IN DEMAND
A N N UA L R E P O RT (cid:2249)(cid:2247)(cid:2249)(cid:2249)
3
2022 ANNUAL REPORT
4
MEDICAL PROPERTIES TRUST, INC.
ON THE COVER AND ABOVE: MOUNTAIN POINT MEDICAL CENTER - LEHI, UTAH
TABL E OF
CONTENTS
02 SHAREHOLDER LETTER
04 THE NUCLEUS
08 EXPANDING CHOICE
10 MAKING AN IMPACT EVERY DAY
14 TIME TO SHINE
18 THE BEST AND THE BRIGHTEST
24 LEADING THE TEAM
26 FINANCIAL REVIEW
2022 ANNUAL REPORT
1
LETTER TO INVESTORS:
A TIME TESTED
& FLEXIBLE MODEL
ROOTED IN COMMUNITY NEED
(cid:1505) Vision, Passion and Discipline
In August of 2023, MPT will be celebrating its 20th
Anniversary. I am especially proud to be on the verge of this
major milestone in our history because of the meaningful
and enduring relationships we have formed with so many key
(cid:613)(cid:679)(cid:456)(cid:549)(cid:497)(cid:526)(cid:576)(cid:554)(cid:491)(cid:497)(cid:606)(cid:613)(cid:1324)(cid:3)(cid:76)(cid:623)(cid:3)(cid:456)(cid:554)(cid:613)(cid:576)(cid:3)(cid:563)(cid:456)(cid:549)(cid:497)(cid:613)(cid:3)(cid:563)(cid:497)(cid:3)(cid:606)(cid:497)(cid:776)(cid:497)(cid:485)(cid:623)(cid:3)(cid:576)(cid:566)(cid:3)(cid:657)(cid:526)(cid:456)(cid:623)(cid:3)(cid:531)(cid:623)(cid:3)(cid:679)(cid:456)(cid:549)(cid:497)(cid:613)(cid:3)(cid:623)(cid:576)(cid:3)(cid:484)(cid:497)(cid:3)(cid:456)(cid:3)
(cid:613)(cid:632)(cid:613)(cid:679)(cid:456)(cid:531)(cid:566)(cid:456)(cid:484)(cid:554)(cid:497)(cid:3)(cid:497)(cid:566)(cid:623)(cid:497)(cid:606)(cid:603)(cid:606)(cid:531)(cid:613)(cid:497)(cid:3)(cid:516)(cid:576)(cid:606)(cid:3)(cid:623)(cid:657)(cid:576)(cid:3)(cid:491)(cid:497)(cid:485)(cid:456)(cid:491)(cid:497)(cid:613)(cid:1324)(cid:3)(cid:808)(cid:606)(cid:497)(cid:497)(cid:3)(cid:657)(cid:576)(cid:606)(cid:491)(cid:613)(cid:3)(cid:485)(cid:576)(cid:563)(cid:497)(cid:3)(cid:623)(cid:576)(cid:3)
mind – vision, passion and discipline.
Vision reflects the plan we had since our founding days to be a uniquely differentiated real
estate investment trust (REIT). First, we wanted to own an asset category that would always
be in demand because it fulfilled a critical need in the lives of people everywhere. When you
think about it, restaurants, shopping centers and industrial parks all play an important role
in fueling economies and satisfying consumers, yet they seldom qualify as the absolutely
essential nucleus of a community’s physical well-being like a hospital does. Today, MPT is
the only U.S. REIT dedicated solely to hospital properties. We have come a long way from
owning a handful of hospitals to our current portfolio of 444 properties diversified primarily
across General Acute Care, Behavioral Health and Post- and Sub-acute facilities throughout
the United States and nine other countries.
Passion for a business comes easily when you know the mission of that business is vital.
We have built a remarkable team whose knowledge of what makes hospitals successful
is unique within the REIT industry. The passion of our team members motivates them to
understand the complex hospital landscape, from the regulatory environment to local
demographics to the best hospital operators. Their expertise makes MPT a premier financial
resource for top operators across a wide variety of global healthcare delivery systems. There
is real value to being passionate and focused on a single asset category for which we have
established a track record of success and a reputation for collaboration.
Discipline takes into account many things. In our business, it starts with the best use
of capital to build long-term value. That must be supported by diligent underwriting to
evaluate acquisition candidates. We dig deep to find high-quality hospital properties with
strong operators, who have a history of attracting top physicians and delivering outstanding
healthcare to their communities. Our team knows the right questions to ask and where to
probe. A property must check all the boxes before it becomes an MPT hospital, and most
importantly, it must have the ability to deliver returns for our shareholders.
OVER
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IN HIGH-QUALITY
INVESTMENTS IN 2022
(cid:1505) Strong Risk-Adjusted Cash
Flows in All Environments
As a REIT, we seek to generate risk-adjusted returns
to our shareholders in the form of dividends – and
we have been very successful delivering this since
our founding. We paid attractive dividends through
the financial crisis in 2008 and the COVID pandemic
starting in 2020. Once again, we are facing uncertain
times around inflation and pressures on banking
systems, yet we remain confident - and here’s why.
First, we have a strong balance sheet with well-
staggered debt maturities. At the same time interest
rates have increased, we have CPI rent escalators in
our lease contracts. With our average lease contract
being greater than 17 years, this rent escalation
compounds over time and provides a cushion
against inflationary pressures. Also keep in mind that
hospital properties are valuable real estate; they are
need-based and recession resilient.
As we have demonstrated over the years, we
can unlock embedded value through our capital
harvesting strategy. Proceeds from hospital sales
can be used to invest in strategic opportunities or
to reduce debt depending on the circumstances at
the time, much like our recently announced plan to
sell our Australian real estate. We have built many
margins of safety into the MPT platform to give our
investors confidence in the foundational strength of
our company and the sustainability of its revenue.
2
MEDICAL PROPERTIES TRUST, INC.
“We know that managing a successful
business for long-term value creation is a
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(cid:345)(cid:1)(cid:406)(cid:494)(cid:386)(cid:345)(cid:511)(cid:1)(cid:373)(cid:520)(cid:501)(cid:419)(cid:454)(cid:386)(cid:501)(cid:501)(cid:1)(cid:451)(cid:464)(cid:380)(cid:386)(cid:442)(cid:1632)(cid:1)(cid:345)(cid:1)(cid:406)(cid:494)(cid:386)(cid:345)(cid:511)(cid:1)(cid:511)(cid:386)(cid:345)(cid:451)(cid:1)(cid:345)(cid:454)(cid:380)(cid:1)
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EDWARD K. ALDAG, JR.
MPT’s Chairman, President and CEO
(cid:1505) Up and to the Right
Businesses don’t grow ever upward in a straight line — there
are always some bumps in the road. While 2022 had its share
of challenging situations as hospital systems exited COVID and
dealt with extraordinary staffing costs, MPT had its share of real
progress. First, we generated a return on equity (ROE) of 10.6%
as measured on a net income basis, tracking in-line with our
historical performance and comparing favorably to healthcare and
net-lease REITs.(1) On a normalized funds from operations (NFFO)
basis, our ROE was above 11% and in-line with our historical
(cid:1522)(cid:1521)(cid:1773)(cid:1752)
RETURN ON EQUITY
IN 2022
performance. These robust
and low-volatility returns
demonstrate our portfolio’s
profitability relative to the
actual cost of equity with
which it was assembled — a
pattern of thoughtful capital
allocation dating back nearly 20 years. We are confident that we
have a business model and balance sheet that provide us ample
flexibility to sustain this pace. Second, we invested over $1.0 billion
in high quality assets during the year. In the United Kingdom,
we were very excited to acquire six of the largest, highest acuity,
most profitable and best-known Priory behavioral health facilities
located around London, Manchester and Bristol. We also contracted
to build three new hospitals on the Spanish Mediterranean coast
with IMED, one of Spain’s top operators. Expanding our presence in
Europe is a key element of our growth plan, and the opportunity is
compelling for private hospitals. In the U.S., we acquired hospital
properties in Arizona and Florida, increasing our footprint in these
dynamically growing states. I invite you to read more about how we
are innovating hospital healthcare and executing against our growth
strategy in this Annual Report.
Looking ahead into 2023, we continue to see long-term
opportunities for market acceptance and expansion; but given
uncertainties around global capital markets and the cost of capital
generally, we will remain focused and disciplined. We know that
managing a successful business for long-term value creation is a
marathon, not a sprint. That said, we have a great business model,
a great team and we’re always looking up and to the right.
In closing, my long-time partner, friend and co-founder of MPT,
Emmett McLean, recently announced his planned retirement. I
want to thank Emmett for 20 years of collaboration, dedication and
strong commitment to our philanthropic efforts. Emmett has made
a great impact on our people and the communities we serve. We
promise to continue his good work.
(1) Factset.
EDWARD K. ALDAG, JR.
Chairman, President and CEO
2022 ANNUAL REPORT
3
U C L E U S ONE HOSPITAL’S IRREPLACEABLE ROLE
IN LOCAL CARE DELIVERY
E N
T H
GILBERT HSED
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CHANDLER
GERMANN HSED
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CHANDLER
MCQUEEN HSED
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ARIZONA GENERAL HOSPITAL
MPT has
proven time and again
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(cid:485)(cid:576)(cid:563)(cid:563)(cid:632)(cid:566)(cid:531)(cid:623)(cid:663)(cid:1375)(cid:613)(cid:3)(cid:531)(cid:566)(cid:516)(cid:606)(cid:456)(cid:613)(cid:623)(cid:606)(cid:632)(cid:485)(cid:623)(cid:632)(cid:606)(cid:497)(cid:1324)(cid:3)(cid:164)(cid:576)(cid:3)(cid:623)(cid:526)(cid:606)(cid:531)(cid:656)(cid:497)(cid:1319)(cid:3)
(cid:623)(cid:526)(cid:497)(cid:3)(cid:526)(cid:576)(cid:613)(cid:603)(cid:531)(cid:679)(cid:456)(cid:554)(cid:3)(cid:563)(cid:632)(cid:613)(cid:623)(cid:3)(cid:484)(cid:497)(cid:3)(cid:516)(cid:632)(cid:554)(cid:554)(cid:663)(cid:3)(cid:531)(cid:566)(cid:623)(cid:497)(cid:517)(cid:606)(cid:456)(cid:623)(cid:497)(cid:491)(cid:3)(cid:531)(cid:566)(cid:623)(cid:576)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)
(cid:554)(cid:576)(cid:485)(cid:456)(cid:554)(cid:3)(cid:526)(cid:497)(cid:456)(cid:554)(cid:623)(cid:526)(cid:485)(cid:456)(cid:606)(cid:497)(cid:3)(cid:566)(cid:497)(cid:623)(cid:657)(cid:576)(cid:606)(cid:549)(cid:1319)(cid:3)(cid:456)(cid:485)(cid:485)(cid:497)(cid:603)(cid:623)(cid:531)(cid:566)(cid:517)(cid:3)(cid:456)(cid:491)(cid:563)(cid:531)(cid:613)(cid:613)(cid:531)(cid:576)(cid:566)(cid:613)(cid:3)
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(cid:456)(cid:566)(cid:491)(cid:3)(cid:491)(cid:531)(cid:613)(cid:485)(cid:526)(cid:456)(cid:606)(cid:517)(cid:531)(cid:566)(cid:517)(cid:3)(cid:603)(cid:456)(cid:623)(cid:531)(cid:497)(cid:566)(cid:623)(cid:613)(cid:3)(cid:623)(cid:576)(cid:3)(cid:566)(cid:497)(cid:456)(cid:606)(cid:484)(cid:663)(cid:3)
(cid:603)(cid:576)(cid:613)(cid:623)(cid:1362)(cid:456)(cid:485)(cid:632)(cid:623)(cid:497)(cid:3)(cid:613)(cid:497)(cid:606)(cid:656)(cid:531)(cid:485)(cid:497)(cid:3)
(cid:603)(cid:606)(cid:576)(cid:656)(cid:531)(cid:491)(cid:497)(cid:606)(cid:613)(cid:1324)
It is crucial that the full
ist
continuum of medical care exists
in every community to meet its
healthcare needs. Without a strong
ng
general acute care hospital sitting at the
top of the acuity “pyramid,” an otherwise
wis
vibrant community’s broader healthcare
ecosystem risks becoming a collection
of spokes without a hub.
t t
MPT owns many of these
anchoring hospitals across its
global portfolio. These facilities
receive direct (emergency room)
patient in-flow as well as high volumes
of referrals from a network of local
physician practices, urgent care facilities and
HSEDs. MPT often owns these secondary facilities
and they serve to ensure that patients with higher acuity
needs ultimately arrive at the general acute hospital.
Mesa has a
population of
more than
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people
no
In Mesa, Arizona, MPT owns not only the anchoring hospital but three additional HSED facilities, all leased
to Dignity Health. The scope of MPT’s presence in the Mesa market illustrates the importance of the hub facility, the strategic positioning
sit
of outpost facilities to amplify the hospital’s presence in the market and the role of numerous physician practices and post-acute
e
services that have deliberately co-located their operations near the hospital.
of
co
th
Arizona General Hospital in Mesa is a fully equipped hospital with 50 inpatient beds, 14 emergency room bays, four operating rooms,
m
full onsite lab and radiology suite featuring top-of-the-line equipment. Arizona General, Dignity Health and MPT provide the entire
Mesa population, regardless of income level, with the state-of-the-art medical care they deserve.
a i
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Mesa currently has a population of more than 500,000 people that
is projected to grow 2.8% by 2027.(1) Mesa has become a premier
location for medical device design, manufacturing and
healthcare-related start-ups. This growth in the surrounding
healthcare industry has likewise attracted a large and
growing workforce. The roughly 17% of Mesa’s population
that is currently 65+ is expected to naturally increase
as the population ages and as Arizona continues to
position itself as an attractive destination for retirees.
a
sa
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et
or
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uf
i
ARIZONA G
E
N
E
R
A
L
H
O
S
P
I
T
A
L
In a community where 95% of all households have
e
internet access and at least one computer, the patient
e
l
populace knows they have access to several hospitals and
nearly 125,000 healthcare professionals in the Phoenix-
ix
Mesa area.(1) Patients in this type of community will seek
ek
out the most convenient and interconnected care networks
o
available, and at the root of any such network must be a first-
i
class general acute care hospital.
(1) Lofgren, K (2022, October 25) Demographics. Mesa Arizona Office of Economic Development. Selectmesa.com.
2022 ANNUAL REPORT
5
(cid:1505) Providing Convenient Care
As the anchoring facility, Arizona General ensures that the residents of Mesa do
not have to travel far to receive high acuity services that can only be provided in
a general acute setting. For situations necessitating simple or unknown levels of
care, Dignity also operates numerous HSED’s in greater Phoenix, seven of which
are owned by MPT. These are located conveniently throughout the community,
enabling shorter travel time and potentially reduced wait times for emergency
care. These facilities are fully equipped, 24-hour emergency rooms providing
the same level of care as a hospital emergency room, with doctors and nurses
specifically trained in emergency medicine. Care may range from treatment
for allergic reactions, dehydration, lacerations and rashes to broken bones,
pneumonia or asthmatic breathing issues and even cardiac episodes. These
facilities feature advanced diagnostic equipment and on-site laboratory services
to provide the necessary care, just as the acute care facility would render.
The HSED may send patients to the anchoring acute care facility if inpatient
care is required, or if not, discharge the patient and refer them to a nearby
physician for any necessary follow-up care.
C
H
A
N
D
L
E
R GERMANN - HSED
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MEDICAL PROPERTIES TRUST, INC.
Dignity’s Arizona General Hospital operates
as a General Acute Care Hospital in Mesa, AZ.
Three hospital satellite emergency department
facilities operated by Dignity refer patients
to Arizona General Hospital. Emergency care
is one of over 20 healthcare services that are
provided by Dignity at this general acute
care hospital and its related hospital satellite
emergency departments. This is a great
example of why MPT’s general acute
care hospitals are central to their
communities’ infrastructure.
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for Recovery
Mesa represents an example in which MPT owns
an anchoring acute care facility and its outposts,
while other supportive healthcare facilities that
provide additional care and services can be found
concentrically throughout the community. These
other facilities are vital to the healthcare ecosystem
and include inpatient rehabilitation (IRF), long-term
acute care (LTACH), behavioral health and skilled
nursing (SNF) facilities. It is no coincidence that
leading providers of these post-acute services typically
position their services in close proximity to a hospital.
Likewise, private pay senior housing facilities would
also likely struggle to convince families that their loved
ones should live in an area without a hospital in the
immediate vicinity.
Physician offices and emergency medicine practices
are also limited in their ability to effectively treat
patients without a nearby general acute care hospital
to which they can refer patients for surgery. It is also
increasingly important that these secondary practices
are able to fluidly integrate and interact with the
electronic health records system of a major hospital-
anchored system. Simply put, many of these ancillary
practices would have little reason to exist in any
community without a dependable hospital.
CHANDLER M
C
Q
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N
-
H
S
E
D
(cid:1505) Delivering
Better Outcomes
Healthcare facilities which support
and reinforce each other’s vital role in the
community all organize around a general acute care
hospital nucleus — the only place where the most acute
patient needs can be addressed. It’s the definition of a great
healthcare network.
MPT invests in facilities that play a vital role in the
organization of the local healthcare ecosystem, a
characteristic with strong implications for long-term real
estate returns.
