005 AMORTIZATION
----------- ---------------- ---------------- ---------------- ----------------

Land................. $ 2,000,000 $ -- $ -- $ -- $ --
Buildings............ 24,994,553 624,864 312,432 208,288 104,144
Intangible lease
assets............. 1,005,447 67,030 33,515 22,344 11,171
----------- -------- -------- -------- --------
$28,000,000 $691,894 $345,947 $230,632 $115,315
=========== ======== ======== ======== ========

(6) Completed Acquisition: Records six months of rent income for the Gulf
States -- Covington facility as though we owned it from January 1, 2005, to June
30, 2005. Rent income is based on the straight-line rent (as required by SFAS
No. 13) in the lease agreements between the Company and the

F-7

lessee. Pro forma rent income for the facility for the six months ended June 30,
2005 consists of the following:

RENT
----------

Annual rent income.......................................... $1,252,210
Rent income for six months of the first year................ $ 626,105
Historical rent from June 10 to June 30, 2005............... (70,438)
----------
Additional pro forma rent income............................ $ 555,667
==========

Depreciation of the building (straight line using a 40-year life) and
amortization of the intangible lease assets (straight-line using a 15 year life)
for the six months ended June 30, 2005 as though the property was occupied on
January 1, 2005.

HISTORICAL
DEPRECIATION AND ADDITIONAL
ANNUAL DEPRECIATION AND AMORTIZATION FOR PRO FORMA
DEPRECIATION AND AMORTIZATION FOR JUNE 9-JUNE 30, DEPRECIATION AND
COST AMORTIZATION SIX MONTHS 2005 AMORTIZATION
----------- ---------------- ---------------- ---------------- ----------------

Land................. $ 821,429 $ -- $ -- $ -- $ --
Buildings............ 10,234,101 255,853 127,927 14,220 113,707
Intangible lease
assets............. 444,470 29,631 14,816 3,262 11,554
----------- -------- -------- ------- --------
$11,500,000 $285,484 $142,743 $17,482 $125,261
=========== ======== ======== ======= ========

(7) Completed Acquisition: Records six months of rent income for the
Vibra -- Redding facility as though we owned it from January 1, 2005, to June
30, 2005. Rent income is based on the straight-line rent (as required by SFAS
No. 13) in the lease agreements between the Company and the lessee. Pro forma
rent income for the facility for the six months ended June 30, 2005 consists of
the following:

Annual rent income.......................................... $2,259,422
Rent income for six months of the first year................ $1,129,711
Historical rent for the one day of June 30, 2005............ (5,250)
----------
Additional pro forma rent income............................ $1,124,461
==========

Depreciation of buildings (straight line using a 40 year life) and
amortization of intangible lease assets (straight line using a fifteen year
life) for the three months ended June 30, 2005 as though the property was
occupied on January 1, 2005.

HISTORICAL
ANNUAL DEPRECIATION AND DEPRECIATION AND PRO FORMA
DEPRECIATION AND AMORTIZATION FOR AMORTIZATION FOR DEPRECIATION AND
COST AMORTIZATION SIX MONTHS JUNE 30, 2005 AMORTIZATION
----------- ---------------- ---------------- ---------------- ----------------

Land................. $ -- $ -- $ -- $ -- $ --
Buildings............ 19,948,022 498,701 249,351 1,386 247,965
Intangible lease
assets............. 801,978 53,465 26,733 148 26,585
-------- -------- ------- --------
$552,166 $276,084 $ 1,534 $274,550
======== ======== ======= ========

(8) Probable Acquisition: Records six months of rent income for the two
Gulf States Health facilities as though we owned them from January 1, 2005, to
June 30, 2005. Rent income is based on the straight-line rent (as required by
SFAS No. 13) in the lease agreements between the Company and the lessee. Pro

F-8

forma rent income for the two Gulf States Health facilities for the six months
ended June 30, 2005 consists of the following:

ANNUAL RENT SIX MONTHS RENT
----------- ---------------

Gulf States -- Denham Springs............................. $ 753,141 $ 376,571
Gulf States -- Hammond.................................... 1,291,009 645,505
---------- ----------
$2,044,150 $1,022,076
========== ==========

Depreciation of buildings (straight line using a 40 year life) and
amortization of intangibles (straight-line using a 15 year life) for the six
months ended June 30, 2005 as though the properties were occupied on January 1,
2005.

COST
------------------------ ANNUAL DEPRECIATION AND
DENHAM DEPRECIATION AND AMORTIZATION FOR
SPRINGS HAMMOND AMORTIZATION SIX MONTHS
---------- ----------- ---------------- ----------------

Land.............................. $ 428,571 $ 734,643 $ -- $ --
Buildings......................... 5,339,532 9,152,846 362,310 181,155
Intangible lease assets........... 231,897 397,511 41,961 20,981
---------- ----------- -------- --------
$6,000,000 $10,285,000 $404,271 $202,136
========== =========== ======== ========

(9) Pro forma weighted average shares outstanding, basic and diluted, are
calculated as follows:

BASIC DILUTED
---------- ----------

Historical.................................................. 26,096,813 26,105,844
Effect of our initial public offering....................... 13,175,023 13,175,023
Restricted shares awarded to management and employees....... 188,000 188,000
---------- ----------
Pro forma weighted average shares........................... 39,459,836 39,468,867
========== ==========

The shares issued in our initial public offering and the restricted shares
awarded to management and employees are shown as though they were issued on
January 1, 2005.

F-9

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

ADJUSTMENTS FOR UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
YEAR ENDED DECEMBER 31, 2004:

(10) Completed Acquisition: Records year of rent income for the six Vibra
initial property purchases as though we owned them from January 1, 2004, to
December 31, 2004. Rent income is based on the monthly straight-line rent (as
required by SFAS No. 13) for each property. Rent income from the Vibra
properties is as follows:

ANNUAL RENT
-----------

Bowling Green............................................... $ 5,471,964
Fresno...................................................... 2,675,182
Kentfield................................................... 1,094,393
Marlton..................................................... 4,752,598
New Bedford................................................. 3,171,528
Denver...................................................... 1,219,818
-----------
TOTAL..................................................... 18,385,483
Historical rent income for July 1 - December 31, 2004....... 8,611,344
-----------
Pro forma rent income....................................... $ 9,774,139
===========

Records interest income from loans to Vibra entities as though the loans
were made on January 1, 2004 and interest income was earned for the year ended
December 31, 2004, at the stated rate of 10.25%.

ANNUAL INTEREST
LOANS INCOME
----------- ---------------

Bowling Green............................................ $11,771,389 $1,206,567
Fresno................................................... 6,561,308 672,534
Kentfield................................................ 5,422,387 555,795
Marlton.................................................. 11,203,366 1,148,345
New Bedford.............................................. 8,361,930 857,098
Denver................................................... 5,821,564 596,710
----------- ----------
TOTAL.................................................. $49,141,944 5,037,049
===========
Historical interest income for July 1 - December 31,
2004................................................... 2,282,115
----------
Pro forma interest income................................ $2,754,934
==========

F-10

Depreciation of buildings (straight line using a 40 year life) and
amortization of intangible lease assets (straight line using a fifteen year
life) for the year ended December 31, 2004 as though the properties were
acquired on January 1, 2004.

TOTAL
ANNUAL ANNUAL DEPRECIATION AND
DEPRECIATION AMORTIZATION AMORTIZATION
------------ ------------ ----------------

Bowling Green................................ $ 839,268 $104,736 $ 944,004
Fresno....................................... 409,080 51,204 460,284
Kentfield.................................... 119,124 23,808 142,932
Marlton...................................... 772,572 90,972 863,544
New Bedford.................................. 494,304 60,384 554,688
Denver....................................... 150,324 23,220 173,544
---------- -------- ----------
TOTAL...................................... 2,784,672 354,324 3,138,996
Historical depreciation and amortization for
July 1 - December 31, 2004................. 1,311,757 166,713 1,478,470
---------- -------- ----------
Pro forma depreciation and amortization...... $1,472,915 $187,611 $1,660,526
========== ======== ==========

Property expenses consist primarily of payments for the ground lease at
Marlton for the year ended December 31, 2004.

(11) Completed Acquisition: Records one year of rent income for the Desert
Valley -- Victorville facility as though we owned it from January 1, 2004, to
December 31, 2004. Rent income is based on the straight-line rent (as required
by SFAS No. 13) in the lease agreements between the Company and the lessee. Pro
forma rent income for the Desert Valley -- Victorville for the year ended
December 31, 2004 consists of the following:

ANNUAL RENT
-----------

Desert Valley -- Victorville................................ $3,228,104

ANNUAL
DEPRECIATION AND
COST AMORTIZATION
----------- ----------------

Land..................................................... $ 2,000,000 $ --
Buildings................................................ 24,994,553 624,864
Intangible lease assets.................................. 1,005,447 67,030
----------- --------
$28,000,000 $691,894
=========== ========

(12) Completed Acquisition: Records one year of rent income for the Gulf
States -- Covington facility as though we owned it from January 1, 2004, to
December 31, 2004. Rent income is based on the straight-line rent (as required
by SFAS No. 13) in the lease agreements between the Company and the lessee. Pro
forma rent income for the facility for the year ended December 31, 2004 consists
of the following:

ANNUAL RENT
-----------

Gulf States -- Covington.................................... $1,443,520

F-11

Depreciation of the building (straight line using a 40 year life) and
amortization of the intangible lease asset (straight-line using a fifteen year
life) for the year ended December 31, 2004 as though the properties were
acquired on January 1, 2004.

ANNUAL
DEPRECIATION AND
COST AMORTIZATION
----------- ----------------

Land..................................................... $ 821,429 $ --
Buildings................................................ 10,234,101 255,853
Intangible lease assets.................................. 444,470 29,631
----------- --------
$11,500,000 $285,484
=========== ========

(13) Completed Acquisition: Records one year of rent income for the
Vibra -- Redding facility as though we owned it from January 1, 2004, to
December 31, 2004. Rent income is based on the straight-line rent (as required
by SFAS No. 13) in the lease agreements between the Company and the lessee. Pro
forma rent income for the facility for the year ended December 31, 2004 consists
of the following:

ANNUAL RENT
-----------

Vibra -- Redding $2,259,422

ANNUAL
DEPRECIATION AND
COST AMORTIZATION
----------- ----------------

Buildings................................................ $19,948,022 $498,701
Intangible lease assets.................................. 801,978 53,465
----------- --------
$20,750,000 $552,166
=========== ========

(14) Probable Acquisition: Records one year of rent income for the three
Gulf States Health facilities as though we owned them from January 1, 2004, to
December 31, 2004. Rent income is based on the straight-line rent (as required
by SFAS No. 13) in the lease agreement between the Company and the lessee. Pro
forma rent income for the Gulf States Health facilities for the year ended
December 31, 2004 consists of the following:

ANNUAL RENT
-----------

Gulf States -- Denham Springs............................... $ 753,141
Gulf States -- Hammond...................................... 1,291,009
----------
$2,044,150
==========

Depreciation of buildings (straight-line using a 40 year life) and
amortization of intangible lease assets (straight-line using a fifteen year
life) for the year ended December 31, 2004 as though the properties were
occupied on January 1, 2004.

COST ANNUAL
----------------------------- DEPRECIATION AND
DENHAM SPRINGS HAMMOND AMORTIZATION
-------------- ------------ ----------------

Land..................................... $ 428,571 $ 734,643 $ --
Buildings................................ 5,339,532 9,152,846 362,310
Intangible lease assets.................. 231,897 397,511 41,961
---------- ----------- --------
$6,000,000 $10,285,000 $404,271
========== =========== ========

F-12

(15) Pro forma weighted average shares outstanding, basic and diluted, are
calculated as follows:

BASIC DILUTED
---------- ----------

Historical.................................................. 19,310,833 19,312,634
Effect of our initial public offering....................... 13,175,023 13,175,023
Restricted shares awarded to management and employees....... 188,000 188,000
---------- ----------
Pro forma weighted average shares........................... 32,673,856 32,675,657
========== ==========

The shares issued in our initial public offering and the restricted shares
awarded to management and employees are shown as though they were issued on
January 1, 2004.

Staff Accounting Bulletin (SAB) Topic 1.B.3 requires that basic and diluted
earnings per share should be calculated based on the pro forma effect of shares
assumed to be issued when dividends are paid in excess of earnings. As of June
30, 2005, cumulative net income for 2004 and the six months ended June 30, 2005,
totaled $12,516,094. Cumulative distributions, including the distributions
declared May 20, 2005, and August 18, 2005, totaled $19,327,636, resulting in
excess distributions during the period of $6,811,542. The pro forma weighted
average shares in our unaudited consolidated statement of operations for the six
months ended June 30, 2005, assume the issuance of 648,718 shares at an offering
price of $10.50 per share, or proceeds of $6,811,542 to pay these distributions
in excess of net income. See unaudited Note 13 at page F-36 for related pro
forma presentation.

F-13

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2005 and December 31, 2004

JUNE 30, 2005 DECEMBER 31, 2004
------------- -----------------
(UNAUDITED)

ASSETS
Real estate assets
Land...................................................... $ 13,491,429 $ 10,670,000
Buildings and improvements................................ 166,572,054 111,387,232
Construction in progress.................................. 50,529,769 24,318,098
Intangible lease assets................................... 7,558,712 5,314,963
------------ ------------
Gross investment in real estate assets................. 238,151,964 151,690,293
Accumulated depreciation.................................. (2,927,987) (1,311,757)
Accumulated amortization.................................. (366,886) (166,713)
------------ ------------
Net investment in real estate assets................... 234,857,091 150,211,823
Cash and cash equivalents................................... 34,357,866 97,543,677
Interest and rent receivable................................ 1,195,299 419,776
Unbilled rent receivable.................................... 7,458,980 3,206,853
Loans....................................................... 48,498,111 50,224,069
Other assets................................................ 7,377,045 4,899,865
------------ ------------
TOTAL ASSETS................................................ $333,744,392 $306,506,063
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Debt...................................................... $ 73,204,167 $ 56,000,000
Accounts payable and accrued expenses..................... 11,596,030 10,903,025
Deferred revenue.......................................... 6,418,038 3,578,229
Lease deposit............................................. 7,728,195 3,296,365
------------ ------------
Total liabilities...................................... 98,946,430 73,777,619
Minority interests.......................................... 2,137,500 1,000,000
Stockholders' equity
Preferred stock, $0.001 par value. Authorized 10,000,000
shares; no shares outstanding.......................... -- --
Common stock, $0.001 par value. Authorized 100,000,000
shares; issued and outstanding -- 26,082,862 shares at
June 30, 2005 and December 31, 2004.................... 26,083 26,083
Additional paid in capital................................ 233,678,165 233,626,690
Accumulated deficit....................................... (1,043,786) (1,924,329)
------------ ------------
Total stockholders' equity............................. 232,660,462 231,728,444
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $333,744,392 $306,506,063
============ ============

See accompanying notes to consolidated financial statements.

F-14

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
--------------------------- -------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2005 2004 2005 2004
------------ ------------ ----------- -----------

REVENUES
Rent billed............................ $ 4,692,328 $ -- $ 8,615,377 $ --
Unbilled rent.......................... 1,432,298 -- 2,777,739 --
Interest income from loans............. 1,117,151 -- 2,329,189 --
----------- ----------- ----------- -----------
Total revenues...................... 7,241,777 -- 13,722,305 --
EXPENSES
Real estate depreciation and
amortization........................ 973,996 -- 1,816,403 --
General and administrative............. 1,415,067 1,212,457 3,165,877 1,697,961
Costs of terminated acquisitions....... -- 336,724 -- 336,724
----------- ----------- ----------- -----------
Total operating expenses............ 2,389,063 1,549,181 4,982,280 2,034,685
----------- ----------- ----------- -----------
Operating income (loss)........... 4,852,714 (1,549,181) 8,740,025 (2,034,685)
OTHER INCOME (EXPENSE)
Interest income........................ 358,214 479,289 741,986 479,289
Interest expense....................... (831,117) -- (1,542,266) (8,222)
----------- ----------- ----------- -----------
Net other (expense) income.......... (472,903) 479,289 (800,280) 471,067
----------- ----------- ----------- -----------
NET INCOME (LOSS)................. $ 4,379,811 $(1,069,892) $ 7,939,745 $(1,563,618)
=========== =========== =========== ===========
NET INCOME (LOSS) PER SHARE,
BASIC.......................... $ 0.17 $ (0.04) $ 0.30 $ (0.13)
WEIGHTED AVERAGE SHARES
OUTSTANDING -- BASIC........... 26,096,021 24,397,524 26,096,813 12,459,716
NET INCOME (LOSS) PER SHARE,
DILUTED........................ $ 0.17 $ (0.04) $ 0.30 $ (0.13)
WEIGHTED AVERAGE SHARES
OUTSTANDING -- DILUTED......... 26,110,119 24,399,813 26,105,844 12,460,860

See accompanying notes to consolidated financial statements.

F-15

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

FOR THE SIX MONTHS ENDED
-----------------------------
JUNE 30, 2005 JUNE 30, 2004
------------- -------------

OPERATING ACTIVITIES
Net income (loss)......................................... $ 7,939,745 $ (1,563,618)
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities
Depreciation and amortization......................... 1,886,454 1,784
Amortization of deferred financing costs.............. 449,762 --
Unbilled rent revenue................................. (2,777,739) --
Share based payments.................................. 122,766 --
Other adjustments..................................... (129,768) --
Increase in:
Interest and rent receivable.......................... (775,523) --
Other assets.......................................... (1,088,749) (235,463)
Increase (decrease) in:
Accounts payable and accrued expenses................. (3,493,372) 125,268
Deferred revenue...................................... 1,264,502 --
Lease deposits........................................ 70,493 --
------------ ------------
Net cash provided by (used for) operating activities...... 3,468,571 (1,672,029)
INVESTING ACTIVITIES
Real estate acquired.................................... (56,513,944) --
Principal received on loans receivable.................. 7,725,958 --
Investment in loans receivable.......................... (4,934,772) --
Construction in progress................................ (26,420,931) (21,427,781)
Equipment acquired...................................... (122,066) (137,006)
------------ ------------
Net cash used for investing activities.................... (80,265,755) (21,564,787)
FINANCING ACTIVITIES
Addition to debt........................................ 19,000,000 --
Proceeds from loan payable.............................. -- 200,000
Payment of loan payable................................. -- (300,000)
Payments of debt........................................ (1,795,833) --
Deferred financing and offering costs................... (1,786,178) --
Payments for deferred stock units....................... (75,000) --
Distributions paid...................................... (2,869,116) --
Proceeds from sale of common shares, net of offering
costs.................................................. -- 233,738,967
Sale of partnership units............................... 1,137,500 --
------------ ------------
Net cash provided by financing activities................. 13,611,373 233,638,967
------------ ------------
Increase in cash and cash equivalents for period.......... (63,185,811) 210,402,151
Cash and cash equivalents at beginning of period........ 97,543,677 100,000
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 34,357,866 $210,502,151
============ ============
Interest paid, net of capitalized interest of $1,003,779 in
2005...................................................... $ 2,096,283 $ --
Supplemental schedule of non-cash investing activities:
Unbilled rent receivables recorded as deferred revenue.... $ 1,474,387 --
Additions to real estate and loans receivable recorded as
lease and loan deposits................................. 8,773,312 --
Additions to real estate and loans receivable recorded as
deferred revenue........................................ 389,309 --
Supplemental schedule of non-cash financing activities:
Additions to stockholders equity from share based
payments................................................ $ 126,475 $ --
Distributions declared, unpaid............................ 4,186,377 --

See accompanying notes to consolidated financial statements.

F-16

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004

(UNAUDITED)

1. ORGANIZATION

Medical Properties Trust, Inc., a Maryland corporation (the Company), was
formed on August 27, 2003 under the General Corporation Law of Maryland for the
purpose of engaging in the business of investing in and owning commercial real
estate. The Company's operating partnership subsidiary, MPT Operating
Partnership, L.P. (the Operating Partnership), was formed in September 2003.
Through another wholly owned subsidiary, Medical Properties Trust, LLC, the
Company is the sole general partner of the Operating Partnership. The Company
owns directly all of the limited partnership interests in the Operating
Partnership.

The Company succeeded to the business of Medical Properties Trust, LLC, a
Delaware limited liability company, which was formed in December 2002. On the
day of formation, the Company issued 1,630,435 shares of common stock, and the
membership interests of Medical Properties Trust, LLC were transferred to the
Company. Medical Properties Trust, LLC had no assets, but had incurred
liabilities for costs and expenses related to acquisition due diligence, a
planned offering of common stock, consulting fees and office overhead in an
aggregate amount of approximately $423,000, which was assumed by the Operating
Partnership.

The Company's primary business strategy is to acquire and develop real
estate and improvements, primarily for long term lease to providers of
healthcare services such as operators of general acute care hospitals, inpatient
physical rehabilitation hospitals, long-term acute care hospitals, surgery
centers, centers for treatment of specific conditions such as cardiac,
pulmonary, cancer, and neurological hospitals, and other healthcare-oriented
facilities. The Company considers this to be a single business segment as
defined in Statement of Financial Accounting Standard (SFAS) No. 131,
Disclosures about Segments of an Enterprise and Related Information.

On April 6, 2004, the Company completed the sale of 25.6 million shares of
common stock in a private placement to qualified institutional buyers and
accredited investors. The Company received $233.5 million after deducting
offering costs. The proceeds are being used to purchase properties, to pay debt
and accrued expenses and for working capital and general corporate purposes.

On July 13, 2005, the Company completed the sale of 11,365,000 shares of
common stock in an initial public offering (IPO) at a price of $10.50 per share.
On August 5, 2005, the underwriters purchased an additional 1,810,023 shares at
the same offering price, less an underwriting commission of seven percent and
expenses pursuant to their over-allotment option. (See Note 7).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates: The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
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 financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Principles of Consolidation: Property holding entities and other
subsidiaries of which the Company owns 100% of the equity or has a controlling
financial interest evidenced by ownership of a majority voting interest are
consolidated. All inter-company balances and transactions are eliminated. For
entities in which the Company owns less than 100% of the equity interest, the
Company consolidates the property if it has the direct or indirect ability to
make decisions about the entities' activities based upon the terms of the
respective entities' ownership agreements. For entities in which the Company
owns less than 100% and

F-17

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004 -- (CONTINUED)

does not have the direct or indirect ability to make decisions but does exert
significant influence over the entities' activities, the Company records its
ownership in the entity using the equity method of accounting.

The Company periodically evaluates all of its transactions and investments
to determine if they represent variable interests in a variable interest entity
as defined by FASB Interpretation No. 46 (revised December 2003) (FIN 46-R).
Consolidation of Variable Interest Entities, an interpretation of Accounting
Research Bulletin No. 51, Consolidated Financial Statements. If the Company
determines that it has a variable interest in a variable interest entity, the
Company determines if it is the primary beneficiary of the variable interest
entity. The Company consolidates each variable interest entity in which the
Company, by virtue of its transactions with or investments in the entity, is
considered to be the primary beneficiary. The Company re-evaluates its status as
primary beneficiary when a variable interest entity or potential variable
interest entity has a material change in its variable interests.

Unaudited Interim Consolidated Financial Statements: The accompanying
unaudited interim consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month and six
month periods ended June 30, 2005, are not necessarily indicative of the results
that may be expected for the year ending December 31, 2005.

3. REAL ESTATE AND LENDING ACTIVITIES

In February 2005, Vibra Healthcare, LLC (Vibra) repaid $7.8 million of
principal and interest on its loans from the Company. The payments left a $41.4
million loan payable to the Company by Vibra. The Company has no commitments to
make additional loans to Vibra.

In February 2005, the Company purchased a general acute care hospital
(Victorville) for $28.0 million. The purchase price was paid from loan proceeds
and from the proceeds of the Company's private placement. Upon closing the
purchase of the hospital, the Company and the seller entered into a 15 year
lease of the hospital back to the seller, with renewal options for three
additional five year terms.

In June 2005, the Company completed two transactions with the owner of two
long-term acute care hospitals. In one transaction, the Company purchased a
long-term acute care hospital (Covington) for $11.5 million. The purchase price
was paid from loan proceeds and from the proceeds of the Company's private
placement. Upon closing the purchase of Covington, the Company and the seller
entered into a 15 year lease of the hospital back to the seller, with renewal
options for three additional five year terms. In a second transaction, in
connection with our proposed acquisition of another long-term acute care
hospital (Denham Springs) from the same owner, the Company made a 15 year,
interest only mortgage loan of $6.0 million, $500,000 of which is being held in
escrow pending the resolution of certain environmental issues regarding the
facility. If these environmental issues are resolved to the Company's
satisfaction, the escrowed funds will be released and the Company will proceed
to acquire Denham Springs. The loan accrues interest at a rate of 10.5% per
year, subject to escalation, and provides for monthly payments of interest only.

In June 2005, the Company purchased a rehabilitation hospital
(Vibra-Redding) for $20.75 million from Vibra. The purchase price was paid from
loan proceeds and from the proceeds of the Company's private placement. Upon
closing the purchase of Vibra-Redding, the Company and Vibra entered into a 15
year lease of the hospital back to Vibra, with renewal options for three
additional five year terms. The lease is cross-defaulted with the Company's
other Vibra loan and leases. The Company has withheld

F-18

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004 -- (CONTINUED)

$2.75 million of the purchase price contingent on conversion of the facility to
a long-term acute care hospital and other facility improvements which the
Company expects the lessee to make during the next 12 months. If the conversion
and improvements are not made, the Company has no obligation to pay the withheld
amounts.

In June 2005, the Company closed on a loan with a local operator to fund
the construction and development of a community hospital (North Cypress). The
total loan commitment is approximately $64.0 million. The Company has the option
to purchase North Cypress at the end of construction at which time the Company
will enter into a 15 year lease with the operator. During the construction
phase, the Company also plans to purchase the land, currently being subleased by
the Company, on which North Cypress is being built. The Company has advanced
approximately $1.9 million to the operator at June 30, 2005, for construction of
the facility. The Company has included this transaction in construction in
progress in its consolidated balance sheet at June 30, 2005.

The Company has recorded the following assets from the acquisitions of
Victorville, Covington and Vibra-Redding:

Land........................................................ $ 2,821,429
Buildings................................................... 55,184,822
Intangible lease assets..................................... 2,243,749
-----------
$60,250,000
===========

4. DEBT

At June 30, 2005, the Company had outstanding borrowings of approximately
$73.2 million pursuant to a term loan agreement. The loan agreement requires
monthly payments based on a 20 year amortization schedule and interest at the
one month London Interbank Offered Rate (LIBOR) plus 300 basis points (6.56% at
June 30, 2005). The loan is secured by six Vibra facilities, which have a book
value of $125.9 million, and requires the Company to meet financial coverage,
ratio and total debt covenants typical of such loans. On August 4, 2005, the
Company prepaid $31.9 million of principal on the term loan.

Maturities of debt at June 30, 2005, for each successive twelve month
period are as follows:

2006........................................................ $ 3,750,000
2007........................................................ 3,750,000
2008........................................................ 65,704,167
-----------
$73,204,167
===========

The Company has signed a term sheet with the same lender for a $100 million
revolving credit facility to replace the existing loan.

5. STOCK AWARDS

In February 2005, the Company awarded 7,500 deferred stock units valued at
$10.00 per share to three new independent directors elected to the Company's
board. The total value of $75,000 was recorded as additional paid-in-capital in
the consolidated balance sheet and an expense in the consolidated income
statement on the date of the awards. The Company also awarded 60,000 stock
options to the new directors, of which one-third vested immediately, one-third
vest one year from the date of grant, and one-third vest two years from the date
of grant. The Company follows APB No. 25 and related Interpretations

F-19

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004 -- (CONTINUED)

in accounting for stock options. In accordance with APB No. 25, no compensation
expense has been recorded for stock options.

In April 2005, the Company awarded to employees 82,000 shares of restricted
common stock valued at $10.00 per share. Fifty-two thousand of these shares vest
over a period of five years beginning one year from the date of the Company's
IPO (July 7, 2005). Thirty thousand of these shares vest quarterly over a three
year period beginning September 30, 2005. The Company is recording compensation
expense over the vesting period.

6. EARNINGS PER SHARE

The following is a reconciliation of the weighted average shares used in
net income per common share to the weighted average shares used in net income
per common share -- assuming dilution for the six months ended June 2005 and
2004, respectively:

FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------

Historical weighted average shares
Weighted average number of shares
issued and outstanding............. 26,082,862 24,397,524 26,082,862 12,459,716
Vested deferred stock units.......... 13,159 -- 13,951 --
---------- ---------- ---------- ----------
Weighted average shares -- basic..... 26,096,021 24,397,524 26,096,813 12,459,716
Common stock warrants and options.... 14,098 2,289 9,031 1,144
---------- ---------- ---------- ----------
Weighted average shares -- diluted... 26,110,119 24,399,813 26,105,844 12,460,860
========== ========== ========== ==========

Staff Accounting Bulletin (SAB) Topic 1.B.3 requires that basic and diluted
earnings per share must be calculated based on the pro forma effect of shares
assumed to be issued in an initial public offering when dividends are paid in
excess of earnings. As of June 30, 2005, cumulative net income for 2004 and the
six months ended June 30, 2005, totaled $12,516,094. Cumulative distributions,
including the distributions declared May 20, 2005, and August 18, 2005, totaled
$19,327,636, resulting in excess distributions during this period of $6,811,542.
The pro forma weighted average shares in the table below assumes the issuance of
648,718 shares at an offering price of $10.50 per share, or proceeds of
$6,811,542, to pay these distributions in excess of net income.

BASIC DILUTED
---------- ----------

Pro forma weighted average shares for the six months ended
June 30, 2005:
Historical from above..................................... 26,096,813 26,105,844
Pro forma effect of assumed additional shares............. 648,718 648,718
---------- ----------
Pro forma weighted average shares......................... 26,745,531 26,754,562
========== ==========
Pro forma earnings per share................................ $ 0.30 $ 0.30
========== ==========

The pro forma effect of this excess distribution of $6,811,542 on the June
30, 2005 consolidated balance sheet would be to reduce cash and cash equivalents
to a balance of $90,732,135 and to increase the accumulated deficit to a balance
of $8,735,871.

F-20

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004 -- (CONTINUED)

7. INITIAL PUBLIC OFFERING AND ISSUANCE OF COMMON STOCK

On July 13, 2005, the Company completed the sale of 11,365,000 shares of
common stock in its IPO at a price of $10.50 per share, less underwriters'
discount and expenses. On August 5, 2005, the underwriters exercised their
option to purchase an additional 1,810,023 shares at the same offering price,
less underwriters' discount and expenses. Our proceeds from the IPO and exercise
of the over-allotment option, before deducting offering costs of $2.4 million at
June 30, 2005, are as follows:

Gross proceeds.............................................. $138,337,742
Underwriters' discount...................................... (9,683,642)
Expenses.................................................... (167,650)
------------
Net proceeds................................................ $128,486,450
============

8. COMMITMENTS AND CONTINGENCIES

The Company entered into two ground leases for its North Cypress
development project. Under the ground lease covering the larger tract of land,
the Company has the right to purchase the land during the construction phase.
The Company currently intends to exercise its purchase rights. Under the ground
lease covering the smaller tract of land, the Company can terminate the lease
when certain specified improvements are made to the larger land tract. The
Company currently intends to make such improvements during the construction
phase of the project. The ground leases are for 99 years and require payments of
approximately $502,000 during each of the first five years of the leases. The
Company is subleasing the land to the tenant in an amount and for a term equal
to the lease payments which the Company makes to the owners of the land.
However, collection of the sublease rent is being deferred until completion of
construction at which time the tenant will begin making all previously deferred
sublease payments.

Upon the acquisition of the Vibra-Redding facility, the Company assumed a
ground lease with a remaining term of approximately 70 years. The Company's
lease of the facility to Vibra requires that Vibra make all ground lease
payments to the ground lessor. The ground lease payments are approximately
$21,000 per year, escalating at four percent per year for the remaining term of
the ground lease.

F-21

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Medical Properties Trust, Inc.:

We have audited the accompanying consolidated balance sheets of Medical
Properties Trust, Inc. and subsidiaries as of December 31, 2004 and 2003, and
the related consolidated statements of operations, stockholders' equity
(deficit), and cash flows for the year ended December 31, 2004 and for the
period from inception (August 27, 2003) to December 31, 2003. In connection with
our audits of the consolidated financial statements, we have also audited the
accompanying financial statement Schedule III. These consolidated financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Medical
Properties Trust, Inc. and subsidiaries as of December 31, 2004 and 2003, and
the results of their operations and their cash flows for the year ended December
31, 2004 and for the period from inception (August 27, 2003) to December 31,
2003 in conformity with U.S. generally accepted accounting principles. Also in
our opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

/s/ KPMG LLP

Birmingham, Alabama
March 16, 2005

F-22

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Consolidated Balance Sheets
December 31, 2004 and December 31, 2003

DECEMBER 31, 2004 DECEMBER 31, 2003
----------------- -----------------

ASSETS
Real estate assets
Land...................................................... $ 10,670,000 $ --
Buildings and improvements................................ 111,387,232 --
Construction in progress.................................. 24,318,098 166,301
Intangible lease assets................................... 5,314,963 --
------------ -----------
Gross investment in real estate assets................. 151,690,293 166,301
Accumulated depreciation.................................. (1,311,757) --
Accumulated amortization.................................. (166,713) --
------------ -----------
Net investment in real estate assets................... 150,211,823 166,301
Cash and cash equivalents................................... 97,543,677 100,000
Interest receivable......................................... 419,776 --
Unbilled rent receivable.................................... 3,206,853 --
Loans receivable............................................ 50,224,069 --
Other assets................................................ 4,899,865 201,832
------------ -----------
TOTAL ASSETS................................................ $306,506,063 $ 468,133
============ ===========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities
Long-term debt............................................ $ 56,000,000 $ --
Accounts payable and accrued expenses..................... 10,903,025 1,389,779
Deferred revenue.......................................... 3,578,229 --
Lease deposit............................................. 3,296,365 --
Loan payable.............................................. -- 100,000
------------ -----------
Total liabilities...................................... 73,777,619 1,489,779
Minority interest........................................... 1,000,000 --
Stockholders' equity (deficit)
Preferred stock, $0.001 par value. Authorized 10,000,000
shares; no shares outstanding.......................... -- --
Common stock, $0.001 par value. Authorized 100,000,000
shares; issued and outstanding -- 26,082,862 shares at
December 31, 2004 and 1,630,435 shares at December 31,
2003................................................... 26,083 1,630
Additional paid in capital................................ 233,626,690 --
Accumulated deficit....................................... (1,924,329) (1,023,276)
------------ -----------
Total stockholders' equity (deficit)................... 231,728,444 (1,021,646)
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)........ $306,506,063 $ 468,133
============ ===========

See accompanying notes to consolidated financial statements.
F-23

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Consolidated Statements of Operations
For The Year Ended December 31, 2004 and
Period from Inception (August 27, 2003) through December 31, 2003

YEAR ENDED PERIOD FROM INCEPTION
DECEMBER 31, (AUGUST 27, 2003)
2004 THROUGH DECEMBER 31, 2003
------------ -------------------------

REVENUES
Rent billed............................................. $ 6,162,278 $ --
Unbilled rent........................................... 2,449,066 --
Interest income from loans.............................. 2,282,115 --
----------- -----------
Total revenues....................................... 10,893,459 --
EXPENSES
Real estate depreciation................................ 1,311,757 --
Amortization of intangible lease assets................. 166,713 --
Other property expenses................................. 93,502 --
General and administrative.............................. 5,057,284 992,418
Costs of terminated acquisitions........................ 585,345 30,858
----------- -----------
Total operating expenses............................. 7,214,601 1,023,276
----------- -----------
Operating income (loss)............................ 3,678,858 (1,023,276)
OTHER INCOME (EXPENSE)
Interest income......................................... 930,260 --
Interest expense........................................ (32,769) --
----------- -----------
Net other income..................................... 897,491 --
----------- -----------
NET INCOME (LOSS).................................. $ 4,576,349 $(1,023,276)
=========== ===========
NET INCOME (LOSS) PER SHARE, BASIC................. $ 0.24 $ (0.63)
WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC......... 19,310,833 1,630,435
NET INCOME (LOSS) PER SHARE, DILUTED............... $ 0.24 $ (0.63)
WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED....... 19,312,634 1,630,435

See accompanying notes to consolidated financial statements.
F-24

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows
For The Year Ended December 31, 2004 and
Period from Inception (August 27, 2003) through December 31, 2003

PERIOD FROM INCEPTION
YEAR ENDED (AUGUST 27, 2003) THROUGH
DECEMBER 31, 2004 DECEMBER 31, 2003
----------------- --------------------------

OPERATING ACTIVITIES
Net income (loss)......................................... $ 4,576,349 $(1,023,276)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation and amortization......................... 1,517,530 --
Unbilled rent revenue................................. (2,449,066) --
Warrant issued to lender.............................. 24,500 --
Deferred stock units issued to directors.............. 125,000 --
Increase in:
Interest receivable................................... (419,776) --
Other assets.......................................... (309,769) --
Increase in:
Accounts payable and accrued expenses................. 6,644,130 1,391,409
Deferred revenue...................................... 210,000 --
------------- -----------
Net cash provided by operating activities................. 9,918,898 368,133
INVESTING ACTIVITIES
Real estate acquired.................................... (127,372,195) --
Loans receivable........................................ (44,317,263) --
Construction in progress................................ (23,151,797) (166,301)
Equipment acquired...................................... (759,387) --
------------- -----------
Net cash used for investing activities.................... (195,600,642) (166,301)
FINANCING ACTIVITIES
Addition to long-term debt.............................. 56,000,000 --
Proceeds from loan payable.............................. 200,000 100,000
Payment of loan payable................................. (300,000) --
Deferred financing costs................................ (3,869,767) (201,832)
Distributions paid...................................... (2,608,286) --
Sale of common stock, net of offering costs............. 233,703,474 --
------------- -----------
Net cash provided by (used for) financing activities...... 283,125,421 (101,832)
------------- -----------
Increase in cash and cash equivalents for period.......... 97,443,677 100,000
Cash at beginning of period............................. 100,000 --
------------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 97,543,677 $ 100,000
============= ===========
Supplemental schedule of non-cash investing activities:
Additions to unbilled rent receivables recorded as
deferred revenue........................................ $ 757,787 $ --
Additions to loans receivable recorded as lease deposits
and deferred revenue.................................... 5,906,807 --
Supplemental schedule of non-cash financing activities:
Minority interest granted for contribution of land to
development project................................... 1,000,000 --
Distributions declared, not paid........................ 2,869,116 --
Deferred offering costs charged to proceeds from sale of
common stock.......................................... 201,832 --
Additional paid in capital from deferred stock units
issued to directors................................... 125,000 --
Conversion of accounts payable and accrued expenses to
common stock.......................................... -- 1,630
Interest expense paid....................................... 32,769 --

See accompanying notes to consolidated financial statements.
F-25

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity (Deficit)
For the Year Ended December 31, 2004
and Period from Inception (August 27, 2003) through December 31, 2003

PREFERRED COMMON TOTAL
------------------ ---------------------- ADDITIONAL PAID ACCUMULATED STOCKHOLDERS'
SHARES PAR VALUE SHARES PAR VALUE IN CAPITAL DEFICIT EQUITY
------ --------- ---------- --------- --------------- ----------- -------------

BALANCE AT INCEPTION
(AUGUST 27, 2003)....... -- $ -- -- $ -- $ -- $ -- $ --
Issuance of common
stock................. -- -- 1,630,435 1,630 -- -- 1,630
Net loss................ -- -- -- -- -- (1,023,276) (1,023,276)
---- ----- ---------- ------- ------------ ----------- ------------
BALANCE AT DECEMBER 31,
2003.................... -- -- 1,630,435 1,630 -- (1,023,276) (1,021,646)
Redemption of founders'
shares................ -- -- (1,108,527) (1,108) 1,108 -- --
Issuance of common stock
in private placement
(net of offering
costs)................ -- -- 25,560,954 25,561 233,476,082 -- 233,501,643
Value of warrants
issued................ -- -- -- -- 24,500 -- 24,500
Deferred stock units
issued to directors... -- -- -- -- 125,000 -- 125,000
Distributions declared
($.21 per common
share)................ -- -- -- -- -- (5,477,402) (5,477,402)
Net income.............. -- -- -- -- -- 4,576,349 4,576,349
---- ----- ---------- ------- ------------ ----------- ------------
BALANCE AT DECEMBER 31,
2004.................... -- $ -- 26,082,862 $26,083 $233,626,690 $(1,924,329) $231,728,444
==== ===== ========== ======= ============ =========== ============

See accompanying notes to consolidated financial statements.
F-26

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2004 AND
PERIOD FROM INCEPTION (AUGUST 27, 2003) THROUGH DECEMBER 31, 2003

1. ORGANIZATION

Medical Properties Trust, Inc., a Maryland corporation (the Company), was
formed on August 27, 2003 under the General Corporation Law of Maryland for the
purpose of engaging in the business of investing in and owning commercial real
estate. The Company's operating partnership subsidiary, MPT Operating
Partnership, L.P. (the Operating Partnership), was formed in September 2003.
Through another wholly owned subsidiary, Medical Properties Trust, LLC, the
Company is the sole general partner of the Operating Partnership. The Company
presently owns directly all of the limited partnership interests in the
Operating Partnership.

The Company's primary business strategy is to acquire and develop real
estate and improvements, primarily for long term lease to providers of
healthcare services such as operators of inpatient physical rehabilitation
hospitals, long-term acute care hospitals, surgery centers, centers for
treatment of specific conditions such as cardiac, pulmonary, cancer, and
neurological hospitals, and other healthcare-oriented facilities. The Company
considers this to be a single business segment as defined in Statement of
Financial Accounting Standard (SFAS) No. 131, Disclosures about Segments of an
Enterprise and Related Information.

The Company has filed with the Securities and Exchange Commission (SEC) a
Form S-11 registration statement for an Initial Public Offering (IPO) of common
stock. The Company has not determined the number of shares nor price per share
to be offered in the IPO.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2004 AND
PERIOD FROM INCEPTION (AUGUST 27, 2003) THROUGH DECEMBER 31, 2003 -- (CONTINUED)

The Company periodically evaluates all of its transactions and investments
to determine if they represent variable interests in a variable interest entity
as defined by FASB Interpretation No. 46 (revised December 2003) (FIN 46-R),
Consolidation of Variable Interest Entities, an interpretation of Accounting
Research Bulletin No. 51, Consolidated Financial Statements. If the Company
determines that it has a variable interest in a variable interest entity, the
Company determines if it is the primary beneficiary of the variable interest
entity. The Company consolidates each variable interest entity in which the
Company, by virtue of its transactions with or investments in the entity, is
considered to be the primary beneficiary. The Company re-evaluates its status as
primary beneficiary when a variable interest entity or potential variable
interest entity has a material change in its variable interests.

Cash and Cash Equivalents: Certificates of deposit and short-term
investments with remaining maturities of three months or less when acquired and
money-market mutual funds are considered cash equivalents.

Deferred Costs: Costs incurred prior to the completion of offerings of
stock or other capital instruments that directly relate to the offering are
deferred and netted against proceeds received from the offering. Costs incurred
in connection with anticipated financings and refinancing of debt are
capitalized as deferred financing costs in other assets and amortized over the
lives of the related loans as an addition to interest expense to produce a
constant effective yield on the loan (interest method). Costs that are
specifically identifiable with, and incurred prior to the completion of,
probable acquisitions are deferred and capitalized upon closing. The Company
begins deferring costs when the Company and the seller have executed a letter of
intent (LOI), commitment letter or similar document for the purchase of the
property by the Company. Deferred acquisition costs are expensed when management
determines that the acquisition is no longer probable. Leasing commissions and
other leasing costs directly attributable to tenant leases are capitalized as
deferred leasing costs and amortized on the straight-line method over the terms
of the related lease agreements. Costs identifiable with loans made to lessees
are recognized as a reduction in interest income over the life of the loan by
the interest method.

Revenue Recognition: The Company receives income from operating leases
based on the fixed, minimum required rents (base rent) and from additional rent
based on a percentage of tenant revenues once the tenant's revenue has exceeded
an annual threshold (percentage rent). Rent revenue is recorded on the
straight-line method over the terms of the related lease agreements for new
leases and the remaining terms of existing leases for acquired properties. The
straight-line method records the periodic average amount of rent earned over the
term of a lease, taking into account contractual rent increases over the lease
term. The straight-line method has the effect of recording more rent revenue
from a lease than a tenant is required to pay during the first half of the lease
term. During the last half of a lease term, this effect reverses with less rent
revenue recorded than a tenant is required to pay. Rent revenue as recorded on
the straight-line method in the consolidated statement of operations is shown as
two amounts. Billed rent revenue is the amount of rent actually billed to the
customer each period as required by the lease. Unbilled rent revenue is the
difference between rent revenue earned based on the straight-line method and the
amount recorded as billed rent revenue. These differences between rental
revenues earned and amounts due per the respective lease agreements are charged,
as applicable, to unbilled rent receivable. Percentage rents are recognized in
the period in which revenue thresholds are met. Rental payments received prior
to their recognition as income are classified as rent received in advance.

Fees received from development and leasing services for lessees are
initially recorded as deferred revenue and recognized as income over the initial
term of an operating lease to produce a constant effective yield on the lease
(interest method). Fees from lending services are recorded as deferred revenue
and recognized as income over the life of the loan using the interest method.

F-28

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2004 AND
PERIOD FROM INCEPTION (AUGUST 27, 2003) THROUGH DECEMBER 31, 2003 -- (CONTINUED)

Acquired Real Estate Purchase Price Allocation: The Company allocates the
purchase price of acquired properties to net tangible and identified intangible
assets acquired based on their fair values in accordance with the provisions of
SFAS No. 141, Business Combinations. In making estimates of fair values for
purposes of allocating purchase prices, the Company utilizes a number of
sources, including independent appraisals that may be obtained in connection
with the acquisition or financing of the respective property and other market
data. The Company also considers information obtained about each property as a
result of its pre-acquisition due diligence, marketing and leasing activities in
estimating the fair value of the tangible and intangible assets acquired.

The Company records above-market and below-market in-place lease values, if
any, for its facilities which are based on the present value (using an interest
rate which reflects the risks associated with the leases acquired) of the
difference between (i) the contractual amounts to be paid pursuant to the
in-place leases and (ii) management's estimate of fair market lease rates for
the corresponding in-place leases, measured over a period equal to the remaining
non-cancelable term of the lease. The Company amortizes any resulting
capitalized above-market lease values as a reduction of rental income over the
remaining non-cancelable terms of the respective leases. The Company amortizes
any resulting capitalized below-market lease values as an increase to rental
income over the initial term and any fixed-rate renewal periods in the
respective leases. Because the Company's strategy largely involves the
origination of long term lease arrangements at market rates, management does not
expect the above-market and below-market in-place lease values to be significant
for many anticipated transactions.

The Company measures the aggregate value of other intangible assets to be
acquired based on the difference between (i) the property valued with existing
in-place leases adjusted to market rental rates and (ii) the property valued as
if vacant. Management's estimates of value are expected to be made using methods
similar to those used by independent appraisers (e.g., discounted cash flow
analysis). Factors considered by management in its analysis include an estimate
of carrying costs during hypothetical expected lease-up periods considering
current market conditions, and costs to execute similar leases. Management also
considers information obtained about each targeted facility as a result of
pre-acquisition due diligence, marketing and leasing activities in estimating
the fair value of the tangible and intangible assets acquired. In estimating
carrying costs, management also includes real estate taxes, insurance and other
operating expenses and estimates of lost rentals at market rates during the
expected lease-up periods, which are expected to range primarily from three to
eighteen months, depending on specific local market conditions. Management also
estimates costs to execute similar leases including leasing commissions, legal
and other related expenses to the extent that such costs are not already
incurred in connection with a new lease origination as part of the transaction.

The Company amortizes the value of in-place leases, if any, to expense over
the initial term of the respective leases, which range primarily from 10 to 15
years. The value of customer relationship intangibles is amortized to expense
over the initial term and any renewal periods in the respective leases, but in
no event will the amortization period for intangible assets exceed the remaining
depreciable life of the

F-29

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2004 AND
PERIOD FROM INCEPTION (AUGUST 27, 2003) THROUGH DECEMBER 31, 2003 -- (CONTINUED)

building. Should a tenant terminate its lease, the unamortized portion of the
in-place lease value and customer relationship intangibles would be charged to
expense.

Real Estate and Depreciation: Depreciation is calculated on the
straight-line method over the estimated useful lives of the related assets, as
follows:

Buildings and improvements....................... 40 years
Tenant origination costs......................... Remaining terms of the related leases
Tenant improvements.............................. Term of related leases
Furniture and equipment.......................... 3-7 years

Real estate is carried at depreciated cost. Expenditures for ordinary
maintenance and repairs are expensed to operations as incurred. Significant
renovations and improvements which improve and/or extend the useful life of the
asset are capitalized and depreciated over their estimated useful lives. In
accordance with SFAS No. 144, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of the Company records impairment
losses on long-lived assets used in operations when events and circumstances
indicate that the assets might be impaired and the undiscounted cash flows
estimated to be generated by those assets, including an estimated liquidation
amount, during the expected holding periods are less than the carrying amounts
of those assets. Impairment losses are measured as the difference between
carrying value and fair value of assets. For assets held for sale, impairment is
measured as the difference between carrying value and fair value, less cost of
disposal. Fair value is based on estimated cash flows discounted at a
risk-adjusted rate of interest.

Construction in progress includes the cost of land, the cost of
construction of buildings, improvements and equipment and costs for design and
engineering. Other costs, such as interest, legal, property taxes and corporate
project supervision, which can be directly associated with the project during
construction, are also included in construction in progress.

Loans Receivable: Real estate related loans consist of working capital
loans and long-term loans. Interest income on loans is recognized as earned
based upon the principal amount outstanding. The working capital and long-term
loans are generally secured by interests in receivables and corporate and
individual guaranties.

Losses from Rent Receivables and Loans Receivable: A provision for losses
on rent receivables and loans receivable is recorded when it becomes probable
that the loan will not be collected in full. The provision is an amount which
reduces the rent or loan to its estimated net realizable value based on a
determination of the eventual amounts to be collected either from the debtor or
from the collateral, if any. At that time, the Company discontinues recording
interest income on the loan or rent receivable from the tenant.

Net Income (Loss) Per Share: The Company reports earnings per share
pursuant to SFAS No. 128, Earnings Per Share. Basic net income (loss) per share
is computed by dividing the net income (loss) to common stockholders by the
weighted average number of common shares and potential common stock outstanding
during the period. Diluted net income (loss) per share is computed by dividing
the net income (loss) available to common shareholders by the weighted average
number of common shares outstanding during the period, adjusted for the assumed
conversion of all potentially dilutive outstanding share options.

Income Taxes: For the period from January 1, 2004 through April 5, 2004,
the Company has elected Sub-chapter S status for income tax purposes, at which
time the Company filed its final tax returns as a Sub-chapter S company. Since
April 6, 2004, the Company has conducted its business as a real estate
investment trust (REIT) under Sections 856 through 860 of the Internal Revenue
Code of 1986, as

F-30

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2004 AND
PERIOD FROM INCEPTION (AUGUST 27, 2003) THROUGH DECEMBER 31, 2003 -- (CONTINUED)

amended (the Code). The Company will file its initial tax return as a REIT for
the period from April 6, 2004, through December 31, 2004, at which time it must
formally make an election to be taxed as a REIT. To qualify as a REIT, the
Company must meet certain organizational and operational requirements, including
a requirement to currently distribute to shareholders at least 90% of its
ordinary taxable income. As a REIT, the Company generally will not be subject to
federal income tax on taxable income that it distributes to its shareholders. If
the Company fails to qualify as a REIT in any taxable year, it will then be
subject to federal income taxes on its taxable income at regular corporate rates
and will not be permitted to qualify for treatment as a REIT for federal income
tax purposes for four years following the year during which qualification is
lost, unless the Internal Revenue Service grants the Company relief under
certain statutory provisions. Such an event could materially adversely affect
the Company's net income and net cash available for distribution to
shareholders. However, the Company believes that it will be organized and
operate in such a manner as to qualify for treatment as a REIT and intends to
operate in the foreseeable future in such a manner so that the Company will
remain qualified as a REIT for federal income tax purposes.

The Company's financial statements include the operations of a taxable REIT
subsidiary, MPT Development Services, Inc. (MDS) that is not entitled to a
dividends paid deduction and is subject to federal, state and local income
taxes. MDS is authorized to provide property development, leasing and management
services for third-party owned properties and makes loans to lessees and
operators.

Stock-Based Compensation: The Company currently sponsors a stock option
and restricted stock award plan that was established in 2004. The Company
accounts for its stock option plan under the recognition and measurement
provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB No. 25) and related interpretations. Under APB No. 25,
no expense is recorded for options which are exercisable at the price of the
Company's stock at the date the options are granted. Deferred compensation on
restricted stock relates to the issuance of restricted stock to employees and
directors of the Company. Deferred compensation is amortized to compensation
expense based on the passage of time and certain performance criteria.

Fair Value of Financial Instruments: The Company has various assets and
liabilities that are considered financial instruments. The Company estimates
that the carrying value of cash and cash equivalents, interest receivable and
accounts payable and accrued expenses approximates their fair values. The fair
value of unbilled rent receivable has been estimated based on expected payment
dates and discounted at a rate which the Company considers appropriate for such
assets considering their credit quality and maturity. The fair value of loans
receivable is estimated based on the present value of future payments,
discounted at a rate which the Company considers appropriate for such assets
considering their credit quality and maturity. The Company estimates that the
carrying value of the Company's long term debt should approximate fair value
because the debt is variable rate and adjusts daily with changes in the
underlying interest rate index.

Reclassifications: Certain reclassifications have been made to the 2003
consolidated financial statements to conform to the 2004 consolidated financial
statement presentation. These reclassifications have no impact on shareholders'
equity or net income.

New Accounting Pronouncements: The following is a summary of recently
issued accounting pronouncements which have been issued but not yet adopted by
the Company and which could have a material effect on the Company's financial
position and results of operations.

In December 2004, the Financial Accounting Standards Board (FASB) issued
SFAS No. 123(R), Share-Based Payment, which is a revision of SFAS No. 123(R),
Accounting for Stock Based

F-31

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2004 AND
PERIOD FROM INCEPTION (AUGUST 27, 2003) THROUGH DECEMBER 31, 2003 -- (CONTINUED)

Compensation. SFAS No. 123(R) establishes standards for the accounting for
transactions in which an entity exchanges its equity instruments for goods or
services. This Statement focuses primarily on accounting for transactions in
which an entity obtains employee services in share-based payment transactions.
SFAS No. 123(R) requires that the fair value of such equity instruments be
recognized as expense in the historical financial statements as services are
performed. Prior to SFAS No. 123(R), only certain pro-forma disclosures of fair
value were required. SFAS No. 123(R) becomes effective for public companies with
their first annual reporting period that begins after June 15, 2005. For
non-public companies, the standard becomes effective for their first fiscal year
beginning after December 15, 2005. The Company does not expect SFAS No. 123(R)
to have a material effect on its financial position or the results of its
operations.

3. PROPERTY ACQUISITIONS AND LOANS

On July 1, 2004, the Company purchased four rehabilitation facilities at a
price of $96.8 million, which were then leased to a new operator of the
facilities, Vibra Healthcare, LLC and its operating subsidiaries (collectively,
Vibra). The Company also made loans of $33.3 million to Vibra. On August 18,
2004, the Company purchased two additional rehabilitation facilities for $30.6
million, which were then leased to Vibra, and made additional loans to Vibra of
$13.8 million. The Company made an additional $2 million loan to Vibra on
October 1, 2004. Loans totaling $42.9 million accrue interest at the rate of
10.25% per year and are to be paid over 15 years with interest only for the
first three years and the principal balance amortizing over the remaining 12
year period. Loans totaling $6.2 million accrue interest at the rate of 10.25%
per year. Vibra will pay fees of $1.5 million to the Company for transacting the
leases and loans. The Company has determined that Vibra is a variable interest
entity as defined by FIN 46-R. The Company has also determined that it is not
the primary beneficiary of Vibra and, therefore, has not consolidated Vibra in
the Company's consolidated financial statements. For the year ended December 31,
2004, Vibra has been the only tenant which is required to make payments under
operating leases and loans from the Company.

The Company recorded intangible lease assets of $5,314,963 representing the
estimated value of the Vibra leases which were entered into at the date the
Company acquired the facilities. The Company recorded amortization expense of
$166,713 and expects to recognize amortization expense of $354,324 in each of
the next five years.

As security for the loans, each of the Vibra tenants and Vibra have granted
the Company a security interest in their respective rights to receive payments,
directly or indirectly, for any goods or services provided to any persons or
entities; any records or data related to those rights; and all cash and non-cash
proceeds resulting from those rights. As additional security, Vibra has pledged
to the Company all of its interests in each of the tenants. One individual is
the majority owner of Vibra, The Hollinger Group and Vibra Management, LLC. The
owner of Vibra has pledged his interest in Vibra to secure the loans. In
addition, The Hollinger Group and Vibra Management have guaranteed the loans.
The owner of Vibra has also provided a $5 million personal guarantee.

4. LONG-TERM DEBT AND LOAN PAYABLE

In 2003, the Company entered into a loan agreement which provided for
maximum borrowings of $300,000 if certain conditions were met by the Company.
Borrowings under the agreement ($100,000 at December 31, 2003) accrued interest
at 20% per annum and were due upon the earlier of (i) the third business day
following the funding of the Company's private placement or (ii) March 29, 2004.
During the first three months of 2004, the Company increased its borrowings on
the loan to $300,000, which was paid

F-32

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2004 AND
PERIOD FROM INCEPTION (AUGUST 27, 2003) THROUGH DECEMBER 31, 2003 -- (CONTINUED)

in full in April 2004. Contemporaneous with the private placement, the Company
issued to the lender a warrant to purchase up to 35,000 shares of the Company's
common stock at a price per share equal to 93% of the price at which the
Company's shares were offered to investors in the private placement. The warrant
has been recorded in the consolidated balance sheet using the intrinsic value
method as an addition to Additional Paid-in Capital and as additional interest
expense at a value of $.70 per warrant ($10.00 per share private placement price
less $9.30 exercise price per warrant) or a total of $24,500. The Company
considers any differences which would result between the intrinsic method and
another fair value method to not be material to the Company's financial
position, results of its operations or changes in its cash flows.

In December 2004, the Company received $56 million as part of a $75
million, three year term loan. In February 2005, the Company received the
remaining $19 million of this loan. The loan requires monthly payments based on
a 20 year amortization schedule and interest at the one month London Interbank
Offered Rate (LIBOR) plus 300 basis points, which results in an interest rate of
5.42% at December 31, 2004. The loan is secured by the six Vibra facilities,
which have a book value of $125.9 million, and requires the Company to meet
financial coverage, ratio and total debt covenants typical of such loans.

In December 2004, the Company closed a $43 million loan with a bank to
finance the construction of the Company's medical office building and community
hospital development project in Houston, Texas. The loan carries a construction
period term of eighteen months, with the option to convert the loan into a
thirty month term loan thereafter with a twenty-five year amortization. The loan
requires interest payments only during the initial eighteen month term, and
principal and interest payments during the optional thirty month term. The loan
is secured by mortgages on the development property. The loan bears interest at
a rate of one month LIBOR plus 225 basis points (4.67% at December 31, 2004)
during the construction period and one month LIBOR plus 250 basis points (4.92%
at December 31, 2004) during the thirty month optional period. The Company has
paid a commitment fee of one per-cent for the construction loan with an
additional .25% per-cent fee due if the Company exercises the term loan option.
Proceeds may be drawn down by periodically presenting to the lender
documentation of construction and development costs incurred. The Company has
not drawn down any proceeds from this loan as of December 31, 2004.

Maturities of long-term debt at December 31, 2004, are as follows:

2005........................................................ $ 2,566,663
2006........................................................ 2,799,996
2007........................................................ 50,633,341
-----------
$56,000,000
===========

5. COMMITMENTS AND CONTINGENCIES

In June 2004, the Company began construction of a hospital and medical
office building with an expected total cost of $63.4 million. The Company plans
to fund this project with a combination of its own and borrowed funds. At
December 31, 2004, the Company has funded $24.2 million of the cost which has
been financed with funds from the April 6, 2004 private placement. The remaining
commitment for construction and development contracts at December 31, 2004,
totals $32.1 million.

F-33

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2004 AND
PERIOD FROM INCEPTION (AUGUST 27, 2003) THROUGH DECEMBER 31, 2003 -- (CONTINUED)

Fixed minimum payments due under operating leases with non-cancellable
terms of more than one year at December 31, 2004 are as follows:

2005........................................................ $ 275,106
2006........................................................ 339,570
2007........................................................ 346,158
2008........................................................ 352,746
2009........................................................ 359,334
Thereafter.................................................. 2,133,005
----------
$3,805,919
==========

A former consultant to the Company has made a claim for 2003 and 2004
consulting compensation under the terms of a now terminated consulting agreement
with the Company. The Company disputes this claim and has made an offer of
settlement based on the terms of the consulting agreement. The Company has made
provision for the amount (which the Company has determined is not material to
the consolidated financial statements) that it estimates is owed to the former
consultant.

6. EQUITY INCENTIVE PLAN AND OTHER STOCK AWARDS

The Company has adopted the Medical Properties Trust, Inc. 2004 Amended and
Restated Equity Incentive Plan (the Equity Incentive Plan) which authorizes the
issuance of options to purchase shares of common stock, restricted stock awards,
restricted stock units, deferred stock units, stock appreciation rights and
performance units. The Company has reserved 791,180 shares of common stock for
awards under the Equity Incentive Plan. The Equity Incentive Plan contains a
limit of 300,000 shares as the maximum number of shares of common stock that may
be awarded to an individual in any fiscal year.

Upon their election to the board in April, 2004, each of our original
independent directors was awarded options to acquire 20,000 shares of our common
stock. These options have an exercise price of $10 per option, vested one-third
upon grant and the remainder will vest one-half on each of the first and second
anniversaries of the date of grant, and expire ten years from the date of grant.
The Company has determined that the exercise price of these options is equal to
the fair value of the common stock because the options were granted immediately
following the private placement of its common stock in April, 2004. Accordingly,
the options have no intrinsic value as that term is used in SFAS No. 123,
Accounting for Stock-Based Compensation. No other options have been granted.

SHARES EXERCISE PRICE
-------- --------------

Outstanding at January 1, 2004.............................. -- --
Granted..................................................... 100,000 $10.00
Exercised................................................... -- --
Forfeited................................................... -- --
-------- ------
Outstanding at December 31, 2004............................ 100,000 $10.00
======== ======
Options exercisable at December 31, 2004.................... 33,333 $10.00
Weighted-average grant-date fair value of options granted... $ 1.21

F-34

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2004 AND
PERIOD FROM INCEPTION (AUGUST 27, 2003) THROUGH DECEMBER 31, 2003 -- (CONTINUED)

Options exercisable at December 31, 2004, are as follows:

OPTIONS OPTIONS AVERAGE REMAINING
EXERCISE PRICE OUTSTANDING EXERCISABLE CONTRACTUAL LIFE (YEARS)
- -------------- ----------- ----------- ------------------------

$10.00 100,000 33,333 9.6

The Company follows APB No. 25 and related Interpretations in accounting
for the Plan. In accordance with APB 25, no compensation expense has been
recognized for stock options. Had compensation expense for the Company's stock
option plans been determined based on the fair value at the grant dates for
awards under those plans consistent with the methods prescribed in SFAS No. 123,
the Company's net income and income per share for the year ended December 31,
2004, would have been decreased by $67,000 and would have had no per share
effect, respectively.

In addition to these options to purchase common stock, each independent
director was awarded 2,500 deferred stock units in October, 2004, valued by the
Company at $10 per unit, which represent the right to receive 2,500 shares of
common stock in October, 2007. Beginning in 2005, each independent director will
receive 2,000 shares of restricted common stock annually, which will be
restricted as to transfer for three years. The Company has recognized expense in
the amount of $125,000 for the deferred stock units awarded to its' independent
directors in 2004. The Company has also allocated 114,500 shares of restricted
stock to be awarded to employees upon completion of its IPO.

The Company uses the Black-Scholes pricing model to calculate the fair
values of the options awarded, which are included in the pro forma amounts
above. The following assumptions were used to derive the fair values: an option
term of four to six years; no estimated volatility; a weighted average risk-
free rate of return of 3.63%; and a dividend yield of 1.00% for 2004.

7. LEASING OPERATIONS

For the properties purchased in July and August, 2004 (see Note 3), minimum
rental payments due in future periods under operating leases which have
non-cancelable terms extending beyond one year at December 31, 2004, are as
follows:

2005........................................................ $ 14,343,635
2006........................................................ 16,082,461
2007........................................................ 16,484,523
2008........................................................ 16,896,636
2009........................................................ 17,319,052
Thereafter.................................................. 188,238,038
------------
$269,364,345
============

The leases are with tenants engaged in medical operations in California
(two facilities), Colorado, Kentucky, Massachusetts, and New Jersey. Each of the
six lease agreements are for an initial term of 15 years with options for the
tenant to renew for three periods of five years each. Lease payments are
calculated based on the total acquisition cost (aggregating approximately
$127,000,000) and an initial lease rate of 10.25%; the rate increases to 12.23%
on the first anniversary of lease commencement and upon each January 1
thereafter escalates at a rate of 2.5%. At such time that the tenants' aggregate
net revenue exceeds a certain level, the leases further provide that the tenants
will pay additional rent of between 1% and 2% of total net revenue. All of the
leases are cross-defaulted.

