UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

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

Commission file number 001-32559

MEDICAL PROPERTIES TRUST, INC.

MARYLAND (State or other jurisdiction of incorporation or organization)		20-0191742 (I. R. S. Employer Identification No.)
1000 URBAN CENTER DRIVE, SUITE 501
BIRMINGHAM, AL (Address of principal executive offices)		35242 (Zip Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   No þ

As of November 9, 2009, the registrant had 80,164,801 shares of common stock, par value $.001, outstanding.

 

 

MEDICAL PROPERTIES TRUST, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED September 30, 2009

Table of Contents

		Page
PART I — FINANCIAL INFORMATION
Item 1 Financial Statements			3
Condensed Consolidated Balance Sheets at September 30, 2009 and December 31, 2008			3
Condensed Consolidated Statements of Income for the Three Months and Nine Months Ended September 30, 2009 and 2008			4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2008			5
Notes to Condensed Consolidated Financial Statements			6
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations			12
Item 3 Quantitative and Qualitative Disclosures about Market Risk			18
Item 4 Controls and Procedures			18
PART II — OTHER INFORMATION
Item 1 Legal Proceedings			18
Item 1A Risk Factors			18
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds			18
Item 3 Defaults Upon Senior Securities			19
Item 4 Submission of Matters to a Vote of Security Holders			19
Item 5 Other Information			19
Item 6 Exhibits			19
SIGNATURE			20
INDEX TO EXHIBITS			21
EX-10.1
EX-31.1
EX-31.2
EX-32
EX-99.1

PART I — FINANCIAL INFORMATION

Item 1.		Financial Statements.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

		September 30, 2009				December 31, 2008
(In thousands, except per share amounts)		(Unaudited)				(Note 2)
Assets
Real estate assets
Land, buildings and improvements, and intangible lease assets		$	995,228			$	996,965
Mortgage loans			185,000				185,000
Gross investment in real estate assets			1,180,228				1,181,965
Accumulated depreciation and amortization			(54,177	)			(40,334	)
Net investment in real estate assets			1,126,051				1,141,631
Cash and cash equivalents			13,094				11,748
Interest and rent receivable			19,458				13,837
Straight-line rent receivable			24,946				19,003
Other loans			109,921				108,523
Assets of discontinued operations			1,185				2,385
Other assets			13,143				14,246
Total Assets		$	1,307,798			$	1,311,373
Liabilities and Equity
Liabilities
Debt		$	566,185			$	630,557
Accounts payable and accrued expenses			33,044				24,718
Deferred revenue			12,771				16,110
Lease deposits and other obligations to tenants			16,792				13,645
Total liabilities			628,792				685,030
Medical Properties Trust, Inc. stockholders’ equity
Preferred stock, $0.001 par value. Authorized 10,000 shares; no shares outstanding			—				—
Common stock, $0.001 par value. Authorized 150,000 shares; issued and outstanding — 78,658 shares at September 30, 2009, and 65,056 shares at December 31, 2008			78				65
Additional paid in capital			758,354				686,238
Distributions in excess of net income			(79,383	)			(59,941	)
Treasury shares, at cost			(262	)			(262	)
Total Medical Properties Trust, Inc. stockholders’ equity			678,787				626,100
Non-controlling interests			219				243
Total equity			679,006				626,343
Total Liabilities and Equity		$	1,307,798			$	1,311,373

See accompanying notes to condensed consolidated financial statements.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income
(Unaudited)

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
(In thousands, except per share amounts)		2009				2008				2009				2008
Revenues
Rent billed		$	23,636			$	24,332			$	70,321			$	60,649
Straight-line rent			3,244				767				5,856				4,707
Interest and fee income			7,213				8,018				21,804				22,273
Total revenues			34,093				33,117				97,981				87,629
Expenses
Real estate depreciation and amortization			6,465				10,625				19,419				19,490
Property-related			2,252				338				4,362				545
General and administrative			4,859				4,652				16,337				13,632
Total operating expenses			13,576				15,615				40,118				33,667
Operating income			20,517				17,502				57,863				53,962
Other income (expense)
Interest and other income (expense)			(6	)			(37	)			48				80
Interest expense			(9,390	)			(10,838	)			(28,284	)			(31,172	)
Net other expense			(9,396	)			(10,875	)			(28,236	)			(31,092	)
Income from continuing operations			11,121				6,627				29,627				22,870
Income (loss) from discontinued operations			(736	)			410				(667	)			8,450
Net income			10,385				7,037				28,960				31,320
Net income attributable to non-controlling interests			(11	)			(17	)			(30	)			(36	)
Net income attributable to MPT common stockholders		$	10,374			$	7,020			$	28,930			$	31,284
Earnings per common share — basic
Income from continuing operations attributable to MPT common stockholders		$	0.14			$	0.09			$	0.37			$	0.35
Income (loss) from discontinued operations attributable to MPT common stockholders			(0.01	)			0.01				(0.01	)			0.14
Net income attributable to MPT common stockholders		$	0.13			$	0.10			$	0.36			$	0.49
Weighted average shares outstanding — basic			78,665				65,059				77,904				61,016
Earnings per share — diluted
Income from continuing operations attributable to MPT common stockholders		$	0.14			$	0.09			$	0.37			$	0.35
Income (loss) from discontinued operations attributable to MPT common stockholders			(0.01	)			0.01				(0.01	)			0.14
Net income attributable to MPT common stockholders		$	0.13			$	0.10			$	0.36			$	0.49
Weighted average shares outstanding — diluted			78,665				65,066				77,904				61,026
Dividends declared per common share		$	0.20			$	0.27			$	0.60			$	0.81

See accompanying notes to condensed consolidated financial statements.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows
(Unaudited)

		For the Nine Months Ended September 30,
		2009				2008
Operating activities
Net income		$	28,960			$	31,320
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization			19,726				20,922
Straight-line rent revenue			(6,935	)			(7,181	)
Share-based compensation			4,282				5,130
Gain on sale of real estate			—				(9,326	)
Straight-line rent write off/reserve			1,079				11,079
Increase (decrease) in accounts payable and accrued liabilities			5,560				7,219
Amortization and write-off of deferred financing costs and debt discount			4,225				5,302
Other adjustments			(6,454	)			(1,647	)
Net cash provided by operating activities			50,443				62,818
Investing activities
Real estate acquired			(423	)			(383,880	)
Principal received on loans receivable			3,273				27,829
Proceeds from sale of real estate			—				89,981
Investment in loans receivable			(6,317	)			(73,756	)
Construction in progress and other			(4,434	)			(3,946	)
Net cash used for investing activities			(7,901	)			(343,772	)
Financing activities
Revolving credit facilities, net			(65,800	)			14,014
Additions to debt			—				110,094
Payments of debt			(907	)			(570	)
Distributions paid			(45,602	)			(47,096	)
Sale of common stock			67,843				128,250
Other financing activities			3,270				(8,342	)
Net cash (used) provided by financing activities			(41,196	)			196,350
Increase (decrease) in cash and cash equivalents for period			1,346				(84,604	)
Cash and cash equivalents at beginning of period			11,748				94,215
Cash and cash equivalents at end of period		$	13,094			$	9,611
Interest paid		$	21,068			$	18,268
Supplemental schedule of non-cash investing activities:
Interest and other receivables transferred to loans receivable			—				78
Supplemental schedule of non-cash financing activities:
Distributions declared, unpaid			16,105				17,931
Other non-cash financing activities			5				38

See accompanying notes to condensed consolidated financial statements.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. Organization

Medical Properties Trust, Inc., a Maryland corporation, was formed on August 27, 2003 under the General Corporation Law of Maryland for the purpose of engaging in the business of investing in, owning, and leasing commercial real estate. Our operating partnership subsidiary, MPT Operating Partnership, L.P. (the “Operating Partnership”), through which we conduct all of our operations, was formed in September 2003. Through another wholly-owned subsidiary, Medical Properties Trust, LLC, we are the sole general partner of the Operating Partnership. At present, we directly own substantially all of the limited partnership interests in the Operating Partnership.

We have operated as a real estate investment trust (“REIT”) since April 6, 2004, and accordingly, elected REIT status upon the filing in September 2005 of the calendar year 2004 federal income tax return. Accordingly, we will not be subject to U.S. federal income tax, provided that we continue to qualify as a REIT and our distributions to our stockholders equal or exceed our taxable income. Certain activities we undertake must be conducted by an entity which we elected to be treated as a taxable REIT subsidiary (“TRS”). Our TRS is subject to both federal and state income taxes.

Our primary business strategy is to acquire and develop real estate and improvements, primarily for long-term lease to providers of healthcare services such as operators of general acute care hospitals, inpatient physical rehabilitation hospitals, 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. We manage our business as a single business segment.

2. Summary of Significant Accounting Policies

Unaudited Interim Condensed Consolidated Financial Statements: The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information, including rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of 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 and nine month periods ended September 30, 2009, are not necessarily indicative of the results that may be expected for the year ending December 31, 2009. Except for the impact from the adoption of new accounting pronouncements (see Notes 4 and 9), the condensed consolidated balance sheet at December 31, 2008 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

We evaluated all events or transactions that occurred after September 30, 2009 up through November 9, 2009, the date we issued these financial statements.

For information about significant accounting policies, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K, as amended, for the year ended December 31, 2008.

New Accounting Pronouncements:

In June 2009, the FASB amended the consolidation guidance for variable interest entities. This amendment includes: (1) the elimination of the exemption from consolidation for qualifying special purpose entities; (2) a new approach for determining the primary beneficiary of a variable interest entity, which requires that the primary beneficiary have both (i) the power to direct the activities of a variable interest entity that most significantly impacts the entity’s economic performance and (ii) either the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the variable interest entity; and (3) the requirement to continually reassess who should consolidate a variable interest entity. This amendment is effective for all variable interest entities and relationships with variable interest entities existing as of January 1, 2010. We do not believe this amendment will have a significant impact on our financial position or results of operations.