GIL
B
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R
T -
H
S
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D
2022 ANNUAL REPORT
O
7
EXPANDING
CHOICE
HEALTHCARE CONSUMERS PLACE
HOSPITAL RESOURCES AT A PREMIUM
(cid:1505) Evolving to Meet a
Community’s Needs
Smaller, growing communities often find
themselves with healthcare systems that aren’t
keeping up with their rapid growth. That was
the case in Idaho Falls, a burgeoning town of
67,000 people in southeastern Idaho. When MPT
learned about Idaho Falls’ situation, they saw a
community that needed another great hospital.
It began with MPT property Mountain View
Hospital, a physician-owned joint venture that
operated as a surgical specialty hospital. It has
always succeeded in delivering high-quality
inpatient and outpatient surgical care, as well
as women’s and newborn services. However,
Mountain View did not offer the other key
service lines of traditional, full-service hospitals.
Nonetheless, it continued to grow and thrive as
Idaho Falls continued to grow and thrive. It wasn’t
long before local physicians, community members
and others began urging Mountain View to expand
capacity and provide new services.
Mountain View teamed up with Surgery Partners,
a surgical operator based in Nashville, to create
a plan for a new facility. They approached
MPT about building a new hospital, and MPT’s
long-standing rigorous underwriting principles
confirmed the need for another full-service
facility in the high growth community with strong
economic fundamentals. It joined forces with
Surgery Partners to build Idaho Falls Community
Hospital (IFCH) from the ground up. Surgery
Partners owns the operations, and MPT owns the
real estate.
(cid:1505) A Diverse Population
Fully Cared For
The new facility immediately provided consumers
with more options when it came to choosing
where to receive their health care. IFCH
brought to Idaho Falls an additional option for
full medical-surgical services, an emergency
room, an intensive care unit (ICU) and a cardiac
catheterization lab.
IDAHO FALLS HAS
(cid:1527)(cid:1528)(cid:89)
RESIDENTS WHO
WANT COMPETITIVE
HEALTHCARE ACCESS
8
MEDICAL PROPERTIES TRUST, INC.
IDAHO FALLS COMMUNITY HOSPITAL
The hospital’s arrival was particularly timely. IFCH opened in December 2019,
only months before the COVID-19 pandemic began. The additional beds
and second ICU were vital resources for the citizens of Idaho Falls and the
surrounding area.
“IFCH hits the mark on everything that MPT looks for in a community
hospital,” said Matt Lyden, Director, Asset Management & Underwriting.
“It’s a high demand hospital. It has been welcomed and well received in the
community, so much so that now, only a few years after opening, they’re
already looking to expand the facility.”
Idaho Falls has experienced a more than 14% surge in its population since
2010 and serves as the economic center of southeastern Idaho.(1) IFCH fills
the essential need for more access and more healthcare capacity as the area
continues to gain residents.
“IFCH is not focused simply on the hospital, but how to feed the hospital,” Mr.
Lyden added. “They are regionally focused with numerous access points for
in-demand health services including imaging, ambulatory and urgent care
centers located throughout the community. They extend their reach across
the entire southeastern part of Idaho, serving as a referral center. It’s a well-
run, well-respected, very successful hospital.”
(cid:1372)(cid:76)(cid:62)(cid:32)(cid:71)(cid:3)(cid:526)(cid:531)(cid:623)(cid:613)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:563)(cid:456)(cid:606)(cid:549)(cid:3)(cid:576)(cid:566)(cid:3)(cid:497)(cid:656)(cid:497)(cid:606)(cid:663)(cid:623)(cid:526)(cid:531)(cid:566)(cid:517)(cid:3)
(cid:623)(cid:526)(cid:456)(cid:623)(cid:3)(cid:105)(cid:144)(cid:164)(cid:3)(cid:554)(cid:576)(cid:576)(cid:549)(cid:613)(cid:3)(cid:516)(cid:576)(cid:606)(cid:3)(cid:531)(cid:566)(cid:3)(cid:456)(cid:3)(cid:485)(cid:576)(cid:563)(cid:563)(cid:632)(cid:566)(cid:531)(cid:623)(cid:663)(cid:3)
(cid:526)(cid:576)(cid:613)(cid:603)(cid:531)(cid:679)(cid:456)(cid:554)(cid:1324)(cid:3)(cid:76)(cid:623)(cid:1375)(cid:613)(cid:3)(cid:456)(cid:3)(cid:526)(cid:531)(cid:517)(cid:526)(cid:3)(cid:491)(cid:497)(cid:563)(cid:456)(cid:566)(cid:491)(cid:3)(cid:526)(cid:576)(cid:613)(cid:603)(cid:531)(cid:679)(cid:456)(cid:554)(cid:1324)(cid:3)
(cid:76)(cid:623)(cid:3)(cid:526)(cid:456)(cid:613)(cid:3)(cid:484)(cid:497)(cid:497)(cid:566)(cid:3)(cid:657)(cid:497)(cid:554)(cid:485)(cid:576)(cid:563)(cid:497)(cid:491)(cid:3)(cid:456)(cid:566)(cid:491)(cid:3)(cid:657)(cid:497)(cid:554)(cid:554)(cid:3)
(cid:606)(cid:497)(cid:485)(cid:497)(cid:531)(cid:656)(cid:497)(cid:491)(cid:3)(cid:531)(cid:566)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:485)(cid:576)(cid:563)(cid:563)(cid:632)(cid:566)(cid:531)(cid:623)(cid:663)(cid:1324)(cid:1373)
MATT LYDEN
Director, Asset Management & Underwriting
(1) (2022) City Pops Ranking Idaho. City Idaho Transportation Department. Itd.Idaho.gov.
2022 ANNUAL REPORT
9
MAKING
AN IMPACT
EVERY DAY
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
(cid:4)(cid:613)(cid:3)(cid:456)(cid:3)(cid:554)(cid:497)(cid:456)(cid:491)(cid:531)(cid:566)(cid:517)(cid:3)(cid:603)(cid:606)(cid:576)(cid:656)(cid:531)(cid:491)(cid:497)(cid:606)(cid:3)(cid:576)(cid:516)(cid:3)(cid:606)(cid:497)(cid:456)(cid:554)(cid:3)(cid:497)(cid:613)(cid:679)(cid:456)(cid:623)(cid:497)(cid:3)(cid:485)(cid:456)(cid:603)(cid:531)(cid:679)(cid:456)(cid:554)(cid:3)
(cid:517)(cid:554)(cid:576)(cid:484)(cid:456)(cid:554)(cid:554)(cid:663)(cid:3)(cid:456)(cid:566)(cid:491)(cid:3)(cid:576)(cid:566)(cid:497)(cid:3)(cid:576)(cid:516)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:554)(cid:456)(cid:606)(cid:517)(cid:497)(cid:613)(cid:623)(cid:3)(cid:576)(cid:657)(cid:566)(cid:497)(cid:606)(cid:613)(cid:3)(cid:576)(cid:516)(cid:3)
(cid:526)(cid:576)(cid:613)(cid:603)(cid:531)(cid:679)(cid:456)(cid:554)(cid:3)(cid:484)(cid:497)(cid:491)(cid:613)(cid:3)(cid:531)(cid:566)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:171)(cid:1324)(cid:154)(cid:1324)(cid:1319)(cid:3)(cid:105)(cid:144)(cid:164)(cid:3)(cid:531)(cid:613)(cid:3)(cid:485)(cid:576)(cid:563)(cid:563)(cid:531)(cid:623)(cid:623)(cid:497)(cid:491)(cid:3)
(cid:623)(cid:576)(cid:3)(cid:678)(cid:456)(cid:485)(cid:531)(cid:554)(cid:531)(cid:679)(cid:456)(cid:623)(cid:531)(cid:566)(cid:517)(cid:3)(cid:657)(cid:576)(cid:606)(cid:554)(cid:491)(cid:1362)(cid:485)(cid:554)(cid:456)(cid:613)(cid:613)(cid:3)(cid:526)(cid:576)(cid:613)(cid:603)(cid:531)(cid:679)(cid:456)(cid:554)(cid:3)(cid:485)(cid:456)(cid:606)(cid:497)(cid:3)
(cid:456)(cid:613)(cid:3)(cid:491)(cid:497)(cid:554)(cid:531)(cid:656)(cid:497)(cid:606)(cid:497)(cid:491)(cid:3)(cid:484)(cid:663)(cid:3)(cid:456)(cid:485)(cid:485)(cid:576)(cid:563)(cid:603)(cid:554)(cid:531)(cid:613)(cid:526)(cid:497)(cid:491)(cid:3)(cid:576)(cid:603)(cid:497)(cid:606)(cid:456)(cid:623)(cid:576)(cid:606)(cid:613)(cid:3)
(cid:531)(cid:566)(cid:3)(cid:485)(cid:576)(cid:563)(cid:563)(cid:632)(cid:566)(cid:531)(cid:623)(cid:531)(cid:497)(cid:613)(cid:3)(cid:456)(cid:606)(cid:576)(cid:632)(cid:566)(cid:491)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:517)(cid:554)(cid:576)(cid:484)(cid:497)(cid:1324)(cid:3)(cid:105)(cid:144)(cid:164)(cid:3)
(cid:632)(cid:566)(cid:491)(cid:497)(cid:606)(cid:613)(cid:679)(cid:456)(cid:566)(cid:491)(cid:613)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:485)(cid:606)(cid:531)(cid:623)(cid:531)(cid:485)(cid:456)(cid:554)(cid:3)(cid:606)(cid:576)(cid:554)(cid:497)(cid:3)(cid:526)(cid:576)(cid:613)(cid:603)(cid:531)(cid:679)(cid:456)(cid:554)(cid:613)(cid:3)(cid:603)(cid:554)(cid:456)(cid:663)(cid:3)
(cid:531)(cid:566)(cid:3)(cid:485)(cid:576)(cid:563)(cid:563)(cid:632)(cid:566)(cid:531)(cid:623)(cid:531)(cid:497)(cid:613)(cid:3)(cid:1360)(cid:3)(cid:531)(cid:563)(cid:603)(cid:606)(cid:576)(cid:656)(cid:531)(cid:566)(cid:517)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:605)(cid:632)(cid:456)(cid:554)(cid:531)(cid:623)(cid:663)(cid:3)(cid:576)(cid:516)(cid:3)
(cid:554)(cid:531)(cid:516)(cid:497)(cid:3)(cid:484)(cid:663)(cid:3)(cid:531)(cid:566)(cid:485)(cid:606)(cid:497)(cid:456)(cid:613)(cid:531)(cid:566)(cid:517)(cid:3)(cid:456)(cid:485)(cid:485)(cid:497)(cid:613)(cid:613)(cid:3)(cid:623)(cid:576)(cid:3)(cid:566)(cid:497)(cid:497)(cid:491)(cid:497)(cid:491)(cid:3)(cid:526)(cid:497)(cid:456)(cid:554)(cid:623)(cid:526)(cid:485)(cid:456)(cid:606)(cid:497)(cid:3)
(cid:613)(cid:497)(cid:606)(cid:656)(cid:531)(cid:485)(cid:497)(cid:613)(cid:3)(cid:456)(cid:566)(cid:491)(cid:3)(cid:526)(cid:497)(cid:554)(cid:603)(cid:531)(cid:566)(cid:517)(cid:3)(cid:623)(cid:576)(cid:3)(cid:456)(cid:491)(cid:491)(cid:606)(cid:497)(cid:613)(cid:613)(cid:3)(cid:491)(cid:531)(cid:613)(cid:603)(cid:456)(cid:606)(cid:531)(cid:623)(cid:531)(cid:497)(cid:613)(cid:3)
(cid:531)(cid:566)(cid:3)(cid:497)(cid:605)(cid:632)(cid:456)(cid:554)(cid:3)(cid:456)(cid:485)(cid:485)(cid:497)(cid:613)(cid:613)(cid:3)(cid:623)(cid:576)(cid:3)(cid:526)(cid:497)(cid:456)(cid:554)(cid:623)(cid:526)(cid:485)(cid:456)(cid:606)(cid:497)(cid:1324)(cid:3)(cid:808)(cid:497)(cid:3)(cid:32)(cid:576)(cid:563)(cid:603)(cid:456)(cid:566)(cid:663)(cid:3)
(cid:456)(cid:554)(cid:531)(cid:517)(cid:566)(cid:613)(cid:3)(cid:657)(cid:531)(cid:623)(cid:526)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:526)(cid:531)(cid:517)(cid:526)(cid:497)(cid:613)(cid:623)(cid:3)(cid:605)(cid:632)(cid:456)(cid:554)(cid:531)(cid:623)(cid:663)(cid:3)(cid:576)(cid:603)(cid:497)(cid:606)(cid:456)(cid:623)(cid:576)(cid:606)(cid:613)(cid:3)(cid:657)(cid:526)(cid:576)(cid:3)
(cid:613)(cid:526)(cid:456)(cid:606)(cid:497)(cid:3)(cid:105)(cid:144)(cid:164)(cid:1375)(cid:613)(cid:3)(cid:516)(cid:576)(cid:485)(cid:632)(cid:613)(cid:3)(cid:576)(cid:566)(cid:3)(cid:491)(cid:497)(cid:554)(cid:531)(cid:656)(cid:497)(cid:606)(cid:531)(cid:566)(cid:517)(cid:3)(cid:613)(cid:497)(cid:606)(cid:656)(cid:531)(cid:485)(cid:497)(cid:613)(cid:3)(cid:623)(cid:526)(cid:456)(cid:623)(cid:3)
(cid:456)(cid:606)(cid:497)(cid:3)(cid:497)(cid:613)(cid:613)(cid:497)(cid:566)(cid:623)(cid:531)(cid:456)(cid:554)(cid:3)(cid:623)(cid:576)(cid:3)(cid:623)(cid:526)(cid:497)(cid:531)(cid:606)(cid:3)(cid:485)(cid:576)(cid:563)(cid:563)(cid:632)(cid:566)(cid:531)(cid:623)(cid:531)(cid:497)(cid:613)(cid:1324)
12
MEDICAL PROPERTIES TRUST, INC.
As this work is executed every day, MPT does so with
environmental sustainability and social impact in
mind. Last year, the Company issued its inaugural
Corporate Responsibility Report. This Report, which
is available on the Company’s website, outlines
how MPT’s approach to environmental, social and
governance issues enables the Company to support
its employees, build strong tenant relationships
and position the business for sustainable success
to create value for shareholders. Laura Katherine
Crum, Analyst – Special Projects, emphasized, “We
are committed to making a positive difference in our
own operations and in the communities in which we
operate, and we encourage our tenant operators to
do the same.”
(cid:1372)(cid:196)(cid:497)(cid:3)(cid:456)(cid:606)(cid:497)(cid:3)(cid:485)(cid:576)(cid:563)(cid:563)(cid:531)(cid:623)(cid:623)(cid:497)(cid:491)(cid:3)
(cid:623)(cid:576)(cid:3)(cid:563)(cid:456)(cid:549)(cid:531)(cid:566)(cid:517)(cid:3)(cid:456)(cid:3)(cid:603)(cid:576)(cid:613)(cid:531)(cid:623)(cid:531)(cid:656)(cid:497)(cid:3)
(cid:491)(cid:531)(cid:814)(cid:497)(cid:606)(cid:497)(cid:566)(cid:485)(cid:497)(cid:3)(cid:531)(cid:566)(cid:3)(cid:576)(cid:632)(cid:606)(cid:3)(cid:576)(cid:657)(cid:566)(cid:3)
operations and in the
(cid:485)(cid:576)(cid:563)(cid:563)(cid:632)(cid:566)(cid:531)(cid:623)(cid:531)(cid:497)(cid:613)(cid:3)(cid:531)(cid:566)(cid:3)(cid:657)(cid:526)(cid:531)(cid:485)(cid:526)(cid:3)(cid:657)(cid:497)(cid:3)
(cid:576)(cid:603)(cid:497)(cid:606)(cid:456)(cid:623)(cid:497)(cid:1319)(cid:3)(cid:456)(cid:566)(cid:491)(cid:3)(cid:657)(cid:497)(cid:3)(cid:497)(cid:566)(cid:485)(cid:576)(cid:632)(cid:606)(cid:456)(cid:517)(cid:497)(cid:3)
(cid:576)(cid:632)(cid:606)(cid:3)(cid:623)(cid:497)(cid:566)(cid:456)(cid:566)(cid:623)(cid:3)(cid:576)(cid:603)(cid:497)(cid:606)(cid:456)(cid:623)(cid:576)(cid:606)(cid:613)(cid:3)
to do the (cid:613)(cid:456)(cid:563)(cid:497)(cid:1324)(cid:1373)
LAURA KATHERINE CRUM
Analyst – Special Projects
FROM LEFT TO RIGHT: MEGAN LOGAN, LAURA KATHERINE CRUM,
MATT STUENKEL AND SCOTT HEALD.
MPT IS
TRACKING FOR A
(cid:1523)(cid:1521)(cid:1523)(cid:1526)
OPENING OF ITS
NEW SUSTAINABLE
HEADQUARTERS
(cid:1505) (cid:44)(cid:566)(cid:656)(cid:531)(cid:606)(cid:576)(cid:566)(cid:563)(cid:497)(cid:566)(cid:679)(cid:456)(cid:554)(cid:3)(cid:154)(cid:623)(cid:497)(cid:657)(cid:456)(cid:606)(cid:491)(cid:613)(cid:526)(cid:531)(cid:603)
As a large owner of hospitals, MPT has a unique
perspective on environmental sustainability in the
healthcare sector. The Company was recognized
recently as a Green Lease Leader with silver status by
the Institute for Market Transformation. Since MPT’s
operators have direct responsibility for maintaining
and running its hospitals, the Company engages
regularly with them on sustainability matters
and their importance. Details on many of their
initiatives to reduce the environmental footprint
of their operations are featured in MPT’s Corporate
Responsibility Report.
