10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

 

 

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

For the quarterly period ended June 30, 2014

OR

 

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

For the transition period from                      to                     

Commission file number 001-32559

 

 

MEDICAL PROPERTIES TRUST, INC.

MPT OPERATING PARTNERSHIP, L.P.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

MARYLAND

DELAWARE

 

20-0191742

20-0242069

(State or other jurisdiction of

incorporation or organization)

 

(I. R. S. Employer

Identification No.)

1000 URBAN CENTER DRIVE, SUITE 501

BIRMINGHAM, AL

  35242
(Address of principal executive offices)   (Zip Code)

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

 

 

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  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

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.

 

Large accelerated filer   x (Medical Properties Trust, Inc. only)    Accelerated filer   ¨
Non-accelerated filer  

x  (MPT Operating Partnership, L.P. only)

      (Do not check if a smaller reporting company)

   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  ¨    No  x

As of August 6, 2014, Medical Properties Trust, Inc. had 173,308,511 shares of common stock, par value $0.001, outstanding.

 

 

 


Table of Contents

EXPLANATORY NOTE

This report combines the Quarterly Reports on Form 10-Q for the three and six months ended June 30, 2014, of Medical Properties Trust, Inc., a Maryland corporation, and MPT Operating Partnership, L.P., a Delaware limited partnership, through which Medical Properties Trust, Inc. conducts substantially all of its operations. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” “our company,” “Medical Properties,” “MPT,” or “the company” refer to Medical Properties Trust, Inc. together with its consolidated subsidiaries, including MPT Operating Partnership, L.P. Unless otherwise indicated or unless the context requires otherwise, all references to “our operating partnership” or “the operating partnership” refer to MPT Operating Partnership, L.P. together with its consolidated subsidiaries.


Table of Contents

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

AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED June 30, 2014

Table of Contents

 

     Page  

PART I — FINANCIAL INFORMATION

     3   

Item 1 Financial Statements

     3   

Medical Properties Trust, Inc. and Subsidiaries

  

Condensed Consolidated Balance Sheets at June 30, 2014 and December 31, 2013

     3   

Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended June  30, 2014 and 2013

     4   

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months and Six Months Ended June 30, 2014 and 2013

     5   

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013

     6   

MPT Operating Partnership, L.P. and Subsidiaries

  

Condensed Consolidated Balance Sheets at June 30, 2014 and December 31, 2013

     7   

Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended June  30, 2014 and 2013

     8   

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months and Six Months Ended June 30, 2014 and 2013

     9   

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013

     10   

Medical Properties Trust, Inc. and MPT Operating Partnership, L.P.

  

Notes to Condensed Consolidated Financial Statements

     11   

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

     35   

Item 3 Quantitative and Qualitative Disclosures about Market Risk

     43   

Item 4 Controls and Procedures

     44   

PART II — OTHER INFORMATION

     44   

Item 1 Legal Proceedings

     44   

Item 1A Risk Factors

     44   

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

     44   

Item 3 Defaults Upon Senior Securities

     44   

Item 4 Mine Safety Disclosures

     44   

Item 5 Other Information

     45   

Item 6 Exhibits

     45   

SIGNATURE

     46   

INDEX TO EXHIBITS

     47   

 

2


Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

 

     June 30, 2014     December 31,
2013
 
(In thousands, except per share amounts)    (Unaudited)     (Note 2)  

Assets

    

Real estate assets

    

Land, buildings and improvements, and intangible lease assets

   $ 2,026,259      $ 1,865,455   

Mortgage loans

     385,100        388,756   

Net investment in direct financing leases

     434,311        431,024   
  

 

 

   

 

 

 

Gross investment in real estate assets

     2,845,670        2,685,235   

Accumulated depreciation and amortization

     (178,262     (159,776
  

 

 

   

 

 

 

Net investment in real estate assets

     2,667,408        2,525,459   

Cash and cash equivalents

     197,023        45,979   

Interest and rent receivables

     46,353        58,565   

Straight-line rent receivables

     51,193        45,829   

Other loans

     140,470        160,990   

Other assets

     87,597        67,873   
  

 

 

   

 

 

 

Total Assets

   $ 3,190,044      $ 2,904,695   
  

 

 

   

 

 

 

Liabilities and Equity

    

Liabilities

    

Debt, net

   $ 1,640,353      $ 1,421,681   

Accounts payable and accrued expenses

     84,231        94,290   

Deferred revenue

     27,425        24,114   

Lease deposits and other obligations to tenants

     25,081        20,402   
  

 

 

   

 

 

 

Total liabilities

     1,777,090        1,560,487   

Equity

    

Preferred stock, $0.001 par value. Authorized 10,000 shares; no shares outstanding

     —          —     

Common stock, $0.001 par value. Authorized 250,000 shares; issued and outstanding — 171,551 shares at June 30, 2014 and 161,310 shares at December 31, 2013

     171        161   

Additional paid in capital

     1,750,809        1,618,054   

Distributions in excess of net income

     (330,075     (264,804

Accumulated other comprehensive loss

     (7,689     (8,941

Treasury shares, at cost

     (262     (262
  

 

 

   

 

 

 

Total Equity

     1,412,954        1,344,208   
  

 

 

   

 

 

 

Total Liabilities and Equity

   $ 3,190,044      $ 2,904,695   
  

 

 

   

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

3


Table of Contents

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

 

     For the Three Months
Ended June 30,
    For the Six Months
Ended June 30,
 
(In thousands, except per share amounts)    2014     2013     2014     2013  

Revenues

        

Rent billed

   $ 45,928      $ 31,024      $ 88,889      $ 62,528   

Straight-line rent

     3,178        2,777        5,366        5,468   

Income from direct financing leases

     12,263        9,230        24,479        17,986   

Interest and fee income

     15,191        14,093        30,915        28,755   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     76,560        57,124        149,649        114,737   

Expenses

        

Real estate depreciation and amortization

     12,442        8,643        26,131        17,112   

Impairment charges

     29,631        —          50,128        —     

Property-related

     (38     649        700        1,062   

General and administrative

     8,206        7,111        17,165        14,877   

Acquisition expenses

     2,535        2,088        3,047        2,278   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     52,776        18,491        97,171        35,329   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     23,784        38,633        52,478        79,408   

Other income (expense)

        

Other income (expense)

     19        (22     (30     (248

Earnings from equity and other interests

     686        1,176        905        1,668   

Interest expense

     (24,362     (14,641     (45,974     (30,065

Debt refinancing costs

     (290     —          (290     —     

Income tax benefit (expense)

     (40     (115     16        (167
  

 

 

   

 

 

   

 

 

   

 

 

 

Net other expense

     (23,987     (13,602     (45,373     (28,812
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     (203     25,031        7,105        50,596   

Income (loss) from discontinued operations

     —          2,374        (2     3,018   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (203     27,405        7,103        53,614   

Net income attributable to non-controlling interests

     —          (57     (65     (110
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to MPT common stockholders

   $ (203   $ 27,348      $ 7,038      $ 53,504   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share — basic

        

Income (loss) from continuing operations attributable to MPT common stockholders

   $ —        $ 0.16      $ 0.04      $ 0.35   

Income (loss) from discontinued operations attributable to MPT common stockholders

     —         0.02        —         0.02   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to MPT common stockholders

   $ —        $ 0.18      $ 0.04      $ 0.37   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share — diluted

        

Income (loss) from continuing operations attributable to MPT common stockholders

   $ —        $ 0.16      $ 0.04      $ 0.34   

Income (loss) from discontinued operations attributable to MPT common stockholders

     —         0.02        —          0.02   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to MPT common stockholders

   $ —        $ 0.18      $ 0.04      $ 0.36   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

        

Basic

     171,718        149,509        167,846        144,928   

Diluted

     172,369        151,056        168,459        146,291   

Dividends declared per common share

   $ 0.21      $ 0.20      $ 0.42      $ 0.40   

See accompanying notes to condensed consolidated financial statements.

 

4


Table of Contents

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

 

     For the Three Months
Ended June 30,
    For the Six Months
Ended June 30,
 
(In thousands)    2014     2013     2014     2013  

Net income (loss)

   $ (203   $ 27,405      $ 7,103      $ 53,614   

Other comprehensive income:

        

Unrealized gain on interest rate swap

     486        1,779        1,206        2,606   

Foreign currency translation gain

     73        —          46        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     356        29,184        8,355        56,220   

Comprehensive income attributable to non-controlling interests

     —          (57     (65     (110
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to MPT common stockholders

   $ 356      $ 29,127      $ 8,290      $ 56,110   
  

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

5


Table of Contents

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

     For the Six Months
Ended June 30,
 
     2014     2013  
     (In thousands)  

Operating activities

    

Net income

   $ 7,103      $ 53,614   

Adjustments to reconcile net income to net cash provided by operating activities

    

Depreciation and amortization

     26,715        17,927   

Straight-line rent revenue

     (6,236     (5,407

Straight-line rent write-off

     950        —     

Impairment charges

     50,128        —     

Direct financing lease interest accretion

     (3,256     (2,498

Share-based compensation

     4,433        4,204   

Gain on sale of real estate

     —          (2,054

Amortization and write-off of deferred financing costs and debt discount

     2,484        1,752   

Other adjustments

     (8,486     4,605   

Changes in:

    

Interest and rent receivable

     (9,064     (8,943

Accounts payable and accrued expenses

     (14,516     (6,955
  

 

 

   

 

 

 

Net cash provided by operating activities

     50,255        56,245   

Investing activities

    

Cash paid for acquisitions and other related investments

     (115,000     (75,000

Principal received on loans receivable

     6,829        3,293   

Net proceeds from sale of real estate

     —          18,409   

Investment in loans receivable

     (5,601     (1,300

Construction in progress and other

     (55,159     (33,171
  

 

 

   

 

 

 

Net cash used for investing activities

     (168,931     (87,769

Financing activities

    

Revolving credit facilities, net

     (105,000     (85,000

Additions to term debt

     425,000        —     

Payments of term debt

     (100,132     (11,124

Distributions paid

     (71,809     (57,846

Proceeds from sale of common shares, net of offering costs

     128,332        172,853   

Lease deposits and other obligations to tenants

     4,910        1,516   

Debt issuance costs paid and other financing activities

     (11,496     (114
  

 

 

   

 

 

 

Net cash provided by financing activities

     269,805        20,285   
  

 

 

   

 

 

 

Increase in cash and cash equivalents for period

     151,129        (11,239

Effect of exchange rate changes

     (85     —     

Cash and cash equivalents at beginning of period

     45,979        37,311   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 197,023      $ 26,072   
  

 

 

   

 

 

 

Interest paid

   $ 41,907      $ 29,114   

Supplemental schedule of non-cash financing activities:

    

Distributions declared, unpaid

   $ 36,277      $ 30,081   

See accompanying notes to condensed consolidated financial statements.

 

6


Table of Contents

MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

 

     June 30,
2014
    December 31,
2013
 
(In thousands)    (Unaudited)     (Note 2)  

Assets

    

Real estate assets

    

Land, buildings and improvements, and intangible lease assets

   $ 2,026,259      $ 1,865,455   

Mortgage loans

     385,100        388,756   

Net investment in direct financing leases

     434,311        431,024   
  

 

 

   

 

 

 

Gross investment in real estate assets

     2,845,670        2,685,235   

Accumulated depreciation and amortization

     (178,262     (159,776
  

 

 

   

 

 

 

Net investment in real estate assets

     2,667,408        2,525,459   

Cash and cash equivalents

     197,023        45,979   

Interest and rent receivables

     46,353        58,565   

Straight-line rent receivables

     51,193        45,829   

Other loans

     140,470        160,990   

Other assets

     87,597        67,873   
  

 

 

   

 

 

 

Total Assets

   $ 3,190,044      $ 2,904,695   
  

 

 

   

 

 

 

Liabilities and Capital

    

Liabilities

    

Debt, net

   $ 1,640,353      $ 1,421,681   

Accounts payable and accrued expenses

     48,055        58,538   

Deferred revenue

     27,425        24,114   

Lease deposits and other obligations to tenants

     25,081        20,402   

Payable due to Medical Properties Trust, Inc.

     35,786        35,362   
  

 

 

   

 

 

 

Total liabilities

     1,776,700        1,560,097   

Capital

    

General Partner — issued and outstanding — 1,710 units at June 30, 2014 and 1,608 units at December 31, 2013

     14,218        13,541   

Limited Partners:

    

Common units — issued and outstanding — 169,841 units at June 30, 2014 and 159,702 units at December 31, 2013

     1,406,815        1,339,998   

LTIP units — issued and outstanding — 363 units at June 30, 2014 and 292 units at December 31, 2013

     —          —     

Accumulated other comprehensive loss

     (7,689     (8,941
  

 

 

   

 

 

 

Total capital

     1,413,344        1,344,598   
  

 

 

   

 

 

 

Total Liabilities and Capital

   $ 3,190,044      $ 2,904,695   
  

 

 

   

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

7


Table of Contents

MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

 

     For the Three Months
Ended June 30,
    For the Six Months
Ended June 30,
 
(In thousands, except per unit amounts)    2014     2013     2014     2013  

Revenues

        

Rent billed

   $ 45,928      $ 31,024      $ 88,889      $ 62,528   

Straight-line rent

     3,178        2,777        5,366        5,468   

Income from direct financing leases

     12,263        9,230        24,479        17,986   

Interest and fee income

     15,191        14,093        30,915        28,755   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     76,560        57,124        149,649        114,737   

Expenses

        

Real estate depreciation and amortization

     12,442        8,643        26,131        17,112   

Impairment charges

     29,631        —          50,128        —     

Property-related

     (38     649        700        1,062   

General and administrative

     8,206        7,111        17,165        14,877   

Acquisition expenses

     2,535        2,088        3,047        2,278   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     52,776        18,491        97,171        35,329   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     23,784        38,633        52,478        79,408   

Other income (expense)

        

Interest and other income (expense)

     19        (22     (30     (248

Earnings from equity and other interests

     686        1,176        905        1,668   

Interest expense

     (24,362     (14,641     (45,974     (30,065

Debt refinancing costs

     (290     —          (290     —     

Income tax benefit (expense)

     (40     (115     16        (167
  

 

 

   

 

 

   

 

 

   

 

 

 

Net other expense

     (23,987     (13,602     (45,373     (28,812
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     (203     25,031        7,105        50,596   

Income (loss) from discontinued operations

     —          2,374        (2     3,018   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (203     27,405        7,103        53,614   

Net income (loss) attributable to non-controlling interests

     —          (57     (65     (110
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to MPT Operating Partnership partners

   $ (203   $ 27,348      $ 7,038      $ 53,504   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per units — basic

        

Income (loss) from continuing operations attributable to MPT Operating Partnership partners

   $ —        $ 0.16      $ 0.04      $ 0.35   

Income (loss) from discontinued operations attributable to MPT Operating Partnership partners

     —          0.02        —          0.02   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to MPT Operating Partnership partners

   $ —        $ 0.18      $ 0.04      $ 0.37   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per units — diluted

        

Income (loss) from continuing operations attributable to MPT Operating Partnership partners

   $ —        $ 0.16      $ 0.04      $ 0.34   

Income (loss) from discontinued operations attributable to MPT Operating Partnership partners

     —          0.02        —          0.02   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to MPT Operating Partnership partners

   $ —        $ 0.18      $ 0.04      $ 0.36   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average units outstanding:

        

Basic

     171,718        149,509        167,846        144,928   

Diluted

     172,369        151,056        168,459        146,291   

Dividends declared per unit

   $ 0.21      $ 0.20      $ 0.42      $ 0.40   

See accompanying notes to condensed consolidated financial statements.

 

8


Table of Contents

MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

 

     For the Three Months
Ended June 30,
    For the Six Months
Ended June 30,
 
(In thousands)    2014     2013     2014     2013  

Net income (loss)

   $ (203   $ 27,405      $ 7,103      $ 53,614   

Other comprehensive income:

        

Unrealized gain on interest rate swap

     486        1,779        1,206        2,606   

Foreign currency translation gain

     73        —          46        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     356        29,184        8,355        56,220   

Comprehensive income attributable to non-controlling interests

     —          (57     (65     (110
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to MPT Operating Partnership partners

   $ 356      $ 29,127      $ 8,290      $ 56,110   
  

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

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MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

     For the Six Months
Ended June 30,
 
     2014     2013  
     (In thousands)  

Operating activities

    

Net income

   $ 7,103      $ 53,614   

Adjustments to reconcile net income to net cash provided by operating activities

    

Depreciation and amortization

     26,715        17,927   

Straight-line rent revenue

     (6,236     (5,407

Straight-line rent write-off

     950        —     

Impairment Charges

     50,128        —     

Direct financing lease interest accretion

     (3,256     (2,498

Share-based compensation

     4,433        4,204   

Gain on sale of real estate

     —          (2,054

Amortization and write-off of deferred financing costs and debt discount

     2,484        1,752   

Other adjustments

     (8,486     4,605   

Changes in:

    

Interest and rent receivable

     (9,064     (8,943

Accounts payable and accrued expenses

     (14,516     (6,955
  

 

 

   

 

 

 

Net cash provided by operating activities

     50,255        56,245   

Investing activities

    

Cash paid for acquisitions and other related investments

     (115,000     (75,000

Principal received on loans receivable

     6,829        3,293   

Proceeds from sale of real estate

     —          18,409   

Investment in loans receivable

     (5,601     (1,300

Construction in progress and other

     (55,159     (33,171
  

 

 

   

 

 

 

Net cash used for investing activities

     (168,931     (87,769

Financing activities

    

Revolving credit facilities, net

     (105,000     (85,000

Additions to term debt

     425,000        —     

Payments of term debt

     (100,132     (11,124

Distributions paid

     (71,809     (57,846

Proceeds from sale of units, net of offering costs

     128,332        172,853   

Lease deposits and other obligations to tenants

     4,910        1,516   

Debt issuance costs paid and other financing activities

     (11,496     (114
  

 

 

   

 

 

 

Net cash provided by financing activities

     269,805        20,285   
  

 

 

   

 

 

 

Increase in cash and cash equivalents for period

     151,129        (11,239

Effect of exchange rate changes

     (85     —     

Cash and cash equivalents at beginning of period

     45,979        37,311   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 197,023      $ 26,072   
  

 

 

   

 

 

 

Interest paid

   $ 41,907      $ 29,114   

Supplemental schedule of non-cash financing activities:

    

Distributions declared, unpaid

   $ 36,277      $ 30,081   

See accompanying notes to condensed consolidated financial statements.

 

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

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization

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

We have operated 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 entities which we elected to be treated as taxable REIT subsidiaries (“TRSs”). Our TRSs are subject to both U.S. 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 also make mortgage and other loans to operators of similar facilities. In addition, we may obtain profits or equity interests in our tenants, from time to time, in order to enhance our overall return. We manage our business as a single business segment. All of our properties are located in the United States and Europe—we made our first acquisition outside the United States in the fourth quarter of 2013.

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 six month periods ended June 30, 2014, are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. The condensed consolidated balance sheet at December 31, 2013 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.

For information about significant accounting policies, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013. During the six months ended June 30, 2014, there were no material changes to these policies, except as noted below with respect to discontinued operations.

Reclassifications: Certain reclassifications have been made to the condensed consolidated financial statements to conform to the 2014 consolidated financial statement presentation. These reclassifications had no impact on stockholders’ equity or net income.