Reclassifications: Certain reclassifications have been made to the condensed consolidated financial statements to conform to the 2009 consolidated financial statement presentation. These reclassifications had no impact on stockholders’ equity or net income. In accordance with the new accounting guidance on non-controlling interests that we adopted in 2009 (i) all prior period non-controlling interests on the condensed consolidated balance sheets have been reclassified as a component of equity and (ii) all prior period non-controlling interests’ share of earnings on the condensed consolidated statements of income have been reclassified to clearly identify net income attributable to the non-controlling interest.

3. Real Estate and Lending Activities

Acquisitions

In the second and third quarters of 2008, we completed the acquisition of 20 properties from a single seller for approximately $357.2 million. In May 2008, we acquired a long-term acute care hospital at a cost of $10.8 million from an unrelated party and entered into an operating lease with Vibra Healthcare (“Vibra”). We financed these acquisitions using proceeds from our March 2008 issuance of debt and equity (see Note 4 — Debt and Note 5 — Common Stock), from our existing revolving credit facilities and from the sale of three rehabilitation facilities to Vibra in May 2008 with proceeds (including lease termination fees and loan prepayment) totaling $105.0 million (see Note 8 — Discontinued Operations).

In June 2008, we entered into a $60 million financing arrangement with affiliates of Prime Healthcare Services, Inc. (“Prime”) related to three southern California hospital campuses operated by Prime. We acquired one of the facilities in July 2008 from a Prime affiliate for approximately $15.0 million and the other two facilities (including two medical office buildings) in the 2008 fourth quarter for $45 million.

The results of operations for each of the properties acquired are included in our consolidated results from the effective date of each acquisition. The following table sets forth certain unaudited pro forma consolidated earnings data for the nine month period ended September 30, 2008, as if each acquisition and the sale of three rehabilitation facilities to Vibra were consummated on the same terms at the beginning of 2008 ($ amounts in thousands except per share amounts).

		For the Nine Months
		Ended September 30,
		2008
Revenues		$	101,256
Net income			28,941
Earnings per share — diluted		$	0.45

Leasing Operations

In July 2009, we entered into a lease of our Bucks County facility located in Bensalem, Pennsylvania. The lease has a fixed term of five years with an option, at the lessee’s discretion, to extend 15 additional periods of one year each. No rent is required for the first six months. Thereafter, rent will be $2.0 million per year with annual escalations of 2%. Separately, we also obtained a profits interest whereby we may receive up to $1.0 million annually pursuant to a an agreement that provides for our receipt of certain cash flows, if any, as defined in the agreement. After the fixed term, the tenant has the right to purchase the facility at a price based on a formula set forth in the lease agreement.

In April 2009, we terminated leases on two of our facilities in Louisiana (Covington and Denham Springs) after the operator defaulted on the leases. As a result of the lease terminations, we recorded a $1.1 million charge in order to fully reserve and write off, respectively, the related straight-line rent receivables associated with the Covington and Denham Springs facilities. In addition, we accelerated the amortization of the related lease intangibles resulting in $0.5 million of expense in the 2009 second quarter. In June 2009, we re-leased the Denham Springs facility to a new operator under terms similar to the terminated lease. The operator of the Covington facility has entered bankruptcy proceedings, during which it has made payments to us generally equivalent to the amounts payable under the terms of the terminated lease.

In the 2008 third quarter, we terminated leases on two general acute care hospitals in Houston, Texas and one hospital in Redding, California due to certain tenant defaults. These facilities were previously leased to affiliates of Hospital Partners of America, Inc. (“HPA”), a multi-hospital operating company that filed for bankruptcy subsequent to the lease terminations. Pursuant to these lease terminations, we recorded $4.5 million in accelerated amortization in the 2008 third quarter related to lease intangibles. In addition, we recorded a $1.5 million charge for the write-off of straight-line rent.

On November 1, 2008, we entered into a new lease agreement for the Redding hospital. The new operator, an affiliate of Prime, agreed to increase the lease base from $60.0 million to $63.0 million and to pay up to $20.0 million in additional rent and profits participation based on the expected future profitability of the new lessee’s operations. In September 2009, we recorded $1.1 million of additional rent under this lease. The additional rent (which is fixed and may not exceed $12 million per the lease) is recognized on a straight-line basis over the life of the lease. Until the 2009 third quarter, we had reserved for the straight-line rent; however, the operations of the Redding facility have performed well, and we now believe such additional rent will be fully collectible.

In regards to the two Houston facilities formerly leased to HPA, both were unoccupied at September 2009.

At September 30, 2009, the tenant/borrower of our Monroe, Indiana hospital has not made full payments in accordance with the lease and loan documents. We are recognizing only that portion of contractual amounts due that are either received or we believe will be received based on our evaluation of our collateral value. As of September 30, 2009, we have recognized but not received approximately $6.9 million in interest, rent, and other charges that we believe will be collected. Between September 30 and November 9, 2009 we advanced approximately $1.1 million to the lessee.

We are presently negotiating with multiple parties to lease or purchase the Monroe facility. Based on these negotiations and other evaluation procedures, we believe it likely that we will recover our investment related to Monroe, including approximately $6.9 million of accrued rent, interest, and other charges and approximately $25.4 million in loans. However, there is no assurance that we will re-lease or sell the facility or that such a transaction would be sufficient enough for us to recover our investments related to Monroe. Included in our receivables due from Monroe at September 30, 2009, is approximately $2.2 million in straight line rents that are due in future years. If we lease the facility to a different operator, it is unlikely that this will be collected.

At September 30, 2009, we had approximately $3.8 million of receivables related to the former operator of Bucks that were guaranteed by its parent company. We are currently pursuing collection of this receivable, and although we believe these receivables are fully collectible and no reserve has been recorded, there is no assurance that we will receive all of the guaranteed amounts.

For the three months ended September 30, 2009 and 2008, revenue from affiliates of Prime (including rent and interest from mortgage and working capital loans) accounted for 39.9% and 31.0%, respectively, of total revenue. For the nine months ended September 30, 2009 and 2008, revenue from affiliates of Prime (including rent and interest from mortgage and working capital loans) accounted for 39.4% and 31.6%, respectively, of total revenue. For the three months ended September 30, 2009 and 2008, revenue from Vibra (including rent and interest from working capital loans) accounted for 13.0% and 14.7%, respectively, of total revenue. For the nine months ended September 30, 2009 and 2008, revenue from Vibra (including rent and interest from working capital loans) accounted for 13.7% and 16.1%, respectively, of total revenue.

4. Debt

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

		As of September 30,								As of December 31,
		2009								2008
		Balance				Interest Rate				Balance				Interest Rate
Revolving credit facilities		$	127,200			Variable				$	193,000			Variable
Senior unsecured notes — fixed rate through July and October 2011 due July and October 2016			125,000				7.333% - 7.871	%			125,000				7.333% - 7.871	%
Exchangeable senior notes
Principal amount			220,000				6.125% - 9.250	%			220,000				6.125% - 9.250	%
Unamortized discount			(9,082	)							(11,418	)
			210,918								208,582
Term loans			103,067			Various					103,975			Various
		$	566,185							$	630,557

As of September 30, 2009, principal payments due for our debt (which exclude the effects of any discounts recorded) are as follows:

2009		$	304
2010			117,273	(1)
2011			211,090
2012			39,600
2013			82,000
Thereafter			125,000
Total		$	575,267

In January 2009, we completed a public offering of common stock (see Note 5 — Common Stock) resulting in net proceeds of $67.8 million, which were used to repay borrowings outstanding under our revolving credit facilities.

In November 2006 and March 2008, our Operating Partnership issued and sold $138.0 million and $82.0 million, respectively, of Exchangeable Senior Notes. See Note 4 of our 2008 Annual Report on Form 10-K, as amended, for further information in regards to the terms of the exchangeable senior notes.

In May 2008, the FASB issued a new accounting standard that affected the accounting for our exchangeable senior notes. The new standard requires that the initial debt proceeds from the sale of our exchangeable senior notes be allocated between a liability component and an equity component. The resulting debt discount is amortized over the period the debt is expected to be outstanding as additional interest expense. We adopted the new accounting standard on January 1, 2009 and have applied it retroactively to all periods presented. The adoption of the new standard resulted in an increase in unamortized debt discount of $7.7 million and additional paid in capital of $11.0 million and a decrease in retained earnings of $3.3 million in our consolidated balance sheet as of December 31, 2008. We recorded additional non-cash interest expense in our consolidated statements of income of approximately $0.5 million ($0.01 per share) in the third quarters of 2009 and 2008, associated with the amortization of this discount at an annual effective interest rate of 8.3% and 11.3% for the 2006 and 2008 exchangeable senior notes, respectively. For the nine months ended September 30, 2009 and 2008, we recorded $1.6 million ($0.02 per share) and $1.3 million ($0.02 per share), respectively. The unamortized discounts of $5.5 million and $3.5 million at September 30, 2009 will continue to be amortized through November 2011 and April 2013 for the 2006 and 2008 exchangeable senior notes, respectively.

Our revolving credit agreement and term loans impose certain restrictions on us, including restrictions on our ability to: incur debts; grant liens; provide guarantees in respect of obligations of any other entity; make redemptions and repurchases of our capital stock; prepay, redeem or repurchase debt; engage in mergers or consolidations; enter into affiliated transactions; and change our business. In addition, these agreements limit the amount of dividends we can pay to 100% of funds from operations, as defined in the agreements, on a rolling four quarter basis. These agreements also contain provisions for the mandatory prepayment of outstanding borrowings under these facilities from the proceeds received from the sale of properties that serve as collateral.

In addition to these restrictions, our revolving credit agreement and term loans contain customary financial and operating covenants, including covenants relating to our total leverage ratio, fixed charge coverage ratio, mortgage secured leverage ratio, recourse mortgage secured leverage ratio, consolidated adjusted net worth, floating rate debt, facility leverage ratio, and borrowing base interest coverage ratio. These agreements also contain customary events of default, including among others, nonpayment of principal or interest, material inaccuracy of representations and failure to comply with our covenants. If an event of default occurs and is continuing under these facilities, the entire outstanding balance may become immediately due and payable. At September 30, 2009, we were in compliance with all such financial and operating covenants.