F-35

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2004 AND
PERIOD FROM INCEPTION (AUGUST 27, 2003) THROUGH DECEMBER 31, 2003 -- (CONTINUED)

In addition, the Company is funding the acquisition and development costs
for a community hospital and adjacent medical office building in Houston, Texas
on land that is leased to the operator/tenant. During the development and
construction period, the tenant is charged rent (construction period rent) based
on the lease rates (which average 10.4%) and the amount funded, which aggregated
$16,225,907 at December 31, 2004. The Company has recorded $757,787 of
construction period rent as unbilled rent receivable and as deferred revenue as
of December 31, 2004. Upon completion of development and occupancy by the
tenant, the fixed lease term (15 and 10 years for the hospital and medical
office building, respectively) will commence and any accrued construction period
rent will be paid, with interest calculated at the lease rate, over the term of
the respective lease. Upon occupancy, the Company will begin recognizing as rent
revenue, using the straight-line method, all construction period rent recorded
during the construction period. The Company expects to complete the construction
of the hospital and the medical office building in October 2005 and August 2005,
respectively.

8. FAIR VALUE OF FINANCIAL INSTRUMENTS

DECEMBER 31, 2004 DECEMBER 31, 2003
------------------------- -----------------------
BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE
----------- ----------- ---------- ----------

Cash and cash equivalents.......... $97,543,677 $97,543,677 $ 100,000 $ 100,000
Interest receivable................ 419,776 419,776 -- --
Unbilled rent receivable........... 3,206,853 1,679,450 -- --
Loans.............................. 50,224,069 50,646,695 100,000 100,000
Long-term debt..................... 56,000,000 56,000,000 -- --
Accounts payable and accrued
expenses......................... 10,903,025 10,903,025 1,389,779 1,389,779

9. INCOME TAXES

The following table reconciles the Company's net income as reported in its
consolidated statement of operations prepared in accordance with generally
accepted accounting principles with its taxable income under the REIT income tax
regulations for the year ended December 31, 2004:

Net income as reported...................................... $ 4,576,349
Less: Net income of the taxable REIT subsidiary............. (63,905)
-----------
Net income from REIT operations............................. 4,512,444
Unbilled rent receivable.................................... (2,449,066)
GAAP depreciation and amortization in excess of tax
depreciation.............................................. 198,266
Expenses deductible in future tax periods................... 2,434,535
Other....................................................... 289,759
-----------
Taxable income subject to REIT distribution requirements.... $ 4,985,938
===========

The Company paid distributions of $2,608,286 ($.10 per share) on October
10, 2004, and $2,869,115 ($.11 per share) on January 11, 2005. All of the
October distribution and $755,546 of the January 2005, distribution will be
subject to federal incomes taxes by the Company's stockholders in 2004. The
remainder of the January, 2005, distribution will be subject to federal income
taxes by the Company's stockholders in 2005. All of the distributions are
taxable to the Company's shareholders at ordinary income federal tax rates.

F-36

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2004 AND
PERIOD FROM INCEPTION (AUGUST 27, 2003) THROUGH DECEMBER 31, 2003 -- (CONTINUED)

10. SUBSEQUENT EVENTS

On February 9, 2005, Vibra made a $7.8 million payment of principal and
interest on its transaction fee and working capital loans from the Company. The
payments left a $41.4 million loan payable to the Company by Vibra. The Company
has no commitments to make additional loans to Vibra.

In February, 2005, the Company purchased a community hospital for $28
million. The purchase price was paid from loan proceeds and from the proceeds of
the Company's private placement. Upon closing the purchase of the hospital, the
Company and the seller entered into a fifteen year lease of the hospital back to
the seller, with renewal options for three additional five year terms.

11. EARNINGS PER SHARE

The following is a reconciliation of the weighted average shares used in
net income (loss) per common share to the weighted average shares used in net
income (loss) per common share -- assuming dilution for the year ended December
31, 2004, and for the period from Inception (August 27, 2003) through December
31, 2003, respectively:

2004 2003
---------- ---------

Weighted average number of shares issued and outstanding.... 19,308,511 1,630,435
Vested deferred stock units................................. 2,322 --
---------- ---------
Weighted average shares -- basic............................ 19,310,833 1,630,435
Common stock warrants....................................... 1,801 --
---------- ---------
Weighted average shares -- diluted.......................... 19,312,634 1,630,435
========== =========

12. RELATED PARTIES

The Company's lead underwriter for its IPO and private placement is the
largest stockholder, including shares owned directly and indirectly through
funds it manages. In connection with services provided for its managing and
underwriting of the private placement, the underwriter received approximately
261,000 shares of the Company's common stock. The Company also manages its cash
and cash equivalents (approximately $96.1 million at December 31, 2004) through
the underwriter.

13. PRO FORMA EARNINGS PER SHARE (UNAUDITED)

Staff Accounting Bulletin (SAB) Topic 1.B.3 requires that basic and diluted
earnings per share must be calculated based on the pro forma effect of shares
assumed to be issued in an initial public offering when dividends are paid in
excess of earnings. As of June 30, 2005, cumulative net income for 2004 and the
six months ended June 30, 2005, totaled $12,516,094. Cumulative distributions,
including the distributions declared May 20, 2005, and August 18, 2005 totaled
$19,327,636, resulting in excess distributions during this period of $6,811,542.
The pro forma weighted average shares in the table below assumes the issuance of
648,718 shares at an offering price of $10.50 per share, or proceeds of
$6,811,542 to pay these distributions in excess of net income.

BASIC DILUTED
---------- ----------

Pro forma weighted average shares for the year ended
December 31, 2004:
Historical from above..................................... 19,310,833 19,312,634
Pro forma effect of assumed additional shares............. 648,718 648,718
---------- ----------
Pro forma weighted average shares......................... 19,959,551 19,961,352
========== ==========
Pro forma earnings per share................................ $ 0.23 $ 0.23
========== ==========

F-37

SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2004 AND DECEMBER 31, 2003

ADDITIONS SUBSEQUENT TO
INITIAL COSTS ACQUISITION
--------------------------- ------------------------------
LOCATION TYPE OF PROPERTY LAND BUILDINGS IMPROVEMENTS CARRYING COSTS
- -------- ----------------------- ----------- ------------ ------------ --------------

Bowling Green, KY.............. Rehabilitation hospital $ 3,070,000 $ 33,570,541 $ -- $ --
Thornton, CO................... Rehabilitation hospital 2,130,000 6,013,142 -- --
Fresno, CA..................... Rehabilitation hospital 1,550,000 16,363,153 -- --
Kentfield, CA.................. Long term acute care 2,520,000 4,765,176 -- --
hospital
Marlton, NJ.................... Rehabilitation hospital -- 30,903,051 -- --
New Bedford, NJ................ Long term acute care 1,400,000 19,772,169 -- --
hospital
----------- ------------ -----
TOTAL $10,670,000 $111,387,232 $ -- $ --
=========== ============ =====

COST AT DECEMBER 31, 2004
------------------------------------------ ACCUMULATED DATE OF DATE
LOCATION LAND BUILDINGS(1) TOTAL DEPRECIATION CONSTRUCTION ACQUIRED
-------- ----------- ------------- ------------ ------------ ----------------- ---------------

Bowling Green, KY................. $ 3,070,000 $ 33,570,541 $ 36,640,541 $ 419,634 1992 July 1, 2004
Thornton, CO...................... 2,130,000 6,013,142 8,143,142 56,371 1962, 1975 August 17, 2004
Fresno, CA........................ 1,550,000 16,363,153 17,913,153 204,540 1990 July 1, 2004
Kentfield, CA..................... 2,520,000 4,765,176 7,285,176 59,562 1963 July 1, 2004
Marlton, NJ....................... -- 30,903,051 30,903,051 386,286 1994 July 1, 2004
New Bedford, NJ................... 1,400,000 19,772,169 21,172,169 185,364 1962, 1975, 1992 August 17, 2004
----------- ------------ ------------ ----------
TOTAL $10,670,000 $111,387,232 $122,057,232 $1,311,757
=========== ============ ============ ==========

DEPRECIABLE
LOCATION LIFE (YEARS)
-------- ------------

Bowling Green, KY................. 40
Thornton, CO...................... 40
Fresno, CA........................ 40
Kentfield, CA..................... 40
Marlton, NJ....................... 40
New Bedford, NJ................... 40
TOTAL

DECEMBER 31, 2004 DECEMBER 31, 2003
----------------- -----------------

COST
Balance at beginning of period.......... $ -- $ --
Additions during the period
Acquisitions........................ 122,057,232 --
------------ --------
Balance at end of period................ $122,057,232 $ --
============ ========

DECEMBER 31, 2004 DECEMBER 31, 2003
------------------ -----------------

ACCUMULATED DEPRECIATION
Balance at beginning of period.......... $ -- $ --
Additions during the period
Depreciation........................ 1,311,757 --
------------ --------
Balance at end of period................ $ 1,311,757 $ --
============ ========

- ---------------

(1) The gross cost for Federal income tax purposes is $116,702,195.

F-38

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

Consolidated Balance Sheet

June 30, 2005 (Unaudited) and December 31, 2004 (Audited)

JUNE 30, 2005 DECEMBER 31, 2004
------------- -----------------
(UNAUDITED) (AUDITED)

ASSETS
Current assets:
Cash and cash equivalents................................. $ 4,304,350 $ 2,280,772
Patient accounts receivable, net of allowance for doubtful
collections of $431,900 at June 30, 2005 and $302,988
at December 31, 2004................................... 21,858,179 17,319,154
Third party settlements receivable........................ -- 346,141
Prepaid insurance......................................... 116,416 719,480
Deposit for workers' compensation claims.................. -- 1,375,000
Other current assets...................................... 730,609 518,650
----------- -----------
Total current assets................................... 27,009,554 22,559,197
Restricted investment....................................... 100,000 --
Property and equipment, net................................. 17,479,679 2,662,546
Goodwill.................................................... 24,650,800 24,510,296
Intangible assets........................................... 5,140,000 4,260,000
Deposits.................................................... 4,260,427 3,485,387
Deferred financing and lease costs.......................... 1,912,030 1,543,424
----------- -----------
Total assets........................................... $80,552,490 $59,020,850
=========== ===========

LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Current maturities of long-term debt...................... $ 56,459 $ --
Current maturities of obligations under capital leases.... 354,808 --
Accounts payable.......................................... 4,341,706 5,142,345
Accounts payable -- related parties....................... 201,771 262,144
Accrued liabilities....................................... 4,611,516 4,387,292
Accrued insurance claims.................................. 2,424,958 1,441,516
----------- -----------
Total current liabilities.............................. 11,991,218 11,233,297
Deferred rent............................................... 5,077,798 2,460,308
Long-term debt.............................................. 52,135,372 49,141,945
Long-term obligations under capital leases.................. 17,808,365 --
----------- -----------
Total liabilities........................................... 87,012,753 62,835,550
Partners' deficit........................................... (6,460,263) (3,814,700)
----------- -----------
Total liabilities and partners' deficit................ $80,552,490 $59,020,850
=========== ===========

The accompanying notes are an integral part of these consolidated financial
statements.

F-39

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

Consolidated Statement of Operations and Changes in Partners' Deficit

For the Three and Six Months Ended June 30, 2005 (Unaudited)

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30,2005 JUNE 30, 2005
------------------ ----------------
(UNAUDITED) (UNAUDITED)

REVENUE:
Net patient service revenue.............................. $30,588,335 $59,916,423
----------- -----------
EXPENSES:
Cost of services......................................... 21,491,176 41,558,235
General and administrative............................... 3,669,721 7,024,370
Rent expense............................................. 5,342,554 10,464,137
Interest expense......................................... 1,294,943 2,558,299
Management fee - Vibra Management, LLC................... 657,466 1,244,059
Depreciation and amortization............................ 220,682 414,975
Bad debt expense......................................... 178,431 345,664
----------- -----------
Total expenses........................................ 32,854,973 63,609,739
----------- -----------
Loss from operations................................ (2,266,638) (3,693,316)
Non-operating revenue.................................... 514,293 1,047,753
----------- -----------
Net loss............................................ (1,752,345) (2,645,563)
Partners' deficit -- beginning............................. (4,707,918) (3,814,700)
----------- -----------
Partners' deficit -- ending................................ $(6,460,263) $(6,460,263)
=========== ===========

The accompanying notes are an integral part of these consolidated financial
statements.

F-40

VIBRA HEALTHCARE LLC AND SUBSIDIARIES

Consolidated Statement of Cash Flows

For Six Months Ended June 30, 2005 (Unaudited)

Operating activities:
Net loss.................................................. $(2,645,563)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization........................ 414,975
Provision for bad debts.............................. 345,664
Changes in operating assets and liabilities, net of effects
from acquisition of business:
Patient accounts receivable including third party
settlements......................................... (4,679,052)
Prepaids and other current assets.................... 490,081
Deposits............................................. 1,072,460
Accounts payable..................................... (861,010)
Accrued liabilities.................................. 1,207,666
Deferred rent........................................ 2,617,490
-----------
Net cash used in operating activities....................... (2,037,289)
-----------
Investing activities:
Purchase of restricted investment.................... (100,000)
Purchases of property and equipment.................. (505,408)
Assets acquired in business acquisition.............. (284,292)
-----------
Net cash used in investing activities....................... (889,700)
-----------
Financing activities:
Borrowings under revolving credit facility........... 50,591,077
Repayments of revolving credit facility.............. (40,066,178)
Borrowings under capital leases...................... 2,181,898
Repayment of capital leases.......................... (11,988)
Borrowings under other long-term debt................ 99,000
Repayment of long-term debt.......................... (7,731,041)
Payment of deferred financing costs.................. (112,201)
-----------
Net cash provided by financing activities................... 4,950,567
-----------
Net increase in cash and cash equivalents................... 2,023,578
Cash and cash equivalents -- beginning...................... 2,280,772
-----------
Cash and cash equivalents -- ending......................... $ 4,304,350
===========
Supplemental cash flow information:
Cash paid for interest............................... $ 2,558,299
===========
Non-cash transactions:
Deferred financing costs funded by revolving credit
facility and MPT capital lease...................... $ 352,627
===========
Business acquisition adjustment of goodwill.......... $ 140,504
===========
Building and equipment acquisition funded by MPT
capital lease....................................... $14,270,000
===========
License acquisition funded by MPT capital lease...... $ 880,000
===========
Lease deposit funded by MPT capital lease............ $ 472,500
===========
Equipment purchases funded by capital leases......... $ 175,161
===========

The accompanying notes are an integral part of these consolidated financial
statements.

F-41

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Vibra Healthcare, LLC ("Vibra" and the "Company") was formed May 14, 2004,
and commenced operations with the acquisition of its subsidiaries consisting of
four independent rehabilitation hospitals ("IRF") and two long-term acute care
hospitals ("LTACH") located throughout the United States on July 1, 2004 and
August 17, 2004, respectively. On June 30, 2005, Vibra acquired an IRF with the
intention of converting the beds to LTACH by January 1, 2006. Vibra, a Delaware
limited liability company ("LLC"), has an infinite life. The members' liability
is limited to the capital contribution. Vibra was previously named Highmark
Healthcare LLC until a name change in December 2004. Vibra's wholly-owned
subsidiaries consist of:

SUBSIDIARIES LOCATION
- ------------ -----------------

92 Brick Road Operating Company LLC......................... Marlton, NJ
4499 Acushnet Avenue Operating Company LLC.................. New Bedford, MA
1300 Campbell Lane Operating Company LLC.................... Bowling Green, KY
8451 Pearl Street Operating Company LLC..................... Denver, CO
7173 North Sharon Avenue Operating Company LLC.............. Fresno, CA
1125 Sir Francis Drake Boulevard Operating Company LLC...... Kentfield, CA
Northern California Rehabilitation Hospital, LLC............ Redding, CA

The Company provides long-term acute care hospital services and inpatient
acute rehabilitative hospital care at its hospitals. Patients in the Company's
LTACHs typically suffer from serious and often complex medical conditions that
require a high degree of care. Patients in the Company's IRFs typically suffer
from debilitating injuries including traumatic brain and spinal cord injuries,
and require rehabilitation care in the form of physical, psychological, social
and vocational rehabilitation services. The Company also operates eleven
outpatient clinics affiliated with six of its seven hospitals.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries controlled through majority membership
interests in limited liability companies. All significant intercompany balances
and transactions are eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. Cash equivalents are
stated at cost which approximates market.

F-42

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED) -- (CONTINUED)

PATIENT ACCOUNTS RECEIVABLE

Patient accounts receivable are reported at net realizable value. Accounts
are written off when they are determined to be uncollectible based upon
management's assessment of individual accounts. The allowance for doubtful
collections is estimated based upon a periodic review of the accounts receivable
aging, payor classifications and application of historical write-off
percentages.

INVENTORIES

Inventories of pharmaceuticals and pharmaceutical supplies are stated at
the lower of cost or market value. Cost is determined on a first-in, first-out
basis. These inventories totaled $549,195 at June 30, 2005, and are included in
other current assets in the accompanying consolidated balance sheet.

RESTRICTED INVESTMENT

The restricted investment consists of a five year certificate of deposit
with a local bank pledged as collateral for a letter of credit benefiting the
California Department of Health Services ("CDHS"). CDHS can draw on the letter
of credit to reimburse any medicaid overpayments.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost net of accumulated depreciation.
Depreciation and amortization are computed using the straight-line method over
the lesser of the estimated useful lives of the assets or the term of the lease,
as appropriate. The general range of useful lives is as follows:

Building under capital lease................. Lesser of 15 years or remaining lease term
Leasehold improvements....................... Lesser of 15 years or remaining lease term
Furniture and equipment...................... 2-7 years

In accordance with Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS No 144),
the Company reviews the realizability of long-lived assets whenever events or
circumstances occur which indicate recorded costs may not be recoverable.

INTANGIBLE ASSETS

The Company adopted Statement of Financial Accounting Standards (SFAS) No.
142, "Goodwill and Other Intangible Assets". Under SFAS No. 142, goodwill and
other intangible assets with indefinite lives are no longer subject to periodic
amortization but are instead reviewed annually or more frequently if impairment
indicators arise. These reviews require the Company to estimate the fair value
of its identified reporting units and compare those estimates against the
related carrying values. Identifiable assets and liabilities acquired in
connection with business combinations accounted for under the purchase method
are recorded at their respective fair values. For each of the reporting units,
the estimated net realizable value is determined using current transaction
information and the present value of future cash flows of the units.

Management has allocated the intangible assets between identifiable
intangibles and goodwill. Intangible assets, other than goodwill, consist of
values assigned to certificates of need ("CONs") and licenses. The useful life
of each class of intangible assets is as follows:

Goodwill.................................................... Indefinite
Certificates of Need/Licenses............................... Indefinite

F-43

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED) -- (CONTINUED)

DEFERRED FINANCING AND LEASE COSTS

Costs and fees incurred in connection with the MPT acquisition note and
leases and the Merrill Lynch revolving credit facility have been deferred and
are being amortized over the term of the loans and leases using the
straight-line method, which approximates the effective interest method.
Amortization expense was $54,713 and $96,223 for the three and six months ended
June 30, 2005, respectively.

INSURANCE RISK PROGRAMS

Under the Company's insurance programs, the Company is liable for a portion
of its losses. The Company estimates its liability for losses based on
historical trends that will be incurred in a respective accounting period and
accrues that estimated liability. These programs are monitored quarterly and
estimates are revised as necessary to take into account additional information.
The Company has accrued $2,424,958 related to these programs at June 30, 2005. A
deposit for workers' compensation claims of $1,375,000 at December 31, 2004,
consisted of cash provided to Vibra's insurance carrier to fund workers'
compensation claims. In February 2005, Vibra used $1,375,000 of its borrowing
base on the Merrill Lynch loan to collateralize a letter of credit for the
claims and the cash deposit was refunded.

DEFERRED RENT

The excess of straight line rent expense over rent paid is credited to
deferred rent on a monthly basis. At June 30, 2005, rent expense exceeded rent
paid by $5,077,798.

REVENUE RECOGNITION

Net patient service revenue consists primarily of charges to patients and
are recognized as services are rendered. Net patient service revenue is reported
net of provisions for contractual allowances from third-party payors and
patients. The Company has agreements with third-party payors that provide for
payments to the Company at amounts different from its established rates. The
differences between the estimated program reimbursement rates and the standard
billing rates are accounted for as contractual adjustments, which are deducted
from gross revenues to arrive at net patient service revenues. Payment
arrangements include prospectively determined rates per discharge, reimbursed
costs, discounted charges and per diem payments. Retroactive adjustments are
accrued on an estimated basis in the period the related services are rendered
and adjusted in future periods as final settlements are determined. Patient
accounts receivable resulting from such payment arrangements are recorded net of
contractual allowances.

A significant portion of the Company's net patient service revenues are
generated directly from the Medicare and Medicaid programs. Approximately 53%
and 27% of the Company's gross patient accounts receivable at June 30, 2005, are
from Medicare and Medicaid, respectively. As a provider of services to these
programs, the Company is subject to extensive regulations. The inability of a
hospital to comply with regulations can result in changes in that hospital's net
patient service revenues generated from these programs.

The following table represents the Company's net patient service revenues
from the Medicare and Medicaid programs as a percentage of total consolidated
net patient service revenues:

THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 2005 JUNE 30, 2005
------------- ----------------

Medicare................................................... 65% 65%
Medicaid................................................... 12% 13%

F-44

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED) -- (CONTINUED)

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentration
of credit risk consist primarily of cash balances and patient accounts
receivables. The Company deposits its cash with large banks. The Company grants
unsecured credit to its patients, most of whom reside in the service area of the
Company's facilities and are insured under third-party payor agreements. Because
of the geographic diversity of the Company's facilities and non-governmental
third-party payors, Medicare and Medicaid represent the Company's primary
concentration of credit risk.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company has various assets and liabilities that are considered
financial instruments. The Company estimates that the carrying value of its
current assets, current liabilities and long-term debt approximates their fair
value.

INCOME TAXES

Vibra and its subsidiaries have elected to be a LLC for federal and state
income tax purposes. In lieu of corporate income taxes, the member of a LLC is
taxed on their proportionate share of the Company's taxable income or loss.
Therefore, no provision or liability for federal or state income taxes has been
provided for in the consolidated balance sheet or consolidated statement of
operations.

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and six months ended June 30, 2005, are not necessarily indicative of the
results that may be expected for the year ending December 31, 2005.

2. ACQUISITIONS

YEAR ENDED DECEMBER 31, 2004

In July and August 2004, Vibra entered into agreements with Medical
Properties Trust, Inc. (MPT) to acquire the operations of six specialty
hospitals. MPT, a healthcare real estate investment trust based in Birmingham,
Alabama, acquired the real estate for approximately $127.4 million and assigned
to Vibra its rights to acquire the operations of the hospitals from Care One
Realty of Hackensack, New Jersey for approximately $38.1 million net of cash
acquired and $7.5 million of liabilities assumed which was financed by MPT. The
assignment of the LLC interests to Vibra transferred the operations, assets and
liabilities of each LLC. The purchase price of the operations may be adjusted
either upward or downward pursuant to a post-closing working capital adjustment
with the seller. The purchase price of the operations has been allocated to net
assets acquired, and liabilities assumed based on valuation studies subject to
purchase price adjustments. The excess of the amount of purchase price over the
net asset value, including identifiable intangible assets, was allocated to
goodwill. The purchase price was negotiated based on management's evaluation of
future operational performance of the hospitals as a group under Vibra. The
results of operations of the hospitals acquired have been included in the
Company's consolidated financial

F-45

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED) -- (CONTINUED)

statements since the date of acquisition. The following table summarizes the
acquisition date and other relevant information regarding each hospital:

LOCATION TYPE BEDS ACQUISITION DATE
- -------- ----- ---- ----------------

Marlton, NJ...................................... IRF 46(1) July 1, 2004
Bowling Green, KY................................ IRF 60 July 1, 2004
Fresno, CA....................................... IRF 62 July 1, 2004
Kentfield, CA.................................... LTACH 60 July 1, 2004
New Bedford, MA.................................. LTACH 90 August 17, 2004
Thornton, CO..................................... IRF 117(2) August 17, 2004

- ---------------

(1) Vibra subleases a floor of the Marlton building to an unaffiliated provider
which operates 30 pediatric rehabilitation beds which are in addition to the
46 beds operated by Vibra.

(2) Includes beds licensed as skilled nursing and beds licensed as psychiatric.

Information with respect to the businesses acquired in these transactions
is as follows:

Notes issued, net of cash acquired.......................... $ 38,093,842
Liabilities assumed......................................... 7,477,988
------------
45,571,830
Fair value of assets acquired:
Accounts receivable....................................... (13,640,825)
Property and equipment.................................... (2,749,840)
CONs/Licenses............................................. (4,260,000)
Other..................................................... (410,869)
------------
Cost in excess of fair value of net assets acquired
(goodwill) at December 31, 2004........................... $ 24,510,296
============

Based on an analysis of pre-acquisition accounts receivable at June 30,
2005, the Company estimated the fair value of the acquired accounts receivable
required a downward adjustment of $140,504. This adjustment increased the
goodwill recorded at June 30, 2005 to $24,650,800.

SIX MONTHS ENDED JUNE 30, 2005

On June 30, 2005, under the terms of a purchase agreement, Vibra acquired
the building, equipment, inventory and license of an 88 bed specialty hospital
in Redding, California, for $15.43 million. The hospital currently operates with
24 IRF beds and 54 skilled nursing beds. The hospital is also licensed for 14
acute care beds that are currently not in service. Vibra is in the process of
converting approximately 26 of the skilled nursing beds and all of the IRF beds
to LTACH beds. Under the purchase agreement, Vibra subleased the operations and
the right to occupy the Redding facility back to the seller during a transition
term, until Vibra obtains certain healthcare licenses necessary to operate the
hospital. In the interim, Vibra is managing the hospital on behalf of the seller
during this transition term. The terms of the management agreement provide that
revenues and expenses during the transition term accrue to Vibra. Management
expects the transition term to last approximately 120 days. Simultaneously with
the closing of the acquisition, Vibra entered into an agreement with MPT for the
sale of the building associated with this hospital to MPT and leased it back
from MPT under an $18 million capital lease. An additional $2.75 million can be
drawn under the lease agreement upon the completion of certain building
renovations and the LTACH conversion. The purchase price of the operations has
been allocated to net assets acquired, and liabilities assumed based on
valuation studies. The land on which the hospital is built is subject to a land
lease, which Vibra assumed from the seller. Vibra is in the process of obtaining
a third party appraisal of the land lease to determine if any value should be
assigned to the lease in the purchase

F-46

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED) -- (CONTINUED)

accounting. Therefore, the allocation of the purchase price is subject to
refinement. The purchase price was negotiated based on management's evaluation
of future operational performance of the hospital under Vibra. The results of
operations of the hospital acquired have been included in the Company's
consolidated financial statements since the date of acquisition.

Information with respect to the business acquired in this transaction is as
follows:

Capital lease............................................... $18,000,000
Cash paid by Vibra for the building......................... 185,316
Cash paid by Vibra for the inventory........................ 98,976
-----------
$18,284,292
Less other assets arising from transaction:
Cash to Vibra............................................. (2,181,898)
Lease deposit funded...................................... (472,500)
Deferred financing costs.................................. (195,602)
-----------
Fair value of assets acquired............................... $15,434,292
===========
Fair value of assets acquired:
Building.................................................. $14,087,816
Furniture and equipment................................... 367,500
Licenses.................................................. 880,000
Inventory................................................. 98,976
-----------
$15,434,292
===========

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

JUNE 30, 2005
-----------------------------------------
DIRECT UNDER
OWNERSHIP CAPITAL LEASES TOTAL
---------- -------------- -----------

Building....................................... $ -- $14,087,816 $14,087,816
Leasehold improvements......................... 92,834 -- 92,834
Furniture and equipment........................ 3,697,813 175,161 3,872,974
---------- ----------- -----------
3,790,647 14,262,977 18,053,624
Less: accumulated depreciation and
amortization................................. 565,262 8,683 573,945
---------- ----------- -----------
Total.......................................... $3,225,385 $14,254,294 $17,479,679
========== =========== ===========

Depreciation expense was $165,969 and $318,752 for the three and six months
ended June 30, 2005, respectively.

F-47

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED) -- (CONTINUED)

4. DEPOSITS

The facility lease agreements with MPT require deposits equal to three
months rent. The funds are on deposit with MPT in non-interest bearing accounts.
Deposits consist of the following:

JUNE 30, 2005
-------------

MPT lease deposits.......................................... $3,768,865
Other deposits.............................................. 491,562
----------
Total....................................................... $4,260,427
==========

5. INTANGIBLE ASSETS

The Company adopted SFAS No. 142. Under SFAS No. 142, goodwill and other
intangible assets with indefinite lives are not subject to periodic amortization
but are instead reviewed annually as of June 30, or more frequently if
impairment indicators arise. These reviews require the Company to estimate the
fair value of its identified reporting units and compare those estimates against
the related carrying values. For each of the reporting units, the estimated net
realizable value is determined using current transaction information and the
present value of future cash flows of the units. The following table summarizes
intangible assets:

JUNE 30, 2005
-------------

Goodwill.................................................... $24,650,800
===========
CONs/Licenses............................................... $ 5,140,000
===========

The CONs/Licenses have not been amortized as they have indefinite lives.

6. LONG-TERM DEBT

The components of long-term debt are shown in the following table:

JUNE 30, 2005
-------------

MPT 10.25% hospital acquisition note........................ $41,415,988
Merrill Lynch $17 million revolving credit facility......... 10,681,924
Other....................................................... 93,919
-----------
$52,191,831
Less: current maturities.................................... 56,459
-----------
$52,135,372
===========

At December 31, 2004, MPT had advanced $49,141,945 to Vibra under four
notes for the hospital acquisition and working capital. Three notes for working
capital and transaction fees totaling $7,725,957 were interest only, with a
balloon payment due on March 31, 2005. Vibra may prepay the notes at any time
without penalty.

The hospital acquisition note is interest only through June 2007, and then
amortized over the next 12 years with a final maturity in 2019. Substantially
all of the assets of Vibra and its subsidiaries, as well as Vibra's membership
interests in its subsidiaries, secure the MPT note. In addition the majority
member of Vibra, an affiliated company owned by the majority member and Vibra
Management, LLC have jointly and severally guaranteed the notes payable to MPT,
although the obligation of the majority member is

F-48

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED) -- (CONTINUED)

limited to $5 million and his membership interest in Vibra. A default in any of
the MPT lease terms will also constitute a default under the notes.

The revolving credit facility has a balloon maturity on February 8, 2008.
Interest is payable monthly at the rate of 30 day LIBOR plus 3% (6.33% as of
June 30, 2005). The loan is secured by a first position in the Company's
accounts receivable through an intercreditor agreement with MPT. Up to $17
million can be borrowed based on a formula of qualifying accounts receivable. A
portion of the proceeds were used to pay off $7,725,957 in working capital and
transaction fee notes to MPT which had a maturity of March 31, 2005. The Company
is subject to various financial and non-financial covenants under the credit
facility. A default in any of the MPT note and lease terms will also constitute
a default under the credit facility. At March 31, 2005, Vibra was not in
compliance with a facility rent coverage covenant. The Merrill Lynch credit
facility documents were amended for no consideration in June 2005 to
retroactively change the rent coverage covenant from a by facility rent coverage
to a consolidated rent coverage calculation. At June 30, 2005, the Company met
the amended covenant. The maximum facility was increased from $14 million to $17
million in the June 2005 amendment.

Other long-term debt consists of a bank loan for equipment, furniture and
fixtures. The equipment purchased is pledged as collateral for the loan. The
loan is payable in monthly installments of $5,000 plus interest at a fixed rate
of 6.7%.

Maturities of long-term debt for the next five years are as follows:

JUNE 30
- ------- (IN THOUSANDS)

2006........................................................ $ 56,459
2007........................................................ 37,460
2008........................................................ 12,533,614
2009........................................................ 2,050,664
2010........................................................ 2,271,018
Thereafter.................................................. 35,242,616
-----------
$52,191,831
===========

7. RELATED PARTY TRANSACTIONS

The Company has entered into agreements with Vibra Management, LLC (a
company affiliated through common ownership) to provide management services to
each hospital. The services include information system support, legal counsel,
accounting/tax, human resources, program development, quality management and
marketing oversight. The agreements call for a management fee equal to 2% of net
patient service revenue, and are for an initial term of five years with
automatic one-year renewals. Management fee expense amounted to $657,466 and
$1,244.059 for the three and six months ended June 30, 2005, respectively. At
June 30, 2005, $201,771 was payable to Vibra Management, LLC and is included
accounts payable -- related party in the accompanying consolidated balance
sheet.

The spouse of the majority member of the Company provided legal consulting
services to the Company on the hospital acquisition and on various operational
licensing and financing matters. During the period from inception through
December 31, 2004, legal consulting services from this person totaled $176,187,
of which $98,137 was payable at December 31, 2004. The balance was paid during
the six months ended June 30, 2005, and no additional services were provided.

F-49

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED) -- (CONTINUED)

8. OPERATING LEASES

Vibra entered into triple-net long-term real estate operating leases with
MPT at each of the six hospitals leased from MPT in 2004. Each lease is for an
initial term of 15 years and contains renewal options at Vibra's option for
three additional five-year terms. The base rate at commencement is calculated at
10.25% of MPT's adjusted purchase price of the real estate ("APP"). The base
rate increases to 12.23% of APP effective July 1, 2005. Beginning January 1,
2006, and each January 1, thereafter, the base rate increases by an inflator of
2.5% (i.e. base rate becomes 12.54% of APP on January 1, 2006).

Each lease also contains a percentage rent provision ("Percentage Rent").
Beginning January 1, 2005, if the aggregate monthly net patient service revenues
of the six hospitals exceed an annualized net patient service revenue run rate
of $110,000,000, additional rent equal to 2% of monthly net patient service
revenue is triggered. The percentage rent is payable within ten days after the
end of the applicable quarter. The percentage rent declines from 2% to 1% on a
pro rata basis as Vibra repays the $41.416 million in notes to MPT. Percentage
rents totaling $1,016,590 are included in rent expense in the accompanying
consolidated statement of operations, representing the percentage rents due for
the six months ended June 30, 2005. Vibra has the option to purchase the leased
property at the end of the lease term, including any extension periods, for the
greater of the fair market value of the leased property, or the purchase price
increased by 2.5% per annum from the commencement date.

Commencing on July 1, 2005, Vibra must make quarterly deposits to a capital
improvement reserve at the rate of $375 per quarter per bed, or $652,500 on an
annual basis, for all hospitals leased from MPT. The reserve may be used to fund
capital improvements and repairs as agreed to by the parties.

Beginning with the quarter ending September 30, 2006, the MPT leases will
be subject to various financial covenants including limitations on total debt to
100% of the total capitalization of the guarantors (as defined) or 4.5 times the
12 month total EBITDAR (as defined) of the guarantors whichever is greater,
coverage ratios of 125% of debt service and 150% of rent (as defined), and
maintenance of average daily patient census. A default in any of the loan terms
will also constitute a default under the leases. All of the MPT leases are cross
defaulted.

Vibra has also entered into operating leases for six outpatient clinics
which expire on various dates through 2011. The Redding hospital land is leased
from a prior owner under a triple net lease that expires in November 2075. The
lease has monthly payments of $1,483. The lease payments increase annually by 4%
each November until lease expiration.

Minimum future lease obligations on the operating leases are as follows (in
thousands):

MPT RENT OUTPATIENT REDDING
JUNE 30 OBLIGATION CLINICS LAND LEASE TOTAL
- ------- ------------ ---------- ---------- ------------

2006............................. $ 15,809,861 $ 415,104 $ 18,205 $ 16,243,170
2007............................. 16,283,492 389,774 18,933 16,692,199
2008............................. 16,690,580 296,468 19,690 17,006,738
2009............................. 17,107,844 241,272 20,478 17,369,594
2010............................. 17,535,540 241,272 21,297 17,798,109
Thereafter....................... 179,677,678 180,954 7,872,041 187,730,673
------------ ---------- ---------- ------------
$263,104,995 $1,764,844 $7,970,644 $272,840,483
============ ========== ========== ============

Substantially, all of the assets of Vibra and its subsidiaries, as well as
Vibra's membership interests in its subsidiaries, secure the MPT leases. In
addition the majority member of Vibra, an affiliated Company owned by the
majority member, and Vibra Management, LLC have jointly and severally guaranteed
the

F-50

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED) -- (CONTINUED)

leases to MPT, although the obligation of the majority member is limited to $5
million and his membership interest in Vibra.

The Company has sublet a floor of its Marlton, NJ hospital to an
independent pediatric rehabilitation provider. Three other hospitals have
entered into numerous sublease arrangements. These subleases generated rental
income of $433,883 and $822,268 for the three and six months ended June 30,
2005, respectively, which is included in non-operating revenue in the
accompanying consolidated statement of operations. The following table
summarizes amounts due under sub leases (in thousands):

JUNE 30
- -------

2006........................................................ $1,131,762
2007........................................................ 1,157,227
2008........................................................ 1,183,265
2009........................................................ 1,209,888
2010........................................................ 1,237,111
Thereafter.................................................. 3,991,679
----------
$9,910,932
==========

9. OBLIGATIONS UNDER CAPITAL LEASES

On June 30, 2005, Vibra entered into a triple-net real estate lease with
MPT on the Redding, California property. The lease is for an initial term of 15
years and contains renewal options at Vibra's option for three additional five
year terms. The initial lease base rate is 10.5% of MPT's APP. Beginning January
1, 2006, and each January 1 thereafter, the base rate increases by the greater
of 2.5% (to 10.76%) or by the increase in the consumer price index from the
previous adjustment date. An additional $2.75 million can be drawn under the
lease agreement upon the completion of certain building renovations and the
conversion of the operations to a LTACH.

The Redding lease does not contain a purchase option or percentage rent
provisions. Commencing January 1, 2006, Vibra must make quarterly deposits to a
capital improvement reserve at the rate of $375 per bed per quarter, or $132,000
on an annual basis.

Beginning with the quarter ending September 30, 2006, the Redding lease is
subject to a covenant limiting total debt to 100% of the total capitalization of
the guarantors (as defined) or 4.5 times the 12 month total EBITDAR (as defined)
of the guarantors whichever is greater. Redding is also subject to the following
financial covenants relating to EBITDAR coverage:

FIXED CHARGE LEASE PAYMENT
12 MONTH PERIOD ENDING COVERAGE REQUIRED COVERAGE REQUIRED
- ---------------------- ----------------- -----------------

June 30, 2006........................................ 40% 50%
September 30, 2006................................... 40% 50%
December 31, 2006.................................... 40% 50%
March 31, 2007....................................... 60% 75%
June 30, 2007........................................ 100% 120%
September 30, 2007 and thereafter.................... 125% 150%

Other capital leases consist of equipment financing. The equipment is
pledged as collateral for the lease.

F-51

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED) -- (CONTINUED)

The following schedule summarizes the future minimum lease payments under
capital leases together with the net minimum lease payments:

MPT REDDING
JUNE 30 LEASE OTHER TOTAL
- ------- ------------- -------- ------------

2006.......................................... $ 1,913,625 $ 63,262 $ 1,976,887
2007.......................................... 1,961,466 53,318 2,014,784
2008.......................................... 2,010,502 30,852 2,041,354
2009.......................................... 2,060,765 29,992 2,090,757
2010.......................................... 2,112,284 27,493 2,139,777
Thereafter.................................... 24,256,341 -- 24,256,341
------------ -------- ------------
Total minimum lease payments.................. 34,314,983 204,917 34,519,900
Less amount representing interest (imputed
rate 9%).................................... (16,315,740) (40,987) (16,356,727)
------------ -------- ------------
Present value of net minimum lease payments... $ 17,999,243 $163,930 $ 18,163,173
============ ======== ============

10. COMMITMENTS AND CONTINGENCIES

LITIGATION

The Company is subject to legal proceedings and claims that have arisen in
the ordinary course of its business and have not been finally adjudicated
(including claims against the hospitals under prior ownership). In the opinion
of management, the outcome of these actions will not have a material effect on
consolidated financial position or results of operations of the Company.

CALIFORNIA MEDICAID

The Company has recently fulfilled change of ownership requirements imposed
by Medi-Cal, the California Medicaid administrator that date back to the prior
owners' acquisition of the California hospitals. Accounts receivable at June 30,
2005, include $1,619,037 due from Medi-Cal, including $657,000 prior to the
acquisition. The Company is in the process of submitting bills for services
provided from July 2003 to present and expects payment within nine months.

CALIFORNIA SEISMIC UPGRADE

For earthquake protection California requires hospitals to receive an
approved Structural Performance Category 2 (SPC-2) by January 1, 2008, to
maintain its license. Hospitals may request a five year implementation
extension. The Fresno and Redding, CA hospitals are expected to meet the SPC-2
standard by January 1, 2008, with capital outlays that are not material to the
consolidated financial statements. The Kentfield, CA hospital has received a
five year extension to meet the requirement. Management is in preliminary
consultations with consulting architects and engineers to develop a plan for
Kentfield to meet the requirements. The capital outlay required to meet the
standards at Kentfield cannot be determined at this time.

F-52

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED) -- (CONTINUED)

11. RETIREMENT SAVINGS PLAN

In November 2004, the Company began sponsorship of a defined contribution
retirement savings plan for substantially all of its employees. Employees may
elect to defer up to 15% of their salary. The Company matches 25% of the first
3% of compensation employees contribute to the plan. The employees vest in the
employer contributions over a five-year period beginning on the employee's hire
date. The expense incurred by the Company related to this plan was $58,092 and
$87,962 for the three and six months ended June 30, 2005, respectively.

12. SEGMENT INFORMATION

SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information", establishes standards for reporting information about operating
segments and related disclosures about products and services, geographic areas
and major customers.

The Company's segments consist of (i) IRFs and (ii) LTACHs. The accounting
policies of the segments are the same as those described in the summary of
significant accounting policies. The Company evaluates performance of the
segments based on loss from operations.

The following table summarizes selected financial data for the Company's
reportable segments:

FOR THE SIX MONTHS ENDED JUNE 30, 2005
---------------------------------------------------
IRF LTACH OTHER TOTAL
----------- ----------- --------- -----------

Net patient service revenue....... $27,964,866 $31,951,557 $ -- $59,916,423
Net loss from operations.......... (2,881,538) (573,389) (238,389) (3,693,316)
Interest expense.................. 1,497,427 1,060,872 -- 2,558,299
Depreciation and amortization..... 193,568 174,822 46,585 414,975
Deferred rent..................... 3,666,428 1,411,370 -- 5,077,798
Total assets...................... 50,589,942 29,089,970 872,578 80,552,490
Purchases of property and
equipment....................... 129,427 370,980 5,001 505,408
Goodwill.......................... 16,409,877 8,240,923 -- 24,650,800

FOR THE THREE MONTHS ENDED JUNE 30, 2005
---------------------------------------------------
IRF LTACH OTHER TOTAL
----------- ----------- --------- -----------

Net patient service revenue....... $14,141,942 $16,446,393 $ -- $30,588,335
Net loss from operations.......... (1,728,535) (383,980) (154,123) (2,266,638)
Interest expense.................. 752,429 542,514 -- 1,294,943
Depreciation and amortization..... 98,220 92,387 30,075 220,682

13. SUBSEQUENT EVENT

On September 23, 2005, Merrill Lynch and Vibra amended their loan agreement
for no consideration. The amendment excludes the Redding capital lease from the
definition of leased assets in the agreement.

F-53

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Member
Vibra Healthcare, LLC

We have audited the accompanying consolidated balance sheet of Vibra
Healthcare, LLC and subsidiaries (the "Company") as of December 31, 2004, and
the related consolidated statements of operations, changes in partner's capital,
and cash flows for the period from inception (May 14, 2004) through December 31,
2004. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Vibra
Healthcare, LLC and subsidiaries as of December 31, 2004, and the results of
their operations and their cash flows for the period from inception (May 14,
2004) through December 31, 2004 in conformity with accounting principles
generally accepted in the United States of America.

/s/ Parente Randolph, LLC

Harrisburg, Pennsylvania
March 8, 2005, except Note 11,
as to which the date is March 31, 2005

F-54

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

Consolidated Balance Sheet
December 31, 2004

ASSETS
Current assets:
Cash and cash equivalents................................. $ 2,280,772
Patient accounts receivable, net of allowance for doubtful
collections of $302,988................................ 17,319,154
Third party settlements receivable........................ 346,141
Prepaid insurance......................................... 719,480
Deposit for workers' compensation claims.................. 1,375,000
Other current assets...................................... 518,650
-----------
Total current assets................................... 22,559,197
Property and equipment, net................................. 2,662,546
Goodwill.................................................... 24,510,296
Intangible assets........................................... 4,260,000
Deposits.................................................... 3,485,387
Deferred financing and lease costs.......................... 1,543,424
-----------
Total assets........................................... $59,020,850
===========

LIABILITIES AND PARTNER'S CAPITAL
Current liabilities:
Accounts payable.......................................... $ 5,142,345
Accounts payable -- related parties....................... 262,144
Accrued liabilities....................................... 4,387,292
Accrued insurance claims.................................. 1,441,516
-----------
Total current liabilities.............................. 11,233,297
Deferred rent............................................... 2,460,308
Long-term debt, net of current maturities................... 49,141,945
-----------
Total liabilities........................................... 62,835,550
-----------
Partner's capital........................................... (3,814,700)
-----------
Total liabilities and partner's capital................ $59,020,850
===========

The accompanying notes are an integral part of these consolidated financial
statements.
F-55

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

Consolidated Statements of Operations and Changes in Partner's Capital
For the Period from Inception (May 14, 2004) through December 31, 2004

REVENUE:
Net patient service revenue............................... $48,266,019
-----------
EXPENSES:
Cost of services.......................................... 34,528,924
General and administrative................................ 5,631,229
Rent expense.............................................. 8,859,233
Interest expense.......................................... 2,293,402
Management fee -- Vibra Management, LLC................... 982,668
Depreciation and amortization............................. 302,194
Bad debt expense.......................................... 776,780
-----------
Total expenses......................................... 53,374,430
-----------
Loss from operations................................. (5,108,411)
Non-operating revenue..................................... 1,293,711
-----------
Net loss............................................. (3,814,700)
Partner's capital -- beginning............................ --
-----------
Partner's capital -- ending............................... ($3,814,700)
-----------

The accompanying notes are an integral part of these consolidated financial
statements.
F-56

VIBRA HEALTHCARE LLC AND SUBSIDIARIES

Consolidated Statement of Cash Flows
For the Period from Inception (May 14, 2004) through December 31, 2004

Operating activities:
Net loss.................................................. $(3,814,700)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization........................ 302,194
Provision for bad debts.............................. 776,780
Changes in operating assets and liabilities, net of effects
from acquisition of business:
Accounts receivable including third party
settlements......................................... (4,801,250)
Prepaids and other current assets.................... (2,257,611)
Deposits............................................. (133,671)
Accounts payable..................................... 1,884,531
Accounts payable -- related party.................... 262,144
Accrued liabilities.................................. 1,608,634
Deferred rent........................................ 2,460,308
-----------
Net cash used in operating activities....................... (3,712,641)
-----------
Investing activities:
Purchases of property and equipment.................. (167,900)
Cash acquired in business acquisition................ 201,280
-----------
Net cash provided by investing activities................... 33,380
-----------
Financing activities:
Proceeds of notes payable............................ 6,050,458
Payment of deferred financing costs.................. (90,425)
-----------
Net cash provided by financing activities................... 5,960,033
-----------
Net increase in cash and cash equivalents................... 2,280,772
Cash and cash equivalents -- beginning...................... --
-----------
Cash and cash equivalents -- ending......................... $ 2,280,772
===========
Supplemental cash flow information:
Cash paid for interest............................... $ 2,293,402
===========
Non-cash transactions:
Notes issued relating to acquisition................. $38,093,842
===========
Lease deposits funded by notes payable............... $ 3,296,365
===========
Deferred financing costs funded by notes payable..... $ 1,500,000
===========

The accompanying notes are an integral part of these consolidated financial
statements.
F-57

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD FROM INCEPTION (MAY 14, 2004) THROUGH DECEMBER 31, 2004

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization: Vibra Healthcare LLC ("Vibra" and the "Company") was formed
May 14, 2004, and commenced operations with the acquisition of its subsidiaries
consisting of four independent rehabilitation hospitals ("IRF") and two
long-term acute care hospitals ("LTACH") located throughout the United States on
July 1, 2004, and August 17, 2004. Vibra, a Delaware limited liability company
("LLC"), is a single member LLC with an infinite life. The members liability is
limited to the capital contribution. Vibra was previously named Highmark
Healthcare LLC until a name change in December 2004. Vibra's wholly-owned
subsidiaries consist of:

SUBSIDIARIES LOCATION
- ------------ -----------------

The Company provides long-term acute care hospital services and inpatient
acute rehabilitative hospital care at its hospitals. Patients in the Company's
LTACHs typically suffer from serious and often complex medical conditions that
require a high degree of care. Patients in the Company's IRFs typically suffer
from debilitating injuries including traumatic brain and spinal cord injuries,
and require rehabilitation care in the form of physical, psychological, social
and vocational rehabilitation services. The Company also operates ten outpatient
clinics affiliated with five of its six hospitals.

Principles of Consolidation: The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries controlled through
sole membership interests in limited liability companies. All significant
intercompany balances and transactions are eliminated in consolidation.

Use of Estimates: The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
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 financial statements and reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Cash and Cash Equivalents: The Company considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents. Cash equivalents are stated at cost which approximates market.

Patient Accounts Receivable: Patient accounts receivable are reported at
net realizable value. Accounts are written off when they are determined to be
uncollectible based upon management's assessment of individual accounts. The
allowance for doubtful collections is estimated based upon a periodic review of
the accounts receivable aging, payor classifications and application of
historical write-off percentages.

Inventories: Inventories of pharmaceuticals and pharmaceutical supplies
are stated at the lower of cost or market value. Cost is determined on a
first-in, first-out basis. These inventories totaled $363,720 at December 31,
2004, and are included in other current assets in the accompanying consolidated
balance sheet.

F-58

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD FROM INCEPTION (MAY 14, 2004) THROUGH DECEMBER 31, 2004

Property and Equipment: Property and equipment are stated at cost net of
accumulated depreciation. Depreciation and amortization are computed using the
straight-line method over the estimated useful lives of the assets or the term
of the lease, as appropriate. The general range of useful lives is as follows:

Leasehold improvements...................................... 15 years
Furniture and equipment..................................... 2-7 years

Intangible Assets: The Company adopted Statement of Financial Accounting
Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets". Under SFAS No.
142, goodwill and other intangible assets with indefinite lives are no longer
subject to periodic amortization but are instead reviewed annually or more
frequently if impairment indicators arise. These reviews require the Company to
estimate the fair value of its identified reporting units and compare those
estimates against the related carrying values. Identifiable assets and
liabilities acquired in connection with business combinations accounted for
under the purchase method are recorded at their respective fair values. For each
of the reporting units, the estimated net realizable value is determined using
current transaction information and the present value of future cash flows of
the units.

Goodwill.................................................... Indefinite
Certificates of Need/Licenses............................... Indefinite

Deferred Financing and Lease Costs: Costs and fees incurred in connection
with the MPT loans and leases have been deferred and are being amortized over
the 15 year term of the loans and leases using the straight-line method, which
approximates the effective interest method. Amortization expense was $47,000 for
the period from inception through December 31, 2004.

Insurance Risk Programs: Under the Company's insurance programs, the
Company is liable for a portion of its losses. The Company estimates its
liability for losses based on historical trends that will be incurred in a
respective accounting period and accrues that estimated liability. These
programs are monitored quarterly and estimates are revised as necessary to take
into account additional information. At December 31, 2004, the Company has
accrued $1,441,516 related to these programs. Deposits for workers' compensation
claims consist of cash provided to Vibra's insurance carrier to fund workers'
compensation claims. In February 2005, Vibra used $1,375,000 of its borrowing
base on the Merrill Lynch loan (see Note 11) to collateralize a letter of credit
for the claims and the cash deposit was refunded.

Deferred Rent: The excess of straight line rent expense over each rent
paid is credited to deferred rent on a monthly basis. For the period from
inception through December 31, 2004, rent expense exceeded the rent paid in cash
by $2,460,308.

Revenue Recognition: Net patient service revenue consists primarily of
charges to patients and are recognized as services are rendered. Net patient
service revenue is reported net of provisions for contractual allowances from
third-party payors and patients. The Company has agreements with third-party
payors that provide for payments to the Company at amounts different from its
established rates. The differences between the estimated program reimbursement
rates and the standard billing rates are

F-59

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD FROM INCEPTION (MAY 14, 2004) THROUGH DECEMBER 31, 2004

accounted for as contractual adjustments, which are deducted from gross revenues
to arrive at net patient service revenues. Payment arrangements include
prospectively determined rates per discharge, reimbursed costs, discounted
charges and per diem payments. Retroactive adjustments are accrued on an
estimated basis in the period the related services are rendered and adjusted in
future periods as final settlements are determined. Patient accounts receivable
resulting from such payment arrangements are recorded net of contractual
allowances.

A significant portion of the Company's net patient service revenues are
generated directly from the Medicare and Medicaid programs. Net patient service
revenues generated directly from the Medicare and Medicaid programs represented
approximately 63% and 13%, respectively, of the Company's consolidated net
patient service revenues for the period from inception through December 31,
2004. Approximately 46% and 21% of the Company's gross patient accounts
receivable at December 31, 2004, are from Medicare and Medicaid, respectively.
As a provider of services to these programs, the Company is subject to extensive
regulations. The inability of a hospital to comply with regulations can result
in changes in that hospital's net patient service revenues generated from these
programs.

Concentration of Credit Risk: Financial instruments that potentially
subject the Company to concentration of credit risk consist primarily of cash
balances and patient accounts receivables. The Company deposits its cash with
large banks. The Company grants unsecured credit to its patients, most of whom
reside in the service area of the Company's facilities and are insured under
third-party payor agreements. Because of the geographic diversity of the
Company's facilities and non-governmental third-party payors, Medicare and
Medicaid represent the Company's primary concentration of credit risk.

Income Taxes: Vibra and its subsidiaries have elected to be a LLC for
federal and state income tax purposes. In lieu of corporate income taxes, the
member of a LLC is taxed on their proportionate share of the Company's taxable
income or loss. Therefore, no provision or liability for federal or state income
taxes has been provided for in the consolidated balance sheet or consolidated
statement of operations.

2. ACQUISITIONS

F-60

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD FROM INCEPTION (MAY 14, 2004) THROUGH DECEMBER 31, 2004

statements since the date of acquisition. The following table summarizes the
acquisition date and other relevant information regarding each hospital:

LOCATION TYPE BEDS ACQUISITION DATE
- -------- ----- ---- ----------------

Marlton, NJ........................................ IRF 46(1) July 1, 2004
Bowling Green, KY.................................. IRF 60 July 1, 2004
Fresno, CA......................................... IRF 62 July 1, 2004
Kentfield, CA...................................... LTACH 60 July 1, 2004
New Bedford, MA.................................... LTACH 90 August 17, 2004
Thornton, CO....................................... IRF 117(2) August 17, 2004

- ---------------

(1) Vibra subleases a floor of the Marlton building to an unaffiliated provider
which operates 30 pediatric rehabilitation beds which are in addition to the
46 beds operated by Vibra.

(2) Includes beds licensed as skilled nursing and beds licensed as psychiatric.

Information with respect to the businesses acquired in purchase
transactions is as follows:

Notes issued, net of cash acquired.......................... $ 38,093,842
Liabilities assumed......................................... 7,477,988
------------
45,571,830
Fair value of assets acquired:
Accounts receivable....................................... (13,640,825)
Property and equipment.................................... (2,749,840)
CONs/Licenses............................................. (4,260,000)
Other..................................................... (410,869)
------------
Cost in excess of fair value of net assets acquired
(goodwill)................................................ $ 24,510,296
============

3. PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2004, consists of the following:

Leasehold improvements...................................... $ 48,055
Furniture and equipment..................................... 2,869,685
----------
2,917,740
Less: accumulated depreciation and amortization............. 255,194
----------
Total....................................................... $2,662,546
==========

Depreciation expense was $255,194 for the period from inception through
December 31, 2004.

F-61

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD FROM INCEPTION (MAY 14, 2004) THROUGH DECEMBER 31, 2004

4. DEPOSITS

The facility lease agreements with MPT require deposits equal to three
months rent. The funds are on deposit with MPT in non-interest bearing accounts.
Deposits at December 31, 2004, consist of the following:

MPT lease deposits.......................................... $3,296,365
Other deposits.............................................. 189,022
----------
Total....................................................... $3,485,387
==========

5. INTANGIBLE ASSETS

The Company adopted SFAS No. 142. Under SFAS No. 142, goodwill and other
intangible assets with indefinite lives are not subject to periodic amortization
but are instead reviewed annually as of April 30, or more frequently if
impairment indicators arise. These reviews require the Company to estimate the
fair value of its identified reporting units and compare those estimates against
the related carrying values. For each of the reporting units, the estimated net
realizable value is determined using current transaction information and the
present value of future cash flows of the units.

Goodwill in the amount of $24,510,296 and CONs/Licenses of $4,260,000 have
been recorded in connection with the acquisition of the six hospitals, and have
not been amortized as both have indefinite lives.

6. NOTES PAYABLE

As of December 31, 2004, MPT had advanced $49,141,945 to Vibra under four
notes for the hospital acquisition and working capital. The notes bear interest
at 10.25%. Three notes totaling $7,725,958 are interest only, with a balloon
payment due on March 31, 2005. The remaining note for $41,415,988 is payable
interest only for the first 36 months and then amortized over the next 12 years
with a final maturity in 2019. Vibra may prepay the notes at any time without
penalty. Maturities for the next five years are:

(IN THOUSANDS)
--------------

December 31, 2005........................................... $ --
2006........................................................ --
2007........................................................ 902
2008........................................................ 9,675
2009........................................................ 2,158
Thereafter.................................................. 36,407
-------
$49,142
=======

Substantially all of the assets of Vibra and its subsidiaries, as well as
Vibra's membership interests in its subsidiaries, secure the loans. In addition
the sole member of Vibra, an affiliated company owned by the sole member and
Vibra Management, LLC have jointly and severally guaranteed the notes payable to
MPT, although the obligation of the sole member is limited to $5 million and his
membership interest in Vibra. A default in any of the MPT lease terms will also
constitute a default under the notes.

As discussed in Note 11, Vibra used a portion of the proceeds of a
long-term revolving credit facility from Merrill Lynch Capital to repay the MPT
notes due March 31, 2005. As a result of this refinancing,

F-62

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD FROM INCEPTION (MAY 14, 2004) THROUGH DECEMBER 31, 2004

the notes due MPT have been classified as long-term at December 31, 2004 in the
accompanying consolidated balance sheet.

7. RELATED PARTY TRANSACTIONS

The Company has entered into agreements with Vibra Management, LLC (a
company affiliated through common ownership) to provide management services to
each hospital. The services include information system support, legal counsel,
accounting/tax, human resources, program development, quality management and
marketing oversight. The agreements call for a management fee equal to 2% of net
patient service revenue, and are for an initial term of five years with
automatic one-year renewals. Management fee expense amounted to $982,668 for the
period from inception through December 31, 2004. At December 31, 2004, $164,007
was payable to Vibra Management, LLC and is included accounts payable -- related
party in the accompanying consolidated balance sheet.

The spouse of the sole member of the Company provided legal consulting
services to the Company on the hospital acquisition and on various operational
licensing and financing matters. During the period from inception through
December 31, 2004, legal consulting services from this person totaled $176,187,
of which $98,137 was payable at December 31, 2004.

8. COMMITMENTS AND CONTINGENCIES

LEASES

Vibra entered into triple-net long-term real estate operating leases with
MPT at each hospital. Each lease is for an initial term of 15 years and contains
renewal options at Vibra's option for three additional five-year terms. Vibra
has the option to purchase the leased property at the end of the lease term,
including any extension periods, for the greater of the fair market value of the
leased property, or the purchase price increased by 2.5% per annum from the
commencement date.

The base rate at commencement is calculated at 10.25% of MPT's adjusted
purchase price of the real estate ("APP"). The base rate increases to 12.23% of
APP effective July 1, 2005. Beginning January 1, 2006, and each January 1,
thereafter, the base rate increases by an inflator of 2.5% (i.e. base rate
becomes 12.54% of APP on January 1, 2006).

Commencing on July 1, 2005, Vibra must make quarterly deposits to a capital
improvement reserve at the rate of $375 per quarter per bed or $652,500 on an
annual basis for all hospitals leased from MPT. The reserve may be used to fund
capital improvements and repairs as agreed to by the parties.

The MPT leases are subject to various financial covenants including
limitations on total debt to 100% of the total capitalization of the guarantors
(as defined) or 4.5 times the 12 month total EBITDAR of the guarantors,
whichever is greater, coverage ratios of 125% of debt service and 150% of rent
(as defined), and maintenance of average daily patient census. As of December
31, 2004, Vibra was not in compliance with the debt service and rent coverage
covenants. The MPT lease agreements were subsequently amended to delay the
initial measurement date with respect to these financial covenants (Note 11). A
default in

F-63

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD FROM INCEPTION (MAY 14, 2004) THROUGH DECEMBER 31, 2004

any of the loan terms will also constitute a default under the leases. All of
the MPT leases are cross defaulted.

Vibra has entered into operating leases for six outpatient clinics which
expire on various dates through 2008.

Minimum future lease obligations on the leases are as follows (in
thousands):

MPT RENT OUTPATIENT
OBLIGATION CLINICS TOTAL
---------- ---------- --------

December 31, 2005.................................... $ 14,344 $205 $ 14,549
2006................................................. 16,082 122 16,204
2007................................................. 16,485 84 16,569
2008................................................. 16,897 55 16,952
2009................................................. 17,319 -- 17,319
Thereafter........................................... 188,465 -- 188,465
-------- ---- --------
$269,592 $466 $270,058
======== ==== ========

Substantially, all of the assets of Vibra and its subsidiaries, as well as
Vibra's membership interests in its subsidiaries, secure the MPT leases. In
addition the sole member of Vibra, an affiliated Company owned by the sole
member, and Vibra Management LLC have joint and severally guaranteed the leases
to MPT, although the obligation of the sole member is limited to $5 million and
his membership interest in Vibra.

The Company has sublet a floor of its Marlton, NJ, hospital to an
independent pediatric rehabilitation provider. Three other hospitals have
entered into numerous sublease arrangements. These subleases generated rental
income of $884,913 for the period from inception through December 31, 2004 and
is included in non-operating revenue in the accompanying consolidated statement
of operations. The following table summarizes amounts due under sub leases (in
thousands):

December 31, 2005........................................... $ 1,119
2006........................................................ 1,144
2007........................................................ 1,170
2008........................................................ 1,197
2009........................................................ 1,223
Thereafter.................................................. 4,614
-------
$10,467
=======

LITIGATION

The Company is subject to legal proceedings and claims that have arisen in
the ordinary course of its business and have not been finally adjudicated
(including claims against the hospitals under prior ownership). In the opinion
of management, the outcome of these actions will not have a material effect on
the financial position or results of operations of the Company.

CALIFORNIA MEDICAID

The Company is in the process of fulfilling change of ownership
requirements imposed by Medi-Cal, the California Medicaid administrator that
date back to the prior owners' acquisition of the California

F-64

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD FROM INCEPTION (MAY 14, 2004) THROUGH DECEMBER 31, 2004

hospitals. Amounts receivable at December 31, 2004, include $1,015,959 due from
Medi-Cal, including $657,000 prior to the acquisition. Management is continuing
to negotiate with Medi-Cal. The amount that will ultimately be received cannot
be determined at this time.

CALIFORNIA SEISMIC UPGRADE

For earthquake protection California requires hospitals to receive an
approved Structural Performance Category 2 (SPC-2) by January 1, 2008, to
maintain its license. Hospitals may request a five year implementation
extension. The Fresno, CA, hospital is expected to meet the SPC-2 standard by
January 1, 2008, with capital outlays that are not material to the consolidated
financial statements. The Kentfield, CA, hospital has applied for a three year
extension to meet the requirement. Management is in preliminary consultations
with consulting architects and engineers to develop a plan for Kentfield to meet
the requirements. The capital outlay required to meet the standards at Kentfield
cannot be determined at this time.

9. RETIREMENT SAVINGS PLAN

In November 2004, the Company began sponsorship of a defined contribution
retirement savings plan for substantially all of its employees. Employees may
elect to defer up to 15% of their salary. The Company matches 25% of the first
3% of compensation employees contribute to the plan. The employees vest in the
employer contributions over a five-year period beginning on the employee's hire
date. The expense incurred by the Company related to this plan was $21,310 for
the period from inception through December 31, 2004.