Recent Accounting Developments: In 2014, the FASB issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which raises the threshold for disposals to qualify as discontinued operations. A discontinued operation is defined as: (1) a component of an entity or group of components that has been disposed of or classified as held for sale and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results; or (2) an acquired business that is classified as held for sale on the acquisition date. ASU 2014-08 also requires additional disclosures regarding discontinued operations, as well as material disposals that do not meet the definition of discontinued operations. We adopted ASU 2014-08 for the quarter ended March 31, 2014. The application of this guidance is prospective from the date of adoption and should result in our not generally having to reflect single property disposals as discontinued operations in the future.

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In adopting ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. Additionally, this guidance requires improved disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning after December 15, 2016, and early adoption is not permitted. We are currently in the process of evaluating the impact the adoption of ASU 2014-09 will have on our financial position and results of operations.

 

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Variable Interest Entities

At June 30, 2014, we had loans to and/or equity investments in several variable interest entities (“VIEs”) for which we are not the primary beneficiary. The carrying value and classification of the related assets and maximum exposure to loss as a result of our involvement with these VIEs are presented below at June 30, 2014 (in thousands):

 

                                                                          

VIE Type

   Maximum Loss
Exposure(1)
    

Asset Type

Classification

   Carrying
Amount(2)
 

Loans, net

   $ 248,794       Mortgage and other loans    $ 208,509   

Equity investments

   $ 18,785       Other assets    $ 5,141   

 

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(1) Our maximum loss exposure related to loans with VIEs represents our current aggregate gross carrying value of the loan plus accrued interest and any other related assets (such as rent receivables), less any liabilities. Our maximum loss exposure related to our equity investment in VIEs represents the current carrying values of such investment plus any other related assets (such as rent receivables) less any liabilities.
(2) Carrying amount reflects the net book value of our loan or equity interest only in the VIE.

For the VIE types above, we do not consolidate the VIE because we do not have the ability to control the activities (such as the day-to-day healthcare operations of our borrower or investee) that most significantly impact the VIE’s economic performance. As of June 30, 2014, we were not required to provide financial support through a liquidity arrangement or otherwise to our unconsolidated VIEs, including circumstances in which it could be exposed to further losses (e.g., cash short falls).

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

See Note 3 for additional description of the nature, purpose and activities of our more significant VIEs and interests therein.

3. Real Estate and Lending Activities

Acquisitions

2014 Activity

On March 31, 2014, we acquired a general acute care hospital and an adjacent parcel of land for an aggregate purchase price of $115 million from a joint venture of LHP Hospital Group, Inc. and Hackensack University Medical Center Mountainside. The facility was simultaneously leased back to the seller under a lease with a 15-year initial term with a 3-year extension option, followed by a further 12-year extension option at fair market value. The lease provides for consumer price-indexed annual rent increases, subject to a specified floor and ceiling. The lease includes a customary right of first refusal with respect to a subsequent proposed sale of the facility.

2013 Activity

On June 11, 2013, we acquired the real estate of two acute care hospitals in Kansas from affiliates of Prime Healthcare Services, Inc. (“Prime”) for a combined purchase price of $75 million and leased the facilities to the operator under a master lease agreement. The master lease is for 10 years and contains two renewal options of five years each, and the rent increases annually based on the greater of the consumer price-index or 2%. This lease is accounted for as a direct financing lease (“DFL”).

As part of these acquisitions, we acquired the following assets:

 

     2014      2013  

Assets Acquired

     

Land

   $ 8,515       $ —     

Building

     99,602         —     

Intangible lease assets — subject to amortization (weighted average useful life 15 years)

     6,883         —     

Net investments in direct financing leases

     —           75,000   
  

 

 

    

 

 

 

Total assets acquired

   $ 115,000       $ 75,000   
  

 

 

    

 

 

 

The purchase price allocation attributable to the facility acquired in the 2014 first quarter along with the facilities acquired from IASIS and RHM in the 2013 third and fourth quarters is preliminary as we are waiting on additional information to perform our final analysis. When all relevant information is obtained, and if changes to our provisional purchase price allocations are needed, we will retrospectively adjust to reflect the new information obtained about the facts and circumstances that existed as of the respective acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.

 

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Development Activities

During the first six months of 2014, we completed construction and began recording rental income on the following facilities:

 

    Northern Utah Rehabilitation Hospital – This $19 million inpatient rehabilitation facility located in South Ogden, Utah is leased to Ernest pursuant to the 2012 master lease.

 

    First Choice ER (a subsidiary of Adeptus Health) – We completed 8 acute care facilities for this tenant during 2014 totaling approximately $29.5 million, including Nacogdoches, Alvin, Brodie, Firestone, Frisco, Briar Forest, North Gate and Cedar Hill. These facilities are leased pursuant to the master lease entered into in 2013.

During the first six months of 2014, we began construction on two additional facilities pursuant to the master funding and development agreement with First Choice ER.

In regards to our Twelve Oaks facility, approximately 55% of this facility is being occupied, pursuant to a 15 year lease.

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

 

Property

 

Location

 

Property Type

  Operator   Commitment     Costs Incurred
as of
June 30,
2014
    Estimated
Completion
Date
 

Oakleaf Surgical Hospital

  Altoona, WI   Acute Care Hospital     National Surgical
Hospitals
  $ 33,500      $ 28,669        3Q 2014   

First Choice ER - Allen

  Allen, TX   Acute Care Hospital   Adeptus Health     6,187        3,365        3Q 2014   

First Choice ER - Broomfield

  Broomfield, CO     Acute Care Hospital   Adeptus Health     5,238        2,515        3Q 2014   

First Choice ER - Spring

  Spring, TX   Acute Care Hospital   Adeptus Health     5,804        2,676        3Q 2014   

First Choice ER - Fountain

  Fountain, CO   Acute Care Hospital   Adeptus Health     6,194        3,380        3Q 2014   

First Choice ER - Missouri City (Sienna)

  Houston, TX   Acute Care Hospital   Adeptus Health     5,394        3,565        3Q 2014   

First Choice ER - Pearland

  Pearland, TX   Acute Care Hospital   Adeptus Health     5,691        2,331        4Q 2014   

First Choice ER - Thornton

  Thornton, CO   Acute Care Hospital   Adeptus Health     6,029        2,652        4Q 2014   

First Choice ER - Missouri City (Dulles)

  Houston, TX   Acute Care Hospital   Adeptus Health     5,693        2,516        4Q 2014   

First Choice ER - Commerce City

  Denver, CO   Acute Care Hospital   Adeptus Health     5,371        707        4Q 2014   
       

 

 

   

 

 

   
        $ 85,101      $ 52,376     
       

 

 

   

 

 

   

Disposals

In April 2013, we sold two long-term acute care hospitals, Summit Hospital of Southeast Arizona and Summit Hospital of Southeast Texas, for total proceeds of $18.5 million, resulting in a gain of $2.1 million.

 

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Leasing Operations

All of our leases are accounted for as operating leases except for the master lease of 13 Ernest facilities and five Prime facilities which are accounted for as direct financing leases (“DFLs”). The components of our net investment in DFLs consisted of the following (dollars in thousands):

 

     As of June 30,
2014
    As of December 31,
2013
 

Minimum lease payments receivable

   $ 1,626,490      $ 1,647,567   

Estimated residual values

     211,888        211,863   

Less: Unearned income

     (1,404,067 )     (1,428,406 )
  

 

 

   

 

 

 

Net investment in direct financing leases

   $ 434,311      $ 431,024   
  

 

 

   

 

 

 

Monroe Facility

As of June 30, 2014 and December 31, 2013, our net investment (exclusive of the related real estate) in Monroe was as follows:

 

     As of June 30,
2014
    As of December 31,
2013
 

Loans

   $ 32,943      $ 31,341   

Less: Loan impairment reserve

     (32,943     (12,000
  

 

 

   

 

 

 

Loans, net

     —          19,341   

Interest, rent and other receivables

     —          20,972   
  

 

 

   

 

 

 

Net investment

   $ —        $ 40,313   
  

 

 

   

 

 

 

The current operator of our Monroe facility has not made all payments required by the real estate lease agreement and working capital loan agreement, and we have deemed these assets to be impaired. During 2010, we recorded a $12 million impairment charge on the working capital loan and fully reserved for unbilled straight-line rent receivables as well. Since 2010, we have not recognized any interest income on the Monroe loan and have not recorded any unbilled rent revenue. In addition, we stopped recording billed rental revenue on April 1, 2013.

During the first quarter of 2014, we executed a non-binding letter of intent with a third party with respect to a restructuring of our investment in the form of a new joint venture that would acquire the real estate of our Monroe facility and related assets in exchange for a combination of cash and promissory notes along with the potential of additional cash, if any, to be generated from our share in this new joint venture’s operations. Based on those new developments and the fair value of the loan’s underlying collateral at that time (using Level 2 inputs), we recorded an approximate $20.5 million impairment charge in the 2014 first quarter. Subsequent to the 2014 first quarter, we terminated this non-binding letter of intent.

In July 2014, we entered into an agreement with a third-party to manage the Monroe Hospital. In addition, we entered into a non-binding letter of intent with this same party to lease the facility for initial cash rents of $2.1 million. These agreements contemplate a bankruptcy filing by the existing tenant and do not provide us with any recovery on the past due receivables at June 30, 2014. Based on these new developments and the fair value of our real estate and the underlying collateral of our loan (using Level 2 inputs), we recorded a $26.5 million impairment charge in the 2014 second quarter. This charge effectively reduces our overall investment in Monroe to the fair value of the underlying real estate, or $25 million, which we believe is fully recoverable at June 30, 2014.

 

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Bucks facility

On May 20, 2014, the tenant of our Bucks facility gave notice of their intent to exercise the lease’s purchase option. Pursuant to this purchase option, the tenant acquired the facility on August 6, 2014 for $35 million. At June 30, 2014, we met the criteria to classify this facility as an Asset Held for Sale; thus, we wrote down this facility to fair market value less cost to sell, resulting in a $3.1 million real estate impairment charge. The sale of the Bucks facility is not a strategic shift in our operations, and therefore the results of the Bucks operations have not been reclassified as discontinued operations.

Florence facility

On March 6, 2013, the tenant of our facility in Phoenix, Arizona filed for Chapter 11 bankruptcy; but continues to pay rent. We have a letter of credit for approximately $1.2 million to cover any rent and other monetary payments not made. Although no assurances can be made that we will not have any impairment charges in the future, we believe our real estate investment in Florence of approximately $28 million at June 30, 2014, is fully recoverable.

Gilbert facility

In the first quarter of 2014, the tenant of our facility in Gilbert, Arizona filed for Chapter 11 bankruptcy; we sent notice of termination of the lease prior to the bankruptcy filing. As a result of the lease terminating, we recorded a charge of approximately $1 million to reserve against the straight-line rent receivables. In addition, we accelerated the amortization of the related lease intangible asset resulting in $1.1 million of additional expense in the 2014 first quarter. At June 30, 2014, we have $0.3 million of outstanding receivables, which we believe are collectible. Although no assurances can be made that we will not have any impairment charges or write-offs of receivables in the future, we believe our real estate investment in Gilbert of approximately $14 million at June 30, 2014, is fully recoverable.

Loans

The following is a summary of our loans (in thousands):

 

     As of
June 30,
2014
     As of
December 31,
2013
 

Mortgage loans

   $ 385,100       $ 388,756   

Acquisition loans

     108,772         109,655   

Working capital and other loans

     28,346         47,983   

Convertible loan

     3,352         3,352   
  

 

 

    

 

 

 
   $ 525,570       $ 549,746   
  

 

 

    

 

 

 

The decrease in our working capital and other loans is primarily due to the impairment charge incurred on our Monroe loan during 2014 – see Note 3, Leasing Operations for further discussion.

On March 1, 2012, pursuant to our convertible note agreement, we converted $1.7 million of our $5.0 million convertible note into a 9.9% equity interest in the operator of our Hoboken University Medical Center facility. At June 30, 2014, $3.3 million remains outstanding on the convertible note, and we retain the option, subject to regulatory approvals, to convert this remainder into 15.1% of equity interest in the operator.

Concentrations of Credit Risk

For the three months ended June 30, 2014 and 2013, revenue from affiliates of Prime (including rent and interest from mortgage loans) accounted for 27.9% and 32.5%, respectively, of total revenue. For the six months ended June 30, 2014 and 2013, revenue from affiliates of Prime (including rent and interest from mortgage loans) accounted for 28.5% and 31.9%, respectively, of total revenue. From an investment concentration perspective, Prime represented 22.3% and 24.5% of our total assets at June 30, 2014 and December 31, 2013, respectively.

For the three months ended June 30, 2014 and 2013, revenue from affiliates of Ernest (including rent and interest from mortgage and acquisition loans) accounted for 18.2% and 20.4%, respectively, of total revenue. For the six months ended June 30, 2014 and 2013, revenue from affiliates of Ernest (including rent and interest from mortgage and acquisition loans) accounted for 18.9% and 20.5%, respectively, of total revenue. From an investment concentration perspective, Ernest represented 15.1% and 15.9% of our total assets at June 30, 2014 and December 31, 2013, respectively.

 

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On an individual property basis, we had no investment of any single property greater than 4% of our total assets as of June 30, 2014.

From a geographic perspective, investments located in California represented 17.1% of our total assets at June 30, 2014, down from 18.7% at December 31, 2013. Investments located in Texas represented 21.3% of our total assets at June 30, 2014, down slightly from 22.7% at December 31, 2013. In addition, we further expanded our portfolio into Europe with the RHM portfolio acquisition in 2013, which represents less than 8% of total assets at June 30, 2014.

4. Debt

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

 

     As of June 30,
2014
    As of December 31,
2013
 
     Balance      Interest Rate     Balance      Interest Rate  

Revolving credit facility

   $ —           Variable      $ 105,000         Variable   

2006 Senior Unsecured Notes

     125,000         Various        125,000         Various   

2011 Senior Unsecured Notes

     450,000         6.875     450,000         6.875

2012 Senior Unsecured Notes:

          

Principal amount

     350,000         6.375     350,000         6.375

Unamortized premium

     2,697         —          2,873        —     
  

 

 

      

 

 

    
     352,697           352,873      

2013 Senior Unsecured Notes (A)

     273,840        5.750     274,860         5.750

2014 Senior Unsecured Notes

     300,000        5.500     —           —     

Term loans

     138,816         Various        113,948         Various   
  

 

 

      

 

 

    
   $ 1,640,353         $ 1,421,681      
  

 

 

      

 

 

    

 

(A) These notes are Euro-denominated and reflect the exchange rate at June 30, 2014 and December 31, 2013, respectively.

As of June 30, 2014, principal payments due for our debt (which exclude the effects of any premiums recorded) are as follows (in thousands):

 

2014

   $ 134   

2015

     283   

2016

     125,298   

2017

     320   

2018

     12,781   

Thereafter

     1,498,840   
  

 

 

 

Total

   $ 1,637,656   
  

 

 

 

Credit Facility

On June 19, 2014, we closed on a new $900 million senior unsecured credit facility (the “Credit Facility”). The Credit Facility is comprised of a $775 million senior unsecured revolving credit facility (the “Revolving credit facility”) and a $125 million senior unsecured term loan facility (the “Term Loan”) .The Credit Facility has an accordion feature that allows us to expand the size of the facility by up to $250 million through increases to the Revolving credit facility, Term Loan, both or as a separate term loan tranche. The Credit Facility replaces our existing $400 million unsecured revolving credit facility and $100 million unsecured term loan. This transaction resulted in a refinancing charge of approximately $0.3 million in the 2014 second quarter.

The Revolving credit facility matures in June 2018 and can be extended for an additional 12 months at our option. The Revolving credit facility’s interest rate is (1) the higher of the “prime rate”, federal funds rate plus 0.50%, or Eurodollar rate plus 1.00%, plus a spread initially set at 1.00%, but that is adjustable from 0.70% to 1.25% based on current total leverage, or (2) LIBOR

 

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plus a spread initially set at 2.00%, but that is adjustable from 1.70% to 2.25% based on current total leverage. The pricing grid for the Revolving credit facility may be further adjusted subject to an investment grade rating being obtained. In addition to interest expense, we are required to pay a quarterly commitment fee on the undrawn portion of the revolving credit facility, ranging from 0.25% to 0.35% per year. At June 30, 2014, we had no borrowings outstanding on the Revolving credit facility.

The Term Loan matures in June 2019. The Term Loan’s interest rate is (1) the higher of the “prime rate”, federal funds rate plus 0.50%, or Eurodollar rate plus 1.00%, plus a spread initially set at 0.95%, but that is adjustable from 0.60% to 1.20% based on current total leverage, or (2) LIBOR plus a spread initially set at 1.95%, but that is adjustable from 1.60% to 2.20% based on current total leverage. The pricing grid for the Term Loan may be similarly adjusted subject to an investment grade rating being obtained.

2014 Senior Unsecured Notes

On April 17, 2014, we completed a $300 million senior unsecured notes offering (“2014 Senior Unsecured Notes”). Interest on the Notes will be payable semi-annually on May 1 and November 1 of each year, commencing on November 1, 2014. The 2014 Senior Unsecured Notes will pay interest in cash at a rate of 5.50% per year. The Notes mature on May 1, 2024. We may redeem some or all of the 2014 Senior Unsecured Notes at any time prior to May 1, 2019 at a “make-whole” redemption price. On or after May 1, 2019, we may redeem some or all of the Notes at a premium that will decrease over time. In addition, at any time and from time to time prior to May 1, 2017, we may redeem up to 35% of the aggregate principal amount of the 2014 Senior Unsecured Notes using the proceeds of one or more equity offerings. The 2014 Senior Unsecured Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis, by certain subsidiary guarantors. In the event of a change of control, each holder of the 2014 Senior Unsecured Notes may require us to repurchase some or all of our 2014 Senior Unsecured Notes at a repurchase price equal to 101% of the aggregate principal amount of the 2014 Senior Unsecured Notes plus accrued and unpaid interest to the date of purchase.

Interest Rate Swap

During the second quarter 2010, we entered into an interest rate swap to manage our exposure to variable interest rates by fixing $65 million of our 2006 Senior Unsecured Notes, which started July 31, 2011 (date on which the interest rate turned variable) through maturity date (or July 2016), at a rate of 5.507%. We also entered into an interest rate swap to fix $60 million of our 2006 Senior Unsecured Notes which started October 31, 2011 (date on which the related interest rate turned variable) through the maturity date (or October 2016) at a rate of 5.675%. The fair value of the interest rate swaps was $7.8 million and $9.0 million as of June 30, 2014 and December 31, 2013, respectively, which is reflected in accounts payable and accrued expenses on the consolidated balance sheets.

We designated our interest rate swaps as cash flow hedges. Accordingly, the effective portion of changes in the fair value of our swaps is recorded as a component of accumulated other comprehensive income/loss on the balance sheet and reclassified into earnings in the same period, or periods, during which the hedged transactions effect earnings, while any ineffective portion is recorded through earnings immediately. We did not have any hedge ineffectiveness in the periods; therefore, there was no income statement effect recorded during the three and six month periods ended June 30, 2014 or 2013. We do not expect any of the current losses included in accumulated other comprehensive loss to be reclassified into earnings in the next 12 months. At June 30, 2014 and December 31, 2013, we had $4.1 million and $5.0 million, respectively, posted as collateral, which is currently reflected in other assets on our consolidated balance sheets.