5. Common Stock

In January 2009, we completed a public offering of 12.0 million shares of our common stock at $5.40 per share. Including the underwriters’ purchase of approximately 1.3 million additional shares to cover over allotments, net proceeds from this offering, after underwriting discount and commissions and fees, were $67.8 million.

In January 2009, we filed Articles of Amendment to our charter with the Maryland State Department of Assessments and Taxation increasing the number of authorized shares of common stock, par value $0.001 per share available for issuance from 100,000,000 to 150,000,000.

In March 2008, we sold 12,650,000 shares of common stock at a price of $10.75 per share. After deducting underwriters commissions and offering expenses, we realized proceeds of $128.6 million.

6. Stock Awards

Our stockholders have approved and we have adopted the Second Amended and Restated Medical Properties Trust, Inc. 2004 Equity Incentive Plan (the “Equity Incentive Plan”) which authorizes the issuance of options to purchase common stock, restricted stock, restricted stock units, deferred stock units, stock appreciation rights, performance units and other stock based awards, including profits interest in our Operating Partnership. The Equity Incentive Plan is administered by the Compensation Committee of the Board of Directors. We have reserved 7,441,180 shares of common stock for awards under the Equity Incentive Plan for which 3,692,623 shares remain available for future stock awards as of September 30, 2009. We awarded 441,134 and 405,512 shares in the first quarter of 2009 and 2008, respectively, of restricted stock to management, independent directors, and certain employees. The 2009 awards vest quarterly based on service, over three years in equal amounts beginning April 2009. The 2008 awards to management vest based on service over five years in equal annual amounts beginning February 2009, while the awards to directors vest based on service over three years in equal amounts beginning February 2009.

7. Fair Value of Financial Instruments

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

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

		September 30,								December 31,
		2009								2008
		Book				Fair				Book				Fair
		Value				Value				Value				Value
Asset (Liability)
Interest and Rent Receivables		$	19,458			$	18,223			$	13,837			$	12,475
Loans			294,921				283,782				293,523				282,459
Debt			(566,185	)			(503,085	)			(630,557	)			(482,175	)

8. Discontinued Operations

In the second quarter of 2008, we sold the real estate assets of three inpatient rehabilitation facilities to Vibra for proceeds of approximately $105.0 million, including $7.0 million representing early lease termination fee income and $8.0 million in the form of a loan pre-payment. We recognized a $9.3 million gain on the sales of the real estate. In addition, we wrote-off approximately $9.5 million in related straight-line rent receivables.

In 2006, we terminated leases for a hospital and medical office building (“MOB”) complex with Stealth L.P. (“Stealth”) and repossessed the real estate. In January 2007, we sold the hospital and MOB complex recognizing a gain of approximately $4.1 million. During the period between termination of the lease and sale of the real estate, we substantially funded through loans the working capital requirements of the hospital’s operator pending the operator’s collection of patient receivables from Medicare and other sources. In July 2008, we received from Medicare the substantial remainder of amounts we expected to collect and based thereon recorded a charge of $2.1 million (net of approximately $1.2 million in tax benefits) to write-off the remaining uncollectible receivables from the operator in June 2008. We are defendants in ongoing litigation related to the Stealth transaction as described in Note 10 — Contingencies, which has resulted in a certain amount of legal expenses for the three and nine months ended September 30, 2009 and 2008.

We have classified current and prior year activity related to these transactions, along with the related operating results of the facilities prior to these transactions taking place, as discontinued operations.

The following table presents the results of discontinued operations for the three and nine months ended September 30, 2009 and 2008 ($ amounts in thousands except per share amounts):

		For the Three Months								For the Nine Months
		Ended September 30,								Ended September 30,
		2009				2008				2009				2008
Revenues		$	—			$	(228	)		$	—			$	2,477
Gain on sale			—				(2	)			—				9,326
Net income (loss)			(736	)			410				(667	)			8,450
Earnings per share — diluted		$	(0.01	)		$	0.01			$	(0.01	)		$	0.14

9. Earnings Per Share

In June 2008, the FASB issued new accounting guidance that addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method. Under this guidance, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. Certain of our unvested restricted and performance stock awards contain non-forfeitable rights to dividends, and accordingly, these awards are deemed to be participating securities. We adopted this new accounting guidance on January 1, 2009 which resulted in an approximate $– and $0.01 negative impact on earnings per share for the three and nine month periods, respectively, ended September 30, 2009 versus a $0.01 and $0.02 per share negative impact for the three and nine month periods, respectively, ended September 30, 2008. Our earnings per share were calculated based on the following (amounts in thousands):

		For the Three Months
		Ended September 30,
		2009				2008
Numerator:
Income from continuing operations		$	11,121			$	6,627
Non-controlling interests’ share in continuing operations			(9	)			(18	)
Participating securities’ share in earnings			(372	)			(455	)
Income from continuing operations, less participating securities’ share in earnings			10,740				6,154
Income from discontinued operations			(736	)			410
Non-controlling interests’ share in discontinued operations			(2	)			1
Income from discontinued operations attributable to MPT common stockholders			(738	)			411
Net income, less participating securities’ share in earnings		$	10,002			$	6,565
Denominator:
Basic weighted-average common shares			78,665				65,059
Dilutive stock options			—				7
Diluted weighted-average common shares			78,665				65,066

		For the Nine Months
		Ended September 30,
		2009				2008
Numerator:
Income from continuing operations		$	29,627			$	22,870
Non-controlling interests’ share in continuing operations			(27	)			(35	)
Participating securities’ share in earnings			(1,142	)			(1,415	)
Income from continuing operations, less participating securities’ share in earnings			28,458				21,420

		For the Nine Months
		Ended September 30,
		2009				2008
Income from discontinued operations			(667	)			8,450
Non-controlling interests’ share in discontinued operations			(3	)			(1	)
Income from discontinued operations attributable to MPT common stockholders			(670	)			8,449
Net income, less participating securities’ share in earnings		$	27,788			$	29,869
Denominator:
Basic weighted-average common shares			77,904				61,016
Dilutive stock options			—				10
Diluted weighted-average common shares			77,904				61,026

For the three and nine months ended September 30, 2009 and 2008, 0.1 million of options were excluded from the diluted earnings per share calculation as they were determined not to be dilutive. Shares that may be issued in the future in accordance with our convertible bonds were excluded from the diluted earnings per share calculation as they were determined not to be dilutive.

10. Contingencies

In October 2006, two of our subsidiaries terminated their respective leases with Stealth, the operator of a hospital and MOB that we owned in Houston, Texas. Pursuant to our subsidiaries’ rights under these leases, we took possession of the real estate and contracted with a third party to operate the facilities for an interim period. In January 2007, we completed the sale of these properties to Memorial Hermann Healthcare System (“Memorial Hermann”). Several limited partners of Stealth filed suit against the general partner of Stealth, our subsidiaries, the interim operator and several other parties in December 2006, in Harris County, Texas District Court, generally alleging that the defendants breached duties, interfered with the plaintiffs’ partnership rights and misappropriated assets of Stealth. Further amended petitions filed by the plaintiffs added Memorial Hermann as a defendant and, while dropping some of the original claims, alleged new claims that our conduct violated the antitrust laws and constituted tortious interference with Stealth’s business contracts and relationships.

In May 2007, Stealth itself filed a cross claim against our subsidiaries and the interim operator, later amended to include us, our operating partnership and Memorial Hermann, broadly alleging, among other things, fraud, negligent misrepresentation, breaches of contract and warranty, fraudulent presentment of a letter of credit, and that we operated all our subsidiaries as a single enterprise and/or conspired with our subsidiaries to commit the other tort claims asserted. Stealth most recently consolidated all of its claims against us in a consolidated petition that added claims of breach of fiduciary duty and seeking actual and punitive money damages. The trial court recently dismissed the letter of credit claim, and Memorial Hermann has agreed to defend and indemnify us against one of Stealth’s breach of contract claims.

The plaintiffs and Stealth jointly seek more than $120 million in actual damages and more than $350 million in punitive damages. The case is set for trial in January 2010. We believe that all of the claims asserted by Stealth and its limited partners are without merit and we intend to continue to vigorously defend them. We have not accrued any estimated settlement, judgment or future defense costs related to this litigation as of September 30, 2009. We presently estimate that a jury trial and the appeals process may take two years and cost $2 million in additional defense costs. However, there can be no assurances about the time, cost or outcome of the trial and appeals process.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of the consolidated financial condition and consolidated results of operations should be read together with the condensed consolidated financial statements of Medical Properties Trust, Inc. and notes thereto contained in this Form 10-Q and

the financial statements and notes thereto contained in our Annual Report on Form 10-K (as amended) for the year ended December 31, 2008.

Forward-Looking Statements.

This report on Form 10-Q contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or future performance, achievements or transactions or events to be materially different from those expressed or implied by such forward-looking statements, including, but not limited to, the risks described in our Annual Report on Form 10-K for the year ended December 31, 2008, as amended, filed with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934. Such factors include, among others, the following:

•		National and local economic, business, real estate and other market conditions;
•		The competitive environment in which we operate;
•		The execution of our business plan;
•		Financing risks;
•		Acquisition and development risks;
•		Potential environmental, contingencies, and other liabilities;
•		Other factors affecting the real estate industry generally or the healthcare real estate industry in particular;
•		Our ability to maintain our status as a REIT for federal and state income tax purposes;
•		Our ability to attract and retain qualified personnel;
•		Federal and state healthcare regulatory requirements; and
•		The impact of the current credit crisis and global economic slowdown, which is having and may continue to have a negative effect on the following, among other things:

	•		the financial condition of our tenants, our lenders, counterparties to our capped call transactions and institutions that hold our cash balances, which may expose us to increased risks of default by these parties;
	•		our ability to obtain debt financing on attractive terms or at all, which may adversely impact our ability to pursue acquisition and development opportunities and refinance existing debt and our future interest expense; and
	•		the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis.