10. SEGMENT INFORMATION

The following table summarizes selected financial data for the Company's
reportable segments:

FOR THE PERIOD FROM INCEPTION (MAY 14, 2004) THROUGH
DECEMBER 31, 2004
------------------------------------------------------
IRF LTACH OTHER TOTAL
------------ ------------ --------- ------------

Net patient service revenue........ $24,741,573 $23,524,446 $ -- $48,266,019
Net operating loss................. (3,649,867) (1,395,339) (63,205) (5,108,411)
Interest expense................... 1,493,279 800,123 -- 2,293,402
Depreciation and amortization...... 185,746 116,448 -- 302,194
Deferred rent...................... 1,833,216 627,092 -- 2,460,308
Total assets....................... 32,175,207 26,702,535 143,108 59,020,850
Purchases of property and
equipment........................ 75,582 92,318 -- 167,900
Goodwill........................... 16,664,491 7,845,805 -- 24,510,296

F-65

VIBRA HEALTHCARE, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD FROM INCEPTION (MAY 14, 2004) THROUGH DECEMBER 31, 2004

11. SUBSEQUENT EVENT

On February 9, 2005, Vibra closed on a revolving credit facility (the
"Revolver") with Merrill Lynch Capital secured by a first position in the
Company's accounts receivable through an intercreditor agreement with MPT. Up to
$14 million can be borrowed based on a formula of qualifying accounts
receivable. The terms of the Revolver are interest only for three years at 30
day LIBOR plus 3% with a balloon maturity on February 8, 2008. The proceeds were
used to repay $7,725,958 of notes payable to MPT and for general corporate
purposes.

On March 31, 2005, MPT and Vibra amended the hospital leases for no
consideration. The amendments included delaying the initial measurement date
with respect to limitations on total debt and coverage ratios until the quarter
ending September 30, 2006, aggregating the six hospitals financial results in
calculating the financial covenants, establishing an escrow for property taxes
and insurance, and certain other terms.

F-66

------------------------------------------------------
------------------------------------------------------

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND IF GIVEN OR MADE SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY US OR THE UNDERWRITERS. THE STATEMENTS IN THIS
PROSPECTUS ARE MADE AS OF THE DATE HEREOF, UNLESS ANOTHER DATE IS SPECIFIED, AND
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
FACTS SET FORTH HEREIN SINCE THE DATE HEREOF. THIS PROSPECTUS IS NOT AN OFFER TO
SELL OR SOLICITATION OF AN OFFER TO BUY THESE SHARES OF COMMON STOCK IN ANY
CIRCUMSTANCES UNDER WHICH THE OFFER OR SOLICITATION IS UNLAWFUL.

TABLE OF CONTENTS

Summary............................... 1
Risk Factors.......................... 17
A Warning About Forward Looking
Statements.......................... 41
Use of Proceeds....................... 42
Capitalization........................ 43
Distribution Policy................... 44
Selected Financial Information........ 45
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 47
Our Business.......................... 57
Our Portfolio......................... 74
Management............................ 102
Compensation Committee Interlocks and
Insider Participation............... 113
Market Price of Our Common Stock...... 113
Principal Stockholders................ 114
Selling Stockholders.................. 115
Registration Rights and Lock-up
Agreements.......................... 125
Certain Relationships and Related
Transactions........................ 127
Investment Policies and Policies with
Respect to Certain Activities....... 129
Description of Capital Stock.......... 133
Material Provisions of Maryland Law
and of our Charter and Bylaws....... 137
Partnership Agreement................. 142
United States Federal Income Tax
Considerations...................... 146
Plan of Distribution.................. 165
Legal Matters......................... 167
Experts............................... 168
Where You Can Find More Information... 168
Index to Financial Statements and
Financial Statement Schedules....... F-1

------------------------------------------------------

------------------------------------------------------
------------------------------------------------------
------------------------------------------------------

25,411,039 Shares

(MEDICAL PROPERTIES TRUST LOGO)
Common Stock
------------------------

PROSPECTUS
------------------------

September , 2005

- ------------------------------------------------------
- ------------------------------------------------------

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 31. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale and distribution of the common stock
being registered. All amounts are estimates.

AMOUNT TO BE PAID
-----------------

SEC registration fee........................................ $ 29,729
Transfer agent and registrar fees........................... 100,000
Legal fees and expenses..................................... 500,000
Accounting fees and expenses................................ 165,000
Printing and mailing fees................................... 115,000
Miscellaneous............................................... 10,000
--------
Total....................................................... 919,729
========

ITEM 32. SALES TO SPECIAL PARTIES.

Not applicable.

ITEM 33. RECENT SALES OF UNREGISTERED SECURITIES.

On April 6, 2004 and April 7, 2004, we sold in a private placement
21,857,329 shares of common stock to Friedman, Billings, Ramsey & Co., Inc., as
initial purchaser, pursuant to the exemptions from registration provided in
Section 4(2) of the Securities Act of 1933, as amended , or the Securities Act,
and Rule 506 of Regulation D thereunder. Friedman, Billings, Ramsey & Co., Inc.
promptly resold 20,244,426 of these shares to qualified institutional buyers in
accordance the resale exemption provided in Rule 144A under the Securities Act
and to non-U.S. persons in accordance with the exemption provided in Regulation
S under the Securities Act. Friedman, Billings, Ramsey & Co., Inc. paid us a
purchase price of $9.30 per share for the shares it purchased and resold the
shares that it resold for a price of $10.00 per share.

Also on April 7, 2004, the Company sold in a concurrent private placement
3,442,671 shares of common stock directly to institutional and individual
accredited investors pursuant to the exemptions from registration provided in
Section 4(2) of the Securities Act and Rule 506 of Regulation D thereunder.
These shares were sold for $10.00 per share; however, Friedman, Billings, Ramsey
& Co., Inc., which acted as placement agent, received a placement agent fee of
$0.70 per share. In addition, we issued 260,954 shares of our common stock on
April 7, 2004, to Friedman, Billings, Ramsey & Co., Inc. in a private placement
under Section 4(2) of the Securities Act and Rule 506 of Regulation D thereunder
as payment for financial advisory services.

Each of the private placements that we made in reliance on the exemptions
from registration provided under Section 4(2) of the Securities Act and Rule 506
of Regulation D thereunder, as described in the two proceeding paragraphs, did
not involve any public offering of the common stock. In addition, each purchaser
of privately placed shares provided us with written representations that it was
an accredited investor within the meaning of Rule 501(e) of Regulation D, that
it was a sophisticated investor and that it had the knowledge and experience
necessary to evaluate the risks and merits of the investment in our common
stock. In addition, each purchaser of our common stock in the private placements
and resales that occurred on April 6 and April 7, 2004 was solicited on a
private and confidential basis in a manner not involving any general
solicitation or advertising in compliance with Regulation D.

II-1

Pursuant to our 2004 Equity Incentive Plan, we have granted options to
purchase a total of 160,000 shares of common stock, and awarded 20,000 deferred
stock units, to our current or former independent directors. In addition, on
April 25, 2005, we awarded 82,000 shares of restricted common stock to certain
of our employees. In granting these options to purchase common stock and
deferred stock units and in making these restricted stock awards, we relied upon
exemptions from registration set forth in Section 4(2) of the Securities Act and
Rule 701 under the Securities Act.

In August and September 2003, Mr. Aldag, Mr. McLean, Mr. McKenzie and Mr.
Hamner, or our founders, were collectively issued 1,630,435 shares of our common
stock in exchange for nominal cash consideration. Upon completion of our private
placement in April 2004, 1,108,527 shares of common stock held by our senior
management were redeemed for nominal value and they now collectively hold
557,908 shares of our common stock, including shares purchased in our April 2004
private placement. We relied upon Section 4(2) of the Securities Act in issuing
these shares of common stock to our founders.

ITEM 34. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

We maintain a directors and officers liability insurance policy. Our
charter limits the personal liability of our directors and officers for monetary
damages to the fullest extent permitted under current Maryland law, and our
charter and bylaws provide that a director or officer shall be indemnified to
the fullest extent required or permitted by Maryland law from and against any
claim or liability to which such director or officer may become subject by
reason of his or her status as a director or officer of our company. Maryland
law allows directors and officers to be indemnified against judgments,
penalties, fines, settlements, and expenses actually incurred in a proceeding
unless the following can be established:

- the director or officer actually received an improper personal benefit in
money, property or services; or

- with respect to any criminal proceeding, the director or officer had
reasonable cause to believe his or her act or omission was unlawful.

In addition to any indemnification to which our directors and officers are
entitled pursuant to our charter and bylaws and the MGCL, our charter and bylaws
provide that we may indemnify other employees and agents to the fullest extent
permitted under Maryland law, whether they are serving us or, at our request,
any other entity.

We have entered into indemnification agreements with each of our directors
and executive officers, which we refer to in this context as indemnitees. The
indemnification agreements provide that we will, to the fullest extent permitted
by Maryland law, indemnify and defend each indemnitee against all losses and
expenses incurred as a result of his current or past service as our director or
officer, or incurred by reason of the fact that, while he was our director or
officer, he was serving at our request as a director, officer, partners,
trustee, employee or agent of a corporation, partnership, joint venture, trust,
other enterprise or employee benefit plan. We have agreed to pay expenses
incurred by an indemnitee before the final disposition of a claim provided that
he provides us with a written affirmation that he has met the standard of
conduct required for indemnification and a written undertaking to repay the
amount we pay or reimburse if it is ultimately determined that he has not met
the standard of conduct required for

II-2

indemnification. We are to pay expenses within 20 days of receiving the
indemnitee's written request for such an advance. Indemnitees are entitled to
select counsel to defend against indemnifiable claims.

ITEM 35. TREATMENT OF PROCEEDS FROM STOCK BEING REGISTERED.

We will not receive any proceeds from the sale of the securities covered by
this registration statement.

ITEM 36. FINANCIAL STATEMENTS AND EXHIBITS.

(a) See Page F-1 for an index of the financial statements included in this
registration statement.

(b) Exhibits. The following exhibits are filed as part of this
registration statement on Form S-11.

EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------

II-3

EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------

10.14* Third Amended and Restated Lease Agreement between San
Joaquin Health Care Associates Limited Partnership and 7173
North Sharon Avenue Operating Company, LLC, dated December
20, 2004
10.15* First Amendment to Third Amended and Restated Lease
Agreement between San Joaquin Health Care Associates Limited
Partnership and 7173 North Sharon Avenue Operating Company,
LLC, dated December 31, 2004
10.16* Second Amended and Restated Lease Agreement between 8451
Pearl Street, LLC and 8451 Pearl Street Operating Company,
LLC, dated December 20, 2004
10.17* First Amendment Second Amended and Restated Lease Agreement
between 8451 Pearl Street, LLC and 8451 Pearl Street
Operating Company, LLC, dated December 31, 2004
10.18* Second Amended and Restated Lease Agreement between 4499
Acushnet Avenue, LLC and 4499 Acushnet Avenue Operating
Company, LLC, dated December 20, 2004
10.19* First Amendment to Second Amended and Restated Lease
Agreement between 4499 Acushnet Avenue, LLC and 4499
Acushnet Avenue Operating Company, LLC, dated December 31,
2004
10.20* Third Amended and Restated Lease Agreement between Kentfield
THCI Holding Company, LLC and 1125 Sir Francis Drake
Boulevard Operating Company, LLC, dated December 20, 2004
10.21* First Amendment to Third Amended and Restated Lease
Agreement between Kentfield THCI Holding Company, LLC and
1125 Sir Francis Drake Boulevard Operating Company, LLC,
dated December 31, 2004
10.22* Loan Agreement between Colonial Bank, N.A., and MPT West
Houston MOB, L.P., dated December 17, 2004
10.23* Loan Agreement between Colonial Bank, N.A., and MPT West
Houston Hospital, L.P., dated December 17, 2004
10.24* Loan Agreement between Merrill Lynch Capital and 4499
Acushnet Avenue, LLC, 8451 Pearl Street, LLC, 92 Brick Road,
LLC, 1300 Campbell Lane, LLC, Kentfield THCI Holding
Company, LLC and San Joaquin Health Care Associates, LP,
dated December 31, 2004
10.25* Payment Guaranty made by the Registrant and MPT Operating
Partnership, L.P. in favor of Merrill Lynch Capital, dated
December 31, 2004
10.26* Purchase Agreement among THCI Company, LLC, THCI of
California, LLC, THCI of Massachusetts, LLC, THCI Mortgage
Holding Company, LLC and MPT Operating Partnership, L.P.,
dated May 20, 2004
10.27* Purchase and Sale Agreement among MPT Operating Partnership,
L.P., MPT of Victorville, LLC, Prime A Investments, L.L.C.,
Desert Valley Health System, Inc., Desert Valley Hospital,
Inc. and Desert Valley Medical Group, Inc., dated February
28, 2005
10.28* Lease Agreement between MPT of Victorville, LLC and Desert
Valley Hospital, Inc., dated February 28, 2005
10.29* Purchase and Sale Agreement among MPT Operating Partnership,
L.P., MPT of Bucks County Hospital, L.P., Bucks County
Oncoplastic Institute, LLC, Jerome S. Tannenbaum, M.D., M.
Stephen Harrison and DSI Facility Development, LLC, dated
March 3, 2005
10.30* Employment Agreement between the Registrant and Michael G.
Stewart, dated April 28, 2005
10.31* Letter of Commitment between MPT Operating Partnership, L.P.
and Monroe Hospital Operating Hospital, dated February 28,
2005
10.32* Letter of Commitment between MPT Operating Partnership,
L.P., Covington Healthcare Properties, LLC and Denham
Springs Healthcare Properties, LLC, dated March 14, 2005
10.33* Letter of Commitment between MPT Operating Partnership, L.P.
and North Cypress Medical Center Operating Partnership,
Ltd., dated March 16, 2005
10.34* Letter of Commitment between MPT Operating Partnership,
L.P., Hammond Healthcare Properties, LLC and Hammond
Rehabilitation Hospital, LLC, dated April 1, 2005
10.35* Letter of Commitment between MPT Operating Partnership, L.P.
and Diversified Specialty Institutes, Inc., dated March 3,
2005

II-4

EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------

10.36* Amendment to Letter of Commitment between MPT Operating
Partnership, L.P. and Diversified Specialty Institutes,
Inc., dated March 31, 2005
10.37* Letter of Commitment between MPT Operating Partnership,
L.P., MPT of Victorville, LLC and Desert Valley Hospital,
Inc., dated February 28, 2005
10.38* Amendment to Purchase and Sale Agreement among MPT Operating
Partnership, L.P., MPT of Bucks County Hospital, L.P., Bucks
County Oncoplastic Institute, LLC, DSI Facility Development,
LLC, Jerome S. Tannenbaum, M.D., M. Stephen Harrison and G.
Patrick Maxwell, M.D., dated April 29, 2005
10.39* Sublease Agreement between MPT of North Cypress, L.P. and
North Cypress Medical Center Operating Company, Ltd., dated
as of June 1, 2005
10.40* Net Ground Lease between North Cypress Property Holdings,
Ltd. and MPT of North Cypress, L.P., dated as of June 1,
2005
10.41* Purchase and Sale Agreement between MPT of North Cypress,
L.P. and North Cypress Medical Center Operating Company,
Ltd., dated as of June 1, 2005
10.42* Contract for Purchase and Sale of Real Property between
North Cypress Property Holdings, Ltd. and MPT of North
Cypress, L.P., dated as of June 1, 2005
10.43* Lease Agreement between MPT of North Cypress, L.P. and North
Cypress Medical Center Operating Company, Ltd., dated as of
June 1, 2005
10.44* Net Ground Lease between Northern Healthcare Land Ventures,
Ltd. and MPT of North Cypress, L.P., dated as of June 1,
2005
10.45* Amendment to the First Amended and Restated Agreement of
Limited Partnership of MPT Operating Partnership, L.P.
10.46* Construction Loan Agreement between North Cypress Medical
Center Operating Company, Ltd. and MPT Finance Company, LLC,
dated June 1, 2005
10.47* Purchase, Sale and Loan Agreement among MPT Operating
Partnership, L.P., MPT of Covington, LLC, MPT of Denham
Springs, LLC, Covington Healthcare Properties, L.L.C.,
Denham Springs Healthcare Properties, L.L.C., Gulf States
Long Term Acute Care of Covington, L.L.C. and Gulf States
Long Term Acute Care of Denham Springs, L.L.C., dated June
9, 2005
10.48* Lease Agreement between MPT of Covington, LLC and Gulf
States Long Term Acute Care of Covington, L.L.C., dated June
9, 2005
10.49* Promissory Note made by Denham Springs Healthcare
Properties, L.L.C. in favor of MPT of Denham Springs, LLC,
dated June 9, 2005
10.50* Purchase and Sale Agreement among MPT Operating Partnership,
L.P., MPT of Redding, LLC, Vibra Healthcare, LLC and
Northern California Rehabilitation Hospital, LLC, dated June
30, 2005
10.51* Lease Agreement between Northern California Rehabilitation
Hospital, LLC and MPT of Redding, LLC, dated June 30, 2005
10.52* Ground Lease Agreement between National Medical Specialty
Hospital of Redding, Inc. and Guardian Postacute Services,
Inc., dated November 14, 1997
10.53* Ground Lease Agreement between West Jersey Health System and
West Jersey/Mediplex Rehabilitation Limited Partnership,
dated July 15, 1993
10.54* Amendment No. 1 to Ground Lease Agreement between National
Medical Specialty Hospital of Redding, Inc. and Ocadian Care
Centers, Inc., dated November 29, 2001
10.55* Form of Indemnification Agreement between the Registrant and
executive officers and directors
10.56 Lease Agreement between Bucks County Oncoplastic Institute,
LLC and MPT of Bucks County, L.P., dated September 16, 2005.
10.57 Development Agreement among DSI Facility Development, LLC,
Bucks County Oncoplastic Institute, LLC and MPT of Bucks
County, L.P., dated September 16, 2005.

II-5

EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------

10.58 Funding Agreement among DSI Facility Development, LLC, Bucks
County Oncoplastic Institute, LLC and MPT of Bucks County,
L.P., dated September 16, 2005.
21.1* Subsidiaries of the Registrant
23.1 Consent of KPMG LLP
23.2 Consent of Parente Randolph, LLC
23.3 Consent of Baker, Donelson, Bearman, Caldwell & Berkowitz,
P.C. (included in Exhibits 5.1 and 8.1)
24.1*** Power of Attorney, included on signature page of the
Registrant's Form S-11 filed with the Commission on January
6, 2005
24.2*** Power of Attorney, included on signature page of the
Registrant's Amendment No. 1 to the Registrant's Form S-11
filed with the Commission on July 26, 2005

- ---------------

* Incorporated by reference to the Registrant's Registration Statement on Form
S-11 filed with the Commission on October 26, 2004, as amended (File No.
333-119957).

** Incorporated by reference to the Registrant's quarterly report on Form 10-Q
for the quarter ended June 30, 2005, filed with the Commission on August 22,
2005.

*** Previously filed.

ITEM 37. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to trustees, officers or controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other

II-6

than the payment by the Registrant of expenses incurred or paid by a trustee,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such trustee, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

II-7

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-11 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Birmingham, Alabama on September 30, 2005.

MEDICAL PROPERTIES TRUST, INC.

By: /s/ R. STEVEN HAMNER
------------------------------------
R. Steven Hamner
Executive Vice President,
Chief Financial Officer and Director

Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates listed.

SIGNATURE TITLE DATE
--------- ----- ----

Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

* Chairman of the Board, September 30, 2005
- -------------------------------------- President and Chief Executive
Edward K. Aldag, Jr. Officer

* Director September 30, 2005
- --------------------------------------
Virginia A. Clarke

* Director September 30, 2005
- --------------------------------------
Bryan L. Goolsby

/s/ R. STEVEN HAMNER Executive Vice President, September 30, 2005
- -------------------------------------- Chief Financial Officer and
R. Steven Hamner Director

* Director September 30, 2005
- --------------------------------------
G. Steven Dawson

* Director September 30, 2005
- --------------------------------------
Robert E. Holmes, Ph.D.

* Vice Chairman of the Board September 30, 2005
- --------------------------------------
William G. McKenzie

* Director September 30, 2005
- --------------------------------------
L. Glenn Orr, Jr.

*By: /s/ R. STEVEN HAMNER September 30, 2005
------------------------------
R. Steven Hamner
Attorney-in-Fact

II-8

EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------

3.1* Registrant's Second Articles of Amendment and Restatement
3.2** Registrant's Amended and Restated Bylaws
4.1* Form of Common Stock Certificate
4.2* Registration Rights Agreement among Registrant, Friedman,
Billings, Ramsey & Co., Inc. and certain holders of the
Registrant's common stock, dated April 7, 2004
5.1 Opinion of Baker, Donelson, Bearman, Caldwell & Berkowitz,
P.C. with respect to the legality of the shares being
registered
8.1 Opinion of Baker, Donelson, Bearman, Caldwell & Berkowitz,
P.C. with respect to certain tax matters
10.1* First Amended and Restated Agreement of Limited Partnership
of MPT Operating Partnership, L.P.
10.2* Amended and Restated 2004 Equity Incentive Plan
10.3* Employment Agreement between the Registrant and Edward K.
Aldag, Jr., dated September 10, 2003
10.4* First Amendment to Employment Agreement between the
Registrant and Edward K. Aldag, Jr., dated March 8, 2004
10.5* Employment Agreement between the Registrant and Emmett E.
McLean, dated September 10, 2003
10.6* Employment Agreement between the Registrant and R. Steven
Hamner, dated September 10, 2003
10.7* Amended and Restated Employment Agreement between the
Registrant and William G. McKenzie, dated September 10, 2003
10.8* Lease Agreement between MPT West Houston MOB, L.P. and
Stealth L.P., dated June 17, 2004
10.9* Lease Agreement between MPT West Houston Hospital, L.P. and
Stealth L.P., dated June 17, 2004
10.10* Third Amended and Restated Lease Agreement between 1300
Campbell Lane, LLC and 1300 Campbell Lane Operating Company,
LLC, dated December 20, 2004
10.11* First Amendment to Third Amended and Restated Lease
Agreement between 1300 Campbell Lane, LLC and 1300 Campbell
Lane Operating Company, LLC, dated December 31, 2004
10.12* Second Amended and Restated Lease Agreement between 92 Brick
Road, LLC and 92 Brick Road, Operating Company, LLC, dated
December 20, 2004
10.13* First Amendment to Second Amended and Restated Lease
Agreement between 92 Brick Road, LLC and 92 Brick Road,
Operating Company, LLC, dated December 31, 2004
10.14* Third Amended and Restated Lease Agreement between San
Joaquin Health Care Associates Limited Partnership and 7173
North Sharon Avenue Operating Company, LLC, dated December
20, 2004
10.15* First Amendment to Third Amended and Restated Lease
Agreement between San Joaquin Health Care Associates Limited
Partnership and 7173 North Sharon Avenue Operating Company,
LLC, dated December 31, 2004
10.16* Second Amended and Restated Lease Agreement between 8451
Pearl Street, LLC and 8451 Pearl Street Operating Company,
LLC, dated December 20, 2004
10.17* First Amendment to Second Amended and Restated Lease
Agreement between 8451 Pearl Street, LLC and 8451 Pearl
Street Operating Company, LLC, dated December 31, 2004
10.18* Second Amended and Restated Lease Agreement between 4499
Acushnet Avenue, LLC and 4499 Acushnet Avenue Operating
Company, LLC, dated December 20, 2004
10.19* First Amendment to Second Amended and Restated Lease
Agreement between 4499 Acushnet Avenue, LLC and 4499
Acushnet Avenue Operating Company, LLC, dated December 31,
2004
10.20* Third Amended and Restated Lease Agreement between Kentfield
THCI Holding Company, LLC and 1125 Sir Francis Drake
Boulevard Operating Company, LLC, dated December 20, 2004

II-9

EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------

10.21* First Amendment to Third Amended and Restated Lease
Agreement between Kentfield THCI Holding Company, LLC and
1125 Sir Francis Drake Boulevard Operating Company, LLC,
dated December 31, 2004
10.22* Loan Agreement between Colonial Bank, N.A., and MPT West
Houston MOB, L.P., dated December 17, 2004
10.23* Loan Agreement between Colonial Bank, N.A., and MPT West
Houston Hospital, L.P., dated December 17, 2004
10.24* Loan Agreement between Merrill Lynch Capital and 4499
Acushnet Avenue, LLC, 8451 Pearl Street, LLC, 92 Brick Road,
LLC, 1300 Campbell Lane, LLC, Kentfield THCI Holding
Company, LLC and San Joaquin Health Care Associates, LP,
dated December 31, 2004
10.25* Payment Guaranty made by the Registrant and MPT Operating
Partnership, L.P. in favor of Merrill Lynch Capital, dated
December 31, 2004
10.26* Purchase Agreement among THCI Company, LLC, THCI of
California, LLC, THCI of Massachusetts, LLC, THCI Mortgage
Holding Company, LLC and MPT Operating Partnership, L.P.,
dated May 20, 2004
10.27* Purchase and Sale Agreement among MPT Operating Partnership,
L.P., MPT of Victorville, LLC, Prime A Investments, L.L.C.,
Desert Valley Health System, Inc., Desert Valley Hospital,
Inc. and Desert Valley Medical Group, Inc., dated February
28, 2005
10.28* Lease Agreement between MPT of Victorville, LLC and Desert
Valley Hospital, Inc., dated February 28, 2005
10.29* Purchase and Sale Agreement among MPT Operating Partnership,
L.P., MPT of Bucks County Hospital, L.P., Bucks County
Oncoplastic Institute, LLC, Jerome S. Tannenbaum, M.D., M.
Stephen Harrison and DSI Facility Development, LLC, dated
March 3, 2005
10.30* Employment Agreement between the Registrant and Michael G.
Stewart, dated April 28, 2005
10.31* Letter of Commitment between MPT Operating Partnership, L.P.
and Monroe Hospital Operating Hospital, dated February 28,
2005
10.32* Letter of Commitment between MPT Operating Partnership,
L.P., Covington Healthcare Properties, LLC and Denham
Springs Healthcare Properties, LLC, dated March 14, 2005
10.33* Letter of Commitment between MPT Operating Partnership, L.P.
and North Cypress Medical Center Operating Partnership,
Ltd., dated March 16, 2005
10.34* Letter of Commitment between MPT Operating Partnership,
L.P., Hammond Healthcare Properties, LLC and Hammond
Rehabilitation Hospital, LLC, dated April 1, 2005
10.35* Letter of Commitment between MPT Operating Partnership, L.P.
and Diversified Specialty Institutes, Inc., dated March 3,
2005
10.36* Amendment to Letter of Commitment between MPT Operating
Partnership, L.P. and Diversified Specialty Institutes,
Inc., dated March 31, 2005
10.37* Letter of Commitment between MPT Operating Partnership,
L.P., MPT of Victorville, LLC and Desert Valley Hospital,
Inc., dated February 28, 2005
10.38* Amendment to Purchase and Sale Agreement among MPT Operating
Partnership, L.P., MPT of Bucks County Hospital, L.P., Bucks
County Oncoplastic Institute, LLC, DSI Facility Development,
LLC, Jerome S. Tannenbaum, M.D., M. Stephen Harrison and G.
Patrick Maxwell, M.D., dated April 29, 2005
10.39* Sublease Agreement between MPT of North Cypress, L.P. and
North Cypress Medical Center Operating Company, Ltd., dated
as of June 1, 2005
10.40* Net Ground Lease between North Cypress Property Holdings,
Ltd. and MPT of North Cypress, L.P., dated as of June 1,
2005
10.41* Purchase and Sale Agreement between MPT of North Cypress,
L.P. and North Cypress Medical Center Operating Company,
Ltd., dated as of June 1, 2005
10.42* Contract for Purchase and Sale of Real Property between
North Cypress Property Holdings, Ltd. and MPT of North
Cypress, L.P., dated as of June 1, 2005

II-10

EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------

10.43* Lease Agreement between MPT of North Cypress, L.P. and North
Cypress Medical Center Operating Company, Ltd., dated as of
June 1, 2005
10.44* Net Ground Lease between Northern Healthcare Land Ventures,
Ltd. and MPT of North Cypress, L.P., dated as of June 1,
2005
10.45* Amendment to the First Amended and Restated Agreement of
Limited Partnership of MPT Operating Partnership, L.P.
10.46* Construction Loan Agreement between North Cypress Medical
Center Operating Company, Ltd. and MPT Finance Company, LLC,
dated June 1, 2005
10.47* Purchase, Sale and Loan Agreement among MPT Operating
Partnership, L.P., MPT of Covington, LLC, MPT of Denham
Springs, LLC, Covington Healthcare Properties, L.L.C.,
Denham Springs Healthcare Properties, L.L.C., Gulf States
Long Term Acute Care of Covington, L.L.C. and Gulf States
Long Term Acute Care of Denham Springs, L.L.C., dated June
9, 2005
10.48* Lease Agreement between MPT of Covington, LLC and Gulf
States Long Term Acute Care of Covington, L.L.C., dated June
9, 2005
10.49* Promissory Note made by Denham Springs Healthcare
Properties, L.L.C. in favor of MPT of Denham Springs, LLC,
dated June 9, 2005
10.50* Purchase and Sale Agreement among MPT Operating Partnership,
L.P., MPT of Redding, LLC, Vibra Healthcare, LLC and
Northern California Rehabilitation Hospital, LLC, dated June
30, 2005
10.51* Lease Agreement between Northern California Rehabilitation
Hospital, LLC and MPT of Redding, LLC, dated June 30, 2005
10.52* Ground Lease Agreement between National Medical Specialty
Hospital of Redding, Inc. and Guardian Postacute Services,
Inc., dated November 14, 1997
10.53* Ground Lease Agreement between West Jersey Health System and
West Jersey/Mediplex Rehabilitation Limited Partnership,
dated July 15, 1993
10.54* Amendment No. 1 to Ground Lease Agreement between National
Medical Specialty Hospital of Redding, Inc. and Ocadian Care
Centers, Inc., dated November 29, 2001
10.55* Form of Indemnification Agreement between the Registrant and
executive officers and directors
10.56 Lease Agreement between Bucks County Oncoplastic Institute,
LLC and MPT of Bucks County, L.P., dated September 16, 2005.
10.57 Development Agreement among DSI Facility Development, LLC,
Bucks County Oncoplastic Institute, LLC and MPT of Bucks
County, L.P., dated September 16, 2005.
10.58 Funding Agreement among DSI Facility Development, LLC, Bucks
County Oncoplastic Institute, LLC and MPT of Bucks County,
L.P., dated September 16, 2005.
21.1* Subsidiaries of the Registrant
23.1 Consent of KPMG LLP
23.2 Consent of Parente Randolph, LLC
23.3 Consent of Baker, Donelson, Bearman, Caldwell & Berkowitz,
P.C. (included in Exhibits 5.1 and 8.1)

II-11

EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------

24.1*** Power of Attorney, included on signature page of the
Registrant's Form S-11 filed with the Commission on January
6, 2005
24.2*** Power of Attorney included on signature page of the
Registrant's Amendment No. 1 to the Registration Statement
on Form S-11 filed with the Commission on July 26, 2005.

- ---------------

* Incorporated by reference to the Registrant's Registration Statement on Form
S-11 filed with the Commission on October 26, 2004, as amended (File No.
333-119957).

** Incorporated by reference to the Registrant's quarterly report on Form 10-Q
for the quarter ended June 30, 2005, filed with the Commission on July 26,
2005.

*** Previously filed.

II-12



                                                                     EXHIBIT 5.1

                               September 30, 2005

Medical Properties Trust, Inc.
1000 Urban Center Drive, Suite 501
Birmingham, Alabama 35242

Re:     Legality of Securities to be Registered under Registration Statement on
        Form S-11 (File No. 333-121883)

Ladies and Gentlemen:

                This opinion is furnished in our capacity as Maryland counsel to
Medical Properties Trust, Inc., a Maryland corporation (the "Company"), in
connection with certain matters of Maryland law arising out of the registration
of up to 25,411,039 shares (the "Shares") of the Company's common stock, $.001
par value per share (the "Common Stock"), under the Securities Act of 1933, as
amended (the "1933 Act"). The Shares are covered by the above-referenced
Registration Statement and all amendments thereto, filed by the Company with the
Securities and Exchange Commission (the "Commission").

                In connection with our representation of the Company, and as a
basis for the opinion set forth below, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of the following
documents (hereinafter collectively referred to as the "Documents"):

        1.      The Registration Statement (Registration No. 333-121883),
including all amendments thereto, with the prospectus included therein, in the
form in which it was transmitted to the Commission under the 1933 Act (the
"Resale Registration Statement");

        2.      The charter of the Company (the "Charter"), certified as of a
recent date by the State Department of Assessments and Taxation of Maryland (the
"SDAT");

        3.      The Bylaws of the Company, certified as of the date hereof by an
officer of the Company;

        4.      Resolutions adopted by the Board of Directors of the Company
(the "Resolutions") relating to the registration, sale and issuance of the
Shares, certified as of the date hereof by an officer of the Company;

        5.      A certificate of the SDAT as to the good standing of the
Company, dated as of a recent date;

        6.      A certificate executed by an officer of the Company, upon which
we have relied as to factual, not legal, representations, dated as of the date
hereof; and



        7.      Such other documents and matters as we have deemed necessary or
appropriate to express the opinion set forth below, subject to the assumptions,
limitations and qualifications stated herein.

                In expressing the opinion set forth below, we have assumed the
following:

        1.      Each individual executing any of the Documents, whether on
behalf of such individual or another person, is legally competent to do so.

        2.      Each individual executing any of the Documents on behalf of a
party (other than the Company) is duly authorized to do so.

        3.      Each of the parties (other than the Company) executing any of
the Documents has duly and validly executed and delivered each of the Documents
to which such party is a signatory, and such party's obligations set forth
therein are legal, valid and binding and are enforceable in accordance with all
stated terms.

        4.      All Documents submitted to us as originals are authentic. The
form and content of all Documents submitted to us as unexecuted drafts do not
differ in any respect relevant to this opinion from the form and content of such
Documents as executed and delivered. All Documents submitted to us as certified
or photostatic copies conform to the original documents. All signatures on all
such Documents are genuine. All public records reviewed or relied upon by us or
on our behalf are true and complete. All representations, warranties, statements
and information contained in the Documents are true and complete. There has been
no oral or written modification of or amendment to any of the Documents, and
there has been no waiver of any provision of any of the Documents, by action or
omission of the parties or otherwise.

        5.      None of the Shares will be issued, sold or transferred in
violation of the restrictions on ownership and transfer contained in Article VI
of the Charter.

                Based upon the foregoing, and subject to the assumptions,
limitations and qualifications stated herein, it is our opinion that the Shares
have been duly authorized and are validly issued, fully paid and nonassessable.

                The foregoing opinion is limited to the substantive laws of the
State of Maryland and we do not express any opinion herein concerning any other
law. We express no opinion as to compliance with any federal or state securities
laws, including the securities laws of the State of Maryland. The opinion
expressed herein is specifically set forth herein and no other opinion shall be
inferred beyond the matters expressly stated. We assume no obligation to
supplement this opinion if any applicable law changes after the date hereof or
if we become aware of any fact that might change the opinion expressed herein
after the date hereof.

        This opinion is being furnished to you solely for submission to the
Commission as an exhibit to the Registration Statement.



        We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of the name of our firm therein in the
section entitled "Legal Matters" in the Registration Statement. In giving this
consent, we do not admit that we are within the category of persons whose
consent is required by Section 7 of the 1933 Act.

                                        Very truly yours,


                                        /s/ Baker, Donelson, Bearman, Caldwell &
                                        Berkowitz, a Professional Corporation


                                                                     Exhibit 8.1
                               September 30, 2005

Medical Properties Trust, Inc.
1000 Urban Center Drive, Suite 501
Birmingham, Alabama 35242

Re:     Medical Properties Trust, Inc.
        Qualification as a Real Estate Investment Trust

Dear Ladies and Gentlemen:

        This opinion is furnished in our capacity as counsel to Medical
Properties Trust, Inc., a Maryland corporation (the "Company"), in connection
with the preparation of the Registration Statement on Form S-11 filed by the
Company with the Securities and Exchange Commission (the "SEC") on January 6,
2005 (File No. 333-121883) as amended through the date hereof (the "Resale
Registration Statement"). You have requested our opinion regarding certain
United States federal income tax matters.

        The Company, through MPT Operating Partnership, L.P., a Delaware limited
partnership, (the "Operating Partnership") and its subsidiary limited liability
companies and partnerships (collectively the "Subsidiaries"), owns interests in
twelve healthcare facilities, nine of which are in operation and three of which
are under development. The Operating Partnership owns MPT Development Services,
Inc., a Delaware corporation and the Company and MPT Development Services, Inc.
have elected for MPT Development Services, Inc. to be a taxable REIT subsidiary
(a "TRS").

        In giving this opinion, we have examined the following documents:

        1.      The charter of the Company (the "Charter"), certified as of a
                recent date by the State Department of Assessments and Taxation
                of Maryland (the "SDAT");

        2.      The Bylaws of the Company, certified as of the date hereof by an
                Officer of the Company;

        3.      The Resale Registration Statement;

        4.      The First Amended and Restated Agreement of Limited Partnership
                of the Operating Partnership dated February 29, 2004 (the
                "Operating Partnership Agreement") and all amendments thereto;

        5.      The organizational documents of the Subsidiaries;



        6.      The TRS election for MPT Development Services, Inc.;

        7.      The Loan Agreement dated August 17, 2004 by and among MPT
                Development Services, Inc., the Operating Partnership, and
                Highmark Healthcare, LLC (now known as Vibra Healthcare, LLC)
                and certain of its operating subsidiaries (the "Loan
                Agreement");

        8.      The Security Agreement dated July 1, 2004 among Highmark
                Healthcare, LLC and certain of its operating subsidiaries and
                MPT Development Services, Inc., as amended by the First
                Amendment to Security Agreement dated August 17, 2004 (the
                "Security Agreement");

        9.      The Loan Guaranty dated July 1, 2004 among Senior Real Estate
                Holdings, LLC dba The Hollinger Group, Highmark Management, LLC,
                and Brad E. Hollinger, as Guarantors, and MPT Development
                Services, Inc., the Operating Partnership and their affiliates,
                as amended and restated by the Amended and Restated Loan
                Guaranty dated August 17, 2004 (the "Loan Guaranty");

        10.     The Pledge Agreement dated July 1, 2004 among Highmark
                Healthcare, LLC and Brad E. Hollinger, as Pledgors and the
                Operating Partnership and MPT Development Services, Inc., as
                amended by the First Amendment to the Pledge Agreement dated
                August 17, 2004 (the "Pledge Agreement");

        11.     The Subordination Agreement dated July 1, 2004 among Highmark
                Healthcare, LLC, Highmark Management, LLC and certain of their
                affiliates and the Operating Partnership, and MPT Development
                Services, Inc., as amended and restated by the Amended and
                Restated Subordination Agreement dated August 17, 2004 (the
                "Subordination Agreement");

        12.     The Promissory Notes dated July 1, 2004 of Highmark Healthcare,
                LLC, as Maker, and MPT Development Services, Inc., as Lender, as
                amended by the Amendment to Promissory Note dated August 17,
                2004;

        13.     The Promissory Note dated August 17, 2004 of Highmark
                Healthcare, LLC, as Maker, and the Operating Partnership, as
                Lender;

        14.     The Promissory Note dated July 1, 2004 of Highmark Healthcare,
                LLC and certain of its affiliates, as Makers, and MPT
                Development Services, Inc., as Lender, as amended by the
                Amendment to Promissory Note dated August 17, 2004, the Second
                Amendment to Promissory Note dated October 1, 2004, the Third
                Amendment to Promissory Note dated December 31, 2004 and the
                Fourth Amendment to Promissory Note dated January 31, 2005;

        15.     The Promissory Note dated July 1, 2004 of MPT Development
                Services, Inc., as Maker, and the Operating Partnership, as
                Lender in the principal amount of $6,197,642.00; and



        16.     The Promissory Note dated July 1, 2004 of MPT Development
                Services, Inc., as Maker, and the Operating Partnership, as
                Lender in the principal amount of $41,415,986.00.

        17.     The Intercreditor Agreement dated February 9, 2005 by and among
                Vibra Healthcare, LLC and certain of its affiliates, Merrill
                Lynch Capital, a division of Merrill Lynch Business Financial
                Services, Inc., MPT Development Services, Inc. and the Operating
                Partnership and certain of its affiliates.

        In connection with the opinions rendered below, we have assumed, with
your consent, that:

                1.      each of the documents referred to above has been duly
                        authorized, executed, and delivered; is authentic, if an
                        original, or is accurate, if a copy; and has not been
                        amended;

                2.      except for the Company, for which no assumption is made,
                        each partner of the Operating Partnership (a "Partner")
                        that is a corporation or other entity has a valid legal
                        existence; and

                3.      each Partner has full power, authority, and legal right
                        to enter into and to perform the terms of the Operating
                        Partnership Agreement and the transactions contemplated
                        thereby.

        In connection with the opinions rendered below, we also have relied upon
the correctness of the factual representations and covenants contained in that
certain certificate dated September 30, 2005 and executed by R. Steven Hamner as
Executive Vice President and Chief Financial Officer of the Company (the
"Officer's Certificate"). To the extent such representations and covenants speak
to the intended ownership or operations of the Company, we assume that the
Company will in fact be owned and operated in accordance with such stated
intent. After reasonable inquiry, we are not aware of any facts inconsistent
with the representations set forth in the Officer's Certificate. Furthermore,
where such factual representations involve terms defined in the Internal Revenue
Code of 1986, as amended (the "Code"), the Treasury regulations thereunder (the
"Regulations"), published rulings of the Internal Revenue Service (the
"Service"), or other relevant authority, we have explained such terms to the
Company's representatives and are satisfied that the Company's representatives
understand such terms and are capable of making such representations.

        Based on the documents and assumptions set forth above and the factual
representations set forth in the Officer's Certificate, we are of the opinion
that:

                (a)     the Company is and has been organized in conformity with
                        the requirements for qualification to be taxed as a REIT
                        under the Code commencing with its initial taxable year
                        ended December 31, 2004, and the Company's current and
                        proposed method of operations as described in the Resale
                        Registration Statement and as represented to us by it
                        satisfies currently, and will enable it to continue to
                        satisfy in the future, the requirements for such
                        qualification and taxation as a REIT under the Code;



                (b)     the loans made by MPT Development Services, Inc.
                        pursuant to the Loan Agreement (i) are properly
                        characterized as debt of the borrowers rather than
                        equity securities of the borrowers under principles of
                        federal income tax law, and (ii) if those loans were
                        treated as having been made by the Operating Partnership
                        instead of MPT Development Services, Inc. under
                        applicable federal income tax principles, such loans
                        would constitute "straight-debt securities" of the
                        borrowers, as defined in Sections 856(m)(1)(a) and
                        856(m)(2) of the Code; and

                (c)     the descriptions of the law and the legal conclusions
                        contained in the Resale Registration Statement under the
                        caption "United States Federal Income Tax
                        Considerations" are correct in all material respects,
                        and the discussion thereunder fairly summarizes the
                        federal income tax considerations that are likely to be
                        material to a holder of the common stock of the Company.

        We will not review on a continuing basis the Company's compliance with
the documents or assumptions set forth above, or the representations set forth
in the Officer's Certificate. Accordingly, no assurance can be given that the
actual results of the Company's operations for any given taxable year will
satisfy the requirements for qualification and taxation as a REIT.

        The foregoing opinions are based on current provisions of the Code and
the Regulations, published administrative interpretations thereof, and published
court decisions. The Service has not issued Regulations or administrative
interpretations with respect to various provisions of the Code relating to REIT
qualification. No assurance can be given that the law will not change in a way
that will prevent the Company from qualifying as a REIT.

        The foregoing opinions are limited to the United States federal income
tax matters addressed herein, and no other opinions are rendered with respect to
other federal tax matters or to any issues arising under the tax laws of any
other country, or any state or locality. We undertake no obligation to update
the opinions expressed herein after the date of this letter. This opinion letter
is solely for the information and use of the addressee and the purchasers of the
common stock of the Company pursuant to the Resale Registration Statement
(except as provided in the next paragraph), and it speaks only as of the date
hereof. Except as provided in the next paragraph, this opinion letter may not be
distributed, relied upon for any purpose by any other person, quoted in whole or
in part or otherwise reproduced in any document, or filed with any governmental
agency without our prior express written consent.

        We hereby consent to the filing of this opinion as an exhibit to the
Resale Registration Statement. We also consent to the references to Baker,
Donelson, Bearman, Caldwell & Berkowitz, P.C. under the captions "United States
Federal Income Tax Considerations" and "Legal Matters" in the Resale
Registration Statement. In giving this consent, we do not admit that we are in
the category of the persons whose consent is required by Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations promulgated
thereunder by the SEC.

                          Very truly yours,

                          /s/ Baker, Donelson, Bearman, Caldwell & Berkowitz, PC


                                                                   Exhibit 10.56

                                 LEASE AGREEMENT

                           MPT OF BUCKS COUNTY, L.P.,
                         A Delaware limited partnership

                                     Lessor

                                       AND

                    BUCKS COUNTY ONCOPLASTIC INSTITUTE, LLC,
                      a Delaware limited liability company

                                     Lessee

              Property: Twenty-four (24)-Bed Hospital Facility and
                      incorporated Medical Office Building
                      Bensalem, Bucks County, Pennsylvania

                               September 16, 2005

                                Table of Contents



                                                                            Page
                                                                            ----
                                                                         
LEASE AGREEMENT   .......................................................     i
LEASE             .......................................................     1
ARTICLE I         LEASED PROPERTY; TERM..................................     1
ARTICLE II        DEFINITIONS............................................     2
ARTICLE III       RENT...................................................    11
   3.1            Construction Period Rent; Base Rent; Percentage Rent...    11
   3.2            Additional Charges.....................................    12
   3.3            Absolute Net Lease.....................................    12
ARTICLE IV        IMPOSITIONS............................................    13
   4.1            Payment of Impositions.................................    13
   4.2            Adjustment of Impositions..............................    13
   4.3            Utility Charges........................................    13
   4.4            Insurance Premiums.....................................    14
ARTICLE V         NO TERMINATION.........................................    14
   5.1            Acknowledgment.........................................    13
ARTICLE VI        OWNERSHIP OF LAND AND PERSONAL PROPERTY................    14
   6.1            Ownership of the Land..................................    14
   6.2            Lessee's Personal Property.............................    14
ARTICLE VII       CONDITION AND USE OF LEASED PROPERTY...................    15
   7.1            Condition of the Leased Property.......................    15
   7.2            Use of the Leased Property.............................    15
   7.3            Lessor to Grant Easements..............................    16
ARTICLE VIII      LEGAL AND INSURANCE REQUIREMENTS.......................    16
   8.1            Compliance with Legal and Insurance Requirements.......    16
   8.2            Legal Requirement Covenants............................    17
   8.3            Hazardous Materials....................................    17
   8.4            Healthcare Laws........................................    18
   8.5            Representations and Warranties.........................    16
ARTICLE IX        REPAIRS; RESTRICTIONS..................................    19
   9.1            Maintenance and Repair.................................    19
   9.2            Encroachments; Restrictions............................    20
ARTICLE X         CAPITAL ADDITIONS......................................    21
   10.1           Construction of Capital Additions to the Leased
                     Property............................................    21
   10.2           Capital Additions Financed by Lessee...................    21
   10.3           Capital Additions Financed by Lessor...................    22
   10.4           Salvage................................................    24
ARTICLE XI        LIENS..................................................    24
ARTICLE XII       PERMITTED CONTESTS.....................................    24
ARTICLE XIII      INSURANCE..............................................    25
   13.1           General Insurance Requirements.........................    25
   13.2           Additional Insurance...................................    27



                                        i

                                Table of Contents
                                   (continued)



                                                                            Page
                                                                            ----
                                                                         
   13.3           Waiver of Subrogation..................................    27
   13.4           Form of Insurance......................................    27
   13.5           Increase in Limits.....................................    28
   13.6           Blanket Policy.........................................    28
   13.7           No Separate Insurance..................................    28
ARTICLE XIV       FIRE AND CASUALTY......................................    28
   14.1           Insurance Proceeds.....................................    28
   14.2           Reconstruction in the Event of Damage
                  or Destruction Covered by Insurance....................    29
   14.3           Reconstruction in the Event of Damage
                  or Destruction Not Covered by Insurance................    30
   14.4           Lessee's Personal Property.............................    30
   14.5           Restoration of Lessee's Property.......................    30
   14.6           No Abatement of Rent...................................    30
   14.7           Damage Near End of Term................................    30
   14.8           Termination of Right to Purchase and Substitution......    30
   14.9           Waiver.................................................    30
   14.10          Purchase Option Subordinate to Facility Instrument.....    30
ARTICLE XV        CONDEMNATION...........................................    31
   15.1           Definitions............................................    31
   15.2           Parties' Rights and Obligations........................    31
   15.3           Total Taking...........................................    31
   15.4           Partial Taking.........................................    31
   15.5           Restoration............................................    31
   15.6           Award Distribution.....................................    31
   15.7           Temporary Taking.......................................    32
   15.8           Purchase Option Subordinate to Facility Instrument.....    32
ARTICLE XVI       DEFAULT................................................    32
   16.1           Events of Default......................................    32
   16.2           Events of Default in Financial Covenants...............    37
   16.3           Additional Expenses....................................    39
   16.4           Waiver.................................................    39
   16.5           Application of Funds...................................    39
   16.6           Notices by Lessor......................................    39
   16.7           Lessor's Contractual Security Interest.................    39
ARTICLE XVII      LESSOR'S RIGHT TO CURE.................................    39
ARTICLE XVIII     PURCHASE OF THE LEASED PROPERTY........................    40
ARTICLE XIX       HOLDING OVER...........................................    40
ARTICLE XX        INTENTIONALLY OMITTED..................................    34
ARTICLE XXI       RISK OF LOSS...........................................    41
ARTICLE XXII      INDEMNIFICATION........................................    41
ARTICLE XXIII     ASSIGNMENT, SUBLETTING AND SUBLEASE SUBORDINATION......    41
   23.1           Assignment and Subletting..............................    38



                                       ii

                                Table of Contents
                                   (continued)



                                                                            Page
                                                                            ----
                                                                         
   23.2           Sublease Limitations...................................    38
   23.3           Sublease Subordination and Non-Disturbance.............    39
ARTICLE XXIV      OFFICER'S CERTIFICATES; FINANCIAL
                  STATEMENTS; NOTICES AND OTHER CERTIFICATES.............    43
ARTICLE XXV       INSPECTION AND FEES....................................    44
ARTICLE XXVI      NO WAIVER..............................................    45
ARTICLE XXVII     REMEDIES CUMULATIVE....................................    45
ARTICLE XXVIII    SURRENDER..............................................    45
ARTICLE XXIX      NO MERGER OF TITLE.....................................    45
ARTICLE XXX       TRANSFERS BY LESSOR....................................    46
ARTICLE XXXI      QUIET ENJOYMENT........................................    46
ARTICLE XXXII     NOTICES................................................    46
ARTICLE XXXIII    APPRAISAL..............................................    47
ARTICLE XXXIV     PURCHASE RIGHTS........................................    48
   34.1           Lessee's Option to Purchase............................    48
   34.2           Lessor's Option to Purchase Lessee's Personal Property.    49
   34.3           Limitation on Lessee's Option to Purchase..............    44
   34.4           Survival...............................................    49
ARTICLE XXXV      INTENTIONALLY OMITTED..................................    44
ARTICLE XXXVI     INTENTIONALLY OMITTED..................................    44
ARTICLE XXXVII    FINANCING OF THE LEASED PROPERTY.......................    49
   37.1           Financing by Lessor....................................    49
ARTICLE XXXVIII   SUBORDINATION AND NON-DISTURBANCE......................    49
ARTICLE XXXIX     LICENSES...............................................    50
ARTICLE XL        COMPLIANCE WITH HEALTHCARE LAWS........................    51
ARTICLE XLI       MISCELLANEOUS..........................................    52
   41.1           General................................................    48
   41.2           Lessor's Expenses......................................    48
   41.3           Entire Agreement; Modifications........................    52
   41.4           Lease Guaranty.........................................    52
   41.5           Lessor's Right to Sell.................................    53
   41.6           Future Financing.......................................    53
   41.7           Cash Deposit; Letter of Credit.........................    53
   41.8           Intentionally Omitted..................................    53
   41.9           Cash Injection.........................................    53
   41.10          Additional Letter of Credit............................    53
   41.11          Change in Ownership/Control............................    53
   41.12          Lessor Securities Offering and Filings.................    54
   41.13          Non-Recourse as to Lessor..............................    54
   41.14          Subdivision, Covenants, Restrictions and Reciprocal
                     Easements...........................................    54
   41.15          Force Majeure..........................................    54
   41.16          Management Agreements..................................    54



                                       iii

                                Table of Contents
                                   (continued)



                                                                            Page
                                                                            ----
                                                                         
   41.17          Governing Law..........................................    54
   41.18          Jurisdiction and Venue.................................    54
   41.19          Counterparts...........................................    54
ARTICLE XLII      MEMORANDUM OF LEASE....................................    56



                                       iv

                                 LEASE AGREEMENT

     THIS LEASE AGREEMENT (the "Lease") is dated as of the 16th day of
September, 2005, and is between MPT OF BUCKS COUNTY, L.P., a Delaware limited
partnership ("Lessor"), having its principal office at 1000 Urban Center Drive,
Suite 501, Birmingham, Alabama 35242, and BUCKS COUNTY ONCOPLASTIC INSTITUTE,
LLC, a Delaware limited liability company ("Lessee"), having its principal
office at 511 Union Street, Suite 1800, Nashville, Tennessee 37219.

                                   WITNESSETH:

     WHEREAS, Lessor owns that certain real property located in Bensalem, Bucks
County, Pennsylvania, which real property is more particularly described on
EXHIBIT A attached hereto and incorporated herein by reference (the "Land");

     WHEREAS, Lessor plans to develop a hospital facility and a medical office
building on the Land;

     WHEREAS, Lessor wishes to lease the Land and Leased Improvements (as
hereinafter defined) to the Lessee and the Lessee desires to lease the Land and
Leased Improvements from the Lessor; and

     WHEREAS, the parties desire to enter into this Lease on the terms and
conditions hereinafter provided.

     NOW, THEREFORE, the parties hereto hereby agree as follows:

                                    ARTICLE I

                              LEASED PROPERTY; TERM

     Upon and subject to the terms and conditions hereinafter set forth, and
subject to the rights of any tenants, subtenants, lessees or sublessees under
any Existing Subleases as described in Section 24.1 below, Lessor leases to
Lessee and Lessee rents from Lessor all of Lessor's rights and interest in and
to the following property (collectively, the "Leased Property"):

          (a) the Land;

          (b) the Facility (including the Connector) to be constructed on the
     Land as provided in the Development Agreement (as herein defined), all
     Fixtures (as hereinafter defined) and other improvements of every kind
     including, but not limited to, alleyways and connecting tunnels, sidewalks,
     utility pipes, conduits and lines (on-site and off-site), parking areas and
     roadways appurtenant to such buildings and structures presently or
     hereafter situated upon the Land and related to the Facility, and Capital
     Additions (hereinafter defined) financed by Lessor (collectively, the
     "Leased Improvements");

          (c) all easements, rights and appurtenances relating to the Land and
     the Leased Improvements; and

          (d) all permanently affixed non-medical equipment, machinery,
     fixtures, and other items of real and/or personal property, including all
     components thereof, now and hereafter located in, on or used in connection
     with, and permanently affixed to or incorporated into the Leased
     Improvements, including, without limitation, all furnaces, boilers,
     heaters, electrical equipment, heating, plumbing, lighting, ventilating,
     refrigerating, incineration, air and water pollution control, waste
     disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
     systems and fire and theft protection equipment, and built-in oxygen and
     vacuum systems, all of which, to the greatest extent permitted by law, are
     hereby deemed by the parties hereto to constitute real estate, together
     with all replacements, modifications, alterations and

     additions thereto, but specifically excluding all items included within the
     category of Lessee's Personal Property as defined in Article II below
     (collectively the "Fixtures").

SUBJECT, HOWEVER, to the matters set forth on EXHIBIT B attached hereto (the
"Permitted Exceptions"); Lessee shall have and hold the Leased Property for a
fixed term (the "Fixed Term") commencing on the date hereof (the "Commencement
Date") and ending at midnight on the last day of the one hundred and eightieth
(180th) month period following the Completion Date (as hereinafter defined).
Notwithstanding anything contained herein to the contrary, in the event the
certificate of occupancy is not issued within ninety (90) days from the date of
the Completion of the construction of the Facility or if Lessee fails to obtain
its Medicare billing number within one hundred eighty (180) days from the date
of Completion of the construction of the Facility, Lessor shall have the option
to terminate this Lease upon fifteen (15) days prior written notice to the
Lessee.

     So long as no Default or Event of Default then exists, Lessee shall have
the option to extend the Fixed Term of this Lease on the same terms and
conditions set forth herein for two (2) additional periods of five (5) years
each, and one (1) additional period that expires on August 15, 2035 (each an
"Extension Term"). Lessee may exercise each such option by giving written notice
to the Lessor at least six (6) months prior to the expiration of the Fixed Term
or Extension Term, as applicable (the "Extension Notice"). If during the period
following the delivery of the Extension Notice to Lessor, a Default shall occur
and the same is not cured within the applicable cure period, at Lessor's option,
Lessee shall be deemed to have forfeited all Extension Options. If Lessee elects
not to exercise its option to extend, all subsequent options to extend and all
rights of the Lessee to purchase as provided herein shall be deemed to have
lapsed and be of no further force or effect.

                                   ARTICLE II

                                   DEFINITIONS

     For all purposes of this Lease, except as otherwise expressly provided or
unless the context otherwise requires, (a) the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular, (b) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP as at the time applicable,
(c) all references in this Lease to designated "Articles", "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease, and (d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision:

     Additional Charges: As defined in Section 3.2.

     Adjustment Date: January 1 of each year commencing on January 1, 2006.

     Affiliate: When used with respect to any corporation, limited liability
company, or partnership, the term "Affiliate" shall mean any person,
corporation, limited liability company, partnership or other legal entity,
which, directly or indirectly, controls or is controlled by or is under common
control with such corporation, limited liability company, or partnership. For
the purposes of this definition, "control" (including the correlative meanings
of the terms "controlled by" and "under common control with"), as used with
respect to any person, corporation, limited liability company, partnership or
other legal entity, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
person, corporation, limited liability company, partnership or other legal
entity, through the ownership of voting securities, partnership interests or
other equity interests.

     Applicable Law: As defined in Section 41.16.

     Award: As defined in Section 15.1.

     Base Rent: As defined in Section 3.1.


                                        2

     Business: The operation of the Facility and the engagement in and pursuit
and conduct of any business venture or activity related thereto.

     Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which money centers in the City of New York, New York are
authorized, or obligated, by law or executive order, to close.

     Capital Additions: One or more new buildings or one or more additional
structures annexed to any portion of any of the Leased Improvements, which are
constructed after the Completion Date on any parcel or portion of the Land
during the Term, including a new wing or new story.

     Capital Addition Cost: The cost of any Capital Additions proposed to be
made by Lessee whether or not paid for by Lessee or Lessor. Such cost shall
include (a) the cost of construction of such Capital Additions, including site
preparation and improvement, materials, labor, supervision and certain related
design, engineering and architectural services, the cost of any fixtures
included in such Capital Addition, the cost of construction financing and
miscellaneous costs approved by Lessor, (b) if agreed to by Lessor in writing in
advance, the cost of any land contiguous to the Leased Property purchased for
the purpose of placing thereon such Capital Additions or any portion thereof or
for providing means of access thereto, or parking facilities therefor, including
the cost of surveying the same, (c) the cost of insurance, real estate taxes,
water and sewage charges and other carrying charges for such Capital Additions
during construction, (d) the cost of title insurance, (e) reasonable fees and
expenses of legal counsel, (f) filing, registration and recording taxes and
fees, (g) documentary stamp taxes, if any, and (h) all reasonable costs and
expenses of Lessor and any Lending Institution which has committed to finance
the Capital Additions, including, but not limited to, (i) the reasonable fees
and expenses of their respective legal counsel, (ii) all printing expenses,
(iii) the amount of any filing, registration and recording taxes and fees, (iv)
documentary stamp taxes, if any, (v) title insurance charges, appraisal fees, if
any, (vi) rating agency fees, if any, and (vii) commitment fees, if any, charged
by any Lending Institution advancing or offering to advance any portion of the
financing for such Capital Additions.

     Cash Deposit: As defined in Section 41.7.

     Code: The Internal Revenue Code of 1986, as amended.

     Collateral: Lessee's accounts receivable and Lessee's machinery, equipment
(including medical equipment whether or not affixed to the Leased Property),
furniture, furnishings, tools, movable walls or partitions, computers, signage,
trade fixtures, supplies, inventory and any other tangible personal property
placed on the Leased Property and used or useful in Lessee's business conducted
at or on the Leased Property.

     Commencement Date: The date hereof.

     Commitment Letter: The commitment letter between Lessor and Lessee (or
their Affiliates) dated October 21, 2004, as amended by letter dated December
23, 2004, and as further amended, modified and supplemented by the Purchase
Agreement.

     Completion: The terms "completion," "complete construction," "completion of
construction" and similar phrases means such time as Lessor receives from the
architect that the construction of the Leased Improvements has been
substantially completed in accordance with the plans and specifications
therefor, which certificate shall be in form and substance satisfactory to
Lessor and shall include the written approval of Lessor's, construction
inspector noted thereon.

     Completion Date: As defined in Section 3.3(e) of the Development Agreement.

     Condemnation, Condemnor: As defined in Section 15.1.


                                        3

     Connector: Those two (2) hallways containing in the aggregate approximately
750 square feet, which connect to the hospital to be constructed on the Land on
either side of the medical office building to be constructed on the Land.

     Consolidated Net Worth: At any time, the sum of the following for Lessee
and its respective consolidated subsidiaries on a consolidated basis determined
in accordance with GAAP.

          (a) the amount of capital or stated capital (after deducting the cost
     of any treasury shares), plus

          (b) the amount of capital surplus and retained earnings (or, in the
     case of a capital surplus or retained earnings deficit, minus the amount of
     such deficit), minus

          (c) the sum of the following (without duplication of deductions in
     respect of items already deducted in arriving at surplus and retained
     earnings): (i) unamortized debt discount and expense and (ii) any write-up
     in book value of assets resulting from a revaluation thereof pursuant to
     GAAP subsequent to the most recent Statements of Cash Flow prior to the
     date thereof.

     Construction Period: That period of time from the date hereof and ending on
the Completion Date.

     Construction Period Rent: As defined in Section 3.1(a).

     Consumer Price Index: The Consumer Price Index, all urban consumers, all
items, U.S. City Average, published by the United States Department of Labor,
Bureau of Labor Statistics, in which 1982-1984 equals one hundred (100). If the
Consumer Price Index is discontinued or revised during the term of this Lease,
such other governmental index or computation with which it is replaced shall be
used in order to obtain substantially the same result as would be obtained if
the Index had not been discontinued or revised.

     CPI: The Consumer Price Index.

     Credit Enhancements: All security deposits, security interests, letters of
credit, pledges, guaranties, prepaid rent or other sums, deposits or interests
held by Lessee, if any, with respect to the Leased Property, the Tenant Leases
or the Tenants.

     Date of Taking: As defined in Section 15.1.

     Default: Any event, act or condition that with the giving of notice or the
passage of time or both would constitute an Event of Default.

     Developer: DSI Facility Development, LLC, a Delaware limited liability
company.

     Development Agreement: That certain Development Agreement of even date
herewith among Developer, Lessor and Lessee, as the same may be amended,
modified, supplemented and/or restated from time to time.

     EBITDAR: Net earnings calculated in accordance with GAAP, less actual
management fees paid by Lessee, plus management fees calculated at five percent
(5%) of Lessee's net revenue, plus interest, taxes, depreciation, amortization
and rent (including any equipment lease or rent expense).

     Encumbrances: As defined in Article XXXVII.

     Event of Default: As defined in Section 16.1 and Section 16.2.

     Extension Notice: As defined in Article I.


                                        4

     Extension Term: As defined in Article I.

     Extraordinary Repairs: All repairs to the Facility (including, without
limitation, all parking decks and parking lots), whether interior or exterior,
structural or non-structural, which are not consistent in nature, scope and
magnitude with, and that would not reasonably be expected to result from, the
normal use, operation and wear of the Facility, as Lessee and/or Lessor may
determine to be necessary or appropriate from time to time during the Term.

     Facility: The licensed twenty-four (24)-bed hospital facility and
incorporated medical office building and all improvements constructed in
connection therewith to be constructed and operated on the Land.

     Facility Instrument: A note (whether secured or unsecured), loan agreement,
credit agreement, guaranty, security agreement, mortgage, deed of trust or other
security agreement pursuant to which a Facility Lender has provided financing to
Lessor, or pursuant to which Lessor or an Affiliate of Lessor has provided
financing to Lessee, in connection with the Leased Property or any part thereof,
and any and all renewals, replacements, modifications, supplements,
consolidations, spreaders and extensions thereof.

     Facility Lender: A holder (which may include any Affiliate of Lessor) of
any Facility Instrument.