(cid:1505) Building a Culture of
Collaboration and Respect
MPT was honored to be named again in 2022 as
a “Best Place to Work in Healthcare” by Modern
Healthcare. In announcing the strong ranking, the
survey noted high levels of employee satisfaction and
confidence in executive management. This third-party
recognition is a testament to the strong culture that
the leadership team at MPT has fostered over the last
two decades, where employees feel empowered to
contribute to meaningful work, while advancing their
careers and developing new skill sets.
2022 ANNUAL REPORT
11
(cid:1505) Impact in Our Communities
MPT is dedicated to improving the well-being of those
who live in communities where MPT operates. An
employee-driven Charity and Community Support
Committee oversees the Company’s community
impact programs and initiatives across many
different communities. In addition to providing all
employees with one day of paid time to volunteer
at an organization of their choice, MPT contributed
to more than 200 non-profit organizations in 2022
with a charitable impact focused on five areas of
giving: health, education, social agencies, community
organizations and youth activities.
More information on the numerous programs and
initiatives that receive support from MPT can be found
on the Company’s website.
Packing food with Community Food Bank,
for families in Birmingham, Alabama.
12
MEDICAL PROPERTIES TRUST, INC.
2022 ANNUAL REPORT
13
TIME TO SHINE
PRIVATE HOSPITALS IN DEMAND AS EUROPE
ADDRESSES GROWING HEALTHCARE NEEDS
APPROXIMATELY
(cid:1523)(cid:1522)(cid:1521)
PROPERTIES
ACROSS EUROPE
APPROXIMATELY
(cid:1736)(cid:1527)(cid:1637)(cid:1526)(cid:29)(cid:1)
IN EUROPEAN
TOTAL ASSETS
14
MEDICAL PROPERTIES TRUST, INC.
(cid:1505) (cid:808)(cid:497)(cid:3)(cid:44)(cid:632)(cid:606)(cid:576)(cid:603)(cid:497)(cid:456)(cid:566)(cid:3)(cid:105)(cid:456)(cid:606)(cid:549)(cid:497)(cid:623)(cid:3)(cid:117)(cid:656)(cid:497)(cid:606)(cid:656)(cid:531)(cid:497)(cid:657)
In 2013, MPT first established its presence in Europe,
long before the COVID-19 pandemic challenged hospital
capacities. The pandemic placed tremendous stress on
universal health systems’ ability to deliver critical care in an
inclusive and timely way. The strain on these systems and
the resulting challenges in service and care emphasized
the significant role private hospitals play in delivering
healthcare to European markets.
(cid:1505) (cid:808)(cid:497)(cid:3)(cid:105)(cid:144)(cid:164)(cid:3)(cid:4)(cid:491)(cid:656)(cid:456)(cid:566)(cid:679)(cid:456)(cid:517)(cid:497)
These factors highlight the marketplace for private
healthcare across Europe — and it is still in the early stages
of its growth potential. Importantly, European universal
health providers are viewing private hospitals not as
competitors but often as partners in delivering healthcare
to its populations. In many instances, the public systems are
now sending their patient overflow to private hospitals and
reimbursing them accordingly.
Public healthcare systems have identified opportunities
to satisfy the healthcare needs of their populations while
managing tight capital budgets. It is often more cost-
effective to reimburse private hospitals than to expand or
build new facilities to meet growing demand. This positions
the private hospital sector for continued growth. And these
positive trends reinforce MPT’s European growth strategy
— private enterprise and government working together to
find efficiencies and effective solutions to deliver superior
healthcare to the European market.
(cid:1505) Expertise and Experience
MPT seized on critical first-mover advantages by
establishing its presence in the European market a decade
ago and introducing a strong and proven concept to the
private hospital sector overseas. Our outside expertise and
perspective on what makes a successful hospital helped us
to attract some top European private hospital operators
as partners.
UNPARALLELED HEALTHCARE EXPERTISE
As a real estate investment trust focused solely on hospital
assets, MPT has tremendous insight into what makes a
hospital successful. Many members of the leadership and
management teams came to MPT with years of experience
working in the healthcare sector where they gained direct
knowledge and expertise into how hospitals are run.
2022 ANNUAL REPORT
15
CUF VISEU HOSPITAL - PORTUGAL
PRIORY GLASGOW - U.K.
A hospital is not just a building — it is a vital player in the well-being and
vibrancy of the community it serves. That is just as true in Bakersfield,
Calif., as it is in Birmingham, U.K., or Berlin, Germany. A well-run hospital
instills confidence in the people it serves that they will receive the best
care. It is where top medical personnel want to practice. It is where
dedicated hospital operators want to uphold the highest standards of
their profession.
Hospitals are very complex operations, and they require a great deal of
expertise to make investments that will generate strong and sustainable
returns. It is important that owners and operators of potential hospital
acquisitions understand MPT’s singular and focused expertise in their
industry. MPT has established its credibility in the European market
by understanding not only real estate but also the unique healthcare
frameworks within each of its markets. “Our skill set transcends
traditional real estate investing in that we understand hospital
operations and what ultimately drives hospitals to either be successful
or not successful in the long term. I believe that’s our most significant
differentiator in the European market,” said Scott Heald, Director of Asset
Management and Underwriting.
In addition to developing strong relationships with operators across
several countries, our strategy sometimes includes identifying
opportunities for joint ventures. MPT has a proven track record for
disciplined capital allocation that brings certainty and decisiveness
into a competitive marketplace. Joint venture partners count on our
hospital real estate expertise to evaluate opportunities in an attractive
yet complex asset class. Steve Nitschke, Managing Director, Head of
European Acquisitions, added, “Our expertise in the hospital sector, long-
term relationships with premier operators worldwide and demonstrated
history of strategic, accretive investments have positioned MPT as an
attractive joint venture partner for sophisticated institutional investors,
validating MPT as the leading investor in hospital real estate. In turn, joint
ventures offer MPT access to alternative sources of capital and establish
partnerships with key global investors to give us more optionality as we
consider efficient capital strategies for the future.”
RIGOROUS STANDARDS FOR EUROPEAN
HOSPITAL REAL ESTATE
MPT’s disciplined acquisition and underwriting processes are designed
to identify the optimal locations for investing in hospital properties
across Europe. The Company currently has a highly select portfolio of
European hospital assets in the United Kingdom, Spain, Switzerland,
Italy, Germany, Portugal and Finland.
Given the multitude of variables within each country, MPT’s due diligence
is extensive. Geopolitical risk and the reimbursement environment are
important to evaluate on a country-by-country basis. A cooperative
relationship between public and private healthcare providers is a top
priority. MPT recently entered the Nordic market with its first transaction
in Finland, and the Company believes there is strong growth potential
in Scandinavia based on the collaborative spirit of their government
healthcare systems and private hospitals.
16
MEDICAL PROPERTIES TRUST, INC.
(cid:1505) A Strong Presence in the
United Kingdom
With 87 properties, MPT’s most significant presence in Europe
is in the U.K. In a country where the National Health Service
(NHS) is the primary source of care, MPT is well established in
the private healthcare system and owns two NHS hospitals. In
addition to serving a growing number of Britons with private
insurance, private hospitals are working collaboratively
with the public system to address substantial care backlogs
due to increasing demand and constrained resources.
Inpatient behavioral healthcare is facing similar dynamics,
and our hospitals leased to market leader Priory play an
important role in increasing access to behavioral care within
communities across the U.K.
(cid:1505) Seizing the Opportunity in Spain
In 2017, MPT had identified Spain as a promising
expansion opportunity when IMED Hospitales, a leading
Spanish private hospital operator, came to MPT seeking
a real estate investor that had the healthcare expertise
to actualize their vision of a state-of-the-art hospital.
Following that successful endeavor, MPT agreed to fund the
development of three IMED general acute care hospitals
in Barcelona, Valencia and Alicante over the next three
years for a combined €121 million. These projects, in
addition to MPT’s existing IMED facility in Valencia, reflect
the growing presence of private hospitals in Spain and
further demonstrate MPT’s ability to grow through existing
relationships. Today, MPT owns nine top-tier healthcare
facilities in Spain.
(cid:1505) (cid:105)(cid:497)(cid:497)(cid:623)(cid:531)(cid:566)(cid:517)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:71)(cid:531)(cid:517)(cid:526)(cid:3)(cid:154)(cid:679)(cid:456)(cid:566)(cid:491)(cid:456)(cid:606)(cid:491)(cid:613)(cid:3)(cid:576)(cid:516)(cid:3)
Swiss Healthcare
Switzerland has an exceptionally high standard of
healthcare, often considered one of the best in the world.
MPT entered the Swiss market in 2019 and now owns a 70%
interest in a portfolio of 17 premier general acute hospitals
operated by Swiss Medical Network, Switzerland’s second
largest private hospital group.
NHS CAVENDISH SQUARE – U.K.
IMED HOSPITALES DEVELOPMENT
VALENCIA, SPAIN
VILLA IM PARK - SWITZERLAND
2022 ANNUAL REPORT
17
THE BEST
AND THE
BRIGHTEST
A FLOURISHING UTAH DEMANDS
EXCELLENT HOSPITALS
(cid:623) (cid:1359)
(cid:171)(cid:679)(cid:456)(cid:526)(cid:3)(cid:531)(cid:613)(cid:3)(cid:549)(cid:566)(cid:576)(cid:657)(cid:566)(cid:3)(cid:456)(cid:613)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:32)(cid:606)(cid:576)(cid:613)(cid:613)(cid:606)(cid:576)(cid:456)(cid:491)(cid:613)(cid:3)(cid:576)(cid:516)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:196)(cid:497)(cid:613)(cid:623)(cid:3)(cid:1359)(cid:3)
(cid:623)(cid:526)(cid:497)(cid:3)(cid:485)(cid:576)(cid:566)(cid:566)(cid:497)(cid:485)(cid:623)(cid:531)(cid:566)(cid:517)(cid:3)(cid:603)(cid:576)(cid:531)(cid:566)(cid:623)(cid:3)(cid:516)(cid:576)(cid:606)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:32)(cid:497)(cid:566)(cid:623)(cid:606)(cid:456)(cid:554)(cid:3)(cid:144)(cid:456)(cid:485)(cid:531)(cid:775)(cid:485)(cid:3)(cid:456)(cid:566)(cid:491)(cid:3)
(cid:456)(cid:566)(cid:491)(cid:3)
(cid:775)(cid:606)(cid:613)(cid:623)(cid:3)
(cid:171)(cid:566)(cid:531)(cid:576)(cid:566)(cid:3)(cid:144)(cid:456)(cid:485)(cid:531)(cid:775)(cid:485)(cid:3)(cid:147)(cid:456)(cid:531)(cid:554)(cid:606)(cid:576)(cid:456)(cid:491)(cid:613)(cid:1319)(cid:3)(cid:657)(cid:526)(cid:531)(cid:485)(cid:526)(cid:3)(cid:485)(cid:606)(cid:497)(cid:456)(cid:623)(cid:497)(cid:491)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:775)(cid:606)(cid:613)(cid:623)(cid:3)
(cid:623)(cid:606)(cid:456)(cid:566)(cid:613)(cid:485)(cid:576)(cid:566)(cid:623)(cid:531)(cid:566)(cid:497)(cid:566)(cid:679)(cid:456)(cid:554)(cid:3)(cid:606)(cid:456)(cid:531)(cid:554)(cid:606)(cid:576)(cid:456)(cid:491)(cid:3)(cid:531)(cid:566)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:171)(cid:1324)(cid:154)(cid:1324)(cid:3)(cid:531)(cid:566)(cid:3)(cid:1201)(cid:1208)(cid:1206)(cid:1209)(cid:1324)(cid:1209)(cid:1324)
(cid:808)(cid:531)(cid:613)(cid:3)(cid:526)(cid:531)(cid:613)(cid:623)(cid:576)(cid:606)(cid:531)(cid:485)(cid:3)(cid:456)(cid:485)(cid:526)(cid:531)(cid:497)(cid:656)(cid:497)(cid:563)(cid:497)(cid:566)(cid:623)(cid:3)(cid:576)(cid:603)(cid:497)(cid:566)(cid:497)(cid:491)(cid:3)(cid:632)(cid:603)(cid:3)(cid:485)(cid:576)(cid:563)(cid:563)(cid:497)(cid:606)(cid:485)(cid:497)(cid:3)
(cid:497)(cid:606)(cid:485)(cid:497)(cid:3)
(cid:456)(cid:566)(cid:491)(cid:3)(cid:623)(cid:606)(cid:456)(cid:656)(cid:497)(cid:554)(cid:1319)(cid:3)(cid:456)(cid:485)(cid:485)(cid:497)(cid:554)(cid:497)(cid:606)(cid:456)(cid:623)(cid:531)(cid:566)(cid:517)(cid:3)(cid:517)(cid:606)(cid:576)(cid:657)(cid:623)(cid:526)(cid:3)(cid:456)(cid:566)(cid:491)(cid:3)(cid:497)(cid:662)(cid:603)(cid:456)(cid:566)(cid:613)(cid:531)(cid:576)(cid:566)(cid:531)(cid:576)(cid:566)
(cid:456)(cid:485)(cid:606)(cid:576)(cid:613)(cid:613)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:497)(cid:566)(cid:623)(cid:531)(cid:606)(cid:497)(cid:3)(cid:171)(cid:1324)(cid:154)(cid:1324)(cid:3)(cid:497)(cid:485)(cid:576)(cid:566)(cid:576)(cid:563)(cid:663)(cid:1324)(cid:3)(cid:164)(cid:576)(cid:491)(cid:456)(cid:663)(cid:1319)(cid:3)(cid:171)(cid:679)(cid:456)(cid:526)(cid:3)(cid:526)(cid:3)
(cid:485)(cid:576)(cid:566)(cid:623)(cid:531)
(cid:623)(cid:526)(cid:1324)
(cid:485)(cid:576)(cid:566)(cid:623)(cid:531)(cid:566)(cid:632)(cid:497)(cid:613)(cid:3)(cid:623)(cid:576)(cid:3)(cid:623)(cid:526)(cid:606)(cid:531)(cid:656)(cid:497)(cid:3)(cid:456)(cid:613)(cid:3)(cid:456)(cid:566)(cid:3)(cid:497)(cid:603)(cid:531)(cid:485)(cid:497)(cid:566)(cid:623)(cid:497)(cid:606)(cid:3)(cid:576)(cid:516)(cid:3)(cid:517)(cid:606)(cid:576)(cid:657)(cid:623)(cid:526)(cid:1324)(cid:3)
Central Pacific
(cid:1522)(cid:1529)(cid:1637)(cid:1525)(cid:1773)(cid:1)
POPULATION GROWTH
FROM 2010 TO 2020
SEVEN MPT
HOSPITALS AND
(cid:1529)(cid:1526)(cid:1773)
OF UTAH RESIDENTS IN
WASATCH FRONT REGION
18
, INC.
MEDICAL PROPERTIES TRUST, INC.
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(cid:171)(cid:623)(cid:456)(cid:526)(cid:3)(cid:62)(cid:456)(cid:485)(cid:623)(cid:613)*
YOUNGEST MEDIAN AGE OF ANY STATE
IN THE UNITED STATES
(cid:1528)(cid:1773)(cid:1)
UNDER AGE 5
(cid:1523)(cid:1529)(cid:1773)(cid:1)
UNDER AGE 18
(cid:1522)(cid:1523)(cid:1773)
OVER AGE 65
MOUNTAIN POINT MEDICAL CENTER
In fact, it is the fastest growing stat
n fact, it is the fastest growing state
in the Union as people flock to its
s people flock to its
vibrant economy, wide-ranging
industries, breathtaking landscapes
and outdoor recreation.
As new employers and affluent young
professionals with growing families
move to the area, ample access to
superior hospital care is expected.
MPT’s seven thriving facilities in Utah
illustrate a great deal about the key
infrastructure characteristics the
Company looks for when growing its
hospital portfolio.
“These Utah hospitals checked all of
the boxes as far as our cornerstone
underwriting principles,” said Edward
K. Aldag, Jr., Chairman, President and
Chief Executive Officer. “They not only
meet the critical healthcare needs of
their communities but also facilitate
attractive real estate returns to MPT.”
uke Savage, Vice President, Head
Luke Savage, Vice President, Head
f Global Acquisitions, echoed Mr
of Global Acquisitions, echoed Mr.
Aldag’s view. “Every community is
community
different, and our acquisition strategy
focuses on the needs of each specific
community and how important that
hospital is to the area,” Mr. Savage
said. “What needs is the hospital
serving? Do they have all the pieces
in place to help the doctors? Are they
serving the whole community?”
The geographic distribution of Utah’s
population supports a concentration
of high-quality healthcare facilities
located in close proximity to each
other. Eighty-five percent of the
state’s 3.4 million people live along
the Wasatch Front, where Salt Lake
City and MPT’s seven properties are
located. It is a high growth area that
features multiple higher education
institutions and fosters a successful
business environment. This “Silicon
Slopes” region has become a hub
*Sources: 2020 U.S. Census and Economic Development Corporation of Utah.