Overview

We were incorporated under Maryland law on August 27, 2003 primarily for the purpose of investing in and owning net-leased healthcare facilities across the United States. We have operated as a real estate investment trust (“REIT”) since April 6, 2004, and accordingly, elected REIT status upon the filing in September 2005 of our calendar year 2004 federal income tax return. We acquire and develop healthcare facilities and lease the facilities to healthcare operating companies under long-term net leases. We also make mortgage loans to healthcare operators collateralized by their real estate assets. In addition, we selectively make loans to certain of our operators through our taxable REIT subsidiary, the proceeds of which are used for acquisitions and working capital. In November 2008 we acquired a profits interest in one of our tenants that gives us a limited right to share in the tenant’s positive cash flow. We intend to attempt, under appropriate circumstances, to acquire similar interests in the future.

At September 30, 2009, our portfolio consisted of 52 properties: 46 facilities (of the 49 facilities that we own) are leased to 14 tenants, three are presently not under lease, and the remaining assets are in the form of first mortgage loans to two operators. Our owned facilities consisted of 22 general acute care hospitals, 13 long-term acute care hospitals, 6 inpatient rehabilitation hospitals, 2 medical office

buildings, and 6 wellness centers. The non-owned facilities on which we have made mortgage loans consist of general acute care facilities.

We have 27 employees as of November 9, 2009. We believe that any adjustments to the number of our employees will have only immaterial effects on our operations and general and administrative expenses. We believe that our relations with our employees are good. None of our employees are a member of any union.

Key Factors that May Affect Our Operations

Our revenues are derived from rents we earn pursuant to the lease agreements with our tenants, interest income from loans to our tenants and other facility owners, and our profits interests in certain of our tenants. 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 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 borrowers and in monitoring the performance of existing tenants and borrowers 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 or borrower and at each facility;
•		the ratio of our tenants’ and borrowers’ operating earnings both to facility rent and to facility rent plus other fixed costs, including debt costs;
•		trends in the source of our tenants’ or borrowers’ revenue, including the relative mix of Medicare, Medicaid/MediCal, managed care, commercial insurance, and private pay patients; and
•		the effect of evolving healthcare regulations on our tenants’ and borrowers’ profitability.

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

•		trends in the cost and availability of capital, including market interest rates, that our prospective tenants may use for their real estate assets instead of financing their real estate assets through lease structures;
•		potential 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;
•		other changes to the overall healthcare economy that may result from proposed and future federal legislation in the United States;
•		competition from other financing sources; and
•		the ability of our tenants and borrowers to access funds in the credit markets.

Global economic conditions during the preceding 24 months have created historic levels of credit concentration and capital market disruptions. These conditions have affected our access to and cost of capital, generally resulting in our suspension of acquisitions and development activities. In recent months, conditions in the debt and equity capital markets have improved and the cost of such capital has declined to a level that makes acquisitions of new assets more likely. However, we believe economies and markets remain sensitive to global events that would affect the stability of such improving conditions. Accordingly, there is no assurance that we will be able to successfully make significant new acquisitions in the near future.

CRITICAL ACCOUNTING POLICIES

For a discussion of our critical accounting policies, which include revenue recognition, investment in real estate, purchase price allocation, loans, losses from rent receivables, accounting policies for derivatives and hedging activities, variable interest entities, and stock-based compensation refer to our 2008 Annual Report on Form 10-K, as amended. During the nine months ended September 30, 2009, there were no material changes to these policies other than the accounting change related to our convertible debt as described in Note 4 to the Notes to the condensed consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES

During the nine months ended September 30, 2009, operating cash flows approximated $50.4 million, which, along with borrowings from our revolving credit facility, were used to fund our dividends of $45.6 million and investing activities of $7.9 million. In January 2009, we completed a public offering of 12.0 million shares of our common stock at $5.40 per share. Including the underwriters’ purchase of approximately 1.3 million additional shares to cover over allotments, net proceeds from this offering, after underwriting discount and commissions and fees, were approximately $67.8 million. The net proceeds of this offering were generally used to repay borrowings outstanding under our revolving credit facilities. At September 30, 2009 we had approximately $68.0 million of available borrowing capacity under our credit facilities and cash of approximately $13.1 million.

For the first nine months of 2008 in addition to operating cash flows of approximately $62.8 million, we generated cash of approximately $342.9 million from various sources including $128.3 million from an equity offering, $79.6 million from the issuance of exchangeable notes, $105.0 million from the sale of the three facilities to Vibra, and $30.0 million from a new term loan. These proceeds along with cash already on hand and borrowings from our revolving credit facilities were used to fund our $357.2 million acquisition of 20 healthcare facilities and the $60.0 million financing arrangement with affiliates of Prime related to three southern California hospital campuses (including two MOBs).

     Short-term Liquidity Requirements: At November 6, 2009, our availability under our revolving credit facilities plus cash on-hand approximated $72.1 million. We have only nominal principal payments due, no significant maturities until November 2010, and only $8 million in approved capital projects. We believe that the current liquidity available to us, along with our monthly cash receipts from rent and loan interest, will be sufficient for operations, debt service, capital project funding, and distributions in compliance with REIT requirements during the remainder of 2009 and 2010.

     Long-term Liquidity Requirements: Our first significant maturity of debt is in November 2010 when our $30.0 million term loan ($29.6 million outstanding on November 6, 2009) and our $154.0 million revolving credit facility ($96 million outstanding on November 6, 2009) mature. However, of the approximately $125.6 million coming due in 2010, the $96.0 million related to our revolving credit facility can be extended to November 2011 so long as no default has occurred and we provide necessary notice of our intentions to extend the facility.

We will require external capital in 2011 and beyond to satisfy debt maturities, including $138 million in maturing exchangeable notes and $64.7 million in a maturing term loan in November 2011. In recent months, debt and equity capital market conditions have improved, and we believe capital is more available than at any time during the past 24 months. We believe we have several alternatives for refinancing debt as it matures, including:

•		cash flows from operations;
•		proceeds from property sales;
•		issuance of new debt;
•		replacement or extension of existing credit arrangements; and
•		sale of equity and equity-linked securities.

However, there is no assurance that conditions will remain good or that our present plans will be successful.

Results of Operations

Three months Ended September 30, 2009 Compared to September 30, 2008

Net income for the three months ended September 30, 2009 was $10.4 million compared to $7.0 million for the three months ended September 30, 2008.

A comparison of revenues for the three month periods ended September 30, 2009 and 2008, is as follows ($ amounts in thousands):

																		Year over
						% of								% of				Year
		2009				Total				2008				Total				Change
Base rents		$	22,837				67.0	%		$	23,373				70.6	%			-2.3	%
Straight-line rents			3,244				9.5	%			767				2.3	%			322.9	%
Percentage rents			799				2.3	%			959				2.9	%			-16.7	%
Fee income			37				0.1	%			111				0.3	%			-66.7	%
Interest from loans			7,176				21.1	%			7,907				23.9	%			-9.2	%
Total revenue		$	34,093				100.0	%		$	33,117				100.0	%			2.9	%

Base rents for the 2009 third quarter decreased 2.3% versus the prior year as a result of the loss in rental income from the Bucks facility, which exceeded the additional rent generated from the annual escalation provisions in the leases.

Straight-line rents in 2009 included $1.1 million in additional rent from our Redding facility. In addition, we recorded a $1.5 million charge in the 2008 third quarter for the write-off of straight-line rent associated with the closure of our River Oaks facility and the termination of the prior lease agreement on the Redding hospital. See Note 3 to our condensed consolidated financial statements in Item 1 of this Form 10-Q for more information.

Real estate depreciation and amortization during the third quarter of 2009 was $6.5 million compared to $10.6 million during the third quarter of 2008, a 39.1% decrease. All of this decrease is related to the $4.5 million charge in the 2008 third quarter to accelerate the amortization of intangible lease assets on the River Oaks and Redding properties due to lease terminations as noted in Note 3 to our condensed consolidated financial statements in Item 1 of this Form 10-Q.

Property-related expenses in the third quarter of 2009 increased from $0.3 million to $2.3 million. Approximately $1.1 million of this increase related to maintenance, utility costs, property taxes, and legal costs associated with our vacant River Oaks and previously vacant Bucks facility and $0.4 million in legal expense related to matters involving the previous tenant of our Redding facility. These expenses are typically paid by our tenants. No such expenses related to River Oaks, Bucks or Redding facilities were recorded in 2008. In addition, approximately $0.6 million in bad debt expense was recognized during the third quarter of 2009 related to our leases of six wellness centers.

General and administrative expenses in the third quarter of 2009 remained relatively flat compared to the same period in 2008, reflecting a slight increase in cash compensation in 2009 due to the addition of key employees.

Interest expense for the quarters ended September 30, 2009 and 2008 totaled $9.4 million and $10.8 million, respectively. This decrease is related primarily to higher debt balances in the 2008 quarter.

In addition to the items noted above, net income for the quarters was impacted by discontinued operations. See Note 8 to our condensed consolidated financial statements of in Item 1 to this Form 10-Q for further information.

Nine Months Ended September 30, 2009 Compared to September 30, 2008

Net income for the nine months ended September 30, 2009, was $28.9 million compared to net income of $31.3 million for the nine months ended September 30, 2008.

A comparison of revenues for the nine month periods ended September 30, 2009 and 2008, is as follows:

																		Year over
						% of								% of				Year
		2009				Total				2008				Total				Change
Base rents		$	68,691				70.1	%		$	59,610				68.0	%			15.2	%
Straight-line rents			5,856				6.0	%			4,707				5.4	%			24.4	%
Percentage rents			1,630				1.7	%			1,040				1.2	%			56.7	%
Fee income			212				0.2	%			1,204				1.4	%			-82.4	%
Interest from loans			21,592				22.0	%			21,068				24.0	%			2.5	%
Total revenue		$	97,981				100.0	%		$	87,629				100.0	%			11.8	%

The increase in base rents, percentage rent, and interest is primarily due to acquisitions and other new investments. In the 2008 second quarter, and early third quarter, we completed the acquisition of 20 properties for $357.2 million from a single seller and five properties for $60 million that were subsequently leased to Prime.