Covenants

Our debt facilities impose certain restrictions on us, including, but not limited to, restrictions on our ability to: incur debt; create or incur liens; provide guarantees in respect of obligations of any other entity; make redemptions and repurchases of our capital stock; prepay, redeem or repurchase debt; engage in mergers or consolidations; enter into affiliated transactions; dispose of real estate or other assets; and change our business. In addition, the credit agreement governing our Credit Facility limit the amount of dividends we can pay to 95% of normalized adjusted funds from operations, as defined in the agreements, on a rolling four quarter basis. The indentures governing our 2011, 2012, 2013 and 2014 Senior Unsecured Notes also limit the amount of dividends we can pay based on the sum of 95% of funds from operations, proceeds of equity issuances and certain other net cash proceeds. Finally, our 2011, 2012, 2013 and 2014 Senior Unsecured Notes require us to maintain total unencumbered assets (as defined in the related indenture) of not less than 150% of our unsecured indebtedness.

In addition to these restrictions, the Credit Facility contains customary financial and operating covenants, including covenants relating to our total leverage ratio, fixed charge coverage ratio, secured leverage ratio, unsecured leverage ratio, consolidated adjusted net worth, and unsecured interest coverage ratio. This facility also contains customary events of default, including among others, nonpayment of principal or interest, material inaccuracy of representations and failure to comply with our covenants. If an event of default occurs and is continuing under the facility, the entire outstanding balance may become immediately due and payable. At June 30, 2014, we were in compliance with all such financial and operating covenants.

 

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5. Common Stock/Partners’ Capital

Medical Properties Trust, Inc.

On March 11, 2014, we completed an underwritten public offering of 7.7 million shares of our common stock, resulting in net proceeds of approximately $100.2 million, after deducting estimated offering expenses. We also granted the underwriters a 30-day option to purchase up to an additional 1.2 million shares of common stock. The option, which was exercised in full, closed on April 8, 2014 and resulted in additional net proceeds of approximately $16 million.

In January 2014, we put an at-the-market equity offering program in place, giving us the ability to sell up to $250 million of stock with a commission of 1.25%. During the first quarter of 2014, we sold 0.9 million shares of our common stock under our at-the-market equity offering program, at an average price of $13.21 per share resulting in total proceeds, net of commission, of $12.3 million.

On February 28, 2013, we completed an offering of 12.7 million shares of our common stock (including 1.7 million shares sold pursuant to the exercise in full of the underwriters’ option to purchase additional shares) at a price of $14.25 per share, resulting in net proceeds (after underwriting discount and expenses) of $172.9 million.

MPT Operating Partnership, L.P.

At June 30, 2014, the Company has a 99.9% ownership interest in the Operating Partnership with the remainder owned by three other partners, two of whom are employees and one of whom is a director. During the six months ended June 30, 2014 and 2013, the partnership issued 9.8 million and 12.7 million units, respectively, in direct response to the common stock offerings by Medical Properties Trust, Inc.

6. Stock Awards

We adopted the 2013 Equity Incentive Plan (the “Equity Incentive Plan”) during second quarter of 2013, which authorizes the issuance of common stock options, restricted stock, restricted stock units, deferred stock units, stock appreciation rights, performance units and awards of interests in our Operating Partnership. The Equity Incentive Plan is administered by the Compensation Committee of the Board of Directors. We have reserved 7,643,651 shares of common stock for awards under the Equity Incentive Plan for which 6,436,291 shares remain available for future stock awards as of June 30, 2014. We awarded the following during the six months ended June 2014 and 2013:

Time-based awards —We granted 345,984 and 258,736 shares in 2014 and 2013, respectively, of time-based restricted stock to management, independent directors and certain employees. These awards vest quarterly based on service, over three years, in equal amounts.

 

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Performance-based awards —Our management team and certain employees were awarded 324,754 and 222,566 of performance based awards in 2014 and 2013, respectively. These awards vest ratably over a three year period based on the achievement of certain total shareholder return measures, with a carry-back and carry-forward provision through December 31, 2017 (for the 2013 awards) and December 31, 2018 (for the 2014 awards). Dividends on these awards are paid only upon achievement of the performance measures.

Multi-year Performance-based awards —We awarded 500,000 and 550,000 shares in 2014 and 2013, respectively, of multi-year performance-based awards to management. These shares are subject to three-year cumulative performance hurdles based on measures of total shareholder return. At the end of the three-year performance period, any earned shares will be subject to an additional two years of ratable time-based vesting on an annual basis. Dividends are paid on these shares only upon achievement of the performance measures.

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. Included in our accounts payable and accrued expenses are our interest rate swaps, which are recorded at fair value based on Level 2 observable market assumptions using standardized derivative pricing models. We estimate the fair value of our interest and rent receivables using Level 2 inputs such as discounting the estimated future cash flows using the current rates at which similar receivables would be made to others with similar credit ratings and for the same remaining maturities. The fair value of our mortgage loans and working capital loans are estimated by using Level 2 inputs such as discounting the estimated future cash flows using the current rates which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. We determine the fair value of our 2011, 2012, 2013 and 2014 Senior Unsecured Notes, using Level 2 inputs such as quotes from securities dealers and market makers. We estimate the fair value of our 2006 Senior Unsecured Notes, revolving credit facility, and term loans using Level 2 inputs based on the present value of future payments, discounted at a rate which we consider appropriate for such debt.

Fair value estimates are made at a specific point in time, are subjective in nature, and involve uncertainties and matters of significant judgment. Settlement of such fair value amounts may not be possible and may not be a prudent management decision. The following table summarizes fair value estimates for our financial instruments (in thousands):

 

     June 30,
2014
    December 31,
2013
 

Asset (Liability)

   Book
Value
    Fair
Value
    Book
Value
    Fair
Value
 

Interest and rent receivables

   $ 46,353      $ 40,158      $ 58,565      $ 44,415   

Loans (1)

     328,037        343,958        351,713        358,383   

Debt, net

     (1,640,354     (1,740,184     (1,421,681     (1,486,090

 

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

Items Measured at Fair Value on a Recurring Basis

Our equity interest in Ernest and related loans, which were acquired in 2012, are being measured at fair value on a recurring basis as we elected to account for these investments using the fair value option method. We have elected to account for these investments at fair value due to the size of the investments and because we believe this method is more reflective of current values. We have not made a similar election for other equity interests or loans.

 

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At June 30, 2014, these amounts were as follows (in thousands):

 

Asset Type

   Fair
Value
     Cost     

Asset Type
Classification

Mortgage loans

   $ 100,000       $ 100,000       Mortgage loans

Acquisition loans

     97,533         97,533       Other loans

Equity investments

     3,300         3,300       Other assets
  

 

 

    

 

 

    
   $ 200,833       $ 200,833      
  

 

 

    

 

 

    

Our mortgage loans with Ernest are recorded at fair value based on Level 3 inputs by discounting the estimated cash flows using the market rates which similar loans would be made to borrowers with similar credit ratings and the same remaining maturities. Our acquisition loans and equity investments in Ernest are recorded at fair value based on Level 3 inputs, by using a discounted cash flow model, which requires significant estimates of our investee such as projected revenue and expenses and appropriate consideration of the underlying risk profile of the forecast assumptions associated with the investee. We classify these loans and equity investments as Level 3, as we use certain unobservable inputs to the valuation methodology that are significant to the fair value measurement, and the valuation requires management judgment due to the absence of quoted market prices. For these cash flow models, our observable inputs include use of a capitalization rate, discount rate (which is based on a weighted-average cost of capital), and market interest rates, and our unobservable input includes an adjustment for a marketability discount (“DLOM”) on our equity investment of 40% at June 30, 2014.

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

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

 

Basis Point Change in Marketability Discount

   Estimated Increase (Decrease)
In Fair Value
 

+100 basis points

   $ (375

- 100 basis points

     375   

Because the fair value of Ernest investments noted above approximate their original cost, we did not recognize any unrealized gains/losses during the first half of 2014.

8. Discontinued Operations

The following table presents the results of discontinued operations, which include the revenue and expenses of facilities disposed of in 2013, for the three and six months ended June 30, 2014 and 2013 (dollar amounts in thousands except per share/unit amounts):

 

     For the Three Months
Ended June 30,
     For the Six Months
Ended June 30,
 
     2014      2013      2014     2013  

Revenues

   $ —         $ 411      $ —        $ 1,238   

Gain (loss) on sale

     —          2,054         —          2,054   

Income

     —          2,374         (2     3,018   

Earnings per share/unit — diluted

   $ —         $ 0.02       $ —        $ 0.02   

 

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9. Earnings Per Share/Common Unit

Medical Properties Trust, Inc.

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

 

     For the Three Months
Ended June 30,
 
     2014     2013  

Numerator:

    

Income (loss) from continuing operations

   $ (203   $ 25,031   

Non-controlling interests’ share in continuing operations

     —          (57

Participating securities’ share in earnings

     (195     (179
  

 

 

   

 

 

 

Income (loss) from continuing operations, less participating securities’ share in earnings

     (398     24,795   

Income from discontinued operations attributable to MPT common stockholders

     —          2,374   
  

 

 

   

 

 

 

Net income (loss), less participating securities’ share in earnings

   $ (398   $ 27,169   
  

 

 

   

 

 

 

Denominator:

    

Basic weighted-average common shares

     171,718        149,509   

Dilutive potential common shares

     651        1,547   
  

 

 

   

 

 

 

Dilutive weighted-average common shares

     172,369        151,056   
  

 

 

   

 

 

 

 

     For the Six Months
Ended June 30,
 
     2014     2013  

Numerator:

    

Income from continuing operations

   $ 7,105      $ 50,596   

Non-controlling interests’ share in continuing operations

     (65     (110

Participating securities’ share in earnings

     (404     (372
  

 

 

   

 

 

 

Income from continuing operations, less participating securities’ share in earnings

     6,636        50,114   

Income (loss) from discontinued operations attributable to MPT common stockholders

     (2     3,018   
  

 

 

   

 

 

 

Net income, less participating securities’ share in earnings

   $ 6,634      $ 53,132   
  

 

 

   

 

 

 

Denominator:

    

Basic weighted-average common shares

     167,846        144,928   

Dilutive potential common shares

     613        1,363  
  

 

 

   

 

 

 

Dilutive weighted-average common shares

     168,459        146,291   
  

 

 

   

 

 

 

 

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MPT Operating Partnership, L.P.

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

 

     For the Three Months
Ended June 30,
 
     2014     2013  

Numerator:

    

Income (loss) from continuing operations

   $ (203   $ 25,031   

Non-controlling interests’ share in continuing operations

     —          (57

Participating securities’ share in earnings

     (195     (179
  

 

 

   

 

 

 

Income (loss) from continuing operations, less participating securities’ share in earnings

     (398     24,795   

Income from discontinued operations attributable to MPT Operating Partnership partners

     —          2,374   
  

 

 

   

 

 

 

Net income (loss), less participating securities’ share in earnings

   $ (398   $ 27,169   
  

 

 

   

 

 

 

Denominator:

    

Basic weighted-average units

     171,718        149,509   

Dilutive potential units

     651        1,547   
  

 

 

   

 

 

 

Dilutive weighted-average units

     172,369        151,056   
  

 

 

   

 

 

 

 

     For the Six Months
Ended June 30,
 
     2014     2013  

Numerator:

    

Income from continuing operations

   $ 7,105      $ 50,596   

Non-controlling interests’ share in continuing operations

     (65     (110

Participating securities’ share in earnings

     (404     (372
  

 

 

   

 

 

 

Income from continuing operations, less participating securities’ share in earnings

     6,636        50,114   

Income (loss) from discontinued operations attributable to MPT Operating Partnership partners

     (2     3,018   
  

 

 

   

 

 

 

Net income, less participating securities’ share in earnings

   $ 6,634      $ 53,132   
  

 

 

   

 

 

 

Denominator:

    

Basic weighted-average units

     167,846        144,928   

Dilutive potential units

     613        1,363  
  

 

 

   

 

 

 

Dilutive weighted-average units

     168,459        146,291   
  

 

 

   

 

 

 

 

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Table of Contents

10. Commitments and Contingencies

Contingencies

We are a party to various legal proceedings incidental to our business. In the opinion of management, after consultation with legal counsel, the ultimate liability, if any, with respect to those proceedings is not presently expected to materially affect our financial position, results of operations or cash flows.

11. Subsequent Events

On July 29, 2014, we executed a binding $150 million agreement with Adeptus Health for the development of acute care hospitals and free-standing emergency departments in the states of Texas, Colorado and Arizona. These facilities will be leased to Adeptus Health pursuant to a new master lease agreement that has a 15-year initial term with three extension options of five years each that provides for annual rent increases based on changes in the consumer price index. This new master lease agreement is cross-defaulted with the original master lease executed with First Choice ER in 2013.

On July 1, 2014, we acquired an acute care hospital in Peasedown St. John, United Kingdom from Circle Health Ltd., through its subsidiary Circle Hospital (Bath) Ltd. The sale/leaseback transaction, excluding any transfer taxes, is valued at approximately £28.3 million. The lease has an initial term of 15-years with a tenant option to extend the lease for an additional 15 years. The lease includes annual rent increases, which will equal the year-over-year change in the retail price index (“RPI”) with a floor of 2% and a cap of 5%. With this transaction, we will incur approximately £1.1 million of transfer and other taxes that will be expensed as acquisition costs.

12. Condensed Consolidating Financial Information

The following tables present the condensed consolidating financial information for (a) Medical Properties Trust, Inc. (“Parent” and a guarantor to our 2011, 2012, 2013 and 2014 Senior Unsecured Notes), (b) MPT Operating Partnership, L.P. and MPT Finance Corporation (“Subsidiary Issuers”), (c) on a combined basis, the guarantors of our 2011, 2012, 2013 and 2014 Senior Unsecured Notes (“Subsidiary Guarantors”), and (d) on a combined basis, the non-guarantor subsidiaries (“Non-Guarantor Subsidiaries”). Separate financial statements of the Subsidiary Guarantors are not presented because the guarantee by each 100% owned Subsidiary Guarantor is joint and several, and we believe separate financial statements and other disclosures regarding the Subsidiary Guarantors are not material to investors. Furthermore, there are no significant legal restrictions on the Parent’s ability to obtain funds from its subsidiaries by dividend or loan.

The guarantees by the Subsidiary Guarantors may be released and discharged upon: (1) any sale, exchange or transfer of all of the capital stock of a Subsidiary Guarantor; (2) the merger or consolidation of a Subsidiary Guarantor with a Subsidiary Issuer or any other Subsidiary Guarantor; (3) the proper designation of any Subsidiary Guarantor by the Subsidiary Issuers as “unrestricted” for covenant purposes under the indenture governing the 2011, 2012, 2013 and 2014 Senior Unsecured Notes; (4) the legal defeasance or covenant defeasance or satisfaction and discharge of the indenture; (5) a liquidation or dissolution of a Subsidiary Guarantor permitted under the indenture governing the 2011, 2012, 2013 and 2014 Senior Unsecured Notes; or (6) the release or discharge of the Subsidiary Guarantor from its guarantee obligations under our revolving credit facility.

Subsequent to June 30, 2013, certain of our subsidiaries were re-designated as non-guarantors of our 2011, 2012, 2013 and 2014 Senior Unsecured Notes as the underlying properties were sold in 2013 or related mortgage loans paid off in 2014. In addition, certain of our subsidiaries previously classified as non-guarantors are guarantors as of June 30, 2014. With these re-designations, we have restated the 2013 consolidating financial information below to reflect these changes.

 

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Condensed Consolidated Balance Sheet

June 30, 2014

(in thousands)

 

     Parent      Subsidiary
Issuers
    Subsidiary
Guarantors
    Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Assets

             

Real estate assets

             

Land, buildings and improvements and intangible lease assets

   $ —        $ —        $ 1,959,605      $ 66,654      $ —        $ 2,026,259   

Mortgage loans

     —           —          285,100        100,000        —          385,100   

Net investment in direct financing leases

     —           —          213,966        220,345        —          434,311   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross investment in real estate assets

     —           —          2,458,671        386,999        —          2,845,670   

Accumulated depreciation and amortization

     —           —          (169,260     (9,002     —          (178,262

Net investment in real estate assets

     —           —          2,289,411        377,997        —          2,667,408   

Cash and cash equivalents

     —           120,030        26,705        50,288        —          197,023   

Interest and rent receivables

     —           832        18,655        26,866        —          46,353   

Straight-line rent receivables

     —           —          40,900        10,293        —          51,193   

Other loans

     —           —          1,100        139,370        —          140,470   

Net intercompany receivable

     35,785         2,028,913        —          —          (2,064,698     —     

Investment in subsidiaries

     1,413,344         880,837        43,159        —          (2,337,340     —     

Other assets

     —           46,340        857        40,400        —          87,597   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

   $ 1,449,129       $ 3,076,952      $ 2,420,787      $ 645,214      $ (4,402,038   $ 3,190,044   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and Equity

             

Liabilities

             

Debt, net

   $ —         $ 1,626,537      $ —        $ 13,816      $ —        $ 1,640,353   

Accounts payable and accrued expenses

     36,175         37,438        10,103        515        —          84,231   

Net intercompany payable

     —           —          1,620,097        444,601        (2,064,698     —     

Deferred revenue

     —           220        21,046        6,159        —          27,425   

Lease deposits and other obligations to tenants

     —           (587     21,579        4,089        —          25,081   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     36,175         1,663,608        1,672,825        469,180        (2,064,698     1,777,090   

Total equity

     1,412,954         1,413,344        747,962        176,034        (2,337,340     1,412,954   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities and Equity

   $ 1,449,129       $ 3,076,952      $ 2,420,787      $ 645,214      $ (4,402,038   $ 3,190,044   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents

Condensed Consolidated Statements of Operations

For the Three Months Ended June 30, 2014

(in thousands)

 

     Parent     Subsidiary
Issuers
    Subsidiary
Guarantors
    Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Revenues

            

Rent billed

   $ —        $ —        $ 43,592      $ 6,240      $ (3,904   $ 45,928   

Straight-line rent

     —          —          2,491        687        —          3,178   

Income from direct financing leases

     —          —          11,652        5,898        (5,287     12,263   

Interest and fee income

     —          8,360        13,666        7,422        (14,257     15,191   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     —          8,360        71,401        20,247        (23,448     76,560   

Expenses

            

Real estate depreciation and amortization

     —          —          11,940        502        —          12,442   

Impairment charges

     —          289        21,975        7,367        —          29,631   

Property-related

     —          168        (105     9,090        (9,191     (38

General and administrative

     —          8,500        55        (349     —          8,206   

Acquisition expenses

     —          2,510        25        —          —          2,535   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     —          11,467        33,890        16,610        (9,191     52,776   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (expense)

     —          (3,107     37,511        3,637        (14,257     23,784   

Other income (expense)

            

Other income (expense)

     —          19        —          —          —          19   

Earnings from equity and other interests

     —          —          111        575        —          686   

Interest income (expense)

     —          (24,724     (6,636     (7,259     14,257        (24,362

Debt refinancing costs

     —          (290     —          —          —          (290

Income tax benefit (expense)

     —          —          (32     (8     —          (40
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net other income (expense)

     —          (24,995     (6,557     (6,692     14,257        (23,987
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     —          (28,102     30,954        (3,055     —          (203 )  

Income from discontinued operations

     —          —          —          —          —          —     

Equity in earnings of consolidated subsidiaries, net of income taxes

     (203     27,899        1,042        —          (28,738     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     (203     (203     31,996        (3,055     (28,738     (203

Net income (loss) attributable to non-controlling interests

     —          —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to MPT common stockholders

   $ (203   $ (203   $ 31,996      $ (3,055   $ (28,738   $ (203
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Condensed Consolidated Statements of Operations