     Fair Market Value: The amount that a willing buyer would pay a willing
seller, neither being under a particular compulsion to buy or sell, each fully
aware of all applicable facts, assuming a reasonable marketing period, taking
into account general economic conditions as of the date fair market value is
being determined and taking into account all other conditions in effect on such
date that may reasonably be considered in determining fair market value, and
otherwise determined in accordance with prevailing standards of appraisal
practice at the time of determination. Fair Market Value (a) shall be determined
in accordance with the appraisal procedures set forth in Article XXXIII or in
such other manner as shall be mutually acceptable to Lessor and Lessee, and (b)
shall not take into account any reduction in value resulting from any
indebtedness to which the Leased Property is subject and which encumbrance
Lessee or Lessor is otherwise required to remove pursuant to any provision of
this Lease or agrees to remove at or prior to the closing of the transaction as
to which such Fair Market Value determination is being made. The positive or
negative effect on the value of the Leased Property attributable to the interest
rate, amortization schedule, maturity date, prepayment penalty and other terms
and conditions of any Encumbrance on the Leased Property, which is not so
required or agreed to be removed shall be taken into account in determining such
Fair Market Value. Notwithstanding anything contained herein to the contrary,
any appraisal of the Leased Property shall assume the Lease is in place for a
term of fifteen (15) years, and shall not take into account any purchase options
contained herein.

     Fair Market Added Value: The Fair Market Value of the Leased Property
(including all Capital Additions) less the Fair Market Value of the Leased
Property determined as if no Capital Additions paid for by Lessee had been
constructed.

     Fair Market Value Purchase Price: The Fair Market Value of the Leased
Property less the Fair Market Added Value.

     Fiscal Year: The fiscal year for this Lease shall be the twelve (12) month
period from January 1 to December 31.

     Fixed Charges: The sum of the Lease Payments and required principal and
interest payments with respect to the Total Debt.

     Fixed Term: As defined in Article I.

     Fixtures: As defined in Article I.

     Funding Agreement: That certain Funding Agreement of even date herewith
among Lessor, Lessee and Developer, as the same may be amended, modified,
supplemented and/or restated from time to time.


                                        5

     GAAP: Generally accepted accounting principles in the United States,
consistently applied.

     Governmental Entity: Any national, federal, regional, state, local,
provincial, municipal, foreign or multinational court or other governmental or
regulatory authority, administrative body or government, department, board,
body, tribunal, instrumentality or commission of competent jurisdiction.

     Ground Contract: That certain Agreement of Sale dated April 14, 2005,
between Glenview Land Holdings, L.P., as Seller, and Lessee, which was assigned
by Lessee to Lessor by that certain Assignment and Assumption Agreement of even
date herewith.

     Guarantors: Shall mean those parties identified on Exhibit A of that
certain Lease Guaranty of even date herewith.

     Hazardous Materials: Any substance, including without limitation, asbestos
or any substance containing asbestos and deemed hazardous under any Hazardous
Materials Law, the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, infectious wastes,
biomedical and medical wastes, chemicals known to cause cancer or reproductive
toxicity, pollutants, effluents, contaminants, emissions or related materials
and any items included in the definition of hazardous or toxic wastes, materials
or substances under any Hazardous Materials Laws.

     Hazardous Materials Laws: All local, state and federal laws relating to
environmental conditions and industrial hygiene, including, without limitation,
the Resource Conservation and Recovery Act of 1976 ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as
amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"),
the Hazardous Materials Transportation Act, the Federal Water Pollution Control
Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act,
the Safe Drinking Water Act, and all similar federal, state and local
environmental statutes, ordinances and the regulations, orders, or decrees now
or hereafter promulgated thereunder.

     Healthcare Laws: All rules and regulations under the False Claims Act (31
U.S.C. Section 3729 et seq.), the Federal Health Care Programs Anti-Kickback
statute (42 U.S.C. Section 1320a-7a(b)), the Ethics in Patient Referrals Act of
1989, as amended (Stark Law) (42 U.S.C. 1395nn), the Civil Money Penalties Law
(42 U.S.C. Section 1320a-7a), Health Care Fraud (18 U.S.C. 1347), Wire Fraud (18
U.S.C. 1343), Theft or Embezzlement (18 U.S.C. 669), False Statements (18 U.S.C.
1001), False Statements (19 U.S.C. 1035), and Patient Inducement Statute (42
U.S.C. 1320a-7a(a)(5)), and equivalent state statutes and any and all rules or
regulations promulgated by governmental entities with respect to any of the
foregoing.

     Impositions: Collectively, all civil monetary penalties, fines and
overpayments imposed by state and federal regulatory authorities, all Real
Estate Taxes, all capital stock and franchise taxes of Lessor, all sales and use
taxes, all single business, gross receipts, transaction privilege, rent or
similar taxes and assessments, all assessments, charges and costs imposed under
the Permitted Exceptions (including, without limitation, all penalties, fines,
damages, costs and expenses for any violation of or a default under any of the
Permitted Exceptions), all assessments for public improvements or benefits,
whether or not commenced or completed prior to the date hereof and whether or
not to be completed within the Term, ground rents, water, sewer or other rents
and charges, excises, tax levies, fees (including, without limitation, license,
permit, inspection, authorization and similar fees), and all other governmental
charges, in each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of the Leased Property
and/or the Rent (including all interest and penalties thereon due to any failure
in payment by Lessee), and all other fees, costs and expenses which at any time
prior to, during or in respect of the Term hereof may be charged, assessed or
imposed on or in respect of or be a lien upon (a) Lessor or Lessor's interest in
the Leased Property, (b) the Leased Property or any part thereof or any rent
therefrom or any estate, right, title or interest therein, or (c) any occupancy,
operation, use or possession of, sales from, or activity conducted on, or in
connection with, the Leased Property or the leasing or use of the Leased
Property or any part thereof; provided, however, nothing contained in this Lease
shall be construed to require Lessee to pay (1) any tax based on net income
(whether denominated as a franchise or capital stock, financial institutions or
other tax)


                                        6

imposed on Lessor, or (2) any transfer or net revenue tax of Lessor, or (3) any
tax imposed with respect to the sale, exchange or other disposition by Lessor of
any portion of the Leased Property or the proceeds thereof, or (4) except as
expressly provided elsewhere in this Lease, any principal or interest on any
Encumbrance on the Leased Property, except to the extent that any tax,
assessment, tax levy or charge which Lessee is obligated to pay pursuant to the
first sentence of this definition and which is in effect at any time during the
Term hereof is totally or partially repealed, and a tax, assessment, tax levy or
charge set forth in clause (1) or (2) is levied, assessed or imposed expressly
in lieu thereof, in which case Lessee shall pay.

     Initial Purchase Price: A price equal to the purchase price paid by Lessor
(and its Affiliates, including, without limitation, MPT Operating Partnership,
L.P.) contemporaneously herewith for the Leased Property pursuant to the Ground
Contract, which the parties acknowledge is Five Million Three Hundred
Ninety-Five Thousand Four Hundred Ninety-Seven and 21/100 Dollars
($5,395,497.21).

     Inspection Fee: As defined in Article XXV.

     Insurance Premiums: As defined in Section 4.4.

     Insurance Requirements: All terms of any insurance policy required by this
Lease.

     Land: As defined in the Recitals.

     Lease: As defined in the Preamble.

     Lease Assignment: That certain Assignment of Rents and Leases to be
effective on the Commencement Date executed and delivered by Lessee to Lessor,
pursuant to which Lessee has assigned to Lessor each of the Tenant Leases and
Credit Enhancements (subject to Tenant's rights as expressly set forth in the
Lease Assignment), if any, as security for the obligations of Lessee under this
Lease (as this Lease may be amended, modified and/or restated from time to time)
and all other obligations of Lessee to Lessor, or any Affiliate of Lessee to
Lessor or to any Affiliate of Lessor.

     Lease Guaranty: As defined in Section 41.4 hereof.

     Lease Payments: The Construction Period Rent and Base Rent as required
under this Lease.

     Lease Year: A twelve (12) month period commencing on the Commencement Date
or on each anniversary date thereof, as the case may be.

     Leased Improvements; Leased Property: Each as defined in Article I.

     Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting the Lessee's operation of its business on the
Leased Property, along with the Leased Property or the construction, use or
alteration thereof (including, without limitation, the Americans With
Disabilities Act and Section 504 of the Rehabilitation Act of 1973) whether now
or hereafter enacted and in force, including any which may (a) require repairs,
modifications, or alterations in or to the Leased Property, or (b) in any way
adversely affect the use and enjoyment thereof, and all permits, licenses,
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to Lessee (other than encumbrances created by Lessor without the consent
of Lessee), at any time in force affecting the Leased Property.

     Lender: As defined in Section 35.1.

     Lending Institution: Any insurance company, federally insured commercial or
savings bank, national banking association, savings and loan association,
employees' welfare, pension or retirement fund or system, corporate
profit-sharing or pension trust, college or university, or real estate
investment trust, including any


                                        7

corporation qualified to be treated for federal tax purposes as a real estate
investment trust, having a net worth of at least Fifty Million Dollars
($50,000,000).

     Lessee: Bucks County Oncoplastic Institute, LLC, a Delaware limited
liability company, and its successors and permitted assigns, which, if required
by Lessor, shall at all times during the term of this Lease be a Single Purpose
Entity created and to remain in good standing as required hereunder for the sole
purpose of leasing and operating the Facility.

     Lessee's Personal Property: All of Lessee's machinery, medical equipment,
furniture, furnishings, movable walls or partitions, computers, trade fixtures
or other personal property (including all such items affixed to the Leased
Property), and consumable inventory and supplies, currently owned and acquired
after the execution of this Lease, used or useful in the operation of the
Facility, including without limitation, all operating licenses, but excluding
Lessee's accounts receivable, subject to a lien in favor of Lessee's Primary
Lender as expressly allowed hereunder, and any items included within the
definition of Fixtures.

     Lessor: MPT of Bucks County, L.P., a Delaware limited partnership, and its
successors and assigns.

     Letter of Credit: As defined in Section 41.7 hereof.

     Licenses: As defined in Article XXXIX.

     Management Agreement: Any contracts and agreements for the management of
any part of the Leased Property, including, without limitation, the real estate
and the Leased Improvements and the operations of the Facility.

     Management Company: Any person, firm, corporation or other entity or
individual who or which will manage any part of the Leased Property.

     Medicaid: The medical assistance program established by Title XIX of the
Social Security Act (42 U.S.C. Sections 1396 et seq.) and any statute succeeding
thereto.

     Medicare: The health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act (42 U.S.C. Sections 1395
et seq.) and any statute succeeding thereto.

     Mortgage: As defined in Section 35.1.

     MPT: Medical Properties Trust, Inc., an Affiliate of Lessor.

     MPT Development Services: MPT Development Services, Inc., an Affiliate of
Lessor.

     Officer's Certificate: A certificate of Lessee signed by the officer(s) or
representative(s) authorized to so sign by the governing body of Lessee, or any
other person whose power and authority to act has been authorized by delegation
in writing by any of the persons holding the foregoing offices.

     Other Leases: All other leases entered into between Lessor or any Affiliate
of Lessor, on the one hand, and Lessee, or any of its Affiliates, on the other
hand.

     Overdue Rate: On any date, a rate per annum equal to four percent (4%).

     Percentage Rent: As defined in Section 3.2(d).

     Permitted Exceptions: As defined in Article I.


                                        8

     Person: An individual, a corporation, a limited liability company, a
general or limited partnership, an unincorporated association, a joint venture,
a Governmental Entity or another entity or group.

     Primary Intended Use: As defined in Article VII.

     Primary Lender. A lender providing financing for Lessee to purchase items
of Collateral or in connection with the refinancing of any items of Collateral.

     Primary Lien of Lessee's Primary Lender: Any first priority lien granted by
Lessee in any of the Collateral which may be given in connection with Lessee's
Primary Lender providing equipment and working capital financing for Lessee, as
such term "Primary Lender" is more particularly defined in the Security
Agreement.

     Prime Rate: The annual rate announced by Citibank in New York, New York, to
be the prime rate for 90-day unsecured loans to its United States corporate
borrowers of the highest credit standing, as in effect from time to time.

     Principals: Collectively, Jerome S. Tannenbaum, M.D., M. Stephen Harrison
and G. Patrick Maxwell, M.D.

     Promissory Note: That certain Promissory Note of even date herewith made by
Lessee in favor of MPT Development Services (as may be hereafter amended,
modified and/or restated from time to time).

     Purchase Agreement: The Purchase and Sale Agreement dated as of March 3,
2005, as amended by that certain letter amendment dated April 29, 2005, and as
further amended by that certain letter amendment dated June 21, 2005, by and
among MPT Operating Partnership, L.P., MPT Bucks County, Lessee, Jerome S.
Tannenbaum, M.D., M. Stephen Harrison, G. Patrick Maxwell, M.D. and Developer.

     Real Estate Taxes: All real estate taxes, assessments and special
assessments and dues which shall be levied, or imposed upon the Leased Property
during the Term.

     Removal Notice: As defined in Section 16.2.

     Rent: Collectively, the Base Rent (as increased in accordance with the
provisions of Section 3.1 hereof), the Construction Period Rent, the Percentage
Rent and the Additional Charges.

     Reserve: As defined in Section 9.2.

     Revenues: Collectively, all revenues generated by reason of the operation
of the Facility, whether or not directly received or to be received by the
Lessee, including, without limitation, all patient and/or resident revenues
received or receivable for the use of, or otherwise by reason of, all rooms,
beds, units and other facilities provided, meals served, services performed,
space or facilities subleased or goods sold on or from the Facility; provided,
however, that Revenues shall not include non-operating revenues such as interest
income or gain from the sale of assets not sold in the ordinary course of
business; and provided, further, that there shall be excluded or deducted (as
the case may be) from such revenues; (i) contractual allowances for billings not
paid by or received from the governmental authorities or third party payors,
(ii) allowances according to GAAP for uncollectible accounts, (iii) all proper
patient or resident billing credits and adjustments according to GAAP related to
health care accounting, (iv) deposits refundable to patients/residents of the
Facility and (v) provider discounts for hospital or other medical facility
utilization contracts.

     Security Agreement: That certain Security Agreement to be effective on the
Commencement Date executed and delivered by Lessee to Lessor, pursuant to the
terms of which Lessee has granted to Lessor a first lien and security interest
in all of Lessee's rights under this Lease (as this Lease may be amended,
modified and/or restated from time to time), to all of Lessee's Personal
Property (excluding Lessee's accounts receivable) and to all of the Licenses.


                                        9

     Single Purpose Entity: An entity which (i) exists solely for the purpose of
owning and/or leasing all or any portion of the Leased Property and conducting
the operation of the Business, (ii) conducts business only in its own name or in
fictitious or d/b/a names previously disclosed to Lessor, (iii) does not engage
in any business other than the Business or the operation of that certain
stand-alone imaging center previously disclosed to Lessor, (iv) does not hold,
directly or indirectly, any ownership interest (legal or equitable) in any
entity or any real or personal property other than the interest in the Leased
Property and the other assets incident to the operation of the Business, (v)
does not have any debt other than as permitted by this Lease or arising in the
ordinary course of the Business and does not guarantee or otherwise obligate
itself with respect to the debts of any other person or entity, other than as
approved by Lessor, (vi) has its own separate books, records, accounts,
financial statements and tax returns (with no commingling of funds or assets),
(vii) holds itself out as being a company separate and apart from any other
entity, and (viii) maintains all corporate formalities independent of any other
entity.

     Statements of Cash Flow: For any fiscal year or other accounting period for
Lessee or Guarantors and their respective consolidated subsidiaries, statements
of earnings and retained earnings and of changes in financial position for such
period and for the period from the beginning of the respective Fiscal Year to
the end of such period and the related balance sheet as at the end of such
period, together with the notes thereto, all in reasonable detail and setting
forth in comparative form the corresponding figures for the corresponding period
in the preceding fiscal year, and prepared in accordance with GAAP.

     Taking: A taking or voluntary conveyance during the Term hereof of all or
part of the Leased Property, or any interest therein or right accruing thereto
or use thereof, as the result of, or in settlement of, any Condemnation or other
eminent domain proceeding affecting the Leased Property whether or not the same
shall have actually been commenced.

     Tangible Net Worth: The members' equity of the Lessee determined in
accordance with GAAP, minus the value of all intangible assets used in such
calculation.

     Tannenbaum: Jerome S. Tannenbaum, M.D.

     Tenant: The lessees/sublessees or tenants/subtenants under the Tenant
Leases, if any.

     Tenant Improvements: The interior partitions, finishes and other tenant
improvement work in and for each suite of space in the Building leased to a
Tenant as required under the Tenant Leases.

     Tenant Leases: All leases, subleases and other rental agreements (written
or verbal, now or hereafter in effect), if any, pursuant to which Lessee grants
or has granted a possessory interest in and to any space in or any part of the
Leased Property, including the Existing Subleases, and all Credit Enhancements,
if any, held in connection therewith.

     Term: The actual duration of this Lease, including the Fixed Term and the
Extension Terms (if exercised by the Lessee) and taking into account any
termination.

     Total Debt: All indebtedness which, in accordance with GAAP, will be
included in determining total liabilities of Lessee, as shown on the liability
side of a balance sheet, including any such indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, excluding any nonrecourse
indebtedness and excluding any current liabilities.

     Total Development Costs: The (i) Initial Purchase Price, plus any
additional purchase price amounts paid for the Leased Property by Lessor or its
Affiliates pursuant to the Purchase Agreement, plus all reasonable costs and
expenses not included in the Initial Purchase Price incurred or paid in
connection with the purchase and lease of the Leased Property, including, but
not limited to, legal, appraisal, title, survey, environmental, seismic,
engineering and other fees and expenses paid in connection with the inspection
of the Leased Property and site visits, and fees paid to advisors and brokers,
except to the extent such items are paid by Lessee, (ii) costs of Capital
Additions financed by


                                       10

Lessor (and Lessor's Affiliates) as provided in Section 10.3 of this Lease,
(iii) all amounts advanced or paid pursuant to the Development Agreement and the
Funding Agreement, (iii) Construction Period Rent, as provided in Section
3.1(a); (iv) interest on advances made by Lessor prior to the date hereof in the
amount of Ninety-Seven Thousand, One Hundred Sixty and 12/100 Dollars
($97,160.12) which shall be deemed incurred as of the date hereof; (v) any
amounts paid by Lessor in connection with the posting of a development bond
required by the township of Bensalem, Pennsylvania (it being understood that
Total Development Costs and the Base Rent shall be adjusted accordingly for any
amounts returned to Lessor with respect to such bond) and (vi) all fees and
expenses paid or advanced by Lessor and its Affiliates in connection with the
construction and development of the Leased Property, except to the extent such
items are paid by Lessee. Notwithstanding the foregoing, Total Development Costs
shall not include any Additional Charges.

     Unsuitable for Its Use or Unsuitable for Its Primary Intended Use: As used
anywhere in this Lease, the terms "Unsuitable for Its Use" or "Unsuitable for
Its Primary Intended Use" shall mean that, by reason of damage or destruction,
or a partial Taking by Condemnation, the Facility cannot be operated on a
commercially practicable basis for its Primary Intended Use, taking into
account, all relevant factors, and the effect of such damage or destruction or
partial Taking.

                                  ARTICLE III

                                      RENT

     3.1 CONSTRUCTION PERIOD RENT; BASE RENT; PERCENTAGE RENT. During the Term,
Lessee shall pay to Lessor, without notice, demand, set off or counterclaim, in
lawful money of the United States of America, at Lessor's address set forth
herein or at such other place or to such other person, firm or entity as Lessor
from time to time may designate in writing, Construction Period Rent, Base Rent
and Percentage Rent, as follows:

          (a) CONSTRUCTION PERIOD RENT: During the Construction Period, the rent
     payable by Lessee to Lessor shall accrue but be deferred as provided
     herein. The amount of such accrual shall be calculated each month during
     the Construction Period as follows: beginning October 1, 2005, and on the
     first (1st) day of each month during the Construction Period thereafter,
     Lessee shall be obligated to pay, on a deferred basis as provided herein,
     an amount equal to the product of (i) ten and 75/100 percent (10.75%)
     (subject to adjustment as provided in Section 3.1(c) below) multiplied by
     (ii) the amount of Total Development Costs which have been incurred as of
     the last day of the immediately preceding month, divided by (iii) twelve
     (12), it being understood and agreed that, beginning November 1, 2005, and
     on the first (1st) day of each month thereafter during the Construction
     Period, any amounts of previously deferred Construction Period rent are to
     be included within Total Development Costs for purposes of the calculation
     of Construction Period rent under this Section 3.1(a) (such construction
     period rent calculated as herein provided being referred to herein as the
     "Construction Period Rent"). The Construction Period Rent will be deferred
     and added to Total Development Costs but will not be paid until the
     Completion Date at which time the Construction Period Rent amount will be
     amortized and paid over the Fixed Term beginning with the Completion Date,
     in equal monthly installments as part of the payments of Base Rent. Lessee
     shall be entitled to prepay all or any portion of Construction Period Rent,
     without penalty. As the amortized Construction Period Rent is paid, the
     Total Development Costs and Base Rent will be adjusted and reduced
     accordingly.

          (b) BASE RENT: Subject to adjustments as expressly set forth herein
     (including as provided in Section 3.1(c) below), Lessee shall pay Lessor
     base rent (the "Base Rent") following the Construction Period in an amount
     equal to ten and 75/100 percent (10.75%) per annum (subject to adjustment
     as provided in Section 3.1(c) below) of the Total Development Costs, which
     Base Rent shall be payable in advance in equal, consecutive monthly
     installments. Base Rent shall be payable on the first (1st) day of each
     calendar month of the Term, commencing on the first (1st) day of the month
     immediately following the Completion Date (prorated as to any partial
     month).


                                       11

          (c) ADJUSTMENT OF BASE RENT: Commencing on January 1, 2007, and on
     each January 1 thereafter (each an "Adjustment Date") during the term of
     this Lease, the Base Rent shall be increased, if any, by an amount equal to
     the greater of (A) two and one-half percent (2.5%) per annum of the prior
     year's Base Rent, or (B) the percentage by which the CPI in effect on the
     Adjustment Date shall have increased over the CPI figure in effect on the
     then just previous Adjustment Date. If the previous year's Base Rent is for
     a partial year, it shall be annualized. In the event the Total Development
     Costs are adjusted and increased by the Total Development Costs Adjustment,
     then all calculations of Base Rent shall be adjusted accordingly.

          (d) PERCENTAGE RENT: Commencing with the first calendar month next
     succeeding the Completion Date and thereafter throughout the Term, in
     addition to the Base Rent, Lessee shall pay to Lessor, percentage rent in
     an amount equal to one and 75/100 percent (1.75%) (the "Percentage Rent")
     of Revenues for the preceding month. Percentage Rent shall be payable at
     the same time as Base Rent is payable hereunder.

          (e) SCHEDULE OF TOTAL DEVELOPMENT COSTS AND RENT ADJUSTMENTS: At the
     end of the Construction Period, the Lessor shall, in its reasonable
     discretion, calculate the Total Development Costs, Construction Period Rent
     and Base Rent to be paid hereunder (the "Schedule"), and provide a copy of
     such Schedule to the Lessee, which Schedule will become a part of this
     Lease and incorporated herein by reference, and shall be substituted,
     amended and adjusted by Lessor from time to time in its reasonable
     discretion as the Total Development Costs, rent payments and rent
     adjustments are calculated during the Term as provided herein, and, when
     delivered to the Lessee, such substituted, amended and adjusted Schedule
     shall become a part of this Lease and incorporated herein by reference.

     3.2 ADDITIONAL CHARGES. In addition to the Construction Period Rent, Base
Rent and the Percentage Rent, and except as expressly otherwise provided herein
(a) Lessee will also pay and discharge as and when due and payable all costs of
owning and operating the Facility, all Impositions, all Real Estate Taxes,
Insurance Premiums, maintenance and capital improvements, all violations and
defaults under any of the Permitted Exceptions, all licensure violations, civil
monetary penalties and fines, and (b) in the event of any failure on the part of
Lessee to pay any of those items referred to in clause (a) above, Lessee will
also promptly pay and reimburse Lessor and/or its Affiliates for all such
amounts paid by Lessor and promptly pay and discharge every fine, penalty,
interest and cost which may be added for non-payment or late payment of such
items (the items referred to in clauses (a) and (b) above being referred to
herein collectively as the "Additional Charges"), and Lessor shall have all
legal, equitable and contractual rights, powers and remedies provided in this
Lease, by statute or otherwise, in the case of non-payment of the Additional
Charges, as in the case of the Base Rent. If any installment of Base Rent,
Construction Period Rent, Percentage Rent or Additional Charges (but only as to
those Additional Charges which are payable directly to Lessor) shall not be paid
within seven (7) days after its due date, Lessee will pay Lessor on demand, as
Additional Charges, a late charge (to the extent permitted by law) computed at
the Overdue Rate (or at the maximum rate permitted by law, whichever is less) on
the amount of such installment, from the due date of such installment to the
date of payment thereof. To the extent that Lessee pays any Additional Charges
to Lessor pursuant to any requirement of this Lease, Lessee shall be relieved of
its obligation to pay such Additional Charges to the entity to which they would
otherwise be due. At any time during the Term, Lessor may require Lessee to pay
into escrow or make deposits to Lessor (or to a Facility Lender if requested by
Lessor) relating to any part of the Impositions, Real Estate Taxes and/or
Insurance Premiums and Lessee shall pay to Lessor (or directly to a Facility
Lender if requested by Lessor), upon written request from Lessor, such amounts
as and when required by Lessor (or the Facility Lender). All sums paid into
escrow or deposits shall not bear interest, may be commingled with Lessor's (or
Facility Lender's) books and accounts, and may be applied by the Lessor (or the
Facility Lender) to all sums owed by Lessee to Lessor (or to sums owed to
Facility Lender).

     3.3 ABSOLUTE NET LEASE. The Rent shall be paid absolutely net to Lessor, so
that this Lease shall yield to Lessor the full amount of the installments of
Base Rent, Construction Period Rent, Percentage Rent and the payments of
Additional Charges throughout the Term, but subject to any other provisions of
this Lease which


                                       12

expressly provide for adjustment of Rent or other charges. Lessee further
acknowledges and agrees that all charges, assessments or payments of any kind
due and payable without notice, demand, set off or counterclaim under the
Permitted Exceptions shall be paid by Lessee as they become due and payable.

                                   ARTICLE IV

                                   IMPOSITIONS

     4.1 PAYMENT OF IMPOSITIONS. Subject to Article XII relating to permitted
contests, Lessee will pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such payments to be made
directly to the taxing or assessing authorities, unless, in the case of the
escrows and deposits required to be paid to Lessor or Facility Lender as
provided in Section 3.2 herein, and Lessee will promptly, upon request, furnish
to Lessor copies of official receipts or other satisfactory proof evidencing
such payments. Lessee's obligation to pay such Impositions shall be deemed
absolutely fixed upon the date such Impositions become a lien upon the Leased
Property or any part thereof. If any such Imposition may, at the option of the
Lessor, lawfully be paid in installments (whether or not interest shall accrue
on the unpaid balance of such Imposition), Lessee may exercise the option to pay
the same (and any accrued interest on the unpaid balance of such Imposition) in
installments and, in such event, shall pay such installments during the Term
hereof (subject to Lessee's right of contest pursuant to the provisions of
Article XII); and, subject to the requirement to pay escrows and deposits as
required in Section 3.2 herein) as the same respectively become due and before
any fine, penalty, premium, further interest or cost may be added thereto.
Lessor, at its expense, shall, to the extent permitted by applicable law,
prepare and file all tax returns and reports as may be required by governmental
authorities in respect of Lessor's net income, gross receipts, franchise taxes
and taxes on its capital stock, and Lessee, at its expense, shall, to the extent
permitted by applicable laws and regulations, prepare and file all other tax
returns and reports in respect of any Imposition as may be required by
governmental authorities. If any refund shall be due from any taxing authority
in respect of any Imposition paid by Lessee, the same shall be paid over to or
retained by Lessee if no Default or Event of Default shall have occurred
hereunder and be continuing at the time Lessor receives such refund. Any such
funds retained by Lessor due to a Default shall be applied as provided in
Article XVI. Lessor and Lessee shall, upon request of the other, provide such
data as is maintained by the party to whom the request is made with respect to
the Leased Property as may be necessary to prepare any required returns and
reports. In the event governmental authorities classify any property covered by
this Lease as personal property, Lessee shall file all personal property tax
returns in such jurisdictions where it may legally so file. Lessor, to the
extent it possesses the same, and Lessee, to the extent it possesses the same,
will provide the other party, upon request, with cost and depreciation records
necessary for filing returns for any property so classified as personal
property. Where Lessor is legally required to file personal property tax
returns, Lessee will be provided with copies of assessment notices indicating a
value in excess of the reported value in sufficient time for Lessee to file a
protest. After consultation with Lessor, Lessee may, at Lessee's sole cost and
expense, protest, appeal, or institute such other proceedings as Lessee may deem
appropriate to effect a reduction of real estate or personal property
assessments and Lessor, at Lessee's expense as aforesaid, shall fully cooperate
with Lessee in such protest, appeal, or other action. Billings for reimbursement
by Lessee to Lessor of personal property taxes shall be accompanied by copies of
a bill therefor and payments thereof which identify the personal property with
respect to which such payments are made.

     4.2 ADJUSTMENT OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term terminates, unless Lessee purchases the
Leased Property pursuant to the purchase options expressly provided herein,
shall be adjusted and prorated between Lessor and Lessee as of the date on which
this Lease terminates. Lessee shall be responsible for a pro rata share of any
such Impositions attributable to the period before the date on which this Lease
terminates, whether or not such Imposition is imposed before or after such
termination, and Lessee's obligation to pay its prorated share thereof shall
survive such termination.

     4.3 UTILITY CHARGES. Lessee will contract for, in its own name, and will
pay or cause to be paid all charges for electricity, power, gas, oil, sewer,
water and other utilities used in connection with the Leased Property


                                       13

during the Term, including, without limitation, unless paid as part of the Total
Development Costs, all connection, impact and tap fees necessary for the
development and operation of the Facility.

     4.4 INSURANCE PREMIUMS. Lessee will contract for in its own name and will
pay or cause to be paid all premiums for the insurance coverage required to be
maintained pursuant to Article XIII during the Term; provided, however, if
required by Lessor pursuant to Section 3.2 of this Lease, such premiums shall be
paid as required under Section 3.2 herein. At Lessor's option, Lessor may obtain
such coverages and, in such event, shall be entitlted to obtain reimbursement
from Lessee for the costs of such coverages.

                                   ARTICLE V

                                 NO TERMINATION

     5.1 ACKNOWLEDGEMENT. The parties hereto understand, acknowledge and agree
that this is an absolute net lease. Lessee shall remain bound by this Lease in
accordance with its terms and shall neither take any action without the consent
of Lessor to modify, surrender or terminate the same, nor seek nor be entitled
to any abatement, deduction, deferment or reduction of Rent, or set-off against
the Rent, nor shall the respective obligations of Lessor and Lessee be otherwise
affected by reason of (a) any damage to, or destruction of, any Leased Property
or any portion thereof from whatever cause or any Taking of the Leased Property
or any portion thereof, (b) the lawful or unlawful prohibition of, or
restriction upon, Lessee's use of the Leased Property, or any portion thereof,
or the interference with such use by any person, corporation, partnership or
other entity, or by reason of eviction by paramount title; (c) any claim which
Lessee has or might have against Lessor or by reason of any default or breach of
any warranty by Lessor under this Lease or any other agreement between Lessor
and Lessee, or to which Lessor and Lessee are parties, (d) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceedings affecting Lessor or any assignee or transferee
of Lessor, or (e) for any other cause whether similar or dissimilar to any of
the foregoing other than a discharge of Lessee from any such obligations as a
matter of law. Lessee hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(i) modify, surrender or terminate this Lease or quit or surrender the Leased
Property or any portion thereof, or (ii) entitle Lessee to any abatement,
reduction, suspension or deferment of the Rent or other sums payable by Lessee
hereunder, except as otherwise specifically provided in this Lease. The
obligations of Lessor and Lessee hereunder shall be separate and independent
covenants and agreements and the Rent and all other sums payable by Lessee
hereunder shall continue to be payable in all events unless the obligations to
pay the same shall be terminated pursuant to the express provisions of this
Lease or by termination of this Lease other than by reason of an Event of
Default.

                                   ARTICLE VI

               OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY

     6.1 OWNERSHIP OF THE LEASED PROPERTY. Lessee acknowledges that the Land is
the property of Lessor, that upon the construction of the Leased Improvements
the Lessor will own all of the Leased Property, and that Lessee has only the
right to the possession and use of the Leased Property and the right to purchase
the Leased Property, subject to the terms, provisions and conditions set forth
in this Lease.

     6.2 LESSEE'S PERSONAL PROPERTY. Upon the occurrence and during the
continuation of any Default hereunder, Lessee shall not, without the prior
written consent of Lessor, remove any of the Lessee's Personal Property from the
Leased Property. Lessee shall provide and maintain during the entire Term all
such Lessee's Personal Property as shall be necessary in order to operate the
Facility in compliance with all licensure and certification requirements, in
compliance with all applicable Legal Requirements and Insurance Requirements and
otherwise in accordance with customary practice in the industry for the Primary
Intended Use. All of Lessee's Personal Property not removed by Lessee within
fifteen (15) Business Days following the expiration or earlier termination of
this Lease shall be considered abandoned by Lessee and may be appropriated,
sold, destroyed or


                                       14

otherwise disposed of by Lessor without first giving notice thereof to Lessee,
without any payment to Lessee and without any obligation to Lessee to account
therefor. Lessee will, at its expense, restore the Leased Property and repair
all damage to the Leased Property caused by the removal of Lessee's Personal
Property, whether effected by Lessee, Lessor, any Lessee lender, or any Lessor
lender.

                                  ARTICLE VII

                      CONDITION AND USE OF LEASED PROPERTY

     7.1 CONDITION OF THE LEASED PROPERTY. Lessee acknowledges receipt and
delivery of possession of the Leased Property and that Lessee has examined and
otherwise has acquired knowledge of the condition of the Leased Property prior
to the execution and delivery of this Lease and has found the same to be in good
order and satisfactory for its purpose hereunder and under the Development
Agreement. Lessee is leasing the Leased Property "as is" in its present
condition and as shall be improved pursuant to the Development Agreement. Lessee
warrants and represents that it has obtained, or will obtain, or will cause to
be obtained, within the time periods required in the Development Agreement and
the Funding Agreement, all approvals, variances, permits, licenses and
certificates required by all Governmental Entities for the construction and
development of the Facility. Lessee waives any claim or action against Lessor in
respect of the condition of the Leased Property. LESSOR MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY
PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, SUITABILITY, DESIGN OR CONDITION
FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE
TO BE BORNE BY LESSEE.

     7.2 USE OF THE LEASED PROPERTY.

          (a) If not obtained on or prior to the Completion Date, Lessee
     covenants that it will use its best efforts to obtain as soon as
     practicable following the Completion Date, and shall maintain throughout
     the entire Term all approvals needed to use and operate the Leased Property
     and the Facility for the Primary Intended Use, as defined below, under
     applicable local, state and federal law, including but not limited to
     licensure approvals and Medicare and a Medicaid certifications, provider
     numbers, certificates of need, governmental approvals, and full
     accreditation from all applicable governmental authorities, if any, that
     are necessary for the operation of the Facility as an acute care hospital
     facility and incorporated medical office building.

          (b) Beginning on the Completion Date and during the entire Term, after
     the completion of the construction of the Leased Improvements, Lessee shall
     use or cause to be used the Leased Property and the improvements thereon as
     an acute care hospital facility and incorporated medical office building
     and for such other legal ancillary uses as may be necessary in connection
     with or incidental to such use, subject to all covenants, restrictions and
     easements (including those set forth in the Permitted Exceptions) relating
     to the Facility (the "Primary Intended Use"). Lessee shall not use the
     Leased Property or any portion thereof for any other use, nor change the
     number of type of beds within the Facility, nor reconfigure or rearrange
     any portion of the Leased Property or the Facility without the prior
     written consent of Lessor, which consent Lessee agrees may be withheld in
     Lessor's sole discretion; provided, however, that Lessee may decrease the
     number of beds by ten percent (10%) or less without Lessor's consent and
     may increase the number of beds without Lessor's consent provided such
     increase consists of additional licensed acute care beds. No use shall be
     made or permitted to be made of the Leased Property and no acts shall be
     done which will cause the cancellation of any insurance policy covering the
     Leased Property or any part thereof, nor shall Lessee sell or otherwise
     provide to residents or patients therein, or permit to be kept, used or
     sold in or about the Leased Property any article which may be prohibited by
     law or by the standard form of fire insurance policies, any other insurance
     policies required to be carried hereunder, or fire underwriters
     regulations. Lessee shall, at its sole cost, comply with all of the
     requirements, covenants and restrictions


                                       15

     pertaining to the Leased Property, including, without limitation, all of
     the Permitted Exceptions, and other requirements of any insurance board,
     association, organization or company necessary for the maintenance of the
     insurance, as herein provided, covering the Leased Property and Lessee's
     Personal Property.

          (c) Lessee covenants and agrees that during the Term it will
     continuously operate the Leased Property only as a provider of healthcare
     services in accordance with the Primary Intended Use and Lessee shall
     maintain its certifications for reimbursement and licensure and all
     accreditations.

          (d) Lessee shall not commit or suffer to be committed any waste on the
     Leased Property, or in the Facility, nor shall Lessee cause or permit any
     nuisance thereon.

          (e) Lessee shall neither suffer nor permit the Leased Property or any
     portion thereof, including any Capital Addition whether or not financed by
     Lessor, or Lessee's Personal Property, to be used in such a manner as (i)
     might reasonably tend to impair Lessor's (or Lessee's, as the case may be)
     title thereto or to any portion thereof, or (ii) may reasonably make
     possible a claim or claims of adverse usage or adverse possession by the
     public, as such, or of implied dedication of the Leased Property or any
     portion thereof.

          (f) Lessee agrees that during the Term, Lessor shall have the right
     and option to erect a sign or signs on the Leased Property stating that the
     Leased Property is owned by the Lessor (and, if applicable, that Lessor or
     its Affiliates is the funding source for the construction and development
     of the Facility). Such signs shall be in sizes, and shall be erected in a
     location approved by Lessee, which approval shall not be unreasonably
     withheld, conditioned or delayed. Lessor agrees that Lessee shall have the
     right during the Term to erect a sign or signs on the Leased Property
     stating that the Leased Property is operated by the Lessee.

     7.3 LESSOR TO GRANT EASEMENTS. Provided no Default or Event of Default then
exists, Lessor will, at the request of Lessee and at Lessee's cost and expense,
but subject to the reasonable approval of Lessor (a) grant easements and other
rights in the nature of easements, (b) release existing easements or other
rights in the nature of easements which are for the benefit of the Leased
Property, (c) dedicate or transfer unimproved portions of the Leased Property
for road, highway or other public purposes, (d) execute petitions to have the
Leased Property annexed to any municipal corporation or utility district, (e)
execute amendments to any covenants and restrictions affecting the Leased
Property and (f) execute and deliver to any person any instrument appropriate to
confirm or effect such grants, releases, dedications and transfers, but only
upon delivery to Lessor of an Officer's Certificate stating (and such other
information as Lessor may reasonably require confirming) that such grant,
release, dedication, transfer, petition or amendment is required for and not
detrimental to the proper conduct of the Primary Intended Use on the Leased
Property and does not reduce the value of the Leased Property. Any such grants,
releases, dedications, transfers, petitions or amendments executed by Lessor as
provided in this Section 7.3 shall be recorded or filed by Lessee or Lessor, at
Lessee's sole cost and expense, in the proper recording/filing office where the
Land is located.

                                  ARTICLE VIII

                        LEGAL AND INSURANCE REQUIREMENTS

     8.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS. Subject to Article
XII relating to permitted contests, Lessee, at its expense, will promptly (a)
comply with all Legal Requirements and Insurance Requirements applicable to
Lessee and its use, operation, maintenance, repair and restoration of the Leased
Property, whether or not compliance therewith shall require structural change in
any of the Leased Improvements or interfere with the use and enjoyment of the
Leased Property, and (b) procure, maintain and comply with all licenses,
certificates of need, provider agreements, accreditations and other
authorizations required for any use of the Leased Property and Lessee's Personal
Property then being made, and for the proper erection, installation, operation
and


                                       16

maintenance of the Leased Property or any part thereof, including without
limitation, any Capital Additions. Upon Lessor's request, Lessee shall deliver
copies of all such licenses, certificates of need agreements and other
authorizations. Lessee hereby agrees to indemnify and defend, at Lessee's sole
cost and expense, and hold Lessor, its successors and assigns harmless from and
against and to reimburse Lessor and its successors and assigns with respect to
any and all claims, demands, actions, causes of action, losses, damages,
liabilities, costs and expenses (including, without limitation, reasonable
attorneys' fees and court costs) of any and every kind and character, known or
unknown, fixed or contingent, asserted against or incurred by Lessor, its
successors and assigns, at any time and from time to time by reason or arising
out of any breach by Lessee of any of the representations and warranties set
forth in this Section 8.1.

     8.2 LEGAL REQUIREMENT COVENANTS. Lessee covenants and agrees that the
Leased Property and Lessee's Personal Property shall not be used for any
unlawful purpose. Lessee shall use its commercially reasonable efforts to have
tenants acquire and maintain all licenses, certificates, permits, provider
agreements and other authorizations and approvals needed to operate the Leased
Property and all equipment and machinery used in or in connection with the
Leased Property in its customary manner for the Primary Intended Use and any
other use conducted on the Leased Property as may be permitted from time to time
hereunder. Lessee further covenants and agrees that Lessee's use of the Leased
Property, the use of all equipment and machinery used in connection with the
Leased Property and the maintenance, alteration, and operation of the same, and
all parts thereof, shall at all times conform to all applicable local, state and
federal laws, ordinances, rules and regulations.

     8.3 HAZARDOUS MATERIALS. Except for Hazardous Materials generated, used
and/or handled in the normal course of business regarding the Primary Intended
Use (which Hazardous Materials shall be handled and disposed of in compliance
with all Hazardous Materials Laws), no Hazardous Materials shall be installed,
used, generated, manufactured, treated, handled, refined, produced, processed,
stored or disposed of, or otherwise present in, on or under the Leased Property.
No activity shall be undertaken on the Leased Property which would cause (i) the
Leased Property to become a treatment, storage or disposal facility of hazardous
waste, infectious waste, biomedical or medical waste, within the meaning of, or
otherwise bring the Leased Property within the ambit of RCRA or any Hazardous
Materials Laws, (ii) a release or threatened release of Hazardous Materials from
the Leased Property within the meaning of, or otherwise bring the Leased
Property within the ambit of, CERCLA or SARA or any Hazardous Materials Laws or
(iii) the discharge of Hazardous Materials into any watercourse, surface or
subsurface of body of water or wetland, or the discharge into the atmosphere of
any Hazardous Materials which would require a permit under any Hazardous
Materials Laws. No activity shall be undertaken with respect to the Leased
Property which would cause a violation or support a claim under RCRA, CERCLA,
SARA or any Hazardous Materials Laws. No investigation, administrative order,
litigation or settlement with respect to any Hazardous Materials is, to the best
of the Lessee's knowledge, threatened or in existence with respect to the Leased
Property. No notice has been served on Lessee from any entity, governmental body
or individual claiming any violation of any Hazardous Materials Laws, or
requiring compliance with any Hazardous Materials Laws, or demanding payment or
contribution for environmental damage or injury to natural resources. Lessee has
not obtained and Lessee has no knowledge of any reason Lessee will be required
to obtain any permits, licenses, or similar authorizations to occupy, operate or
use the Improvements or any part of the Leased Property by reason of any
Hazardous Materials Laws. Lessee hereby agrees to indemnify and defend, at its
sole cost and expense, and hold Lessor, its successors and assigns, harmless
from and against and to reimburse Lessor with respect to any and all claims,
demands, actions, causes of action, losses, damages, liabilities, costs and
expenses (including without limitation, reasonable attorney's fees and court
costs) of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by Lessor at any time and from time to
time by reason or arising out of any breach or violation of any Hazardous
Materials Laws by Lessee, its agents, representatives, employees, contractors,
subtenants and/or sublessees. Lessee shall, at its sole cost, expense, risk and
liability, remove or cause to be removed from the Leased Property all Hazardous
Materials generated in connection with the Primary Intended Use, including,
without limitation, all infectious waste materials, syringes, needles and any
materials contaminated with bodily fluids of any type, character or description
of whatsoever nature in accordance with all Hazardous Materials Laws. Lessee
shall not dispose of any such infectious waste and Hazardous Materials in any
receptacles used for the disposal of normal refuse.


                                       17

     8.4 HEALTHCARE LAWS. Lessee warrants and represents that this Lease and all
subleases are, and at all times during the term of this Lease will be, in
compliance with all Healthcare Laws. Lessee agrees to add to all subleases, that
in the event it is determined that such agreement and/or sublease is in
violation of the Healthcare Laws, such agreement and/or sublease shall be
renegotiated so that same are in compliance with all Healthcare Laws. Lessee
agrees promptly to notify Lessor in writing of receipt of any notice of
investigation of any alleged Healthcare Law violations. Lessee hereby agrees to
indemnify and defend, at Lessee's sole cost and expense, and hold Lessor and its
successors and assigns, harmless from and against and to reimburse Lessor and
its successors and assigns with respect to any and all claims, demands, actions,
causes of action, losses, damages, liabilities, costs and expenses (including,
without limitation, reasonable attorneys' fees and court costs) of any and every
kind or character, known or unknown, fixed or contingent, asserted against or
incurred by Lessor and its successors and assigns at any time and from time to
time by reason or arising out of any breach by Lessee of the provisions set
forth in this Section 8.4 or any violation of any Healthcare Laws.

     8.5 REPRESENTATIONS AND WARRANTIES. Lessee represents, warrants and
covenants to Lessor that as of the date hereof: (i) Lessee is a limited
liability company duly organized and validly existing under the laws of the
State of Delaware, has duly qualified to do business in the State of
Pennsylvania, and is duly authorized to enter into, deliver and perform this
Lease and the other documents referred to herein and such agreements constitute
the valid and binding obligations of Lessee, enforceable in accordance with
their terms, (ii) neither the entering into of this Lease or the other documents
referred to herein nor the performance by Lessee of its obligations hereunder or
under the other documents referred to herein will violate any provision of law
or any agreement, indenture, note or other instrument binding upon Lessee, (iii)
no authority from or approval by any governmental body, commission or agency or
consent of any third party is required in connection with the making or validity
of and the execution, delivery and performance of this Lease or the other
documents referred to herein, (iv) there are no actions, suits or proceedings
pending against or, to the knowledge of Lessee, threatened against or affecting
Lessee or any of its Affiliates, in any court or before or by any governmental
department, agency or instrumentality, an adverse decision in which could
materially and adversely affect the financial condition, business or operations
of Lessee or the ability of Lessee to perform its obligations under this Lease
or the other documents referred to herein, (v) Lessee and each of its Affiliates
is in compliance with all applicable laws, ordinances, rules, regulations and
requirements of governmental authorities, and (vi) Lessee has obtained and
delivered copies thereof to Lessor on the Commencement Date all certificates of
need, Medicare billing numbers, other licenses and agreements required for the
operation of the Facility and all medical equipment used in connection with the
Facility, or will use its best efforts to obtain the same as soon as practicable
and shall deliver evidence of such documentation to Lessor within ten (10)
Business Days after obtaining same.

     8.6 SINGLE PURPOSE ENTITY. Lessee represents, warrants, covenants and
agrees that Lessee is, at the time of the execution of this Lease, and shall
remain at all times during the term of this Lease, a Single Purpose Entity
created and to remain in good standing for the sole purpose of leasing and
operating the Facility in accordance with the terms of this Lease.
Simultaneously with the execution of this Lease, and as requested by Lessor at
other times during the term of this Lease, Lessee shall provide Lessor evidence
that Lessee is a Single Purpose Entity and is in good standing in the state of
its organization and in the state in which the Leased Property is located.

     8.7 ORGANIZATIONAL DOCUMENTS. Lessee shall not permit or suffer, without
the prior written consent of Lessor (i) any material and adverse amendment or
modification of its Organizational Documents (as defined below) (including any
amendment or modification which changes Lessee's status as a Single Purpose
Entity), (ii) any dissolution or termination of its existence, or (iii) change
in its state of formation or organization or its name. Lessee has,
simultaneously with the execution of this Lease, delivered to Lessor a true and
complete copy of the articles of organization and certificate of formation and
limited liability company operating agreement creating Lessee, and all other
documents creating and governing the Lessee (collectively, the "Organizational
Documents"). Lessee warrants and represents that the Organizational Documents
(i) were duly executed and delivered, (ii) are in full force and effect, and
binding upon and enforceable in accordance with their terms, (iii) constitute
the entire understanding among the partners and members or equity owners of
Lessee, and (iv) no breach exists under the


                                       18

Organizational Documents and no act has occurred and no condition exists which,
with the giving of notice or the passage of time would constitute such a breach
under the Organizational Documents.

                                   ARTICLE IX

                         REPAIRS; RESERVE; RESTRICTIONS

     9.1 MAINTENANCE AND REPAIR.

          (a) Lessee, at its expense, will keep the Leased Property and all
     private roadways, sidewalks and curbs appurtenant thereto (and Lessee's
     Personal Property) in good first class order and repair (whether or not the
     need for such repairs occurs as a result of Lessee's use, any prior use,
     the elements, the age of the Leased Property or any portion thereof) and,
     except as otherwise provided in Articles XIV and XV, with reasonable
     promptness, will make all necessary and appropriate repairs thereto of
     every kind and nature, whether interior or exterior, structural or
     non-structural, ordinary or extraordinary, foreseen or unforeseen or
     arising by reason of a condition existing prior to the commencement of the
     Term of this Lease (concealed or otherwise). All repairs shall, to the
     extent reasonably achievable, be at least equivalent in quality to the
     original work. Lessee will not take or omit to take any action the taking
     or omission of which would be reasonably expected to materially impair the
     value or the usefulness of the Leased Property or any part thereof for the
     Primary Intended Use. Notwithstanding anything contained herein to the
     contrary, Lessee may make additions, modifications and remodeling to the
     Leased Property which are not Capital Additions from time to time which are
     necessary for the Primary Intended Use and which permit the Lessee to
     comply fully with its obligations set forth in this Lease, provided that
     any such action will be undertaken expeditiously, in a workmanlike manner
     and will not significantly alter the character or purpose or detract from
     the value or operating efficiency of the Leased Property and will not
     significantly impair the revenue producing capability of the Leased
     Property or adversely affect the ability of the Lessee to comply with the
     provisions of this Lease. Such additions, modifications and remodeling
     shall, without payment by Lessor at any time, be included under the terms
     of this Lease and shall be the property of Lessor. Lessee shall notify the
     Lessor of any and all repairs, improvements, additions, modifications and
     remodeling made to the Leased Property in excess of Fifty Thousand and
     00/100 Dollars ($50,000.00) and obtain consent from Lessor prior to making
     such repairs, improvements, additions, modifications and remodeling;
     provided, however, that if in the reasonable judgment of Lessee emergency
     repairs are needed, Lessee may make such repairs and shall notify Lessor
     that such repairs have been made as soon as practicable.

          (b) Lessor shall not under any circumstances be required to build or
     rebuild any improvements on the Leased Property, or to make any repairs,
     replacements, alterations, restorations, or renewals of any nature or
     description to the Leased Property, whether ordinary or extraordinary or
     capital in nature, structural or non-structural, foreseen or unforeseen, or
     to make any expenditure whatsoever with respect thereto in connection with
     this Lease, or to maintain the Leased Property in any way.

          (c) Nothing contained in this Lease and no action or inaction by
     Lessor shall be construed as (i) constituting the consent or request of
     Lessor, expressed or implied, to any contractor, subcontractor, laborer,
     materialmen or vendor to or for the performance of any labor or services or
     the furnishing of any materials or other property for the construction,
     alteration, addition, repair or demolition of or to the Leased Property or
     any part thereof, or (ii) giving Lessee any right, power or permission to
     contract for or permit the performance of any labor or services or the
     furnishing of any materials or other property in such fashion as would
     permit the making of any claim against Lessor in respect thereof or to make
     any agreement that may create, or in any way be the basis for, any right,
     title, interest, lien, claim or other encumbrance upon the estate of Lessor
     in the Leased Property or any portion thereof.

          (d) Unless Lessor shall convey any of the Leased Property to Lessee
     pursuant to the provisions of this Lease, Lessee will, upon the expiration
     or prior termination of the Term, vacate and


                                       19

     surrender the Leased Property to Lessor in the condition in which the
     Leased Property was originally received from Lessor, except as improved,
     constructed, repaired, rebuilt, restored, altered or added to as permitted
     or required by the provisions of this Lease and except for ordinary wear
     and tear (subject to the obligation of Lessee to maintain the Leased
     Property in good order and repair during the entire Term of the Lease),
     damage caused by the gross negligence or willful acts of Lessor and damage
     or destruction described in Article XIV or resulting from a Taking
     described in Article XV which Lessee is not required by the terms of this
     Lease to repair or restore.

     9.2 RESERVES FOR EXTRAORDINARY REPAIRS. Commencing on the date of
Completion of the construction of the Facility, and on each January 1
thereafter, Lessee shall make annual deposits to a reserve account for
Extraordinary Repairs (the "Reserve") in an interest bearing account jointly
held by Lessor and Lessee at a financial institution of Lessor's choosing. The
first annual deposit shall be equal to the sum of Two Thousand Five Hundred and
00/100 Dollars ($2,500.00) per bed per annum (the number of beds to be
determined by the actual number of beds certified to be available for use in the
Facility). Beginning on the first January 1 after the Completion Date, and on
each January 1 thereafter, the number of beds shall be determined by the actual
number of beds placed in service or certified to be available for use in the
Facility, which number of beds shall not be reduced without the prior written
consent of Lessor. The Reserve account shall require the signature of an officer
of Lessee and an officer of Lessor to make withdrawals. On each January 1
thereafter during the entire Term, such payment into the Reserve shall be
increased by two and one-half percent (2.5%) per annum. The amounts in the
Reserve shall be used to pay for Extraordinary Repairs on the Facility or, in
the event Lessee fails to make any required non-Extraordinary Repairs hereunder,
Lessor may use funds in the Reserve for that purpose as well, without the
necessity of obtaining the signature of an officer of Lessee. Lessee shall
replenish amounts drawn from the Reserve at the rate of one-twelfth (1/12th) of
the total amount withdrawn per month, until completely replenished. Lessee
hereby grants to Lessor a security interest in all monies deposited into the
Reserve and Lessee shall, within fifteen (15) days from the Commencement Date,
execute all documents necessary for Lessor to perfect its security interest in
the Reserve. Lessor and Lessee agree that the first dollars of all expenditures
for Extraordinary Repairs made in each year during the Term shall be funded from
the Reserve account to the full extent of such account; provided, however, that
if Lessor, in its reasonable discretion, determines at any time that the balance
then remaining in the Reserve account is insufficient to pay in full for the
present and future anticipated Extraordinary Repairs on the Facility, Lessor
shall retain funds in the Reserve account in an amount sufficient to pay in full
for Extraordinary Repairs and Lessee will deposit additional sums in the Reserve
account from time to time, upon the written request of Lessor, in amounts equal
to the difference between the then balance in the Reserve account and the cost
to complete the present and future Extraordinary Repairs so that at all times
there is adequate amounts in the Reserve account to pay for such items on a
going forward basis. So long as no Default or Event of Default has then occurred
under any of the terms hereof, any amounts remaining in the Reserve, after the
payment of and the reimbursement for the Extraordinary Repairs on the Facility
shall be returned to Lessee at the expiration of this Lease. Lessee consents to
Lessor's pledge of the Reserve to any Facility Lender.

     9.3 ENCROACHMENTS; RESTRICTIONS. If any of the Leased Improvements shall,
at any time, encroach upon any property, street or right-of-way adjacent to the
Leased Property, or shall violate the agreements or conditions contained in any
federal, state or local law, restrictive covenant or other agreement affecting
the Leased Property, or any part thereof, or shall impair the rights of others
under any easement or right-of-way to which the Leased Property is subject, then
promptly upon the request of Lessor and provided a third party has delivered a
notice, demand or complaint regarding any such matter, Lessee shall, at its
expense, subject to its right to contest the existence of any encroachment,
violation or impairment, (a) obtain valid and effective waivers or settlements
of all claims, liabilities and damages resulting from each such encroachment,
violation or impairment, whether the same shall affect Lessor or Lessee or (b)
make such changes in the Leased Improvements, and take such other actions, as
Lessor in the good faith exercise of its judgment deems reasonably practicable,
to remove such encroachment, or to end such violation or impairment, including,
if necessary, the alteration of any of the Leased Improvements, and in any event
take all such actions as may be necessary in order to be able to continue the
operation of the Facility without such violation, encroachment or impairment.
Any such alteration shall be made in conformity with the applicable requirements
of Article X. Lessee's obligations under this Section 9.3 shall be in addition
to and shall in


                                       20

no way discharge or diminish any obligation of any insurer under any policy of
title or other insurance and Lessee shall be entitled to a credit for any sums
paid by Lessee and recovered by Lessor under any such policy of title or other
insurance.

                                    ARTICLE X

                                CAPITAL ADDITIONS

     10.1 CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY.

          (a) After the completion of the construction of the Leased
     Improvements under the Development Agreement, and provided no Default or
     Event of Default, Lessee shall have the right, upon and subject to the
     terms and conditions set forth below, to construct or install Capital
     Additions on the Leased Property without the prior written consent of
     Lessor, provided, however, except as expressly provided in Section 10.2(d)
     hereof, Lessee shall not be permitted to create any Encumbrance on the
     Leased Property in connection with such Capital Addition. Prior to
     commencing construction of any Capital Addition, Lessee shall, at Lessee's
     sole cost and expense (i) submit to Lessor in writing a proposal setting
     forth in reasonable detail any proposed Capital Addition, (ii) submit to
     Lessor such plans and specifications, certificates of need and other
     approvals, permits, licenses, contracts and other information concerning
     the proposed Capital Addition as Lessor may reasonably request, and (iii)
     obtain all necessary certificates of need, state licensure surveys and all
     regulatory approvals of architectural plans. Without limiting the
     generality of the foregoing, such proposal shall indicate the approximate
     projected cost of constructing such Capital Addition, and the use or uses
     to which it will be put.

          (b) Prior to commencing construction of any Capital Addition, Lessee
     shall first request Lessor to provide funds to pay for such Capital
     Addition in accordance with the provisions of Section 10.3. If Lessor
     declines or is unable to provide such financing on terms acceptable to
     Lessee, the provisions of Section 10.2 shall apply. Notwithstanding any
     other provision of this Article X to the contrary, no Capital Additions
     shall be made without the consent of Lessor, which consent shall not be
     unreasonably withheld or delayed, if the Capital Addition Cost of such
     proposed Capital Addition, when aggregated with the costs of all Capital
     Additions made by Lessee, would exceed twenty-five percent (25%) of the
     then Fair Market Value of the Leased Property or would diminish the value
     of the Leased Property. Furthermore, no Capital Addition shall be made
     which would tie in or connect the Leased Property and/or any Leased
     Improvements on the Leased Property with any other improvements on property
     adjacent to the Leased Property (and not part of the Land covered by this
     Lease) including, without limitation, tie-ins of buildings or other
     structures or utilities, unless Lessee shall have obtained the prior
     written approval of Lessor, which approval in Lessor's sole discretion may
     be granted or withheld. All proposed Capital Additions shall be
     architecturally integrated and consistent with the Leased Property.

     10.2 CAPITAL ADDITIONS FINANCED BY LESSEE. If Lessee provides or arranges
to finance any Capital Addition, this Lease shall be and hereby is amended to
provide as follows:

          (a) There shall be no adjustment in the Base Rent by reason of any
     such Capital Addition.

          (b) Upon the expiration or earlier termination of this Lease, except
     by reason of a Default or an Event of Default by Lessee hereunder, Lessor
     shall, if Lessee does not purchase the Leased Property as provided herein,
     compensate Lessee for all Capital Additions paid for or financed by Lessee
     in any of the following ways, determined in the sole discretion of Lessor:

               (i) By purchasing all Capital Additions paid for by Lessee from
          Lessee for cash in the amount of the Fair Market Added Value,
          determined as of the date of expiration or termination of this Lease,
          of all such Capital Additions paid for or financed by Lessee; or


                                       21

               (ii) By purchasing such Capital Additions from Lessee by
          delivering to Lessee Lessor's purchase money promissory note in the
          amount of said Fair Market Added Value, due and payable not later than
          eighteen (18) months after the date of expiration or other termination
          of this Lease, bearing interest at the test rate applicable under
          Section 1272 of the Code or any successor section thereto ("Test
          Rate") or, if no such Test Rate exists, at the Prime Rate, which
          interest shall be payable monthly, and which note shall be secured by
          a mortgage on the Leased Property, subject to all mortgages and
          encumbrances on the Leased Property at the time of such purchase; or

               (iii) Such other arrangement regarding such compensation as shall
          be mutually acceptable to Lessor and Lessee.

          (c) Lessor and Lessee agree that Lessee's construction lender for
     Capital Additions shall have the right to secure its loan by a mortgage
     upon the Leased Property provided such mortgage (i) shall not exceed the
     cost of the Capital Additions, (ii) shall be subordinate to the mortgage(s)
     or other security documents, if any, securing the repayment of money
     borrowed by Lessor to acquire the Land or to pay for Capital Additions,
     (iii) shall be subordinate to any mortgage or encumbrance now existing or
     hereinafter created including, without limitation, Facility Instruments,
     (iv) the term of the loan shall not extend beyond the term of this Lease,
     (v) such lender executes all subordination and other documents and
     certificates required by the Facility Lenders, and (vi) shall be limited
     solely to Lessee's interest in the Leased Property.

     10.3 CAPITAL ADDITIONS FINANCED BY LESSOR.

          (a) Lessee shall request that Lessor provide or arrange financing for
     a Capital Addition by providing to Lessor such information about the
     Capital Addition as Lessor may request (a "Request"), including without
     limitation, all information referred to in Section 10.1 above. Lessor may,
     but shall be under no obligation to, obtain the funds necessary to meet the
     Request. Within thirty (30) days of receipt of a Request, Lessor shall
     notify Lessee as to whether it will finance the proposed Capital Addition
     and, if so, the terms and conditions upon which it would do so, including
     the terms of any amendment to this Lease. In no event shall the portion of
     the projected Capital Addition Cost comprised of land, if any, materials,
     labor charges and fixtures be less than ninety percent (90%) of the total
     amount of such cost. Lessee may withdraw its Request by notice to Lessor at
     any time before or after receipt of Lessor's terms and conditions.

          (b) If Lessor agrees to finance the proposed Capital Addition on terms
     and conditions that are acceptable to Lessee in Lessee's discretion, Lessee
     shall provide Lessor with the following prior to any advance of funds:

               (i) all customary or other required loan documentation (if the
          Capital Addition is to be financed through the incurrence of debt);

               (ii) any information, certificates of need, regulatory approvals
          of architectural plans and other certificates, licenses, permits or
          documents requested by either Lessor or any lender with whom Lessor
          has agreed or may agree to provide financing which are necessary to
          confirm that Lessee will be able to use the Capital Addition upon
          completion thereof in accordance with the Primary Intended Use,
          including all required federal, state or local government licenses and
          approvals;

               (iii) an Officer's Certificate and, if requested, a certificate
          from Lessee's architect, setting forth in reasonable detail the
          projected (or actual, if available) cost of the proposed Capital
          Addition;


                                       22

               (iv) an amendment to this Lease, duly executed and acknowledged,
          in form and substance satisfactory to Lessor (the "Lease Amendment"),
          and containing such provisions as may be necessary or appropriate,
          including without limitation, any appropriate changes in the legal
          description of the Land, the Fair Market Value and the Rent, which
          shall be increased to take into account an adjustment to the Total
          Development Costs in an amount equal to the equity contributed by
          Lessor to finance the Capital Addition, or, in the case of debt
          financing, the principal and interest on the debt incurred by Lessor
          to finance the Capital Addition;

               (v) a warranty deed conveying title to Lessor to any land
          acquired for the purpose of constructing the Capital Addition, free
          and clear of any liens or encumbrances except those approved by Lessor
          and, both prior to and following completion of the Capital Addition,
          an as-built survey thereof satisfactory to Lessor;

               (vi) endorsements to any outstanding policy of title insurance
          covering the Leased Property and any additional land referred to in
          Section 10.3(b)(v) above, or a supplemental policy of title insurance
          covering the Leased Property and any additional land referred to in
          Section 10.3(b)(v) above, satisfactory in form and substance to Lessor
          (A) updating the same without any additional exceptions, except as may
          be permitted by Lessor; and (B) increasing the coverage thereof by an
          amount equal to the Fair Market Value of the Capital Addition (except
          to the extent covered by the owner's policy of title insurance
          referred to in subparagraph (vii) below);

               (vii) if required by Lessor, (A) an owner's policy of title
          insurance insuring fee simple title to any land conveyed to Lessor
          pursuant to subparagraph (v), free and clear of all liens and
          encumbrances except those approved by Lessor and (B) a lender's policy
          of title insurance satisfactory in form and substance to Lessor and
          the Lending Institution advancing any portion of the Capital Addition
          Cost;

               (viii) if required by Lessor, prior to commencing the Capital
          Addition, an M.A.I. appraisal of the Leased Property indicating that
          the value of the Leased Property upon completion of the Capital
          Addition will exceed the Fair Market Value of the Leased Property
          prior thereto by an amount not less than one hundred percent (100%) of
          the Capital Addition Costs; and

               (ix) such other certificates (including, but not limited to,
          endorsements increasing the insurance coverage, if any, at the time
          required by Section 13.1), documents, contracts, opinions of counsel,
          appraisals, surveys, certified copies of duly adopted resolutions of
          the governing body of Lessee authorizing the execution and delivery of
          the Lease Amendment and any other instruments as may be reasonably
          required by Lessor and any Lending Institution advancing or
          reimbursing Lessee for any portion of the Capital Addition Cost.