Straight-line rent for the first nine months of 2009 included $1.1 million in additional rent for our Redding facility. The write-off of straight-line rent receivables in the 2008 third quarter related to the River Oaks and Redding properties were offset by a similar reserve/write-off for our Covington and Denham Springs properties in the 2009 second quarter. See Note 3 to our condensed consolidated financial statements in Item 1 of this Form 10-Q for more information on the activity in the period related to straight-line rent.

Real estate depreciation and amortization during the first three quarters of 2009 was $19.4 million, compared to $19.5 million during the same period of 2008, a 0.4% decrease. Depreciation remained relatively flat as a result of an increase in the number of rent producing properties from 2008 to 2009 offset by the recognition of accelerated amortization of our lease intangibles associated with the River Oaks and Redding hospitals in September 2008 resulting in a charge of approximately $1.8 million and $2.7 million, respectively.

Property-related expenses during the first three quarters of 2009 increased from $0.5 million to $4.4 million. Approximately $2.5 million of this increase related to maintenance, utility costs, property taxes, and legal costs associated with our vacant River Oaks and Bucks facilities and $0.7 million in legal expense related to matters involving the previous tenant of our Redding facility. These expenses are typically paid by our tenants. No such expenses related to River Oaks, Bucks or Redding facility were recorded in 2008. In addition, approximately $0.6 million in bad debt expense was recognized during the third quarter of 2009 related to our leases of six wellness centers.

General and administrative expenses in the first three quarters of 2009 and 2008 totaled $16.3 million and $13.6 million, respectively, an increase of 19.8%, reflecting an increase in cash compensation in 2009 due to the addition of key employees. Cash compensation in 2009 was also higher due to a favorable accrual adjustment in 2008 related to the 2007 bonus year in which no bonus was paid. In addition, we experienced higher office and travel expenses in 2009 versus 2008 as a result of the expansion of our portfolio.

Interest expense for the nine months ended September 30, 2009 and 2008 totaled $28.3 million and $31.2 million, respectively. Interest expense was higher in the prior year primarily due to the $3.2 million non-cash charge for the write-off of costs associated with the short-term bridge facility that was terminated in June 2008.

In addition to the items noted above, net income for the nine month periods was impacted by discontinued operations. See Note 8 to our condensed consolidated financial statements in Item 1 to this Form 10-Q for further information.

Distribution Policy

We 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 and maintain such status going forward.

The table below is a summary of our distributions declared during the two year period ended September 30, 2009:

Declaration Date		Record Date		Date of Distribution		Distribution per Share
August 20, 2009		September 17, 2009		October 15, 2009		$	0.20
May 21, 2009		June 11, 2009		July 14, 2009		$	0.20
February 24, 2009		March 19, 2009		April 9, 2009		$	0.20
December 4, 2008		December 23, 2008		January 22, 2009		$	0.20

Declaration Date		Record Date		Date of Distribution		Distribution per Share
August 21, 2008		September 18, 2008		October 16, 2008		$	0.27
May 22, 2008		June 13, 2008		July 11, 2008		$	0.27
February 28, 2008		March 13, 2008		April 11, 2008		$	0.27
November 16, 2007		December 13, 2007		January 11, 2008		$	0.27

We intend to pay to our stockholders, within the time periods prescribed by the Internal Revenue Code (“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 distributions of cash or common shares to stockholders in order for us to maintain our status as a REIT under the Code and to avoid corporate income and excise taxes on undistributed income. Our Credit Agreement, signed in November 2007, limits the amounts of dividends we can pay to 100% of funds from operations, as defined in the Credit Agreement, on a rolling four quarter basis.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. In addition, the value of our facilities will be subject to fluctuations based on changes in local and regional economic conditions and changes in the ability of our tenants to generate profits, all of which may affect our ability to refinance our debt if necessary. The changes in the value of our facilities would be affected also by changes in “cap” rates, which is measured by the current base rent divided by the current market value of a facility.

Our primary exposure to market risks relates to fluctuations in interest rates and equity prices. Refer to our 2008 Annual Report on Form 10-K, as amended, for a discussion of our quantitative and qualitative disclosures and analyses about market risk, which include, interest rate and share price sensitivity. During the nine months ended September 30, 2009, there were no material changes to our analyses.

Item 4. Controls and Procedures.

We have adopted and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b), under the Securities Exchange Act of 1934, as amended, we have carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the quarter covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be disclosed by us in the reports that we file with the SEC.

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

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

There have been no material changes to legal proceedings as presented in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2008 as filed with the commission on May 11, 2009.

Item 1A. Risk Factors.

There have been no material changes to the Risk Factors as presented in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2008 as filed with the commission on May 11, 2009.

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

(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.

     The following exhibits are filed as a part of this report:

Exhibit
Number		Description
10.1		Revolving Credit and Term Loan Agreement, dated November 30, 2007, among Medical Properties Trust, Inc., MPT Operating Partnership, L.P., as Borrower, the Several Lenders from Time to Time Parties Thereto, KeyBank National Association, as Syndication Agent, and JPMorgan Chase Bank, N.A. as Administrative Agent, with J.P. Morgan Securities Inc. and KeyBank National Association, as Joint Lead Arrangers and Bookrunners
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1		Consolidated Financial Statements of Prime Healthcare Services, Inc. as of September 30, 2009. Since affiliates of Prime Healthcare Services, Inc. lease more than 20% of our total assets under triple net leases, the financial status of Prime may be considered relevant to investors. Prime’s most recently available financial statements (unaudited, as of and for the period ended September 30, 2009) are attached as Exhibit 99.1 to this Quarterly Report on Form 10-Q. We have not participated in the preparation of Prime’s financial statements nor do we have the right to dictate the form of any financial statements provided to us by Prime.

SIGNATURE

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

Date: November 9, 2009

INDEX TO EXHIBITS

Exhibit
Number		Description
10.1		Revolving Credit and Term Loan Agreement, dated November 30, 2007, among Medical Properties Trust, Inc., MPT Operating Partnership, L.P., as Borrower, the Several Lenders from Time to Time Parties Thereto, KeyBank National Association, as Syndication Agent, and JPMorgan Chase Bank, N.A. as Administrative Agent, with J.P. Morgan Securities Inc. and KeyBank National Association, as Joint Lead Arrangers and Bookrunners
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1		Consolidated Financial Statements of Prime Healthcare Services, Inc. as of September 30, 2009. Since affiliates of Prime Healthcare Services, Inc. lease more than 20% of our total assets under triple net leases, the financial status of Prime may be considered relevant to investors. Prime’s most recently available financial statements (unaudited, as of and for the period ended September 30, 2009) are attached as exhibit 99.1 to this Quarterly Report on Form 10-Q. We have not participated in the preparation of Prime’s financial statements nor do we have the right to dictate the form of any financial statements provided to us by Prime.

Exhibit 10.1

Execution Version

REVOLVING CREDIT AND

TERM LOAN AGREEMENT

among

MEDICAL PROPERTIES TRUST, INC.

MPT OPERATING PARTNERSHIP, L.P.,

as Borrower,

The Several Lenders from Time to Time Parties Hereto,

KEYBANK NATIONAL ASSOCIATION,

as Syndication Agent,

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

Dated as of November 30, 2007

J.P. MORGAN SECURITIES INC. AND KEYBANK NATIONAL ASSOCIATION,

as Joint Lead Arrangers and Bookrunners

TABLE OF CONTENTS

				Page
SECTION 1.		DEFINITIONS			1
1.1		Defined Terms			1
1.2		Other Definitional Provisions			22
SECTION 2.		AMOUNT AND TERMS OF COMMITMENTS			23
2.1		Term Commitments			23
2.2		Procedure for Term Loan Borrowing			23
2.3		Repayment of Term Loans			23
2.4		Revolving Commitments			24
2.5		Procedure for Revolving Loan Borrowing			25
2.6		Swingline Commitment			25
2.7		Procedure for Swingline Borrowing; Refunding of Swingline Loans			26
2.8		Commitment Fees, etc			27
2.9		Termination or Reduction of Revolving Commitments			27
2.10		Optional Prepayments			28
2.11		Mandatory Prepayments and Commitment Reductions			28
2.12		Conversion and Continuation Options			29
2.13		Limitations on Eurodollar Tranches			30
2.14		Interest Rates and Payment Dates			30
2.15		Computation of Interest and Fees			31
2.16		Inability to Determine Interest Rate			31
2.17		Pro Rata Treatment and Payments			31
2.18		Requirements of Law			33
2.19		Taxes			34
2.20		Indemnity			36
2.21		Change of Lending Office			36
2.22		Replacement of Lenders			37
2.23		Incremental Commitments			38

				Page
SECTION 3.		LETTERS OF CREDIT			39
3.1		L/C Commitment			39
3.2		Procedure for Issuance of Letter of Credit			39
3.3		Fees and Other Charges			40
3.4		L/C Participations			40
3.5		Reimbursement Obligation of the Borrower			41
3.6		Obligations Absolute			42
3.7		Letter of Credit Payments			42
3.8		Applications			42
SECTION 4.		REPRESENTATIONS AND WARRANTIES			42
4.1		Financial Condition			42
4.2		No Change			43
4.3		Existence; Compliance with Law			43
4.4		Power; Authorization; Enforceable Obligations			44
4.5		No Legal Bar			44
4.6		Litigation			44
4.7		No Default			44
4.8		Ownership of Property; Liens			44
4.9		Intellectual Property			45
4.10		Taxes			45
4.11		Federal Regulations			45
4.12		Labor Matters			45
4.13		ERISA			45
4.14		Investment Company Act; Other Regulations			46
4.15		Subsidiaries			46
4.16		Use of Proceeds			46
4.17		Environmental Matters			46
4.18		Accuracy of Information, etc			47
4.19		Security Documents			48
4.20		Solvency			48