For the Six Months Ended June 30, 2014

(in thousands)

 

     Parent     Subsidiary
Issuers
    Subsidiary
Guarantors
    Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Revenues

            

Rent billed

   $ —       $ —        $ 84,543      $ 11,928      $ (7,582   $ 88,889   

Straight-line rent

     —          —          3,888        1,478        —          5,366   

Income from direct financing leases

     —          —          23,261        11,770        (10,552     24,479   

Interest and fee income

     —          18,492        28,863        15,293        (31,733     30,915   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     —          18,492        140,555        40,469        (49,867     149,649   

Expenses

            

Real estate depreciation and amortization

     —          —          25,204        927        —          26,131   

Impairment charges

     —          289        21,975        27,864        —          50,128   

Property-related

     —          339        325        18,170        (18,134     700   

General and administrative

     —          16,649        258        258        —          17,165   

Acquisition expenses

     —          2,886        161        —          —          3,047   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     —          20,163        47,923        47,219        (18,134     97,171   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (expense)

     —          (1,671     92,632        (6,750     (31,733     52,478   

Other income (expense)

            

Other income (expense)

     —          (30     —          —          —          (30

Earnings from equity and other interests

     —          —          111        794        —          905   

Interest income (expense)

     —          (46,546     (16,533     (14,628     31,733        (45,974

Debt refinancing costs

     —          (290     —          —          —          (290

Income tax benefit expense

     —          —          32        (16     —          16   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net other income (expense)

     —          (46,866     (16,390     (13,850     31,733        (45,373
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     —          (48,537     76,242        (20,600     —          7,105   

Income (loss) from discontinued operations

     —          —          —          (2     —          (2

Equity in earnings of consolidated subsidiaries net of income taxes

     7,103        55,640        2,163        —          (64,906     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     7,103        7,103        78,405        (20,602     (64,906     7,103   

Net income (loss) attributable to non-controlling interests

     (65     (65     —          —          65        (65
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to MPT common stockholders

   $ 7,038      $ 7,038      $ 78,405      $ (20,602   $ (64,841   $ 7,038   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

27


Table of Contents

Condensed Consolidated Statements of Comprehensive Income

For the Three Months Ended June 30, 2014

(in thousands)

 

     Parent     Subsidiary
Issuers
    Subsidiary
Guarantors
     Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Net income (loss)

   $ (203   $ (203   $ 31,996       $ (3,055   $ (28,738   $ (203

Other comprehensive income:

             

Unrealized gain on interest rate swap

     486        486        —           —          (486     486   

Foreign currency translation gain

     73        73        —           —          (73     73   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total comprehensive income

     356        356        31,996         (3,055     (29,297     356   

Comprehensive income attributable to non-controlling interests

     —          —          —           —          —          —     
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to MPT common stockholders

   $ 356      $ 356      $ 31,996       $ (3,055   $ (29,297   $ 356   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Condensed Consolidated Statements of Comprehensive Income

For the Six Months Ended June 30, 2014

(in thousands)

 

     Parent     Subsidiary
Issuers
    Subsidiary
Guarantors
     Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Net income (loss)

   $ 7,103      $ 7,103      $ 78,405       $ (20,602   $ (64,906   $ 7,103   

Other comprehensive income:

             

Unrealized gain on interest rate swap

     1,206        1,206        —           —          (1,206     1,206   

Foreign currency translation gain

     46        46        —           —          (46     46   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total comprehensive income

     8,355        8,355        78,405         (20,602     (66,158     8,355   

Comprehensive income attributable to non-controlling interests

     (65     (65     —           —          65        (65
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to MPT common stockholders

   $ 8,290      $ 8,290      $ 78,405       $ (20,602   $ (66,093   $ 8,290   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

28


Table of Contents

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2014

(in thousands)

 

    Parent     Subsidiary
Issuers
    Subsidiary
Guarantors
    Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Operating Activities

           

Net cash provided by (used in) operating activities

  $ (35   $ (41,011   $ 106,136      $ (14,835   $ —        $ 50,255   

Investing Activities

           

Cash paid for acquisitions and other related investments

    —          —          (115,000     —          —          (115,000

Principal received on loans receivable

    —          —          —          6,829        —          6,829   

Net proceeds from sale of real estate

    —          —          —          —          —          —     

Investments in loans receivable

    —          —          —          (5,601     —          (5,601

Construction in progress and other

    —          (382     (53,671     (1,106     —          (55,159
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) investing activities

    —          (382     (168,671     122        —          (168,931

Financing Activities

           

Revolving credit facilities, net

    —          (105,000     —          —          —          (105,000

Additions to term debt, net of discount

    —          425,000        —          —          —          425,000   

Payments of term debt

    —          (100,000     —          (132     —          (100,132

Distributions paid

    (71,686     (71,809     —          —          71,686        (71,809

Proceeds from sale of common shares/units, net of offering costs

    128,332        128,332        —          —          (128,332     128,332   

Lease deposits and other obligations to tenants

    —          (404     3,645        1,669        —          4,910   

Net payments relating to intercompany financing

    (56,611     (122,015     58,586        63,394        56,646        —     

Debt issuance costs paid and other financing activities

    —          (11,496     —          —          —          (11,496
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by financing activities

    35        142,608        62,231        64,931        —          269,805   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents for period

    —          101,215        (304     50,218        —          151,129   

Effects of exchange rate changes on cash

    —          —          (85     —          —          (85

Cash and cash equivalents at beginning of period

    —          18,815        27,094        70        —          45,979   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

  $ —        $ 120,030      $ 26,705      $ 50,288      $ —        $ 197,023   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

29


Table of Contents

Condensed Consolidated Balance Sheet

December 31, 2013

(in thousands)

 

    Parent     Subsidiary
Issuers
    Subsidiary
Guarantors
    Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Assets

           

Real estate assets

           

Land, buildings and improvements and intangible lease assets

  $ —        $ —        $ 1,796,415      $ 69,040      $ —        $ 1,865,455   

Mortgage loans

    —          —          285,106        103,650        —          388,756   

Investment in direct financing leases

    —          —          212,543        218,481        —          431,024   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross investment in real estate assets

    —          —          2,294,064        391,171        —          2,685,235   

Accumulated depreciation and amortization

    —          —          (151,624     (8,152     —          (159,776
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment in real estate assets

    —          —          2,142,440        383,019        —          2,525,459   

Cash and cash equivalents

    —          18,815        27,094        70        —          45,979   

Interest and rent receivables

    —          336        31,492        26,737        —          58,565   

Straight-line rent receivables

    —          —          37,015        8,814        —          45,829   

Other loans

    —          178        1,100        159,712        —          160,990   

Net intercompany receivable

    35,363        1,907,474        —          —          (1,942,837     —     

Investment in subsidiaries

    1,344,598        825,153        42,407        —          (2,212,158     —     

Other assets

    —          37,311        1,096        29,466        —          67,873   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

  $ 1,379,961      $ 2,789,267      $ 2,282,644      $ 607,818      $ (4,154,995   $ 2,904,695   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and Equity

           

Liabilities

           

Debt, net

  $ —        $ 1,407,733      $ —        $ 13,948      $ —        $ 1,421,681   

Accounts payable and accrued expenses

    35,753        36,887        20,500        1,150        —          94,290   

Net intercompany payable

    —          —          1,556,634        386,203        (1,942,837     —     

Deferred revenue

    —          232        17,866        6,016        —          24,114   

Lease deposits and other obligations to tenants

    —          (183     18,163        2,422        —          20,402   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    35,753        1,444,669        1,613,163        409,739        (1,942,837     1,560,487   

Total equity

    1,344,208        1,344,598        669,481        198,079        (2,212,158     1,344,208   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities and Equity

  $ 1,379,961      $ 2,789,267      $ 2,282,644      $ 607,818      $ (4,154,995   $ 2,904,695   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

30


Table of Contents

Condensed Consolidated Statements of Operations

For the Three Months Ended June 30, 2013

(in thousands)

 

     Parent     Subsidiary
Issuers
    Subsidiary
Guarantors
     Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Revenues

             

Rent billed

   $ —        $ —        $ 29,051       $ 5,088      $ (3,115   $ 31,024   

Straight-line rent

     —          —          2,171         606        —          2,777   

Income from direct financing leases

     —          —          8,664         5,509        (4,943     9,230   

Interest and fee income

     —          5,052        9,120         7,006        (7,085     14,093   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total revenues

     —          5,052        49,006         18,209        (15,143     57,124   

Expenses

             

Real estate depreciation and amortization

     —          —          8,229         414        —          8,643   

Property-related

     —          104        335         8,267        (8,057     649   

General and administrative

     —          7,674        —           (563     —          7,111   

Acquisition expenses

     —          2,088        —           —          —          2,088   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total operating expenses

     —          9,866        8,564         8,118        (8,057     18,491   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Operating income (loss)

     —          (4,814     40,442         10,091        (7,086     38,633   

Other income (expense)

             

Other income (expense)

     —          (20     —           (2     —          (22

Earnings from equity and other interests

     —          —          233         943        —          1,176   

Interest income (expense)

     —          (14,726     318         (7,319     7,086        (14,641

Income tax benefit (expense)

     —          —          —           (115     —          (115
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net other income (expense)

     —          (14,746     551         (6,493     7,086        (13,602
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     —          (19,560     40,993         3,598        —          25,031   

Income (loss) from discontinued operations

     —          —          —           2,374        —          2,374   

Equity in earnings of consolidated subsidiaries, net of income taxes

     27,405        46,965        1,121         —          (75,491     —     
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net income

     27,405        27,405        42,114         5,972        (75,491     27,405   

Net income (loss) attributable to non-controlling interests

     (57     (57     —           —          57        (57
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net income attributable to MPT common stockholders

   $ 27,348      $ 27,348      $ 42,114       $ 5,972      $ (75,434   $ 27,348   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

31


Table of Contents

Condensed Consolidated Statements of Operations

For the Six Months Ended June 30, 2013

(in thousands)

 

     Parent     Subsidiary
Issuers
    Subsidiary
Guarantors
     Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Revenues

             

Rent billed

   $ —        $ —        $ 58,657       $ 9,621      $ (5,750   $ 62,528   

Straight-line rent

     —          —          4,489         979        —          5,468   

Income from direct financing leases

     —          —          16,868         10,994        (9,876     17,986   

Interest and fee income

     —          10,108        18,267         14,554        (14,174     28,755   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total revenues

     —          10,108        98,281         36,148        (29,800     114,737   

Expenses

             

Real estate depreciation and amortization

     —          —          16,262         850        —          17,112   

Property-related

     —          276        537         15,875        (15,626     1,062   

General and administrative

     —          14,419        —           458        —          14,877   

Acquisition expenses

     —          2,278        —           —          —          2,278   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total operating expenses

     —          16,973        16,799         17,183        (15,626     35,329   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Operating income (loss)

     —          (6,865     81,482         18,965        (14,174     79,408   

Other income (expense)

             

Other income (expense)

     —          (42     —           (206     —          (248

Earnings from equity and other interests

     —          —          233         1,435        —          1,668   

Interest income (expense)

     —          (30,243     628         (14,624     14,174        (30,065

Income tax benefit (expense)

     —          —          —           (167     —          (167
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net other income (expense)

     —          (30,285     861         (13,562     14,174        (28,812
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     —          (37,150     82,343         5,403        —          50,596   

Income (loss) from discontinued operations

     —          —          —           3,018        —          3,018   

Equity in earnings of consolidated subsidiaries net of income taxes

     53,614        90,764        2,242         —          (146,620     —     
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net income

     53,614        53,614        84,585         8,421        (146,620     53,614   

Net income (loss) attributable to non-controlling interests

     (110     (110     —           —          110        (110
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net income attributable to MPT common stockholders

   $ 53,504      $ 53,504      $ 84,585       $ 8,421      $ (146,510   $ 53,504   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

32


Table of Contents

Condensed Consolidated Statements of Comprehensive Income

For the Three Months Ended June 30, 2013

(in thousands)

 

     Parent     Subsidiary
Issuers
    Subsidiary
Guarantors
     Non-Guarantor
Subsidiaries
     Eliminations     Total
Consolidated
 

Net income

   $ 27,405      $ 27,405      $ 42,114       $ 5,972       $ (75,491   $ 27,405   

Other comprehensive income:

              

Unrealized gain on interest rate swap

     1,779        1,779        —          —          (1,779     1,779   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total comprehensive income

     29,184        29,184        42,114         5,972         (77,270     29,184   

Comprehensive income attributable to non-controlling interests

     (57     (57     —          —          57        (57
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Comprehensive income attributable to MPT common stockholders

   $ 29,127      $ 29,127      $ 42,114       $ 5,972       $ (77,213   $ 29,127   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Condensed Consolidated Statements of Comprehensive Income

For the Six Months Ended June 30, 2013

(in thousands)

 

     Parent     Subsidiary
Issuers
    Subsidiary
Guarantors
     Non-Guarantor
Subsidiaries
     Eliminations     Total
Consolidated
 

Net income

   $ 53,614      $ 53,614      $ 84,585       $ 8,421       $ (146,620   $ 53,614   

Other comprehensive income:

              

Unrealized gain on interest rate swap

     2,606        2,606        —          —          (2,606     2,606   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total comprehensive income

     56,220        56,220        84,585         8,421         (149,226     56,220   

Comprehensive income attributable to non-controlling interests

     (110     (110     —          —          110        (110
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Comprehensive income attributable to MPT common stockholders

   $ 56,110      $ 56,110      $ 84,585       $ 8,421       $ (149,116   $ 56,110   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

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Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2013

(in thousands)

 

    Parent     Subsidiary
Issuers
    Subsidiary
Guarantors
    Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Operating Activities

           

Net cash provided by (used in) operating activities

  $ (35   $ (29,090   $ 83,872      $ 1,498      $ —       $ 56,245   

Investing Activities

           

Cash paid for acquisitions and other related investments

    —         —         (75,000     —          —         (75,000

Principal received on loans receivable

    —         —         —          3,293        —         3,293   

Net proceeds from sale of real estate

    —         —         —          18,409        —         18,409   

Investments in loans receivable

    —         —         —          (1,300     —         (1,300

Construction in progress and other

    —         (621     (33,144     594        —         (33,171
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

    —          (621     (108,144     20,996        —          (87,769

Financing Activities

           

Revolving credit facilities, net

    —         (85,000     —          —         —         (85,000

Payments of term debt

    —         (11,000 )     —         (124     —         (11,124

Distributions paid

    (57,712     (57,846     —          —          57,712        (57,846

Proceeds from sale of common stock/units, net of offering costs

    172,853        172,853        —         —         (172,853     172,853   

Lease deposits and other obligations to tenants

    —         (159     558        1,117        —         1,516   

Net payments relating to intercompany financing

    (115,106     1,417        22,149        (23,601     115,141        —     

Debt issuance costs paid and other financing activities

    —         (114     —         —         —         (114
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

    35        20,151        22,707        (22,608     —          20,285   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase in cash and cash equivalents for period

    —         (9,560     (1,565     (114     —         (11,239

Cash and cash equivalents at beginning of period

    —         35,483        1,565        263        —         37,311   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

  $ —       $ 25,923      $ —        $ 149      $ —       $ 26,072   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

The following discussion and analysis of the consolidated financial condition and consolidated results of operations should be read together with the condensed consolidated financial statements and notes thereto contained in this Form 10-Q and the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2013.

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 and as updated in our quarterly reports on Form 10-Q for future periods, and current reports on Form 8-K as we file them with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934. Such factors include, among others, the following:

 

    U.S. (both national and local) and European 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 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;

 

    changes in foreign currency exchange rates;

 

    U.S. (both federal and state) and European healthcare, and other regulatory requirements; and

 

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

 

    the financial condition of our tenants, our lenders, and institutions that hold our cash balances, which may expose us to increased risks of default by these parties;

 

    our ability to obtain equity or debt financing on attractive terms or at all, which may adversely impact our ability to pursue acquisition and development opportunities and reference 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.

Key Factors that May Affect Our Operations

Our revenues are derived primarily from rents we earn pursuant to the lease agreements with our tenants and from interest income from loans to our tenants and other facility owners. Our tenants operate in the healthcare industry, generally providing medical, surgical and rehabilitative care to patients. The capacity of our tenants to pay our rents and interest is dependent upon their ability to conduct their operations at profitable levels. We believe that the business environment of the industry segments in which our tenants operate 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;

 

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    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;

 

    competition from other financing sources; and

 

    the ability of our tenants and borrowers to access funds in the credit markets.

CRITICAL ACCOUNTING POLICIES

Refer to our 2013 Annual Report on Form 10-K, for a discussion of our critical accounting policies, which include revenue recognition, investment in real estate, purchase price allocation, loans, losses from rent receivables, stock-based compensation, our fair value option election, and our accounting policy on consolidation. During the six months ended June 30, 2014, there were no material changes to these policies, except as noted in Note 2 to the condensed consolidated financial statements with respect to discontinued operations.

Overview

We are a self-advised real estate investment trust (“REIT”) focused on investing in and owning net-leased healthcare facilities across the United States and selectively in foreign jurisdictions. We have operated as a REIT since April 6, 2004, and accordingly, elected REIT status upon the filing of our calendar year 2004 federal income tax return. Medical Properties Trust, Inc. was incorporated under Maryland law on August 27, 2004, and MPT Operating Partnership, L.P. was formed under Delaware law on September 10, 2003. We conduct substantially all of our business through MPT Operating Partnership, L.P. We acquire and develop healthcare facilities and lease the facilities to healthcare operating companies under long-term net leases, which require the tenant to bear most of the costs associated with the property. We also make mortgage loans to healthcare operators collateralized by their real estate assets. In addition, we selectively make loans to certain of our operators through our taxable REIT subsidiaries, the proceeds of which are typically used for acquisitions and working capital. Finally, from time to time, we acquire a profits or other equity interest in our tenants that gives us a right to share in such tenant’s profits and losses.

At June 30, 2014, our portfolio consisted of 118 properties: 100 facilities (of the 110 facilities that we own, of which two are subject to long-term ground leases) are leased to 25 tenants, 10 are under development, and the remaining eight assets are in the form of mortgage loans to three operators. Our facilities consisted of 56 general acute care hospitals, 23 long-term acute care hospitals, 31 inpatient rehabilitation hospitals, two medical office buildings, and six wellness centers.

All of our investments are currently located in the United States and Europe.

The following is our revenue by operating type (dollar amounts in thousands):

Revenue by property type:

 

                                                   
     For the Three
Months Ended
June 30, 2014
     % of
Total
    For the Three
Months Ended
June 30, 2013
     % of
Total
 

General Acute Care Hospitals (A)

   $ 45,599         59.6   $ 33,237         58.2

Long-term Acute Care Hospitals

     13,338         17.4     13,406         23.5

Rehabilitation Hospitals

     17,208         22.5     10,065         17.6

Wellness Centers

     415         0.5     416         0.7
  

 

 

    

 

 

   

 

 

    

 

 

 

Total revenue

   $ 76,560         100.0   $ 57,124         100.0
  

 

 

      

 

 

    

 

                                                   
     For the Six
Months Ended
June 30, 2014
     % of
Total
    For the Six
Months Ended
June 30, 2013
     % of
Total
 

General Acute Care Hospitals (A)

   $ 86,986         58.1   $ 66,820         58.3

Long-term Acute Care Hospitals

     27,096         18.1     26,873         23.4

Rehabilitation Hospitals

     34,736         23.2     20,214         17.6

Wellness Centers

     831         0.6     830         0.7
  

 

 

    

 

 

   

 

 

    

 

 

 

Total revenue

   $ 149,649         100.0   $ 114,737         100.0
  

 

 

      

 

 

    

 

(A) Includes two medical office buildings associated with two of our general acute care hospitals.