          (c) With respect to Capital Additions financed by Lessee, Lessor and
     Lessee agree that Lessee shall have the right to designate the general
     contractor, developer, architect, construction company, engineer and other
     parties which will participate in the development of the Capital Addition,
     subject to Lessor's approval not to be unreasonably withheld, conditioned
     or delayed. In such event, Lessee shall control the preparation and
     negotiation of the definitive agreements with such parties and Lessee will
     give Lessor an opportunity to review and approve such definitive agreements
     prior to their execution, such approval not to be unreasonably withheld,
     conditioned or delayed. With respect to Capital Additions financed by
     Lessor, Lessor and Lessee shall jointly designate the general contractor,
     developer, architect, construction company, engineer and other parties
     which will participate in the development of the Capital Addition and, in
     such event, the parties shall jointly control the preparation and
     negotiation of the definitive agreements with such parties.


                                       23

          (d) Upon making a Request to finance a Capital Addition, whether or
     not such financing is actually consummated, Lessee shall pay or agree to
     pay, upon demand, all reasonable costs and expenses of Lessor and any
     Lending Institution which has committed to finance such Capital Addition
     which have been paid or incurred by them in connection with the financing
     of the Capital Addition, including, but not limited to, (i) the fees and
     expenses of their respective counsel, (ii) all printing expenses, (iii) the
     amount of any filing, registration and recording taxes and fees, (iv)
     documentary stamp taxes, if any, (v) title insurance charges, appraisal
     fees, if any, rating agency fees, if any, and (vi) commitment fees, if any,
     and (vii) costs of obtaining regulatory and governmental approvals,
     including but not limited to any required certificates of need, for the
     construction, operation, use or occupancy of the Capital Addition.

     10.4 SALVAGE. All materials which are scrapped or removed in connection
with the making of either Capital Additions financed by Lessee or repairs made
by Lessee pursuant to this Lease shall be or become the property of Lessee. All
materials which are scrapped or removed in connection with the making of either
Capital Additions financed by Lessor pursuant to Section 10.3 or repairs made by
Lessor pursuant to this Lease shall be or become the property of Lessee and
Lessee may remove same at its sole cost and expense.

                                   ARTICLE XI

                                      LIENS

     Subject to the provisions of Article XII relating to permitted contests,
Lessee will not directly or indirectly create or allow to remain and will
promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters, if any, set forth in EXHIBIT B, (c) restrictions, liens
and other encumbrances which are consented to in writing by Lessor, or any
easements granted pursuant to the provisions of Section 7.3 of this Lease, (d)
liens for those taxes of Lessor which Lessee is not required to pay hereunder,
(e) liens for Impositions or for sums resulting from noncompliance with Legal
Requirements so long as (1) the same are not yet payable or are payable without
the addition of any fine or penalty or (2) such liens are in the process of
being contested as permitted by Article XII, (f) liens of mechanics, laborers,
materialmen, suppliers or vendors for sums either disputed or not yet due,
provided that (1) the payment of such sums shall not be postponed for more than
sixty (60) days after the completion of the action giving rise to such lien and
such reserve or other appropriate provisions as shall be required by law or
generally accepted accounting principles shall have been made therefor or (2)
any such liens are in the process of being contested as permitted by Article
XII, and (g) any liens which are the responsibility of Lessor pursuant to this
Lease. Unless otherwise expressly provided herein, Lessee shall not mortgage or
grant any interest or security interest in, or otherwise assign, any part of
Lessee's rights and interests in this Lease, the Leased Property, Lessee's
Personal Property, or any permits, licenses, certificates of need (if any) or
any other approvals required to operate the Leased Property during the Term
without the prior written consent of the Lessor, which may be withheld at
Lessor's sole discretion.

                                   ARTICLE XII

                               PERMITTED CONTESTS

     So long as no Default or an Event of Defaults then exits, Lessee, at
Lessee's expense, may contest, after consultation with Lessor at least ten (10)
Business Days prior to such contest, by appropriate legal proceedings conducted
in good faith and with due diligence, the amount, validity or application, in
whole or in part, of any Imposition, Legal Requirement, Insurance Requirement,
lien, attachment, levy, encumbrance, charge or claim not otherwise permitted by
Article XI, provided that (a) in the case of an unpaid Imposition, lien,
attachment, levy, encumbrance, charge or claim, the commencement and
continuation of such proceedings shall suspend the collection thereof from
Lessor and from the Leased Property, (b) neither the Leased Property nor any
Rent therefrom nor any part thereof or interest therein would be in any
immediate danger of being sold, forfeited, attached or lost, (c) in the case of
a Legal Requirement, Lessor would not be in any immediate danger of civil or
criminal


                                       24

liability for failure to comply therewith pending the outcome of such
proceedings, (d) in the event that any such contest shall involve a sum of money
or potential loss in excess of Fifty Thousand Dollars ($50,000), then, in any
such event, (i) provided the Consolidated Net Worth of Lessee is then in excess
of Fifty Million Dollars ($50,000,000), Lessee shall deliver to Lessor an
Officer's Certificate to the effect set forth in clauses (a), (b) and (c), to
the extent applicable, or (ii) in the event the Consolidated Net Worth of Lessee
is not then in excess of Fifty Million Dollars ($50,000,000), then Lessee shall
deliver to Lessor and its counsel an opinion of Lessee's counsel to the effect
set forth in clauses (a), (b) and (c), to the extent applicable, (e) in the case
of a Legal Requirement and/or an Imposition, lien, encumbrance or charge, Lessee
shall give such reasonable security as may be demanded by Lessor to insure
ultimate payment of the same and to prevent any sale or forfeiture of the
affected portion of the Leased Property or the Rent by reason of such
non-payment or non-compliance; provided, however, the provisions of this Article
XII shall not be construed to permit Lessee to contest the payment of Rent
(except as to contests concerning the method of computation or the basis of levy
of any Imposition or the basis for the assertion of any other claim) or any
other sums payable by Lessee to Lessor hereunder, (f) in the case of an
Insurance Requirement, the coverage required by Article XIII shall be
maintained, and (g) if such contest be finally resolved against Lessor or
Lessee, Lessee shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or comply with the applicable Legal Requirement or Insurance
Requirement. Lessor, at Lessee's expense, shall execute and deliver to Lessee
such authorizations and other documents as may reasonably be required in any
such contest and, if reasonably requested by Lessee or if Lessor so desires,
Lessor shall join as a party therein. Lessee shall indemnify and save Lessor
harmless against any liability, cost or expense of any kind that may be imposed
upon Lessor in connection with any such contest and any loss resulting
therefrom.

                                  ARTICLE XIII

                                    INSURANCE

     13.1 GENERAL INSURANCE REQUIREMENTS. During the Term of this Lease (except
that the coverages in Sections 13.1(a), and 13.1(c) and those relating to
professional liability referenced in Sections 13.1(g) and 13.1(h) below shall be
required from and after the Completion Date), Lessee shall at all times keep the
Leased Property and all property located in or on the Leased Property, including
Lessee's Personal Property, insured against loss or damage from such causes as
are customarily insured against, by prudent owners of similar facilities.
Without limiting the generality of the foregoing, Lessee shall obtain and
maintain in effect throughout the Lease Term, the kinds and amounts of insurance
deemed necessary by the Lessor and as described below. At Lessor's option,
Lessor may obtain such coverages and, in such event, shall be entitled to obtain
reimbursement from Lessee for the costs of such coverages. This insurance shall
be written by insurance companies (i) acceptable to the Lessor, (ii) that are
rated at least an "A-VIII" or better by Best's Insurance Guide and Key Ratings
and a claim payment rating by Standard & Poor's Corporation of A or better, and
(iii) authorized, licensed and qualified to do insurance business in the state
in which the Leased Property is located. The aggregate amount of coverage by a
single company must not exceed five percent (5%) of the insurance company's
policyholders' surplus. The policies must name Lessor (and any other entities as
Lessor may deem necessary) as an additional insured and losses shall be payable
to Lessor and/or Lessee as provided in Article XIV. Each insurance policy
required hereunder must (i) provide primary insurance without right of
contribution from any other insurance carried by Lessor, (ii) permit Lessor to
pay premiums at Lessor's discretion, and (iii) as respects any third party
liability claim brought against Lessor, obligate the insurer to defend Lessor as
an additional insured thereunder. In addition, the policies shall name as an
additional insured all Facility Lenders, if any, by way of a standard form of
mortgagee's loss payable endorsement. Any loss adjustment shall require the
written consent of Lessor and each affected Facility Lender. Evidence of
insurance and/or Impositions shall be deposited with Lessor and, if requested,
with any Facility Lender. If any provision of any Facility Instrument requires
deposits of insurance to be made with such Facility Lender, Lessee shall either
pay to Lessor monthly the amounts required and Lessor shall transfer such
amounts to such Facility Lender or, pursuant to written direction by Lessor,
Lessee shall make such deposits directly with such Facility Lender. The policies
on the Leased Property, including the Leased Improvements, the Fixtures and
Lessee's Personal Property, shall insure against the following risks:


                                       25

          (a) All Risks or Special Form Property insurance against loss or
     damage to the building and improvements, including but not limited to,
     perils of fire, lightning, water, wind, theft, vandalism and malicious
     mischief, plate glass breakage, and perils typically provided under an
     Extended Coverage Endorsement and other forms of broadened risk perils, and
     insured on a "replacement cost" value basis to the extent of the full
     replacement value of the Leased Property. The policy shall include coverage
     for subsidence. The deductible amount thereunder shall be borne by the
     Lessee in the event of a loss and the deductible must not exceed Ten
     Thousand and 00/100 Dollars ($10,000.00) per occurrence. Further, in the
     event of a loss, Lessee shall abide by all provisions of the insurance
     contract, including proper and timely notice of the loss to the insurer,
     and Lessee further agrees that it will notify the Lessor of any loss in the
     amount of Twenty-Five Thousand and 00/100 Dollars ($25,000.00) or greater
     and that no claim at or in excess of Twenty-Five Thousand and 00/100
     Dollars ($25,000.00) shall be settled without the prior written consent of
     Lessor, which consent shall not be unreasonably withheld or delayed.

          (b) Intentionally Deleted

          (c) Insurance against loss of earnings in an amount sufficient to
     cover not less than twelve (12) months' lost earnings and written in an
     "all risks" form, either as an endorsement to the insurance required under
     subparagraph 13.1(a) above, or under a separate policy.

          (d) Worker's compensation insurance covering all employees in amounts
     that are customary for the Lessee's industry.

          (e) Commercial General Liability in a primary amount of at least One
     Million and 00/100 Dollars ($1,000,000.00) per occurrence, bodily injury
     for injury or death of any one person or property damage for damage to or
     loss of property of others, subject to a Three Million and 00/100 Dollars
     ($3,000,000.00) annual aggregate policy limit for all bodily injury and
     property damage claims, occurring on or about the Leased Property or in any
     way related to the Leased Property, including but not limited to, any
     swimming pools or other rehabilitation and recreational facilities or areas
     that are located on the Leased Property otherwise related to the Leased
     Property. Such policy shall include coverages of a Broad Form nature,
     including, but not limited to, Explosion, Collapse and Underground (XCU),
     Products Liability, Completed Operations, Broad Form Contractual Liability,
     Broad Form Property Damage, Personal Injury, Incidental Malpractice
     Liability, and Host Liquor Liability.

          (f) Automobile and vehicle liability insurance coverage for all owned,
     non-owned, leased or hired automobiles and vehicles in a primary limit
     amount of One Million and 00/100 Dollars ($1,000,000.00) per occurrence for
     bodily injury or per occurrence for property damage.

          (g) Umbrella liability insurance in the minimum amount of Five Million
     and 00/100 Dollars ($5,000,000.00) for each occurrence, subject to an
     aggregate liability amount of Five Million and 00/100 Dollars
     ($5,000,000.00), with a Ten Thousand and 00/100 Dollars ($10,000.00)
     self-insured retention for exposure not covered in underlying primary
     policies. The umbrella liability policy shall name in its underlying
     schedule the policies of professional liability (the coverages of which
     shall be subject to subparagraph (h) below), commercial general liability,
     garage keepers liability, automobile/vehicle liability and employer's
     liability under the Worker's Compensation Policy.

          (h) Subject to the feasibility of obtaining such coverages, with
     respect to costs and availability, from carriers in the State of
     Pennsylvania, Lessee shall use its best efforts to procure Professional
     liability insurance for Lessee and any physician employed by Lessee or
     other employee or agent of the Lessee providing services at the Leased
     Property in an amount not less than Five Million and 00/100 Dollars
     ($5,000,000.00) per individual claim and Ten Million and 00/100 Dollars
     ($10,000,000.00) annual aggregate; it being understood and agreed that
     until such coverages become feasible, if ever, Lessee


                                       26

     shall be required to maintain such coverages in limits of One Million and
     00/100 Dollars ($1,000,000.00) per individual claim and Four Million and
     00/100 Dollars ($4,000,000.00) annual aggregate.

          (i) A commercial blanket bond covering all employees of the Lessee,
     including its officers and the individual owners of the insured business
     entity, whether a joint-venture, partnership, proprietorship or
     incorporated entity, against loss as a result of their dishonesty. Policy
     limit shall be in an amount of at least One Million and 00/100 Dollars
     ($1,000,000.00) subject to a deductible of no more than Ten Thousand and
     00/100 Dollars ($10,000.00) per occurrence.

     The term "Full Replacement Cost" as used herein, shall mean the actual
     replacement cost thereof from time to time, including increased cost of
     construction endorsement, less exclusions provided in the normal fire
     insurance policy. In the event either Lessor or Lessee believes that the
     Full Replacement Cost has increased or decreased at any time during the
     Term, it shall have the right to have such Full Replacement Cost
     re-determined by the fire insurance company which is then providing the
     largest amount of fire insurance carried on the Leased Property,
     hereinafter referred to as the "impartial appraiser". The party desiring to
     have the Full Replacement Cost so re-determined shall forthwith, on receipt
     of such determination by such impartial appraiser, give written notice
     thereof to the other party hereto. The determination of such impartial
     appraiser shall be final and binding on the parties hereto, and Lessee
     shall forthwith increase, or may decrease, the amount of the insurance
     carried pursuant to this Section 13.1, as the case may be, to the amount so
     determined by the impartial appraiser. Lessee shall pay the fee, if any, of
     the impartial appraiser.

     13.2 ADDITIONAL INSURANCE. In addition to the insurance described above,
Lessee shall maintain at all times adequate worker's compensation insurance
coverage for all persons employed by Lessee on the Leased Property, in
accordance with the requirements of applicable local, state and federal law.

     13.3 WAIVER OF SUBROGATION. All insurance policies to be obtained by Lessee
as required hereunder, including, without limitation, insurance policies
covering the Leased Property, the Fixtures, the Facility and/or Lessee's
Personal Property, including without limitation, contents, fire and casualty
insurance, shall, expressly waive any right of subrogation on the part of the
insurer against Lessor. Lessee shall obtain insurance policies which include
such a waiver clause or endorsement regardless of whether same is obtainable
without extra cost, and in the event of such an extra charge Lessee shall pay
the same, unless it is impossible for Lessee to obtain such clause or
endorsement from the insurance company approved by Lessor as provided in Section
13.1 hereof.

     13.4 FORM OF INSURANCE. All of the policies of insurance referred to in
this Section 13.4 shall be written in form satisfactory to Lessor and by
insurance companies satisfactory to Lessor. Lessee shall pay all of the premiums
therefor, and shall deliver such original policies, or in the case of a blanket
policy, a copy of the original policy certified in writing by a duly authorized
agent for the insurance company as a "true and certified" copy of the policy to
the Lessor effective with the Commencement Date and furnished annually
thereafter (and, with respect to any renewal policy no later than the expiration
of the existing policy) and in the event of the failure of Lessee either to
obtain such insurance in the names herein called for or to pay the premiums
therefor, or to deliver such policies or certified copies of such policies (if
allowed hereunder) to Lessor at the times required, Lessor shall be entitled,
but shall have no obligation, to obtain such insurance and pay the premiums
therefor, which premiums shall be repayable to Lessor upon written demand
therefor, and failure to repay the same shall constitute an Event of Default
within the meaning of Section 16.1(c). Each insurer mentioned in this Section
13.4 shall agree, by endorsement on the policy or policies issued by it, or by
independent instrument furnished to Lessor, that it will give to Lessor sixty
(60) days' prior written notice (at Lessor's notice address as specified in this
Lease (the "Lessor's Notice Address")) before the policy or policies in question
shall be altered, allowed to expire or canceled. The parties hereto agree that
all insurance policies, endorsements and certificates which provide that the
insurer will "endeavor to" give notice before same may be altered, allowed to
expire or canceled will not be acceptable to Lessor. Notwithstanding anything
contained herein to the contrary, all policies of insurance required to be
obtained by the Lessee hereunder shall provide (i) that such policies will not
lapse, terminate, be canceled, or be amended or modified to reduce limits


                                       27

or coverage terms unless and until Lessor has received not less than sixty (60)
days' prior written notice at the Lessor's Notice Address, with a simultaneous
copy to MPT Operating Partnership, L.P., Attention: Its President, 1000 Urban
Center Drive, Suite 501, Birmingham, Alabama 35242, and (ii) that in the event
of cancellation due to non-payment of premium, the insurer will provide not less
than ten (10) days' prior written notice to the Lessor at the Lessor's Notice
Address, with a simultaneous copy to MPT Operating Partnership, L.P., Attention:
Its President, 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242.

     13.5 INCREASE IN LIMITS. In the event that Lessor shall at any time deem
the limits of the personal injury, property damage or general public liability
insurance then carried to be insufficient, the parties shall endeavor to agree
on the proper and reasonable limits for such insurance to be carried and such
insurance shall thereafter be carried with the limits thus agreed on until
further change pursuant to the provisions of this Section 13.5. If the parties
shall be unable to agree thereon, the proper and reasonable limits for such
insurance to be carried shall be determined by an impartial third party selected
by the parties. Nothing herein shall permit the amount of insurance to be
reduced below the amount or amounts required by any of the Facility Instruments.

     13.6 BLANKET POLICY. Notwithstanding anything to the contrary contained in
this Section 13.6, Lessee's obligations to carry the insurance provided for
herein may be brought within the coverage of a so-called blanket policy or
policies of insurance carried and maintained by Lessee provided that

          (a) Any such blanket policy or policies are acceptable to and have
     been approved by the Lessor;

          (b) Any such blanket policy or policies shall not be changed, altered
     or modified without the prior written consent of the Lessor; and

          (c) Any such blanket policy or policies shall otherwise satisfy the
     insurance requirements of this Article XIII (including the requirement of
     thirty (30) days' written notice before the expiration or cancellation of
     such policies as required by Section 13.4 hereof) and shall provide for
     deductibles in amounts acceptable to Lessor.

     13.7 NO SEPARATE INSURANCE. Lessee shall not, on Lessee's own initiative or
pursuant to the request or requirement of any third party, take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article to be furnished by, or which may reasonably be required
to be furnished by, Lessee, or increase the amounts of any then existing
insurance by securing an additional policy or additional policies, unless all
parties having an insurable interest in the subject matter of the insurance,
including in all cases Lessor and all Facility Lenders, are included therein as
additional insureds and the loss is payable under said insurance in the same
manner as losses are required to be payable under this Lease. Lessee shall
immediately notify Lessor of the taking out of any such separate insurance or of
the increasing of any of the amounts of the then existing insurance by securing
an additional policy or additional policies.

                                   ARTICLE XIV

                                FIRE AND CASUALTY

     14.1 INSURANCE PROCEEDS. All proceeds payable by reason of any loss or
damage to the Leased Property, or any portion thereof, and insured under any
policy of insurance required by Article XIII of this Lease shall be paid to
Lessor and held by Lessor in trust (subject to the provisions of Section 14.7)
and shall be made available for reconstruction or repair, as the case may be, of
any damage to or destruction of the Leased Property, or any portion thereof, and
shall be paid out by Lessor from time to time for the reasonable cost of such
reconstruction or repair. Any excess proceeds of insurance remaining after the
completion of the restoration or reconstruction of the Leased Property (or in
the event neither Lessor nor Lessee is required or elects to repair and restore,
all such insurance proceeds) shall be retained by Lessor free and clear upon
completion of any such repair and restoration


                                       28

except as otherwise specifically provided below in this Article XIV. All salvage
resulting from any risk covered by insurance shall belong to Lessor except that
any salvage relating to Capital Additions paid for by Lessee or to Lessee's
Personal Property shall belong to Lessee.

     14.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY
INSURANCE.

          (a) Except as provided in Section 14.7, if during the Term the Leased
     Property is totally or partially destroyed from a risk covered by the
     insurance described in Article XIII and the Facility is thereby rendered
     Unsuitable for its Use, Lessee shall have the option, by giving written
     notice to Lessor within sixty (60) days following the date of such
     destruction, to (i) restore the Facility to substantially the same
     condition as existed immediately before the damage or destruction, or (ii)
     so long as no Default or Event of Default then exists, and so long as no
     such Default or Event of Default exists at the time of the closing of such
     purchase, purchase the Leased Property from Lessor for a purchase price
     equal to the Fair Market Value Purchase Price of the Leased Property
     immediately prior to such damage or destruction, or (iii) so long as the
     damage or destruction was not caused by the negligence of Lessee, its
     agents, servants, employees or contractors, terminate this Lease and, in
     this event, Lessor shall be entitled to retain the insurance proceeds, and
     Lessee shall pay to Lessor on demand the amount of any deductible or
     uninsured loss arising in connection therewith. In the event Lessee
     purchases the Leased Property pursuant to this Section 14.2(a), the terms
     set forth in Article XVIII shall apply and the sale/purchase must be closed
     within ninety (90) days after the date of the written notice from Lessee to
     Lessor of Lessee's intent to purchase, unless a different closing date is
     agreed upon in writing by Lessor and Lessee.

          (b) Except as provided in Section 14.7, if during the Term the Leased
     Improvements and/or the Fixtures are totally or partially destroyed from a
     risk covered by the insurance described in Article XIII, but the Facility
     is not thereby rendered Unsuitable for its Primary Intended Use, Lessee
     shall restore the Facility to substantially the same condition as existed
     immediately before the damage or destruction. Such damage or destruction
     shall not terminate this Lease; provided, however, if Lessee cannot within
     a reasonable time obtain all necessary governmental approvals, including
     building permits, licenses, conditional use permits and any certificates of
     need, after good faith diligent efforts to do so, in order to be able to
     perform all required repair and restoration work and to operate the
     Facility for its Primary Intended Use in substantially the same manner as
     immediately prior to such damage or destruction, so long as no Default or
     Event of Default then exists and so long as no such Default or Event of
     Default exists at the time of the closing of such purchase, Lessee shall
     have the option, by giving written notice to Lessor within sixty (60) days
     following the date of such damage or destruction, to purchase the Leased
     Property for a purchase price equal to the Fair Market Value Purchase Price
     of the Leased Property immediately prior to such damage or destruction. In
     the event Lessee purchases the Leased Property pursuant to this Section
     14.2(b), the terms set forth in Article XVIII shall apply and the
     sale/purchase must be closed within ninety (90) days after the date of the
     written notice from Lessee to Lessor of Lessee's intent to purchase, unless
     a different closing date is agreed upon in writing by Lessor and Lessee.

          (c) If the cost of the repair or restoration exceeds the amount of
     proceeds received by Lessor from the insurance required under Article XIII,
     Lessee shall be obligated to contribute any excess amount needed to restore
     the Facility prior to use of the insurance proceeds. Such amount shall be
     paid by Lessee to Lessor (or a Facility Lender if required) to be held in
     trust together with any other insurance proceeds for application to the
     cost of repair and restoration.

          (d) In the event Lessee elects to purchase the Leased Property as
     provided in this Section 14.1, and no Default or Event of Default exists at
     the time of the closing of such purchase, this Lease shall terminate upon
     payment of the purchase price and transfer of title to the Leased Property
     to Lessee, and Lessor shall remit to Lessee all insurance proceeds being
     held in trust by Lessor or the Facility Lender on or prior to the closing
     of Lessee's purchase of the Leased Property.


                                       29

     14.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED BY
INSURANCE. Except as provided in Section 14.7 below, if during the Term, the
Facility is totally or materially destroyed from a risk not covered by the
insurance described in Article XIII but that would have been covered if Lessee
carried the insurance required pursuant to the terms of this Lease, then whether
or not such damage or destruction renders the Facility Unsuitable for its Use,
Lessee shall, at Lessee's sole cost and expense, restore the Facility to
substantially the same condition it was in immediately before such damage or
destruction and such damage or destruction shall not terminate this Lease. If
such damage or destruction is not material, Lessee shall restore the Leased
Property at Lessee's expense.

     14.4 LESSEE'S PERSONAL PROPERTY. Intentionally Omitted.

     14.5 RESTORATION OF LESSEE'S PROPERTY. If Lessee is required or elects to
restore the Facility as provided in Section 14.2 or Section 14.3, Lessee shall
also restore all alterations and improvements made by Lessee, Lessee's Personal
Property and all Capital Additions paid for by Lessee.

     14.6 NO ABATEMENT OF RENT. This Lease shall remain in full force and effect
and Lessee's obligation to make rental payments and to pay all other charges
required by this Lease shall remain unabated during any period required for
repair and restoration.

     14.7 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of Section
14.2 or Section 14.3 to the contrary, if damage to or destruction of the
Facility occurs during the last twenty-four (24) months of the Term, and if such
damage or destruction cannot be fully repaired and restored within six (6)
months immediately following the date of loss, either party shall have the right
to terminate this Lease by giving notice to the other within thirty (30) days
after the date of damage or destruction, in which event Lessor shall be entitled
to retain the insurance proceeds and Lessee shall pay to Lessor on demand the
amount of any deductible or uninsured loss arising in connection therewith;
provided, however, that any such notice given by Lessor shall be void and of no
force and effect if Lessee exercises an available option to extend the Term for
one Extended Term within thirty (30) days following receipt of such termination
notice.

     14.8 TERMINATION OF RIGHT TO PURCHASE AND SUBSTITUTION. Any termination of
this Lease pursuant to this Article XIV shall cause any right to purchase
granted to Lessee under any other provisions of this Lease to be terminated and
to be without further force and effect.

     14.9 WAIVER. Lessee hereby waives any statutory or common law rights of
termination which may arise by reason of any damage or destruction of the
Facility.

     14.10 PURCHASE OPTION SUBORDINATE TO FACILITY INSTRUMENT. Notwithstanding
any provision set forth in this Article XIV to the contrary, Lessee's purchase
rights as set forth in this Article XIV are and shall be subject, subordinate
and inferior to any Facility Instrument. This provision shall be self-operative.
However, any Facility Lender may from time to time request that such
subordination be evidenced by a separate written agreement. Within ten (10) days
following written request by Lessor or any Facility Lender, the Lessee shall
execute and deliver to Lessor or such Facility Lender a written agreement in
form and substance satisfactory to such Facility Lender and any applicable
rating agency. In the event Lessee fails or refuses to execute and deliver such
written agreement within such ten (10) day period, then, in addition to all
other remedies available at law or in equity, the Lessor shall be entitled to
terminate Lessee's purchase rights under this Article XIV upon delivery of five
(5) days' written notice to Lessee. In the event Lessee has not executed and
delivered to such Facility Lender and any applicable rating agency, if any, the
written agreement requested within such five (5) day period, then in such event,
Lessee's purchase rights under this Article XIV shall be deemed forfeited and of
no further force or effect.


                                       30

                                   ARTICLE XV

                                  CONDEMNATION

     15.1 DEFINITIONS.

          (a) "Condemnation" means (i) the exercise of any governmental power,
     whether by legal proceedings or otherwise, by a Condemnor or (ii) a
     voluntary sale or transfer by Lessor to any Condemnor, either under threat
     of Condemnation or while legal proceedings for Condemnation are pending.

          (b) "Date of Taking" means the date the Condemnor has the right to
     possession of the property being condemned.

          (c) "Award" means all compensation, sums or anything of value awarded,
     paid or received on a total or partial Condemnation.

          (d) "Condemnor" means any public or quasi-public authority, or private
     corporation or individual, having the power of Condemnation.

     15.2 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any
Taking of all or any part of the Leased Property or any interest in this Lease
by Condemnation, the rights and obligations of the parties shall be determined
by this Article XV.

     15.3 TOTAL TAKING. If there is a Taking of all of the Leased Property by
Condemnation, this Lease shall terminate on the Date of Taking.

     15.4 PARTIAL TAKING. If there is a Taking of a portion of the Leased
Property by Condemnation, this Lease shall remain in effect if the Facility is
not thereby rendered Unsuitable for its Primary Intended Use. If, however, the
Facility is thereby rendered Unsuitable for its Primary Intended Use, Lessee
shall have the option (a) to restore the Facility, at its own expense, to the
extent possible, to substantially the same condition as existed immediately
before the partial Taking, or (b) so long as no Default or Event of Default then
exists and so long as no such Default or Event of Default exists at the time of
the closing of such purchase, to acquire the Leased Property from Lessor for a
purchase price equal to the Fair Market Value Purchase Price of the Leased
Property immediately prior to such partial Taking, in which event this Lease
shall terminate upon payment of the purchase price. Lessee shall exercise its
option by giving Lessor notice thereof within sixty (60) days after Lessee
receives notice of the Taking. In the event Lessee exercises the option to
purchase the Leased Property pursuant to this Section 15.4, the terms set forth
in Article XVIII shall apply and the sale/purchase must be closed within thirty
(30) days after the date of the written notice from Lessee to Lessor of Lessee's
intent to purchase, unless a different closing date is agreed upon in writing by
Lessor and Lessee.

     15.5 RESTORATION. If there is a partial Taking of the Leased Property and
this Lease remains in full force and effect pursuant to Section 15.4, Lessee
shall accomplish all necessary restoration.

     15.6 AWARD DISTRIBUTION. In the event Lessee exercises the purchase option
as described in clause (b) of Section 15.4, the entire Award shall belong to
Lessee provided no Default or Event of Default then exists and so long as no
such Default or Event of Default exists at the time of the closing of such
purchase, and Lessor agrees to assign to Lessee all of its rights thereto. In
any other event, the entire Award shall belong to and be paid to Lessor, except
that, if this Lease is terminated, and subject to the rights of the Facility
Lender, Lessee shall be entitled to receive from the Award, if and to the extent
such Award specifically includes such items, the following:


                                       31

          (a) A sum attributable to the Capital Additions for which Lessee would
     be entitled to reimbursement at the end of the Term pursuant to the
     provisions of Section 10.2(c) and the value, if any, of the leasehold
     interest of Lessee under this Lease; and

          (b) A sum attributable to Lessee's Personal Property and any
     reasonable removal and relocation costs included in the Award.

If Lessee is required or elects to restore the Facility, Lessor agrees that,
subject to the rights of the Facility Lenders, its portion of the Award shall be
used for such restoration and it shall hold such portion of the Award in trust,
for application to the cost of the restoration.

     15.7 TEMPORARY TAKING. The Taking of the Leased Property, or any part
thereof, by military or other public authority shall constitute a Taking by
Condemnation only when the use and occupancy by the Taking authority has
continued for longer than six (6) months. During any such six (6) month period
all the provisions of this Lease shall remain in full force and effect and the
Base Rent shall not be abated or reduced during such period of Taking.

     15.8 PURCHASE OPTION SUBORDINATE TO FACILITY INSTRUMENT. Notwithstanding
any provision set forth in this Article XV to the contrary, Lessee's purchase
rights as set forth in this Article XV, are and shall be subject, subordinate
and inferior to any Facility Instrument. This provision shall be self-operative.
However, any Facility Lender may from time to time request that such
subordination be evidenced by a separate written agreement. Within ten (10) days
following written request by Lessor or any Facility Lender, the Lessee shall
execute and deliver to Lessor or such Facility Lender a written agreement, in
form and substance satisfactory to such Facility Lender and any applicable
rating agency. In the event Lessee fails or refuses to execute and deliver such
written agreement within such ten (10) day period, then, in addition to all
other remedies available at law or in equity, the Lessor shall be entitled to
terminate Lessee's purchase rights under this Article XV upon delivery of five
(5) days' written notice to Lessee. In the event Lessee has not executed and
delivered to Lessor or such Facility Lender and any applicable rating agency, if
any, the written agreement requested within such five (5) day period, then in
such event, Lessee's purchase rights under this Article XV shall be deemed
forfeited and of no further force or effect.

                                   ARTICLE XVI

                                     DEFAULT

     16.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events (individually, an "Event of Default") shall constitute Events of Default
hereunder:

          (a) a default or event of default by Lessee shall occur under any of
     the Other Leases that is not cured within the applicable cure period as
     provided therein, or

          (b) if Lessee shall fail to make a payment of the Rent or any other
     monetary payment due and payable by Lessee under this Lease within seven
     (7) days from the date same becomes due and payable, or

          (c) if Lessee shall fail to observe or perform any other term,
     covenant or condition of this Lease and such failure is not cured by Lessee
     within a period of thirty (30) days after receipt by Lessee of written
     notice thereof from Lessor unless such failure cannot with due diligence be
     cured within a period of thirty (30) days, in which case such failure shall
     not be deemed to continue if Lessee proceeds promptly and with due
     diligence to cure the failure and diligently completes the curing thereof
     within sixty (60) days after receipt by Lessee of Lessor's notice of
     default provided, however, that such extended cure period may be extended
     upon Lessee's request for additional sixty (60) day periods if Lessee
     provides evidence that is diligently pursuing the curing of such failure,
     or


                                       32

          (d) if Lessee shall:

               (i) admit in writing its inability to pay its debts generally as
          they become due,

               (ii) file a petition in bankruptcy or a petition to take
          advantage of any insolvency act,

               (iii) make an assignment for the benefit of its creditors,

               (iv) consent to the appointment of a receiver of itself or of the
          whole or any substantial part of its property, or

               (v) file a petition or answer seeking reorganization or
          arrangement under the Federal bankruptcy laws or any other applicable
          law or statute of the United States of America or any state thereof,
          or

          (e) if Lessee's license as defined in Article XXXIX or participation
     or certification in Medicare, Medicaid or other governmental payor programs
     is terminated, or

          (f) if Lessee admits in writing that it cannot meet its obligations as
     they become due; or is declared insolvent according to any law; or
     assignment of Lessee's property is made for the benefit of creditors; or a
     receiver or trustee is appointed for Lessee or its property; or the
     interest of Lessee under this Lease is levied on under execution or other
     legal process; or any petition is filed by or against Lessee to declare
     Lessee bankrupt or to delay, reduce or modify Lessee's capital structure if
     Lessee be a corporation or other entity (provided that no such levy,
     execution, legal process or petition filed against Lessee shall constitute
     a breach of this Lease if Lessee shall vigorously contest the same by
     appropriate proceedings and shall remove or vacate the same within thirty
     (30) days from the date of its creation, service or filing); or the real or
     personal property of Lessee shall be sold or levied upon by any sheriff,
     marshall or constable, or

          (g) if Lessee abandons or vacates the Leased Property (Lessee's
     absence from the Leased Property for thirty (30) consecutive days shall
     constitute abandonment), or Lessee fails to continuously operate the
     Facility in accordance with the terms of this Lease, or

          (h) if the Lessee shall, after a petition in bankruptcy is filed
     against it, be adjudicated a bankrupt or if a court of competent
     jurisdiction shall enter an order or decree appointing, without the consent
     of Lessee, a receiver of Lessee or of the whole or substantially all of its
     property, or approving a petition filed against it seeking reorganization
     or arrangement of Lessee under the federal bankruptcy laws or any other
     applicable law or statute of the United States of America or any state
     thereof, and such judgment, order or decree shall not be vacated or set
     aside or stayed within ninety (90) days from the date of the entry thereof,
     or

          (i) if Lessee shall be liquidated or dissolved, or shall begin
     proceedings toward such liquidation or dissolution, or shall, in any
     manner, permit the sale or divestiture of substantially all of its assets
     other than in connection with a merger or consolidation of Lessee into, or
     a sale of substantially all of Lessee's assets to, another corporation,
     provided that if the survivor of such merger or the purchaser of such
     assets shall assume all of Lessee's obligations under this Lease by a
     written instrument, in form and substance reasonably satisfactory to
     Lessor, accompanied by an opinion of counsel, reasonably satisfactory to
     Lessor and addressed to Lessor stating that such instrument of assumption
     is valid, binding and enforceable against the parties thereto in accordance
     with its terms (subject to usual bankruptcy and other creditors' rights
     exceptions), and provided, further, that if, immediately after giving
     effect to any such merger, consolidation or sale, Lessee or such other
     corporation (if not the Lessee) surviving the same, shall have a
     Consolidated Net Worth not less than the Consolidated Net Worth of Lessee
     immediately prior to


                                       33

     such merger, consolidation or sale, all as to be set forth in an Officer's
     Certificate delivered to Lessor within thirty (30) days of such merger,
     consolidation or sale, an Event of Default shall not be deemed to have
     occurred, or

          (j) if the estate or interest of Lessee in the Leased Property or any
     part thereof shall be levied upon or attached in any proceeding and the
     same shall not be vacated or discharged within the later of ninety (90)
     days after commencement thereof or thirty (30) days after receipt by Lessee
     of written notice thereof from Lessor (unless Lessee shall be contesting
     such lien or attachment in good faith in accordance with Article XII
     hereof), or

          (k) if, except as a result of damage, destruction or a partial or
     complete Condemnation, Lessee voluntarily ceases operations on the Leased
     Property for a period in excess of ninety (90) days, or

          (l) a default or event of default shall occur under the Funding
     Agreement, Development Agreement, Promissory Note, Lease Guaranty, Lease
     Assignment, Purchase Agreement, Assignment of Rents and Leases, Security
     Agreement or any other agreement between Lessor or any Affiliate of Lessor,
     on the one hand, and Lessee or any Affiliate of Lessee, on the other hand,
     which is not cured within the cure period as provided therein, or

          (m) if Lessee defaults under the Tenant Leases or fails or refuses to
     enforce the terms and conditions of the Tenant Leases.

If an Event of Default shall have occurred, Lessor shall have the right at its
election, then or at any time thereafter, to pursue any one or more of the
following remedies, in addition to any remedies which may be permitted by law or
by other provisions of this Lease, without notice or demand, except as
hereinafter provided:

     A. Lessor may enter upon and take possession of such Leased Property in
order to protect it from deterioration and continue to demand from Lessee the
monthly rentals and other charges provided in this Lease, without any obligation
to relet (unless otherwise required by Applicable Law); but that if Lessor does,
at its sole discretion, elect to relet the Leased Property, such action by
Lessor shall not be deemed as an acceptance of Lessee's surrender of the Leased
Property unless Lessor expressly notifies Lessee of such acceptance in writing
pursuant to subsection B of this Section 16.1, Lessee hereby acknowledging that
Lessor shall otherwise be reletting as Lessee's agent and Lessee furthermore
hereby agreeing to pay to Lessor on demand any deficiency that may arise between
the monthly rentals and other charges provided in this Lease and that are
actually collected by Lessor. It is further agreed in this regard that in the
event of an Event of Default, Lessor shall have the right to enter upon the
Leased Property by force, if necessary, without being liable for prosecution or
any claim for damages therefor, and do whatever Lessee is obligated to do under
the terms of this Lease; and Lessee agrees to reimburse Lessor on demand for any
expenses which Lessor may incur in thus effecting compliance with Lessee's
obligations under this Lease, and Lessee further agrees that Lessor shall not be
liable for any damages resulting to the Lessee from such action.

     B. Lessor may terminate this Lease by written notice to Lessee, in which
event Lessee shall immediately surrender the Leased Property to Lessor, and if
Lessee fails to do so, Lessor may, without prejudice to any other remedy which
Lessor may have for possession or arrearages in rent (including any interest
which may have accrued pursuant to Section 3.4 of this Lease), enter upon and
take possession of the Leased Property and expel or remove Lessee and any other
person who may be occupying said premises or any part thereof, by force, if
necessary, without being liable of prosecution or any claim for damages
therefor. Lessee hereby waives any statutory requirement of prior written notice
for filing eviction or damage suits for nonpayment of rent. In addition, Lessee
agrees to pay to Lessor on demand the amount of all loss and damage which Lessor
may suffer by reason of any termination effected pursuant to this subsection B,
said loss and damage to be determined, at Lessor's option, by either of the
following alternative measures of damages:


                                       34

               (i) Until Lessor is able to relet the Leased Property (provided
          that Lessor shall be obligated to diligently attempt to relet the
          Leased Property, whether or not required pursuant to Applicable Law),
          Lessee shall pay to Lessor on or before the first day of each calendar
          month, the monthly rentals and other charges provided in this Lease.
          After the Leased Property has been relet by Lessor, Lessee shall pay
          to Lessor on the 10th day of each calendar month the difference
          between the monthly rentals and other charges provided in this Lease
          for the preceding calendar month and that actually collected by Lessor
          for such month. If it is necessary for Lessor to bring suit in order
          to collect any deficiency, Lessor shall have a right to allow such
          deficiencies to accumulate and to bring an action on several or all of
          the accrued deficiencies at one time. Any such suit shall not
          prejudice in any way the right of Lessor to bring a similar action for
          any subsequent deficiency or deficiencies. Any amount collected by
          Lessor from subsequent tenants for any calendar month, in excess of
          the monthly rentals and other charges provided in this Lease, shall be
          credited to Lessee in reduction of Lessee's liability for any calendar
          month for which the amount collected by Lessor will be less than the
          monthly rentals and other charges provided in this Lease; but Lessee
          shall have no right to such excess other than the above-described
          credit.

               (ii) When Lessor desires, Lessor may demand a final settlement.
          Upon demand for a final settlement, Lessor shall have a right to, and
          Lessee hereby agrees to pay, the difference between the total of all
          monthly rentals and other charges provided in this Lease for the
          remainder of the Lease Term and the fair market rental value of the
          Leased Property for such period, such difference to be discounted to
          present value at a rate equal to the lowest rate of capitalization
          (highest present worth) reasonably applicable at the time of such
          determination and allowed by applicable law. If Lessor elects to
          exercise the remedy prescribed in subsection A above, this election
          shall in no way prejudice Lessor's right at any time thereafter to
          cancel said election in favor of the remedy prescribed in subsection B
          above. Similarly, if Lessor elects to compute damages in the manner
          prescribed by subsection B(i) above, this election shall in no way
          prejudice Lessor's right at any time thereafter to demand a final
          settlement in accordance with this subsection B(ii) above. Pursuit of
          any of the above remedies shall not preclude pursuit of any other
          remedies prescribed in other sections of this Lease and any other
          remedies provided by law or equity. Forbearance by Lessor to enforce
          one or more of the remedies herein provided upon an Event of Default
          shall not be deemed or construed to constitute a waiver of such Event
          of Default.

     C. In addition to other rights and remedies Lessor may have hereunder and
at law and in equity, if an Event of Default occurs under this Lease, (i) Lessee
is deemed to have assigned to Lessor, at Lessor's sole option, all service
agreements (including, without limitation, all medical director agreements), and
(ii) to the extent permitted by law, Lessee is deemed, at Lessor's sole
discretion, to have transferred and assigned to Lessor all Licenses and
agreements, including, without limitation, all Medicare and Medicaid provider
numbers. In the event there are legal limitations on any of the foregoing
remedies, Lessee further hereby covenants and agrees that it will take all
actions necessary to orderly transfer the operations and occupancy of the Leased
Property to the Lessor, including cooperating with respect to the transfer to
Lessor or its nominee or designee of all Licenses, provider numbers and other
agreements.

     D. Without entry onto the Leased Property, or any other action, Lessor may
declare due and payable, the Rent for the remaining Term of this Lease,
including all Additional Charges related or necessary to operate the Leased
Property and the Facility for the Primary Intended Use, including without
limitation, the five percent (5%) chargeable by Act of Assembly to the Lessor,
together with any Rents, charges, expenses or costs already in arrears. If this
Lease or any part hereof is assigned, or if the Leased Property, or any part
thereof is relet, Lessee hereby irrevocably constitutes and appoints Lessor as
Lessee's agent to collect the rents due by such assignee or sub-lessee and apply
the same to the Rent due hereunder without in any way affecting Lessee's
obligation to pay any unpaid balance of Rent due hereunder.


                                       35

     E. Without entry onto the Leased Property or any other action by Lessor,
this Lease and the Term hereby created shall terminate and become absolutely
void without any right on the part of the Lessee to save the forfeiture by
payment of any sum due or by other performance of any condition, term or
covenant broken; whereupon, Lessor shall be entitled to recover damages for such
breach in an amount equal to the amount of Rent reserved for the balance of the
Term of this Lease, less the fair rental value of the Leased Property, for the
residue of said Term.

     F. Lessor, or anyone acting on Lessor's behalf, may without notice or
demand to Lessee, enter the Leased Property, by force, if necessary, without
liability to action for prosecution or damages for such entry or for the manner
thereof, to distrain, levy, take possession of and sell all goods and chattels
at auction, and pay all sums owing to Lessor out of the proceeds, including
without limitation, the Rents and Additional Charges related or necessary to
operate the Leased Property and the Facility for the Primary Intended Use, as
well as a sum equal to five percent (5%) of the amount of the levy as
commissions to the constable or other person making the levy. Lessee hereby
releases and discharges the Lessor and its agents from all claims, actions,
suits, damages and penalties for or by reason of any entry, distraint, levy,
appraisement or sale. Lessee expressly waives in favor of Lessor the benefit of
all laws now made or which may hereafter be made limiting goods or chattels upon
which, or the time within which, distress is to be made after removal of such
goods and chattels, and further relieves the Lessor of the obligations of
proving or identifying such goods and chattels, it being the purpose and intent
of this provision that all goods and chattels of Lessee, whether upon the Leased
Property or not, shall be liable to distress for Rent under this Lease. Lessee
further waives in favor of Lessor, all rights under the Act of Assembly of April
6, 1951, P.L. 69, and all supplements and amendments thereto that have been or
may hereafter be passed, and authorizes the sale of any goods and chattels
distrained for Rent at any time after five (5) days from said distraint without
any appraisement or condemnation thereof.

     G. Upon an Event of Default, Lessee hereby empowers any Prothonotary, Clerk
of Court or attorney of any Court of Record to appear for Lessee in any and all
actions which may be brought for Rent and/or the charges, payments, costs and
expenses reserved as rent, or agreed to be paid by the Lessee and/or to sign for
Lessee an agreement for entering in any competent court an amicable action or
actions for the recovery of rent or other charges, payments, costs and expenses,
and in said suits or in said amicable action or actions to confess judgment
against Lessee for all or any part of the rent specified in this Lease and then
unpaid including, at Lessor's option, the rent for the entire unexpired balance
of the Term of this Lease, and/or other charges, payments, costs and expenses
reserved as rent or agreed to be paid by the Lessee, and for interest and costs
together with any attorneys' commissions of five percent (5%). Such authority
shall not be exhausted by one exercise thereof, but judgment may be confessed as
aforesaid from time to time as often as any of said rent and/or other charges,
payments, costs and expenses, reserved as rent shall fall due or be in arrears,
and such powers may be exercised as well after the expiration of the Fixed Term
and/or during any Extension Term of this Lease.

     H. Upon an Event of Default, either during the Fixed Term or any Extension
Term, it shall be lawful for any attorney as attorney for Lessee to file an
agreement for entering in any competent court an amicable action and judgment in
ejectment against Lessee and all persons claiming under Lessee for the recovery
by Lessor of the possession of the Leased Property, for which this Lease shall
be his sufficient warrant, whereupon, if Lessor so desires, a writ of Execution
or of Possession may issue forthwith, without any prior writ or proceedings
whatsoever, and provided that if for any reason after such action shall have
been commenced the same shall be determined and the possession of the Leased
Property remain in or be restored to Lessee, Lessor shall have the right upon
any subsequent Event of Default, or upon the termination of this Lease as
hereinbefore set forth, to bring one or more amicable action or actions as
hereinbefore set forth to recover possession of the Leased Property.

     I. In any amicable action of ejectment and/or for rent in arrears, Lessor
shall first cause to be filed in such action an affidavit made by Lessor or
someone acting for Lessor setting forth the facts necessary to authorize the
entry of judgment, of which facts such affidavit shall be conclusive evidence
and if a true copy of this Lease (and of the truth of the copy such affidavit
shall be sufficient evidence) be filed in such action, it shall not be necessary
to file the original as a warrant of attorney, any rule of Court, custom or
practice to the contrary notwithstanding.


                                       36

     J. Lessee waives the right to issue a Writ of Replevin under the
Pennsylvania Rules of Civil Procedure, No. 1071 &c. and Laws of the Commonwealth
of Pennsylvania, or under any other law previously enacted and now in force, or
which may be hereafter enacted, for the recovery of any articles, household
goods, furniture, etc., seized under a distress for rent or levy upon an
execution for rent, damages or otherwise. All waivers hereinbefore mentioned are
hereby extended to apply to any such action.

     16.2 EVENTS OF DEFAULT IN FINANCIAL COVENANTS.

     (a) The occurrence of any one or more of the following shall constitute a
default and breach of this Section 16.2(a) and the Lessor shall have the rights
and remedies provided for herein:

          (i) Based on the trailing twelve (12) month results tested at the end
of each calendar quarter during the periods set forth below (except that with
respect to Year 2, the tests will be based upon the year to date results of Year
2 only), if EBITDAR shall be less than the amount calculated during the
applicable testing period as provided below:



                   Testing Periods:                                 Calculation:
                   ----------------                                 ------------
                                                              
Year 1:            1-12 months, beginning with the first            Deferred
                   calendar quarter after the Completion Date

Year 2:            13-24 months after the first calendar quarter    1.50 times Lease Payments
                   after the Completion Date

Year 3:            25-36 months after the first calendar quarter    1.75 times Lease Payments
                   after the Completion Date

Year 4:            37-180 months after the first calendar quarter   2.00 times Lease Payments
                   after the Completion Date
(and thereafter)


          (ii) Based on the trailing twelve (12) month results tested at the end
of each calendar quarter during the periods set forth below (except that with
respect to Year 2, the tests will be based upon the year to date results of Year
2 only), if EBITDAR shall be less than the amount calculated during the
applicable testing period as provided below:



                   Testing Periods:                                 Calculation:
                   ---------------                                  ------------
                                                              
Year 1:            1-12 months, beginning with the first            Deferred
                   calendar quarter after the Completion Date

Year 2:            13-24 months after the first calendar quarter    1.00 times Fixed Charges
                   after the Completion Date

Year 3:            25-36 months after the first calendar quarter    1.25 times Fixed Charges
                   after the Completion Date

Year 4:            37-180 months after the first calendar quarter   1.50 times Fixed Charges
                   after the Completion Date
(and thereafter)


     Upon the occurrence of any of the items set forth in Section 16.1 or in
this Section 16.2(a), Lessor may, at its option, upon five (5) days' written
notice to Lessee (any such notice requiring such termination being  herein


                                       37

referred to as the "Removal Notice"), require Lessee to terminate the engagement
of any Management Company managing the Facility and replace such Management
Company with a manager chosen by Lessor (or, if there is no Management Company
managing the Facility at that time, Lessor may require the Lessee to engage a
Management Company acceptable to Lessor and enter into a contract with such
Management Company upon terms and conditions acceptable to Lessor).

     (b) The occurrence of any one or more of the following shall constitute a
default and breach of this Section 16.2(b) and the Lessor shall have the rights
and remedies provided for herein:

          (i) Based on the trailing twelve (12) month results tested at the end
of each calendar quarter during the periods set forth below (except that with
respect to Year 2, the tests will be based upon the year to date results of Year
2 only), if EBITDAR shall be less than the amount calculated during the
applicable testing period as provided below:



                   Testing Periods:                                 Calculation:
                   ----------------                                 ------------
                                                              
Year 1:            1-12 months, beginning with the first            Deferred
                   calendar quarter after the Completion Date

Year 2:            13-24 months after the first calendar quarter    1.20 times Lease Payments
                   after the Completion Date

Year 3:            25-36 months after the first calendar quarter    1.35 times Lease Payments
                   after the Completion Date

Year 4:            37-180 months after the first calendar quarter   1.50 times Lease Payments
                   after the Completion Date
(and thereafter)


          (ii) Based on the trailing twelve (12) month results tested at the end
of each calendar quarter during the periods set forth below (except that with
respect to Year 2, the tests will be based upon the year to date results of Year
2 only), if EBITDAR shall be less than the amount calculated during the
applicable testing period as provided below:



                   Testing Periods:                                 Calculation:
                   ----------------                                 ------------
                                                              
Year 1-2:          1-24 months, beginning with the first            Deferred
                   calendar quarter after the Completion Date

Year 3:            25-36 months after the first calendar quarter    1.20 times Fixed charges
                   after the Completion Date

Year 4:            37-180 months after the first calendar quarter   1.35 times Fixed Charges
                   after the Completion Date
(and thereafter)


     Upon the occurrence of any of the items set forth in Section 16.1 or in
this Section 16.2(b), Lessor may, at its option, upon delivery of the Removal
Notice, require Lessee to terminate the engagement of the Management Company
managing the Facility and replace such Management Company with manager chosen by
Lessor (or, if there is no Management Company managing the Facility at that
time, Lessor may require the Lessee to engage a Management Company acceptable to
Lessor and enter into a contract with such Management Company upon terms and
conditions acceptable to Lessor), and Lessor may, at its option, proceed with
all other remedies Lessor deems


                                       38

necessary, including, without limitation, terminating this Lease and pursuing
all other provided for herein as well as any other customary remedies available
at law or in equity.

     16.3 ADDITIONAL EXPENSES. It is further agreed that, in addition to
payments required pursuant to subsections A and B of Section 16.1 above, Lessee
shall compensate Lessor for (i) all administrative expenses, (ii) all expenses
incurred by Lessor in repossessing the Leased Property (including among other
expenses, any increase in insurance premiums caused by the vacancy of the Leased
Property), (iii) all expenses incurred by Lessor in reletting (including among
other expenses, repairs, remodeling, replacements, advertisements and brokerage
fees), (iv) all concessions granted to a new tenant or tenants upon reletting
(including among other concessions, renewal options), (v) Lessor's reasonable
attorneys' fees and expenses, (vi) all losses incurred by Lessor as a direct or
indirect result of Lessee's Default or an Event of Default (including among
other losses any adverse action by mortgagees), and (vii) a reasonable allowance
for Lessor's administrative efforts, salaries and overhead attributable directly
or indirectly to Lessee's Default or an Event of Default and Lessor's pursuing
the rights and remedies provided herein and under applicable law.

     16.4 WAIVER. If this Lease is terminated pursuant to Section 16.1 or 16.2,
Lessee waives, to the extent permitted by applicable law, (a) any right of
redemption, re-entry or repossession, (b) any right to a trial by jury in the
event of summary proceedings to enforce the remedies set forth in this Article
XVI, and (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt.

     16.5 APPLICATION OF FUNDS. Any payments otherwise payable to Lessee which
are received by Lessor under any of the provisions of this Lease during the
existence or continuance of any Event of Default shall be applied to Lessee's
obligations in the order which Lessor may reasonably determine or as may be
prescribed by the laws of the state in which the Facility is located.

     16.6 NOTICES BY LESSOR. The provisions of this Article XVI concerning
notices shall be liberally construed insofar as the contents of such notices are
concerned, and any such notice shall be sufficient if reasonably designed to
apprise Lessee of the nature and approximate extent of any default, it being
agreed that Lessee is in good or better position than Lessor to ascertain the
exact extent of any default by Lessee hereunder.

     16.7 LESSOR'S CONTRACTUAL SECURITY INTEREST. Subject to the Prior Lien of
Lessee's Primary Lender (as such terms are defined herein), to secure the
payment of all Rent due and to become due hereunder and the faithful performance
of this Lease and to secure all other obligations, indebtedness and liabilities
of Lessee to Lessor, now existing or hereafter incurred, and all Obligations (as
defined in the Security Agreement), Lessee has executed and delivered to Lessor
the Security Agreement.

                                  ARTICLE XVII

                             LESSOR'S RIGHT TO CURE

     If Lessee shall fail to make any payment, or to perform any act required to
be made or performed under this Lease and to cure the same within the relevant
time periods provided in Section 16.1, Lessor, without waiving or releasing any
obligation or Event of Default, may (but shall be under no obligation to) at any
time thereafter make such payment or perform such act for the account and at the
expense of Lessee, and may, to the extent permitted by law, enter upon the
Leased Property for such purpose and take all such action thereon as, in
Lessor's opinion, may be necessary or appropriate therefor. No such entry shall
be deemed an eviction of Lessee. All sums so paid by Lessor and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, in each case, to the extent permitted by law) so incurred, together
with a late charge thereon (to the extent permitted by law) at the Overdue Rate
from the date on which such sums or expenses are paid or incurred by Lessor,
shall be paid by


                                       39

Lessee to Lessor on demand. The obligations of Lessee and rights of Lessor
contained in this Article shall survive the expiration or earlier termination of
this Lease.

                                 ARTICLE XVIII

                         PURCHASE OF THE LEASED PROPERTY

     In the event Lessee purchases the Leased Property from Lessor pursuant to
any of the terms of this Lease, including, without limitation Article XXXIV,
Lessor shall, upon receipt from Lessee of the applicable purchase price,
together with full payment of any unpaid Rent due and payable with respect to
any period ending on or before the date of the purchase, deliver to Lessee an
appropriate special warranty deed or other instrument of conveyance conveying
the entire interest of Lessor in and to the Leased Property to Lessee in the
condition as received from Lessee, free and clear of all encumbrances other than
(a) those that Lessee has agreed hereunder to pay or discharge, (b) those
mortgage liens, if any, which Lessee has agreed in writing to accept and to take
title subject to, (c) any other Encumbrances permitted to be imposed on the
Leased Property under the provisions of Article XXXVII which are assumable at no
cost to Lessee or to which Lessee may take subject without cost to Lessee, and
(d) any matters affecting the Leased Property on or as of the Commencement Date.
The difference between the applicable purchase price and the total of the
encumbrances assigned or taken subject to shall be paid in cash to Lessor, or as
Lessor may direct, in federal or other immediately available funds except as
otherwise mutually agreed by Lessor and Lessee. The closing of any such sale
shall be contingent upon and subject to Lessee obtaining all required
governmental consents and approvals for such transfer (so long as Lessee
immediately applies for, seeks in good faith and, diligently pursues to obtain,
such consents and approvals) and if such sale shall fail to be consummated by
reason of the inability of Lessee to obtain all such approvals and consents
prior to the closing date, any options to extend the Term of this Lease which
otherwise would have expired during the period from the date when Lessee elected
or became obligated to purchase the Leased Property until Lessee's inability to
obtain the approvals and consents is confirmed shall be deemed to remain in
effect for thirty (30) days after the end of such period. All expenses of such
conveyance, including, without limitation, the cost of title examination or
standard coverage title insurance, survey, attorneys' fees incurred by Lessor in
connection with such conveyance, transfer taxes, recording fees and similar
charges shall be paid for by Lessee.

                                  ARTICLE XIX

                                  HOLDING OVER

     If Lessee shall for any reason remain in possession of the Leased Property
after the expiration of the Term or any earlier termination of the Term hereof,
such possession shall be as a tenancy at will during which time Lessee shall pay
as rental each month, one and one-half times the aggregate of (a) one-twelfth of
the aggregate Base Rent payable with respect to the last complete Lease Year
prior to the expiration of the Term; (b) all Additional Charges accruing during
the month and (c) all other sums, if any, payable by Lessee pursuant to the
provisions of this Lease with respect to the Leased Property. During such period
of tenancy, Lessee shall be obligated to perform and observe all of the terms,
covenants and conditions of this Lease, but shall have no rights hereunder other
than the right, to the extent given by law to tenancies at will, to continue its
occupancy and use of the Leased Property. Nothing contained herein shall
constitute the consent, express or implied, of Lessor to the holding over of
Lessee after the expiration or earlier termination of this Lease.

                                   ARTICLE XX

                              INTENTIONALLY OMITTED


                                       40

                                  ARTICLE XXI

                                  RISK OF LOSS

     During the Term of this Lease, the risk of loss or of decrease in the
enjoyment and beneficial use of the Leased Property in consequence of the damage
or destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise, or in consequence of foreclosures, attachments, levies or executions
(other than by Lessor and those claiming from, through or under Lessor) is
assumed by Lessee and, Lessor shall in no event be answerable or accountable
therefor nor shall any of the events mentioned in this Article XXI entitle
Lessee to any abatement of Rent except as specifically provided in this Lease.

                                  ARTICLE XXII

                                 INDEMNIFICATION

     NOTWITHSTANDING THE EXISTENCE OF ANY INSURANCE OR SELF INSURANCE PROVIDED
FOR IN ARTICLE XIII, AND WITHOUT REGARD TO THE POLICY LIMITS OF ANY SUCH
INSURANCE OR SELF INSURANCE, LESSEE WILL PROTECT, INDEMNIFY, SAVE HARMLESS AND
DEFEND LESSOR FROM AND AGAINST ALL LIABILITIES, OBLIGATIONS, CLAIMS, DAMAGES,
PENALTIES, CAUSES OF ACTION, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTORNEYS' FEES AND EXPENSES AND EXPERT WITNESS FEES), TO THE EXTENT
PERMITTED BY LAW, IMPOSED UPON OR INCURRED BY OR ASSERTED AGAINST LESSOR BY
REASON OF: (A) ANY ACCIDENT, INJURY TO OR DEATH OF PERSONS OR LOSS OF PERSONAL
PROPERTY OCCURRING ON OR ABOUT THE LEASED PROPERTY OR ADJOINING SIDEWALKS,
INCLUDING WITHOUT LIMITATION ANY CLAIMS OF MALPRACTICE, (B) ANY USE, MISUSE, NO
USE, CONDITION, MAINTENANCE OR REPAIR BY LESSEE OF THE LEASED PROPERTY, (C) ANY
IMPOSITIONS (WHICH ARE THE OBLIGATIONS OF LESSEE TO PAY PURSUANT TO APPLICABLE
PROVISIONS OF THIS LEASE), (D) ANY FAILURE ON THE PART OF LESSEE TO PERFORM OR
COMPLY WITH ANY OF THE TERMS OF THIS LEASE, AND (E) THE NON-PERFORMANCE OF ANY
OF THE TERMS AND PROVISIONS OF ANY AND ALL EXISTING AND FUTURE SUBLEASES OF THE
LEASED PROPERTY TO BE PERFORMED BY THE LANDLORD (LESSEE) THEREUNDER. ANY AMOUNTS
WHICH BECOME PAYABLE BY LESSEE UNDER THIS ARTICLE XXII SHALL BE PAID WITHIN TEN
(10) DAYS AFTER LIABILITY THEREFOR ON THE PART OF LESSOR IS DETERMINED BY
LITIGATION OR OTHERWISE AND, IF NOT TIMELY PAID, SHALL BEAR A LATE CHARGE (TO
THE EXTENT PERMITTED BY LAW) AT THE OVERDUE RATE FROM THE DATE OF SUCH
DETERMINATION TO THE DATE OF PAYMENT. LESSEE, AT ITS EXPENSE, SHALL CONTEST,
RESIST AND DEFEND ANY SUCH CLAIM, ACTION OR PROCEEDING ASSERTED OR INSTITUTED
AGAINST LESSOR OR MAY COMPROMISE OR OTHERWISE DISPOSE OF THE SAME AS LESSEE AND
LESSOR SEE FIT. NOTHING HEREIN SHALL BE CONSTRUED AS INDEMNIFYING LESSOR AGAINST
ITS OWN NEGLIGENCE OR OMISSIONS OR WILLFUL MISCONDUCT. LESSEE'S LIABILITY FOR A
BREACH OF THE PROVISIONS OF THIS ARTICLE SHALL SURVIVE ANY TERMINATION AND THE
EXPIRATION OF THIS LEASE.