(cid:1372)(cid:44)(cid:656)(cid:497)(cid:606)(cid:663)(cid:3)(cid:485)(cid:576)(cid:563)(cid:563)(cid:632)(cid:566)(cid:531)(cid:623)(cid:663)(cid:3)(cid:531)(cid:613)(cid:3)(cid:491)(cid:531)(cid:814)(cid:497)(cid:606)(cid:497)(cid:566)(cid:679)(cid:1319)(cid:3)(cid:456)(cid:566)(cid:491)(cid:3)(cid:576)(cid:632)(cid:606)(cid:3)(cid:456)(cid:485)(cid:605)(cid:632)(cid:531)(cid:613)(cid:531)(cid:623)(cid:531)(cid:576)(cid:566)(cid:3)(cid:613)(cid:623)(cid:606)(cid:456)(cid:623)(cid:497)(cid:830)(cid:3)
(cid:516)(cid:576)(cid:485)(cid:632)(cid:613)(cid:497)(cid:613)(cid:3)(cid:576)(cid:566)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:566)(cid:497)(cid:497)(cid:491)(cid:613)(cid:3)(cid:576)(cid:516)(cid:3)(cid:497)(cid:456)(cid:485)(cid:526)(cid:3)(cid:613)(cid:603)(cid:497)(cid:485)(cid:531)(cid:775)(cid:485)(cid:3)(cid:485)(cid:576)(cid:563)(cid:563)(cid:632)(cid:566)(cid:531)(cid:623)(cid:663)(cid:3)(cid:456)(cid:566)(cid:491)(cid:3)(cid:526)(cid:576)(cid:657)(cid:3)
(cid:531)(cid:563)(cid:603)(cid:576)(cid:606)(cid:679)(cid:456)(cid:566)(cid:623)(cid:3)(cid:623)(cid:526)(cid:456)(cid:623)(cid:3)(cid:526)(cid:576)(cid:613)(cid:603)(cid:531)(cid:679)(cid:456)(cid:554)(cid:3)(cid:531)(cid:613)(cid:3)(cid:623)(cid:576)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:456)(cid:606)(cid:497)(cid:456)(cid:1324)(cid:1373)
LUKE SAVAGE
Vice President, Head of Global Acquisitions
Utah Lakee
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Physical quality of hospital
and equipment is immediately
apparent, as with MPT’s four
other hospitals in the region
Diversification of services
provided, referral base and
reimbursement sources ensures
steady revenue generation
Limited competition in
immediate area due to start-
up costs for new entrants,
increasing construction costs
Deeply rooted community
need demonstrated by strong
occupancy year-round
MOUNTAIN POINT MEDICAL CENTER
19
2022 ANNUAL REPORT
(cid:1372)(cid:171)(cid:679)(cid:456)(cid:526)(cid:3)(cid:531)(cid:613)(cid:3)(cid:576)(cid:566)(cid:497)(cid:3)(cid:576)(cid:516)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:563)(cid:576)(cid:613)(cid:623)(cid:3)
(cid:491)(cid:531)(cid:613)(cid:623)(cid:531)(cid:566)(cid:485)(cid:623)(cid:531)(cid:656)(cid:497)(cid:3)(cid:526)(cid:497)(cid:456)(cid:554)(cid:623)(cid:526)(cid:485)(cid:456)(cid:606)(cid:497)(cid:3)
(cid:563)(cid:456)(cid:606)(cid:549)(cid:497)(cid:623)(cid:613)(cid:3)(cid:531)(cid:566)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)
(cid:171)(cid:566)(cid:531)(cid:623)(cid:497)(cid:491)(cid:3)(cid:154)(cid:679)(cid:456)(cid:623)(cid:497)(cid:613)(cid:1324)(cid:1373)
JASON FREY
Director, Asset Management
and Underwriting
for technological innovation and has
attracted a vibrant, young, highly educated
workforce. Other important industries
within the community include financial
services, construction, manufacturing,
distribution, healthcare and aviation.
Residents and tourists alike take advantage
of the recreational opportunities found
throughout the rich natural surroundings of
the area.
“Utah is one of the most distinctive
healthcare markets in the United States,”
said Jason Frey, Director, Asset Management
and Underwriting. “Its population is younger,
affluent and generally healthy, with larger
families that are commercially insured. It’s
a very attractive market for so many reasons.”
In the latest U.S. Census, Utah retained its
title as the nation’s youngest state, even as
the U.S. population overall continued to
age. Utah’s median age is 31.8 years, a full
seven years younger than the nationwide
average of 38.8 years.
With such a young, healthy population
leading active lifestyles, one might questionti
the utility of multiple hospitals in the area. ea
However, many of these young citizens areare
choosing to start families and will requirere
and
increasing levels of prenatal, childbirth and
ongoing children’s care in the future. Not ot
to mention that the outdoor recreational
activities that appeal to so many Utah
residents as well as tourists also lead too
injuries, emergency room visits and related
ated
surgeries. In fact, MPT’s Salt Lake City
properties see more surgeries than similarlymilarly
situated hospitals in communities of
average or older populations.
JORDAN VALLEY MEDICAL CENTER
20
20
MEDICAL PROPERTIES TRUST, INC.
MEDICAL PROPERTIES TRUST, INC.
DAVIS HOSPITAL AND MEDICAL CENTER
JORDAN VALLEY MEDICAL CENTER - WEST VALLEY CAMPUS
21
SALT LAKE REGIONAL MEDICAL CENTER
2022 ANNUAL REPORT
MPT PORTFOLIO
AS OF DECEMBER 31, 2022
(cid:1524)(cid:1522)
STATES
(cid:1525)
CONTINENTS
(cid:1522)(cid:1521)
COUNTRIES
(cid:1526)(cid:1526)
OPERATORS
(cid:1525)(cid:1525)(cid:1525)
PROPERTIES
(cid:1764)(cid:1525)(cid:1525)(cid:1632)(cid:1521)(cid:1521)(cid:1521)
HOSPITAL BEDS
22
MEDICAL PROPERTIES TRUST, INC.
LARGEST INDIVIDUAL
FACILITY INVESTMENT
LESS THAN
(cid:1524)(cid:1773)
OF TOTAL MPT
PORTFOLIO
(cid:1527)(cid:1522)(cid:1773)
UNITED
STATES
TOTAL
ASSETS BY
GEOGRAPHY
(cid:1524)(cid:1773)
OTHER
(cid:1523)(cid:1522)(cid:1773)
UNITED
KINGDOM
(cid:1525)(cid:1773)
AUSTRALIA
(cid:1525)(cid:1773)
SWITZERLAND
(cid:1524)(cid:1773)
GERMANY
(cid:1522)(cid:1773)
SPAIN
(cid:1524)(cid:1773)
OTHER
COUNTRIES
(cid:1527)(cid:1529)(cid:1773)
GENERAL
ACUTE CARE
HOSPITALS
(cid:1522)(cid:1525)(cid:1773)
BEHAVIORAL
HEALTH
FACILITIES
(cid:1528)(cid:1773)
INPATIENT
REHAB
FACILITIES
TOTAL
ASSETS
BY TYPE
(cid:1523)(cid:1773)
LONG-TERM
ACUTE CARE
HOSPITALS
(cid:1522)(cid:1773)
FREESTANDING
ER / URGENT CARE
FACILITIES
(cid:1529)(cid:1773)
OTHER
(cid:1505) (cid:4)(cid:818)(cid:606)(cid:563)(cid:531)(cid:566)(cid:517)(cid:3)(cid:531)(cid:623)(cid:613)(cid:3)(cid:31)(cid:497)(cid:554)(cid:531)(cid:497)(cid:516)(cid:3)(cid:531)(cid:566)(cid:3)(cid:71)(cid:576)(cid:613)(cid:603)(cid:531)(cid:679)(cid:456)(cid:554)(cid:3)(cid:147)(cid:497)(cid:456)(cid:554)(cid:3)(cid:44)(cid:613)(cid:679)(cid:456)(cid:623)(cid:497)
Acute care hospitals are the most resilient investments across the healthcare sector. MPT increased its market presence in 2022 in
Spain, South America, Finland and across Europe as it committed investment dollars to new relationships and built on existing ones.
MPT continues to bring reliable healthcare to communities worldwide — maintaining its place as the leader in capital solutions for
the healthcare industry.
2022 ANNUAL REPORT
23
LEADING THE TEAM
COMPANY OFFICERS (From the left)
CHARLES R. LAMBERT — (cid:195)(cid:531)(cid:485)(cid:497)(cid:3)(cid:144)(cid:606)(cid:497)(cid:613)(cid:531)(cid:491)(cid:497)(cid:566)(cid:679)(cid:1319)(cid:3)(cid:164)(cid:606)(cid:497)(cid:456)(cid:613)(cid:632)(cid:606)(cid:497)(cid:606)(cid:3)(cid:1522)(cid:3)(cid:105)(cid:456)(cid:566)(cid:456)(cid:517)(cid:531)(cid:566)(cid:517)(cid:3)(cid:38)(cid:531)(cid:606)(cid:497)(cid:485)(cid:623)(cid:576)(cid:606)(cid:3)(cid:576)(cid:516)(cid:3)(cid:32)(cid:456)(cid:603)(cid:531)(cid:679)(cid:456)(cid:554)(cid:3)(cid:105)(cid:456)(cid:606)(cid:549)(cid:497)(cid:623)(cid:613)
ROSA H. HOOPER — (cid:154)(cid:497)(cid:566)(cid:531)(cid:576)(cid:606)(cid:3)(cid:195)(cid:531)(cid:485)(cid:497)(cid:3)(cid:144)(cid:606)(cid:497)(cid:613)(cid:531)(cid:491)(cid:497)(cid:566)(cid:623)(cid:3)(cid:576)(cid:516)(cid:3)(cid:117)(cid:603)(cid:497)(cid:606)(cid:456)(cid:623)(cid:531)(cid:576)(cid:566)(cid:613)(cid:3)(cid:1522)(cid:3)(cid:4)(cid:613)(cid:613)(cid:531)(cid:613)(cid:679)(cid:456)(cid:566)(cid:623)(cid:3)(cid:154)(cid:497)(cid:485)(cid:606)(cid:497)(cid:679)(cid:456)(cid:606)(cid:663)
R. STEVEN HAMNER — (cid:44)(cid:662)(cid:497)(cid:485)(cid:632)(cid:623)(cid:531)(cid:656)(cid:497)(cid:3)(cid:195)(cid:531)(cid:485)(cid:497)(cid:3)(cid:144)(cid:606)(cid:497)(cid:613)(cid:531)(cid:491)(cid:497)(cid:566)(cid:623)(cid:3)(cid:1522)(cid:3)(cid:32)(cid:526)(cid:531)(cid:497)(cid:516)(cid:3)(cid:62)(cid:531)(cid:566)(cid:456)(cid:566)(cid:485)(cid:531)(cid:456)(cid:554)(cid:3)(cid:117)(cid:818)(cid:485)(cid:497)(cid:606)
EDWARD K. ALDAG, JR. — (cid:32)(cid:526)(cid:456)(cid:531)(cid:606)(cid:563)(cid:456)(cid:566)(cid:1319)(cid:3)(cid:144)(cid:606)(cid:497)(cid:613)(cid:531)(cid:491)(cid:497)(cid:566)(cid:623)(cid:3)(cid:1522)(cid:3)(cid:32)(cid:526)(cid:531)(cid:497)(cid:516)(cid:3)(cid:44)(cid:662)(cid:497)(cid:485)(cid:632)(cid:623)(cid:531)(cid:656)(cid:497)(cid:3)(cid:117)(cid:818)(cid:485)(cid:497)(cid:606)
R. LUCAS SAVAGE — (cid:195)(cid:531)(cid:485)(cid:497)(cid:3)(cid:144)(cid:606)(cid:497)(cid:613)(cid:531)(cid:491)(cid:497)(cid:566)(cid:679)(cid:1319)(cid:3)(cid:71)(cid:497)(cid:456)(cid:491)(cid:3)(cid:576)(cid:516)(cid:3)(cid:63)(cid:554)(cid:576)(cid:484)(cid:456)(cid:554)(cid:3)(cid:4)(cid:485)(cid:605)(cid:632)(cid:531)(cid:613)(cid:531)(cid:623)(cid:531)(cid:576)(cid:566)(cid:613)
(cid:44)(cid:105)(cid:105)(cid:44)(cid:807)(cid:3)(cid:44)(cid:1324)(cid:3)(cid:105)(cid:32)(cid:96)(cid:44)(cid:4)(cid:108) — (cid:44)(cid:662)(cid:497)(cid:485)(cid:632)(cid:623)(cid:531)(cid:656)(cid:497)(cid:3)(cid:195)(cid:531)(cid:485)(cid:497)(cid:3)(cid:144)(cid:606)(cid:497)(cid:613)(cid:531)(cid:491)(cid:497)(cid:566)(cid:679)(cid:1319)(cid:3)(cid:32)(cid:526)(cid:531)(cid:497)(cid:516)(cid:3)(cid:117)(cid:603)(cid:497)(cid:606)(cid:456)(cid:623)(cid:531)(cid:566)(cid:517)(cid:3)(cid:117)(cid:818)(cid:485)(cid:497)(cid:606)(cid:3)(cid:1522)(cid:3)(cid:154)(cid:497)(cid:485)(cid:606)(cid:497)(cid:679)(cid:456)(cid:606)(cid:663)
J. KEVIN HANNA — (cid:154)(cid:497)(cid:566)(cid:531)(cid:576)(cid:606)(cid:3)(cid:195)(cid:531)(cid:485)(cid:497)(cid:3)(cid:144)(cid:606)(cid:497)(cid:613)(cid:531)(cid:491)(cid:497)(cid:566)(cid:679)(cid:1319)(cid:3)(cid:32)(cid:576)(cid:566)(cid:623)(cid:606)(cid:576)(cid:554)(cid:554)(cid:497)(cid:606)(cid:3)(cid:1522)(cid:3)(cid:32)(cid:526)(cid:531)(cid:497)(cid:516)(cid:3)(cid:4)(cid:485)(cid:485)(cid:576)(cid:632)(cid:566)(cid:623)(cid:531)(cid:566)(cid:517)(cid:3)(cid:117)(cid:818)(cid:485)(cid:497)(cid:606)
(cid:96)(cid:4)(cid:242)(cid:147)(cid:202)(cid:3)(cid:71)(cid:1324)(cid:3)(cid:144)(cid:117)(cid:147)(cid:164)(cid:4)(cid:96) — (cid:154)(cid:497)(cid:566)(cid:531)(cid:576)(cid:606)(cid:3)(cid:195)(cid:531)(cid:485)(cid:497)(cid:3)(cid:144)(cid:606)(cid:497)(cid:613)(cid:531)(cid:491)(cid:497)(cid:566)(cid:679)(cid:1319)(cid:3)(cid:154)(cid:497)(cid:566)(cid:531)(cid:576)(cid:606)(cid:3)(cid:4)(cid:491)(cid:656)(cid:531)(cid:613)(cid:576)(cid:606)(cid:3)(cid:623)(cid:576)(cid:3)(cid:623)(cid:526)(cid:497)(cid:3)(cid:32)(cid:44)(cid:117)(cid:3)(cid:1349)(cid:566)(cid:576)(cid:623)(cid:3)(cid:603)(cid:531)(cid:485)(cid:623)(cid:632)(cid:606)(cid:497)(cid:491)(cid:1350)
24
MEDICAL PROPERTIES TRUST, INC.
2022 ANNUAL REPORT
25
FINAN CIAL
REVIEW
27 SELECTED FINANCIAL DATA
29 NON-GAAP FINANCIAL MEASURES
32 FORWARD LOOKING STATEMENTS
33 REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
35 CONSOLIDATED BALANCE SHEETS
36 CONSOLIDATED STATEMENTS OF NET INCOME
37 CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
38 CONSOLIDATED STATEMENTS OF EQUITY
39 CONSOLIDATED STATEMENTS OF CASH FLOWS
40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
73 CORPORATE AND SHAREHOLDER INFORMATION
26
MEDICAL PROPERTIES TRUST, INC.
SELECTED FINANCIAL DATA
The following sets forth selected financial and operating information on a historical basis (in thousands except per share data):
For the Years Ended December 31,
2022
2021
OPERATING DATA
Total revenues
Expenses:
Interest
Real estate depreciation and amortization
Property-related
General and administrative
Total expenses
Other income (expense):
Gain on sale of real estate
Real estate and other impairment charges, net
Earnings from equity interests
Debt refinancing and unutilized financing costs
Other (including fair value adjustments on securities)
Income tax (expense)
Net income
Net income attributable to non-controlling interests
Net income attributable to MPT common stockholders
Net income attributable to MPT common stockholders per diluted share
Weighted-average shares outstanding — diluted
OTHER DATA
Dividends declared per common share
FFO(1)
Normalized FFO(1)
Normalized FFO per share(1)
Cash paid for acquisitions and other related investments
$
1,542,851
$
1,544,669
359,036
332,977
45,697
160,494
898,204
536,755
(268,375)
40,800
(9,452)
15,344
(55,900)
903,819
(1,222)
902,597
1.50
598,837
1.16
934,312
1,087,603
1.82
1,332,962
$
$
$
$
$
$
$
367,393
321,249
39,098
145,638
873,378
52,471
(39,411)
28,488
(27,650)
45,699
(73,948)
656,940
(919)
656,021
1.11
590,139
1.12
975,988
1,035,920
1.75
4,246,829
$
$
$
$
$
$
$
(1) See section titled “Non-GAAP Financial Measures” for an explanation of why these non-GAAP financial measures are useful along with a reconciliation to our GAAP earnings.