 

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We have 39 employees as of August 6, 2014. We believe that any foreseeable increase in the number of our employees will have only immaterial effects on our operations and general and administrative expenses. We believe that our relations with our employees are good. None of our employees are members of any labor union.

Results of Operations

Three Months Ended June 30, 2014 Compared to June 30, 2013

Net income (loss) for the three months ended June 30, 2014, was ($0.2) million, compared to $27.3 million for the three months ended June 30, 2013. This decline is due to the $26.5 million impairment charge taken on our Monroe loan and other assets along with a $3.1 million real estate impairment charge taken on our Bucks County facility in the 2014 second quarter. Funds from operations (“FFO”), after adjusting for certain items (as more fully described in Reconciliation of Non-GAAP Financial Measures), was $44.5 million, or $0.26 per diluted share for the 2014 second quarter as compared to $35.9 million, or $0.24 per diluted share for the 2013 second quarter. This 24% increase in FFO is primarily due to the increase in revenue from acquisitions made since June 2013 along with the completion of the First Choice development properties in 2014.

A comparison of revenues for the three month periods ended June 30, 2014 and 2013 is as follows, as adjusted in 2013 for discontinued operations (dollar amounts in thousands):

 

     2014      % of
Total
    2013      % of
Total
    Year over
Year
Change
 

Base rents

   $ 45,928         60.0 %   $ 31,024         54.3 %     48.0 %

Straight-line rents

     3,178         4.2 %     2,777         4.9 %     14.4 %

Income from direct financing leases

     12,263         16.0 %     9,230         16.2 %     32.9 %

Interest from loans and fee income

     15,191         19.8 %     14,093         24.6 %     7.6 %
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total revenue

   $ 76,560         100.0 %   $ 57,124         100.0 %     34.0 %
  

 

 

    

 

 

   

 

 

    

 

 

   

Our total revenue for the 2014 second quarter is up $19.4 million or 34.0% over the prior year. This increase is made up of the following:

 

    Base rents – up $14.9 million over the prior year of which $0.9 million is from our annual escalation provisions in our leases, $12.5 million is from incremental revenue from acquisitions made in 2013, and $1.5 million is incremental revenue from development properties that were completed and put into service in 2013 and 2014.

 

    Straight-line rents – up $0.4 million primarily due to incremental revenue from acquisitions made in 2013 partially offset by the write-off of unbilled rent related to our Gilbert property – see Note 3 to Item 1 of this Form 10-Q for further details.

 

    Income from direct financing leases – up $3.0 million over the prior year of which $0.1 million is from our annual escalation provisions in our leases and $2.9 million is from incremental revenue from acquisitions made in 2013.

 

    Interest from loans – up $1.1 million over the prior year of which $0.4 million is from our annual escalation provisions in our loans and $0.7 million is from new loans made since June 2013.

Real estate depreciation and amortization during the second quarter of 2014 increased to $12.4 million from $8.6 million in 2013, due to the incremental depreciation from the properties acquired since June 30, 2013 and the development properties completed in 2013 and 2014.

During the 2014 second quarter, we recorded a $3.1 million real estate impairment charge on our Bucks facility and a $26.5 million impairment charge on our Monroe facility – see Note 3 to Item 1 of this Form 10-Q for further details.

Acquisition expenses increased from $2.1 million in 2013 to $2.5 million in 2014 primarily as a result of the acquisition in the first quarter of 2014 and continued activity to pursue potential deals.

 

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General and administrative expenses totaled $8.2 million for the 2014 second quarter, which is 10.7% of total revenues, down from 12.4% of total revenues in the prior year second quarter. The drop in general and administrative expenses as a percentage of revenue is primarily due to our business model as we can generally increase our revenue significantly without increasing our head count and related expense at the same rate. On a dollar basis, general and administrative expenses were up $1.1 million from the prior year second quarter due to travel and international administrative expenses, which are up as a result of the growth and expansion of our company since the 2013 second quarter.

Interest expense, for the quarters ended June 30, 2014 and 2013, totaled $24.7 million and $14.6 million, respectively. This increase is primarily related to higher average debt balances in the current year quarter associated with our 2014 and 2013 Senior Unsecured Notes, the $150 million tack on offering to our 2012 Senior Unsecured Notes and our new Credit Facility – all of which closed after the 2013 second quarter. In addition, we recorded a $0.3 million refinancing charge in the 2014 second quarter related to the replacement of our old credit facility. Our weighted average interest rates was 5.9% for the quarter ended June 30, 2014, which is a slight decline from 6% in 2013. See Note 4 to our Condensed Consolidated Financial Statements in Item 1 to this Form 10-Q for further information on our debt activities.

In addition to the items noted above, net income (loss) for the second quarter in both years was impacted by discontinued operations related to property disposals prior to 2014. See Note 8 to our Condensed Consolidated Financial Statements in Item 1 to this Form 10-Q for further information.

Six Months Ended June 30, 2014 Compared to June 30, 2013

Net income for the six months ended June 30, 2014, was $7.0 million compared to net income of $53.5 million for the six months ended June 30, 2013 primarily due to the $50.1 million of impairment charges taken in 2014 — See Note 3 to Item 1 of this Form 10-Q for further details. FFO, after adjusting for certain items (as more fully described in Reconciliation of Non-GAAP Financial Measures), was $87.2 million, or $0.52 per diluted share for the first six months in 2014 as compared to $70.7 million, or $0.48 per diluted share for the first six months of 2013. This 23% increase in FFO is primarily due to the increase in revenue from acquisitions made subsequent to June 2013.

A comparison of revenues for the six month periods ended June 30, 2014 and 2013 is as follows (dollar amounts in thousands):

 

     2014      % of
Total
    2013      % of
Total
    Year over
Year
Change
 

Base rents

   $ 88,889         59.4   $ 62,528         54.5     42.2  % 

Straight-line rents

     5,366         3.6     5,468         4.7     (–0.2 )% 

Income from direct financing leases

     24,479         16.3     17,986         15.7     36.1  % 

Interest from loans and fee income

     30,915         20.7     28,755         25.1     7.5  % 
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total revenue

   $ 149,649         100.0   $ 114,737         100.0     30.4  % 
  

 

 

      

 

 

      

Our total revenue for the first six months of 2014 is up $34.9 million or 30.4% over the prior year. This increase is made up of the following:

 

    Base rents – up $26.4 million over the prior year of which $1.6 million is from our annual escalation provisions in our leases, $22.7 million is from incremental revenue from acquisitions made in the second half of 2013, and $3.0 million is incremental revenue from development properties that were completed and put into service in 2013 and 2014. Approximately $1 million of base rents were recorded in the first half of 2013 related to our Monroe property but none was recorded in the current year.

 

    Straight-line rents – down ($0.1) million primarily due to the write-off of unbilled rent related to our Gilbert property partially offset by the increase due to acquisitions – see Note 3 to Item 1 of this Form 10-Q for further details.

 

    Income from direct financing leases – up $6.5 million over the prior year of which $0.2 million is from our annual escalation provisions in our leases and $6.3 million is from incremental revenue from acquisitions made in 2013.

 

    Interest from loans – up $2.2 million over the prior year of which $0.8 million is from our annual escalation provisions in our loans and $1.9 million is primarily from new loans made since June 2013 partially offset by the repayment of loans in late 2013 and 2014.

 

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Real estate depreciation and amortization during the first six months of 2014 was $26.1 million, compared to $17.1 million in the same period of 2013 due to the incremental depreciation from the properties acquired since June 2013 and the development properties completed in 2013 and 2014.

Acquisition expenses increased from $2.3 million in 2013 to $3.0 million in 2014 primarily as a result of the acquisition in the 2014 first quarter and continued activity to pursue potential deals.

General and administrative expenses in the first two quarters of 2014 totaled $17.2 million, which is 11.5% of revenues down from 13.0% of revenues in the prior year as revenues are up over the prior year. The drop in general and administrative expenses as a percentage of revenue is primarily due to our business model as we can generally increase our revenue significantly without increasing our head count and related expense at the same rate. On a dollar basis, general and administrative expenses were up $2.3 million from the prior year first six months due to higher compensation expense, travel and international administrative expenses, which are up as a result of the growth and expansion of our company since June 2013.

Interest expense for the first six months of 2014 and 2013 totaled $46.3 million and $30.1 million, respectively. This increase is primarily related to higher average debt balances in the current year associated with our 2014 and 2013 Senior Unsecured Notes, the $150 million tack on offering to our 2012 Senior Unsecured Notes and our new Credit Facility – all of which closed after the 2013 second quarter. In addition, we recorded a $0.3 million refinancing charge in the 2014 second quarter related to the replacement of our old credit facility. Our weighted average interest rates was 5.9% for the first six months of 2014, down slightly from 6% in 2013. See Note 4 to our Condensed Consolidated Financial Statements in Item 1 to this Form 10-Q for further information on our debt activities.

In addition to the items noted above, net income (loss) for the first six months in both years was impacted by discontinued operations related to property disposals prior to 2014. See Note 8 to our Condensed Consolidated Financial Statements in Item 1 to this Form 10-Q for further information.

Reconciliation of Non-GAAP Financial Measures

Investors and analysts following the real estate industry utilize funds from operations, or FFO, as a supplemental performance measure. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets, which assumes that the value of real estate diminishes predictably over time. We compute FFO in accordance with the definition provided by the National Association of Real Estate Investment Trusts, or NAREIT, which represents net income (loss) (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairment charges on real estate assets, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures.

In addition to presenting FFO in accordance with the NAREIT definition, we also disclose normalized FFO, which adjusts FFO for items that relate to unanticipated or non-core events or activities or accounting changes that, if not noted, would make comparison to prior period results and market expectations less meaningful to investors and analysts.

We believe that the use of FFO, combined with the required GAAP presentations, improves the understanding of our operating results among investors and the use of normalized FFO makes comparisons of our operating results with prior periods and other companies more meaningful. While FFO and normalized FFO are relevant and widely used supplemental measures of operating and financial performance of REITs, they should not be viewed as a substitute measure of our operating performance since the measures do not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which can be significant economic costs that could materially impact our results of operations. FFO and normalized FFO should not be considered an alternative to net income (loss) (computed in accordance with GAAP) as indicators of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.

 

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The following table presents a reconciliation of FFO to net income attributable to MPT common stockholders for the three and six months ended June 30, 2014 and 2013 ($ amounts in thousands, except per share data):

 

     For the Three Months Ended     For the Six Months Ended  
     June 30, 2014     June 30, 2013     June 30, 2014     June 30, 2013  

FFO information:

        

Net income (loss) attributable to MPT common stockholders

   $ (203   $ 27,348      $ 7,038      $ 53,504   

Participating securities’ share in earnings

     (195     (179     (404     (372
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss), less participating securities’ share in earnings

   $ (398   $ 27,169      $ 6,634      $ 53,132   

Depreciation and amortization:

        

Continuing operations

     12,442        8,643        26,131        17,112   

Discontinued operations

     —         75        —          253   

Real estate impairment charges

     5,974       —          5,974       —     

Loss (gain) on sale of real estate

     —         (2,054     —          (2,054
  

 

 

   

 

 

   

 

 

   

 

 

 

Funds from operations

   $ 18,018      $ 33,833      $ 38,739      $ 68,443   

Write-off of straight line rent

     —         —          950       —     

Loan and other impairment charge

     23,657       —          44,154       —     

Debt refinancing costs

     290       —          290       —     

Acquisition costs

     2,535        2,088        3,047        2,278   
  

 

 

   

 

 

   

 

 

   

 

 

 

Normalized funds from operations

   $ 44,500      $ 35,921      $ 87,180      $ 70,721   
  

 

 

   

 

 

   

 

 

   

 

 

 

Per diluted share data:

        

Net income (loss), less participating securities’ share in earnings

   $ —        $ 0.18      $ 0.04      $ 0.36   

Depreciation and amortization:

        

Continuing operations

     0.07        0.06        0.16        0.12   

Discontinued operations

     —         —         —         —     

Real estate impairment charges

     0.03       —          0.03       —     

Loss (gain) on sale of real estate

     —         (0.02     —         (0.01
  

 

 

   

 

 

   

 

 

   

 

 

 

Funds from operations

   $ 0.10      $ 0.22      $ 0.23      $ 0.47   

Write-off of straight line rent

     —         —          0.01       —     

Loan and other impairment charge

     0.14       —          0.26       —     

Debt refinancing costs

     —         —          —         —     

Acquisition costs

     0.02        0.02        0.02        0.01   
  

 

 

   

 

 

   

 

 

   

 

 

 

Normalized funds from operations

   $ 0.26      $ 0.24      $ 0.52      $ 0.48   
  

 

 

   

 

 

   

 

 

   

 

 

 

Disclosure of Contractual Obligations

The following table summarizes known material contractual obligations (including interest) as of June 30, 2014, excluding the impact of subsequent events (amounts in thousands):

 

Contractual Obligations

   Less Than
1 Year
     1-3 Years      3-5 Years      After
5 Years
     Total  

2006 Senior Unsecured Notes(1)

   $ 6,985      $ 134,555      $ —        $ —        $ 141,540  

2011, 2012 and 2014 Senior Unsecured Notes

     70,392        139,500        139,500        1,311,313         1,660,705  

2013 Senior Unsecured Notes(5)

     15,746        31,492        31,492        297,459         376,189  

Revolving credit facility(2)

     2,625         5,250         2,625         —           10,500  

Term loans

     3,809        7,625         143,684        —          155,118  

Operating lease commitments(3)

     2,731        5,535        5,349        42,029        55,644  

Purchase obligations(4)

     70,834        —          —          —          70,834  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Totals

   $ 173,122       $ 323,957       $ 322,650       $ 1,650,801       $ 2,470,530   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

 

(1) The interest rates on these notes are currently variable rates, but we entered into interest rate swaps to fix these interest rates until maturity. For $65 million of our $125 million senior notes, the rate is 5.507% and for $60 million of our $125 million senior notes the rate is 5.675%. See Note 4 to our Condensed Consolidated Financial Statements in Item 1 to this Form 10-Q for further information.
(2) As of June 19, 2014, we have a new $775 million revolving credit facility that replaced our previous $400 million facility. However, this tables assumes balance and rate in effect at June 30, 2014 (which was $— million as of June 30, 2014) remains in effect through maturity. This also reflects unused credit facility fees assuming balance remains in effect through maturity.
(3) Most of our contractual obligations to make operating lease payments are related to ground leases for which we are reimbursed by our tenants along with corporate office and equipment leases.
(4) Includes approximately $68.9 million of future expenditures related to development projects.
(5) Our 2013 Senior Unsecured Notes are Euro-denominated. We used the exchange rate at June 30, 2014, (or 1.37) in preparing this table.

LIQUIDITY AND CAPITAL RESOURCES

2014 Cash Flow Activity

During the six months ended June 30, 2014, we generated $50.3 million of cash flow from operating activities, primarily consisting of rent and interest from mortgage and other loans. We used these operating cash flows along with cash on-hand to fund our dividends of $71.8 million and certain investing activities including the additional funding of our development activities.

In regards to other financing activities in which we used such net proceeds to ultimately fund our $115 million property acquisition on March 31, 2014, to fund other investment activities, and to pay down our revolving credit facility, we did the following:

 

  a) On March 11, 2014, we completed an underwritten public offering of 7.7 million shares of our common stock, resulting in net proceeds of approximately $100.2 million, after deducting estimated offering expenses. We also granted the underwriters a 30-day option to purchase up to an additional 1.2 million shares of common stock. The option, which was exercised in full, closed on April 8, 2014 and resulted in additional net proceeds of approximately $16 million.

 

  b) On April 17, 2014, we completed a $300 million senior unsecured notes offering.

 

  c) On June 19, 2014, we closed on a new $900 million senior unsecured credit facility (the “Credit Facility”). The Credit Facility is comprised of a $775 million senior unsecured revolving credit facility and a $125 million senior unsecured term loan facility. The Credit Facility replaces our previous $400 million unsecured revolving credit facility and $100 million unsecured term loan.

 

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Table of Contents

2013 Cash Flow Activity

During the first six months of 2013, operating cash flows, which primarily consisted of rent and interest from mortgage and other loans, were $56.2 million, which with cash on-hand, were principally used to fund our dividends of $57.8 million.

On February 28, 2013, we completed an offering of 12.7 million shares of our common stock (including 1.7 million shares sold pursuant to the exercise in full of the underwriters’ option to purchase additional shares) at a price of $14.25 per share, resulting in net proceeds (after underwriting discount and expenses) of $172.9 million. Proceeds from this offering and property sales were used to pay down $85 million on our revolving credit facility and fund our investing activities including our acquisitions and development activities.

Short-term Liquidity Requirements: As of June 30, 2014, we have less than $0.2 million in debt principal payments due in 2014 — see debt maturity schedule below. At August 6, 2014, our availability under our revolving credit facility plus cash on-hand (including the proceeds received from the sale of our Bucks facility) approximated $950 million. In addition, we established an at-the-market equity offering program in January 2014 under which we may sell up to $250 million in shares (of which $12.5 million has been sold through August 6, 2014) which may be used for general corporate purposes as needed. We believe that the liquidity available to us, our current monthly cash receipts from rent and loan interest, and the availability under our at-the-market equity offering program is sufficient to fund our operations, debt and interest obligations, our firm commitments (including capital expenditures, if any, and expected funding requirements on our development projects), dividends in order to comply with REIT requirements, and our current investment strategies for the next twelve months.

Long-term Liquidity Requirements: As of June 30, 2014, we have less than $0.5 million in debt principal payments due between now and July 2016 . With our liquidity at August 6, 2014 of approximately $950 million along with our current monthly cash receipts from rent and loan interest and with the availability under our at-the-market equity offering program, we believe we have the liquidity available to us to fund our operations, debt and interest obligations, dividends in order to comply with REIT requirements, and firm commitments (including capital expenditures, if any, and expected funding requirements on our development projects) for the next several years. We also believe such liquidity is sufficient to cover our current investment goals.

However, if such liquidity is not enough or if we engage in acquisitions at levels significantly greater than our current plan, we may need additional capital, which we believe is currently available in the market such as the following:

 

    amending or entering into new bank term loans,

 

    issuance of new debt securities, including senior unsecured notes,

 

    sale of equity securities,

 

    entering into joint venture arrangements, and/or

 

    proceeds from strategic property sales,

However, there is no assurance that conditions will remain favorable for such possible transactions or that our plans will be successful.