				Page
4.21		Certain Documents			48
4.22		Status of Holdings			48
SECTION 5.		CONDITIONS PRECEDENT			48
5.1		Conditions to Initial Extension of Credit			48
5.2		Conditions to Each Extension of Credit			50
SECTION 6.		AFFIRMATIVE COVENANTS			51
6.1		Financial Statements			51
6.2		Certificates; Other Information			52
6.3		Payment of Obligations			53
6.4		Maintenance of Existence; Compliance			53
6.5		Maintenance of Property; Insurance			53
6.6		Inspection of Property; Books and Records; Discussions			53
6.7		Notices			53
6.8		Environmental Laws			54
6.9		Distributions in the Ordinary Course			54
6.10		Additional Collateral, etc			55
6.11		Notices of Asset Sales or Dispositions			56
6.12		Maintenance of Ratings			56
SECTION 7.		NEGATIVE COVENANTS			56
7.1		Financial Condition Covenants			56
7.2		Indebtedness			58
7.3		Liens			59
7.4		Fundamental Changes			60
7.5		Disposition of Property			60
7.6		Restricted Payments			60
7.7		[Reserved]			61
7.8		Investments			61
7.9		Optional Payments and Modifications of Certain Debt Instruments			61
7.10		Transactions with Affiliates			61
7.11		Sales and Leasebacks			62

				Page
7.12		Swap Agreements			62
7.13		Changes in Fiscal Periods			62
7.14		Negative Pledge Clauses			62
7.15		Clauses Restricting Subsidiary Distributions			62
7.16		Lines of Business			62
SECTION 8.		EVENTS OF DEFAULT			62
SECTION 9.		THE AGENTS			66
9.1		Appointment			66
9.2		Delegation of Duties			66
9.3		Exculpatory Provisions			66
9.4		Reliance by Administrative Agent			67
9.5		Notice of Default			67
9.6		Non-Reliance on Agents and Other Lenders			67
9.7		Indemnification			68
9.8		Agent in Its Individual Capacity			68
9.9		Successor Administrative Agent			68
9.10		Syndication Agent			69
SECTION 10.		MISCELLANEOUS			69
10.1		Amendments and Waivers			69
10.2		Notices			70
10.3		No Waiver; Cumulative Remedies			71
10.4		Survival of Representations and Warranties			71
10.5		Payment of Expenses and Taxes			71
10.6		Successors and Assigns; Participations and Assignments			72
10.7		Adjustments; Set-off			75
10.8		Counterparts			76
10.9		Severability			76
10.10		Integration			76
10.11		Governing Law			76
10.12		Submission To Jurisdiction; Waivers			76

				Page
10.13		Acknowledgements			77
10.14		Releases of Guarantees and Liens			77
10.15		Confidentiality			78
10.16		WAIVERS OF JURY TRIAL			78
10.17		USA PATRIOT Act			78

SCHEDULES:

ES		Excluded Subsidiaries
PBBP		Pooled Borrowing Base Properties
1.1A		Commitments
4.4		Consents, Authorizations, Filings and Notices
4.15		Subsidiaries
4.19(a)		UCC Filing Jurisdictions
4.23(a)		Properties
4.23(b)		Borrowing Base Properties
7.2(d)		Existing Indebtedness
7.3(f)		Existing Liens

EXHIBITS:

A		Form of Guarantee and Collateral Agreement
B		Form of Compliance Certificate
C		Form of Closing Certificate
D		Form of Assignment and Assumption
E		Form of Borrowing Request

          REVOLVING CREDIT AND TERM LOAN AGREEMENT (this “Agreement”), dated as of November 30, 2007, among MEDICAL PROPERTIES TRUST, INC., a Maryland corporation (“Holdings”), MPT OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the “Borrower”), the several banks and other financial institutions or entities from time to time parties to this Agreement (the “Lenders”), KEYBANK NATIONAL ASSOCIATION, as syndication agent (in such capacity, the “Syndication Agent”), and JPMORGAN CHASE BANK, N.A., as administrative agent.

          The parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

     1.1 Defined Terms. As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.

          “ABR”: for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus ¹/2 of 1%. For purposes hereof: “Prime Rate” shall mean the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged by JPMorgan Chase Bank, N.A. in connection with extensions of credit to debtors). Any change in the ABR due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

          “ABR Loans”: Loans the rate of interest applicable to which is based upon the ABR.

          “Adjusted NOI”: for any fiscal period, the NOI (or pro rata share of NOI from any Real Property owned by an unconsolidated Subsidiary or joint venture of the Borrower) from any Real Property minus the Capital Expenditure Reserve net of the amount of such Capital Expenditure Reserve provided by tenants pursuant to leases for such Real Property and adjusted to remove the effect of recognizing rental income on a straight-line basis over the applicable lease term.

          “Adjustment Date”: as defined in the definition of “Pricing Grid”.

          “Administrative Agent”: JPMorgan Chase Bank, N.A., together with its affiliates, as the arranger of the Commitments and as the administrative agent for the Lenders under this Agreement and the other Loan Documents, together with any of its successors.

          “Affiliate”: as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons

performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

     “Agents”: the collective reference to the Syndication Agent and the Administrative Agent.

          “Aggregate Exposure”: with respect to any Lender at any time, an amount equal to (a) until the Funding Date, the aggregate amount of such Lender’s Commitments at such time and (b) thereafter, the sum of (i) the aggregate then unpaid principal amount of such Lender’s Term Loans and (ii) the amount of such Lender’s Revolving Commitment then in effect or, if the Revolving Commitments have been terminated, the amount of such Lender’s Revolving Extensions of Credit then outstanding.

          “Aggregate Exposure Percentage”: with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the Aggregate Exposure of all Lenders at such time.

          “Agreement”: as defined in the preamble hereto.

          “Applicable Margin”: for each Type of Loan, the rate per annum set forth under the relevant column heading below:

		ABR Loans				Eurodollar Loans
Revolving Loans and Swingline Loans			0.75	%			1.75	%
Term Loans			1.00	%			2.00	%

; provided, that (a) on and after the first Adjustment Date occurring after the Closing Date, the Applicable Margin with respect to Revolving Loans and Swingline Loans will be determined pursuant to the Pricing Grid and (b) if the Total Leverage Ratio exceeds 55%, the Applicable Margin for Term Loans shall be 1.25% for ABR Loans and 2.25% for Eurodollar Loans, effective as of the Adjustment Date.

          “Application”: an application, in such form as the Issuing Lender may specify from time to time, requesting the Issuing Lender to issue a Letter of Credit.

          “Approved Fund”: as defined in Section 10.6(b).

          “Asset Sale”: any Disposition of property or series of related Dispositions of any Borrowing Base Property or any Mortgage Note included in the computation of Borrowing Base Value (excluding any such Disposition permitted by clause (a), (b), (c) or (d) of Section 7.5) that yields gross proceeds to any Group Member (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $500,000.

          “Assignee”: as defined in Section 10.6(b).

          “Assignment and Assumption”: an Assignment and Assumption, substantially in the form of Exhibit D.

          “Available Revolving Commitment”: as to any Revolving Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Revolving Commitment then in effect over (b) such Lender’s Revolving Extensions of Credit then outstanding; provided, that in calculating any Lender’s Revolving Extensions of Credit for the purpose of determining such Lender’s Available Revolving Commitment pursuant to Section 2.8(a), the aggregate principal amount of Swingline Loans then outstanding shall be deemed to be zero.

          “Benefitted Lender”: as defined in Section 10.7(a).

          “Board”: the Board of Governors of the Federal Reserve System of the United States (or any successor).

          “Borrower”: as defined in the preamble hereto.

          “Borrowing Base NOI”: for any fiscal period, the total Adjusted NOI attributable to all Borrowing Base Properties for such period plus the net income attributable to unencumbered Mortgage Notes included in the computation of Borrowing Base Value.

          “Borrowing Base Property”: any Real Property that meets each of the following criteria as of the date of determination, provided that the addition of a Borrowing Base Property after the Closing Date shall also be subject to the requirements of Section 6.10(b):

	1.		Such Real Property is either (i) 100% fee owned or ground leased (with a remaining term of at least 40 years and the ability to qualify for financing under traditional long term financing terms and conditions), by Borrower or a Guarantor or (ii) at least 51% owned by the Borrower, directly or indirectly, so long as the Borrower controls the sale and financing of such Real Property.
	2.		Such Real Property is either (A) improved with one or more completed medical buildings of a type consistent with the Borrower’s business strategy or (B) a Pre-Stabilized Asset.
	3.		(a) The equity interests in the owner of such Real Property are pledged to the Administrative Agent and (b) such Real Property is not directly or indirectly subject to any Lien (other than Liens permitted under clauses (a) through (e) of Section 7.3) or any negative pledge agreement or other agreement that prohibits the creation of a Lien.
	4.		The representations in Section 4.17 are true with respect to such Real Property.
	5.		The buildings and improvements on such Real Property are free of material defects which would materially decrease the value of such Real Property.
	6.		Such Real Property is located in the United States.
	7.		Such Real Property is subject to a triple-net lease with a tenant, such lease is not in default after giving effect to applicable cure periods, and such tenant is not in bankruptcy or similar insolvency proceedings.