2022 ANNUAL REPORT
27
December 31,
BALANCE SHEET DATA
Real estate assets — at cost
Real estate accumulated depreciation/amortization
Cash and cash equivalents
Investments in unconsolidated real estate joint ventures
Investments in unconsolidated operating entities
Other loans
Other
Total assets
Debt, net
Other liabilities
Total Medical Properties Trust, Inc. stockholders’ equity
Non-controlling interests
Total equity
Total liabilities and equity
2022
2021
$ 15,917,839
$ 17,425,765
(1,193,312)
235,668
1,497,903
1,444,872
227,839
1,527,191
(993,100)
459,227
1,152,927
1,289,434
67,317
1,118,231
$ 19,658,000
$ 20,519,801
$ 10,268,412
$
11,282,770
795,181
8,592,838
1,569
791,360
8,440,188
5,483
8,594,407
8,445,671
$ 19,658,000
$
20,519,801
28
MEDICAL PROPERTIES TRUST, INC.
Non-GAAP Financial Measures
We consider non-GAAP financial measures to be useful supplemental measures of our operating performance. A non-GAAP financial measure
is a measure of financial performance, financial position, or cash flows that excludes or includes amounts that are not so excluded from or
included in the most directly comparable measure calculated and presented in accordance with GAAP. Described below are the non-GAAP
financial measures used by management to evaluate our operating performance and that we consider most useful to investors, together
with reconciliations of these measures to the most directly comparable GAAP measures.
FUNDS FROM OPERATIONS AND NORMALIZED FUNDS FROM OPERATIONS
Investors and analysts following the real estate industry utilize funds from operations ("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 disclose normalized FFO, which adjusts FFO for items that relate to
unanticipated or non-core events or activities or accounting changes that, if not noted, would make comparison to prior period results and
market expectations less meaningful to investors and analysts.
We believe that the use of FFO, combined with the required GAAP presentations, improves the understanding of our operating results
among investors and the use of normalized FFO makes comparisons of our operating results with prior periods and other companies more
meaningful. While FFO and normalized FFO are relevant and widely used supplemental measures of operating and financial performance of
REITs, they should not be viewed as a substitute measure of our operating performance since the measures do not reflect either depreciation
and amortization costs or the level of capital expenditures and leasing costs (if any not paid by our tenants) to maintain the operating
performance of our properties, which can be significant economic costs that could materially impact our results of operations. FFO and
normalized FFO should not be considered an alternative to net income (loss) (computed in accordance with GAAP) as indicators of our
financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.
2022 ANNUAL REPORT
29
The following table presents a reconciliation of net income attributable to MPT common stockholders to FFO and Normalized FFO for the
years ended December 31, 2022 and 2021 (amounts in thousands except per share data):
2022
2021
$
$
$
$
902,597
(1,602)
900,995
399,622
(536,887)
170,582
656,021
(2,161)
653,860
374,599
(52,471)
—
$
934,312
$
975,988
37,682
—
97,793
(2,333)
10,697
9,452
7,213
(40,945)
39,411
(8,193)
34,796
27,650
$
1,087,603
$
1,035,920
$
$
$
1.50
0.67
(0.90)
0.29
1.56
0.07
—
0.16
—
0.02
0.01
1.82
$
$
$
1.11
0.63
(0.09)
—
1.65
0.01
(0.07)
0.07
(0.01)
0.06
0.04
1.75
For the Years Ended December 31,
FFO INFORMATION
Net income attributable to MPT common stockholders
Participating securities’ share in earnings
Net income, less participating securities’ share in earnings
Depreciation and amortization
Gain on sale of real estate
Real estate impairment charges
Funds from operations
Write-off of unbilled rent and other
Gain on sale of equity investments
Other impairment charges, net
Non-cash fair value adjustments
Tax rate changes and other
Debt refinancing and unutilized financing costs
Normalized funds from operations
PER DILUTED SHARE DATA
Net income, less participating securities’ share in earnings
Depreciation and amortization
Gain on sale of real estate
Real estate impairment charges
Funds from operations
Write-off of unbilled rent and other
Gain on sale of equity investments
Other impairment charges, net
Non-cash fair value adjustments
Tax rate changes and other
Debt refinancing and unutilized financing costs
Normalized funds from operations
30
MEDICAL PROPERTIES TRUST, INC.
RETURN ON EQUITY
Return on equity as measured by normalized FFO is derived from amounts included in our U.S. GAAP financial statements. We use normalized
FFO as the numerator for the same reasons we present normalized FFO, as discussed on page 29. We use average total equity excluding the
effect of accumulated depreciation and amortization similar to the exclusion of depreciation and amortization of real estate assets from funds
from operations.
Return on equity measures the actual profitability we delivered related to the actual cost of the equity with which we have built our
portfolio. Return on equity measured by normalized FFO should not be considered a substitute for return on equity measured by net income
and does not reflect the overall profitability of our business. The following tables reconcile return on equity measured by net income and
return on equity measured by normalized FFO (amounts in thousands):
For the Years Ended December 31,
Return on equity measured by net income
Numerator:
Net income attributable to MPT common stockholders
Denominator:
Beginning total equity
Ending total equity
Average total equity
Return on equity measured by net income
For the Years Ended December 31,
Return on equity measured by normalized funds from operations
Numerator:
Normalized funds from operations(1)
Denominator:
Beginning total equity
Accumulated depreciation and amortization
Accumulated depreciation and amortization (real estate held for sale)
Adjusted beginning total equity
Ending total equity
Accumulated depreciation and amortization
Accumulated depreciation and amortization (real estate held for sale)
Adjusted ending total equity
Average adjusted total equity
Return on equity measured by normalized funds from operations
(1) See reconciliation on previous page.
2022
2021
$
$
902,597
$
656,021
8,445,671
$
7,343,857
8,594,407
8,445,671
$
8,520,039
$
7,894,764
10.59%
8.31%
2022
2021
$
1,087,603
$
1,035,920
$
8,445,671
$
7,343,857
993,100
113,996
833,529
—
9,552,767
8,177,386
8,594,407
1,193,312
—
8,445,671
993,100
113,996
9,787,719
9,552,767
$
9,670,243
$
8,865,077
11.25%
11.69%
2022 ANNUAL REPORT
31
•
•
•
•
•
Forward-Looking Statements
We make forward-looking statements in this Annual Report that are
subject to risks and uncertainties. These forward-looking statements
include information about possible or assumed future results of our
business, financial condition, liquidity, results of operations, plans, and
objectives. Statements regarding the following subjects, among others,
are forward-looking by their nature:
•
•
•
our business strategy;
our projected operating results;
our ability to close on any pending transactions or complete current
development projects on the time schedule or terms described or
at all;
our ability to acquire, develop, and/or manage additional facilities in
the United States (“U.S.”), Europe, Australia, South America, or other
foreign locations;
availability of suitable facilities to acquire or develop;
our ability to enter into, and the terms of, our prospective leases
and loans;
our ability to raise additional funds through offerings of debt and equity
securities, joint venture arrangements, and/or property disposals;
our ability to obtain future financing arrangements (including
refinancing of existing financing arrangements);
estimates relating to, and our ability to pay, future distributions;
our ability to service our debt and comply with all of our debt covenants;
our ability to compete in the marketplace;
lease rates and interest rates;
•
•
•
•
• market trends;
• projected capital expenditures; and
•
Forward-looking statements are based on our beliefs, assumptions,
and expectations of our future performance, taking into account
information currently available to us. These beliefs, assumptions,
and expectations can change as a result of many possible events
or factors, not all of which are known to us. If a change occurs, our
business, financial condition, liquidity, and results of operations
may vary materially from those expressed in our forward-looking
statements. You should carefully consider these risks before you make
an investment decision with respect to our common stock and other
securities, along with, among others, the following factors that could
cause actual results to vary from our forward-looking statements:
the factors referenced in the sections captioned “Risk Factors,”
•
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” and “Business” in our Form 10-K for the year
ended December 31, 2022;
the political, economic, business, real estate, and other market
conditions in the U.S. (both national and local), Europe (in
particular the United Kingdom, Germany, Switzerland, Spain, Italy,
Finland, and Portugal), Australia, South America (in particular
Colombia), and other foreign jurisdictions where we may own
healthcare facilities or transact business, which may have a
negative effect on the following, among other things:
•
the impact of technology on our facilities, operations, and business.
the financial condition of our tenants, our lenders, or
institutions that hold our cash balances or are counterparties to
•
32
MEDICAL PROPERTIES TRUST, INC.
•
•
certain hedge agreements, 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, refinance existing
debt, and our future interest expense; and
the value of our real estate assets, which may limit our ability
to dispose of assets at attractive prices or obtain or maintain
debt financing secured by our real estate assets or on an
unsecured basis;
•
•
•
the impact of factors that may affect our business, our joint ventures
or the business of our tenants/borrowers that are beyond our
control, including natural disasters, health crises, or pandemics
(such as the coronavirus (“COVID-19”)) and subsequent government
actions in reaction to such matters;
the risk that a condition to closing under the agreements governing
any or all of our pending transactions (including the transactions
described in the notes of this Annual Report) that have not closed as
of the date hereof may not be satisfied;
the possibility that the anticipated benefits from any or all of the
transactions we have entered into or will enter into may take longer
to realize than expected or will not be realized at all;
the competitive environment in which we operate;
the execution of our business plan;
financing risks, including due to rising inflation and interest rates;
acquisition and development risks;
•
•
•
•
• potential environmental contingencies and other liabilities;
•
adverse developments affecting the financial health of one or more
of our tenants, including insolvency;
other factors affecting the real estate industry generally or the
healthcare real estate industry in particular;
our ability to maintain our status as a real estate investment trust
(“REIT”) for U.S. federal and state income tax purposes;
our ability to attract and retain qualified personnel;
changes in foreign currency exchange rates;
changes in federal, state, or local tax laws in the U.S., Europe,
Australia, South America, or other jurisdictions in which we may own
healthcare facilities or transact business;
healthcare and other regulatory requirements of the U.S., Europe,
Australia, South America, and other foreign countries; and
the accuracy of our methodologies and estimates regarding
environmental, social, and governance (“ESG”) metrics and targets,
tenant willingness and ability to collaborate towards reporting
ESG metrics and meeting ESG goals and targets, and the impact of
governmental regulation on our and our tenants’ ESG efforts.
•
•
•
•
•
•
•
When we use the words “believe,” “expect,” “may,” “potential,”
“anticipate,” “estimate,” “plan,” “will,” “could,” “intend,” or similar
expressions, we are identifying forward-looking statements. You
should not place undue reliance on these forward-looking statements.
Except as required by law, we disclaim any obligation to update such
statements or to publicly announce the result of any revisions to any of
the forward-looking statements contained in this Annual Report.
Report of Independent Registered Public
Accounting Firm
To the Board of Directors and Stockholders of Medical Properties
Trust, Inc.
OPINIONS ON THE FINANCIAL STATEMENTS AND
INTERNAL CONTROL OVER FINANCIAL REPORTING
We have audited the accompanying consolidated balance sheets of
Medical Properties Trust, Inc. and its subsidiaries (the “Company”)
as of December 31, 2022 and 2021, and the related consolidated
statements of net income, of comprehensive income, of equity
and of cash flows for each of the three years in the period ended
December 31, 2022, including the related notes (collectively referred
to as the “consolidated financial statements”). We also have
audited the Company’s internal control over financial reporting
as of December 31, 2022, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of the Company as of December 31, 2022 and 2021, and the results
of its operations and its cash flows for each of the three years in the
period ended December 31, 2022 in conformity with accounting
principles generally accepted in the United States of America. Also
in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31,
2022, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the COSO.
BASIS FOR OPINIONS
The Company’s management is responsible for these consolidated
financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of
internal control over financial reporting, included in Management’s
Report on Internal Control over Financial Reporting presented
within the 2022 Annual Report to Shareholders. Our responsibility
is to express opinions on the Company’s consolidated financial
statements and on the Company’s internal control over financial
reporting based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent
with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of
the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control
over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included
performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error
or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated
financial statements. Our audit of internal control over financial
reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our
audits provide a reasonable basis for our opinions.
DEFINITION AND LIMITATIONS OF INTERNAL
CONTROL OVER FINANCIAL REPORTING
A company’s internal control over financial reporting is a process
designed 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. A company’s internal control over financial
reporting includes those policies and procedures that (i) pertain to
the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of
the company; (ii) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management
and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could
have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
CRITICAL AUDIT MATTERS
The critical audit matter communicated below is a matter
arising from the current period audit of the consolidated
financial statements that was communicated or required to be
communicated to the audit committee and that (i) relates to
accounts or disclosures that are material to the consolidated
financial statements and (ii) involved our especially challenging,
subjective, or complex judgments. The communication of critical
2022 ANNUAL REPORT
33
Addressing the matter involved performing procedures and
evaluating audit evidence in connection with forming our overall
opinion on the financial statements. These procedures included
testing the effectiveness of controls relating to management’s
acquired real estate purchase price allocations, including controls
over the fair value of each tangible and identified lease intangible
asset acquired. These procedures also included, among others,
testing management’s process by evaluating the significant
assumptions related to capitalization rates and market rental
rates, and the methodology used by management in developing
the estimated fair values and allocations of the purchase price
to the tangible and identified lease intangible assets acquired.
Testing management’s process included using professionals with
specialized skill and knowledge to assist in evaluating the valuation
methodologies and significant assumptions used by management,
such as capitalization rates and market rental rates, for certain
acquisitions. Evaluating the reasonableness of assumptions
involved considering internal data from previous acquisitions,
where relevant.
Birmingham, Alabama
March 1, 2023
We have served as the Company’s auditor since 2008.
audit matters does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are
not, by communicating the critical audit matter below, providing a
separate opinion on the critical audit matter or on the accounts or
disclosures to which it relates.
ACQUIRED REAL ESTATE PURCHASE PRICE
ALLOCATIONS
As described in Notes 2 and 3 to the consolidated financial
statements, management allocates the purchase price of acquired
properties to tangible and identified lease intangible assets based
on their fair values. In 2022, the Company acquired a total of $668
million of land, building and intangible lease assets. In making
estimates of fair values for purposes of allocating purchase prices
of acquired real estate to tangible and identified lease intangible
assets, management utilizes information from a number of sources
including available real estate broker data, independent appraisals
that may be obtained in connection with the acquisition of the
respective property, internal data from previous acquisitions or
developments, other market data, and significant assumptions such
as capitalization rates and market rental rates.
The principal considerations for our determination that performing
procedures relating to the acquired real estate purchase price
allocations is a critical audit matter are (i) the significant judgments
by management when developing the fair value measurements
and allocating the purchase price of the acquired properties to the
tangible and lease intangible assets acquired, which in turn led to
a high degree of auditor judgment and subjectivity in performing
procedures and evaluating audit evidence, (ii) significant audit
effort was required in assessing the reasonableness of significant
assumptions such as capitalization rates and market rental rates used
by management to estimate the fair value of each tangible and lease
intangible asset component, and (iii) the audit effort involved the use
of professionals with specialized skill and knowledge.
34
MEDICAL PROPERTIES TRUST, INC.
Medical Properties Trust, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31,
(Amounts in thousands, except for per share data)
Assets
Real estate assets
Land
Buildings and improvements
Construction in progress
Intangible lease assets
Investment in financing leases
Real estate held for sale
Mortgage loans
Gross investment in real estate assets
Accumulated depreciation
Accumulated amortization
Net investment in real estate assets
Cash and cash equivalents
Interest and rent receivables
Straight-line rent receivables
Investments in unconsolidated real estate joint ventures
Investments in unconsolidated operating entities
Other loans
Other assets
Total Assets
Liabilities and Equity
Liabilities
Debt, net
Accounts payable and accrued expenses
Deferred revenue
Obligations to tenants and other lease liabilities
Total Liabilities
Commitments and Contingencies
Equity
Preferred stock, $ 0.001 par value. Authorized 10,000 shares; no shares outstanding
Common stock, $ 0.001 par value. Authorized 750,000 shares; issued and outstanding — 597,476 shares at De-
cember 31, 2022 and 596,748 shares at December 31, 2021
Additional paid-in capital
Retained earnings (deficit)
Accumulated other comprehensive loss
Total Medical Properties Trust, Inc. stockholders’ equity
Non-controlling interests
Total Equity
Total Liabilities and Equity
See accompanying notes to consolidated financial statements.