                                 ARTICLE XXIII

               ASSIGNMENT, SUBLETTING; AND SUBLEASE SUBORDINATION

     23.1 ASSIGNMENT AND SUBLETTING. Lessee shall not assign this Lease or
sublease any portion of the Leased Property without Lessor's prior written
consent. Lessor shall not unreasonably withhold its consent to any subletting or
assignment, provided that (a) in the case of a subletting, the sublease and the
sublessee shall comply with the provisions of this Article XXIII, (b) in the
case of an assignment, the assignee shall assume in writing and


                                       41

agree to keep and perform all of the terms of this Lease on the part of Lessee
to be kept and performed and shall be and become jointly and severally liable
with Lessee for the performance thereof, (c) an original counterpart of each
such sublease and assignment and assumption, duly executed by Lessee and such
sublessee or assignee, as the case may be, in form and substance satisfactory to
Lessor, shall be delivered promptly to Lessor, and (d) in case of either an
assignment or subletting, Lessee shall remain primarily liable, as principal
rather than as surety, for the prompt payment of the Rent and for the
performance and observance of all of the obligations, covenants and conditions
to be performed by Lessee hereunder and under all of the other documents
executed in connection herewith. Notwithstanding anything contained herein to
the contrary, Lessor and Lessee acknowledge that there currently exists certain
leases or subleases on the Leased Property as described on EXHIBIT C attached
hereto (collectively the "Existing Subleases"). Any modifications, amendments
and restatements of the Existing Subleases must be approved by Lessor in
accordance with this Article XXIII. Notwithstanding anything contained herein to
the contrary, any proposed assignee of Lessee and any proposed sublessee or
subtenant must each have an equal or stronger credit rating than the Lessee on
the Commencement Date. Lessor's failure or refusal to approve an assignment to
an assignee or a subletting to a sublessee or subtenant without the required
credit rating shall be reasonable.

     23.2 SUBLEASE LIMITATIONS. (a) In addition to the sublease limitations as
set forth in Section 23.1 above, Lessee shall not enter into any Tenant Lease
the terms of which Lessee actually knows (acting in good faith) would or could
result in (i) Rent payable under this Lease not qualifying as "rents from real
property" as defined in Section 856(d) of the Code, or any similar or successor
provision thereto; provided, however, that notwithstanding anything herein to
the contrary, (a) Lessee shall not be responsible for any act or omission of
Lessor, and (b) any action taken by Lessee in compliance with the express terms
of this Lease shall not be deemed to create an Event of Default under this
Section 23.2(a).

     (b) Lessee shall not sublet any portion of the Leased Property for a term
extending beyond the Fixed Term hereof without the express consent of Lessor. In
addition, all subleases shall comply with the Healthcare Laws. Lessor and Lessee
acknowledge and agree that all subleases entered into relating to the Leased
Property, whether or not approved by Lessor, shall not, without the prior
written consent of Lessor, be deemed to be a direct lease between Lessor and any
sublessee or subtenant. Lessee agrees that all subleases submitted for Lessor
approval as provided herein (other than the Existing Sublease executed by Dr.
Beth Dupree and any future sublease to be entered into with Dr. Rob Skalicky or
Dr. Robert Riley which, provided such individual executes a sublease
substantially similar to Dr. Dupree's, shall not be subject to any of the
succeeding requirements to the extent Dr. Dupree's Existing Sublease was not
subject to such requirements) must include provisions to the effect that (a)
such sublease is subject and subordinate to all of the terms and provisions of
this Lease, to the rights of Lessor hereunder, and to all matters to which this
Lease is or shall be subject or subordinate, (b) in the event this Lease shall
terminate or be terminated before the expiration of the sublease, the sublessee
or subtenant will, at Lessor's option, attorn to Lessor and waive any right the
sublessee or subtenant may have to terminate the sublease or to surrender
possession thereunder, as a result of the termination of this Lease, (c) in the
event this Lease is terminated and Lessor succeeds to the interest of Lessee
under the sublease, sublessee shall comply with all provisions of this Lease
that address the payment of taxes, insurance, utilities, and all costs of
maintenance and repair of the premises subleased under the sublease, including,
without limitation, extraordinary repairs, capital improvements and other
repairs, it being understood that Lessor leases its facilities on an absolute
net basis with subtenants or sublessees responsible for all such payments and
costs of such maintenance and repair, (d) sublessee or subtenant shall from time
to time upon request of Lessee or Lessor furnish within ten (10) days from
request an estoppel certificate in form and content acceptable to Lessor or its
lender relating to the sublease, (e) in the event the sublessee or subtenant
receives a written notice from Lessor or Lessor's assignees, if any, stating
that a Default or an Event of Default has occurred under this Lease, the
sublessee or subtenant shall thereafter be obligated to pay all rentals accruing
under said sublease directly to the party giving such notice, or as such party
may direct (all rentals received from the sublessee by Lessor or Lessor's
assignees, if any, as the case may be, shall be credited against the amounts
owing by Lessee under this Lease), (g) and that such sublease shall at all times
be subject to the obligations and requirements as set forth in this Article
XXIII, (h) sublessee or subtenant shall provide to Lessor upon written request
such officer's


                                       42

certificates and financial statements as Lessor may request from time to time,
and (i) sublessee will execute and deliver the subordination agreement as
required in Section 23.3 hereof.

     23.3 SUBLEASE SUBORDINATION AND NON-DISTURBANCE. Within twenty (20) days
after request by Lessor, Lessee shall use commercially reasonable efforts to
cause the subtenants or sublessees to execute and deliver to Lessor a
subordination agreement relating to the sublease, which subordination agreement
shall be in such form and content as is acceptable to Lessor. At the request
from time to time by one or more Facility Lender, within twenty (20) days from
the date of request, Lessee shall use commercially reasonable efforts to cause
the subtenants or sublessees of the Leased Property to execute and deliver
within such twenty (20) day period, to such Facility Lender a written agreement
in a form reasonably acceptable to such Facility Lender whereby such subtenants
and sublessees subordinate the sublease and all of their rights and estate
thereunder to each such mortgage or deed of trust that encumbers the Leased
Property or any part thereof and agree with each such Facility Lender that such
subtenants and sublessees will attorn to and recognize such Facility Lender or
the purchaser at any foreclosure sale or any sale under a power of sale
contained in any such mortgage or deed of trust, as the case may be, as Lessor
under this Lease for the balance of the Term then remaining, subject to all of
the terms and provisions of the sublease.

                                  ARTICLE XXIV

  OFFICER'S CERTIFICATES; FINANCIAL STATEMENTS; NOTICES AND OTHER CERTIFICATES

          (a) At any time and from time to time within twenty (20) days
     following written request by Lessor, Lessee will furnish to Lessor an
     Officer's Certificate certifying that this Lease is unmodified and in full
     force and effect (or that this Lease is in full force and effect as
     modified and setting forth the modifications) and the dates to which the
     Rent has been paid. Any such Officer's Certificate furnished pursuant to
     this Article may be relied upon by Lessor and any prospective purchaser of
     the Leased Property.

          (b) Lessee will furnish, or cause to be furnished, the following
     statements to Lessor, which must be in such form and detail as Lessor may
     from time to time, but not unreasonably, request:

               (i) within ninety (90) days after the end of each fiscal year of
          Lessee, a copy of the Statements of Cash Flow for the Lessee for the
          preceding fiscal year and an Officer's Certificate stating that to the
          best of the signer's knowledge and belief after making due inquiry, no
          Default or Event of Default then exists, or, if a Default or Event of
          Default exists, specifying all such defaults, the nature thereof and
          the steps being taken to remedy the same, and

               (ii) within ninety (90) days after the end of each year, audited
          financial statements of Lessee and the operations performed in the
          Facility, prepared by a nationally recognized accounting firm or an
          independent certified public accounting firm acceptable to Lessor,
          which statements shall include a balance sheet and statement of income
          and expenses and changes in cash flow all in accordance with GAAP for
          the year then ended, and

               (iii) within forty-five (45) days after the end of each quarter,
          current financial statements of Lessee and the operations performed in
          the Facility, certified to be true and correct by an officer of
          Lessee, and

               (iv) within thirty (30) days after the end of each month, current
          operating statements of the Facility, including, but not limited to
          operating statistics, certified to be true and correct by an officer
          of the Lessee, and


                                       43

               (v) within ten (10) days of receipt, any and all notices
          (regardless of form) from any and all licensing and/or certifying
          agencies that any license or certification, including without
          limitation, the Medicare and Medicaid certification and/or managed
          care contract of the Facility is being downgraded to a substandard
          category, revoked, or suspended, or that action is pending or being
          considered to downgrade to a substandard category, revoke, or suspend
          such Facility's license or certification, and

               (vi) with reasonable promptness, such other information
          respecting the financial condition and affairs of Lessee as Lessor may
          reasonably request from time to time.

          (c) Upon Lessor's request, Lessee will furnish to Lessor a certificate
     in form acceptable to Lessor certifying that no Event of Default, or
     similar term, as defined herein or in any of the Tenant Leases and the
     Other Leases, then exists and no event has occurred (that has not been
     cured) and no condition currently exists that would, but for the giving of
     any required notice or expiration of any applicable cure period, constitute
     a default hereunder.

          (d) Within two (2) business days of receipt, Lessee shall furnish to
     Lessor copies of all notices and demands from any third party payor,
     including, without limitation, Medicare and Medicaid, concerning
     overpayment which will or may result in a repayment or a refund in excess
     of One Million Dollars ($1,000,000). Lessee hereby agrees that in the event
     of receipt of such notices or demands Lessor shall have the right, at
     Lessor's option, to participate in the appeal of such notices and demands.

          (e) Lessee shall furnish to Lessor on a monthly basis ongoing status
     reports (in form and content acceptable to Lessor) of any governmental
     investigations of the Lessee and any of its Affiliates, or the Facility,
     conducted by the United States Attorney, State Attorney General, the Office
     of the Inspector General of the Department of Health and Human Services, or
     any other Governmental Entity.

          (f) Lessee shall furnish to Lessor immediately upon receipt thereof
     copies of all notices of adverse events or deficiencies as defined by
     regulations or standards of the Joint Commission on the Accreditation of
     Healthcare Organizations ("JCAHO"), or the equivalent of the accrediting
     body relied upon by the Lessee in the operation of the Facility or any part
     thereof.

          (g) Lessee shall furnish to Lessor immediately upon receipt thereof
     copies of all written notices that the Lessee is not in compliance with the
     Standards for Privacy of Individually Identifiable Health Information and
     the Transaction and Code Set Standards which were promulgated pursuant to
     the Health Insurance Portability and Accountability Act of 1996 ("HIPAA").

          (h) Provided that no such requirement of additional information shall
     place an undue hardship on Lessee, Lessor reserves the right to require
     such other financial information from Lessee at such other times as it
     shall deem reasonably necessary. All financial statements and information
     must be in such form and detail as Lessor shall from time to time, but not
     unreasonably, request.

          Subject to the rights of Lessor as provided in Section 41.11 of this
     Lease, Lessor and Lessee agree that all financial information disclosed
     pursuant to this Article XXV shall be kept in strictest confidence and
     shall not be disclosed to any person or entity.

                                   ARTICLE XXV

                               INSPECTION AND FEES

     Lessee shall permit Lessor, MPT Development Services and their respective
authorized representatives to inspect the Leased Property during usual business
hours subject to any security, health, safety or confidentiality


                                       44

requirements of Lessee, any governmental agency, any Insurance Requirements
relating to the Leased Property, or imposed by law or applicable regulations. On
January 1, 2006, Lessee shall pay to MPT Development Services an amount equal to
Seven Thousand Five Hundred and 00/100 Dollars ($7,500.00) (the "Inspection
Fee") to cover the cost of the physical inspections of the Leased Property.
Commencing on January 1, 2007, and continuing on January 1 of each year
thereafter throughout the Term of this Lease, the Inspection Fee to be paid by
Lessee shall be increased by an amount equal to two and one-half percent (2.5%)
per annum.

     In addition to the Inspection Fee, on the Commencement Date, Lessee shall
also pay to Lessor (or, at Lessor's election, its designated Affiliate) a fee in
the amount of Seventy-Five Thousand and No/100 Dollars ($75,000.00) to cover the
inspection of the Facility during the Construction Period.

                                  ARTICLE XXVI

                                    NO WAIVER

     No failure by Lessor or Lessee to insist upon the strict performance of any
term hereof or to exercise any right, power or remedy consequent upon a breach
thereof, and no acceptance of full or partial payment of Rent during the
continuance of any such breach, shall constitute a waiver of any such breach or
any such term. To the extent permitted by law, no waiver of any breach shall
affect or alter this Lease, which shall continue in full force and effect with
respect to any other then existing or subsequent breach.

                                 ARTICLE XXVII

                               REMEDIES CUMULATIVE

     To the extent permitted by law, each legal, equitable or contractual right,
power and remedy of Lessor or Lessee now or hereafter provided either in this
Lease or by statute or otherwise shall be cumulative and concurrent and shall be
in addition to every other right, power and remedy and the exercise or beginning
of the exercise by Lessor or Lessee of any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Lessor or Lessee of any or all of such other rights, powers and remedies.

                                 ARTICLE XXVIII

                                    SURRENDER

     No surrender to Lessor of this Lease or of the Leased Property or any part
of any thereof, or of any interest therein, prior to the expiration of the Term
hereof, shall be valid or effective unless agreed to and accepted in writing by
Lessor and no act by Lessor or any representative or agent of Lessor, other than
such a written acceptance by Lessor, shall constitute an acceptance of any such
surrender.

                                  ARTICLE XXIX

                               NO MERGER OF TITLE

     There shall be no merger of this Lease or of the leasehold estate created
hereby by reason of the fact that the same person, firm, corporation or other
entity may acquire, own or hold, directly or indirectly, (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate and (b) the fee estate in the Leased Property.


                                       45

                                   ARTICLE XXX

                               TRANSFERS BY LESSOR

     If Lessor or any successor owner of the Leased Property shall convey the
Leased Property in accordance with the terms hereof, other than as security for
a debt, and the grantee or transferee of the Leased Property shall expressly
assume all obligations of Lessor hereunder arising or accruing from and after
the date of such conveyance or transfer, and shall be reasonably capable of
performing the obligations of Lessor hereunder, Lessor or such successor owner,
as the case may be, shall thereupon be released from all future liabilities and
obligations of the Lessor under this Lease arising or accruing from and after
the date of such conveyance or other transfer as to the Leased Property and all
such future liabilities and obligations shall thereupon be binding upon the new
owner.

                                  ARTICLE XXXI

                                 QUIET ENJOYMENT

     So long as Lessee shall pay all Rent as the same becomes due and shall
fully comply with all of the terms of this Lease and fully perform its
obligations hereunder and under the Other Leases, Lessee shall peaceably and
quietly have, hold and enjoy the Leased Property for the Term hereof, free of
any claim or other action by Lessor or anyone claiming by, through or under
Lessor, but subject to all liens and encumbrances of record as of the date
hereof or hereafter consented to by Lessee. No failure by Lessor to comply with
the foregoing covenant shall give Lessee any right to cancel or terminate this
Lease, or to fail to pay any other sum payable under this Lease, or to fail to
perform any other obligation of Lessee hereunder. Notwithstanding the foregoing,
Lessee shall have the right by separate and independent action to pursue any
claim it may have against Lessor as a result of a breach by Lessor of the
covenant of quiet enjoyment contained in this Article XXXI.

                                 ARTICLE XXXII

                                     NOTICES

     All notices, demands, consents, approvals, requests and other
communications under this Lease shall be in writing and shall be either (a)
delivered in person, (b) sent by certified mail, return receipt requested, (c)
delivered by a recognized delivery service or (d) sent by facsimile transmission
and addressed as follows:

     (a)  if to Lessee:     Bucks County Oncoplastic Institute, LLC
                            c/o Diversified Specialty Institutes, Inc.
                            511 Union Street
                            Suite 1800
                            Nashville, Tennessee 37219
                            Attention:  Dr. Jerome Tannenbaum
                            Phone: (615) 777-8200
                            Fax: (615) 259-0693


                                       46

          with a copy to:   Latham & Watkins, LLP
                            555 11th Street
                            Suite 1000
                            Washington, D.C. 20004
                            Attn: Eric L. Bernthal
                            Phone: (202) 637-2200
                            Fax: (202) 637-2201

     (b)  if to Lessor:     MPT of Bucks County Hospital, L.P.
                            1000 Urban Center Drive, Suite 501
                            Birmingham, Alabama 35242
                            Attn.: Michael G. Stewart, Esq.
                            Phone: (205) 969-3755
                            Fax: (205) 969-3756

          with a copy to:   Thomas O. Kolb, Esq.
                            Baker, Donelson, Bearman, Caldwell & Berkowitz
                            1600 SouthTrust Tower
                            Birmingham, Alabama 35203
                            Phone: (205) 328-0480
                            Fax: (205) 322-8007

or to such other address as either party may hereafter designate, and shall be
effective upon receipt. A notice, demand, consent, approval, request and other
communication shall be deemed to be duly received if delivered in person or by a
recognized delivery service, when left at the address of the recipient and if
sent by facsimile, upon receipt by the sender of an acknowledgment or
transmission report generated by the machine from which the facsimile was sent
indicating that the facsimile was sent in its entirety to the recipient's
facsimile number; provided that if a notice, demand, consent, approval, request
or other communication is served by hand or is received by facsimile on a day
which is not a Business Day, or after 5:00 p.m. on any Business Day at the
addressee's location, such notice or communication shall be deemed to be duly
received by the recipient at 9:00 a.m. on the first Business Day thereafter.

                                 ARTICLE XXXIII

                                    APPRAISAL

     In the event that it becomes necessary to determine the Fair Market Value
of the Leased Property, the Fair Market Value Purchase Price or the Fair Market
Added Value for any purpose of this Lease, the party required or permitted to
give notice of such required determination shall include in the notice the name
of a person selected to act as an appraiser on its behalf. Lessor and Lessee
agree that any appraisal of the Leased Property shall be without regard to the
termination of this Lease or any purchase options contained herein and shall
assume the Lease is in place for a term of fifteen (15) years, and shall not
take into account any purchase options contained herein. Within ten (10) days
after receipt of any such notice, Lessor (or Lessee, as the case may be) shall
by notice to Lessee (or Lessor, as the case may be) appoint a second person as
an appraiser on its behalf. The appraisers thus appointed (each of whom must be
a member of the American Institute of Real Estate Appraisers or any successor
organization thereto) shall, within forty-five (45) days after the date of the
notice appointing the first (1st) appraiser, proceed to determine the Fair
Market Value of the Leased Property, the Fair Market Value Purchase Price or the
Fair Market Added Value thereof as of the relevant date (giving effect to the
impact, if any, of inflation from the date of their decision to the relevant
date); provided, however, that if only one (1) appraiser shall have been so
appointed, or if two (2) appraisers shall have been so appointed but only one
(1) such appraiser shall have made such determination within fifty (50) days
after the making of Lessee's or Lessor's request, then the determination of such
appraiser shall be final and binding upon the parties. If two (2) appraisers
shall have been appointed and shall have made their


                                       47

determinations within the respective requisite periods set forth above and if
the difference between the amounts so determined shall not exceed ten percent
(10%) of the lesser of such amounts, then the Fair Market Value of the Leased
Property, the Fair Market Value Purchase Price or the Fair Market Added Value
shall be an amount equal to fifty percent (50%) of the sum of the amounts so
determined. If the difference between the amounts so determined shall exceed ten
percent (10%) of the lesser of such amounts, then such two (2) appraisers shall
have twenty (20) days to appoint a third (3rd) appraiser, but if such appraisers
fail to do so, then either party may request the American Arbitration
Association or any successor organization thereto to appoint an appraiser within
twenty (20) days of such request, and both parties shall be bound by any
appointment so made within such 20-day period. If no such appraiser shall have
been appointed within such twenty (20) days or within ninety (90) days of the
original request for a determination of Fair Market Value of the Leased
Property, the Fair Market Value Purchase Price or the Fair Market Added Value,
whichever is earlier, either Lessor or Lessee may apply to any court having
jurisdiction to have appointment made by such court. Any appraiser appointed, by
the American Arbitrator Association or by such court shall be instructed to
determine the Fair Market Value of the Leased Property, the Fair Market Value
Purchase Price or the Fair Market Added Value within thirty (30) days after
appointment of such appraiser. The determination of the appraiser which differs
most in terms of dollar amount from the determinations of the other two (2)
appraisers shall be excluded, and fifty percent (50%) of the sum of the
remaining two (2) determinations shall be final and binding upon Lessor and
Lessee as the Fair Market Value of the Leased Property, the Fair Market Value
Purchase Price or the Fair Market Added Value for such interest. This provision
for determination by appraisal shall be specifically enforceable to the extent
such remedy is available under applicable law, and any determination hereunder
shall be final and binding upon the parties except as otherwise provided by
applicable law. Lessor and Lessee shall each pay the fees and expenses of the
appraiser appointed by it and each shall pay one-half of the fees and expenses
of the third appraiser and one-half of all other costs and expenses incurred in
connection with each appraisal.

                                  ARTICLE XXXIV

                                 PURCHASE RIGHTS

     34.1 LESSEE'S OPTION TO PURCHASE. So long as no Default or Event of Default
then exists, and so long as no such Default or Event of Default exists at the
time of the closing of the purchase, at the expiration of the Fixed Term and at
the expiration of each Extension Term of this Lease, the Lessee shall have the
option, to be exercised by written notice to the Lessor at least sixty (60) days
prior to the expiration of the Fixed Term or the Extension Term, as applicable,
to purchase the Leased Property at a purchase price equal to the greater of (i)
the Fair Market Value of the Leased Property, or (ii) the Total Development
Costs (including any Capital Additions funded by the Lessor, but excluding any
Capital Additions funded by the Lessee), as increased by an amount equal to the
greater of (A) two and one-half percent (2.5%) per annum from the date hereof,
or (B) the rate of increase in the CPI on each Adjustment Date. Notwithstanding
anything contained herein to the contrary, in no event shall the purchase price
be less than the Fair Market Value of the Leased Property. Unless expressly
otherwise provided in this Section 34.1, in the event the Lessee exercises such
option to purchase the Leased Property, (i) the terms set forth in Article XVIII
shall apply, (ii) Lessee shall continue paying Rent as required under this Lease
until the purchase is closed, and (iii) the sale/purchase must be closed within
ninety (90) days after the date of the written notice from Lessee to Lessor.
Notwithstanding any provision herein to the contrary, this Lease, and
specifically Lessee's rights as set forth in this Section 34.1, are and shall be
subject, subordinate and inferior to any Facility Instrument. This provision
shall be self-operative. However, any Facility Lender may from time to time
request that such subordination be evidenced by a separate written agreement.
Within ten (10) days following written request by any Facility Lender, the
Lessee shall execute and deliver to such Facility Lender a written agreement, in
form and substance satisfactory to such Facility Lender and any applicable
rating agency. In the event Lessee fails or refuses to execute and deliver such
written agreement within such ten (10) day period, then, in addition to all
other remedies available at law or in equity, the Lessor shall be entitled to
terminate Lessee's rights under this Section 34.1 upon delivery of five (5)
days' written notice to Lessee. In the event Lessee has not executed and
delivered to such Facility Lender and any applicable rating agency, if any, the
written agreement requested within such five (5) day period, then in such event,
Lessee's rights under this Section 34.1 shall be deemed forfeited and of no
further force or effect.


                                       48

     34.2 LESSOR'S OPTION TO PURCHASE LESSEE'S PERSONAL PROPERTY. Lessor shall
have the option to purchase all (but not less than all) of Lessee's tangible
Personal Property, if any, at the expiration or termination of this Lease due to
the occurrence of an Event of Default, for an amount equal to the net sound
insurable value thereof (current replacement cost less accumulated depreciation
on the books of Lessee pertaining thereto), subject to, and with appropriate
price adjustments for, all equipment leases, conditional sale contracts,
security interests and other encumbrances to which Lessee's tangible Personal
Property is subject. Lessor shall exercise the foregoing option by giving Lessee
notice within thirty (30) days following the date of such termination and the
closing of such purchase and sale shall occur within fifteen (15) days following
delivery of such exercise notice..

     34.3 SURVIVAL. Lessee's purchase rights under this Article XXXIV or
elsewhere in this Lease shall survive the sale or conveyance of the Facility and
shall run with this Lease in favor of Lessee's successors and permitted assigns,
subject to the terms hereof.

                                  ARTICLE XXXV

                             [INTENTIONALLY OMITTED]

                                  ARTICLE XXXVI

                             [INTENTIONALLY OMITTED]

                                 ARTICLE XXXVII

                        FINANCING OF THE LEASED PROPERTY

     Lessor agrees that, if it grants or creates any mortgage, lien, encumbrance
or other title retention agreement ("Encumbrances") upon the Leased Property,
Lessor will use reasonable efforts to obtain an agreement from the holder of
each such Encumbrance whereby such holder agrees (a) to give Lessee the same
notice, if any, given to Lessor of any default or acceleration of any obligation
underlying any such Encumbrance or any sale in foreclosure of such Encumbrance,
(b) to permit Lessee, after twenty (20) days prior written notice, to cure any
such default on Lessor's behalf within any applicable cure period, in which
event Lessor agrees to reimburse Lessee for any and all reasonable out-of-pocket
costs and expenses incurred to effect any such cure (including reasonable
attorneys' fees), (c) to permit Lessee to appear with its representatives and to
bid at any foreclosure sale with respect to any such Encumbrance, (d) that, if
subordination by Lessee is requested by the holder of each such Encumbrance, to
enter into an agreement with Lessee containing the provisions described in
Article XXXVIII of this Lease, and (e) Lessor further agrees that no such
Encumbrance shall in any way prohibit, derogate from, or interfere with Lessee's
right and privilege to collaterally assign its leasehold and contract rights
hereunder provided such collateral assignment and rights granted to the assignee
thereunder shall be subordinate to the rights of the holder of an Encumbrance as
provided in Article XXXVIII hereof.

                                 ARTICLE XXXVIII

                        SUBORDINATION AND NON-DISTURBANCE

     At the request from time to time by one or more Facility Lender, within ten
(10) days from the date of request, Lessee shall execute and deliver within such
ten (10) day period, to such Facility Lender, a written agreement in form and
content reasonably acceptable to Lessee and such Facility Lender whereby Lessee
subordinates this Lease and all of its rights and estate hereunder to each
Facility Instrument that encumbers the Leased Property or any part thereof and
agrees with each such Facility Lender that Lessee will attorn to and


                                       49

recognize such Facility Lender or the purchaser at any foreclosure sale or any
sale under a power of sale contained in any such Facility Instrument as the case
may be, as Lessor under this Lease for the balance of the Term then remaining,
subject to all of the terms and provisions of this Lease; provided, however,
that each such Facility Lender simultaneously executes and delivers to Lessee a
written agreement consenting to this Lease and agreeing that, notwithstanding
any such other mortgage, deed of trust, right, title or interest, or any
default, expiration, termination, foreclosure, sale, entry or other act or
omission under, pursuant to or affecting any of the foregoing, Lessee shall not
be disturbed in peaceful enjoyment of the Leased Property nor shall this Lease
be terminated or canceled at any time, except in the event of a Default or Event
of Default under the terms of this Lease.

                                  ARTICLE XXXIX

                                    LICENSES

     Lessee shall maintain at all times during the Term hereof and any holdover
period all federal, state and local governmental licenses, approvals,
qualifications, variances, certificates of need, franchises, accreditations,
certificates, certifications, consents, permits and other authorizations and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary or useful in the operation of the Facility (collectively,
the "Licenses"), and shall qualify and comply with all applicable laws as they
may from time to time exist, including those applicable to certification and
participation as a provider under Medicare and Medicaid legislation and
regulations.

     Lessee shall not, without the prior written consent of Lessor, which may be
granted or withheld in its sole discretion, effect or attempt to effect any
change in the license category or status of the Facility or any part thereof.
Under no circumstances shall Lessee have the right to transfer any of the
Licenses to any location other than the Facility or to any other person or
entity (except to Lessor as contemplated herein), during the Term hereof.
Following the termination of this Lease as a result of the occurrence of an
Event of Default, Lessee shall retain no rights whatsoever to the Licenses, and
Lessee will not move or attempt to move the Licenses to any other location;
provided, however, that in the event of a termination of this Lease other than
as a result of the occurrence of an Event of Default, the Licenses shall remain
with Lessee. To the extent that Lessee has or will extend any right, title, or
claim of right whatsoever in and to the Licenses or the right to operate the
Facility, all such right, title, or claim of right shall automatically revert to
the Lessor or to Lessor's designee upon termination of this Lease due to an
Event of Default, to the extent permitted by law. Upon any termination of this
Lease for an Event of Default to the extent permitted by law, Lessor shall have
the sole, complete, unilateral, absolute and unfettered right to cause all
Licenses to be reissued in Lessor's name or in the name of Lessor's designee
upon application therefor to the issuing authority, and to further have the
right to have any and all provider and/or third party payor agreements as a
provider in the Medicare and Medicaid and other federal healthcare programs
issued in Lessor's name or in the name of Lessor's designee.

     Upon termination of this Lease due to the occurrence of an Event of Default
and for reasonable periods of time immediately before and after such
termination, Lessee shall use its best efforts, without additional consideration
to Lessee, to facilitate an orderly transfer of the operation and occupancy of
the Facility to Lessor or any new lessee or operator selected by Lessor, it
being understood and agreed that such cooperation shall include, without
limitation, (a) Lessee's transfer and assignment if and to the extent permitted
by law, to Lessor, Lessor's nominee or Lessor's new lessee or operator of any
and all Licenses, (b) Lessee's use of best efforts to maintain, to the maximum
extent allowed by applicable law, the effectiveness of any and all such Licenses
until such time as any new Licenses necessary for any new Lessee or operator to
operate the Facility have been issued, and (c) the taking of such other actions
as are required by applicable law or as are reasonably requested by Lessor. Upon
any termination of this Lease or any breach or default by Lessee hereunder
(which breach or default is not cured within any applicable grace period and
which results in Lessor terminating this Lease), to the extent permitted by law,
Lessor shall have the sole, complete, unilateral, absolute and unfettered right
to cause any and all Licenses to be reissued in Lessor's name or in the name of
Lessor's designee upon application therefor to the appropriate authority,


                                       50

if required, and to further have the right, to the extent permitted by law, to
have any and all Medicare and Medicaid and any other provider and/or third party
payor agreements issued in Lessor's name or in the name of Lessor's designee.
The provisions of this Article XXXIX are in addition to the other provisions of
this Lease.

     It is an integral condition of this Lease that Lessee covenants and agrees
not to sell, move, modify, cancel, surrender, transfer, assign, sell, relocate,
pledge, secure, convey or in any other manner encumber any License or any
governmental or regulatory approval, consent or authorization of any kind to
operate the Facility. To the extent permitted by law, Lessee hereby grants to
Lessor a landlord's lien on the Licenses.

     Lessee shall immediately (within two (2) business days) notify Lessor in
writing of any notice, action or other proceeding or inquiry of any governmental
agency, bureau or other authority whether federal, state, or local, of any kind,
nature or description, which could adversely affect any material License or
Medicare and Medicaid-certification status, or accreditation status of the
Facility, or the ability of Lessee to maintain its status as the licensed and
accredited operator of the Facility or which alleges noncompliance with any law.
Lessee shall immediately (within two (2) business days) upon Lessee's receipt,
furnish Lessor with a copy of any and all such notices and Lessor shall have the
right, but not the obligation, to attend and/or participate, in Lessor's sole
and absolute discretion, in any such actions or proceedings. Lessee shall act
diligently to correct any deficiency or deal effectively with any "adverse
action" or other proceedings, inquiry or other governmental action, so as to
maintain the licensure and Medicare and Medicaid-certification status stated
herein in good standing at all times. Lessee shall not agree to any settlement
or other action with respect to such proceedings or inquiry which affects the
use of the Leased Property or any portion thereof as provided herein without the
prior written consent of Lessor, which consent shall not be unreasonably
withheld or delayed. Lessee agrees to sign, acknowledge, provide and deliver to
Lessor (and if Lessee fails to do so upon request of Lessor, Lessee hereby
irrevocably appoints Lessor, as agent of Lessee for such express purposes) any
and all documents, instruments or other writings which are or may become
necessary, proper and/or advisable to cause any and all hospital licenses
required for the Primary Intended Use, Department of Human Services of the State
of Pennsylvania ("DHS") provider agreements, and/or state or federal Title XVIII
and/or Title XIX provider agreements to be obtained (either in total or
individually) in the name of Lessor or the name of Lessor's designee in the
event that Lessor reasonably determines in good faith that (irrespective of any
claim, dispute or other contention or challenge of Lessee) there is any breach,
default or other lapse in any representation, warranty, covenant or other
delegation of duty to Lessee (beyond any applicable grace or cure period) and
the issuing government agency has threatened or asserted that such license or
provider agreement will terminate or has lapsed or that Lessee's license or
certification or accreditation status is in jeopardy. This power is coupled with
the ownership interest of Lessor in and to the Facility and all incidental
rights attendant to any and all of the foregoing rights.

                                   ARTICLE XL

                         COMPLIANCE WITH HEALTHCARE LAWS

     Lessee hereby covenants, warrants and represents to Lessor that as of the
Commencement Date and throughout the Term ( it being understood and agreed that
Lessee shall have the periods contemplated herein to obtain its Medicare billing
number and provider agreement): (i) Lessee shall be, and shall continue to be
validly licensed, Medicare and Medicaid certified, and, if required, accredited
to operate the Facility in accordance with the applicable rules and regulations
of the State of Pennsylvania, federal governmental authorities and accrediting
bodies, including, but not limited to, the United States Department of Health
and Human Services, DHSS, DHS and CMS; and/or (ii) Lessee shall be, and shall
continue to be, certified by and the holder of valid provider agreements with
Medicare/Medicaid issued by DHHS, DHS and/or CMS and shall remain so certified
and shall remain such a holder in connection with its operation of the Primary
Intended Use on the Leased Property as a licensed and Medicare and Medicaid
certified hospital facility; (iii) Lessee shall be, and shall continue to be in
substantial compliance with and shall remain in substantial compliance with all
state and federal laws, rules, regulations and procedures with regard to the
operation of the Facility, including, without limitation, substantial compliance
under


                                       51

HIPAA; (iv) Lessee shall operate the Facility in a manner consistent with high
quality services and sound reimbursement principles under the Medicare and
Medicaid programs and as required under state and federal law; (v) Lessee shall
not abandon, terminate, vacate or fail to renew any license, certification,
accreditation, certificate, approval, permit, waiver, provider agreement or any
other authorization which is required for the lawful and proper operation of the
Facility or in any way commit any act which will or may cause any such license,
certification, accreditation, certificate, approval, permit, waiver, provider
agreement or other authorization to be revoked by any federal, state or local
governmental authority or accrediting body having jurisdiction thereof; (vi)
neither Lessee or any Affiliate of Lessee will exercise any provision of any
third party agreement which would result in compensation to a physician which
would not comply with Healthcare Laws; and (vii) Lessee and Lessee's Affiliates
acknowledge that Lessor has not consented to the compliance with Healthcare Laws
of any method of redeeming or canceling options granted Beth Dupree, M.D. ("Dr.
Dupree") by Section 4.1 of the April 26, 2004 Medical Director Services
Agreement between Lessee and Dr. Dupree, M.D. if, due to a change in Healthcare
Laws after the date hereof, her ownership is prohibited in Lessee or any
Affiliate.

                                   ARTICLE XLI

                                  MISCELLANEOUS

     41.1 GENERAL. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Lessee or Lessor
arising prior to any date of expiration or termination of this Lease shall
survive such expiration or termination. If any term or provision of this Lease
or any application thereof shall be invalid or unenforceable, the remainder of
this Lease and any other application of such term or provision shall not be
affected thereby. If any late charges provided for in any provision of this
Lease are based upon a rate in excess of the maximum rate permitted by
applicable law, the parties agree that such charges shall be fixed at the
maximum permissible rate. Neither this Lease nor any provision hereof may be
changed, waived, discharged or terminated except by an instrument in writing and
in recordable form signed by Lessor and Lessee. All the terms and provisions of
this Lease shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. The headings in this Lease are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

     41.2 LESSOR'S EXPENSES. In addition to other provisions herein, Lessee
agrees and shall pay and/or reimburse Lessor's reasonable costs and expenses,
including legal fees, incurred or resulting from and relating to (a) requests by
Lessee for approval or consent under this Lease, (b) requests by Lessor for
approval or consent under this Lease or any other documents executed between
Lessor and Lessee in connection herewith, (c) any circumstances or developments
which give rise to Lessor's right of consent or approval, (d) circumstances
resulting from any action or inaction by Lessee contrary to the lease
provisions, and (e) a request for changes including, but not limited to (i) the
permitted use of the Leased Property, (ii) alterations and improvements to the
Leased Improvements, (iii) subletting or assignment, and (iv) any other changes
in the terms, conditions or provisions of this Lease. Such expenses and fees
shall be paid by Lessee within thirty (30) days of the submission of a statement
for the same or such amount(s) shall become Additional Charges and subject to
the Overdue Rate after the said thirty (30) day period.

     41.3 ENTIRE AGREEMENT; MODIFICATIONS. This Lease embodies and constitutes
the entire understanding between the parties with respect to the transactions
contemplated herein, and all prior to contemporaneous agreements,
understandings, representations and statements (oral or written) are merged into
this Lease. Neither this Lease nor any provision hereof may be modified or
amended except by an instrument in writing signed by Lessor and Lessee.

     41.4 LEASE GUARANTY. The parties acknowledge that the Guarantors have
executed that certain Lease Guaranty of even date herewith in the form of
EXHIBIT D attached hereto and made a part hereof by reference and incorporation.


                                       52

     41.5 LESSOR'S RIGHT TO SELL. Lessee understands that Lessor may sell its
interest in the Leased Property in whole or in part. The Lessee agrees that any
purchaser may exercise any and all rights of Lessor, as fully as if such had
made the purchase of the Leased Property directly from the Lessee as set out in
the Purchase Agreement; provided, however, such purchaser shall be subject to
the same restrictions imposed upon Lessor hereunder. Lessor may divulge to any
such purchaser all information, reports, financial statements, certificates and
documents obtained by it from Lessee.

     41.6 FUTURE FINANCING. Lessee hereby agrees that if at any time during the
Term Lessee purchases or contemplates the purchase of a facility, or property to
be used, for the operation of a healthcare business, Lessee shall notify Lessor
in writing ("Lessee's Notice") of such purchase or contemplated purchase, and
Lessor shall have the first opportunity to provide financing for such purchase,
expansion or renovation upon terms mutually agreeable to Lessor and Lessee.
Lessor shall notify Lessee in writing on or before the expiration of twenty (20)
business days after receipt of Lessee's Notice whether Lessor is interested in
providing such financing. If Lessor agrees to provide the financing, the terms
and conditions of such financing will be contingent upon, among other things,
performance benchmarks acceptable to Lessor and the Lessor's satisfaction and
approval of other due diligence requirements.

     41.7 CASH DEPOSIT; LETTER OF CREDIT. Simultaneously herewith, Lessee has
deposited with Lessor, to be held in an interest bearing account at a financial
institution of Lessor's choosing, the sum of Three Million Nine Hundred
Seventy-Seven Thousand Five Hundred Dollars ($3,977,500.00) to secure
performance of Lessee's obligations hereunder (the "Cash Deposit"). On or before
the date of Final Funding (as defined in the Funding Agreement), Lessee shall
obtain and deliver to Lessor an unconditional and irrevocable letter of credit
from a bank acceptable to Lessor (the "Letter of Credit") naming Lessor
beneficiary thereunder, in an amount equal to the sum of Three Million Nine
Hundred Seventy-Seven Thousand Five Hundred Dollars ($3,977,500.00). Once the
Letter of Credit has been obtained, the Cash Deposit shall be retained by Lessor
and applied to the repayment of the Promissory Note.

     41.8 CASH INJECTION. Intentionally Omitted.

     41.9 TANGIBLE NET WORTH. Subject to the provisions of this Section 41.9, as
of the Commencement Date, Lessee shall achieve a Tangible Net Worth of Five
Million and No/100 Dollars ($5,000,000.00), which Lessee may satisfy by any of
the following: (i) Lessee receiving a total equity contribution of no less than
Five Million and No/100 Dollars ($5,000,000.00), (ii) Lessee obtaining a line of
credit of Five Million and No/100 Dollars ($5,000,000.00), which line of credit
shall be in form and substance satisfactory to Lessor in its sole discretion, or
(iii) Lessee achieving such Tangible Net Worth level through a combination of
equity contribution, approved line of credit or operating earnings; provided,
however, that until terminated or a default occurs thereunder, the existence of
the Lease Guaranty shall satisfy the requirements of this Section 41.9. At the
termination of the Lease Guaranty, Lessee shall provide evidence to Lessor, in
the form of an unaudited balance sheet of Lessee, certified as true and correct
by the chief financial officer of Lessee, reflecting that the foregoing Tangible
Net Worth requirement has been satisfied. At no time during the Term shall
Lessee make any distributions to its equity owners unless following such
distribution the Tangible Net Worth of Lessee is at least Five Million and
No/100 Dollars ($5,000,000.00).

     41.10 ADDITIONAL LETTER OF CREDIT. Simultaneously with the execution of
this Lease, Lessee shall execute and deliver to Lessor the Assignment of Rents
and Leases granting Lessor, among other things, a security interest in any
letter of credit or other form of credit enhancement from a sublessee,
subtenant, operating company, management company, or any other individual or
entity relating to the Facility (collectively the "Additional Letter of
Credit"). Lessee shall, within ten (10) days from demand execute, and cause any
applicable sublessee, subtenant, operating company, management company, or any
other individual or entity to execute and deliver, all documents (including,
without limitation, all bank/lender required documents) necessary for Lessor to
perfect its security interest in the Additional Letter of Credit.

     41.11 CHANGE IN OWNERSHIP/CONTROL. So long as this Lease remains in effect,
the aggregate ownership of the current members of Lessee shall not be reduced
below fifty-one percent (51%), except if such ownership is


                                       53

reduced through a sale of equity to either BH1 or its affiliates or Centre
Partners or its affiliates; provided, however, that if Lessee receives a bona
fide offer to purchase equity in Lessee and Lessee desires to engage in a
transaction which would cause Lessee to fail the provisions of this Section
41.10, then Lessee shall provide Lessor with notice as to all of the material
terms of such bona fide offer and shall seek Lessor's consent to such
transaction and, in the event Lessor fails to give such consent, Lessee shall
have the option, by giving written notice to Lessor within thirty (30) days
following such failure to give consent, to purchase the Leased Property for a
purchase price equal to the greater of (i) a purchase price calculated in the
same manner as provided in Section 34.1 of this Lease or (ii) an amount equal to
the sum of (A) the Total Development Costs (including any Capital Additions
funded by the Lessor, but excluding any Capital Additions funded by the Lessee)
and (B) an amount sufficient to yield to Lessor an internal rate of return that
is equal to thirteen percent (13%) per year, taking into account all payments of
Rent (other than Additional Charges) received by Lessor to the closing date of
such purchase. Unless expressly otherwise provided in this Section 35.1, in the
event the Lessee exercises such option to purchase the Leased Property, (i) the
terms set forth in Article XVIII shall apply, (ii) Lessee shall continue paying
Rent as required under this Lease until the purchase is closed, and (iii) the
sale/purchase must be closed within ninety (90) days after the date of the
written notice from Lessee to Lessor of Lessee's intent to purchase, unless a
different closing date is agreed upon in writing by Lessor and Lessee.

     41.12 LESSOR SECURITIES OFFERING AND FILINGS. Notwithstanding anything
contained herein to the contrary, in connection with a public offering or the
private placement of securities of Lessor or MPT, or their efforts to obtain
financing for the Leased Property, Lessor and MPT may disclose that Lessor has
entered into this Lease with the Lessee respecting the Facility and the Leased
Property and may provide and disclose other information regarding this Lease,
the Lessee, the Leased Property, the Facility, the Commitment Letter, and such
other additional information which Lessor and MPT may reasonably deem necessary,
to its proposed investors in such public offering or private offering of
securities or any prospective lenders with respect to such financing. Lessee
shall cooperate with Lessor and MPT by providing financial and other information
reasonably requested by Lessor and MPT in connection with such offering of
securities or financing. Lessor and MPT shall have the right of access to the
Facility, at reasonable business hours and upon advance notice, and all
documentation and information relating to the Facility.

     41.13 NON-RECOURSE AS TO LESSOR. Anything contained herein to the contrary
notwithstanding, any claim based on or in respect of any liability of Lessor
under this Lease shall be enforced only against the Leased Property and not
against any other assets, properties or funds of (i) Lessor, (ii) any director,
officer, general partner, shareholder, limited partner, beneficiary, employee or
agent of Lessor or any general partner of Lessor or any of its general partners
(or any legal representative, heir, estate, successor or assign of any thereof),
(iii) any predecessor or successor partnership or corporation (or other entity)
of Lessor or any of its general partners, shareholders, officers, directors,
employees or agents, either directly or through Lessor or its general partners,
shareholders, officers, directors, employees or agents or any predecessor or
successor partnership or corporation (or other entity), or (iv) any person
affiliated with any of the foregoing, or any director, officer, employee or
agent of any thereof.

     41.14 SUBDIVISION, COVENANTS, RESTRICTIONS AND RECIPROCAL EASEMENTS. Lessor
shall have the right, but not the obligation, to subdivide the Land and to place
of record all covenants, restrictions and reciprocal easements (collectively the
"Declarations") which Lessor deems necessary for the ownership, use and
operation of the Facility, such Declarations to be in form and content
acceptable to Lessor, in its sole discretion; provided, however, such
Declarations shall not adversely affect Lessee's occupancy, use or enjoyment of
the Leased Property as contemplated hereby or any other rights of Lessee
hereunder.

     41.15 FORCE MAJEURE. Except for Rent and other monetary obligations payable
pursuant to the terms of this Lease, in the event Lessor or Lessee shall be
delayed, hindered in or prevented from the performance of any act required under
this Lease by reason of strikes, lockouts, labor troubles, inability to procure
materials, failure of power, unavailability of any utility service, restrictive
governmental laws or regulations, riots, insurrections, the failure to act, or
default of another party, war, or other reason beyond Lessor's or Lessee's
control (individually "Force Majeure"), then performance of such act shall be
excused for the period of the delay, and the period of the


                                       54

performance of any such act shall be extended for a period equivalent to the
period of such delay. Within ten (10) business days following the occurrence of
Force Majeure, the party claiming a delay due to such event shall give written
notice to the other setting forth a reasonable estimate of such delay, provided
that failure to deliver the foregoing notice shall not prevent the force majeure
event from excusing performance as set forth in the preceding sentence.

     41.16 MANAGEMENT AGREEMENTS. Lessee shall not engage any Management Company
or allow any tenants, subtenants or sublessees of the Facility to engage any
Management Company, without Lessor's prior written consent, which consent shall
not be unreasonably withheld; provided, however, Lessor's rights relating to any
Management Company as set forth in Section 16.2 hereof shall be at Lessor's sole
and absolute discretion. Lessee shall, if required by Lessor, assign all of
Lessee's rights under the Management Agreement to Lessor and Lessor shall be
entitled to assign same to Lessor's lender. At the request of the Lessor from
time to time, Lessee shall execute and deliver (and require the tenants,
subtenants or sublessees to execute and deliver, if applicable) an assignment
and/or subordination agreement relating to the Management Agreements, which
assignment and/or subordination agreement shall be in such form and content as
reasonably acceptable to Lessor and/or any lender providing financing to Lessor,
and shall be delivered to Lessor within ten (10) days after Lessor's request.
Lessee hereby agrees that all payments and fees payable under the Management
Agreements are and shall be subordinate to the payment of the obligations under
this Lease and all other documents executed in connection with this Lease and
the Purchase Agreement. Lessee agrees that all Management Agreements entered
into in connection with the Leased Property shall expressly contain provisions
acceptable to Lessor which (i) require an assignment of the Management
Agreements to Lessor upon request by Lessor, (ii) confirm and warrant that all
sums due and payable under the Management Agreements are subordinate to this
Lease, (iii) grant Lessor the right to terminate the Management Agreement
(individually or collectively, if more than one (1)) upon an Event of Default or
Default hereunder, (iv) require the Management Company to execute and deliver to
Lessor within ten (10) days from Lessor's request an estoppel certificate,
assignment and/or subordination agreement as required by Lessor and/or Lessor's
lender providing financing to Lessor, in such form and content as is acceptable
to Lessor and/or its lender, and (v) all fees due and payable under any
Management Agreements, shall be subordinate to all monetary obligations under
this Lease. At the request of the Lessor from time to time, Lessee shall execute
and obtain from all parties subject to such Management Agreements executed
written confirmation of such assignment or subordination, which shall be
delivered to Lessor within ten (10) days from Lessor's request.

     41.17 GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO CONFLICTS OF LAW
PRINCIPLES (THE "APPLICABLE LAW").

     41.18 JURISDICTION AND VENUE. LESSOR AND LESSEE CONSENT TO PERSONAL
JURISDICTION IN THE STATE OF DELAWARE. LESSOR AND LESSEE AGREE THAT ANY ACTION
OR PROCEEDING ARISING FROM OR RELATED TO THIS LEASE SHALL BE BROUGHT AND TRIED
EXCLUSIVELY IN THE STATE OR FEDERAL COURTS OF THE STATE OF DELAWARE. EACH OF THE
PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF
VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT. LESSEE
EXPRESSLY ACKNOWLEDGES THAT DELAWARE IS A FAIR, JUST AND REASONABLE FORUM AND
LESSEE AGREES NOT TO SEEK REMOVAL OR TRANSFER OF ANY ACTION FILED BY LESSOR IN
SAID COURTS. FURTHER, LESSOR AND LESSEE IRREVOCABLY AND UNCONDITIONALLY WAIVE
ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY
CERTIFIED MAIL ADDRESSED TO A PARTY AT THE ADDRESS DESIGNATED PURSUANT TO
ARTICLE XXXII HEREOF SHALL BE EFFECTIVE SERVICE OF PROCESS AGAINST SUCH PARTY
FOR ANY ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT. A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT MAY BE ENFORCED IN ANY OTHER
COURT TO WHOSE JURISDICTION ANY OF THE PARTIES IS OR MAY BE SUBJECT.


                                       55

     41.19 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.

                                  ARTICLE XLII

                               MEMORANDUM OF LEASE

     Lessor and Lessee shall, promptly upon the request of either, enter into a
short form memorandum of this Lease in which reference to this Lease and all
options contained herein shall be made. The short form memorandum shall be in
form suitable for recording and reasonably satisfactory to Lessor and Lessee;
provided, however, such short form memorandum shall at a minimum contain such
matters required by the laws of the state in which the Leased Property is
located.

                     [SIGNATURES APPEAR ON FOLLOWING PAGES]


                                       56

     IN WITNESS WHEREOF, the parties have caused this Lease to be executed and
their respective seals to be hereunto affixed and attested by their respective
officers thereunto duly authorized.

                                      LESSOR:

                                      MPT OF BUCKS COUNTY, L.P.
                                      BY: MPT OF BUCKS COUNTY, LLC
                                      ITS: GENERAL PARTNER

                                      BY: MPT OPERATING PARTNERSHIP, L.P.
                                      ITS: SOLE MEMBER


                                      By: /s/ Edward K. Aldag, Jr.
                                          --------------------------------------
                                          Edward K. Aldag, Jr.
                                      Its: President and Chief Executive Officer


                                      LESSEE:

                                      BUCKS COUNTY ONCOPLASTIC INSTITUTE, LLC


                                      By: /s/ Jerome S. Tannenbaum, M.D.
                                          --------------------------------------
                                          Jerome S. Tannenbaum, M.D.
                                      Its: Chief Manager

STATE OF ALABAMA

JEFFERSON COUNTY

     On this, the _______ day of September, 2005, before me, a Notary Public for
the State of Alabama, the undersigned officer, personally appeared EDWARD K.
ALDAG, JR., known to me (or satisfactorily proven) to be the person whose name
is subscribed to the within instrument, and who acknowledged himself to be the
President and Chief Executive Officer of MPT Operating Partnership, L.P., a
Delaware limited partnership, which limited partnership is the sole member of
MPT OF BUCKS COUNTY, LLC, a Delaware limited liability company, which limited
liability company is the general partner of MPT OF BUCKS COUNTY, L.P., a
Delaware limited partnership, and further acknowledged that he, as such officer,
being authorized to do so, executed the foregoing instrument for the purposes
therein contained.

     IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                        ________________________________________
                                        Notary Public

                                        Print Name: ____________________________

[AFFIX SEAL]                            My Commission Expires: _________________

STATE/COMMONWEALTH OF _______________

COUNTY OF ___________________________

     On this, the ________ day of September, 2005, before me, a Notary Public
for the Commonwealth of Pennsylvania, the undersigned officer, personally
appeared JEROME S. TANNENBAUM, M.D., known to me (or satisfactorily proven) to
be the person whose name is subscribed to the within instrument, and who
acknowledged himself to be the Chief Manager of BUCKS COUNTY ONCOPLASTIC
INSTITUTE, LLC, a Delaware limited liability company, and further acknowledged
that he, as such officer, being authorized to do so, executed the foregoing
instrument for the purposes therein contained.

     IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                        ________________________________________
                                        Notary Public

                                        Print Name: ____________________________

[AFFIX SEAL]                            My Commission Expires: _________________

                                    Exhibit A
                              PROPERTY DESCRIPTION

All that certain tract of land situated on the Westerly side of Tillman Drive,
Bensalem Township, Bucks County, Pennsylvania, as shown on that ALTA/ACSM Land
Title Survey prepared by Taylor Wiseman & Taylor, Chalfont, PA, dated May 12,
2005, most recently revised September 15, 2005, as follows:

Beginning at a common corner of Bucks County Hospital/MOB and the "ITT" property
(tax parcel 2-35-1-8) on the Westerly legal right-of-way line of Tillman Drive,
60 feet wide.

1) Thence along the ITT property South 16 degrees 03 minutes 24 seconds West
80.60 feet to a concrete monument found;

2) Thence still along the ITT property South 09 degrees 39 minutes 43 seconds
West 403.74 feet to a point;

3) Thence still along the ITT property South 80 degrees 20 minutes 17 seconds
East 171.88 feet to a point;

4) Thence still along the ITT property South 44 degrees 27 minutes 04 seconds
East 80.00 feet to a corner in line of the boundary of Glenview Corporate Center
and along various adjoining property owners;;

5) Thence along the boundary of Glenview Corporate Center South 45 degrees 32
minutes 56 seconds West 345.00 feet to a point;

6) Thence still along the boundary of Glenview Corporate Center South 30 degrees
16 minutes 44 seconds West 676.04 feet to a point, a corner of remaining lands
of tax parcel 2-35-1 of which this was a part;

7) Thence along tax parcel 2-35-1 North 59 degrees 43 minutes 16 seconds West
26.81 feet to a point;

8) Thence still along parcel 2-35-1 North 04 degrees 53 minutes 26 seconds East
99.20 feet to a point;

9) Thence still along parcel 2-35-1 North 28 degrees 05 minutes 21 seconds East
36.24 feet to a point;

10) Thence still along parcel 2-35-1 North 01 degree 18 minutes 13 seconds West
19.91 feet to a point;

11) Thence still along parcel 2-35-1 North 23 degrees 51 minutes 58 seconds East
501.50 feet to a point;

12) Thence still along parcel 2-35-1 North 80 degrees 05 minutes 18 seconds West
217.44 feet to a point;

13) Thence still along parcel 2-35-1 North 01 degree 18 minutes 13 seconds West
182.67 feet to a point;

14) Thence still along parcel 2-35-1 North 12 degrees 22 minutes 52 seconds West
136.82 feet to a point;

15) Thence still along parcel 2-35-1 North 62 degrees 45 minutes 33 seconds West
47.59 feet to a point;

16) Thence still along parcel 2-35-1 North 05 degrees 32 minutes 12 seconds West
140.76 feet to a point;

17) Thence still along parcel 2-35-1 North 13 degrees 45 minutes 44 seconds West
377.69 feet to a point;

18) Thence still along parcel 2-35-1 North 32 degrees 14 minutes 28 seconds East
550.47 feet to a point;

19) Thence still along parcel 2-35-1 South 73 degrees 10 minutes 35 seconds East
250.00 feet to a point on the Westerly side of Tillman Drive;

20) Thence still along the Westerly side of Tillman Drive South 16 degrees 47
minutes 24 seconds Wset 182.15 feet to a point of curvature;

21) Thence still along Tillman Drive and a curve to the left having a radius of
235.00 feet the arc distance of 372.15 feet to the point of beginning.

                                    Exhibit B
                              PERMITTED EXCEPTIONS

1. Rights granted to Bell Telephone Company as in Land Record Books 172, Page
2269, 89, Page 868, 89, Page 872, and 262, Page 1975.

2. Rights to Philadelphia Electric Company as in Land Record Books 101, Page
746, 1165, Page 37, and 1803, Page 383.

3. Declaration of Protective Covenants as in Land Record Book 192, Page 1875, as
shown on Survey (defined below).

4. Rights granted to Philadelphia Electric Company and Bell Telephone Company as
in Deed Book 775, Page 482.

5. Sewer Easement as in Deed Book 1288, Page 174.

6. Conditions disclosed by Plans recorded in Plan Books 259, Page 56A, and 299,
Page 81, as shown on Survey (defined below).

7. Dedication of Documents of Completion to allow connection to the Sewer and
Water Facilities as in Land Record Book 1588, Page 244 (Easement "B" affects
subject parcel and is shown on the Survey defined below.)

8. Conditions disclosed by Record Plan of Bucks County Hospital/MOB to be
recorded.

9. Conditions disclosed on that ALTA/ACSM Land Title Survey prepared by Taylor
Wiseman & Taylor, Chalfont, PA, dated May 12, 2005, most recently revised
September 15, 2005, as follows ("Survey"):

     a. Detention basin berm shown;

     b. 30" RCP and 36" RCP shown; and

     c. Poquessing Creek (waters of he United States) runs adjacent to a portion
     of the land.

10. Rights or claims by parties in possession under the terms of any unrecorded
lease or agreement(s) of sale, including, without limitation, that certain Lease
between Bucks County Oncoplastic Institute, LLC and Beth DuPree, M.D. and
Associates, P.C., effective as of September 1, 2005.

11. Easements, or claims of easements, not shown by the public record.

                                    Exhibit C
                               EXISTING SUBLEASES

Lease between Bucks County Oncoplastic Institute, LLC and Beth DuPree, M.D. and
Associates, P.C., effective as of September 1, 2005.

                                    Exhibit D
                                 LEASE GUARANTY

See attached


                                                                   Exhibit 10.57

                              DEVELOPMENT AGREEMENT

     THIS DEVELOPMENT AGREEMENT (the "Agreement") is made and entered into as of
the 16th day of September, 2005 (the "Effective Date"), by and among DSI
FACILITY DEVELOPMENT, LLC, a Delaware limited liability company ("Developer"),
with offices at 511 Union Street, Suite 1800, Nashville, Tennessee 37219, BUCKS
COUNTY ONCOPLASTIC INSTITUTE, LLC, a Delaware limited liability company
("BCOI"), with offices at 511 Union Street, Suite 1800, Nashville, Tennessee
37219, and MPT OF BUCKS COUNTY, L.P., a Delaware limited partnership ("Owner"),
having an address at 1000 Urban Center Drive, Suite 501, Birmingham, Alabama
35242, Attention: Edward K. Aldag, Jr.

                                   WITNESSETH:

     WHEREAS, Diversified Specialty Institutes, Inc., a Delaware corporation
("DSI"), entered into that certain Agreement of Sale dated April 14, 2005 (the
"Ground Contract"), as amended, with Glenview Corporate Center Limited
Partnership, L.P., a Delaware limited partnership ("Glenview"), whereby Glenview
agreed to sell to DSI, and DSI agreed to purchase from Glenview, that certain
real estate located in Bucks County, Pennsylvania, which real estate is more
particularly described on EXHIBIT "A" attached hereto and made a part hereof by
reference and incorporation (the "Property");

     WHEREAS, BCOI, MPT Operating Partnership, L.P., a Delaware limited
partnership ("MPT"), Jerome S. Tannenbaum, M.D., M. Stephen Harrison, G. Patrick
Maxwell, M.D. and Developer entered into that certain Purchase and Sale
Agreement dated as of March 3, 2005 (the "Purchase Agreement"), as amended
relating, in part, to the purchase and development of the Property and the
construction of the Project (as defined below);

     WHEREAS, pursuant to the Purchase Agreement, DSI assigned all of its right,
title and interest under the Ground Contract to MPT, and MPT has acquired the
Property;

     WHEREAS, MPT and BCOI entered into that Lease Agreement of even date
herewith (the "Lease") whereby MPT leased the Property to BCOI;

     WHEREAS, pursuant to that certain Funding Agreement of even date herewith
among BCOI, Developer and Owner (the "Funding Agreement"), Owner has agreed to
fund the development and construction of the Improvements in accordance with the
terms, provisions and conditions of the Funding Agreement and of this Agreement;

     WHEREAS, Developer is an experienced developer of hospitals and medical
office buildings and, because of such expertise, BCOI has selected Developer to
perform the services set forth in this Agreement relating to the development and
construction of the Improvements;

     WHEREAS, BCOI desires that Developer assist BCOI in the development and
construction of the Improvements and provide the services with respect to the
Project (defined below), and Developer has

agreed to assist BCOI in the development and construction of the Project and to
perform such services in accordance with the terms, conditions and agreements
set forth herein; and

     WHEREAS, capitalized terms used herein, but not defined herein, shall have
the meanings given to them in the respective Leases or in the Funding Agreement.

     NOW, THEREFORE, for and in consideration of the mutual promises and
covenants herein set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:

                                    ARTICLE 1
                                   THE PROJECT

     The improvements to be constructed on the Property will include (i) a one
(1)-floor acute-care hospital facility (the "Hospital") consisting of
approximately 57,000 square feet of gross area and a 750 square foot connector
to the MOB (as defined below), (ii) a two (2)-floor medical office building (the
"MOB") consisting of approximately 64,000 square feet of gross area (the MOB,
together with the Hospital, the "Facility"), and (iii) all related parking
areas, driveways, roadways, walkways, bridges, connectors, utility improvements,
site work, landscaping, common areas, signage, and any other improvements,
amenities and facilities to be constructed on the Property to be used in
connection with the operation of the Hospital and the MOB (such improvements
collectively referred to herein as the "Improvements"). The Property and the
Improvements to be constructed on each are collectively referred to as the
"Project". The Project shall be developed and constructed in accordance with
certain plans and specifications approved in writing by BCOI and Owner, prepared
by an architect and engineer approved by BCOI and Owner, and approved and
adopted by the proper governmental authority.

     A preliminary site plan for the Project is shown on the drawing marked
EXHIBIT "B" attached to and made a part of this Agreement.

                                    ARTICLE 2
                                 THE ENGAGEMENT

     Subject to the satisfaction of certain terms, provisions and conditions set
forth herein, BCOI hereby engages and appoints Developer as an independent
contractor and as exclusive development manager and agent (unless Developer
defaults under this Agreement, the Funding Agreement or under any of the
Contracts) for payment to Third Parties under the Contracts (each as defined
below) in connection with the construction of the Project. Developer hereby
agrees to perform the services referred to herein and Developer accepts and
agrees to perform such services pursuant to such engagement. Owner hereby
consents to such engagement. The rights and duties hereby granted to and assumed
by Developer are those of an independent contractor only. Nothing contained
herein shall be so construed as to create a relationship between Developer and
BCOI or between Developer and Owner of employment, partnership, joint venture,
or any other joint undertaking.

                                    ARTICLE 3
                             DEVELOPER'S OBLIGATIONS

     3.1 General Duties of Developer, BCOI and Owner.


                                        2

          (a) Developer shall diligently, in good faith and with due care,
consult with BCOI during the term of this Agreement in performing its
obligations in accordance with the terms and conditions of this Agreement.
Developer shall also diligently, in good faith and with due care, respond
promptly to any request made by BCOI or Owner or their respective employees,
agents and representatives regarding the development and construction of the
Project and cooperate with BCOI in connection with its requirement and with BCOI
and its employees, agents and representatives in the development and
construction of the Project.

          (b) BCOI and Owner shall diligently, in good faith and with due care,
respond promptly to any request by Developer for consents and approvals as
required hereunder regarding the development and construction of the Project and
cooperate with Developer in the performance of Developer's duties under this
Agreement.

          (c) Developer shall perform its obligations under this Agreement in
accordance and in compliance with all applicable laws, rules, regulations,
statutes and ordinances of all governmental authorities. In the event
Developer's obligations as set forth in this Agreement are inconsistent with
such applicable laws, rules, regulations and ordinances, Developer shall be
permitted to take any action that is required thereby (or to refrain from taking
any action that is prohibited thereby) despite that such action is prohibited
(or the action from which Developer refrains is required) under this Agreement.
Developer shall provide written notice to BCOI and Owner of such inconsistency
at least twenty (20) days prior to taking any action or failing to take any
action required or prohibited under this Agreement.

     3.2 Management of Development. Developer shall manage and oversee all
design, development and construction aspects of the Project in accordance with
the Development Schedule (the "Development Schedule"), a preliminary copy of
which is set forth on EXHIBIT "C", and the Development Budget (the "Development
Budget") set forth on EXHIBIT "D" attached hereto. Owner and BCOI hereby
acknowledge and agree that each has reviewed and does hereby approve of the
Development Schedule and the Development Budget attached hereto; provided,
however, that the parties acknowledge that the Development Schedule attached
hereto is a preliminary Development Schedule and within ten (10) days of the
date hereof, the parties shall agree to a final Development Schedule and such
Development Schedule shall supersede the preliminary Development Schedule
attached hereto. In connection therewith, Developer is hereby authorized and
directed to perform, and Developer hereby agrees to perform, without limitation,
the following services (the "Services"):

          (a) Developer shall supervise and assist BCOI in the preparation or
procurement of:

               (i) the Plans and Specifications (as defined below);

               (ii) the Development Schedule for the Project setting forth a
               detailed analysis and schedule for the development and
               construction of the Project;

               (iii) the Development Budget for the Project setting forth a
               detailed budget for the Project; and

               (iv) a survey of the location and boundaries of the Property on
               which the Project will be constructed, which shall, at a minimum,
               clearly depict all wetland areas and contain a legal description
               of the Property, and contain such other


                                        3

               information and detail as required by BCOI or Owner and the title
               insurance company insuring BCOI's leasehold interests in the
               Property.