     “Borrowing Base Value”: an amount equal to the sum without duplication of (i) the lower of the undepreciated cost or market value of those Borrowing Base Properties that are 100% fee owned or ground leased by the Borrower or a Guarantor, plus (ii) the pro rata share of the lower of the undepreciated cost or market value of those Borrowing Base Properties that are at least 51% owned by the Borrower, directly or indirectly, plus (iii) the book value of unencumbered Mortgage Notes so long as (A) the real estate securing such Mortgage Note meets the criteria for a Borrowing Base Property (other than clauses (1), 3(a) and (7) of the definition thereof) and (B) such Mortgage Note is not more than 60 days past due or otherwise in default after giving effect to applicable cure periods and (C) such Mortgage Note is pledged to the Administrative Agent, plus (iv) unrestricted cash and Cash Equivalents in excess of $10,000,000, all, except for clause (ii), as determined on a consolidated basis in accordance with GAAP;

provided that (A) not more than 30% of Borrowing Base Value shall be attributable to Mortgage Notes, (B) not more than 20% of Borrowing Base Value may be attributable to any single Borrowing Base Property, (C) not more than 15% of Borrowing Base Value may be attributable to single Borrowing Base Properties (other than Pre-Stabilized Assets) which have a Lease Coverage Ratio below 1.5 to 1.0 or Pooled Borrowing Base Properties which have an aggregate Lease Coverage Ratio of 1.5 to 1.0, and any Borrowing Base Property or Pooled Borrowing Base Properties which fail to achieve such Lease Coverage Ratio for more than two consecutive quarters shall cease to be eligible for inclusion in the calculation of Borrowing Base Value, (D) not more than 20% of Borrowing Base Value may be attributable to Pre-Stabilized Assets (other than Credit-Enhanced Pre-Stabilized Assets), (E) not more than 10% of Borrowing Base Value may be attributable to Credit-Enhanced Pre-Stabilized Assets, (F) not more than 30% of Borrowing Base Value may be attributable to Borrowing Base Properties and Mortgage Notes for which a single Person is the tenant or obligor (and where any tenant or obligor is a joint venture in which a Person holds an interest, only such Person’s pro-rata share of the Borrowing Base Value attributable to the Borrowing Base Property or Mortgage Note owned by such joint venture shall be counted against such Person for purposes of this clause (F)), and (G) not more than 15% of Borrowing Base Value may be attributable to Borrowing Base Properties that are not wholly-owned by the Borrower or a Guarantor.

     “Borrowing Date”: any Business Day specified by the Borrower as a date on which the Borrower requests the relevant Lenders to make Loans hereunder.

     “Business”: as defined in Section 4.17(b).

     “Business Day”: a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close, provided, that with respect to notices and determinations in connection with, and payments of principal and interest on, Eurodollar Loans, such day is also a day for trading by and between banks in Dollar deposits in the interbank eurodollar market.

     “Capital Expenditure Reserve”: for any Real Property, the greater of (a) the amount of reserves required to be provided by tenants under either the lease (or related lease documentation) for or the Mortgage Note (or related loan documentation) secured by such Property or (b) $1,500 per medical bed which is in service and located at such Real Property.

     “Capital Expenditures”: for any period, with respect to any Person, the aggregate of all expenditures by such Person and its Subsidiaries for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) that should be capitalized under GAAP on a consolidated balance sheet of such Person and its Subsidiaries.

     “Capital Lease Obligations”: as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.

     “Capital Stock”: any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.

     “Cash Equivalents”: (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000; (c) commercial paper of an issuer rated at least A-1 by Standard & Poor’s Ratings Services (“S&P”) or P-1 by Moody’s Investors Service, Inc. (“Moody’s”), or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; (d) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition; (g) money market mutual or similar funds that invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition; or (h) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.

     “Closing Date”: the date hereof.

          “Code”: the Internal Revenue Code of 1986, as amended from time to time.

          “Collateral”: all property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document.

          “Commitment”: as to any Lender, the sum of the Term Commitment and the Revolving Commitment of such Lender.

          “Commitment Fee Rate”: for any calendar quarter (a) 0.35% per annum if the average daily amount of the aggregate Available Revolving Commitments of all Revolving Lenders for such quarter is greater than 50% of the Total Revolving Commitments and (b) 0.20% per annum if the average daily amount of the aggregate Available Revolving Commitments of all Revolving Lenders for such quarter is less than or equal to 50% of the Total Revolving Commitments.

          “Commonly Controlled Entity”: an entity, whether or not incorporated, that is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group that includes the Borrower and that is treated as a single employer under Section 414 of the Code.

          “Compliance Certificate”: a certificate duly executed by a Responsible Officer substantially in the form of Exhibit B.

          “Conduit Lender”: any special purpose corporation organized and administered by any Lender for the purpose of making Loans otherwise required to be made by such Lender and designated by such Lender in a written instrument; provided, that the designation by any Lender of a Conduit Lender shall not relieve the designating Lender of any of its obligations to fund a Loan under this Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender, and provided, further, that no Conduit Lender shall (a) be entitled to receive any greater amount pursuant to Section 2.18, 2.19, 2.20 or 10.5 than the designating Lender would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender or (b) be deemed to have any Commitment.

          “Confidential Information Memorandum”: the Confidential Information Memorandum dated October, 2007 and furnished to certain Lenders.

          “Continuing Directors”: the directors of Holdings on the Closing Date, and each other director, if, in each case, such other director’s nomination for election or appointment to the board of directors of Holdings is made by, or at the direction of, at least 66-2/3% of the then Continuing Directors.

          “Contractual Obligation”: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

          “Control Investment Affiliate”: as to any Person, any other Person that (a) directly or indirectly, is in control of, is controlled by, or is under common control with, such Person and (b) is organized by such Person primarily for the purpose of making equity or debt investments in one or more companies. For purposes of this definition, “control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

          “Credit-Enhanced Pre-Stabilized Assets”: the Pre-Stabilized Assets consisting of (a) as of the Closing Date, (i) the Real Property known as Paradise Valley, so long as the obligations of the tenant thereunder are guaranteed by Prime Healthcare Services, Inc. and (ii) the Real Property known as Centinela Hospital Medical Center, so long as the obligations of the tenant thereunder are guaranteed by Prime Healthcare Services, Inc. and (b) such other properties and guarantors as are proposed by the Borrower and are reasonably acceptable to the Administrative Agent. Each of such properties shall continue to be treated as a Credit-Enhanced Pre-Stabilized Asset until the earlier of (x) such Real Property individually achieves a Lease Coverage Ratio of at least 1.5 to 1.0, or any group of Pooled Borrowing Base Properties achieves an aggregate Lease Coverage Ratio of 1.5 to 1.0, or (y) the 18-month anniversary of completion of construction, redevelopment or acquisition of such Real Property, provided that such completion shall be evidenced by (i) an officer’s certificate attesting to such completion in the case of construction, or (ii) a valid license to operate and an executed lease in the case of a Pre-Stabilized Asset or an asset that requires redevelopment or repositioning.

          “Default”: any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

          “Disposition”: with respect to any property, any sale, lease, sale and leaseback, assignment, conveyance, transfer, or other disposition thereof. The terms “Dispose” and “Disposed of” shall have correlative meanings.

          “Dollars” and “$”: dollars in lawful currency of the United States.

          “Domestic Subsidiary”: any Subsidiary of the Borrower organized under the laws of any jurisdiction within the United States.

          “EBITDA”: for any fiscal period for any Person, consolidated net income (or loss) before interest, taxes, depreciation and amortization, calculated for such period on a consolidated basis in conformity with GAAP, excluding gains and losses from extraordinary items and non-recurring items or asset sales or write-ups/write-downs or forgiveness of indebtedness.

          “EBITDAR”: for any fiscal period for any Person, consolidated net income (or loss) before interest, taxes, depreciation, amortization and rent or operating lease expense, calculated for such period on a consolidated basis in conformity with GAAP, excluding gains and losses from extraordinary items and non-recurring items or asset sales or write-ups/write-downs or forgiveness of indebtedness.

          “Environmental Laws”: any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any

Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect.

          “ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to time.

          “Eurocurrency Reserve Requirements”: for any day as applied to a Eurodollar Loan, the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including basic, supplemental, marginal and emergency reserves) under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the Federal Reserve System.

          “Eurodollar Base Rate”: with respect to each day during each Interest Period pertaining to a Eurodollar Loan, the rate per annum determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on Page LIBOR 01 of the Reuters screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page LIBOR 01 of the Reuters screen (or otherwise on such screen), the “Eurodollar Base Rate” shall be determined by reference to such other comparable publicly available service for displaying eurodollar rates as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the rate at which the Administrative Agent is offered Dollar deposits at or about 11:00 A.M., New York City time, two Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where its eurodollar and foreign currency and exchange operations are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein.

          “Eurodollar Loans”: Loans the rate of interest applicable to which is based upon the Eurodollar Rate.

          “Eurodollar Rate”: with respect to each day during each Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%):

		Eurodollar Base Rate
		1.00 — Eurocurrency Reserve Requirements

          “Eurodollar Tranche”: the collective reference to Eurodollar Loans the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day).

          “Event of Default”: any of the events specified in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

          “Excluded Foreign Subsidiary”: any Foreign Subsidiary.

          “Excluded Subsidiaries”: the Subsidiaries of the Borrower listed on Schedule ES attached hereto.

          “Existing Credit Agreement”: the Credit Agreement dated as of October 27, 2005 among the Borrower, Merrill Lynch Capital, as Administrative Agent, and the lenders party thereto, as the same may be modified or amended or the provisions thereof waived from time to time.

          “Existing Term Loan Agreement”: the Term Loan Credit Agreement dated as of August 9, 2007 among the Borrower, Holdings, JPMorgan Chase Bank, N.A., as Administrative Agent and the Lenders party thereto, as amended to date.

          “Facility”: each of (a) the Term Commitments and the Term Loans made thereunder (the “Term Facility”) and (b) the Revolving Commitments and the extensions of credit made thereunder (the “Revolving Facility”), and collectively, the “Facilities”.

          “Facility Indebtedness”: the sum of the outstanding principal amount of the Term Loans plus the Total Revolving Extensions of Credit.

          “Facility Interest Expense”: for any fiscal period, the amount of Interest Expense on Facility Indebtedness.

          “Federal Funds Effective Rate”: for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by JPMorgan Chase Bank, N.A. from three federal funds brokers of recognized standing selected by it.

          “Fee Payment Date”: the first Business Day following the last day of each March, June, September and December and the last day of the Revolving Commitment Period.