2022
2021
$
1,948,216
$
1,961,478
10,352,308
10,581,992
167,420
1,394,471
1,691,323
—
364,101
15,917,839
(1,008,340)
(184,972)
101,439
1,417,813
2,053,327
1,096,505
213,211
17,425,765
(853,879)
(139,221)
14,724,527
16,432,665
235,668
167,035
787,166
1,497,903
1,444,872
227,839
572,990
459,227
56,229
728,522
1,152,927
1,289,434
67,317
333,480
$ 19,658,000
$ 20,519,801
$ 10,268,412
$ 11,282,770
621,324
27,727
146,130
607,792
25,563
158,005
11,063,593
12,074,130
—
597
—
597
8,535,140
8,564,009
116,285
(59,184)
(87,691)
(36,727)
8,592,838
8,440,188
1,569
5,483
8,594,407
8,445,671
$ 19,658,000
$ 20,519,801
2022 ANNUAL REPORT
35
Medical Properties Trust, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF NET INCOME
For the Years Ended December 31,
(Amounts in thousands, except for per share data)
Revenues
Rent billed
Straight-line rent
Income from financing leases
Interest and other income
Total revenues
Expenses
Interest
Real estate depreciation and amortization
Property-related
General and administrative
Total expenses
Other income (expense)
Gain (loss) on sale of real estate
Real estate and other impairment charges, net
Earnings from equity interests
Debt refinancing and unutilized financing costs
Other (including fair value adjustments on securities)
Total other income (expense)
Income before income tax
Income tax expense
Net income
Net income attributable to non-controlling interests
2022
2021
2020
$
968,874
$
931,942
$
741,311
204,159
203,580
166,238
241,433
202,599
168,695
158,881
206,550
142,496
1,542,851
1,544,669
1,249,238
359,036
332,977
45,697
160,494
898,204
536,755
(268,375)
40,800
(9,452)
15,344
315,072
959,719
(55,900)
903,819
(1,222)
367,393
321,249
39,098
145,638
873,378
52,471
(39,411)
28,488
(27,650)
45,699
59,597
730,888
(73,948)
328,728
264,245
24,890
131,663
749,526
(2,833)
(19,006)
20,417
(28,180)
(6,782)
(36,384)
463,328
(31,056)
656,940
432,272
(919)
(822)
Net income attributable to MPT common stockholders
$
902,597
$
656,021
$
431,450
Earnings per common share — basic and diluted
Net income attributable to MPT common stockholders
$ 1.50
$ 1.11
$ 0.81
Weighted average shares outstanding — basic
Weighted average shares outstanding — diluted
598,634
598,837
588,817
590,139
529,239
530,461
See accompanying notes to consolidated financial statements.
36
MEDICAL PROPERTIES TRUST, INC.
Medical Properties Trust, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31,
(In thousands)
Net income
Other comprehensive income:
Unrealized gain (loss) on interest rate swaps, net of tax
Foreign currency translation (loss) gain
Total comprehensive income
Comprehensive income attributable to non-controlling interests
2022
2021
2020
$
903,819
$
656,940
$
432,272
100,550
(123,007)
881,362
(1,222)
52,288
(37,691)
671,537
(919)
(33,091)
44,672
443,853
(822)
Comprehensive income attributable to MPT common stockholders
$
880,140
$
670,618
$
443,031
See accompanying notes to consolidated financial statements.
2022 ANNUAL REPORT
37
Medical Properties Trust, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EQUITY FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020
(In thousands, except for per share amounts)
Balance at December 31, 2019
Net income
Cumulative effect of change in
accounting principles
Unrealized loss on interest rate swaps, net of tax
Foreign currency translation gain
Stock vesting and amortization of
stock-based compensation
Sale of non-controlling interests
Redemption of MOP units
Distributions to non-controlling interests
Proceeds from offering (net of offering costs)
Dividends declared ($1.08 per common share)
Balance at December 31, 2020
Net income
Unrealized gain on interest rate swaps, net of tax
Foreign currency translation loss
Stock vesting and amortization of
stock-based compensation
Distributions to non-controlling interests
Proceeds from offering (net of offering costs)
Dividends declared ($1.12 per common share)
Balance at December 31, 2021
Net income
Unrealized gain on interest rate swaps, net of tax
Foreign currency translation loss
Stock vesting and amortization of
stock-based compensation
Stock vesting - satisfaction of tax withholdings
Repurchase of common stock
Acquisition of non-controlling interest
Issuance of non-controlling interests
Distributions to non-controlling interests
Dividends declared ($1.16 per common share)
Preferred
Common
Shares
Par
Value
Shares
Par
Value
Additional
Paid-in
Capital
Retained
Earnings
(Deficit)
Accumulated
Other
Comprehensive
Loss
Non-
Controlling
Interests
Total
Equity
— $
— 517,456
$ 518
$ 7,007,422
$ 83,012
$
(62,905)
$
107
$ 7,028,154
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,893
—
—
—
— 21,004
—
—
—
—
—
—
2
—
—
—
21
—
—
—
—
—
47,152
—
(4,928)
—
411,080
431,450
(8,399)
—
—
—
—
—
—
—
—
(577,474)
—
—
(33,091)
44,672
—
—
—
—
—
—
822
432,272
—
—
—
—
(8,399)
(33,091)
44,672
47,154
5,097
5,097
—
(4,928)
(701)
(701)
—
—
411,101
(577,474)
— $
— 541,353
$ 541
$ 7,460,726
$ (71,411)
$
(51,324)
$ 5,325
$ 7,343,857
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,332
—
— 53,063
—
—
—
—
—
3
—
53
—
—
—
—
52,107
—
1,051,176
656,021
—
919
656,940
—
—
—
—
—
52,288
(37,691)
—
—
—
—
—
—
—
52,288
(37,691)
52,110
(761)
(761)
—
—
1,051,229
(672,301)
—
(672,301)
— $
— 596,748
$ 597
$ 8,564,009 $ (87,691)
$
(36,727)
$ 5,483
$ 8,445,671
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3,675
(1,302)
(1,645)
—
—
—
—
—
—
—
3
(1)
(2)
—
—
—
—
—
—
—
49,418
(29,921)
(17,938)
(30,428)
—
—
—
902,597
—
1,222
903,819
—
—
—
—
—
—
—
—
(698,621)
100,550
(123,007)
—
—
—
—
—
—
—
—
—
—
—
—
100,550
(123,007)
49,421
(29,922)
(17,940)
(4,594)
(35,022)
1,054
1,054
(1,596)
(1,596)
—
(698,621)
Balance at December 31, 2022
— $
— 597,476
$ 597
$ 8,535,140
$ 116,285
$
(59,184)
$ 1,569
$ 8,594,407
See accompanying notes to consolidated financial statements.
38
MEDICAL PROPERTIES TRUST, INC.
Medical Properties Trust, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
(Amounts in thousands)
Operating Activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Amortization of deferred financing costs and debt discount
Straight-line rent revenue and other
Stock-based compensation
(Gain) loss from sale of real estate
Real estate and other impairment charges
Write-off of unbilled rent and other
Debt refinancing and unutilized financing costs
Gain on sale of equity investments
Tax rate and other changes
Pre-acquisition rent collected - Circle Transaction
Other adjustments
Changes in:
Interest and rent receivables
Other assets
Accounts payable and accrued expenses
Deferred revenue
Net cash provided by operating activities
y p
p
g
g
Investing Activities
Cash paid for acquisitions and other related investments
Net proceeds from sale of real estate
Principal received on loans receivable
Investment in loans receivable
Construction in progress and other
Proceeds from sale and return of equity investment
Capital additions and other investments, net
Net cash provided by (used for) investing activities
y (
p
g
)
Financial Activities
Proceeds from term debt, net of discount
Payments of term debt
Revolving credit facilities, net
Dividends paid
Lease deposits and other obligations to tenants
Proceeds from sale of common shares, net of offering costs
Repurchase of common stock
Stock vesting - satisfaction of tax withholdings
Payment of debt refinancing, deferred financing costs, and other financing activities
Net cash (used for) provided by financing activities
Decrease in cash, cash equivalents, and restricted cash for the year
Effect of exchange rate changes
Cash, cash equivalents, and restricted cash at beginning of year
Cash, cash equivalents, and restricted cash at end of year
Interest paid, including capitalized interest of $6,454 in 2022, $3,289 in 2021, and $3,030 in 2020
Supplemental schedule of non-cash financing activities:
Dividends declared, unpaid
Cash, cash equivalents, and restricted cash are comprised of the following:
Beginning of period:
Cash and cash equivalents
Restricted cash, included in Other assets
End of period:
Cash and cash equivalents
Restricted cash, included in Other assets
2022
2021
2020
$
903,819
$
656,940
$
432,272
345,577
17,045
(282,504)
49,421
(536,755)
268,375
34,605
9,452
—
10,697
—
6,108
(116,420)
(4,029)
33,576
43
739,010,
(1,332,962)
2,185,574
53,322
(207,542)
(109,237)
14,295
(207,394)
396,056,
128,536
(869,606)
203,576
(698,535)
(5,020)
—
(17,940)
(29,922)
(53,612)
(1,342,523)
(207,457)
(12,887)
461,882
241,538
,
,
353,838
176,580
459,227
2,655
,
,
,
461,882
235,668
5,870
,
,
,
241,538
$
$
$
$
$
$
$
$
$
$
$
$
$
333,781
16,856
(288,717)
52,110
(52,471)
39,411
7,213
27,650
(40,945)
34,796
—
11,913
(23,867)
(4,375)
54,058
(12,697)
811,656,
(5,350,239)
246,468
1,595,708
(58,932)
(67,725)
65,546
(289,239)
)
(3,858,413)
,
( ,
3,407,535
(1,390,994)
559,985
(643,473)
17,815
1,051,229
—
—
(54,489)
2,947,608
(99,149)
4,662
556,369
461,882
,
,
326,406
176,494
549,884
6,485
,
,
,
556,369
459,227
2,655
,
,
,
461,882
$
$
$
$
$
$
$
$
$
$
$
$
$
275,953
13,099
(226,906)
47,154
2,833
19,006
26,415
28,180
—
9,295
(35,020)
8,134
(2,438)
18,264
(18,424)
19,819
,
617,636
(4,249,180)
94,177
1,306,187
(62,651)
(68,350)
69,224
(36,180)
)
(2,946,773)
,
( ,
2,215,950
(800,000)
162,633
(567,969)
21,706
411,101
—
—
(42,347)
1,401,074
(928,063)
16,441
1,467,991
556,369
,
,
309,920
147,666
1,462,286
5,705
,
,
1,467,991
,
,
,
,
549,884
6,485
,
,
,
556,369
$
$
$
$
$
$
$
$
$
$
$
$
$
See accompanying notes to consolidated financial statements.
2022 ANNUAL REPORT
39
MEDICAL PROPERTIES TRUST, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Organization
Medical Properties Trust, Inc., a Maryland corporation, was formed on August 27, 2003, under the Maryland General Corporation Law for
the purpose of engaging in the business of investing in, owning, and leasing healthcare real estate. Our operating partnership subsidiary,
MPT Operating Partnership, L.P. (the “Operating Partnership”), through which we conduct substantially all of our operations, was formed in
September 2003. At present, we own all of the partnership interests in the Operating Partnership and have elected to report our required
disclosures and that of the Operating Partnership on a combined basis, except where material differences exist.
We operate as a real estate investment trust (“REIT”). Accordingly, we are generally not subject to United States (“U.S.”) federal income tax
on our REIT taxable income, provided that we continue to qualify as a REIT and our distributions to our stockholders equal or exceed such
taxable income. Certain non-real estate activities we undertake are conducted by entities which we elected to be treated as taxable REIT
subsidiaries (“TRS”). Our TRS entities are subject to both U.S. federal and state income taxes. For our properties located outside the U.S., we
are subject to the local taxes of the jurisdictions where our properties reside and/or legal entities are domiciled; however, we do not expect
to incur additional taxes, of a significant nature, in the U.S. from foreign-based income as the majority of such income flows through our REIT.
Our primary business strategy is to acquire and develop real estate and improvements, primarily for long-term lease to providers of
healthcare services, such as operators of general acute care hospitals, behavioral health facilities, inpatient physical rehabilitation
facilities, long-term acute care hospitals, and freestanding ER/urgent care facilities. We also make mortgage loans to healthcare operators
collateralized by their real estate. In addition, we may make noncontrolling investments in our tenants, from time-to-time, typically in
conjunction with larger real estate transactions with the tenant, which may enhance our overall return and provide for certain minority rights
and protections.
Our business model facilitates acquisitions and recapitalizations, and allows operators of healthcare facilities to unlock the value of their real
estate to fund facility improvements, technology upgrades, and other investments in operations. At December 31, 2022, we have investments
in 444 facilities in 31 states in the U.S., in seven countries in Europe, one country in South America, and across Australia. We manage our
business as a single business segment.
2. Summary of Significant Accounting Policies
Use of Estimates: The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in
the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. We believe the estimates and assumptions underlying our consolidated financial statements at December 31, 2022 are
reasonable and supportable based on the information available (particularly as it relates to our assessments of the recoverability of our real
estate and the adequacy of our credit loss reserves on loans and financing receivables). Actual results could differ from those estimates.
Principles of Consolidation: Property holding entities and other subsidiaries of which we own 100% of the equity or have a controlling
financial interest evidenced by ownership of a majority voting interest are consolidated. All inter-company balances and transactions are
eliminated. For entities in which we own less than 100% of the equity interest, we consolidate the property if we have the direct or indirect
ability to control the entities’ activities based upon the terms of the respective entities’ ownership agreements. For these entities, we record
a non-controlling interest representing equity held by non-controlling interests.
We continually evaluate all of our transactions and investments to determine if they represent variable interests in a variable interest entity.
If we determine that we have a variable interest in a variable interest entity, we then evaluate if we are the primary beneficiary of the variable
interest entity. The evaluation is a qualitative assessment as to whether we have the ability to direct the activities of a variable interest entity
40
MEDICAL PROPERTIES TRUST, INC.
that most significantly impact the entity’s economic performance. We consolidate each variable interest entity in which we, by virtue of or
transactions with our investments in the entity, are considered to be the primary beneficiary.
At December 31, 2022, we had loans and/or equity investments in certain variable interest entities approximating $633 million, which
represents our maximum exposure to loss as a result of our involvement in such entities. We have determined that we were not the primary
beneficiary of any variable interest entity in which we hold a variable interest because we do not control the activities (such as the day-to-day
operations) that most significantly impact the economic performance of these entities.
Investments in Unconsolidated Entities: Investments in entities in which we have the ability to significantly influence (but not control)
are accounted for by the equity method. This includes the five investments in unconsolidated real estate joint ventures at December 31,
2022. Under the equity method of accounting, our share of the investee’s earnings or losses are included in the “Earnings from equity
interests” line of our consolidated statements of net income. Except for our joint ventures with Primotop Holdings S.à.r.l. (“Primotop”) and
Macquarie Asset Management (“MAM”) (for which we handle the accounting of), we have elected to record our share of such investee’s
earnings or losses on a lag basis (not to exceed three months). The initial carrying value of investments in unconsolidated entities is based
on the amount paid to purchase the interest in the investee entity. Subsequently, our investments are increased/decreased by our share in
the investees’ earnings/losses and decreased by cash distributions from our investees. To the extent that our cost basis is different from the
basis reflected at the investee entity level, the basis difference is generally amortized over the lives of the related assets and liabilities, and
such amortization is included in our share of equity in earnings of the investee.
We evaluate our equity method investments for impairment based upon a comparison of the fair value of the equity method investment
to its carrying value, when impairment indicators exist. If we determine a decline in the fair value of an investment in an unconsolidated
investee entity below its carrying value is other-than-temporary, an impairment is recorded.
Investments in entities in which we do not control nor do we have the ability to significantly influence and for which there is no readily
determinable fair value (such as our investment in Steward Health Care System LLC (“Steward”)) are accounted for at cost, less any
impairment, plus or minus changes resulting from observable price changes in orderly transactions involving the investee. Cash distributions
on these types of investments are recorded to either income upon receipt (if a return on investment) or as a reduction of our investment
(if the distributions received are in excess of our share of the investee’s earnings). For similar investments but for which there are readily
determinable fair values, such investments are measured at fair value, with unrealized gains and losses recorded in income.
Cash and Cash Equivalents: Certificates of deposit, short-term investments with original maturities of three months or less, and money-
market mutual funds are considered cash equivalents. The majority of our cash and cash equivalents are held at major commercial banks,
which at times may exceed the Federal Deposit Insurance Corporation limit. We have not experienced any losses to-date on our invested
cash. Cash and cash equivalents which have been restricted as to its use are recorded in other assets.
Revenue Recognition: Our revenues are primarily from leases and loans. For leases, we follow Accounting Standards Update (“ASU”) 2016-
02, “Leases”, (“ASU 2016-02”). ASU 2016-02 sets out the principles for the recognition, measurement, presentation, and disclosure of leases
for both parties to a contract (i.e. lessees and lessors). For lessors, we apply this standard as follows:
OPERATING LEASE REVENUE
We receive income from operating leases based on the fixed required rents (base rents) per the lease agreements. Rent revenue from
base rents is recorded on the straight-line method, when collectability of the lease payments is deemed probable, over the terms of the
related lease agreements for new leases and the remaining terms of existing leases for those acquired as part of a property acquisition. The
straight-line method records the periodic average amount of base rents earned over the term of a lease, taking into account contractual rent
increases over the lease term. The straight-line method typically has the effect of recording more rent revenue from a lease than a tenant is
required to pay early in the term of the lease. During the later parts of a lease term, this effect reverses with less rent revenue recorded than a
tenant is required to pay. Rent revenue, as recorded on the straight-line method, in our consolidated statements of net income is presented
as two amounts: rent billed and straight-line rent. Rent billed revenue is the amount of base rent actually billed to our tenants each period
as required by the lease. Straight-line rent revenue is the difference between rent revenue earned based on the straight-line method and the
amount recorded as rent billed revenue. We record the difference between rent revenues earned and amounts due per the respective lease
agreements, as applicable, as an increase or decrease to straight-line rent receivables.