As of June 30, 2014, principal payments due for our debt (which exclude the effects of any premiums recorded) are as follows (in thousands):

 

2014

   $ 134   

2015

     283   

2016

     125,298   

2017

     320   

2018

     12,781   

Thereafter

     1,498,840   
  

 

 

 

Total

   $ 1,637,656   
  

 

 

 

 

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Table of Contents

Distribution Policy

The table below is a summary of our distributions declared during the two year period ended June 30, 2014:

 

Declaration Date

   Record Date    Date of Distribution    Distribution per Share  

May 15, 2014

   June 12, 2014    July 10, 2014    $ 0.21   

February 21, 2014

   March 14, 2014    April 11, 2014    $ 0.21   

November 7, 2013

   December 3, 2013    January 7, 2014    $ 0.21   

August 15, 2013

   September 12, 2013    October 10, 2013    $ 0.20   

May 23, 2013

   June 13, 2013    July 11, 2013    $ 0.20   

February 14, 2013

   March 14, 2013    April 11, 2013    $ 0.20   

October 30, 2012

   November 23, 2012    January 5, 2013    $ 0.20   

August 16, 2012

   September 13, 2012    October 11, 2012    $ 0.20   

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 cash distributions to stockholders in order for us to maintain our status as a REIT under the Code and to avoid corporate income and excise taxes on undistributed income. See Note 4 to our condensed consolidated financial statements in Item 1 to this Form 10-Q for any restrictions placed on dividends by our new credit facility.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. We seek to mitigate the effects of fluctuations in interest rates by matching the terms of new investments with new long-term fixed rate borrowings to the extent possible. We may or may not elect to use financial derivative instruments to hedge interest rate exposure. These decisions are principally based on our policy to match our variable rate investments with comparable borrowings, but are also based on the general trend in interest rates at the applicable dates and our perception of the future volatility of interest rates.

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 impacted also by changes in “cap” rates, which is measured by the current base rent divided by the current market value of a facility.

Our primary exposure to market risks relates to fluctuations in interest rates and foreign currency. The following analyses present the sensitivity of the market value, earnings and cash flows of our significant financial instruments to hypothetical changes in interest rates and exchange rates as if these changes had occurred. The hypothetical changes chosen for these analyses reflect our view of changes that are reasonably possible over a one-year period. These forward looking disclosures are selective in nature and only address the potential impact from these hypothetical changes. They do not include other potential effects which could impact our business as a result of changes in market conditions. In addition, they do not include measures we may take to minimize our exposure such as entering into future interest rate swaps to hedge against interest rate increases on our variable rate debt.

Interest Rate Sensitivity

For fixed rate debt, interest rate changes affect the fair market value but do not impact net income to common stockholders or cash flows. Conversely, for floating rate debt, interest rate changes generally do not affect the fair market value but do impact net income to common stockholders and cash flows, assuming other factors are held constant. At June 30, 2014, our outstanding debt totaled $1.6 billion, which consisted of fixed-rate debt of $1.5 billion (including $125.0 million of floating debt swapped to fixed) and variable rate debt of $125.0 million. If market interest rates increase by one percentage point, the fair value of our fixed rate debt at June 30, 2014 would decrease by $8.2 million. Changes in the fair value of our fixed rate debt will not have any impact on us unless we decided to repurchase the debt in the open market.

If market rates of interest on our variable rate debt increase by 1%, the increase in annual interest expense on our variable rate debt would decrease future earnings and cash flows by $1.3 million per year. If market rates of interest on our variable rate debt decrease by 1%, the decrease in interest expense on our variable rate debt would increase future earnings and cash flows by $1.3 million per year. This assumes that the average amount outstanding under our variable rate debt for a year is $125 million, the balance of such variable rate debt at June 30, 2014.

 

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Table of Contents

Foreign Currency Sensitivity

With our acquisition of the properties in Germany in 2013, we are subject to fluctuations in U.S. and Euro currency exchange rates that may, from time to time, affect our financial condition and results of operations. Increases or decreases in the value of the Euro relative to the US dollar may impact the amount of net income we report. Based solely on operating results for the first six month of 2014 and on an annualized basis, if the Euro exchange rate were to change by 1%, our net income would change by less than $0.1 million.

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.

None.

Item 1A. Risk Factors.

There have been no material changes to the Risk Factors as presented in our Annual Report on Form 10-K for the year ended December 31, 2013.

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

 

(a) None.

 

(b) Not applicable.

 

(c) None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

 

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Table of Contents

Item 5. Other Information.

 

(a) None.

 

(b) None.

Item 6. Exhibits.

 

Exhibit

Number

 

Description

4.1(1)   Fifth Supplemental Indenture, dated April 17, 2014, to Indenture dated October 10, 2013, among the Company, the Operating Partnership, MPT Finance, the Subsidiary Guarantors and Wilmington Trust, National Association, as Trustee.
4.2   Sixth Supplemental Indenture, dated June 30, 2014, to Indenture dated October 10, 2013, among the Company, the Operating Partnership, MPT Finance, the Subsidiary Guarantors and Wilmington Trust, National Association, as Trustee.
4.3   Twelfth Supplemental Indenture, dated June 30, 2014, to Indenture dated February 17, 2012, among the Company, the Operating Partnership, MPT Finance, the Subsidiary Guarantors and Wilmington Trust, National Association, as Trustee.
4.4   Fifteenth Supplemental Indenture, dated June 30, 2014, to Indenture dated April 26, 2011, among the Company, the Operating Partnership, MPT Finance, the Subsidiary Guarantors and Wilmington Trust, National Association, as Trustee.
10.1(2)   Amended and Restated Revolving Credit and Term Loan Agreement, dated as of June 19, 2014, among Medical Properties Trust, Inc., MPT Operating Partnership, L.P., the several lenders from time to time party thereto, Bank of America, N.A., as syndication agent, and JPMorgan Chase Bank, N.A., as administrative agent.
31.1   Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (Medical Properties Trust, Inc.)
31.2   Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (Medical Properties Trust, Inc.)
31.3   Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (MPT Operating Partnership, L.P.)
31.4   Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (MPT Operating Partnership, L.P.)
32.1   Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Medical Properties Trust, Inc.)
32.2   Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (MPT Operating Partnership, L.P.)
Exhibit 101.INS   XBRL Instance Document
Exhibit 101.SCH   XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LAB   XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

(1) Incorporated by reference to Medical Properties Trust, Inc.’s Current Report on Form 8-K filed with the Commission on April 23, 2014.

 

(2) Incorporated by reference to Medical Properties Trust, Inc.’s Current Report on Form 8-K filed with the Commission on June 25, 2014.

 

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Table of Contents

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.

 

MEDICAL PROPERTIES TRUST, INC.
By:  

/s/ R. Steven Hamner

  R. Steven Hamner
 

Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

MPT OPERATING PARTNERSHIP, L.P.
By:  

/s/ R. Steven Hamner

  R. Steven Hamner
 

Executive Vice President and Chief Financial Officer of the sole member of the general partner of MPT Operating Partnership, L.P.

(Principal Financial and Accounting Officer)

Date: August 11, 2014

 

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Table of Contents

INDEX TO EXHIBITS

 

Exhibit

Number

 

Description

4.1(1)   Fifth Supplemental Indenture, dated April 17, 2014, to Indenture dated October 10, 2013, among the Company, the Operating Partnership, MPT Finance, the Subsidiary Guarantors and Wilmington Trust, National Association, as Trustee.
4.2   Sixth Supplemental Indenture, dated June 30, 2014, to Indenture dated October 10, 2013, among the Company, the Operating Partnership, MPT Finance, the Subsidiary Guarantors and Wilmington Trust, National Association, as Trustee.
4.3   Twelfth Supplemental Indenture, dated June 30, 2014, to Indenture dated February 17, 2012, among the Company, the Operating Partnership, MPT Finance, the Subsidiary Guarantors and Wilmington Trust, National Association, as Trustee.
4.4   Fifteenth Supplemental Indenture, dated June 30, 2014, to Indenture dated April 26, 2011, among the Company, the Operating Partnership, MPT Finance, the Subsidiary Guarantors and Wilmington Trust, National Association, as Trustee.
10.1(2)   Amended and Restated Revolving Credit and Term Loan Agreement, dated as of June 19, 2014, among Medical Properties Trust, Inc., MPT Operating Partnership, L.P., the several lenders from time to time party thereto, Bank of America, N.A., as syndication agent, and JPMorgan Chase Bank, N.A., as administrative agent.
31.1   Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (Medical Properties Trust, Inc.)
31.2   Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (Medical Properties Trust, Inc.)
31.3   Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (MPT Operating Partnership, L.P.)
31.4   Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (MPT Operating Partnership, L.P.)
32.1   Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Medical Properties Trust, Inc.)
32.2   Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (MPT Operating Partnership, L.P.)
Exhibit 101.INS   XBRL Instance Document
Exhibit 101.SCH   XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LAB   XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

(1) Incorporated by reference to Medical Properties Trust, Inc.’s Current Report on Form 8-K filed with the Commission on April 23, 2014.

 

(2) Incorporated by reference to Medical Properties Trust, Inc.’s Current Report on Form 8-K filed with the Commission on June 25, 2014.

 

47

EX-4.2

Exhibit 4.2

 

 

MPT OF MISSOURI CITY-DULLES FCER, LLC,

as Guarantor,

MPT OPERATING PARTNERSHIP, L.P.

and

MPT FINANCE CORPORATION,

as Issuers,

MEDICAL PROPERTIES TRUST, INC.,

as Parent and a Guarantor,

the other GUARANTORS named herein,

as Guarantors,

and

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee

 

 

SIXTH SUPPLEMENTAL INDENTURE

Dated as of June 30, 2014

To

INDENTURE

Dated as of October 10, 2013

5.70% Senior Notes due 2020

 

 

 


SIXTH SUPPLEMENTAL INDENTURE

SIXTH SUPPLEMENTAL INDENTURE (this “Sixth Supplemental Indenture”), dated as of June 30, 2014, by and among MPT of Missouri City-Dulles FCER, LLC, a Delaware limited liability company (the “New Guaranteeing Subsidiary”), MPT Operating Partnership, L.P., a Delaware limited partnership (“Opco”), MPT Finance Corporation, a Delaware corporation (“Finco” and, together with Opco, the “Issuers”), Medical Properties Trust, Inc., a Maryland corporation (the “Parent”), as Guarantor, each of the other Guarantors (as defined in the Indenture), as Guarantors, and Wilmington Trust, National Association, existing under the laws of the United States of America, as Trustee (the “Trustee”).

WITNESSETH

WHEREAS, the Issuers and the Guarantors have heretofore executed and delivered an Indenture, dated as of October 10, 2013 (the “Base Indenture”), as supplemented by that certain First Supplemental Indenture, dated as of October 10, 2013 (the “First Supplemental Indenture”), by that certain Second Supplemental Indenture, dated as of October 30, 2013 (the “Second Supplemental Indenture”), by that certain Third Supplemental Indenture, dated as of December 20, 2013 (the “Third Supplemental Indenture”), by that certain Fourth Supplemental Indenture, dated as of March 31, 2014 (the “Fourth Supplemental Indenture”), and by that certain Fifth Supplemental Indenture, dated as of April 17, 2014 (the “Fifth Supplemental Indenture”, and together with the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture and the Base Indenture, the “Indenture”), providing for the issuance by the Issuers of the 5.750% Senior Notes due 2020 (the “Notes”);

WHEREAS, pursuant to Section 10.01(a)(4) of the Indenture, the Parent, the Issuers, the Guarantors and the Trustee, together, may supplement the Indenture without notice to or the consent of any Holders or any other party to the Indenture in order to add Guarantees with respect to the Notes;

WHEREAS, as of June 19, 2014, the New Guaranteeing Subsidiaries guarantee the Credit Agreement, and pursuant to Section 5.14(a) of the Indenture, the New Guaranteeing Subsidiary is required to become a Guarantor under the Indenture;

WHEREAS, the Indenture requires that an entity that constitutes a Guarantor shall join the Issuers and the existing Guarantors in executing and delivering to the Trustee a supplemental indenture pursuant to which such entity shall unconditionally Guarantee, on a joint and several basis, the full and prompt payment of the principal of, premium, if any, and interest in respect of the Notes on a senior basis and all other obligations under the Indenture; and

WHEREAS, pursuant to Section 10.06 of the Indenture, the Trustee is authorized to execute and deliver this Sixth Supplemental Indenture.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuers, the Guarantors, the Trustee and the New Guaranteeing Subsidiary mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. The rules of interpretation set forth in the Indenture shall be applied here as if set forth in full herein.


2. AGREEMENT TO GUARANTEE. The New Guaranteeing Subsidiary hereby agrees to provide unconditional Guarantees on the terms and subject to the conditions set forth in the Indenture including, but not limited to, Article 11 thereof.

3. MISCELLANEOUS PROVISIONS.

(a) The Trustee makes no undertaking or representation in respect of, and shall not be responsible in any manner whatsoever for and in respect of, the validity or sufficiency of this Sixth Supplemental Indenture or the proper authorization or the due execution hereof by the Issuers or for or in respect of the recitals and statements contained herein, all of which recitals and statements are made solely by the Issuers.

(b) On the date hereof, the Indenture shall be supplemented and amended in accordance herewith, and this Sixth Supplemental Indenture shall form part of the Indenture for all purposes, and the Holder of every Note heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. The Trustee accepts the trusts created by the Indenture, as amended and supplemented by this Sixth Supplemental Indenture, and agrees to perform the same upon the terms and conditions of the Indenture, as amended and supplemented by this Sixth Supplemental Indenture.

(c) This Sixth Supplemental Indenture shall be deemed to be incorporated in, and made a part of, the Indenture. The Indenture, as amended and supplemented by this Sixth Supplemental Indenture, shall be read, taken and construed as one and the same instrument and all the provisions of the Indenture shall remain in full force and effect in accordance with the terms thereof and as amended and supplemented by this Sixth Supplemental Indenture.

(d) THIS SIXTH SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(e) This Sixth Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.


IN WITNESS WHEREOF, the parties hereto have caused this Sixth Supplemental Indenture to be duly executed and attested, all as of the date first above written.

 

MPT OPERATING PARTNERSHIP, L.P.,

as Issuer

  By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

    By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

      By:  

/s/ Emmett E. McLean

        Name:   Emmett E. McLean
        Title:   Executive Vice President, Chief Operating Officer, Treasurer and Secretary

 

MPT FINANCE CORPORATION,

as Issuer

By:  

/s/ Emmett E. McLean

  Name:   Emmett E. McLean
  Title:   Assistant Secretary

MEDICAL PROPERTIES TRUST, INC.,

as Parent and a Guarantor

By:  

/s/ Emmett E. McLean

  Name:   Emmett E. McLean
  Title:   Executive Vice President, Chief Operating Officer, Treasurer and Secretary
MEDICAL PROPERTIES TRUST, LLC
By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

By:  

/s/ Emmett E. McLean

Name:   Emmett E. McLean
Title:   Executive Vice President, Chief Operating Officer, Treasurer and Secretary

 

SIXTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF VICTORVILLE, LLC
MPT OF BUCKS COUNTY, LLC
MPT OF BLOOMINGTON, LLC
MPT OF COVINGTON, LLC
MPT OF REDDING, LLC
MPT OF CHINO, LLC
MPT OF DALLAS LTACH, LLC
MPT OF PORTLAND, LLC
MPT OF VICTORIA, LLC
MPT OF LULING, LLC
MPT OF WEST ANAHEIM, LLC
MPT OF LA PALMA, LLC
MPT OF PARADISE VALLEY, LLC
MPT OF SOUTHERN CALIFORNIA, LLC
MPT OF TWELVE OAKS, LLC
MPT OF SHASTA, LLC
MPT OF BOSSIER CITY, LLC
MPT OF WEST VALLEY CITY, LLC
MPT OF IDAHO FALLS, LLC
MPT OF POPLAR BLUFF, LLC
MPT OF BENNETTSVILLE, LLC
MPT OF DETROIT, LLC
MPT OF BRISTOL, LLC
MPT OF NEWINGTON, LLC
MPT OF ENFIELD, LLC
MPT OF PETERSBURG, LLC
MPT OF GARDEN GROVE HOSPITAL, LLC
MPT OF GARDEN GROVE MOB, LLC
MPT OF SAN DIMAS HOSPITAL, LLC
MPT OF SAN DIMAS MOB, LLC
MPT OF CHERAW, LLC
MPT OF FT. LAUDERDALE, LLC.
MPT OF PROVIDENCE, LLC
MPT OF SPRINGFIELD, LLC
MPT OF WARWICK, LLC
MPT OF RICHARDSON, LLC
MPT OF ROUND ROCK, LLC
MPT OF SHENANDOAH, LLC
MPT OF HILLSBORO, LLC
MPT OF FLORENCE, LLC
MPT OF CLEAR LAKE, LLC
MPT OF TOMBALL, LLC
MPT OF GILBERT, LLC
MPT OF CORINTH, LLC
MPT OF BAYONNE, LLC
MPT OF ALVARADO, LLC
MPT OF DESOTO, LLC
MPT OF HAUSMAN, LLC

 

SIXTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF HOBOKEN HOSPITAL, LLC
MPT OF HOBOKEN REAL ESTATE, LLC
MPT OF OVERLOOK PARKWAY, LLC
MPT OF NEW BRAUNFELS, LLC
MPT OF WESTOVER HILLS, LLC
MPT OF WICHITA, LLC
MPT OF BILLINGS, LLC
MPT OF BOISE, LLC
MPT OF BROWNSVILLE, LLC
MPT OF CASPER, LLC
MPT OF COMAL COUNTY, LLC
MPT OF GREENWOOD, LLC
MPT OF JOHNSTOWN, LLC
MPT OF LAREDO, LLC
MPT OF LAS CRUCES, LLC
MPT OF MESQUITE, LLC
MPT OF POST FALLS, LLC
MPT OF PRESCOTT VALLEY, LLC
MPT OF PROVO, LLC
MPT OF NORTH CYPRESS, LLC
MPT OF LAFAYETTE, LLC
MPT OF INGLEWOOD LLC
MPT OF RENO, LLC
MPT OF ROXBOROUGH, LLC
MPT OF ALTOONA, LLC
MPT OF HAMMOND, LLC
MPT OF SPARTANBURG, LLC
MPT OF WYANDOTTE COUNTY, LLC
MPT OF LEAVENWORTH, LLC
MPT OF CORPUS CHRISTI, LLC
MPT OF BRODIE FCER, LLC
MPT OF LITTLE ELM FCER, LLC
MPT OF OGDEN, LLC
MPT OF NACOGDOCHES FCER, LLC
MPT OF MESA, LLC
MPT OF PORT ARTHUR, LLC
MPT OF WEST MONROE, LLC
MPT OF DALLAS, LLC
MPT OF LEGACY MONTCLAIR, LLC
MPT OF ALVIN FCER, LLC
MPT OF FIRESTONE FCER, LLC
MPT OF HOUSTON-ELDRIDGE FCER, LLC
MPT OF CEDAR HILL FCER, LLC
MPT OF ALLEN FCER, LLC
MPT OF FRISCO FCER, LLC
MPT OF BROOMFIELD FCER, LLC
MPT OF CHAMPION FOREST FCER, LLC
MPT OF NORTHGATE FCER, LLC

 

SIXTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF THORNTON FCER, LLC
MPT OF FOUNTAIN FCER, LLC
MPT OF MISSOURI CITY FCER, LLC
MPT OF PEARLAND FCER, LLC
MPT OF MISSOURI CITY-DULLES FCER, LLC

 

By:  

MPT OPERATING PARTNERSHIP, L.P.,

sole member of each of the above entities

  By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

    By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

      By:  

/s/ Emmett E. McLean

        Name:   Emmett E. McLean
        Title:   Executive Vice President, Chief Operating Officer, Treasurer and Secretary

 

MPT OF BUCKS COUNTY, L.P.
By:  

MPT OF BUCKS COUNTY, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

MPT OF DALLAS LTACH, L.P.
By:  

MPT OF DALLAS LTACH, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

SIXTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF VICTORIA, L.P.
By:  

MPT OF VICTORIA, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF LULING, L.P.
By:  

MPT OF LULING, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF WEST ANAHEIM, L.P.
By:  

MPT OF WEST ANAHEIM, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

SIXTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF LA PALMA, L.P.
By:  

MPT OF LA PALMA, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF PARADISE VALLEY, L.P.
By:  