          “FFO”: for any fiscal period, “funds from operations” of the Group Members as defined in accordance with resolutions adopted by the Board of Governors of the National Association of Real Estate Investment Trusts as in effect from time to time; provided that FFO shall (a) be based on net income after payment of distributions to holders of preferred partnership units in the Borrower and distributions necessary to pay holders of preferred stock of the Company, (b) at all times exclude (i) charges for impairment losses from property sales and (ii) non-recurring charges and (c) from the Closing Date through the first anniversary of the Closing Date, include gains from asset sales.

          “Foreign Subsidiary”: any Subsidiary of the Borrower that is not a Domestic Subsidiary.

          “Funding Date”: the date on which the conditions precedent set forth in Section 5.1 shall have been satisfied.

          “Funding Office”: the office of the Administrative Agent specified in Section 10.2 or such other office as may be specified from time to time by the Administrative Agent as its funding office by written notice to the Borrower and the Lenders.

          “GAAP”: generally accepted accounting principles in the United States as in effect from time to time, except that for purposes of Section 7.1, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the most recent audited financial statements referred to in Section 4.1(b). In the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then the Borrower and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired result that the criteria for evaluating the Borrower’s financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. “Accounting Changes” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC.

          “Governmental Authority”: any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners).

          “Group Members”: the collective reference to Holdings, the Borrower and their respective Subsidiaries.

          “Guarantee and Collateral Agreement”: the Guarantee and Collateral Agreement to be executed and delivered by Holdings, the Borrower and each Subsidiary Guarantor, substantially in the form of Exhibit A.

          “Guarantee Obligation”: as to any Person (the “guaranteeing person”), any obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing Person that guarantees or in effect guarantees, or which is given to induce the creation of a separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the

owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.

          “Guarantors”: the collective reference to Holdings and the Subsidiary Guarantors.

          “Holdings”: as defined in the preamble hereto.

          “Indebtedness”: of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than current trade payables incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under or in respect of acceptances, letters of credit, surety bonds or similar arrangements, (g) the liquidation value of all redeemable preferred Capital Stock of such Person, (h) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (g) above, (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, (j) all obligations under so-called forward equity purchase contracts to the extent such obligations are not payable solely in equity interests, (k) all obligations in respect of any so-called “synthetic lease” (i.e., a lease of property which is treated as an operating lease under GAAP and as a loan for U.S. income tax purposes) and (l) such obligor’s liabilities, contingent or otherwise of the type set forth in (a) through (h) above, under any joint-venture, limited liability company or partnership agreement, and (m) for the purposes of Section 8(e) only, all obligations of such Person in respect of Swap Agreements. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor.

          “Insolvency”: with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

          “Insolvent”: pertaining to a condition of Insolvency.

          “Intellectual Property”: the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

          “Interest Expense”: for any fiscal period, an amount equal to the sum of the following with respect to all Total Indebtedness: (i) total interest expense, accrued in accordance with GAAP, plus (ii) all capitalized interest determined in accordance with GAAP, plus (iii) the amortization of deferred financing costs (including the Borrower’s prorata share thereof for unconsolidated Subsidiaries and joint ventures).

          “Interest Payment Date”: (a) as to any ABR Loan (other than any Swingline Loan), the last day of each March, June, September and December to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any Eurodollar Loan having an Interest Period of three months or less, the last day of such Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer than three months, each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period, (d) as to any Loan (other than any Revolving Loan that is an ABR Loan and any Swingline Loan), the date of any repayment or prepayment made in respect thereof and (e) as to any Swingline Loan, the day that such Loan is required to be repaid.

          “Interest Period”: as to any Eurodollar Loan, (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not later than 11:00 A.M., New York City time, on the date that is three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:

     (i) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

     (ii) the Borrower may not select an Interest Period under a particular Facility that would extend beyond the Revolving Termination Date or the Term Loan Maturity Date, as the case may be;

     (iii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; and

     (iv) the Borrower shall select Interest Periods so as not to require a payment or prepayment of any Eurodollar Loan during an Interest Period for such Loan.

          “Investments”: as defined in Section 7.8.

          “Issuing Lender”: JPMorgan Chase Bank, N.A. or any affiliate thereof, in its capacity as issuer of any Letter of Credit.

          “L/C Commitment”: $15,000,000.

          “L/C Obligations”: at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit that have not then been reimbursed pursuant to Section 3.5.

          “L/C Participants”: the collective reference to all the Revolving Lenders other than the Issuing Lender.

          “Lease Coverage Ratio”: for any Person or property, the ratio of EBITDAR for such Person or property to the aggregate rent payable under leases with respect to such Person or property for any quarter.

          “Lenders”: as defined in the preamble hereto; provided, that unless the context otherwise requires, each reference herein to the Lenders shall be deemed to include any Conduit Lender.

          “Letters of Credit”: as defined in Section 3.1(a).

          “Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing).

          “Loan”: any loan made by any Lender pursuant to this Agreement.

          “Loan Documents”: this Agreement, the Security Documents, the Notes and any amendment, waiver, supplement or other modification to any of the foregoing.

          “Loan Parties”: each Group Member that is a party to a Loan Document.

          “Majority Facility Lenders”: with respect to any Facility, the holders of more than 50% of the aggregate unpaid principal amount of the Term Loans or the Total Revolving Extensions of Credit, as the case may be, outstanding under such Facility (or, in the case of the Revolving Facility, prior to any termination of the Revolving Commitments, the holders of more than 50% of the Total Revolving Commitments).

          “Material Adverse Effect”: a material adverse effect on (a) the business, property, operations or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.

          “Materials of Environmental Concern”: any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.

          “Moody’s”: as defined in the definition of Cash Equivalents.

          “Mortgage Note”: as defined in the definition of Total Asset Value.

          “Mortgage Secured Indebtedness”: the portion of Total Indebtedness which is secured by a mortgage Lien on Real Property.

          “Multiemployer Plan”: a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

          “Net Cash Proceeds”: (a) in connection with any Asset Sale or any Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received), net of attorneys’ fees, accountants’ fees, investment banking fees, amounts required to be applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any asset that is the subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a Security Document) and other customary fees and expenses actually incurred in connection therewith and net of taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements) and (b) in connection with any issuance or sale of Capital Stock or any incurrence of Indebtedness, the cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith.

          “Net Operating Income (“NOI”)”: for any fiscal period, and with respect to any Real Property, the total rental and other operating income from the operation of such Real Property after deducting all expenses and other proper charges incurred in connection with the operation of such Real Property during such fiscal period, including, without limitation, property operating expenses, real estate taxes and bad debt expenses, but before payment or provision for

Total Fixed Charges, income taxes, and depreciation, amortization, and other non-cash expenses, all as determined in accordance with GAAP. In the case of Real Property owned by Affiliates of the Borrower which are not wholly-owned by the Borrower, Net Operating Income shall be reduced by the amount of cash flow of such Affiliate allocated for distribution to the other owners of such Affiliate.

          “Non-Excluded Taxes”: as defined in Section 2.19(a).

          “Non-U.S. Lender”: as defined in Section 2.19(d).

          “Notes”: the collective reference to any promissory note evidencing Loans.

          “Obligations”: the unpaid principal of and interest on (including interest accruing after the maturity of the Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the Borrower to the Administrative Agent or to any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit, or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges and disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise.

          “Other Taxes”: any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

          “Participant”: as defined in Section 10.6(c).

          “PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).

          “Person”: an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

          “Plan”: at a particular time, any employee benefit plan that is covered by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

          “Pooled Borrowing Base Properties”: the Borrowing Base Properties consisting of (a) as of the Closing Date, those properties set forth on Schedule PBBP for which the underlying leases relating to such properties are cross-defaulted, and (b) after the Closing Date,

such other additional or replacement Borrowing Base Properties which are reasonably acceptable to the Administrative Agent for addition to Schedule PBBP from time to time.

          “Pre-Stabilized Asset”: a Real Property or a Mortgage Note secured by a Real Property, in each case where such Real Property is in the process of being constructed, redeveloped or repositioned with one or more medical buildings of a type consistent with the Borrower’s business strategy and is proceeding to completion without undue delay. Any such Real Property or Mortgage Note shall continue to be treated as a Pre-Stabilized Asset until the earlier of (a) such Real Property individually achieves a Lease Coverage Ratio of at least 1.5 to 1.0, or any group of Pooled Borrowing Base Properties of which such Real Property is a part achieves an aggregate Lease Coverage Ratio of 1.5 to 1.0, or (b) the 18-month anniversary of completion of construction, redevelopment or acquisition of such Real Property, provided that such completion shall be evidenced by (i) an officer’s certificate attesting to such completion in the case of construction, or (ii) a valid license to operate and an executed lease in the case of a Pre-Stabilized Asset or an asset that requires redevelopment or repositioning.

          “Pricing Grid”: the table set forth below.

Total Leverage Ratio		Applicable Margin for				Applicable Margin for
		Revolving Loans which are				Revolving Loans which are
		Eurodollar Loans				ABR Loans
<40%			1.50	%			0.50	%
³40% and <50%			1.75	%			0.75	%
³50% and <55%			2.00	%			1.00	%
³55%			2.25	%			1.25	%

          For the purposes of the Pricing Grid, changes in the Applicable Margin resulting from changes in the Total Leverage Ratio shall become effective on the date (the “Adjustment Date”) that is three Business Days after the date on which financial statements are delivered to the Lenders pursuant to Section 6.1 and shall remain in effect until the next change to be effected pursuant to this paragraph. If any financial statements referred to above are not delivered within the time periods specified in Section 6.1, then, until the date that is three Business Days after the date on which such financial statements are delivered, the highest rate set forth in each column of the Pricing Grid shall apply. In addition, at all times while an Event of Default shall have occurred and be continuing, the highest rate set forth in each column of the Pricing Grid shall apply. Each determination of the Total Leverage Ratio pursuant to the Pricing Grid shall be made in a manner consistent with the determination thereof pursuant to Section 7.1.

          “Projections”: as defined in Section 6.2(b).