          (b) Developer shall use its best efforts to obtain as soon as
practicable, to the extent not obtained by BCOI, all approvals, governmental
approvals and permits necessary or appropriate for the development and
construction of the Project, including, without limitation, approvals required
pursuant to any declarations, covenants, conditions and restrictions relating to
the Property, zoning approvals, zoning variances, subdivision approvals, grading
and utility permits, building permits, tap permits or "connections" for water
and sanitary sewer service for the Project (the expense for which shall be
included in the Development Budget) (all such approvals and permits shall be on
terms and conditions approved by BCOI and Owner). Developer shall furnish Owner
with evidence of such approvals within ten (10) days of receipt of same.

          (c) Developer shall assist BCOI in negotiating contracts (the
"Contracts") with architects, landscape architects, engineers, planners,
designers, general contractors, subcontractors, technology suppliers and
consultants, and other suppliers and vendors (collectively the "Third Parties")
utilized in the development and construction of the Project. All of the
Contracts, other than those listed and described on EXHIBIT "E" hereto which
Owner acknowledges and agrees that it has approved, shall be subject to review,
revision and approval of Owner. Notwithstanding anything contained herein to the
contrary, (i) subject to Owner's prior written approval, BCOI shall have the
right to designate the general contractor ("Contractor") (provided, however,
that Owner hereby approves of Clayco Construction Company), architect
("Architect"), construction company ("Construction Company"), engineer
("Engineer") and other Third Parties which will participate in the development
and construction of the Project, (ii) BCOI, subject to Owner's prior written
approval, shall control the preparation and negotiation of the definitive
agreements with such parties, and (iii) Owner shall have the right to review and
approve all Contracts (other than those listed on EXHIBIT "E") prior to their
execution. Developer acknowledges and understands that the Contracts shall not
be completed, fully negotiated or signed until BCOI and Owner have reviewed and
approved in writing such Contracts (other than those listed on EXHIBIT "E"). In
connection therewith, Developer shall also obtain from all Third Parties such
payment and performance bonds and all other bonds required by BCOI, Owner and
Facility Lender and by any governmental authority applicable to the construction
and development of the Project, naming BCOI, Owner and the Facility Lender (as
defined in Section 11.2 below) as named obligees or additional insureds. In the
event BCOI is not a party to any of the Contracts with Third Parties, either
BCOI, Owner or Facility Lender shall have the right to require the Developer,
within ten (10) days after written request from either BCOI, Owner or Facility
Lender, to obtain a written assignment, consent to assignment estoppel and
subordination agreement signed by the parties to such Contracts in form and
content acceptable to BCOI, Owner and Facility Lender.

          (d) Developer shall advise and assist BCOI in obtaining contracts with
the appropriate government authorities and utility companies for the
construction of any utility services necessary for the implementation of the
Project and the use of the Facility. Neither BCOI nor the Developer shall enter
into any such contract prior to receipt of Owner's written approval of such
contracts which approval may be granted or withheld in Owner's sole discretion.

          (e) Developer shall, within ten (10) days from the Effective Date,
cause the Architect to complete the preparation of the final working drawings,
plans and specifications for the Project, excluding or including, at the
discretion of BCOI and Owner, interior partitions, finishes and other tenant


                                        4

improvement work, but including all related utility, parking, driveway,
landscape and other site improvements to be located on the Property, and to
submit four (4) copies of such working drawings, plans and specifications to
BCOI and to Owner. If BCOI or Owner has any objections or comments with respect
to any such drawings, plans and specifications which are submitted to it, BCOI
or Owner shall notify Developer and Architect in writing within twenty (20) days
after BCOI's or Owner's receipt of such working drawings, plans and
specifications. If BCOI makes any comments or objections or requests any changes
or corrections regarding any such working drawings, plans and specifications,
Developer shall promptly coordinate with Architect and cause the requested
comments, objections, changes and corrections to be addressed and made.
Developer shall promptly resubmit to BCOI and to Owner modified working
drawings, plans and specifications, which shall be subject to the same review
and approval procedures set forth above. All working drawings and specifications
which are approved by BCOI and Owner are herein referred to as the "Plans and
Specifications". Approval of the Plans and Specifications by BCOI and Owner
shall constitute only an approval of the aesthetic features of the building
described in the drawings, and acknowledgment that the floor plan and the
spatial relationship of the various parts of the Plans and Specifications are
satisfactory, and shall not be construed as an approval of the character or
quality of the architectural, structural or engineering design of the
Improvements or any of their components, or an acknowledgment that the design
complies with applicable building codes. No such approval shall constitute a
waiver of any warranties or guaranties set forth in this Agreement or release
Developer or Architect from liability for any errors or omissions. None of the
Plans and Specifications may be changed or otherwise modified without the prior
written consent of BCOI and Owner. All costs, fees and expenses of the
preparation of the Plans and Specifications by the Architect and any other
consultants shall be included in the Development Budget.

          (f) Developer shall obtain and file all notices of commencement of
construction and completion of construction as may be required by the laws of
the State of Pennsylvania and all rules, regulations and ordinances of any
governmental authority having jurisdiction over the Project.

     3.3 Construction Phase Services. During the construction phase of the
Project, the obligations and services to be performed by the Developer shall
include, without limitation, the following (the "Construction Phase Services"):

          (a) Coordination with all Third Parties with respect to the
development, budgeting, design, engineering, construction and landscaping of the
Project in accordance with the Development Schedule and the Development Budget.

          (b) Supervise the performance of the Third Parties and their
compliance with their respective obligations under the Contracts in connection
with the construction of the Project.

          (c) Monitor the construction of the Project to determine whether the
development of the Project is proceeding in accordance with the Development
Budget and the Development Schedule. If the Project is not proceeding in
accordance with the Development Budget and the Development Schedule, Developer
shall immediately report such noncompliance in writing to BCOI and to Owner and
Developer's written report shall specifically state why the Project is not so
proceeding and all issues, problems and concerns in connection therewith.

          (d) Coordinate compliance with all applicable requirements of the
Facility Lender for the Project and the Facility Lender's loan documentation.


                                        5

          (e) Commence construction of the Project no later than the tenth
(10th) business day after the issuance of a land disturbance or building permit
from Bensalem, Pennsylvania; provided, however, such construction must be
commenced no later than the twentieth (20th) day after the Effective Date, and,
subject to the force majeure provisions of Section 3.3(f) and Section 15.1
below, diligently pursue the development, construction and completion of the
Project in accordance with this Agreement, the Development Schedule and the
Development Budget by no later than July 31, 2006 (the "Projected Completion
Date"). The Project shall be deemed substantially completed on the date on which
all of the following have occurred (the "Completion Date"): (i) satisfactory
completion (as determined by BCOI and Owner) of all construction work under the
general construction contract with the Contractor, (ii) the Owner has received a
certificate from the Architect that the construction of the Project has been
substantially completed in accordance with the Plans and Specifications, which
certificate shall be in form and substance satisfactory to Owner and shall
include the written approval of the Construction Inspector noted thereon, (iii)
Owner has received evidence that appropriate governmental authorities have
unconditionally approved and certified the Completed Improvements in their
entirety for permanent occupancy as an acute-care hospital and incorporated
medical office building; and (iv) a license to operate as a health care facility
in the State of Pennsylvania has been issued by the proper governmental
authorities.

          (f) Developer and BCOI acknowledge that governmental agencies
sometimes require changes in construction materials, methods, or design after
certain construction work is in place. If any governmental agency makes such a
requirement with respect to the Project, the additional costs with respect
thereto shall be deemed costs of the Project and any delays resulting therefrom
shall be deemed force majeure events provided that the following conditions have
been satisfied: (i) the Improvements constructed to the date of the required
change in construction materials, methods or design have been designed and
constructed in accordance with the Plans and Specifications, and appropriate
building permits have been issued with respect thereto prior to construction,
and (ii) the Plans and Specifications have been submitted to the Pennsylvania
Health Department for review and comment prior to the installation of the
Improvements. The foregoing shall not be construed as a modification of any
provision of the Leases or any right of the Facility Lender.

          (g) From the commencement of construction until completion of the
Project, Developer shall cause the Third Parties to maintain general liability
and other types of insurance (including, without limitation, errors and
omissions coverages) satisfactory in form, content and amount to BCOI, Owner,
MPT and the Facility Lender and insuring against all hazards normally insured
against in the construction industry for similar projects. Developer shall cause
BCOI, Owner, MPT and the Facility Lender to be added as mortgagees (as
appropriate) and additional insureds on all liability coverages. Developer shall
obtain and deliver to such insured parties before the commencement of the
construction of the Project original policies of insurance, or a certified copy
thereof (which is certified in writing by a duly authorized agent for the
insurance company as a "true, correct, complete and certified" copy of the
policy) for the required insurance. Each insurer must agree, by endorsement on
the policy or policies issued by it, or by independent instrument, that it will
give to BCOI, Owner, MPT and the Facility Lender thirty (30) days' written
notice before the policy or policies in question shall be altered, terminated,
allowed to expire or canceled. All policies of insurance required hereunder to
be obtained shall provide that (i) such policies will not lapse, terminate, be
canceled, or be amended or modified to reduce limits or coverage terms unless
and until BCOI, Owner, MPT and Facility Lender have received not less than
thirty (30) days' prior written notice, (ii) the language "endeavor to" will be
deleted from all


                                        6

notice provisions and (iii) Developer and BCOI shall deposit the amount of any
resulting deficiency in accordance with the requirements of the Facility Lender.

          (h) Following issuance of the Architect's certificate of Final
Completion, BCOI and Owner may inspect the Project and prepare punch lists (each
a "Punch List") setting forth all incomplete, defective or other items of
construction not in conformity with the Plans and Specifications and if such
Punch Lists are delivered to Developer, Developer shall cause all such items to
be completed or corrected within ninety (90) days of receipt of such Punch List.
If ninety (90) days is an insufficient period of time in which to complete or
correct any Punch List item, Developer may request one or more thirty (30) day
extensions of said 90-day period, which extensions Owner shall grant so long as
Developer is working and continues to work in good faith and diligently pursues
the completion and correction thereof. In the event Developer fails to cause
such items to be completed within the ninety (90) day period, or the extended
period of time, as applicable, BCOI or Owner may complete or correct any or all
of such items and Developer shall reimburse BCOI or Owner, as applicable, for
the cost thereof plus interest thereon at an annual rate of ten and
three-quarters percent (10.75%) within thirty (30) days after receipt from BCOI
of written demand for such payment, and in the event Developer fails to
reimburse BCOI or Owner, as applicable, for such cost and interest within such
thirty (30) day period, BCOI or Owner may pursue whatever remedies they may have
against Developer at law or in equity. Notwithstanding anything contained herein
to the contrary, Owner and BCOI shall have the right to withhold from the
Developer Fees and the Developer Bonus (as defined in Article 5 hereof) payable
to Developer hereunder an amount equal to the excess, if any, of one hundred
twenty-five percent (125%) of the total costs necessary to complete the Punch
List items over the retainage under the Contract with the Construction Company,
until such Punch List items are completed to BCOI's and Owner's satisfaction.

     3.4 Authority of Developer.

          (a) Authority of Developer. Except as specifically approved in writing
by BCOI or Owner, as applicable, or as expressly set forth herein, Developer
shall not have authority to bind BCOI or Owner in any matters regarding the
Project.

          (b) Limitation on Authority. Developer's actual authority hereunder is
limited by this Agreement. Developer shall not undertake or permit any
development of or construction on the Property, engage the services of any
contractor, architect, engineer, consultant or other third party, engage a
vendor or supplier, expend any funds or incur any debt in connection with the
development and construction of the Project or the performance of any other
obligation under this Agreement or in connection with the Project, unless either
(i) the action shall have been expressly authorized in this Agreement and can be
completed within the limits of the Development Budget and the time periods set
by the Development Schedule, or (ii) the action is approved by BCOI and Owner in
writing prior to Developer taking such action. All change orders must be
approved by BCOI and Owner in writing prior to making such changes in the
Project. All change orders shall be in form and content reasonably acceptable to
BCOI and Owner.

          (c) Emergencies. It is the desire and intent of the parties hereto, as
evidenced by the terms and provisions of this Agreement, that Developer shall
take only such actions as may be necessary or appropriate in connection with the
performance of its duties under this Agreement; provided, however, in the event
there are occurrences from time to time that require immediate action by
Developer and, in the reasonable opinion of Developer, it would be detrimental
to the continued development of the Project to delay such action until any
required approval by BCOI and/or Owner can be obtained, then,


                                        7

notwithstanding anything in this Agreement to the contrary, Developer shall be,
and hereby is authorized for and on behalf of BCOI (after making a good faith
effort to obtain prior approval or consent from BCOI and Owner) to take such
action as may be reasonably necessary under the circumstances; it being
specifically understood and agreed, however, that the authority granted to
Developer in this Section 3.4(c) shall apply only to occurrences reasonably
determined by Developer to be emergencies and that Developer shall notify BCOI
and Owner as soon as practicable after such actions are taken.

          (d) Owner and Owner's Facility Lender Delay. Notwithstanding any other
provision of this Agreement, Owner and/or Owner's Facility Lender shall grant or
deny approval of any proposed document, expense, act, or other matter with
respect to which their respective approvals are required hereunder by the later
of (i) the time period specified herein for such approval; or (ii) ten (10)
business days after the document, expense, act or other matter is submitted or
otherwise proposed to Owner for approval. In the event Owner and Owner's
Facility Lender fails to grant or deny approval required hereunder with respect
to any such document, expense, act or other matter, such party shall be
conclusively deemed to have approved the proposed document, expense, act or
other matter (whether or not such approval is required to be in writing
hereunder). BCOI and Developer may rely on such deemed approval without
incurring any liability, and without causing any default or event of default
hereunder.

          (e) BCOI's Delay. Notwithstanding any other provision of this
Agreement, BCOI shall grant or deny approval of any proposed document, expense,
act, or other matter with respect to which its approval is required hereunder by
the later of (i) the time period specified herein for such approval; or (ii) ten
(10) business days after the document, expense, act or other matter is submitted
or otherwise proposed to BCOI for approval. In the event BCOI fails to grant or
deny approval required hereunder with respect to any such document, expense, act
or other matter, BCOI shall be conclusively deemed to have approved the proposed
document, expense, act or other matter (whether or not such approval is required
to be in writing hereunder). Owner, Owner's Facility Lender and Developer may
rely on such deemed approval without incurring any liability, and without
causing any default or event of default hereunder.

     3.5 Liens. Developer will not create or permit to be created or to remain
any mechanic's and materialmen's liens, encumbrance or charge on the Property,
the Project or any part thereof which arises by reason of any labor, services or
materials furnished or claimed to have been furnished to Developer, the Project
or by reason of the development, design or construction of the Project.

                                    ARTICLE 4
                               DEVELOPMENT BUDGET

     The parties hereto acknowledge and agree that the total budget for the
Project, including acquisition and development of the Property, is expected to
be Thirty-Eight Million and 00/100 Dollars ($38,000,000.00), as set forth in the
Development Budget. BCOI will only be responsible for cost overruns as provided
in the Funding Agreement. Developer shall be responsible for and pay all cost
overruns not approved in writing by BCOI, Owner and, if applicable, the Facility
Lender. Any cost overruns which are not paid by Developer within five (5) days
after written request from BCOI or Owner may be deducted from the Developer Fees
(as defined below) and shall, at the election either of BCOI or Owner,
constitute a default hereunder.


                                        8

                                    ARTICLE 5
                            COMPENSATION OF DEVELOPER

     Subject to the adjustments, terms and conditions as expressly provided in
this Agreement, as consideration for Developer's services provided under this
Agreement, BCOI agrees to pay to Developer the fees set forth on EXHIBIT "F"
(the "Developer Fees"). So long as (i) the Project is proceeding in all material
respects in accordance with the terms, provisions and conditions of this
Agreement, and is proceeding within the Development Budget and in accordance
with the Development Schedule, (ii) Developer is not in default hereunder and no
event has occurred which with the giving of notice or the passage of time or
both would constitute such a default hereunder, (iii) there is no Default or
Event of Default, each as defined in the Funding Agreement, and (iv) Developer
and/or DSI or any of their Affiliates are not in default under any other
agreements and contracts with BCOI or any of its Affiliates or Owner or any of
its Affiliates, and no event has occurred which with the giving of notice or the
passage of time or both would constitute such a default under this Agreement or
any other agreement or contract of Developer and/or DSI with BCOI and any of its
affiliates, or Owner or any of its affiliates, eighty percent (80%) of the
Developer Fees shall be prorated over ten (10) months and paid in equal monthly
installments commencing on September 15, 2005. Such monthly installments shall
continue thereafter so long as the requirements set forth in subitems (i)
through (iv) of this Article 5 are met and so long as (a) the requirements for
funding under the Funding Agreement are satisfied. The remaining twenty percent
(20%) of the Developer Fees along with the bonus described on EXHIBIT "F" hereto
(the "Developer Bonus").shall be paid to Developer upon the satisfaction of all
conditions to the Final Funding under the Funding Agreement. Developer agrees
that the payments referred to in this Article 5 are subject and subordinate in
all respects to the obligations of BCOI to Owner under the Leases and to any
financing for the Project in favor of the Facility Lender and Developer shall,
upon written request, execute all documents necessary to confirm such
subordination and deferral in such form and on such terms as the Facility Lender
may request. In the event Developer defaults hereunder, or if the Project is not
progressing in accordance with this Agreement and the Development Schedule and
within the Development Budget, then any amounts owed to Developer shall be
determined by BCOI subject to the prior written approval of Owner and the
Facility Lender.

                                    ARTICLE 6
                                  DISBURSEMENTS

     The parties acknowledge and agree that all payments of hard and soft costs
described on the Development Budget and all payments of cost overruns to
applicable third party payees identified on the Development Budget and all other
parties performing services and providing materials to the Project ("Third Party
Payees") shall be paid as provided in the Funding Agreement.

                                    ARTICLE 7
                                TERM OF AGREEMENT

     7.1 Term. Unless sooner terminated as set forth herein, the term of this
Agreement shall commence upon the Effective Date and shall continue until the
Completion Date (as defined in Section 3.3(e)).

     7.2 Early Termination.


                                        9

          (a) Owner, BCOI and any Facility Lender shall have the right, with two
(2) days' prior written notice, to terminate this Agreement if any such party
determines, in its sole discretion (but subject to Owner's prior written
approval), that the transactions contemplated by this Agreement and the leasing
of the Facility could reasonably be expected to result in a violation of any
applicable laws and regulations, including without limitation, federal and state
health care laws and regulations. Such health care laws and regulations include,
without limitation, all rules and regulations under the False Claims Act (31
U.S.C. Section 3729 et seq.), the Anti-Kickback Act of 1986 (41 U.S.C. Section
51 et seq.), the Federal Health Care Programs Anti-Kickback statute (42 U.S.C.
Section 1320a-7a(b)), the Ethics in Patient Referrals Act of 1989, as amended
(Stark Law) (42 U.S.C. 1395nn), the Civil Money Penalties Law (42 U.S.C. Section
1320a-7a), or the Truth in Negotiations (10 U.S.C. Section 2304 et seq.), Health
Care Fraud (18 U.S.C. 1347), Wire Fraud (18 U.S.C. 1343), Theft or Embezzlement
(18 U.S.C. 669), False Statements (18 U.S.C. 1001), False Statements (19 U.S.C.
1035), Patient Inducement Statute (42 U.S.C. 1320a-7(a)(a)(5)), and equivalent
state statutes and any and all rules or regulations promulgated by governmental
entities with respect to any of the foregoing. In the event this Agreement is
terminated pursuant to the terms of this provision, the parties hereto shall
have no further responsibilities to each other hereunder, unless otherwise
expressly set forth herein.

          (b) Owner or the Facility Lender shall have the right to terminate
this Agreement upon Developer's failure to perform any of its obligations
hereunder, which failure is not cured by Developer within fifteen (15) days
after receipt of written notice thereof from Owner or the Facility Lender;
provided, however, neither Owner nor Facility Lender shall be required to give
more than one (1) written notice. In the event such failure cannot reasonably be
cured within such fifteen (15) day period, Developer shall have a reasonable
amount of time to cure such default (but in no event longer than thirty (30)
days after such written notice). Neither BCOI nor Developer may terminate this
Agreement without the prior written consent of Owner and any Facility Lender.

     7.3 Payment of Fees Upon Termination. In the event this Agreement is
terminated by either party in accordance with Section 7.2(b) prior to the
completion of construction of the Project, subject to the terms, provisions and
conditions of this Agreement, and so long as Developer is not in default under
the terms of this Agreement (and no event has occurred which with the giving of
notice or the passage of time or both would constitute a default hereunder)
Developer shall be entitled to receive from BCOI the amounts due to be paid to
the Developer to the date of such termination. In the event that Owner or the
Facility Lender succeeds to the rights of BCOI hereunder, such party shall not
be bound by the terms of this Section 7.3 unless such party expressly agrees in
a written instrument to be so bound.

     7.4 Delivery of Documents Upon Termination. In the event of the termination
of this Agreement pursuant to this Article 7, Developer shall promptly provide
to BCOI with copies to Owner all documents and reports related to the
transactions contemplated hereunder, including, but not limited to, all title
insurance commitments and policies, surveys, environmental reports or studies,
engineering reports or studies, geotechnical reports and studies, drawings,
financial statements, building permits, applications for building permits, soil
tests reports or planning studies that are in the possession of Developer, or
under Developer's control, that are related to the Property or the Project. Upon
BCOI's or Owner's request, Developer shall assign to BCOI or Owner, as
applicable, or their respective designee or nominee, all of Developer's rights
under the Contracts and any other contract or agreement with any architect,
engineer, contractor, supplier, consultant or representative that Developer
and/or BCOI has entered into in connection with the Property or the Project.


                                       10

                                    ARTICLE 8
                             RECORDS AND INFORMATION

     Developer shall furnish to BCOI and Owner, and their respective employees,
agents, representatives and contractors, promptly upon request therefor, copies
of all status reports prepared by Developer and its employees, agents and
representatives for use with respect to Developer's duties under this Agreement,
and all invoices, contractors' requests for payment, certificates of completion,
loan disbursement applications, engineering reports, inspection reports,
surveys, correspondence, site plans, floor plans, and all other documents,
status reports and information relating to the Project. Developer shall also
prepare and furnish to BCOI and to Owner and their respective employees, agents,
representatives and contractors all reports and information requested by such
persons in connection with the Project. Upon the termination or expiration of
this Agreement, Developer shall deliver such documents to BCOI and the Facility
Lender upon request. Except as otherwise expressly set froth herein, Developer
shall not have the right to copy any of the foregoing documents nor retain any
of them unless Developer receives BCOI's and Owner's prior written approval.

                                    ARTICLE 9
                         COMPETING ACTIVITIES OF PARTIES

     Intentionally Omitted.

                                   ARTICLE 10
                         NON-LIABILITY; INDEMNIFICATION

     10.1 Non-liability of BCOI and Owner. As used in this Article 10, the term
Indemnitees refers to BCOI, Owner, MPT and the Facility Lender. Except as
otherwise expressly provided herein, Indemnitees neither undertake nor assume
any responsibility to select, review, inspect, supervise, pass judgment upon or
inform Developer of any matter in connection with the Project, including matters
relating to the suitability of: (i) the Plans and Specifications; (ii) the Third
Parties and any materialmen, or the workmanship of or the materials used by any
of them; or (iii) the progress of the Project and its conformity with the Plans
and Specifications and all laws, rules, regulations and ordinances; and
Developer shall rely entirely on its own judgment with respect to such matters
and acknowledges that any review, inspection, supervision, exercise of judgment
or information supplied to Developer by any Indemnitee which such matters are
solely for the protection of the applicable Indemnitee and that neither
Developer nor any Third Party shall be entitled to rely on it.

     10.2 Non-Relationship between Indemnitee and Developer. Notwithstanding any
other provision of this Agreement, any other agreements entered into between any
Indemnitee and Developer and any other document delivered in connection with the
development and construction of the Project (collectively the "Documents"): (i)
no Indemnitee is a partner, joint venturer, alter-ego, manager, controlling
person or other business associate or participant of any kind of Developer and
no Indemnitee intends to ever assume any such status; (ii) no Indemnitee shall
be deemed responsible for or a participant in any acts, omissions or decisions
of Developer, and (iii) Owner is not the agent or representative of BCOI or
Developer, BCOI and Developer are not the agents of Owner and this Agreement
shall not make Owner liable to the Contractor, materialmen, contractors,
subcontractors, craftsmen, laborers or others for goods delivered to or services
performed by them upon the Property, or for debts or claims accruing to


                                       11

such parties against BCOI or Developer, and there is no contractual
relationship, either expressed or implied, between Owner and the Developer,
Contractor or any materialmen, subcontractors, craftsmen, contractors, laborers,
or any other person supplying any work, labor or materials for the Improvements
or otherwise to the Property.

     10.3 Limitation of BCOI Liability. The parties hereto acknowledge and agree
that no Indemnitee (other than BCOI) or their affiliates and their respective
officers, directors, members (general and limited) partners, shareholders,
employees, agents and representatives (the "MPT Indemnified Parties") shall be
directly or indirectly liable or responsible for any loss or injury of any kind
to any person or property resulting from any development of, construction on, or
occupancy or use of, the Property or the Project, whether arising from any
claim, litigation, investigation or proceeding arising from or relating to: (i)
any defect in any building, grading, landscaping or other on-site or offsite
improvement; (ii) any act or omission of any of the Third Parties, Developer or
any of Developer's agents, employees, independent contractors, licensees or
invitees; (iii) any accident on the Property or the Project or any fire, flood
or other casualty or hazard thereon; (iv) the failure of any of the Third
Parties, Developer or any of Developer's licensees, employees, invitees, agents,
independent contractors or other representatives to maintain the Property or the
Project in a safe condition; and (v) any nuisance made or suffered on the
Property or the Project. By accepting or approving anything required to be
performed or given by Developer under the terms of this Agreement and under the
Documents, including, without limitation, any certificate, financial statement,
survey, appraisal or insurance policy, no Indemnitee (other than BCOI) shall be
deemed to have warranted or represented the sufficiency or legal effect of the
same (other than for purposes of satisfying the requirement that such
Indemnitee's approval be obtained), and no such acceptance or approval shall
constitute a warranty or representation by such Indemnitee to anyone.

     10.4 Developer Indemnification. Developer hereby indemnifies, holds
harmless and agrees to defend the Indemnitees from and against (A) all claims,
demands, causes of action asserted against any Indemnitee by any person if the
claim, demand or cause of action directly or indirectly relates to any claim,
litigation, investigation or proceeding arising from or relating to (i) a claim,
demand or cause of action that the person has or asserts against Developer; (ii)
the payment of any commission, charge or brokerage fee incurred in connection
with this Agreement and the Documents; (iii) any act or omission of Developer,
any contractor, subcontractor, architect, engineer, or material supplier, vendor
or other person with respect to the Property and/or the Project; or (iv) any
claim or cause of action of any kind by any person which would have the effect
of denying Indemnitees the full benefit or protection of any provision of any
document (excluding charges and assessments by governmental agencies imposed
upon BCOI in the normal course of BCOI's business); and (B) all liabilities,
losses and other costs (including court costs and attorneys' fees) incurred by
any Indemnitee as a result of any claim, demand or cause of action described in
clause (A) above, except to the extent of loss proven to result from each
respective Indemnitee's sole gross negligence or willful misconduct.

     The Indemnitees' rights to indemnification shall not be directly or
indirectly limited, prejudiced, impaired or eliminated in any way by any finding
or allegation that any conduct is active, passive or subject to any other
classification or that any Indemnitee is directly or indirectly responsible
under any theory of any kind for any act or omission by Developer or any other
person. Notwithstanding the foregoing, Developer shall not be obligated to
indemnify the Indemnitees with respect to any intentional tort or act of gross
negligence which any Indemnitee is personally determined by the judgment of a
court of competent jurisdiction (sustained on appeal, if any) to have committed.


                                       12

                                   ARTICLE 11
                                   ASSIGNMENT

     11.1 Developer Assignment. Developer shall not, directly or indirectly,
assign, transfer, mortgage, pledge, sell, hypothecate or otherwise encumber (or
permit any of the foregoing) in any manner or by any means whatsoever, whether
voluntarily or by operation of law, all or any part of its interest in or
obligations arising out of this Agreement, nor delegate any of its obligations
or duties hereunder without the prior written consent of BCOI, Owner and the
Facility Lender, which consent may be withheld for any reason; provided,
however, Developer shall be permitted to assign its interest in the Developer's
Fees so long as such assignment is in writing and a copy thereof is delivered to
BCOI, Owner and Facility Lender. In the event BCOI, Owner and the Facility
Lender consents to such assignment or delegation, such assignment or delegation
shall not release Developer from any obligation hereunder unless BCOI, Owner and
the Facility Lender so agree in writing.

     11.2 BCOI Assignment. All of BCOI's rights and interests under this
Agreement are freely assignable in whole or in part, but assignment of any of
such rights shall not release BCOI from any obligation hereunder unless
Developer so agrees in writing (which shall not be unreasonably withheld,
conditioned or delayed). BCOI shall have the right, without the necessity of
obtaining consent from Developer, to assign all of its rights and interests
under this Agreement to Owner or to any lender providing financing for or
secured by an interest in the Property or the Project (the term "lender" may
include, without limitation an affiliate of Owner) ("Facility Lender").

                                   ARTICLE 12
                                     ACCESS

     12.1 Access. BCOI, Owner and their respective employees, agents,
representatives and contractors, and the Facility Lender and its employees,
agents and representatives shall have the right (without the obligation to do
so) to observe the Project as the same is being constructed. BCOI shall promptly
notify Developer of any deviations from the applicable Plans and Specifications
or other deficiencies which they may discover, and Developer shall promptly
correct and/or repair, or cause the prompt correction and/or repair of any such
deviations or deficiencies upon receipt of such notice. All inspecting parties
and their representatives shall use good faith efforts to coordinate their
inspections with one another. Notwithstanding the foregoing, however, such
inspecting parties shall not be responsible for any such deviations, defects or
deficiencies or for any failure to discover or report any such deficiencies,
defects or deviations. The Developer and Architect will, and Developer will
instruct the Architect to, promptly report to such inspecting parties any such
defects, deviations or deficiencies as it or they observe same.

                                   ARTICLE 13
                                 REPRESENTATIVES

     13.1 Developer's Representative. Developer appoints James Cummings and
Martin Fugardi to be its designated representatives with authority to act on
behalf of Developer in connection with the Project, this Agreement and the
disbursement requests and all other matters relating to the Project. BCOI, Owner
and the Facility Lender may rely on documents signed by and actions taken by the
above named person as the fully authorized act of Developer. This designation of
authority shall be effective until written notice revoking the authority granted
hereby and substituting a designated representative has been received by BCOI,
Owner and the Facility Lender.


                                       13

     13.2 BCOI's Representatives. BCOI appoints Jerome S. Tannenbaum, M.D. and
Rob Pantoja to be its designated representatives with authority to act on behalf
of BCOI in connection with the Project, this Agreement, the disbursement
requests and all other matters relating to the Project. Developer, Owner and the
Facility Lender may rely on documents signed by and actions taken by any of the
above named persons as the fully authorized act of BCOI. This designation of
authority shall be effective until written notice revoking the authority granted
hereby has been received by Developer, Owner and the Facility Lender.

                                   ARTICLE 14
                              DEFAULTS AND REMEDIES

     In the event that (i) the Completion Date has not occurred by June 1, 2006
("Outside Completion Date") which is thirty (30) days after the Projected
Completion Date, as the same may have been extended by any force majeure events
as provided in Section 3.3(f) or Section 15.1 below, (ii) Developer fails to
commence and pursue diligently the completion of the Project as provided in this
Agreement or otherwise breaches any of the terms, conditions and provisions
hereof (or an event has occurred which with the giving of notice or the passage
of time or both would constitute such a default hereunder), and, in the event of
a non-monetary default hereunder, Developer fails to cure such non-monetary
default within ten (10) days from the date of written notice from BCOI or Owner;
provided, however, neither BCOI nor Owner will be required to give more than one
(1) written notice, (iii) the Project is not proceeding in all material respects
in accordance with the terms, provisions and conditions of this Agreement, and
is not proceeding within the Development Budget and in accordance with the
Development Schedule, (iv) there is a default or an event has occurred which
with the giving of notice or the passage of time or both would constitute such a
default under the Funding Agreement or the other Transaction Documents, (v)
Developer and/or DSI or any of their Affiliates are in default under any other
agreements and contracts with BCOI or any of its Affiliates or Owner or any of
its Affiliates, or an event has occurred which with the giving of notice or the
passage of time or both would constitute such a default under this Agreement or
any other agreement or contract of Developer and/or DSI with BCOI and any of its
affiliates, or Owner or any of its affiliates, (vi) Developer becomes insolvent
or shall make a transfer in fraud of creditors, or shall make an assignment for
the benefit of creditors, shall file a petition in bankruptcy, shall voluntarily
be adjudicated insolvent or bankrupt or shall admit in writing the inability to
pay debts as they mature, shall petition or apply to any tribunal for or shall
consent to or shall not contest the appointment of a receiver, trustee,
custodian or similar officer for Developer, or for a substantial part of the
assets of Developer, or shall commence any case, proceeding or other action
under any bankruptcy, reorganization, arrangement, readjustment or debt,
dissolution or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect or (vii) a petition is filed or any case, proceeding or
other action is commenced against Developer seeking to have an order for relief
entered against it as debtor or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts or other relief under
any law relating to bankruptcy, insolvency, arrangement, reorganization,
receivership or other debtor relief under any law or statute of any jurisdiction
whether now or hereafter in effect or a court of competent jurisdiction enters
an order for relief against Developer, as debtor, or an order, judgment or
decree is entered appointing, with or without the consent of Developer, a
receiver, trustee, custodian or similar officer for Developer, or for any
substantial part of any of the properties of Developer, and if any such event
shall occur, such petition, case, proceeding, action, order, judgment or decree
shall not be dismissed within sixty (60) days after being commenced; then Owner
(or with Owner's written consent,


                                       14

BCOI) shall have the following rights and remedies: Owner shall have the right
to (A) enter upon the Property and take possession of all materials and
equipment located thereon and on the remainder of the Property, (B) complete the
Project in accordance with the Plans and Specifications, using any contractors,
subcontractors and material suppliers as Owner may elect in its sole discretion,
and (C) withhold Developer Fees and other payments payable hereunder in
accordance with the terms hereof. If requested by Owner, Developer shall
immediately upon written request by Owner, assign, in writing, and cause all
contractors, subcontractors and material suppliers to assign, in writing, any
and all contracts and agreements; however, Owner shall have no obligation to
request or accept any such assignment or assume any of Developer's,
contractor's, subcontractors or material suppliers' obligations under any such
contracts. Upon the occurrence of an Event of Default, Developer agrees to
cooperate with Owner in obtaining any required work from Third Parties with whom
Developer has contracted. Developer shall reimburse Owner, upon demand, all
costs and expenses incurred by Owner in connection with its exercise of the
foregoing rights, including, without limitation, reasonable attorneys' fees and
expenses, and a management fee equal to twelve percent (12%) of all costs and
expenses incurred by Owner, together with interest thereon at an annual rate of
seven percent (7%) from the date incurred until paid. In addition thereto, Owner
may withhold all remaining Developer Fees payable to Developer under this
Agreement.

     In the event of a default under this Agreement, Developer shall promptly
provide to BCOI (with copies to Owner) all documents and reports related to the
transactions contemplated hereunder, including, but not limited to, all title
insurance commitments or policies, surveys, environmental reports or studies,
engineering reports or studies, geotechnical reports and studies, drawings,
financial statements, building permits, applications for building permits, soil
tests reports or planning studies that are in the possession of Developer that
are related to the Project or the Property. Upon Owner's request, Developer
shall assign to Owner its rights under any contract or agreement with any
architect, engineer, contractor, supplier, consultant or representative that
Developer and/or BCOI has entered into in connection with the Property or the
Project, to the extent such rights are assignable.

     Notwithstanding anything contained herein to the contrary, all rights,
privileges and remedies afforded the parties by this Agreement shall be deemed
cumulative and not exclusive. In the event of a breach of or other failure to
perform as required under this Agreement, the party not breaching or defaulting
shall, in addition to all rights and remedies herein provided, have all rights
and remedies available at law or in equity.

     Developer and BCOI acknowledge that all rights privileges and remedies of
BCOI under this Article 14 may, at Owner's option, be exercised by Owner or the
Facility Lender without the assumption by such party of any liabilities,
obligations or responsibilities.

                                   ARTICLE 15
                                  MISCELLANEOUS

15.1 Force Majeure. The Projected Completion Date and Outside Completion Date
shall be extended for a period equal to the duration of any delay due to a cause
beyond Developer's control and without Developer's fault or negligence,
including, but not limited to, acts of God, strikes, lockouts or other
industrial disturbances, acts of public enemies, war, blockades, riots,
earthquakes, fires, storms, floods, civil disturbances and unusually severe
weather conditions not reasonably anticipatable (collectively the "force majeure
events"); provided, however, that such excused delay by any of the force majeure
events shall be deemed to exist only so long as Developer promptly and
specifically notifies BCOI, Owner and


                                       15

Facility Lender in writing of such delay and exercises due diligence to remove
or overcome such delay; and, provided further that such force majeure events
shall not excuse, defer or delay any obligation of Developer involving the
payment of money.

     15.2 Modifications; Waiver. No change or modification of this Agreement
shall be valid or binding upon the parties hereto, nor shall any waiver of any
term or condition in the future be valid or binding upon such parties, unless
such change, modification or waiver shall be in writing and signed by both
parties hereto. Failure by either party to enforce any of the provisions hereof
for any length of time shall not be deemed a waiver of its rights set forth in
this Agreement. Such a waiver may be made only by written instrument signed by
the party sought to be charged with the waiver.

     15.3 Binding Effect. This Agreement shall inure to the benefit of, and
shall be binding upon, the parties hereto, their legal representatives,
permitted transferees and assigns; provided, however, that Developer may not
assign its rights or delegate its duties under this Agreement without the prior
written consent of BCOI, Owner and the Facility Lender, which may be withheld by
any of them in their discretion; provided, however, Developer may assign its
rights to the Developer's Fees as expressly set forth in Section 11.2 above.

     15.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.

     15.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO CONFLICTS OF LAW
PRINCIPLES.

     15.6 Jurisdiction and Venue. BCOI, DEVELOPER AND OWNER CONSENT TO PERSONAL
JURISDICTION IN THE STATE OF DELAWARE. BCOI, DEVELOPER AND OWNER AGREE THAT ANY
ACTION OR PROCEEDING ARISING FROM OR RELATED TO THIS AGREEMENT SHALL BE BROUGHT
AND TRIED EXCLUSIVELY IN THE STATE OR FEDERAL COURTS OF THE STATE OF DELAWARE.
EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE
LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT.
BCOI, DEVELOPER AND OWNER EACH EXPRESSLY ACKNOWLEDGE THAT DELAWARE IS A FAIR,
JUST AND REASONABLE FORUM AND EACH AGREE NOT TO SEEK REMOVAL OR TRANSFER OF ANY
ACTION FILED BY ANY PARTY HERETO IN SAID COURTS. FURTHER, BCOI, DEVELOPER AND
OWNER IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY CLAIM THAT SUCH SUIT, ACTION OR
PROCEEDING HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM. SERVICE OF ANY PROCESS,
SUMMONS, NOTICE OR DOCUMENT BY CERTIFIED MAIL ADDRESSED TO A PARTY AT THE
ADDRESS DESIGNATED PURSUANT TO SECTION 15.10 HEREOF SHALL BE EFFECTIVE SERVICE
OF PROCESS AGAINST SUCH PARTY FOR ANY ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT. A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT MAY BE ENFORCED IN ANY OTHER COURT TO WHOSE JURISDICTION ANY OF THE
PARTIES IS OR MAY BE SUBJECT.

     15.7 Definitions. The term "Affiliate" or "Affiliates" as used herein shall
mean, as to the entity in question, any person or entity that directly or
indirectly controls, is controlled by, or is under common


                                       16

control with, the entity in question and any successors or assigns of such
entities; and the term "control" means possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of an
entity whether through ownership of voting securities, by contract or otherwise.

     15.8 Construction. The titles of the Articles herein and the captions of
this Agreement have been inserted as a matter of convenience for reference only
and shall not control or affect the meaning or construction of any of the terms
or provisions herein, and do not in any way limit or amplify the terms and
provisions hereof.

     15.9 Entire Agreement. This Agreement with the exhibits and schedules,
which are attached hereto, made a part hereof and incorporated herein by
reference, are intended by the parties hereto to be the final expression of
their agreement and is the complete and exclusive statement of the terms
thereof, notwithstanding any representation or statement to the contrary
heretofore made.

     15.10 Notices. All notices, demands, consents, approvals, requests and
other communications under this Agreement shall be in writing and shall be
either (a) delivered in person, (b) sent by certified mail, return receipt
requested, (c) delivered by a recognized delivery service or (d) sent by
facsimile transmission and addressed as follows:

     If to Developer: DSI Facility Development, LLC
                      511 Union Street, Suite 1800
                      Nashville, Tennessee 37219
                      Attention: Jerome S. Tannenbaum, Chief Manager
                      Facsimile: (615) 259-0693

     With a copy to:  Latham & Watkins LLP
                      555 11th Street, N.W., Suite 1000
                      Washington, DC 20004
                      Attn: Eric L. Bernthal
                      Facsimile: (202) 637-2201

     If to BCOI:      Bucks County Oncoplastic Institute, LLC
                      511 Union Street, Suite 1800
                      Nashville, Tennessee
                      Attention: Jerome S. Tannenbaum, M.D.
                      Facsimile: (615) 259-0693

     If to Owner:     MPT of Bucks County, L.P.
                      1000 Urban Center Drive, Suite 501
                      Birmingham, Alabama 35242
                      Attention: Michael G. Stewart, Esq.
                      Facsimile: (205) 969-3756

     With a copy to:  Baker, Donelson, Bearman, Caldwell and Berkowitz, P.C.
                      420 North 20th Street


                                       17

                      1600 SouthTrust Tower
                      Birmingham, Alabama 35203
                      Attention: Thomas O. Kolb, Esq.
                      Facsimile: (205) 488-3721

or to such other address as either party may hereafter designate, and shall be
effective upon receipt. A notice, demand, consent, approval, request and other
communication shall be deemed to be duly received if delivered in person or by a
recognized delivery service, when left at the address of the recipient and if
sent by facsimile, upon receipt by the sender of an acknowledgment or
transmission report generated by the machine from which the facsimile was sent
indicating that the facsimile was sent in its entirety to the recipient's
facsimile number; provided that if a notice, demand, consent, approval, request
or other communication is served by hand or is received by facsimile on a day
which is not a Business Day (defined below), or after 5:00 p.m. on any Business
Day at the addressee's location, such notice or communication shall be deemed to
be duly received by the recipient at 9:00 a.m. on the first Business Day
thereafter. "Business Day" refers to each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which money centers in the City of New York,
New York are authorized, or obligated, by law or executive order, to close.

     15.11 Attorneys' Fees. In the event any litigation ensues with respect to
the rights, duties and obligations of the parties under this Agreement, the
unsuccessful party in any such action or proceeding shall pay for all costs,
expenses and reasonable attorneys' fees incurred by the prevailing party in
enforcing the covenants and agreement of this Agreement. The term "prevailing
party" as used herein shall include, without limitation, a party who obtains
legal counsel and brings action against the other party by reason of the other
party's breach or default and obtains substantially the relief sought, whether
by compromise, settlement or judgment.

     15.12 Captions. The captions of this Agreement are for convenience only,
are not a part of this Agreement, and do not in any way limit or amplify the
terms and provisions hereof.

     15.13 Severability. If any covenant or provision of this Agreement is held
to be invalid or unenforceable by a court of competent jurisdiction, such
holding shall not affect the validity of the remaining covenants and provisions,
it being the intention of the parties that this Agreement be so construed as to
render enforceable that portion of the Agreement unaffected by such holding. The
contractual provisions shall be deemed severable.


                                       18

     IN WITNESS WHEREOF, the parties hereto have caused this Development
Agreement to be executed by their duly and properly authorized officers under
seal as of the date first above written.

                                        BCOI:

                                        BUCKS COUNTY ONCOPLASTIC INSTITUTE, LLC


                                        By: /s/ Jerome S. Tannenbaum, M.D.
                                            ------------------------------------
                                            Jerome S. Tannenbaum, M.D.
                                        Its: Chief Manager


                                        DEVELOPER:

                                        DSI FACILITY DEVELOPMENT, LLC


                                        By: /s/ Jerome S. Tannenbaum, M.D.
                                            ------------------------------------
                                            Jerome S. Tannenbaum, M.D.
                                        Its: Chief Manager


                                       19

                                        MPT:

                                        MPT OF BUCKS COUNTY, L.P.

                                        BY: MPT OF BUCKS COUNTY, LLC
                                        ITS: GENERAL PARTNER

                                        BY: MPT OPERATING PARTNERSHIP, L.P.
                                        ITS: SOLE MEMBER


                                        By: /s/ Edward K. Aldag, Jr.
                                            ------------------------------------
                                            Edward K. Aldag, Jr.
                                        Its: President and Chief Executive
                                             Officer


                                       20

                                   EXHIBIT "A"

                               (LEGAL DESCRIPTION)

                                 [See attached.]


                                       21

                                   EXHIBIT "B"

                         (PRELIMINARY SITE PLAN DRAWING)

                                 [See attached.]


                                       B-1

                                   EXHIBIT "C"

                              (DEVELOPMENT BUDGET)

                                 [See attached.]


                                       C-1

                                   EXHIBIT "D"

                             (DEVELOPMENT SCHEDULE)

                                 [See attached.]


                                       D-1

                                   EXHIBIT "E"

                              (APPROVED CONTRACTS)

                                 [See attached.]


                                       E-1

                                   EXHIBIT "F"

                (SCHEDULE OF DEVELOPER FEES AND DEVELOPER BONUS)

Developer Fees: The sum of $515,000.00 plus $687,500.00 ($55,000.00 of which has
previously been paid to Developer).

Developer Bonus: The amount by which (i) the sum of $37,000,000 and the Fee
Increase Amount (as defined in the next sentence) exceeds (ii) the sum of
$5,395,497.21 and the aggregate funds disbursed pursuant to the Funding
Agreement. The "Fee Increase Amount" equals the total of disbursements made
pursuant to Funding Agreement for the following: (a) legal expenses of BCOI
actually funded under the Funding Agreement minus the amount reflected as the
original budgeted amount for such item in the Development Budget under the
Funding Agreement; (b); legal expenses of Owner actually funded under the
Funding Agreement; and (c) City Permits, Impact Fees and Utility Fees actually
funded under the Funding Agreement minus the amounts reflected as the original
budgeted amounts for such items in the Development Budget under the Funding
Agreement; provided, however, that in no event shall the Fee Increase Amount
exceed $1,000,000.00.


                                       F-1


                                                                   Exhibit 10.58

                                FUNDING AGREEMENT

                                      AMONG

               BUCKS COUNTY ONOCOPLASTIC INSTITUTE, LLC ("BCOI"),

                      MPT OF BUCKS COUNTY, L.P. ("OWNER"),

                                       AND

                   DSI FACILITY DEVELOPMENT, LLC ("DEVELOPER")

                        DATED AS OF SEPTEMBER 16, 2005.

                                TABLE OF CONTENTS



                                                                            Page
                                                                            ----
                                                                         
ARTICLE I DEFINED TERMS..................................................     1
Section 1.01 Certain Defined Terms.......................................     1
Section 1.02 Singular and Plural Terms...................................     5
Section 1.03 Accounting Terms............................................     5
Section 1.04 Amendments to Documents.....................................     6

ARTICLE II DISBURSEMENTS.................................................     6
Section 2.01 Disbursement Procedure......................................     6
Section 2.02 Direct Funding..............................................     8
Section 2.03 Representations and Warranties..............................     9
Section 2.04 Additional Information......................................     9

ARTICLE III CONDITIONS TO FUNDING........................................     9
Section 3.01 Transaction Documents.......................................     9
Section 3.02 Execution of Documents......................................     9
Section 3.03 Title Insurance.............................................     9
Section 3.04 Documents to be Furnished by BCOI Prior to Each Funding.....    10
Section 3.05 Continued Satisfaction of Duties,
             Representations, Warranties and Covenants...................    10
Section 3.06 Disbursements for Materials Stored On-Site..................    10
Section 3.07 Disbursements for Offsite Materials.........................    11
Section 3.08 Disbursements For Tenant Improvements.......................    11
Section 3.09 Assignment of Contracts.....................................    11

ARTICLE IV REPRESENTATIONS AND WARRANTIES................................    12
Section 4.01 Existence and Ownership of BCOI and Developer...............    12
Section 4.02 Violations or Actions Pending...............................    12



                                        i

                                                                          
Section 4.03 Financial Statements........................................    12
Section 4.04 Compliance with Laws and Regulations and
             Transaction Documents.......................................    12
Section 4.05 Roads and Utilities..........................................   13
Section 4.06 Condemnation................................................    13
Section 4.07 Accuracy of Documents.......................................    13
Section 4.08 Environmental and Healthcare Matters........................    13
Section 4.09 Agreements..................................................    13
Section 4.10 Accurate and Complete Disclosure............................    14
Section 4.11 Continuing Effectiveness....................................    14

ARTICLE V COVENANTS OF BCOI/DEVELOPER....................................    14
Section 5.01 Construction of  Improvements...............................    14
Section 5.02 Use of Proceeds.............................................    15
Section 5.03 Liens and Encumbrances......................................    15
Section 5.04 Deficiencies................................................    15
Section 5.05 Reports and Notices.........................................    15
Section 5.06 Books and Records...........................................    16
Section 5.07 Access and Promotion........................................    16
Section 5.08 Changes to the Site Plan and Plans and Specifications.......    16
Section 5.09 List of Contractors, Subcontractors, and Materialmen........    16
Section 5.10 Lien Waiver.................................................    16
Section 5.11 Ownership of Personalty.....................................    17
Section 5.12 Appraisals..................................................    17
Section 5.13 Other Acts..................................................    17
Section 5.14 Construction Contracts......................................    17

ARTICLE VI EVENTS OF DEFAULT.............................................    17




                                       ii

                                                                          
Section 6.01 Assignment or Conveyance....................................    17
Section 6.02 Voluntary Insolvency Proceedings............................    18
Section 6.03 Involuntary Insolvency Proceedings..........................    18
Section 6.04 Transfer....................................................    18
Section 6.05 Foreclosures or Liens.......................................    18
Section 6.06 Casualty Loss...............................................    18
Section 6.07 Misrepresentation...........................................    18
Section 6.08 Failure to Complete Improvements............................    19
Section 6.09 Failure to Perform Obligations..............................    19
Section 6.10 Cross Defaults..............................................    19

ARTICLE VII REMEDIES UPON DEFAULT........................................    19
Section 7.01 Remedies of Owner...........................................    19
Section 7.02 Failure to Exercise Remedies................................    20

ARTICLE VIII MISCELLANEOUS...............................................    21
Section 8.01 Conflict in Transaction Documents...........................    21
Section 8.02 Exclusiveness...............................................    21
Section 8.03 Notice......................................................    21
Section 8.04 Modification and Waiver.....................................    21
Section 8.05 Materiality.................................................    21
Section 8.06 Heading.....................................................    21
Section 8.07 Severability................................................    21
Section 8.08 Counterparts................................................    21
Section 8.09 Assignability...............................................    21
Section 8.10 No Agency Relationship......................................    22
Section 8.11 Waiver......................................................    22




                                       iii

                                                                          
Section 8.12 Costs and Expenses..........................................    22
Section 8.13 Attorneys' Fees.............................................    23
Section 8.14 Warrant of Attorney.........................................    23
Section 8.15 Consequential Damages.......................................    23
Section 8.16 Indemnification.............................................    24
Section 8.17 Governing Law...............................................    24
Section 8.18 Jurisdiction and Venue......................................    24
Section 8.19 Waiver of Jury Trial........................................    24




                                       iv

                                    EXHIBITS

EXHIBIT A   LEGAL DESCRIPTION OF PROPERTY

EXHIBIT B   DEVELOPMENT BUDGET

EXHIBIT C   THIRD PARTY AGREEMENTS

EXHIBIT D   SITE PLAN

EXHIBIT E   DRAW REQUESTS


                                        v

                                FUNDING AGREEMENT

     THIS FUNDING AGREEMENT (this "Agreement") is dated as of September 16,
2005, by and among BUCKS COUNTY ONOCOPLASTIC INSTITUTE, LLC, a Delaware limited
liability company ("BCOI") whose address is 511 Union Street, Suite 1800,
Nashville, Tennessee 37219, Attention: Jerome S. Tannenbaum, MPT of BUCKS
COUNTY, L.P., a Delaware limited partnership ("Owner"), whose address is 1000
Urban Center Drive, Suite 501, Birmingham, Alabama 35242, Attention: Edward K.
Aldag, Jr., and DSI FACILITY DEVELOPMENT, LLC, a Delaware limited liability
company ("Developer"), whose address is 511 Union Street, Suite 1800, Nashville,
Tennessee 37219, Attention: Jerome S. Tannenbaum.

                                   WITNESSETH

     WHEREAS, BCOI has entered into a Lease Agreement dated as of the date
hereof (as defined below), between BCOI, as lessee, and Owner, as lessor;

     WHEREAS, BCOI and Owner have entered into that certain Development
Agreement with Developer (each defined below), concerning the construction of
the Improvements, which Improvements shall be leased by Owner to BCOI pursuant
to the Lease Agreement;

     WHEREAS, Owner has agreed to fund the construction of such Improvements on
the terms and conditions herein contained.

     NOW, THEREFORE, in consideration of the promises and mutual agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties do hereby agree as
follows:

                                   ARTICLE I
                                  DEFINED TERMS

SECTION 1.01 Certain Defined Terms. Certain capitalized terms used herein shall
have the respective meanings:

"Applicable Environmental Law" shall mean any applicable federal, state or local
law, rule or regulation pertaining to health or the environment, or petroleum
products, or radon radiation, or oil or hazardous substances, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), the Resource Conservation and Recovery Act
of 1976, as amended ("RCRA") and the Federal Emergency Planning and Community
Right-To-Know Act of 1986, as amended. The terms "hazardous substance" and
"release" shall have the meanings specified in CERCLA, and the terms "solid
waste," disposal," "dispose," and "disposed" shall have the meanings specified
in RCRA, except that if such acts are amended to broaden the meanings thereof,
the broader meaning shall apply herein prospectively from and after the date of
such amendments; notwithstanding the foregoing, provided, to the extent that the
laws of the state in which the Property is located establish a meaning for
"hazardous substance" or "release" which is broader than that specified in
CERCLA, as CERCLA may be amended from time to time, or a meaning for "solid
waste," "disposal," and "disposed" which is broader than specified in RCRA, as
RCRA may be amended

from time to time, such broader meanings under said state law shall apply in all
matters relating to the laws of such State.

"Applicable Healthcare Laws" shall mean all rules and regulations under the
False Claims Act (31 U.S.C. Section 3729 et seq.), the Federal Health Care
Programs Anti-Kickback statute (42 U.S.C. Section 1320a-7a(b)), the Ethics in
Patient Referrals Act of 1989, as amended (Stark Law) (42 U.S.C. 1395nn), the
Civil Money Penalties Law (42 U.S.C. Section 1320a-7a), Health Care Fraud (18
U.S.C. 1347), Wire Fraud (18 U.S.C. 1343), Theft or Embezzlement (18 U.S.C.
669), False Statements (18 U.S.C. 1001), False Statements (19 U.S.C. 1035), and
Patient Inducement Statute, and applicable equivalent state statutes and any and
all rules or regulations promulgated by governmental entities with respect to
any of the foregoing.

"Assignment of Construction Documents" shall mean that certain Assignment of
Contracts and Documents of even date herewith from BCOI and Developer in favor
of Owner.

"Complete", "Completed" or "Completion" shall mean (i) that Owner has received a
certificate from the Project architect that the construction of the Project has
been substantially completed in accordance with the Plans and Specifications,
which certificate shall be in form and substance satisfactory to Owner and shall
include the written approval of the Construction Inspector noted thereon and
(ii) that Owner has received evidence that appropriate governmental authorities
have unconditionally approved and certified the completed Improvements in their
entirety for permanent occupancy as an acute-care hospital and incorporated
medical office building.

"Construction Contract" shall mean the lump sum price or other construction
contract between BCOI and General Contractor, which has been approved in writing
by Owner.

"Construction Inspector" shall mean Laura Huber, or such other architect,
engineer or other inspector selected by Owner, in Owner's discretion, who shall
assist Owner in connection with the construction of the Improvements, including
but not limited to, reviewing Plans and Specifications, making inspections of
the progress of construction of the Improvements for purposes of funding, and
advising Owner with respect to other matters relating to the Property and
Improvements as Owner may request in its reasonable discretion.

"Credit Enhancements" shall have the meaning set forth in the Lease Agreement.

"Default" shall mean the occurrence or existence of any event which, but for the
giving of notice or expiration of time or both, would constitute an Event of
Default.

"Developer" shall mean DSI Facility Development, LLC, a Delaware limited
liability company.

"Development Agreement" shall mean the Development Agreement between Owner, BCOI
and Developer dated of even date herewith, with respect to the construction of
the Improvements.

"Development Budget" shall mean the detailed line item cost budget attached
hereto as EXHIBIT B (which Owner hereby approves) setting forth total estimated
costs with respect to the Property and the construction of the Improvements, as
revised from time to time with Owner's prior written approval.


                                        2

"Draw Requests" shall mean the detailed written draw requests designated "Draw
Request #1" and "Draw Request #2" attached hereto as EXHIBIT E setting forth the
requests previously made by Developer and the subsequent advances made by Owner
to Developer pursuant thereto.

"Event of Default" shall mean an "Event of Default" as defined in Article VI of
this Agreement. Such term shall mean that any required notice has been given and
any applicable cure period has expired, except as otherwise expressly provided
in the last paragraph of such Article VI.

"Final Funding" shall have the meaning set forth in Section 2.01 (i) hereof.

"Funding" shall mean a disbursement of funds by Owner for purposes of funding
the construction and development of the Improvements, and shall include the
Initial Funding.

"GAAP" shall mean generally accepted accounting principles, consistently
applied.

"General Contractor" shall mean such general contractor(s) selected by BCOI or
the Developer and submitted to and approved by Owner.

"Guarantors" shall mean one or more, Beth Dupree, M.D., Rob Skalicky, M.D., Ann
Griffiths, Ralph Griffiths, Ravi Rajan, M.D., Jennifer Rajan, Merdhad Soroush,
M.D., Roberto G. Pantoja, Theresa R. Pantoja, Ian Clark, Kenneth Kencel, Doug
Grindstaff, G. Patrick Maxwell, M.D., M. Stephen Harrison, Deborah Tannenbaum,
Jerome S. Tannenbaum, M.D., Frank Bumstead and Centre Bregal Partners, L.P..

"Guaranty" shall mean that certain Lease Guaranty executed by the Guarantors of
even date herewith, as the same may be amended, modified and/or restated from
time to time.

"Improvements" shall mean (i) the medical office buildings and related
improvements (the "MOB Improvements") and (ii) the hospital facility and
connector structure (the "Hospital Improvements") as shown on the Site Plan,
including all buildings, improvements, structures and fixtures, landscaping,
parking lots and structures, roads, drainage and all above ground and under
ground utility structures equipment systems and other so-called "infrastructure"
improvements for use in connection therewith.

"Indemnity Agreement" shall mean the Environmental Indemnity Agreement of even
date herewith from BCOI in favor of Owner.

"Initial Funding" shall mean the initial funding hereunder as set forth in the
closing statement signed by BCOI and submitted to and approved by Owner on or
about the date of this Agreement.

"Key Tenant" shall mean the tenant under a Key Tenant Lease.

"Key Tenant Lease" shall mean any lease or other occupancy agreement which
provides to the tenant thereunder a right to approve any construction of the
Improvements.

"Knowledge" shall mean, with respect to any Person, such Person's actual or
deemed knowledge of a particular fact or matter if (i) any of such Person's
officers or directors (or persons


                                        3

possessing and/or exercising similar authority with respect to such Person) (a
Person's "Knowledge Group") has actual knowledge of such fact or matter, or (ii)
any member of such Person's Knowledge Group would reasonably be expected to have
actual knowledge of such fact or matter based on his or her office or position
within such Person.

"Lease Agreement" shall mean that certain Lease Agreement dated the date hereof
between BCOI and Owner with respect to the Property.

"Leased Property" shall have the meaning set forth in the Lease Agreement.

"Overdue Rate" shall have the meaning set forth in the Lease Agreement.

"Person" shall mean an individual, firm, corporation, general or limited
partnership, limited liability company, an unincorporated association, joint
venture, governmental entity or another entity or group.

"Plans and Specifications" shall mean the plans and specifications for the
Improvements prepared by DSI Facility Development, LLC, and dated April 11,
2005, which Owner hereby approves, as the same may be revised from time to time
in accordance with the terms of the Transaction Documents or otherwise with the
approval of Owner.

"Project Completion Date" shall mean (a) July 31, 2006, or (b) as to any
Improvements to be occupied by a Tenant Lease, the date required by such Tenant
Lease, whichever first occurs, or (c) such other date the Owner may approve in
its sole discretion at the request of BCOI.

"Project" shall mean the Property and Improvements.

"Property" shall mean BCOI's leasehold interests in the approximately fifteen
(15) acres of real property located in Bensalem Township, Bucks County,
Pennsylvania more particularly described on the attached EXHIBIT A, as more
fully described in the Lease Agreement.

"Purchase Agreement" shall mean that certain Purchase and Sale Agreement dated
March 3, 2005 among BCOI, MPT Operating Partnership, L.P., DSI Facility
Development, LLC, Jerome S. Tannenbaum, M.D., M. Stephen Harrison and G. Patrick
Maxwell, M.D., as amended, supplemented and otherwise modified from time to time
in accordance with the terms thereof.

"Retainage" shall mean the greater of (a) the retainage required by the
Construction Contract together with change orders with respect thereto which are
approved in accordance with Section 5.08, or (b) ten percent (10%) of the costs
of completed construction under such contract, to the extent such completed
construction and costs thereof have then been approved by Owner's Construction
Inspector.

"Single Purpose Entity" shall mean an entity which (i) exists solely for the
purpose of owning, and/or leasing all or any portion of the Project and
conducting the operation of a business therefrom in accordance with the terms of
the applicable Lease (the "Business"), (ii) conducts business only in its own
name or under fictitious or d/b/a names previously disclosed to Owner, (iii)
does not engage in any business other than the ownership and/or leasing of all
or any portion of the Property and the operation of the Business, except for the
operation of that certain stand


                                        4

alone imaging center previously disclosed to Owner, (iv) does not hold, directly
or indirectly, any ownership interest (legal or equitable) in any entity or any
real or personal property other than the interest in the Project and the other
assets incident to the operation of the Business, (v) does not have any debt
other than as permitted by the Lease Agreement and does not guarantee or
otherwise obligate itself with respect to the debts of any other person or
entity, other than as approved by Owner, (vi) has its own separate books,
records, accounts, financial statements and tax returns (with no commingling of
funds or assets), (vii) holds itself out as being a company separate and apart
from any other entity, and (viii) maintains all corporate formalities
independent of any other entity.

"Site Plan" shall mean BCOI's site plan dated April 8, 2005 prepared by Taylor
Wiseman & Taylor and attached hereto as EXHIBIT D.

"Tenants" shall mean the lessees or tenants under the Tenant Leases, if any.

"Tenant Leases" refers to all leases, subleases and other rental agreements
(written or verbal, now or hereafter in effect), if any, that grant a possessory
interest in and to any space in or any part of the Leased Property, or that
otherwise have rights with regard to the Leased Property, and all Credit
Enhancements, if any, held in connection therewith.

"Tenant Improvements" refers to the interior partitions, finishes and other
tenant improvement work in and for each suite of space in the Leased Property
leased to a Tenant as required or permitted under the Tenant Leases.

"Third Party Agreements" shall mean all agreements with respect to the
development and construction of the Improvements that provide for consideration
to be paid of Five Thousand Dollars ($5,000.00) or more, including the agreement
with the General Contractor. All currently existing Third Party Agreements are
listed on EXHIBIT C hereto.

"Title Company" shall mean First American Title Insurance Company.

"Title Policy" shall have the meaning set forth in Section 3.03.

"Total Funding Amount" shall mean $38,000,000.00

"Transaction Document or "Transaction Documents" shall mean this Agreement, the
Lease Agreement, the Guaranty, the Third Party Agreements, the Development
Agreement, the Assignment of Construction Documents and the Purchase Agreement
and any and all other instruments or documents heretofore or hereafter executed
and delivered in connection with any of the foregoing or the transactions
contemplated thereby, together with any and all extensions, amendments,
modifications and/or renewals of any of the foregoing.