MPT OF PARADISE VALLEY, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF SOUTHERN CALIFORNIA, L.P.
By:  

MPT OF SOUTHERN CALIFORNIA, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

SIXTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF TWELVE OAKS, L.P.
By:  

MPT OF TWELVE OAKS, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF SHASTA, L.P.
By:  

MPT OF SHASTA, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF GARDEN GROVE HOSPITAL, L.P.
By:  

MPT OF GARDEN GROVE HOSPITAL, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

SIXTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF GARDEN GROVE MOB, L.P.
By:  

MPT OF GARDEN GROVE MOB, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF SAN DIMAS HOSPITAL, L.P.
By:  

MPT OF SAN DIMAS HOSPITAL, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF SAN DIMAS MOB, L.P.
By:  

MPT OF SAN DIMAS MOB, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

SIXTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF RICHARDSON, L.P.
By:  

MPT OF RICHARDSON, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF ROUND ROCK, L.P.
By:  

MPT OF ROUND ROCK, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF SHENANDOAH, L.P.
By:  

MPT OF SHENANDOAH, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

SIXTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF HILLSBORO, L.P.
By:  

MPT OF HILLSBORO, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF CLEAR LAKE, L.P.
By:  

MPT OF CLEAR LAKE, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF TOMBALL, L.P.
By:  

MPT OF TOMBALL, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

SIXTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF CORINTH, L.P.
By:  

MPT OF CORINTH, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF ALVARADO, L.P.
By:  

MPT OF ALVARADO, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF DESOTO, L.P.
By:  

MPT OF DESOTO, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

SIXTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF MOUNTAIN VIEW LLC
By:  

MPT OF IDAHO FALLS, LLC,

its sole member

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

WICHITA HEALTH ASSOCIATES LIMITED PARTNERSHIP
By:  

MPT OF WICHITA, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF NORTH CYPRESS, L.P.
By:  

MPT OF NORTH CYPRESS, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

SIXTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF INGLEWOOD, L.P.
By:  

MPT OF INGLEWOOD, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF ROXBOROUGH, L.P.
By:  

MPT OF ROXBOROUGH, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF LOS ANGELES, L.P.
By:  

MPT OF LOS ANGELES, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MEDICAL PROPERTIES TRUST, LLC
By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

  By:  

/s/ Emmett E. McLean

    Name:   Emmett E. McLean
    Title:   Executive Vice President, Chief Operating Officer, Treasurer and Secretary

 

SIXTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT RHM HOLDCO S.à.r.l.
MPT RHM SONNENWENDE S.à.r.l.
MPT RHM KLAUS S.à.r.l.
MPT RHM VESALIUS S.à.r.l.
MPT RHM PARK S.à.r.l.
MPT RHM FONTANA S.à.r.l.
MPT RHM CHRISTIAAN S.à.r.l.
MPT RHM HILLERSBACH S.à.r.l.
By:  

/s/ Leanne McWilliams

  Name:   Leanne McWilliams
  Title:   Class A Manager
By:  

/s/ James Kevin Hanna

  Name:   James Kevin Hanna
  Title:   Class A Manager and Authorized Signatory

 

SIXTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee,

By:  

/s/ Michael H. Wass

  Name:   Michael H. Wass
  Title:   Assistant Vice President

 

SIXTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE

EX-4.3

Exhibit 4.3

MPT OF MISSOURI CITY-DULLES FCER, LLC,

as Guarantor,

MPT OPERATING PARTNERSHIP, L.P.

and

MPT FINANCE CORPORATION,

as Issuers,

MEDICAL PROPERTIES TRUST, INC.,

as Parent and a Guarantor,

the other GUARANTORS named herein,

as Guarantors,

and

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee

TWELFTH SUPPLEMENTAL INDENTURE

Dated as of June 30, 2014

To

INDENTURE

Dated as of February 17, 2012

6.375% Senior Notes due 2022

 

 


TWELFTH SUPPLEMENTAL INDENTURE

TWELFTH SUPPLEMENTAL INDENTURE (this “Twelfth Supplemental Indenture”), dated as of June 30, 2014, by and among MPT of Missouri City-Dulles FCER, LLC, a Delaware limited liability company (the “New Guaranteeing Subsidiary”), MPT Operating Partnership, L.P., a Delaware limited partnership (“Opco”), MPT Finance Corporation, a Delaware corporation (“Finco” and, together with Opco, the “Issuers”), Medical Properties Trust, Inc., a Maryland corporation (the “Parent”), as Guarantor, each of the other Guarantors (as defined in the Indenture), as Guarantors, and Wilmington Trust, National Association, existing under the laws of the United States of America, as Trustee (the “Trustee”).

WITNESSETH

WHEREAS, the Issuers and the Guarantors have heretofore executed and delivered an Indenture, dated as of February 17, 2012, (the “Base Indenture”), as supplemented by that certain First Supplemental Indenture dated as of April 9, 2012 (the “First Supplemental Indenture”), by that certain Second Supplemental Indenture dated as of June 27, 2012 (the “Second Supplemental Indenture”), by that certain Third Supplemental Indenture dated as of July 31, 2012 (the “Third Supplemental Indenture”), by that certain Fourth Supplemental Indenture dated as of September 28, 2012 (the “Fourth Supplemental Indenture”), by that certain Fifth Supplemental Indenture dated as of December 28, 2012 (the “Fifth Supplemental Indenture”), by that certain Sixth Supplemental Indenture dated as of June 27, 2013, by that certain Seventh Supplemental Indenture dated as of August 8, 2013 (the “Seventh Supplemental Indenture”), by that certain Eighth Supplemental Indenture dated as of August 20, 2013 (the “Eighth Supplemental Indenture”), by that certain Ninth Supplemental Indenture dated as of October 30, 2013 (the “Ninth Supplemental Indenture”), by that certain Tenth Supplemental Indenture dated as of December 20, 2013 (the “Tenth Supplemental Indenture”), and by that certain Eleventh Supplemental Indenture dated as of March 31, 2014 (the “Eleventh Supplemental Indenture”, together with the Base Indenture, the First Supplemental Indenture, the Second Supplement Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture, the Fifth Supplemental Indenture, the Sixth Supplemental Indenture, the Seventh Supplemental Indenture, the Eighth Supplemental Indenture, the Ninth Supplemental Indenture and the Tenth Supplemental Indenture, the “Indenture”), providing for the issuance by the Issuers of the 6.375% Senior Notes due 2022 (the “Notes”);

WHEREAS, pursuant to Section 9.01(a)(4) of the Indenture, the Issuers, the Guarantors and the Trustee may supplement the Indenture without the consent of any Holders in order to add Guarantees with respect to the Notes;

WHEREAS, as of June 19, 2014, the New Guaranteeing Subsidiary guaranteed the Credit Agreement, and pursuant to Section 4.14(a) of the Indenture, the New Guaranteeing Subsidiary is required to become a Guarantor under the Indenture;

WHEREAS, the Indenture requires that an entity that constitutes a Guarantor shall join the Issuers and the existing Guarantors in executing and delivering to the Trustee a supplemental indenture pursuant to which such entity shall unconditionally Guarantee, on a joint and several basis, the full and prompt payment of the principal of, premium, if any, and interest in respect of the Notes on a senior basis and all other obligations under the Indenture; and


WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Twelfth Supplemental Indenture.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuers, the Guarantors, the Trustee and the New Guaranteeing Subsidiary mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. The rules of interpretation set forth in the Indenture shall be applied here as if set forth in full herein.

2. AGREEMENT TO GUARANTEE. The New Guaranteeing Subsidiary hereby agrees to provide unconditional Guarantees on the terms and subject to the conditions set forth in the Indenture including but not limited to Article 10 thereof.

3. MISCELLANEOUS PROVISIONS.

(a) The Trustee makes no undertaking or representation in respect of, and shall not be responsible in any manner whatsoever for and in respect of, the validity or sufficiency of this Twelfth Supplemental Indenture or the proper authorization or the due execution hereof by the Issuers or for or in respect of the recitals and statements contained herein, all of which recitals and statements are made solely by the Issuers.

(b) On the date hereof, the Indenture shall be supplemented and amended in accordance herewith, and this Twelfth Supplemental Indenture shall form part of the Indenture for all purposes, and the Holder of every Note heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. The Trustee accepts the trusts created by the Indenture, as amended and supplemented by this Twelfth Supplemental Indenture, and agrees to perform the same upon the terms and conditions of the Indenture, as amended and supplemented by this Twelfth Supplemental Indenture.

(c) This Twelfth Supplemental Indenture shall be deemed to be incorporated in, and made a part of, the Indenture. The Indenture, as amended and supplemented by this Twelfth Supplemental Indenture, shall be read, taken and construed as one and the same instrument and all the provisions of the Indenture shall remain in full force and effect in accordance with the terms thereof and as amended and supplemented by this Twelfth Supplemental Indenture.

(d) THIS TWELFTH SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(e) This Twelfth Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

[Signature Pages Follow]


IN WITNESS WHEREOF, the parties hereto have caused this Twelfth Supplemental Indenture to be duly executed and attested, all as of the date first above written.

 

MPT OPERATING PARTNERSHIP, L.P.,

as Issuer

  By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

    By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

      By:  

/s/ Emmett E. McLean

        Name:   Emmett E. McLean
        Title:   Executive Vice President, Chief Operating Officer, Treasurer and Secretary

 

MPT FINANCE CORPORATION,

as Issuer

By:  

/s/ Emmett E. McLean

  Name:   Emmett E. McLean
  Title:   Assistant Secretary

 

MEDICAL PROPERTIES TRUST, INC.,

as Parent and a Guarantor

By:  

/s/ Emmett E. McLean

  Name:   Emmett E. McLean
  Title:   Executive Vice President, Chief Operating Officer, Treasurer and Secretary

 

MEDICAL PROPERTIES TRUST, LLC
By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

By:  

/s/ Emmett E. McLean

Name:   Emmett E. McLean
Title:   Executive Vice President, Chief Operating Officer, Treasurer and Secretary

 

TWELFTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF VICTORVILLE, LLC

MPT OF BUCKS COUNTY, LLC

MPT OF BLOOMINGTON, LLC

MPT OF COVINGTON, LLC

MPT OF REDDING, LLC

MPT OF CHINO, LLC

MPT OF DALLAS LTACH, LLC

MPT OF PORTLAND, LLC

MPT OF VICTORIA, LLC

MPT OF LULING, LLC

MPT OF WEST ANAHEIM, LLC

MPT OF LA PALMA, LLC

MPT OF PARADISE VALLEY, LLC

MPT OF SOUTHERN CALIFORNIA, LLC

MPT OF TWELVE OAKS, LLC

MPT OF SHASTA, LLC

MPT OF BOSSIER CITY, LLC

MPT OF WEST VALLEY CITY, LLC

MPT OF IDAHO FALLS, LLC

MPT OF POPLAR BLUFF, LLC

MPT OF BENNETTSVILLE, LLC

MPT OF DETROIT, LLC

MPT OF BRISTOL, LLC

MPT OF NEWINGTON, LLC

MPT OF ENFIELD, LLC

MPT OF PETERSBURG, LLC

MPT OF GARDEN GROVE HOSPITAL, LLC

MPT OF GARDEN GROVE MOB, LLC

MPT OF SAN DIMAS HOSPITAL, LLC

MPT OF SAN DIMAS MOB, LLC

MPT OF CHERAW, LLC

MPT OF FT. LAUDERDALE, LLC.

MPT OF PROVIDENCE, LLC

MPT OF SPRINGFIELD, LLC

MPT OF WARWICK, LLC

MPT OF RICHARDSON, LLC

MPT OF ROUND ROCK, LLC

MPT OF SHENANDOAH, LLC

MPT OF HILLSBORO, LLC

MPT OF FLORENCE, LLC

MPT OF CLEAR LAKE, LLC

MPT OF TOMBALL, LLC

MPT OF GILBERT, LLC

MPT OF CORINTH, LLC

MPT OF BAYONNE, LLC

MPT OF ALVARADO, LLC

MPT OF DESOTO, LLC

MPT OF HAUSMAN, LLC

 

TWELFTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF HOBOKEN HOSPITAL, LLC

MPT OF HOBOKEN REAL ESTATE, LLC

MPT OF OVERLOOK PARKWAY, LLC

MPT OF NEW BRAUNFELS, LLC

MPT OF WESTOVER HILLS, LLC

MPT OF WICHITA, LLC

MPT OF BILLINGS, LLC

MPT OF BOISE, LLC

MPT OF BROWNSVILLE, LLC

MPT OF CASPER, LLC

MPT OF COMAL COUNTY, LLC

MPT OF GREENWOOD, LLC

MPT OF JOHNSTOWN, LLC

MPT OF LAREDO, LLC

MPT OF LAS CRUCES, LLC

MPT OF MESQUITE, LLC

MPT OF POST FALLS, LLC

MPT OF PRESCOTT VALLEY, LLC

MPT OF PROVO, LLC

MPT OF NORTH CYPRESS, LLC

MPT OF LAFAYETTE, LLC

MPT OF INGLEWOOD LLC

MPT OF RENO, LLC

MPT OF ROXBOROUGH, LLC

MPT OF ALTOONA, LLC

MPT OF HAMMOND, LLC

MPT OF SPARTANBURG, LLC

MPT OF WYANDOTTE COUNTY, LLC

MPT OF LEAVENWORTH, LLC

MPT OF CORPUS CHRISTI, LLC

MPT OF BRODIE FCER, LLC

MPT OF LITTLE ELM FCER, LLC

MPT OF OGDEN, LLC

MPT OF NACOGDOCHES FCER, LLC

MPT OF MESA, LLC

MPT OF PORT ARTHUR, LLC

MPT OF WEST MONROE, LLC

MPT OF DALLAS, LLC

MPT OF LEGACY MONTCLAIR, LLC

MPT OF ALVIN FCER, LLC

MPT OF FIRESTONE FCER, LLC

MPT OF HOUSTON-ELDRIDGE FCER, LLC

MPT OF CEDAR HILL FCER, LLC

MPT OF ALLEN FCER, LLC

MPT OF FRISCO FCER, LLC

MPT OF BROOMFIELD FCER, LLC

MPT OF CHAMPION FOREST FCER, LLC

MPT OF NORTHGATE FCER, LLC

 

TWELFTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF THORNTON FCER, LLC
MPT OF FOUNTAIN FCER, LLC
MPT OF MISSOURI CITY FCER, LLC
MPT OF PEARLAND FCER, LLC
MPT OF MISSOURI CITY-DULLES FCER, LLC

 

By:  

MPT OPERATING PARTNERSHIP, L.P.,

sole member of each of the above entities

  By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

    By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

      By:  

/s/ Emmett E. McLean

        Name:   Emmett E. McLean
        Title:   Executive Vice President, Chief Operating Officer, Treasurer and Secretary

 

MPT OF BUCKS COUNTY, L.P.
By:  

MPT OF BUCKS COUNTY, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

MPT OF DALLAS LTACH, L.P.
By:  

MPT OF DALLAS LTACH, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

TWELFTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF VICTORIA, L.P.
By:  

MPT OF VICTORIA, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF LULING, L.P.
By:  

MPT OF LULING, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF WEST ANAHEIM, L.P.
By:  

MPT OF WEST ANAHEIM, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

TWELFTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF LA PALMA, L.P.
By:  

MPT OF LA PALMA, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF PARADISE VALLEY, L.P.
By:  

MPT OF PARADISE VALLEY, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF SOUTHERN CALIFORNIA, L.P.
By:  

MPT OF SOUTHERN CALIFORNIA, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

TWELFTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF TWELVE OAKS, L.P.
By:  

MPT OF TWELVE OAKS, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF SHASTA, L.P.
By:  

MPT OF SHASTA, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF GARDEN GROVE HOSPITAL, L.P.
By:  

MPT OF GARDEN GROVE HOSPITAL, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

TWELFTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF GARDEN GROVE MOB, L.P.
By:  

MPT OF GARDEN GROVE MOB, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF SAN DIMAS HOSPITAL, L.P.
By:  

MPT OF SAN DIMAS HOSPITAL, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF SAN DIMAS MOB, L.P.
By:  

MPT OF SAN DIMAS MOB, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

TWELFTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF RICHARDSON, L.P.
By:  

MPT OF RICHARDSON, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF ROUND ROCK, L.P.
By:  

MPT OF ROUND ROCK, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF SHENANDOAH, L.P.
By:  

MPT OF SHENANDOAH, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

TWELFTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF HILLSBORO, L.P.
By:  

MPT OF HILLSBORO, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF CLEAR LAKE, L.P.
By:  

MPT OF CLEAR LAKE, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF TOMBALL, L.P.
By:  

MPT OF TOMBALL, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

TWELFTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF CORINTH, L.P.
By:  

MPT OF CORINTH, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF ALVARADO, L.P.
By:  

MPT OF ALVARADO, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF DESOTO, L.P.
By:  

MPT OF DESOTO, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

TWELFTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF MOUNTAIN VIEW LLC
By:  

MPT OF IDAHO FALLS, LLC,

its sole member

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

WICHITA HEALTH ASSOCIATES LIMITED PARTNERSHIP
By:  

MPT OF WICHITA, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF NORTH CYPRESS, L.P.
By:  

MPT OF NORTH CYPRESS, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

TWELFTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF INGLEWOOD, L.P.
By:  

MPT OF INGLEWOOD, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF ROXBOROUGH, L.P.
By:  

MPT OF ROXBOROUGH, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF LOS ANGELES, L.P.
By:  

MPT OF LOS ANGELES, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MEDICAL PROPERTIES TRUST, LLC
By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

  By:  

/s/ Emmett E. McLean

    Name:   Emmett E. McLean
    Title:   Executive Vice President, Chief Operating Officer, Treasurer and Secretary

 

TWELFTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT RHM HOLDCO S.à.r.l.
MPT RHM SONNENWENDE S.à.r.l.
MPT RHM KLAUS S.à.r.l.
MPT RHM VESALIUS S.à.r.l.
MPT RHM PARK S.à.r.l.
MPT RHM FONTANA S.à.r.l.
MPT RHM CHRISTIAAN S.à.r.l.
MPT RHM HILLERSBACH S.à.r.l.
By:  

/s/ Leanne McWilliams

  Name:   Leanne McWilliams
  Title:   Class A Manager
By:  

/s/ James Kevin Hanna

  Name:   James Kevin Hanna
  Title:   Class A Manager and Authorized Signatory

 

TWELFTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee,

By:  

/s/ Michael H. Wass

  Name:   Michael H. Wass
  Title:   Assistant Vice President

 

TWELFTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE

EX-4.4

Exhibit 4.4

 

 

MPT OF MISSOURI CITY-DULLES FCER, LLC,

as Guarantor,

MPT OPERATING PARTNERSHIP, L.P.

and

MPT FINANCE CORPORATION,

as Issuers,

MEDICAL PROPERTIES TRUST, INC.,

as Parent and a Guarantor,

the other GUARANTORS named herein,

as Guarantors,

and

WILMINGTON TRUST COMPANY,

as Trustee

 

 

FIFTEENTH SUPPLEMENTAL INDENTURE

Dated as of June 30, 2014

To

INDENTURE

Dated as of April 26, 2011

6.875% Senior Notes due 2021

 

 


FIFTEENTH SUPPLEMENTAL INDENTURE

FIFTEENTH SUPPLEMENTAL INDENTURE (this “Fifteenth Supplemental Indenture”), dated as of June 30, 2014, by and among MPT of Missouri City-Dulles FCER, LLC, a Delaware limited liability company (the “New Guaranteeing Subsidiary”), MPT Operating Partnership, L.P., a Delaware limited partnership (“Opco”), MPT Finance Corporation, a Delaware corporation (“Finco” and, together with Opco, the “Issuers”), Medical Properties Trust, Inc., a Maryland corporation (the “Parent”), as Guarantor, each of the other Guarantors (as defined in the Indenture), as Guarantors, and Wilmington Trust Company, a Delaware chartered trust company, as Trustee (the “Trustee”).