Rental payments received prior to their recognition as income are classified as deferred revenue.
2022 ANNUAL REPORT
41
FINANCING LEASE REVENUE
Under ASU 2016-02, if an acquisition and subsequent lease of a property back to the seller does not meet the definition of a sale, we must
account for the transaction as a financing lease with income recognized using the imputed interest method.
Another type of financing lease is a direct financing lease (“DFL”). For leases accounted for as DFLs, the future minimum lease payments are
recorded as a receivable at lease inception, while, the difference between the future minimum lease payments and the estimated residual
values less the cost of the properties is recorded as unearned income. Unearned income is deferred and amortized to income over the lease
term to provide a constant yield when collectability of the lease payments is reasonably assured. Investments in DFLs are presented net of
unearned income.
OTHER LEASING REVENUE
We begin recording base rent income from our development projects when the lessee takes physical possession of the facility, which may
be different from the stated start date of the lease. Also, during construction of our development projects, we may be entitled to accrue rent
based on the cost paid during the construction period (construction period rent). We accrue construction period rent as a receivable with a
corresponding offset to deferred revenue during the construction period. When the lessee takes physical possession of the facility, we begin
recognizing the deferred construction period revenue on the straight-line method over the term of the lease.
We also receive additional rent (contingent rent) under some leases based on increases in the consumer price index (“CPI”) (or similar index
outside the U.S.) or when CPI exceeds the annual minimum percentage increase as stipulated in the lease. Contingent rents are recorded as
rent billed revenue in the period earned.
Tenant payments for ground leases along with other operating expenses, such as property taxes and insurance, that are paid directly by us
and reimbursed by our tenants are presented on a gross basis with the related revenues recorded in “Interest and other income” and the
related expenses in “Property-related” in our consolidated statements of net income. All payments of other operating expenses made directly
by the tenant to the applicable government or appropriate third-party vendor are recorded on a net basis.
INTEREST REVENUE
We receive interest income from our tenants/borrowers on mortgage loans, working capital loans, and other long-term loans. Interest
income from these loans is recognized as earned based upon the principal outstanding and terms of the loans.
OTHER REVENUE
Commitment fees received from lessees for development and leasing services are initially recorded as deferred revenue and recognized as
income over the initial term of a lease to produce a constant effective yield on the lease (interest method). Commitment and origination fees
from lending services are also recorded as deferred revenue initially and recognized as income over the life of the loan using the interest
method.
Acquired Real Estate Purchase Price Allocation: We account for acquisitions of real estate under asset acquisition accounting
rules. Under this accounting standard, we allocate the purchase price (including any third-party transaction costs directly related to the
acquisition) of acquired properties to tangible and identified intangible assets acquired and liabilities assumed (if any) based on their
relative fair values. In making estimates of fair values for purposes of allocating purchase prices of acquired real estate, we may utilize
a number of sources, from time-to-time, including available real estate broker data, independent appraisals that may be obtained in
connection with the acquisition, internal data from previous acquisitions or developments, and other market data, including market
comparables for significant assumptions such as market rental, capitalization, and discount rates. We also consider information obtained
about each property as a result of our pre-acquisition due diligence, marketing, and leasing activities in estimating the fair value of the
tangible and intangible assets acquired.
We measure the aggregate value of lease intangible assets acquired based on the difference between (i) the property valued with new or
in-place leases adjusted to market rental rates and (ii) the property valued as if vacant. Management’s estimates of value are made using
methods similar to those used by independent appraisers (e.g., discounted cash flow analysis). Factors considered by management in
our analysis include an estimate of carrying costs during hypothetical expected lease-up periods, considering current market conditions,
and costs to execute similar leases. We also consider information obtained about each targeted facility as a result of our pre-acquisition
due diligence, marketing, and leasing activities in estimating the fair value of the intangible assets acquired. In estimating carrying costs,
42
MEDICAL PROPERTIES TRUST, INC.
management includes real estate taxes, insurance, and other operating expenses and estimates of lost rentals at market rates during the
expected lease-up periods, which we expect to be about six months, but can be longer depending on specific local market conditions.
Management also estimates costs to execute similar leases including leasing commissions, legal costs, and other related expenses to the
extent that such costs are not already incurred in connection with a new lease origination as part of the transaction.
Other intangible assets acquired may include customer relationship intangible values which are based on management’s evaluation of the
specific characteristics of each prospective tenant’s lease and our overall relationship with that tenant. Characteristics to be considered
by management in allocating these values include the nature and extent of our existing business relationships with the tenant, growth
prospects for developing new business with the tenant, the tenant’s credit quality, and expectations of lease renewals, including those
existing under the terms of the lease agreement, among other factors.
We amortize the value of our lease intangible assets to expense over the term of the respective leases. If a lease is terminated early, the
unamortized portion of the lease intangibles are charged to expense.
We record above-market and below-market in-place lease values, if any, for our facilities, which are based on the present value of the
difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market
lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. We
amortize any resulting capitalized above-market lease values as a reduction of rental income over the lease term. We amortize any resulting
capitalized below-market lease values as an increase to rental income over the lease term. If a lease is terminated early, the unamortized
portion of the capitalized above/below market lease value is recognized in rental income at that time.
Real Estate and Depreciation: Real estate, consisting of land, buildings and improvements, is maintained at cost. Although typically
paid by our tenants, any expenditure for ordinary maintenance and repairs that we pay are expensed to operations as incurred. Significant
renovations and improvements, which improve and/or extend the useful life of the asset, are capitalized and depreciated over their
estimated useful lives. We record impairment losses on long-lived assets used in operations when events and circumstances indicate that
the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets, including an estimated liquidation
amount, during the expected holding periods are less than the carrying amounts of those assets. Impairment losses are measured as the
difference between carrying value and fair value of the assets. For assets held for sale, we cease recording depreciation expense and adjust
the assets’ value to the lower of its carrying value or fair value, less cost of disposal. Fair value is based on estimated cash flows discounted at
a risk-adjusted rate of interest. We classify real estate assets as held for sale when we have commenced an active program to sell the assets,
and in the opinion of management, it is probable the asset will be sold within the next 12 months.
Construction in progress includes the cost of land, the cost of construction of buildings, improvements, and fixed equipment, and costs
for design and engineering. Other costs, such as interest, legal, property taxes, and corporate project supervision, which can be directly
associated with the project during construction, are also included in construction in progress. We commence capitalization of costs
associated with a development project when the development of the future asset is probable and activities necessary to get the underlying
property ready for its intended use have been initiated. We stop the capitalization of costs when the property is substantially complete and
ready for its intended use.
Depreciation is calculated on the straight-line method over the estimated useful lives of the related real estate and other assets. Our
weighted-average useful lives at December 31, 2022 are as follows:
Buildings and improvements
Lease intangibles
Leasehold improvements
Furniture, equipment, and other
39.0 years
26.8 years
14.4 years
9.8 years
2022 ANNUAL REPORT
43
CREDIT LOSSES:
Losses from Rent Receivables: For all leases, we continuously monitor the performance of our existing tenants including, but not limited
to: admission levels and surgery/procedure volumes by type; current operating margins; ratio of our tenant’s operating margins both to
facility rent and to facility rent plus other fixed costs; trends in revenue, cash collections, patient mix; and the effect of evolving healthcare
regulations, adverse economic and political conditions, such as rising inflation and interest rates, and other events ongoing on a tenant’s
profitability and liquidity.
Losses from Operating Lease Receivables: We utilize the information above along with the tenant’s payment and default history in
evaluating (on a property-by-property basis) whether or not a provision for losses on outstanding billed rent and/or straight-line rent
receivables is needed. A provision for losses on rent receivables (including straight-line rent receivables) is ultimately recorded when it becomes
probable that the receivable will not be collected in full. The provision is an amount which reduces the receivable to its estimated net realizable
value based on a determination of the eventual amounts to be collected either from the debtor or from existing collateral, if any.
Losses on Financing Lease Receivables: We apply a forward-looking “expected credit loss” model to all of our financing receivables,
including financing leases and loans. To do this, we have grouped our financial instruments into two primary pools of similar credit risk:
secured and unsecured. The secured instruments include our investments in financing receivables as all are secured by the underlying
real estate, among other collateral. Within the two primary pools, we further grouped our instruments into sub-pools based on several
tenant/borrower characteristics, including years of experience in the healthcare industry and in a particular market or region and overall
capitalization. We then determined a credit loss percentage per pool based on our history over a period of time that closely matches the
remaining terms of the financial instruments being analyzed and adjusted as needed for current trends or unusual circumstances. We
have applied these credit loss percentages to the book value of the related instruments to establish a credit loss reserve on our financing
lease receivables and such credit loss reserve (including the underlying assumptions) is reviewed and adjusted quarterly. If a financing
receivable is under performing and is deemed uncollectible based on the lessee’s overall financial condition, we will adjust the credit
loss reserve based on the fair value of the underlying collateral.
We made the accounting policy election to exclude interest receivables from the credit loss reserve model. Instead, such receivables are
impaired and an allowance recorded when it is deemed probable that we will be unable to collect all amounts due. Like operating lease
receivables, the need for an allowance is based upon our assessment of the lessee’s overall financial condition, economic resources and
payment record, the prospects for support from any financially responsible guarantors, and, if appropriate, the realizable value of any collateral.
Financing leases are placed on non-accrual status when we determine that the collectability of contractual amounts is not reasonably assured. If
on non-accrual status, we generally account for the financing lease on a cash basis, in which income is recognized only upon receipt of cash.
Loans: Loans consist of mortgage loans, working capital loans, and other loans. Mortgage loans are collateralized by interests in real property.
Working capital and other loans are typically collateralized by interests in receivables and corporate and individual guarantees. We record loans
at cost. Like our financing lease receivables, we establish credit loss reserves on all outstanding loans based on historical credit losses of similar
instruments. Such credit loss reserves, including the underlying assumptions, are reviewed and adjusted quarterly. If a loan’s performance
worsens and foreclosure is deemed probable for our collateral-based loans (after considering the borrower’s overall financial condition as
described above for leases), we will adjust the allowance for expected credit losses based on the current fair value of such collateral at the time
the loan is deemed uncollectible. If the loan is not collateralized, the loan will be reserved for/written-off once it is determined that such loan
is no longer collectible. Interest receivables on loans are excluded from the forward looking credit loss reserve model; however, we assess their
collectability similar to how we assess collectability for interest receivables on financing leases described above.
The following table summarizes our credit loss reserves (in thousands):
December 31,
Balance at beginning of the year
Provision (recovery) for credit loss, net
Expected credit loss reserve related to financial instruments sold, repaid, or satisfied
Balance at end of year
2022
2021
$
48,527
$
8,726
99,009
(26,390)
41,710
(1,909)
$
121,146
$
48,527
44
MEDICAL PROPERTIES TRUST, INC.
Earnings Per Share: Basic earnings per common share is computed by dividing net income by the weighted-average number of shares
outstanding during the period. Diluted earnings per common share is calculated by including the effect of dilutive securities.
Our unvested restricted stock awards contain non-forfeitable rights to dividends, and accordingly, these awards are deemed to be
participating securities. These participating securities are included in the earnings allocation in computing both basic and diluted earnings
per common share.
Income Taxes: We conduct our business as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (“the
Code”). To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute to
stockholders at least 90% of our REIT’s ordinary taxable income. As a REIT, we generally pay little U.S. federal and state income tax because of
the dividends paid deduction that we are allowed to take. If we fail to qualify as a REIT in any taxable year, we will then be subject to U.S. federal
income taxes on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax
purposes for four years following the year during which qualification is lost, unless the Internal Revenue Service grants us relief under certain
statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to stockholders.
However, we intend to operate in such a manner so that we will remain qualified as a REIT for U.S. federal income tax purposes.
Our financial statements include the operations of TRS entities. None of our TRS entities are entitled to a dividends paid deduction and
are subject to U.S. federal, state, and local income taxes. Our TRS entities are authorized to provide property development, leasing, and
management services for third-party owned properties, and we will make non-mortgage loans to and/or investments in our lessees through
these entities.
With the property acquisitions and investments in Europe, Australia, and South America, we are subject to income taxes internationally.
However, we do not expect to incur any additional income taxes, of a significant nature, in the U.S. as the majority such income from our
international properties flows through our REIT income tax returns. For our TRS entities and international subsidiaries, we determine
deferred tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected to reverse. Any increase or decrease in our deferred tax assets/
liabilities that results from a change in circumstances and that causes us to change our judgment about expected future tax consequences
of events, is reflected in our tax provision when such changes occur. Deferred income taxes also reflect the impact of operating loss
carryforwards. A valuation allowance is provided if we believe it is more likely than not that all or some portion of our deferred tax assets
will not be realized. Any increase or decrease in the valuation allowance that results from a change in circumstances, and that causes us to
change our judgment about our ability to realize the related deferred tax asset, is reflected in our tax provision when such changes occur.
The calculation of our income taxes involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude
of jurisdictions across our global operations. An income tax benefit from an uncertain tax position may be recognized when it is more likely
than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the
basis of technical merits. However, if a more likely than not position cannot be reached, we record a liability as an offset to the tax benefit
and adjust the liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of
the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current
estimate of the uncertain tax position liabilities. These differences will be reflected as increases or decreases to income tax expense in the
period in which new information is available.
Stock-Based Compensation: We adopted the 2019 Equity Incentive Plan (the “Equity Incentive Plan”) during the second quarter of 2019,
which was amended during the second quarter of 2022. Awards of restricted stock and other equity-based awards with service conditions
are valued at the average stock price per share on the date of grant and are amortized to compensation expense over the service periods
(typically three years), using the straight-line method. Awards that contain market conditions are valued on the grant date using a Monte
Carlo valuation model and are amortized to compensation expense over the derived service periods, which correspond to the periods
over which we estimate the awards will be earned, which generally range from three to five years, using the straight-line method. Awards
with performance conditions are valued at the average stock price per share on the date of grant and are amortized using the straight-line
method over the service period, adjusted for the probability of achieving the performance conditions. Forfeitures of stock-based awards are
recognized as they occur.
2022 ANNUAL REPORT
45
Deferred Costs: Costs incurred that directly relate to the offerings of stock are deferred and netted against proceeds received from the
offering. Leasing commissions and other third-party leasing costs that would not have been incurred if the lease was not obtained are
capitalized as deferred leasing costs and amortized on the straight-line method over the terms of the related lease agreements. Costs
identifiable with loans made to borrowers are capitalized and recognized as a reduction in interest income over the life of the loan.
Deferred Financing Costs: We generally capitalize financing costs incurred in connection with new financings and refinancings of debt.
These costs are amortized over the lives of the related debt as an addition to interest expense. For debt with defined principal re-payment
terms, the deferred costs are amortized to produce a constant effective yield on the debt (interest method) and are included within “Debt,
net” on our consolidated balance sheets. For debt without defined principal repayment terms, such as our revolving credit facility, the
deferred costs are amortized on the straight-line method over the term of the debt and are included as a component of “Other assets” on our
consolidated balance sheets.
Foreign Currency Translation and Transactions: Certain of our international subsidiaries’ functional currencies are the local currencies of
their respective countries. We translate the results of operations of our foreign subsidiaries into U.S. dollars using average rates of exchange in
effect during the period, and we translate balance sheet accounts using exchange rates in effect at the end of the period. We record resulting
currency translation adjustments in accumulated other comprehensive income (loss), a component of stockholders’ equity on our consolidated
balance sheets.
Certain of our U.S. subsidiaries will enter into short-term and long-term transactions denominated in a foreign currency from time-to-time.
Gains or losses resulting from these foreign currency transactions are revalued into U.S. dollars at the rates of exchange prevailing at the
dates of the transactions. The effects of revaluation gains or losses on our short-term transactions are included in other income (expense)
in the consolidated statements of income, while the revaluation effects on our long-term investments are recorded in accumulated other
comprehensive income (loss) on our consolidated balance sheets.
Derivative Financial Investments and Hedging Activities: During our normal course of business, we may use certain types of derivative
instruments for the purpose of managing interest rate and/or foreign currency risk. We record our derivative and hedging instruments at fair
value on the balance sheet. Changes in the estimated fair value of derivative instruments that are not designated as hedges or that do not meet
the criteria for hedge accounting are recognized in earnings. For derivatives designated as cash flow hedges, the change in the estimated fair
value of the effective portion of the derivative is recognized in accumulated other comprehensive income (loss) on our consolidated balance
sheets, whereas the change in the estimated fair value of the ineffective portion is recognized in earnings. For derivatives designated as fair value
hedges, the change in the estimated fair value of the effective portion of the derivatives offsets the change in the estimated fair value of the
hedged item, whereas the change in the estimated fair value of the ineffective portion is recognized in earnings.
To qualify for hedge accounting, we formally document all relationships between hedging instruments and hedged items, as well as our risk
management objective and strategy for undertaking the hedge prior to entering into a derivative transaction. This process includes specific
identification of the hedging instrument and the hedge transaction, the nature of the risk being hedged and how the hedging instrument’s
effectiveness in hedging the exposure to the hedged transaction’s variability in cash flows attributable to the hedged risk will be assessed.