SECTION 1.02 Singular and Plural Terms. Singular terms shall include the plural
forms and vice versa, as applicable, of the terms defined.

SECTION 1.03 Accounting Terms. All accounting terms used in this Agreement shall
be construed in accordance with GAAP, except as otherwise defined.


                                       5

SECTION 1.04 Amendments to Documents. All references to other documents or
instruments shall be deemed to refer to such documents or instruments as they
may hereafter be extended, renewed, modified, or amended and all replacements
and substitutions therefor.

                                   ARTICLE II
                                  DISBURSEMENTS

SECTION 2.01 Disbursement Procedure. Subject to the terms and conditions hereof,
the terms and conditions set forth in the Development Agreement, and based upon
the representations set forth herein, Owner agrees to disburse the amounts set
forth herein for costs of construction of the Improvements and related fees, not
to exceed the Total Funding Amount (less the sum of Five Million Three Hundred
Ninety-Five Thousand Four Hundred Ninety-Seven and 21/100 Dollars
($5,395,497.21)), which is the total cost of the land on which the Improvements
are to be constructed and which is not being funded pursuant hereto) provided,
however, Owner will not disburse any funds for any cost overruns except as
expressly required herein. Subject to compliance by BCOI and the Developer, as
applicable, with all of the terms, conditions and provisions of this Agreement
and the Development Agreement, the Initial Funding will be disbursed at Closing
(as herein defined). The parties acknowledge that advances against the Total
Funding Amount have previously been made as set forth on the Draw Requests. The
remainder of the Total Funding Amount shall be disbursed in Fundings at such
time and in such amounts as Owner shall determine in accordance with the
following procedures:

     (a) Not less than ten (10) business days before the date on which BCOI or
Developer desires a Funding, BCOI or Developer shall submit to Owner a
requisition in form reasonably satisfactory to Owner which shall include (i) the
Development Budget, (ii) for amounts in the Development Budget designated for
construction of the Improvements pursuant to the Construction Contract with the
General Contractor, an AIA G702/703 form containing the itemized schedule of
values for the construction work and all costs incurred to date for construction
pursuant to each category of such schedule of values, (iii) a separate
itemization of costs incurred for equipment, construction and nonconstruction
expenses in connection with the Property and Improvements (other than those
incurred pursuant to a contract with the General Contractor (itemized under the
line items of the Development Budget, with copies of invoices for all such
amounts)) and (iv) the percentage of completion of each line item on the
Development Budget (if applicable) and schedule of values. The accuracy of the
costs and percentage of completion shall be certified to Owner by BCOI and
Developer, by the Construction Inspector, by BCOI's architect and, in the case
of construction of the Improvements by the General Contractor, also by the
General Contractor, in each case as true in all material respects. All
disbursements shall require approval of Owner's Construction Inspector. BCOI
appoints Jerome S. Tannenbaum and Robert Pantoja as its agents to make
disbursement requests. Developer appoints James Cummings and Martin Fugardi as
its agents to make disbursement requests. Any of the foregoing agents, and any
one of the agents appointed by BCOI or Developer pursuant to the next sentence,
is hereby authorized to request a Funding. BCOI and Developer may hereafter by
written notice to Owner appoint one or more other agents or change agents to
make disbursement requests, provided any such notice is not effective until
actually received by Owner.


                                        6

     (b) The completed construction work with respect to the Improvements to the
date of any request for a Funding must be reviewed and approved by the
Construction Inspector as a condition to a Funding. BCOI or Developer will
contact the Construction Inspector and coordinate delivery of BCOI's or
Developer's request for a Funding with an inspection by the Construction
Inspector in order to allow the Construction Inspector to review the completed
construction work for which costs are included in BCOI's or Developer's request
for a Funding. Such Construction Inspector will review and certify to Owner his
opinion of the percentage of completion, compliance with Plans and
Specifications and the maximum allowable Funding applicable thereto, which shall
be determined in accordance with this Agreement.

     (c) A maximum Funding (except in the case of the Final Funding, as herein
defined) will equal nonconstruction expenses actually incurred within the
amounts set forth in the Development Budget (as reallocated from time to time in
accordance with subparagraph (d), below), plus the lesser of (i) the actual cost
of the completed construction of the Improvements, deposits or purchases for
future use, or (ii) Owner-approved scheduled value of each completed portion of
the Improvements (as set forth in the Development Budget), but no Funding for
duplication of work for which funds were previously disbursed, work that does
not conform in all material respects to the Plans and Specifications, or work
that is unsatisfactory in the reasonable opinion of the Construction Inspector
or unavailable for review by the Construction Inspector, less: (1) the Retainage
and (2) the amounts previously disbursed by Owner.

     (d) Any Funding for costs of construction on each line item shown in the
Development Budget shall be made only up to the amount set forth in the
Development Budget shall be made for such line item, except that BCOI or
Developer will be entitled to reallocate individual costs of no more than Six
Hundred Thousand Dollars ($600,000.00) within each of the cost codes set forth
in the Development Budget without Owner's prior written consent. A reallocation
among line items may be made only upon the prior written consent of Owner.
Notwithstanding the foregoing, no Funding from hard cost categories to soft cost
categories or from interest to other categories shall be permitted except in
Owner's sole discretion. No Funding will be made for materials stored for future
use except in accordance with Sections 3.06.

     (e) Fundings may be made for deposits for materials and/or services and for
materials stored for future use in accordance with Sections 3.06 hereof.

     (f) Notwithstanding the foregoing, Owner shall not be required to make a
Funding more than once each month, and Owner reserves the right to limit the
total amount disbursed hereunder at any time to an amount which, when deducted
from the Total Funding Amount, leaves a balance to be disbursed equal to or
greater than the cost of completion of the Improvements and payment of remaining
nonconstruction expenses (including funding of reserve funds or deposits if
required by this Agreement) plus the Retainage under any contract for which the
conditions herein for release have not been satisfied, all as reasonably
determined by Owner from time to time. Prior to the Final Funding, Owner shall
be entitled to retain at all times as undisbursed funds in an amount sufficient
to pay all construction and nonconstruction costs relating to construction of
the Improvements, as reasonably estimated by Owner, including, but not limited
to, amounts to become due pursuant to construction contracts and equipment
purchase contracts, amounts to complete the Improvements but not yet included in
any such contract, maintenance bond and completion bond payments, estimated
interest costs in excess of


                                        7

anticipated cash available for debt service prior to the anticipated date the
Improvements will be completed and will achieve earnings sufficient to cover
operating expenses and debt service, estimated post-closing fees and expenses of
Owner and its counsel, estimated permit and license fees, estimated
architectural and engineering fees of BCOI and the Construction Inspector, and
estimated recording and title insurance costs, all to the extent reasonably
anticipated to be incurred after closing.

     (g) No Fundings shall be made after the Project Completion Date, except in
Owner's discretion.

     (h) The line items on the Development Budget designated as "Developer Fee"
($515,000) and "Construction Management Fee" ($687,500; advances of which have
been previously made by Owner to Developer in the amount set forth on the line
item designated as "DSI Construction Management Fee" and the column designated
as "Payment This Request" on Draw Request #2), will be disbursed as follows: (i)
Eighty percent (80%) of such fees will be disbursed in ten (10) equal monthly
installments beginning on September 15, 2005 and (ii) the remaining twenty
percent (20%) will be disbursed at the time of the Final Funding, unless sooner
paid pursuant to Section 3.3(h) of the Development Agreement; In addition,
unless sooner paid pursuant to Section 3.3 (h) of the Development Agreement, the
Final Funding shall include the Developer Bonus, as defined in Exhibit F to the
Development Agreement.

     (i) The Retainage and any other amounts not previously funded shall be
funded (the "Final Funding") promptly upon the occurrence of all of the
following (i) the satisfactory completion (as determined by BCOI and Owner) of
all construction work under the Construction Contract, (ii) the Owner has
received a certificate from the Project architect that the construction of the
Project has been substantially completed in accordance with the Plans and
Specifications, which certificate shall be in form and substance satisfactory to
Owner and shall include the written approval of the Construction Inspector noted
thereon, (ii) Owner has received evidence that appropriate governmental
authorities have unconditionally approved and certified the Completed
Improvements in their entirety for permanent occupancy as an acute-care hospital
and incorporated medical office building; (iii) the Owner has received evidence
satisfactory to Owner that the Completed Improvements are free of all mechanic's
and materialmen's liens, (iv) BCOI has obtained and delivered to Owner an "as
built" ALTA survey prepared by an engineer or surveyor licensed in the State of
Pennsylvania in form and content acceptable to Owner, certified to ALTA
standards, and certifying that the Improvements, among other things, do not
encroach upon any contiguous properties, (v) all punch list items have been
completed to Owner's Construction Inspector's satisfaction, (vi) BCOI (as tenant
under the Lease Agreement) shall have executed an acknowledgement of acceptance
of the Property in form and substance acceptable to Owner, (vii) there are no
defaults or events of default (and no event has occurred which with the giving
of notice or passage of time or both would constitute a default) under this
Agreement and (viii) BCOI has been issued a license to operate as a healthcare
facility in the State of Pennsylvania by the proper governmental authorities.

SECTION 2.02 Direct Funding. The parties acknowledge and agree that regardless
of whether BCOI has submitted a requisition therefor, Owner intends to make
Fundings directly to the General Contractor and other payees under the Third
Party Agreements. All such Fundings shall nevertheless be deemed Fundings to
BCOI hereunder and shall be subject to the terms hereof to


                                        8

the same extent as if they were made directly to BCOI. Notwithstanding the
foregoing, if BCOI or Developer notify Owner of a payment dispute with any such
payee, Owner shall not make a Funding to such payee until notified by BCOI or
Developer that such dispute has been resolved, unless Owner determines that
withholding such funding will be detrimental to the project.

SECTION 2.03 Representations and Warranties. Each submission by BCOI or
Developer to Owner of a requisition for a Funding shall constitute BCOI's or
Developer's representation and warranty to Owner that: (a) all completed
construction is in accordance with the Plans and Specifications in all material
respects and (b) all construction and nonconstruction costs for the payment of
which Owner has previously disbursed funds have in fact been paid or
arrangements for timely payment thereof have been made.

SECTION 2.04 Additional Information. If Owner or the Title Company shall so
require, BCOI or Developer, as applicable, will submit with its requisitions for
any Funding estoppel certificates in form satisfactory to Owner and the Title
Company, showing amounts paid and amounts due to all persons or organizations
furnishing labor or materials in connection with the completion of the
Improvements.

                                   ARTICLE III
                              CONDITIONS TO FUNDING

     Owner's obligation to make any Funding hereunder shall be effective only
upon fulfillment of, or written waiver by Owner of, the following conditions:

SECTION 3.01 Transaction Documents. Receipt and approval by Owner of all items
required to be provided to Owner under the terms of the Transaction Documents.
For purposes of this Section 3.0l, such items shall be in final form unless
permitted by the Transaction Documents to be in draft or preliminary form.

SECTION 3.02 Execution of Documents. Execution, delivery and, when necessary,
recording or filing, of any of the Transaction Documents which Owner desires to
file or record, and the payment by BCOI and/or Developer of all fees and taxes
with respect to such filing or recording.

SECTION 3.03 Title Insurance. BCOI or Developer shall arrange to have the Title
Company issue and deliver to Owner an endorsement (the "Endorsement") extending
the effective date of the Owner's title insurance policy issued to Owner in
connection with its acquisition of the Property (the "Title Policy") through the
date of such Funding and insuring Owner for said Funding (including a final
Funding) under the Title Policy without additional title exceptions, except
those that may be approved by Owner in its discretion. Each Endorsement shall
confirm that (i) there has been no change in the status of the title to the
Property, (ii) there has been no creation of any new encumbrance or lien on the
Property or the Improvements, and (iii) there has been no occurrence or any
event that could in Owner's opinion impair the priority of the lien of the Lease
Agreement, all as of the time of each such Funding (including a final Funding).
In addition thereto, BCOI or Developer shall deliver to Owner and the Title
Company the documentation required under Section 2.05 above.


                                        9

SECTION 3.04 Documents to be Furnished by BCOI Prior to Each Funding. As a
condition precedent to each Funding (provided, however that the Initial Funding
shall not be required to satisfy the condition precedents set forth in Sections
3.04(b) through (f) below), BCOI shall furnish or cause to be furnished to Owner
the following documents covering each disbursement, in form and substance
satisfactory to Owner:

          (a) A requisition meeting all the requirements set forth in Section
     2.01(a) of this Agreement, and approved by Owner and/or Owner's
     Construction Inspector;

          (b) A completed standard AIA Form G702 and Form G703 signed by the
     General Contractor and the architect, together with sworn statements and
     unconditional waivers of liens signed by the applicable contractor,
     subcontractor or materialman engaged or to be engaged by BCOI or Developer
     or with whom BCOI or Developer shall have any dealings with respect to
     construction of the Improvements, covering all work, to be paid with the
     proceeds of any prior Fundings, together with such invoices, contracts or
     other supporting data as Owner or the Title Company may require to evidence
     that all costs for which disbursement is sought have been incurred;

          (c) An endorsement to Owner's title insurance policy as required by
     Section 3.03 hereof;

          (d) Copies of any executed change orders not previously furnished to
     Owner, and any amendments or modifications to any Third Party Agreements;

          (e) Copies of all construction contracts (including subcontracts)
     executed since the last Funding, together with any bonds obtained or
     required to be obtained with respect thereto;

          (f) Satisfactory evidence that all government approvals have been
     obtained for development of the Project; and

          (g) Such other instruments, documents and information as Owner or the
     Title Company may reasonably request.

SECTION 3.05 Continued Satisfaction of Duties, Representations, Warranties and
Covenants. As of each Funding date, in Owner's sole discretion, (a) BCOI and
Developer continue to satisfy all conditions precedent to Funding set forth in
Articles II and III hereof, (b) BCOI, Developer and Guarantors shall have
performed and complied with all terms and conditions set forth in this Agreement
and the Transaction Documents, (c) all representations and warranties in this
Agreement and the Transaction Documents remain true, correct and complete in all
material respects, and (d) there exists no Default or Event of Default
hereunder.

SECTION 3.06 Disbursements for Materials Stored for Future Use. Any requests for
disbursements which in whole or in part relate to materials which are not
incorporated into the Improvements as of the date of the request for
disbursement but are to be temporarily stored at the Project or in an off-site
storage facility, including disbursements for deposits for such materials, must
be accompanied by evidence satisfactory to Owner that (i) such materials are
included within the coverages of insurance policies carried by BCOI, (ii) the
ownership of such


                                       10

materials is vested (or, in the case of disbursements for deposits, will be
vested) in BCOI free of any liens and claims of third parties, (iii) such
materials are properly insured and protected against theft or damage, (iv) the
Owner's Construction Inspector has viewed and inspected the stored materials
(except in the case of disbursements for deposits), and (v) in the opinion of
the Owner's Construction Inspector, the materials are physically secured and can
be incorporated into the Project within ninety (90) days from the date of the
requisition (or, in the case of disbursements for deposits, in the opinion of
the Construction Inspector the materials to which the deposit relates can be
incorporated into the Project within ninety (90) days from the date the
materials will be delivered). Owner may require separate Uniform Commercial Code
financing statements to cover any such stored materials.

SECTION 3.07 Intentionally omitted.

SECTION 3.08 Disbursements For Tenant Improvements. Owner shall not be obligated
to make any disbursements for Tenant Improvements, unless the Owner receives a
certified statement from BCOI and Developer certifying that the costs of the
Tenant Improvements and all Tenant Improvement allowances are within the
Development Budget. In addition, the first request for disbursement for Tenant
Improvements in connection with a specific leased space in the Project shall be
accompanied by the following, all of which shall be subject to the approval of
Owner: (i) copies of all contracts, if not previously delivered to Owner, for
the performance of such Tenant Improvements, (ii) a cost breakdown for each
trade performing Tenant Improvements in such leased space, and an estimated
commencement and completion date, (iii) an estimate of all direct costs of the
Tenant Improvements to be performed in such leased space which has not been
contracted for or made subject to a work order or order to proceed, (iv) plans
and specifications for the leased space (v) a certified statement from BCOI and
Developer that the costs of the Tenant Improvements and all Tenant Improvement
allowances are within the Development Budget, and (vi) a fully executed lease
approved by Owner covering such leased space.

SECTION 3.09 Assignment of Contracts. BCOI and/or Developer, as applicable, have
assigned, or shall assign, all Third Party Agreements to Owner and, in addition,
have provided, or shall provide, the following to Owner: (i) a subordination,
certificate and consent to assignment from the Project architect and from the
General Contractor, each in form and substance acceptable BCOI and Owner; and
(ii) a letter, in form and substance acceptable to BCOI and Owner, from each of
the parties to any other Third Party Agreements evidencing their agreement to
subordinate such Third Party Agreements and their consent to the assignment
thereof or; (b) where the Third Party Agreement consists only of a purchase
order, a copy of the purchase order executed by each such party, which must be
in form and substance acceptable to, and preapproved by, BCOI and Owner.

     In the event Owner, at its option, elects to make one or more Fundings
prior to receipt and approval of all items required by this Article III, such
election shall not obligate Owner to make any subsequent Funding unless the
terms, conditions and provisions set forth herein are met.


                                       11

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

     BCOI and Developer, jointly and severally represent and warrant to Owner,
knowing that Owner will rely on such representations and warranties as incentive
to enter into the transactions contemplated hereby:

SECTION 4.01 Existence and Ownership of BCOI and Developer. BCOI and Developer
are duly organized and validly existing Delaware limited liability companies
having full power and authority to consummate the transactions contemplated by
this Agreement. Ownership of BCOI and Developer as of the date hereof are as set
forth on SCHEDULE 4.01 attached hereto and made a part hereof by reference and
incorporation. BCOI and Developer each represent and warrant that they are, and
at all times since their formation have been, Single Purpose Entities.

SECTION 4.02 Violations or Actions Pending. There are no actions, suits, or
proceedings pending or, to the best of the knowledge of BCOI and Developer,
threatened, which would reasonably be expected to materially adversely affect
the financial condition of BCOI or Developer or which would reasonably be
expected to impair the value of any Leased Property taken or to be taken by
Owner in connection with this Agreement or any other Transaction Documents. BCOI
and Developer are not in violation of any agreement the violation of which might
reasonably be expected to have a materially adverse effect on BCOI's or
Developer's business or assets, and are not in violation of any order, judgment,
or decree of any court, or any statute or governmental regulation to which BCOI
or Developer is subject, the violation of which would reasonably be expected to
materially adversely affect the financial condition of BCOI or Developer.
Neither the execution nor the performance of this Agreement or any of the
Transaction Documents by BCOI or Developer will result in any material breach of
any security instrument, lease, credit or loan agreement or any other instrument
or agreement which may bind or affect such Person.

SECTION 4.03 Financial Statements. All financial statements of BCOI and
Developer, heretofore given and hereafter to be given to Owner are and will be
true, correct and complete in all material respects as of their respective dates
and prepared in accordance with GAAP, and fairly represent the financial
conditions of the business or persons to which they pertain, and no materially
adverse change has occurred in the financial conditions reflected therein since
the respective date thereof.

SECTION 4.04 Compliance with Laws and Regulations and Transaction Documents. All
necessary permits and approvals have been received, are final and are
unappealable and all necessary action has been taken to permit construction of
the Improvements according to the Plans and Specifications, each as may be
necessary pursuant to applicable covenants and restrictions of record and all
applicable laws, ordinances, and regulations, including, without limitation,
subdivision, zoning, building codes, set back requirements and environmental
laws. When completed according to the Plans and Specifications, the Improvements
will comply with all covenants and restrictions of record and all applicable
laws, ordinances and regulations, including, without limitation, the Applicable
Healthcare Laws, Americans with Disabilities Act and regulations thereunder and
laws, ordinances and regulations relating to subdivision, zoning, building
codes, set back requirements and environmental laws. BCOI and Developer are in
compliance in all material respects with the Transaction Documents.


                                       12

SECTION 4.05 Roads and Utilities. All utility, water and sanitary sewage
services necessary for the construction and use of the Improvements are
available to the Property and BCOI and Developer have received permission to
make such use thereof as is necessary for construction of the Improvements and
as is necessary for the use thereof after completion of the Improvements. The
Property abuts upon or has access via one or more valid and subsisting easements
or rights or way, to a physically open and publicly dedicated street. There are
no off Property improvements necessary for the full use of the Improvements upon
completion thereof.

SECTION 4.06 Condemnation. There are no proceedings pending, or, to the best of
BCOI's and Developer's knowledge, threatened, to acquire any power of
condemnation or eminent domain, with respect to the Property, or any interest
therein, or to enjoin or similarly prevent the construction or use of the
Improvements.

SECTION 4.07 Accuracy of Documents. All documents furnished to Owner by or on
behalf of BCOI and Developer as part of or in support of this Agreement are
true, correct, complete in all material respects and accurately represent the
matters to which they pertain in all material respects.

SECTION 4.08 Environmental and Healthcare Matters. Neither BCOI, Developer nor,
to the best of BCOI's and Developer's knowledge, the Property is in violation of
or subject to any existing, pending or, to the best of BCOI's and Developer's
knowledge, threatened investigation or inquiry by any governmental authority or
any remedial obligations under any Applicable Environmental Law or Applicable
Healthcare Law, and there are no facts, conditions or circumstances known to it
which are reasonably likely to result in any such investigation or inquiry if
such facts, conditions and circumstances, if any, were fully disclosed to the
applicable governmental authority. To the best of BCOI's and Developer's
knowledge, except as disclosed in the Phase I environmental site assessment
report dated April 9, 2005, prepared by EMG Corporation, BCOI and Developer (i)
are not aware of any facts, conditions or circumstances relating to the Project
which are or could reasonably be expected to be in violation of any Applicable
Environmental Law or any Healthcare Law, (ii) are not aware of any Applicable
Environmental Law or any Healthcare Law investigation or inquiry relating to the
Project, (iii) have not obtained and are not required to obtain any permits,
licenses, or similar authorizations to construct, occupy, operate or use any
buildings, improvements, fixtures or equipment required in connection with the
Property or Improvements constructed or to be constructed thereon by reason of
any Applicable Environmental Law or any Healthcare Law that has not already been
obtained, and (iv) are not aware of any oil, toxic or hazardous substances or
solid wastes that have been disposed of or released on the Property
(collectively the "Environmental and Healthcare Matters"). BCOI and Developer
agree (i) to promptly notify Owner if BCOI or Developer becomes aware of any
Environmental and Healthcare Matters which affect or could reasonably be
expected to affect the Project, and (ii) that they will not, in their use of the
Property and the Improvements, dispose of or release oil, toxic or hazardous
substances or solid wastes, on the Property or in the Improvements, except as
would not constitute a violation of any Applicable Environmental Laws and
Healthcare Laws.

SECTION 4.09 Agreements. Each of the Transaction Documents is in full force and
effect, has not been amended or modified, and no default or condition which with
the giving of notice or passage of time would constitute such a default by BCOI
or Developer, exists thereunder. Each


                                       13

Third Party Agreement is assignable to Owner pursuant to the terms thereof. A
true, correct and complete list of all material Third Party Agreements currently
existing with respect to the Project is set forth in EXHIBIT C hereto.

SECTION 4.10 Accurate and Complete Disclosure. No representation or warranty
made by BCOI or Developer under this Agreement and made by any employee,
affiliate or agent of BCOI and Developer to Owner pursuant to or in connection
with this Agreement is false or misleading in any material respect (including by
omission of material information necessary to make such representation, warranty
or statement not misleading in any material respect). BCOI or Developer has
disclosed to Owner in writing every fact of which BCOI or Developer, as
applicable, has knowledge which materially and adversely affects, or would
materially and adversely affect the business, operations or financial condition
of BCOI and Developer or the ability of BCOI and Developer to perform their
obligations under this Agreement.

SECTION 4.11 Continuing Effectiveness. All representations and warranties
contained herein shall be deemed made each time BCOI or Developer requests any
Funding pursuant to this Agreement unless BCOI or Developer specifically
notifies Owner of any change therein. It shall be a condition precedent to the
Initial Funding and each subsequent disbursement that each of said
representations and warranties is true and correct in all material respects as
of the date of such requested disbursement. In addition, at Owner's request,
BCOI and/or Developer shall reaffirm such representations and warranties in
writing prior to each disbursement hereunder.

                                   ARTICLE V
                           COVENANTS OF BCOI/DEVELOPER

     BCOI and Developer covenant and agree, from the date of this Agreement and
as long as BCOI or Developer may obtain any Fundings under this Agreement, to:

SECTION 5.01 Construction of Improvements. (i) Cause the commencement of
construction and the completion of the construction of the Improvements in
accordance with the terms of the Development Agreement; (ii) furnish Owner a
foundation survey promptly upon completion of the foundations of the
Improvements; (iii) cause the Improvements to be constructed in compliance with
and thereafter remain in compliance with all applicable covenants and
restrictions of record and all applicable laws, ordinances and regulations,
including, without limitation, Applicable Environmental Law, the Applicable
Healthcare Laws, Americans with Disabilities Act and regulations thereunder, and
laws, ordinances and regulations relating to subdivision, zoning, building
codes, set back requirements and environmental matters; (iv) cause the
Improvements to be constructed so as not to encroach upon or overhang any
Property line, setback line, easement or right-of-way (except as permitted
pursuant to a properly executed and recorded easement or other applicable
agreement, in form and substance reasonably acceptable to Owner); (v) cause such
construction to proceed continuously (subject to temporary cessation to the
extent not in violation of the terms of this Agreement); (vi) complete
construction of the Improvements by the Project Completion Date, time being of
the essence; (vii) furnish to Owner within thirty (30) days of Owner's request
and upon substantial completion of the Project an as-built survey, in form
satisfactory to Owner showing the location of the Improvements without violation
of set back lines, zoning or subdivision requirements, easements, covenants or
restrictions and showing no encroachments or other conditions which could
reasonably be


                                       14

expected to materially adversely affect the value and use of the Property and
Improvements; and (viii) upon substantial completion of the Project furnish
Owner a final date-down endorsement to the Title Policy bringing the effective
date current, adding the ALTA 3.1 zoning endorsement and comprehensive
endorsement (if not yet a part of the policy)and such other additional
endorsements reasonably required by Owner, to the extent available.

SECTION 5.02 Use of Proceeds. Use each Funding solely and exclusively for the
purposes set forth in, and in the amounts set forth in, the Development Budget
(as may amended or modified in accordance with this Agreement), in this
Agreement or in the Development Agreement, and pay such other fees, closing
costs, and other nonconstruction expenses relating to the construction of the
Improvements, or the discharge of BCOI's or Developer's obligations under this
Agreement as Owner has approved or may from time to time approve.

SECTION 5.03 Liens and Encumbrances. Keep its interest in the Property and
Improvements and all other assets of BCOI free from all liens and encumbrances
except those contemplated by the Transaction Documents; pay prior to delinquency
and prior to any interest, fees or penalties being incurred for not promptly
paying, all persons or entities supplying work or materials for the construction
of the Improvements, except, in each case, for good faith contests of which
Owner has been notified in writing to the extent such contest is material to the
completion of the Project; and promptly discharge, bond off, provide affirmative
title insurance coverage insuring Owner against any loss or damage with respect
to, or make other arrangements acceptable to Owner with respect to, any
mechanic's, materialman's or other lien filed against the Property, the
Improvements, BCOI or the Sole Member.

SECTION 5.04 Deficiencies. Deposit with Owner within ten (10) days following
Owner's demand therefor (which demand may be made at Owner's option) the amount
of money equal to the difference between the undisbursed Total Funding Amount
(less the sum of Five Million Three Hundred Ninety-Five Thousand Four Hundred
Ninety-Seven and 21/100 Dollars ($5,395,497.21)), as of such date and the amount
which Owner shall reasonably determine is necessary to fully complete the
construction of the Improvements free of all liens, including direct and
indirect costs and work performed but for which payment has not been made, and
Owner shall be under no obligation to make any further Fundings until any amount
so demanded is so deposited with Owner.

SECTION 5.05 Reports and Notices. Furnish promptly to Owner such information as
Owner may reasonably require concerning costs, progress of construction,
marketing, and such other factors as Owner may require; notify Owner promptly of
any litigation instituted or threatened against BCOI or Developer, any liens
filed by the Internal Revenue Service against BCOI, Developer, the Property or
the Improvements as a result of deficiencies asserted against BCOI or Developer,
any audits of any Federal or State tax return of BCOI or Developer and the
results of any such audit, any default or dispute with any tenant, any dispute
pursuant to or default under the Transaction Documents by any party, any
condemnation or similar proceedings with respect to any of the Property or
Improvements, any proceeding seeking to enjoin the intended use of the
Improvements, any material changes in governmental requirements pertaining to
the Property or Improvements, utility availability or anticipated costs of
completion, and any other matters which could reasonably be expected to
materially adversely affect BCOI's ability to perform its obligations under this
Agreement.


                                       15

SECTION 5.06 Books and Records. Maintain complete and accurate account books and
records its interest in the Property and the construction of the Improvements,
which books and records shall reflect the consistent application of GAAP, and
make such books and records available at reasonable times upon reasonable prior
notice for inspection and copying by Owner or its agent.

SECTION 5.07 Access and Promotion. Permit Owner and its agents to have access to
the Property and Improvements at all reasonable times during normal business
hours upon reasonable prior notice; provided, however, Owner shall not exercise
its right of access in a manner that unreasonably disrupts construction
activities; provide to Owner at BCOI's expense a sign in accordance with Owner's
specifications publicizing Owner's interest in the Property; and allow Owner to
maintain the sign on the Property, subject to any signage requirements and
restrictions of applicable law.

SECTION 5.08 Changes to the Site Plan and Plans and Specifications. Authorize or
permit no changes to the Site Plan or the Plans and Specifications (and if Plans
and Specifications have not yet been provided to and approved by Owner, then to
any working drawings) without the prior written consent of Owner, any Key
Tenants and all governmental bodies having jurisdiction to the extent such
approval by a governmental body is required by law or regulation.

     Notwithstanding anything contained herein, (a) change orders shall not
increase the cost of construction of the Improvements (or if such change orders
increase the cost of construction of the Improvements and such changes are
approved by Owner, then, prior to making such changes, BCOI shall deposit with
Owner any increase in the costs of construction of the Improvements to be held
and disbursed as provided in Section 5.04 hereof); and (b) such changes must not
result in the Improvements having less value; and (c) such changes must not
affect the general appearance, structure or location of the Improvements or any
portion thereof; and (d) if any sureties have provided bonds in connection with
the construction of the Improvements, such changes must either (i) have the
prior written approval of all such sureties or (ii) such sureties have waived
the right to approve the same, and Construction Inspector (or another architect
or engineer designated by Owner) certifies in writing to Owner that such changes
do not constitute a substantial change in the Plans and Specifications and do
not constitute a change in the scope of the work under the Construction
Contract; and (e) Construction Inspector (or another architect or engineer
designated by Owner) certifies in writing to Owner that such changes do not
constitute a substantial change in the Plans and Specifications. BCOI hereby
agrees to promptly deliver to Owner copies of all "change orders.

SECTION 5.09 List of Contractors, Subcontractors, and Materialmen. Upon Owner's
written request, notify Owner promptly of the names and addresses of all
entities employed as contractors, subcontractors and materialmen in connection
with the construction of the Improvements.

SECTION 5.10 Lien Waiver. Deliver copies of waivers of liens (the originals of
which shall have been filed or are about to be filed, in the office of the
Prothonotary of the Court of Common Pleas of the County in which the Property is
situated), signed by the applicable contractor, subcontractor or materialman
engaged or to be engaged by BCOI or Developer or with whom BCOI or Developer
shall have any dealings with respect to construction of the Improvements,
waiving their right and the right of all subcontractors and parties acting
through or under them or any of them, to


                                       16

file or maintain any mechanics' liens or claims against the Property and the
Improvements, or any interest of BCOI or Developer therein, which waivers shall
be executed and delivered to Owner prior to visible commencement of any work on
the Property by such contractor, subcontractor or materialman.

SECTION 5.11 Ownership of Personalty. Furnish to Owner, if Owner so requests,
copies of the contracts, bills of sale, receipted vouchers, and agreements, or
any of them, under which BCOI claims title to the materials, articles, fixtures
and other personal property used or to be used in the construction or operation
of the Improvements.

SECTION 5.12 Appraisals. Upon Owner's request and upon reasonable notice, permit
Owner and its agents, employees or contractors, to enter upon and appraise the
Improvements during normal business hours; cooperate with and provide any
information requested in connection with such appraisals; and reimburse Owner
for the cost of the first such reappraisal and any other reappraisal while an
Event of Default exists (provided, however, Owner shall not exercise its right
of access in a manner that unreasonably disrupts construction activities).

SECTION 5.13 Other Acts. Upon Owner's request, execute and deliver to Owner all
other documents and perform all other acts which Owner reasonably deems
necessary in connection herewith, to the extent permitted under applicable law.

SECTION 5.14 Construction Contracts. BCOI shall not enter into, modify, amend,
terminate or cancel any agreement or contract with the General Contractor, the
Development Agreement, the architect's contract or any Third Party Agreement,
without the prior written approval of Owner, which approval shall not be
unreasonably withheld. BCOI will furnish Owner promptly after execution thereof
executed copies of all contracts between BCOI, the General Contractor,
architects, engineers and contractors and all subcontracts between the General
Contractor or contractors and all of their subcontractors and suppliers, which
contracts and subcontracts may not have been furnished pursuant to Article III
of this Agreement.

                                   ARTICLE VI
                                EVENTS OF DEFAULT

     The occurrence of any of the events listed in this Article shall constitute
an "Event of Default" under this Agreement.

SECTION 6.01 Assignment or Conveyance. Assignment or attempted assignment by
BCOI of this Agreement, any rights hereunder, or any advance to be made
hereunder, or the conveyance, lease, mortgage, or any other alienation or
encumbrance of its interest in the Property or Improvements or any interest
therein without the prior written consent of Owner, except as otherwise
expressly permitted in the Transaction Documents; provided, however, that
notwithstanding any provision to the contrary in the Transaction Documents,
Developer may assign any Developer Fees and the Developer Bonus set forth in the
Development Agreement (or the right to receive any Developer Fees or the
Developer Bonus) owing to Developer under any Transaction Document in support of
any letter of credit, line of credit or other facility provided for the benefit
of Owner in connection with the Transaction Documents.


                                       17

SECTION 6.02 Voluntary Insolvency Proceedings. The filing by BCOI, the Sole
Member or any other Person owned in majority interest or controlled by BCOI, of
a voluntary petition in bankruptcy or any such Person's adjudication as a
bankrupt or insolvent, or the filing by any such Person of any petition or
answer seeking or acquiescing in any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief for itself under any
present or future federal, state or other statute, law or regulation relating to
bankruptcy, insolvency or other relief for debtors, or any such Person's seeking
or consenting to or acquiescence in the appointment of any trustee, receiver or
liquidator of any such Person or of all or any substantial part its property or
of any or all of the rents, revenues, issues, earnings, profits or income
thereof, or the making of any general assignment for the benefit of creditors or
the admission in writing by BCOI or any such Person of its inability to pay its
debts generally as they become due.

SECTION 6.03 Involuntary Insolvency Proceedings. The entry by a court of
competent jurisdiction of an order, judgment, or decree approving a petition
filed against BCOI, the Sole Member or any Person owned in majority interest or
controlled by BCOI seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future federal, state or other statute, law or regulation relating to
bankruptcy, insolvency, or other relief for debtors, which order, judgment or
decree remains unvacated and unstayed for an aggregate of sixty (60) days
(whether or not consecutive) from the date of entry thereof, or the appointment
of any trustee, receiver or liquidator of any such Person or of all or any
substantial part of its property or of any or all of the rents, revenues,
issues, earnings, profits or income thereof which appointment shall remain
unvacated and unstayed for an aggregate of sixty (60) days (whether or not
consecutive).

SECTION 6.04 Transfer. Except as otherwise permitted herein, the transfer of
BCOI's interest in, or rights under this Agreement by operation of law or
otherwise, including, without limitation, such transfer by BCOI as debtor in
possession under the Bankruptcy Code, or by a trustee for BCOI under the
Bankruptcy Code, to any third party, whether or not the obligations of BCOI
under this Agreement are assumed by such third party.

SECTION 6.05 Foreclosures or Liens. The institution of a foreclosure action
against the Property or Improvements or any part thereof, or the filing of a
lien against the Property or Improvements or any part thereof, which is not
removed of record or dismissed within sixty (60) days after BCOI receives notice
of such filing, unless BCOI has made arrangements satisfactory to Owner with
respect to such lien pursuant to Section 5.03 hereof and no foreclosure or other
possessory action against the Property or Improvements has been commenced.

SECTION 6.06 Casualty Loss. Substantial damage to, or partial or total
destruction of, the Improvements by fire or other casualty such that, in the
determination of Owner, the Improvements will not be restored, rebuilt and
completed on or before the Project Completion Date (as the same may be extended
pursuant to Section 6.08 hereof) and as a result of such damage or destruction
or the delay caused thereby, any tenant would have the right to terminate any
Key Tenant Lease, impose a penalty, or reduce or abate rent, and such right has
not been waived by such tenant.

SECTION 6.07 Misrepresentation. If any certificate, statement, representation,
warranty or audit heretofore or hereafter furnished by or on behalf of BCOI
pursuant to or in connection with this


                                       18

Agreement or otherwise (including, without limitation, representations and
warranties contained herein) or as an inducement to Owner to extend any credit
to or to enter into this or any other agreement with BCOI proves to have been
false in any material respect at the time as of which the facts therein set
forth were stated or certified or to have omitted any substantial contingent or
unliquidated liability or claim against BCOI or if on the date of execution of
this Agreement there shall have been any materially adverse change in any of the
facts previously disclosed by any such certificate, statement, representation,
warranty or audit, which change shall not have been disclosed to Owner at or
prior to the time of such execution.

SECTION 6.08 Failure to Complete Improvements. Except as allowed under Section
15.1 of the Development Agreement for force majeure events, failure by BCOI and
Developer to complete the construction of the Improvements and obtain a
certificate of occupancy or other final governmental approval of the
Improvements for their intended use on or before the Project Completion Date, or
the cessation of work on the construction of the Improvements for any period of
thirty (30) consecutive days.

SECTION 6.09 Failure to Perform Obligations. Failure by BCOI to perform any
term, condition or covenant of this Agreement not otherwise enumerated in this
Article VI, which failure is not cured within any applicable grace or cure
period therefor, and if no grace or cure period is provided therefor, within
thirty (30) days after demand by Owner.

SECTION 6.10 Cross Defaults. Any default, by BCOI, Developer, the Sole Member,
the Guarantors or any affiliate of any of them beyond any applicable grace or
cure period under the terms of any of the Transaction Documents to which such
Person is a party.

Nothing herein shall require notice except as expressly set forth herein or in
the other Transaction Documents. Notwithstanding the foregoing, no notice shall
be required if Owner is prevented from giving notice by bankruptcy or other
applicable law, and the cure period, if any, shall commence with the date of
such event rather than from the date of notice.

                                   ARTICLE VII
                              REMEDIES UPON DEFAULT

SECTION 7.01 Remedies of Owner. Upon an Event of Default in Article VI hereof,
and following the expiration of any applicable grace or cure period, Owner may
if it so elects, without any notice or demand to BCOI (or to any other Person)
whatsoever (which notice or demand is expressly waived, except to the extent
otherwise specifically provided herein or in the other Transaction Documents),
exercise any or all (or none) of the following rights and remedies (all of which
rights and remedies shall be cumulative) as Owner, in its sole discretion, may
deem necessary or appropriate:

     (a) Declare immediately due and owing all outstanding sums or other
obligations due to Owner hereunder or under any of the other Transaction
Documents.

     (b) Exercise all or any of its rights or remedies granted herein, or in any
of the other Transaction Documents (including, but not limited to the right to
set off any or all of the obligations of BCOI against any or all of the property
of BCOI or any guarantor or indemnitor in


                                       19

the possession or control of Owner) or under applicable law, or which it may
otherwise have, against BCOI or any guarantor or indemnitor or otherwise.

     (c) Enter upon the Property and take possession thereof, together with the
Improvements in the course of construction or completed and all materials,
supplies and construction facilities and appliances located thereon, and proceed
either in Owner's name, in the name of BCOI, in the name of Developer, as the
attorney-in-fact of BCOI, as the attorney-in-fact of Developer (which authority
is coupled with an interest and is irrevocable by BCOI and Developer), as Owner
shall elect, to complete the Improvements at the cost and expense of BCOI and
Developer. If not assigned to Owner simultaneously with the execution of this
Agreement, if requested by Owner, BCOI and Developer shall immediately assign to
Owner, in writing, their rights under any contract or agreement with any
architect, engineer, contractor, supplier, consultant or representative that
Developer and/or BCOI has entered into in connection with the Property or the
Project; provided, however, Owner shall have no obligation to accept any such
assignment or assume any of BCOI's or Developer's obligations under any such
contracts. BCOI and Developer shall reimburse Owner, upon demand, all costs and
expenses incurred by Owner in connection with its exercise of the foregoing
rights, including, without limitation, reasonable attorneys' fees and expenses.
If Owner elects to complete or cause the Improvements to be so completed, it may
do so according to the terms of the Third Party Agreements (including the Plans
and Specifications) or according to such changes, alterations or modifications
in and to the Third Party Agreements and the Plans and Specifications as Owner
shall deem expedient or necessary, and Owner may enforce or cancel all or any of
the Third Party Agreements and any and all other contracts theretofore entered
into or make other contracts which, in Owner's opinion, may seem advisable, and
BCOI and Developer shall be liable, under this Agreement or any other
Transaction Document, to pay Owner upon demand any amount or amounts expended by
Owner or its representatives for such performance, together with any costs,
charges or expenses incident thereto or otherwise incurred or expended by Owner
or its representatives on behalf of BCOI and Developer in connection with the
Improvements, and the amounts so expended shall be immediately due and payable
to Owner and shall bear interest thereon at the Overdue Rate.

BCOI acknowledges that all rights privileges and remedies of Owner under this
Section 7.01(c) may, at Owner's option, be exercised by Owner without the
assumption by such party of any liabilities, obligations or responsibilities.

     (d) Decline to disburse any additional Fundings to or for the benefit of
BCOI or any other Person.

SECTION 7.02 Failure to Exercise Remedies. Neither failure nor delay on the part
of Owner to exercise any right, remedy, power or privilege hereunder or under
any Transaction Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege hereunder or under any
Transaction Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The acceptance by Owner of any
partial payments under the Transaction Documents made by or on behalf of BCOI
after the occurrence of an Event of Default hereunder or under any Transaction
Document shall not be deemed a waiver or cure by Owner of said Event of Default
unless expressly agreed in writing by Owner.


                                       20

                                  ARTICLE VIII
                                  MISCELLANEOUS

SECTION 8.01 Conflict of Transaction Documents. In the event of a conflict
between any of the provisions any other Transaction Document with this
Agreement, the provisions of this Agreement shall control.

SECTION 8.02 Exclusiveness. This Agreement is made for the sole protection of
BCOI, Developer and Owner, and their successors and assigns, and except as
expressly set forth herein, no other person or entity shall have any rights
hereunder.

SECTION 8.03 Notice. All notices provided for herein shall be made to such party
in the manner set forth in the Lease Agreement.

SECTION 8.04 Modification and Waiver. No provisions of this Agreement shall be
amended, waived or modified except by an instrument in writing signed by BCOI,
Developer and Owner.

SECTION 8.05 Materiality. All representations and warranties made herein shall
be deemed to have been material and relied on by Owner and shall survive the
execution and delivery of this Agreement and the disbursements of Fundings made
pursuant to this Agreement for a period of two (2) years from the date of the
Final Funding.

SECTION 8.06 Heading. All descriptive headings of articles and sections in this
Agreement are inserted for convenience only, and shall not affect the
construction or interpretation hereof.

SECTION 8.07 Severability. Inapplicability or unenforceability of any provisions
of this Agreement shall not limit or impair the operation or validity of any
other provision of this Agreement.

SECTION 8.08 CounterpartS. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be an original,
but such counterparts shall together constitute one and the same instrument.

SECTION 8.09 Assignability. Neither this Agreement, nor any rights or
obligations hereunder, nor any Funding to be made hereunder, is assignable by
BCOI; provided, however, that notwithstanding any other provision to the
contrary in any Transaction Document, Developer may assign any Developer Fees or
the Developer Bonus (or the right to receive any Developer Fees or the Developer
Bonus) owing to it under any Transaction Document in support of any letter of
credit, line of credit or other facility provided for the benefit of Owner in
connection with the Transaction Documents. Except as set forth in the preceding
sentence, BCOI and Developer shall not convey or encumber, or permit the
conveyance or encumbrance of (other than by the lessor as permitted under the
Lease Agreement), the Property, Improvements or other Leased Property, or any
interest therein, without the prior written consent of Owner, which consent
shall be in Owner's sole discretion. The rights of Owner under this Agreement
are assignable in part or in full, and any assignee of Owner shall succeed to
and be possessed of the rights of Owner hereunder to the extent of the
assignment made, including the right to make Fundings to or on behalf of BCOI or
any approved assignee of BCOI in accordance with this Agreement.


                                       21

SECTION 8.10 No Agency Relationship. Owner is not the agent or representative of
BCOI or Developer, BCOI and Developer are not agents of Owner and this Agreement
shall not make Owner liable to the General Contractor, materialmen, contractors,
subcontractors, craftsmen, laborers or others for goods delivered to or services
performed by them upon the Property, or for debts or claims accruing to such
parties against BCOI or Developer. Except as expressly provided in the
Transaction Documents, there is no contractual relationship, either expressed or
implied, between Owner and the Developer, General Contractor or any materialmen,
subcontractors, craftsmen, contractors, laborers, or any other person supplying
any work, labor or materials for the Improvements or otherwise to the Property.

SECTION 8.11 Waiver. No course of dealing and no delay or omission by Owner in
exercising any right or remedy hereunder or with respect to any other
Transaction Documents shall operate as a waiver thereof or of any other right or
remedy, and no single or partial exercise thereof shall preclude any other or
further exercise thereof or the exercise of any other right or remedy. Owner may
remedy any default hereunder or Event of Default without waiving the default or
Event of Default remedied and without waiving any other prior or subsequent
default or Event of Default, and Owner shall be reimbursed by BCOI for any and
all of its expenses in so remedying such default or Event of Default. All rights
and remedies of Owner hereunder are cumulative.

BCOI agrees that upon any Event of Default under this Agreement, Owner shall
have the absolute right to make such use of the foregoing property so assigned
as Owner shall desire, and, as to any such property which is also the subject of
a security agreement or financing statement in favor of Owner, that Owner will
not be limited to remedies available under the Uniform Commercial Code, but may
at its option avail itself of the rights granted herein in addition to or in
substitution for its Uniform Commercial Code remedies.

SECTION 8.12 Costs and Expenses. BCOI will bear all taxes, fees, costs and
expenses (including reasonable fees and expenses of counsel for Owner and of the
Construction Inspector) in connection with the Transaction Documents (including
any amendments requested by BCOI and hereafter made), all funding and
administration hereunder and the recording of any of the Transaction Documents.
If, at any time, an Event of Default occurs or Owner becomes a party to any suit
or proceeding arising under or out of this Agreement or any of the Transaction
Documents, or if Owner is made a party to any suit or proceeding by virtue of
this Agreement or any Leased Property and as a result of any of the foregoing,
Owner employs counsel to advise or provide other representation with respect to
this Agreement, or to take any action in or with respect to any suit or
proceeding relating to this Agreement, any of the other Transaction Documents,
any Leased Property, BCOI, or to protect, collect, or liquidate any of the
Leased Property, or attempt to enforce any security interest or lien granted to
Owner by any of the Transaction Documents, then in any such events, the
reasonable attorney's fees arising from such services, including fees on appeal
and in any bankruptcy proceedings, and any reasonable out-of-pocket expenses,
costs and charges relating thereto shall constitute additional sums due from
BCOI and Developer to Owner payable within twenty (20) days from delivery of a
reasonably detailed written notice therefor from Owner to BCOI or Developer.
Without limiting the foregoing, BCOI has undertaken the obligation for payment
of, and shall pay, all recording and filing fees, revenue or documentary stamps
or taxes, intangibles taxes, transfer taxes, recording taxes and other taxes,
expenses and charges payable in connection with this Agreement and any of the
Transaction Documents or the filing of any financing statements or other
instruments


                                       22

required to effectuate the purposes of this Agreement, and should BCOI fail to
do so, BCOI agrees to reimburse Owner for the amounts paid by Owner, together
with penalties or interest, if any, incurred by Owner as a result of
underpayment or nonpayment. This Section shall survive termination of this
Agreement.

SECTION 8.13 Attorneys' Fees. Any provisions of the Transaction Documents
providing for the payment of "attorneys' fees," "reasonable attorneys' fees" or
other words or provisions of similar import, shall mean attorneys' and paralegal
fees of outside counsel incurred based upon the usual and customary hourly rates
of the attorneys and paralegals involved for time actually spent by such
attorneys and paralegals and without giving effect to any statutory presumption
that may then be in effect.

SECTION 8.14 Warrant of Attorney. BCOI and Developer each hereby irrevocably
appoints Owner as attorney-in-fact, effectively after the occurrence and during
the continuance of an Event of Default, to do in its stead all things believed
by Owner reasonably necessary to effect performance of this Agreement and filing
notices in public records. The forgoing appointment is coupled with an interest
and is solely for protection of Owner's security and, therefore, is not intended
to confer any right of action on any third party. BCOI AND DEVELOPER EACH
SPECIFICALLY WAIVES ANY RIGHT TO ANY FORM OF NOTICE OR TO ANY ACKNOWLEDGMENT BY
AGENT WHICH MIGHT BE APPLICABLE PURSUANT TO THE PENNSYLVANIA PROBATE, ESTATES
AND FIDUCIARIES CODE ("PROBATE CODE"), AS AMENDED, TO ANY POWER OF ATTORNEY, OR
ANY WARRANT OF ATTORNEY TO CONFESS JUDGMENT, GRANTED HEREIN OR IN ANY OTHER
TRANSACTION DOCUMENT AND HEREBY DIRECTS THAT ANY POWER OF ATTORNEY, OR ANY
WARRANT OF ATTORNEY TO CONFESS JUDGMENT, GRANTED HEREIN OR IN ANY OTHER
TRANSACTION DOCUMENT NOT BE CONSTRUED IN ACCORDANCE WITH THE TERMS OF THE
PROBATE CODE.

SECTION 8.15 Consequential Damages. OWNER SHALL NOT BE RESPONSIBLE OR LIABLE FOR
ANY DAMAGES, CONSEQUENTIAL OR OTHERWISE, THAT MAY BE INCURRED OR ALLEGED BY BCOI
OR DEVELOPER OR BY ANY OTHER PERSON OR ENTITY AS A RESULT OF ANY OF THE
TRANSACTION DOCUMENTS OR THE EXERCISE OF THE TERMS THEREOF BY OWNER OR THE
COLLECTION BY OR ON BEHALF OF THE SUMS DUE THEREUNDER, UNLESS SUCH DAMAGES ARE
INCURRED AS A RESULT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF OWNER.

SECTION 8.16 Indemnification. BCOI HEREBY INDEMNIFIES, HOLDS HARMLESS AND AGREES
TO DEFEND OWNER FROM AND AGAINST (A) ALL CLAIMS, DEMANDS, CAUSES OF ACTION
ASSERTED AGAINST OWNER BY ANY PERSON IF THE CLAIM, DEMAND OR CAUSE OF ACTION
DIRECTLY OR INDIRECTLY RELATES TO ANY CLAIM, LITIGATION, INVESTIGATION OR
PROCEEDING ARISING FROM OR RELATING TO: (I) A CLAIM, DEMAND OR CAUSE OF ACTION
THAT THE PERSON HAS OR ASSERTS AGAINST BCOI; (II) THE PAYMENT OF ANY COMMISSION,
CHARGE OR BROKERAGE FEE INCURRED IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTION DOCUMENTS; (III) ANY ACT OR OMISSION OF BCOI, ANY CONTRACTOR,
SUBCONTRACTOR, ARCHITECT, ENGINEER, MATERIAL SUPPLIER, VENDOR OR OTHER PERSON
WITH RESPECT TO THE PROPERTY AND/OR THE PROJECT; OR (IV) ANY CLAIM OR CAUSE OF
ACTION OF ANY KIND BY ANY PERSON WHICH WOULD HAVE THE EFFECT OF DENYING OWNER
THE FULL BENEFIT OR PROTECTION OF ANY PROVISION OF ANY DOCUMENT; AND (B) ALL
LIABILITIES, LOSSES AND OTHER COSTS (INCLUDING COURT COSTS AND ATTORNEYS' FEES)
INCURRED BY OWNER AS A RESULT OF ANY CLAIM, DEMAND OR CAUSE OF ACTION DESCRIBED
IN CLAUSE (A) ABOVE, EXCEPT TO THE EXTENT OF LOSS PROVEN TO RESULT FROM OWNER'S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. EXCEPT AS EXPRESSLY SET FORTH HEREIN,
THE


                                       23

OWNER'S RIGHT TO INDEMNIFICATION SHALL NOT BE DIRECTLY OR INDIRECTLY LIMITED,
PREJUDICED, IMPAIRED OR ELIMINATED IN ANY WAY BY ANY FINDING OR ALLEGATION THAT
ANY CONDUCT IS ACTIVE, PASSIVE OR SUBJECT TO ANY OTHER CLASSIFICATION OR THAT
OWNER IS DIRECTLY OR INDIRECTLY RESPONSIBLE UNDER ANY THEORY OF ANY KIND FOR ANY
ACT OR OMISSION BY BCOI OR ANY OTHER PERSON. NOTWITHSTANDING THE FOREGOING, BCOI
SHALL NOT BE OBLIGATED TO INDEMNIFY OWNER WITH RESPECT TO ANY INTENTIONALLY TORT
OR ACT OF GROSS NEGLIGENCE WHICH OWNER IS PERSONALLY DETERMINED BY THE JUDGMENT
OF A COURT OF COMPETENT JURISDICTION (SUSTAINED ON APPEAL, IF ANY) TO HAVE
COMMITTED.

SECTION 8.17 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO CONFLICTS OF LAW
PRINCIPLES.

SECTION 8.18 JURISDICTION AND VENUE. EACH OF THE PARTIES HERETO CONSENT TO
PERSONAL JURISDICTION IN THE STATE OF DELAWARE. EACH OF THE PARTIES HERETO AGREE
THAT ANY ACTION OR PROCEEDING ARISING FROM OR RELATED TO THIS AGREEMENT SHALL BE
BROUGHT AND TRIED EXCLUSIVELY IN THE STATE OR FEDERAL COURTS OF THE STATE OF
DELAWARE. EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
OBJECTION TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT. EACH OF THE PARTIES HERETO EXPRESSLY ACKNOWLEDGE THAT DELAWARE IS A
FAIR, JUST AND REASONABLE FORUM AND EACH OF THE PARTIES AGREE NOT TO SEEK
REMOVAL OR TRANSFER OF ANY ACTION FILED BY ANY OF THE PARTIES HERETO IN SAID
COURTS. FURTHER, THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY
CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN ANY INCONVENIENT
FORUM. SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY CERTIFIED MAIL
ADDRESSED TO A PARTY AT THE ADDRESS DESIGNATED PURSUANT TO SECTION 8.03 HEREOF
SHALL BE EFFECTIVE SERVICE OF PROCESS AGAINST SUCH PARTY FOR ANY ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT. A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT MAY BE ENFORCED IN ANY OTHER COURT TO WHOSE
JURISDICTION ANY OF THE PARTIES IS OR MAY BE SUBJECT.

SECTION 8.19 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICBALE LAW, AT
OWNER'S OPTION, BCOI AND DEVELOPER EACH HEREBY WAIVE ANY RIGHT THAT EITHER OF
THEM MAY HAVE TO A TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND,
ACTION OR CAUSE OF ACTION (A) ARISING OUT OF OR IN ANY WAY RELATED TO THIS
AGREEMENT, THE TRANSACTION DOCUMENTS OR (B) IN ANY WAY CONNECTED WITH OR
PERTAINING OR RELATED TO OR INCIDENTAL TO ANY DEALINGS OF OWNER AND/OR BCOI,
OWNER AND/OR DEVELOPER, AND BCOI AND DEVELOPER WITH RESPECT TO THE TRANSACTION
DOCUMENTS OR IN CONNECTION WITH THIS AGREEMENT OR THE EXERCISE OF ANY PARTY'S


                                       24

RIGHTS AND REMEDIES UNDER THIS AGREEMENT OR OTHERWISE, OR THE CONDUCT OR THE
RELATIONSHIP OF THE PARTIES HERETO, IN ALL OF THE FOREGOING CASES WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. BCOI AND DEVELOPER EACH AGREE THAT ANY PARTY MAY FILE A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND
BARGAINED AGREEMENT OF BCOI AND DEVELOPER IRREVOCABLY TO WAIVE THEIR RIGHTS TO
TRIAL BY JURY AS AN INDUCEMENT OF OWNER TO ENTER INTO THIS AGREEMENT AND THAT
ANY DISPUTE OR CONTROVERSY WHATSOEVER BETWEEN THE PARTIES HERETO SHALL INSTEAD
BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

                                      * * *

                     [Signatures appear on following page.]


                                       25

     IN WITNESS WHEREOF, BCOI, Owner and Developer have caused this Agreement to
be executed as of the date first set forth above.

                                        BCOI:

                                        BUCKS COUNTY ONOCOPLASTIC INSTITUTE, LLC


                                        By: /s/ Jerome S. Tannenbaum, M.D.
                                            ------------------------------------
                                            Jerome S. Tannenbaum, M.D.
                                        Its: Chief Manager

                                        OWNER:

                                        MPT OF BUCKS COUNTY, L.P.

                                        BY: MPT OF BUCKS COUNTY, LLC
                                        ITS: GENERAL PARTNER

                                        BY: MPT OPERATING PARTNERSHIP, L.P.
                                        ITS: SOLE MEMBER


                                        By: /s/ Edward K. Aldag, Jr.
                                            ------------------------------------
                                            Edward K. Aldag, Jr.
                                        Its: President and Chief Executive
                                             Officer

                                        DEVELOPER:

                                        DSI FACILITY DEVELOPMENT, LLC


                                        By: /s/ Jerome S. Tannenbaum, M.D.
                                            ------------------------------------
                                            Jerome S. Tannenbaum, M.D.
                                        Its: Chief Manager


                                       26

                                    EXHIBIT A

                                LEGAL DESCRIPTION

                                 [See attached.]


                                       A-1

                                    EXHIBIT B

                               DEVELOPMENT BUDGET

                                 [See attached.]


                                       B-1

                                    EXHIBIT C

                             THIRD PARTY AGREEMENTS

1.   Standard Form of Agreement Between Owner and Architect (1997 Edition)
     entered into as of April 25, 2005, by and between Buck's County Institute,
     LLC, as Owner, and DSI Facility Development, LC, as Architect,
     incorporating the terms of that certain Standard Form of Architect's
     Services (1997 Edition) executed by Jerome Tannenbaum on April 29, 2005, as
     amended by that certain Standard form of Amendment for the Agreement
     Between Owner and Architect (1993 Edition) made as of April 24, 2005, as
     further amended by that certain Rider to Standard Form of Agreement Between
     Owner and Architect between Buck's County Oncoplastic Institute, LLC and
     DSI Facility Development, LLC of even date herewith.

2.   Agreement between Owner and Architect, dated as of September __, 2005, by
     and between Buck's County Oncoplastic Institute, LLC and Kenneth Karkau
     (subject to receipt of evidence of professional liability insurance).

3.   Proposal #230595 dated May 29, 2003 by Hill-Rom to Diversified Specialty
     Institutes, Inc., Customer #1126790.

4.   Proposal #786714 dated March 4, 2005 by Hill-Rom to Diversified Specialty
     Institutes, Inc., customer #250137.

5.   Proposal by York International Corporation ("York") to Dr. Jerome
     Tannenbaum and Short Form of Agreement Between Owner and Engineer For
     Professional Services, between York International and Diversified Specialty
     Institutes executed by Diversified Specialty Institutes on April 21, 2005;
     Purchase Order, dated September 12, 2005, by York, consisting of pages 1
     and 2, and Exhibits A, B, and C (subject to receipt of evidence of required
     insurance).

6.   Letter of Agreement between Taylor Wiseman & Taylor and Diversified
     Specialty Institutes, dated as of October 27, 2004, regarding "Feasibility
     Study; Glenview Corporate Center."

7.   Letter of Agreement between Taylor Wiseman & Taylor and Diversified
     Specialty Institutes, dated as of November 10, 2004, regarding "Zoning
     Hearing Board, Sketch Plan."

8.   Letter of Agreement between Taylor Wiseman & Taylor and Diversified
     Specialty Institutes, dated as of November 30, 2004, regarding "Topographic
     Survey & Preliminary Plans."

9.   Letter of Agreement between Taylor Wiseman & Taylor and Diversified
     Specialty Institutes, dated as of February 2, 2005, regarding "Buck's
     County Hospital/MOB Corp. Center."

10.  Letter of Agreement between Taylor Wiseman & Taylor and Diversified
     Specialty Institutes, dated as of February 4, 2005, regarding "Change Order
     No. 1; Wetlands Features, Floodplain."

11.  Letter of Agreement between Taylor Wiseman & Taylor and Diversified
     Specialty Institutes, dated as of April 8, 2005, regarding "DSI - Hospital;
     ALTA Survey."

12.  Proposal for Geotechnical Investigation dated January 31, 2005, by Geotek
     engineering company, accepted by Diversified Specialty Institutes on
     February 4, 2005.


                                       C-1

                                    EXHIBIT D

                                    SITE PLAN

                                 [See attached.]


                                       D-1

                                    EXHIBIT E

                                  DRAW REQUESTS

                                 [See attached.]


                                       E-1

                                  SCHEDULE 4.01

              Ownership of Buck's County Oncoplastic Institute, LLC

                                                                      
National Oncoplastic Institutes, Inc. ................................   100.00%



                             Ownership of Developer

                                                                      
Diversified Specialty Institutes, Inc. ...............................   100.00%




                                       S-1


                                                                    EXHIBIT 23.1


            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors
Medical Properties Trust, Inc:


We consent to the use of our report included herein and to the references to
our firm under the headings "Experts", "Summary Selected Financial Data" and
"Selected Financial Data" in the Prospectus.


/s/ KPMG, LLP


September 30, 2005
Birmingham, Alabama


                                                                    EXHIBIT 23.2

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Member
Vibra Healthcare, LLC:

We hereby consent to the incorporation in this Amendment No. 2 to Registration
Statement of Medical Properties Trust, Inc. on Form S-11 (No. 333-121883) of
our report dated March 8, 2005, except for Note 11, as to which the date is
March 31, 2005, relating to the consolidated financial statements of Vibra
Healthcare, LLC and subsidiaries as of December 31, 2004 and for the period
from inception (May 14, 2004) through December 31, 2004. We also consent to the
references to us under the heading "Experts" in such Registration Statement.


/s/ Parente Randolph, LLC

Parente Randolph, LLC
Harrisburg, Pennsylvania
September 29, 2005


September 30, 2005




VIA EDGAR
United States Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, D.C.  20549
Attention:  Owen Pinkerton, Senior Counsel

Ladies and Gentlemen:

         On behalf of Medical Properties Trust, Inc. (the "Company"), enclosed
herewith is Amendment No. 2 to the Company's Registration Statement on Form S-11
(the "Amendment"), as filed with the Securities and Exchange Commission on
January 6, 2005, File No. 333-121883 (the "Registration Statement"). The Company
has amended the Registration Statement in response to comments contained in the
letter from the Staff dated August 12, 2005 (the "Comment Letter"), and
addressed to Edward K. Aldag, Jr., Chairman, President and Chief Executive
Officer of the Company. We will separately deliver copies of the amended
Registration Statement, marked to show changes responsive to the Comment Letter,
to members of the Staff specified in the Comment Letter.

         The numbered responses below correspond to the numbered paragraphs of
the Comment Letter.

Selling Stockholders, page 128

1.       We note that the selling stockholders table is incomplete. We may have
         additional comments once the table is completed.


         RESPONSE: We have included the completed selling stockholders table in
         the Registration Statement. See pages 115 - 125.


Where You Can Find More Information, page 182

2.       Please revise to update the address of the SEC's public reference room
         to 100 F Street, N.E., Room 1580, Washington, D.C. 20549.

         RESPONSE: We have revised the Registration Statement as requested. See
         page 168.

Part II - Exhibits

3.       Please file your legal and tax opinions.

         RESPONSE: We have filed the legal and tax opinions. See Exhibits 5.1
         and 8.1.

Please do not hesitate to contact the undersigned or, in his absence, Thomas O.
Kolb (205) 250-8321, if you have any questions or comments relating to the
Company's response to the Comment Letter.



                                        Very truly yours,



                                        /s/ B.G. Minisman, Jr.
                                        ----------------------
                                        B. G. Minisman, Jr.
                                        of Baker, Donelson, Bearman, Caldwell &
                                        Berkowitz, PC

cc:      Andrew Mew
         Cicely Luckey
         Michael McTiernan
         Medical Properties Trust, Inc.