WITNESSETH

WHEREAS, the Issuers and the Guarantors have heretofore executed and delivered an Indenture, dated as of April 26, 2011 (the “Base Indenture”), as supplemented by that certain First Supplemental Indenture, dated as of August 10, 2011 (the “First Supplemental Indenture”), by that certain Second Supplemental Indenture, dated as of October 3, 2011 (the “Second Supplemental Indenture”), by that certain Third Supplemental Indenture, dated as of December 2, 2011 (the “Third Supplemental Indenture”), by that certain Fourth Supplemental Indenture, dated as of January 19, 2012 (the “Fourth Supplemental Indenture”), by that certain Fifth Supplemental Indenture dated as of April 9, 2012, (the “Fifth Supplemental Indenture”), by that certain Sixth Supplemental Indenture dated as of June 27, 2012, (the “Sixth Supplemental Indenture”), by that certain Seventh Supplemental Indenture dated as of July 31, 2012 (the “Seventh Supplemental Indenture”), by that certain Eighth Supplemental Indenture dated as of September 28, 2012 (the “Eighth Supplemental Indenture”), by that certain Ninth Supplement Indenture dated as of December 28, 2012 (the “Ninth Supplemental Indenture”), by that certain Tenth Supplement Indenture dated as of June 27, 2013 (the “Tenth Supplemental Indenture”), by that certain Eleventh Supplemental Indenture dated as of August 8, 2013 (the “Eleventh Supplemental Indenture”), by that certain Twelfth Supplemental Indenture dated as of October 30, 2013 (the “Twelfth Supplemental Indenture”), by that certain Thirteenth Supplemental Indenture dated as of December 20, 2013 (the “Thirteenth Supplemental Indenture”), and by that certain Fourteenth Supplemental Indenture dated as of March 31, 2014 (the “Fourteenth Supplemental Indenture”, and, together with the Base Indenture, the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture, the Fifth Supplemental Indenture, the Sixth Supplemental Indenture, the Seventh Supplemental Indenture, the Eighth Supplemental Indenture, the Ninth Supplemental Indenture, the Tenth Supplemental Indenture, the Eleventh Supplemental Indenture, the Twelfth Supplemental Indenture and Thirteenth Supplemental Indenture, the “Indenture”), providing for the issuance by the Issuers of the 6.875% Senior Notes due 2021 (the “Notes”);

WHEREAS, pursuant to Section 9.01(a)(4) of the Indenture, the Issuers, the Guarantors and the Trustee may supplement the Indenture without the consent of any Holders in order to add Guarantees with respect to the Notes;

WHEREAS, as of June 19, 2014, the New Guaranteeing Subsidiary guaranteed the Credit Agreement, and pursuant to Section 4.14(a) of the Indenture, the New Guaranteeing Subsidiary is required to become a Guarantor under the Indenture;


WHEREAS, the Indenture requires that an entity that constitutes a Guarantor shall join the Issuers and the existing Guarantors in executing and delivering to the Trustee a supplemental indenture pursuant to which such entity shall unconditionally Guarantee, on a joint and several basis, the full and prompt payment of the principal of, premium, if any, and interest in respect of the Notes on a senior basis and all other obligations under the Indenture; and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Fifteenth Supplemental Indenture.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuers, the Guarantors, the Trustee and the New Guaranteeing Subsidiary mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. The rules of interpretation set forth in the Indenture shall be applied here as if set forth in full herein.

2. AGREEMENT TO GUARANTEE. The New Guaranteeing Subsidiary hereby agrees to provide unconditional Guarantees on the terms and subject to the conditions set forth in the Indenture including but not limited to Article 10 thereof.

3. MISCELLANEOUS PROVISIONS.

(a) The Trustee makes no undertaking or representation in respect of, and shall not be responsible in any manner whatsoever for and in respect of, the validity or sufficiency of this Fifteenth Supplemental Indenture or the proper authorization or the due execution hereof by the Issuers or for or in respect of the recitals and statements contained herein, all of which recitals and statements are made solely by the Issuers.

(b) On the date hereof, the Indenture shall be supplemented and amended in accordance herewith, and this Fifteenth Supplemental Indenture shall form part of the Indenture for all purposes, and the Holder of every Note heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. The Trustee accepts the trusts created by the Indenture, as amended and supplemented by this Fifteenth Supplemental Indenture, and agrees to perform the same upon the terms and conditions of the Indenture, as amended and supplemented by this Fifteenth Supplemental Indenture.

(c) This Fifteenth Supplemental Indenture shall be deemed to be incorporated in, and made a part of, the Indenture. The Indenture, as amended and supplemented by this Fifteenth Supplemental Indenture, shall be read, taken and construed as one and the same instrument and all the provisions of the Indenture shall remain in full force and effect in accordance with the terms thereof and as amended and supplemented by this Fifteenth Supplemental Indenture.

(d) THIS FIFTEENTH SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.


(e) This Fifteenth Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

[Signature Pages Follow]


IN WITNESS WHEREOF, the parties hereto have caused this Fifteenth Supplemental Indenture to be duly executed and attested, all as of the date first above written.

 

MPT OPERATING PARTNERSHIP, L.P.,
as Issuer
  By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

    By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

      By:  

/s/ Emmett E. McLean

        Name:   Emmett E. McLean
        Title:   Executive Vice President, Chief Operating Officer, Treasurer and Secretary

 

MPT FINANCE CORPORATION,
as Issuer
By:  

/s/ Emmett E. McLean

  Name:   Emmett E. McLean
  Title:   Assistant Secretary
MEDICAL PROPERTIES TRUST, INC.,
as Parent and a Guarantor
By:  

/s/ Emmett E. McLean

Name:   Emmett E. McLean
Title:   Executive Vice President, Chief Operating Officer, Treasurer and Secretary
MEDICAL PROPERTIES TRUST, LLC
By:   MEDICAL PROPERTIES TRUST, INC.,
  its sole member
By:  

/s/ Emmett E. McLean

Name:   Emmett E. McLean
Title:   Executive Vice President, Chief Operating Officer, Treasurer and Secretary

 

FIFTEENTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF VICTORVILLE, LLC
MPT OF BUCKS COUNTY, LLC
MPT OF BLOOMINGTON, LLC
MPT OF COVINGTON, LLC
MPT OF REDDING, LLC
MPT OF CHINO, LLC
MPT OF DALLAS LTACH, LLC
MPT OF PORTLAND, LLC
MPT OF VICTORIA, LLC
MPT OF LULING, LLC
MPT OF WEST ANAHEIM, LLC
MPT OF LA PALMA, LLC
MPT OF PARADISE VALLEY, LLC
MPT OF SOUTHERN CALIFORNIA, LLC
MPT OF TWELVE OAKS, LLC
MPT OF SHASTA, LLC
MPT OF BOSSIER CITY, LLC
MPT OF WEST VALLEY CITY, LLC
MPT OF IDAHO FALLS, LLC
MPT OF POPLAR BLUFF, LLC
MPT OF BENNETTSVILLE, LLC
MPT OF DETROIT, LLC
MPT OF BRISTOL, LLC
MPT OF NEWINGTON, LLC
MPT OF ENFIELD, LLC
MPT OF PETERSBURG, LLC
MPT OF GARDEN GROVE HOSPITAL, LLC
MPT OF GARDEN GROVE MOB, LLC
MPT OF SAN DIMAS HOSPITAL, LLC
MPT OF SAN DIMAS MOB, LLC
MPT OF CHERAW, LLC
MPT OF FT. LAUDERDALE, LLC.
MPT OF PROVIDENCE, LLC
MPT OF SPRINGFIELD, LLC
MPT OF WARWICK, LLC
MPT OF RICHARDSON, LLC
MPT OF ROUND ROCK, LLC
MPT OF SHENANDOAH, LLC
MPT OF HILLSBORO, LLC
MPT OF FLORENCE, LLC
MPT OF CLEAR LAKE, LLC
MPT OF TOMBALL, LLC
MPT OF GILBERT, LLC
MPT OF CORINTH, LLC
MPT OF BAYONNE, LLC
MPT OF ALVARADO, LLC
MPT OF DESOTO, LLC
MPT OF HAUSMAN, LLC

 

FIFTEENTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF HOBOKEN HOSPITAL, LLC
MPT OF HOBOKEN REAL ESTATE, LLC
MPT OF OVERLOOK PARKWAY, LLC
MPT OF NEW BRAUNFELS, LLC
MPT OF WESTOVER HILLS, LLC
MPT OF WICHITA, LLC
MPT OF BILLINGS, LLC
MPT OF BOISE, LLC
MPT OF BROWNSVILLE, LLC
MPT OF CASPER, LLC
MPT OF COMAL COUNTY, LLC
MPT OF GREENWOOD, LLC
MPT OF JOHNSTOWN, LLC
MPT OF LAREDO, LLC
MPT OF LAS CRUCES, LLC
MPT OF MESQUITE, LLC
MPT OF POST FALLS, LLC
MPT OF PRESCOTT VALLEY, LLC
MPT OF PROVO, LLC
MPT OF NORTH CYPRESS, LLC
MPT OF LAFAYETTE, LLC
MPT OF INGLEWOOD LLC
MPT OF RENO, LLC
MPT OF ROXBOROUGH, LLC
MPT OF ALTOONA, LLC
MPT OF HAMMOND, LLC
MPT OF SPARTANBURG, LLC
MPT OF WYANDOTTE COUNTY, LLC
MPT OF LEAVENWORTH, LLC
MPT OF CORPUS CHRISTI, LLC
MPT OF BRODIE FCER, LLC
MPT OF LITTLE ELM FCER, LLC
MPT OF OGDEN, LLC
MPT OF NACOGDOCHES FCER, LLC
MPT OF MESA, LLC
MPT OF PORT ARTHUR, LLC
MPT OF WEST MONROE, LLC
MPT OF DALLAS, LLC
MPT LEGACY OF MONTCLAIR, LLC
MPT OF ALVIN FCER, LLC
MPT OF FIRESTONE FCER, LLC
MPT OF HOUSTON-ELDRIDGE FCER, LLC
MPT OF CEDAR HILL FCER, LLC
MPT OF ALLEN FCER, LLC
MPT OF FRISCO FCER, LLC
MPT OF BROOMFIELD FCER, LLC
MPT OF CHAMPION FOREST FCER, LLC
MPT OF NORTHGATE FCER, LLC

 

FIFTEENTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF THORNTON FCER, LLC
MPT OF FOUNTAIN FCER, LLC
MPT OF MISSOURI CITY FCER, LLC
MPT OF PEARLAND FCER, LLC
MPT OF MISSOURI CITY-DULLES FCER, LLC

 

By:   MPT OPERATING PARTNERSHIP, L.P.,
  sole member of each of the above entities
  By:   MEDICAL PROPERTIES TRUST, LLC,
    its general partner
    By:   MEDICAL PROPERTIES TRUST, INC.,
      its sole member
      By:  

/s/ Emmett E. McLean

        Name:   Emmett E. McLean
        Title:   Executive Vice President, Chief Operating Officer, Treasurer and Secretary

 

MPT OF BUCKS COUNTY, L.P.
By:   MPT OF BUCKS COUNTY, LLC,
  its general partner
  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:   MEDICAL PROPERTIES TRUST, INC.,
        its sole member

 

MPT OF DALLAS LTACH, L.P.
By:   MPT OF DALLAS LTACH, LLC,
  its general partner
  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

FIFTEENTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF VICTORIA, L.P.
By:  

MPT OF VICTORIA, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:   MEDICAL PROPERTIES TRUST, INC.,
        its sole member
MPT OF LULING, L.P.
By:  

MPT OF LULING, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:   MEDICAL PROPERTIES TRUST, INC.,
        its sole member
MPT OF WEST ANAHEIM, L.P.
By:  

MPT OF WEST ANAHEIM, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:   MEDICAL PROPERTIES TRUST, INC.,
        its sole member

 

FIFTEENTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF LA PALMA, L.P.
By:  

MPT OF LA PALMA, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:   MEDICAL PROPERTIES TRUST, INC.,
        its sole member
MPT OF PARADISE VALLEY, L.P.
By:  

MPT OF PARADISE VALLEY, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:   MEDICAL PROPERTIES TRUST, INC.,
        its sole member
MPT OF SOUTHERN CALIFORNIA, L.P.
By:  

MPT OF SOUTHERN CALIFORNIA, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:   MEDICAL PROPERTIES TRUST, INC.,
        its sole member

 

FIFTEENTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF TWELVE OAKS, L.P.
By:  

MPT OF TWELVE OAKS, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:   MEDICAL PROPERTIES TRUST, INC.,
        its sole member
MPT OF SHASTA, L.P.
By:  

MPT OF SHASTA, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:   MEDICAL PROPERTIES TRUST, INC.,
        its sole member
MPT OF GARDEN GROVE HOSPITAL, L.P.
By:  

MPT OF GARDEN GROVE HOSPITAL, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

FIFTEENTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF GARDEN GROVE MOB, L.P.
By:  

MPT OF GARDEN GROVE MOB, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF SAN DIMAS HOSPITAL, L.P.
By:  

MPT OF SAN DIMAS HOSPITAL, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF SAN DIMAS MOB, L.P.
By:  

MPT OF SAN DIMAS MOB, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

FIFTEENTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF RICHARDSON, L.P.
By:  

MPT OF RICHARDSON, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF ROUND ROCK, L.P.
By:  

MPT OF ROUND ROCK, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF SHENANDOAH, L.P.
By:  

MPT OF SHENANDOAH, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

FIFTEENTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF HILLSBORO, L.P.
By:  

MPT OF HILLSBORO, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF CLEAR LAKE, L.P.
By:  

MPT OF CLEAR LAKE, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF TOMBALL, L.P.
By:  

MPT OF TOMBALL, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

FIFTEENTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF CORINTH, L.P.
By:  

MPT OF CORINTH, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF ALVARADO, L.P.
By:  

MPT OF ALVARADO, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF DESOTO, L.P.
By:  

MPT OF DESOTO, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

FIFTEENTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF MOUNTAIN VIEW LLC
By:  

MPT OF IDAHO FALLS, LLC,

its sole member

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

WICHITA HEALTH ASSOCIATES LIMITED PARTNERSHIP
By:  

MPT OF WICHITA, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF NORTH CYPRESS, L.P.
By:  

MPT OF NORTH CYPRESS, LLC,

its general partner

  By:   MPT OPERATING PARTNERSHIP, L.P.,
    its sole member
    By:   MEDICAL PROPERTIES TRUST, LLC,
      its general partner
      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

 

FIFTEENTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT OF INGLEWOOD, L.P.
By:  

MPT OF INGLEWOOD, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF ROXBOROUGH, L.P.
By:  

MPT OF ROXBOROUGH, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MPT OF LOS ANGELES, L.P.
By:  

MPT OF LOS ANGELES, LLC,

its general partner

  By:  

MPT OPERATING PARTNERSHIP, L.P.,

its sole member

    By:  

MEDICAL PROPERTIES TRUST, LLC,

its general partner

      By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

MEDICAL PROPERTIES TRUST, LLC
By:  

MEDICAL PROPERTIES TRUST, INC.,

its sole member

  By:  

/s/ Emmett E. McLean

    Name:   Emmett E. McLean
    Title:   Executive Vice President, Chief Operating Officer, Treasurer and Secretary

 

FIFTEENTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


MPT RHM HOLDCO S.à.r.l.
MPT RHM SONNENWENDE S.à.r.l.
MPT RHM KLAUS S.à.r.l.
MPT RHM VESALIUS S.à.r.l.
MPT RHM PARK S.à.r.l.
MPT RHM FONTANA S.à.r.l.
MPT RHM CHRISTIAAN S.à.r.l.
MPT RHM HILLERSBACH S.à.r.l.

 

By:  

/s/ Leanne McWilliams

  Name:   Leanne McWilliams
  Title:   Class A Manager
By:  

/s/ James Kevin Hanna

  Name:   James Kevin Hanna
  Title:   Class A Manager and Authorized Signatory

 

FIFTEENTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE


WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee,

By:  

/s/ Michael H. Wass

  Name:   Michael H. Wass
  Title:   Assistant Vice President

 

FIFTEENTH SUPPLEMENTAL INDENTURE SIGNATURE PAGE

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Edward K. Aldag, Jr., certify that:

 

1) I have reviewed this quarterly report on Form 10-Q of Medical Properties Trust, Inc.;

 

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 11, 2014      

/s/ Edward K. Aldag, Jr.

      Edward K. Aldag, Jr.
      Chairman, President and Chief Executive Officer of Medical Properties Trust, Inc.
EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, R. Steven Hamner, certify that:

 

1) I have reviewed this quarterly report on Form 10-Q of Medical Properties Trust, Inc.;

 

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 11, 2014      

/s/ R. Steven Hamner

      R. Steven Hamner
      Executive Vice President and Chief Financial Officer of Medical Properties Trust, Inc.
EX-31.3

Exhibit 31.3

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Edward K. Aldag, Jr., certify that:

 

1) I have reviewed this quarterly report on Form 10-Q of MPT Operating Partnership, L.P.;

 

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 11, 2014      

/s/ Edward K. Aldag, Jr.

      Edward K. Aldag, Jr.
      Chairman, President and Chief Executive Officer of the sole member of the general partner of MPT Operating Partnership, L.P.
EX-31.4

Exhibit 31.4

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, R. Steven Hamner, certify that:

 

1) I have reviewed this quarterly report on Form 10-Q of MPT Operating Partnership, L.P.;

 

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 11, 2014      

/s/ R. Steven Hamner

      R. Steven Hamner
      Executive Vice President and Chief Financial Officer of the sole member of the general partner of MPT Operating Partnership, L.P.
EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934 AND 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this quarterly report on Form 10-Q of Medical Properties Trust, Inc. (the “Company”) for the quarter ended June 30, 2014 (the “Report”), each of the undersigned, Edward K. Aldag, Jr. and R. Steven Hamner, certifies, pursuant to Section 18 U.S.C. Section 1350, that:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: August 11, 2014      

/s/ Edward K. Aldag, Jr.

      Edward K. Aldag, Jr.
      Chairman, President and Chief Executive Officer of Medical Properties Trust, Inc.
     

/s/ R. Steven Hamner

      R. Steven Hamner
      Executive Vice President and Chief Financial Officer of Medical Properties Trust, Inc.
EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934 AND 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this quarterly report on Form 10-Q of MPT Operating Partnership, L.P. (the “Company”) for the quarter ended June 30, 2014 (the “Report”), each of the undersigned, Edward K. Aldag, Jr. and R. Steven Hamner, certifies, pursuant to Section 18 U.S.C. Section 1350, that:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: August 11, 2014      

/s/ Edward K. Aldag, Jr.

      Edward K. Aldag, Jr.
      Chairman, President and Chief Executive Officer of the sole member of the general partner of MPT Operating Partnership, L.P.
     

/s/ R. Steven Hamner

      R. Steven Hamner
      Executive Vice President and Chief Financial Officer of the sole member of the general partner of MPT Operating Partnership, L.P.