Both at the inception of the hedge and on an ongoing basis, we assess whether the derivatives that are used in hedging transactions are
highly effective in offsetting changes in cash flows or fair values of hedged items. In addition, for cash flow hedges, we assess whether the
underlying forecasted transaction will occur. We discontinue hedge accounting if a derivative is not determined to be highly effective as a
hedge or that it is probable that the underlying forecasted transaction will not occur.
Fair Value Measurement: We measure and disclose the estimated fair value of financial assets and liabilities utilizing a hierarchy of valuation
techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace.
Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. This
hierarchy requires the use of observable market data when available. These inputs have created the following fair value hierarchy:
•
•
•
Level 1 — quoted prices for identical instruments in active markets;
r
Level 2 — quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not
active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and
Level 3 — fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers
are unobservable.
46
MEDICAL PROPERTIES TRUST, INC.
We measure fair value using a set of standardized procedures that are outlined herein for all assets and liabilities which are required to be
measured at their estimated fair value on either a recurring or non-recurring basis. When available, we utilize quoted market prices from an
independent third party source to determine fair value and classify such items in Level 1. In some instances where a market price is available,
but the instrument is in an inactive or over-the-counter market, we apply the dealer (market maker) pricing estimate and classify the asset or
liability in Level 2.
If quoted market prices or inputs are not available, fair value measurements are based upon valuation models that utilize current market
or independently sourced market inputs, such as interest rates, option volatilities, credit spreads, market capitalization rates, etc. Items
valued using such internally-generated valuation techniques are classified according to the lowest level input that is significant to the fair
value measurement. As a result, the asset or liability could be classified in either Level 2 or 3 even though there may be some significant
inputs that are readily observable. Internal fair value models and techniques that have been used by us include discounted cash flow and
Monte Carlo valuation models. We also consider counterparty’s and our own credit risk on derivatives and other liabilities measured at their
estimated fair value.
Fair Value Option Election: For our equity investment in the international joint venture and equity interest in Springstone Health Opco,
LLC (“Springstone”), along with any related investments such as loans (see Note 3 for more details), 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 investments that exist at December 31, 2022.
LEASES (LESSEE)
Pursuant to ASU 2016-02, we are required to apply a dual approach, classifying leases (in which we are the lessee) as either financing or
operating leases based on the principle of whether or not the lease is effectively a financed purchase. This classification determines whether
lease expense is recognized based on an effective interest method (for finance leases) or on a straight-line basis (for operating leases) over
the term of the lease. We record a right-of-use asset and a lease liability for all material leases with a term greater than 12 months regardless
of their classification. Leases with a term of 12 months or less are off balance sheet with lease expense recognized on a straight-line basis
over the lease term.
Reclassifications: Certain amounts in the consolidated financial statements for prior periods have been reclassified to conform to the current
period presentation. For the year ended December 31, 2021, $39.4 million has been reclassified from “Other (including fair value adjustments on
securities)” to “Real estate and other impairment charges, net” in our consolidated statements of Net Income. There is no impact to net income.
2022 ANNUAL REPORT
47
3. Real Estate and Other Activities
NEW INVESTMENTS
For the years ended December 31, 2022, 2021, and 2020, we acquired or invested in the following net assets (in thousands):
Land and land improvements
Buildings
Intangible lease assets — subject to amortization (weighted-average useful life of
21.3 years in 2022, 34.5 years in 2021, and 27.5 years in 2020)
Investment in financing leases
Mortgage loans(1) (2)
Investments in unconsolidated real estate joint ventures
Investments in unconsolidated operating entities
Other loans
Other assets
Liabilities assumed
Loans repaid(1)
Total net assets acquired
2022
2021
2020
$
135,301
$
642,312
$
365,281
487,698
2,381,654
2,547,313
45,394
262,385
642,699
—
159,735
399,456
131,105
—
—
—
1,113,300
—
1,033,096
—
—
114,797
176,840
233,593
205,000
103,195
1,328
(25,727)
(82,508)
(140,866)
1,332,962
$
5,350,239
$
4,249,180
—
(1,103,410)
(834,743)
1,332,962
$
4,246,829
$
3,414,437
$
$
(1) The 2021 column includes an £800 million mortgage loan advanced to the Priory Group (“Priory”) in the first quarter of 2021 and converted to fee simple
ownership of 35 properties in the second quarter of 2021 as described below. The 2020 column includes approximately $740 million of loans advanced to
Steward in 2017 and exchanged for the fee simple real estate of two hospitals as described below, as well as approximately $100 million of loans advanced
to Ernest Health, Inc. (“Ernest”) in 2012 and exchanged for the fee simple real estate of four hospitals as described below.
(2) In the 2022 second quarter, we increased our mortgage loan to Prospect Medical Holdings, Inc. (“Prospect”) that was originated in 2019 and that is
secured by a first lien on a California hospital. The loan bears interest at a current market rate plus a component of additional interest upon repayment.
2022 ACTIVITY
Macquarie Transaction
On March 14, 2022, we completed a transaction with Macquarie Asset Management (“MAM”), an unrelated party, to form a partnership
(the “Macquarie Transaction”), pursuant to which we contributed eight Massachusetts-based general acute care hospitals that are leased
to Steward, and a fund managed by MAM acquired, for cash consideration, a 50% interest in the partnership. The transaction valued the
portfolio at approximately $1.7 billion, and we recognized a gain on sale of real estate of approximately $600 million from this transaction,
partially offset by the write-off of unbilled straight-line rent receivables. The partnership raised nonrecourse secured debt of 55% of asset
value, and we received proceeds, including from the secured debt, of approximately $1.3 billion. We obtained a 50% interest in the real estate
partnership valued at approximately $400 million (included in the “Investments in unconsolidated real estate joint ventures” line of our
consolidated balance sheets), which is being accounted for under the equity method of accounting.
In connection with this transaction, we separated the eight Massachusetts-based facilities into a separate master lease with terms generally
identical to the other master lease, and the initial fixed lease term of both master leases were extended to 2041.
Other Transactions
On December 9, 2022, we acquired six behavioral health facilities in the United Kingdom for £233 million ($286 million), plus customary tax and
other transaction costs. These hospitals are leased to Priory pursuant to separate long-term leases with inflation-based escalators. As part of this
transaction, the third-party seller of the real estate provided £105 million of seller financing - see Note 4 for further details on this debt.
48
MEDICAL PROPERTIES TRUST, INC.
On March 11, 2022, we acquired four general acute care hospitals in Finland for €178 million ($194 million). These hospitals are leased to
Pihlajalinna pursuant to a long-term lease with annual inflation-based escalators. We acquired these facilities by the share purchase of real
estate holding entities that included deferred income tax and other liabilities of approximately $26 million.
On February 16, 2022, we agreed to participate in an existing syndicated term loan with a term of six years originated on behalf of Priory. We
funded £96.5 million towards a £100 million participation level, reflecting a 3.5% discount. The loan carries a variable rate that was 8.3% at
December 31, 2022.
Other investments in 2022 included the acquisition of six general acute care facilities and the origination of a CHF 60 million mortgage loan
to Infracore SA (“Infracore”). Of the assets acquired, three were general acute care facilities located throughout Spain, acquired on April
29, 2022 for €27 million, and leased to GenesisCare pursuant to a long-term lease with annual inflation-based escalators. In addition, two
general acute care facilities, one in Arizona and the other in Florida, were acquired on April 18 and 25, 2022, respectively, for approximately
$80 million and leased to Steward pursuant to an already existing master lease agreement with annual inflation-based escalators. The other
general acute care facility, located in Colombia, was acquired on July 29, 2022 for $26 million and leased to Fundación Cardiovascular de
Colombia pursuant to a long-term lease with inflation-based escalators.
2021 ACTIVITY
Priory Group Transaction
On January 19, 2021, we completed the first of two phases in the Priory transaction in which we funded an £800 million interim mortgage
loan on an identified portfolio of Priory real estate assets in the United Kingdom. On June 25, 2021, we completed the second phase of the
transaction in which we converted this mortgage loan to fee simple ownership in a portfolio of 35 select real estate assets from Priory (which
is currently owned by Waterland Private Equity Fund VII C.V. (“Waterland VII”)) in individual sale-and-leaseback transactions. Therefore, the
net aggregate purchase price for the real estate assets we acquired from Priory was approximately £800 million, plus customary stamp duty,
tax, and other transaction costs. As part of the real estate acquisition (for which some of the assets were acquired by the share purchase of
real estate holding entities), we incurred deferred income tax liabilities and other liabilities of approximately £47.1 million.
In addition to the real estate investment, on January 19, 2021, we made a £250 million acquisition loan to Waterland VII, in connection with
the closing of Waterland VII’s acquisition of Priory, which was repaid in full plus interest on October 22, 2021.
Finally, we acquired a 9.9% passive equity interest in the Waterland VII affiliate that indirectly owns Priory.
OTHER TRANSACTIONS
On December 2, 2021, we acquired the remaining 50% interest in a general acute hospital operated by IMED Hospitales (“IMED”) in Valencia,
Spain, which was formerly owned by our joint venture partner. We followed the asset acquisition cost accumulation model to account
for this acquisition and included the carrying amount of our previously held equity interest, along with the approximately €46 million
consideration paid and direct transaction costs incurred, in determining the total cost allocated to the net assets acquired.
On October 21, 2021, we acquired an acute care facility in Portugal for €17.8 million. This facility is leased to Atrys Health pursuant to a long-
term master lease with annual escalations.
On October 19, 2021, we invested in 18 inpatient behavioral health facilities throughout the U.S. and an interest in the operations of
Springstone for total consideration of $950 million (including an acquisition loan of approximately $185 million), plus closing and other
transaction costs. We also incurred deferred income tax liabilities of approximately $8.0 million. These facilities are leased to Springstone
pursuant to a long-term master lease with annual escalations and multiple extension options.
On August 1, 2021, we completed the acquisition of five general acute care hospitals located in South Florida for approximately $900 million,
plus closing and other transaction costs. These hospitals are leased to Steward pursuant to a master lease, with annual inflation-based
escalators.
On July 6, 2021, we acquired four acute care hospitals and two on-campus medical office buildings in Los Angeles, California for $215 million.
These hospitals are leased to Pipeline Health System, LLC (“Pipeline”) pursuant to a long-term lease with annual inflation-based escalators.
On July 6, 2021, we also acquired an acute care hospital in Stirling, Scotland for £15.6 million. This hospital is leased to Circle Health Ltd.
(“Circle”) pursuant to a long-term lease with annual inflation-based escalators.
2022 ANNUAL REPORT
49
On April 16, 2021, we made a CHF 145 million investment in Swiss Medical Network, our tenant via our Infracore equity investment.
On January 8, 2021, we made a $335 million loan to affiliates of Steward, all of the proceeds of which were used to redeem a similarly sized
convertible loan held by Steward’s former private equity sponsor.
2020 ACTIVITY
Circle Transaction
On January 8, 2020, we acquired a portfolio of 30 acute care hospitals located throughout the United Kingdom for approximately £1.5 billion
from affiliates of BMI Healthcare, Inc. (“BMI”), as part of a share purchase in which we also inherited certain net deferred income tax and other
liabilities and £27.6 million of unearned rent revenue. In a related transaction, affiliates of Circle acquired BMI and assumed its operations in
the United Kingdom. As part of our acquisition, we inherited 30 existing leases with the operator that had initial fixed terms ending in 2050,
with no renewal options but with annual inflation-based escalators. Effective June 16, 2020, these 30 leases were amended to include two
five-year renewal options and improve the annual inflation-based escalators. These 30 leases are cross-defaulted and guaranteed by Circle.
OTHER TRANSACTIONS
On December 31, 2020, we acquired an inpatient rehabilitation hospital in South Carolina for approximately $17 million. As part of the
transaction, we acquired the fee simple real estate of three inpatient rehabilitation hospitals and one long-term acute care hospital in
exchange for the reduction of the mortgage loans made to Ernest for such properties in 2012. These five facilities, with an approximate $115
million total investment, are leased to Ernest pursuant to an existing long-term master lease with multiple extension options and annual
escalation provisions.
On December 29, 2020, we increased our equity ownership and related investment in Infracore by investing an additional CHF 206.5 million.
We are accounting for our total investment in this joint venture (this investment along with our initial investment in 2019 as noted below)
under the equity method.
On August 13, 2020, we acquired a general acute care hospital in Lynwood, California for a total investment of approximately $300 million.
This property is leased to Prime Healthcare Services, Inc. (“Prime”) pursuant to a long-term master lease with annual escalations and
multiple extension options.
On July 8, 2020, we acquired the fee simple real estate of two general acute care hospitals located in the Salt Lake City, Utah area, Davis
Hospital & Medical Center and Jordan Valley Medical Center, in exchange for the reduction of the mortgage loans made to Steward for such
properties and additional cash consideration of $200 million based on their relative fair value. The approximate $950 million investment in
these two facilities is subject to a Steward master lease.
On June 24, 2020, we originated a CHF 45 million secured loan to Infracore, which was paid in full on December 2, 2020.
On May 13, 2020, we formed a joint venture for the purpose of investing in the operations of international hospitals. As part of the formation,
we originated a $205 million acquisition loan. We have a 49% interest in this joint venture and are accounting for our investment using the
fair value option election. The joint venture simultaneously purchased from Steward the rights and existing assets related to all present and
future international opportunities previously owned by Steward for strategic, regulatory, and risk management purposes. Through this joint
venture, we invested, on November 17, 2020, in the real estate of three general acute care hospitals in Colombia for approximately $135
million. These properties are operated by the international joint venture.
Other acquisitions in 2020 included three inpatient rehabilitation hospitals, two general acute care hospitals, and one private acute care
hospital totaling approximately $300 million. One inpatient rehabilitation facility, located in Dahlen, Germany, was acquired on August 5,
2020 for €12.5 million and is leased to MEDIAN Kliniken S.á.r.l. (“MEDIAN”) pursuant to the existing master lease. One of the general acute care
facilities, located in Darlington, United Kingdom, was acquired on August 7, 2020 for £29.4 million and is leased to Circle pursuant to a long-
term lease. The other general acute care hospital, located in London, United Kingdom, was acquired on November 25, 2020 for £50 million
via the purchase of a 999-year ground lease and is leased to The Royal Marsden NHS Foundation Trust pursuant to a long-term lease. The
inpatient rehabilitation hospitals, one in Texas and one in Indiana, were acquired on December 17, 2020 for approximately $58 million and
are leased to Post Acute Medical, LLC pursuant to a long-term lease. The private acute care hospital, located in Reading, United Kingdom,
was acquired on December 18, 2020 for £85.0 million and is leased to Circle pursuant to the existing long-term Circle master lease.
50
MEDICAL PROPERTIES TRUST, INC.
DEVELOPMENT ACTIVITIES
2022 Activity
During 2022, we agreed to finance the development of five new projects. One of these development projects is a behavioral health facility
in McKinney, Texas with a total budget of approximately $35 million. This facility will be leased to Springstone pursuant to the existing
long-term master lease. The second development project is an inpatient rehabilitation facility in Cayce, South Carolina with a total budget
of approximately $22 million. This facility will be leased to Ernest pursuant to an existing long-term master lease. In addition, we agreed to
finance the development of and lease three general acute care facilities located throughout Spain for a total commitment of approximately
€120 million. These facilities will be leased to our existing tenant, IMED, under a long-term master lease agreement.
During the 2022 first quarter, we completed construction and began recording rental income on an inpatient rehabilitation facility located in
Bakersfield, California. This facility commenced rent on March 1, 2022 and is being leased to Ernest pursuant to an existing long-term master
lease.
2021 Activity
In the fourth quarter of 2021, we agreed to finance the development of and lease an acute care facility in Texarkana, Texas for $169.4 million.
After initial delays with a change in the general contractor, physical construction has begun with an updated expected completion date of the
first quarter of 2026. This facility will be leased to Steward pursuant to an existing long-term master lease.
2020 Activity
On November 23, 2020, we agreed to finance the development of and lease an inpatient rehabilitation facility in Stockton, California for $47.7
million. This facility will be leased to Ernest pursuant to an existing long-term master lease.
During 2020, we completed construction on two general acute care facilities and one inpatient rehabilitation facility and began recognizing
revenue on these properties immediately thereafter.
See table below for a status summary of our current development projects (in thousands):
Property
Ernest (Stockton, California)
IMED (Spain)
Ernest (South Carolina)
IMED (Spain)
Springstone (Texas)
IMED (Spain)
Steward (Texas)
Commitment
Costs Incurred as
of December 31,
2022
Estimated Rent
Commencement
Date
$
$
47,700
50,411
22,400
45,408
34,600
36,734
169,408
45,739
13,037
7,541
33,801
1,962
8,320
57,020
1Q 2023
2Q 2023
2Q 2023
3Q 2023
1Q 2024
3Q 2024
1Q 2026
$
406,661
$
167,420
2022 ANNUAL REPORT
51
DISPOSALS
2022 Activity
On March 14, 2022, we completed the previously described partnership with MAM, in which we sold the real estate of eight Massachusetts-
based general acute care hospitals, with a fair value of approximately $1.7 billion. See “New Investments” in this Note 3 for further details on
this transaction.
During 2022, we also completed the sale of 15 other facilities (including 11 properties sold on September 1, 2022 related to the Prime
repurchase option for proceeds of $366 million) and five ancillary properties for total proceeds of approximately $522 million and recognized
a gain on real estate of approximately $100 million, along with a $42 million write-off of straight-line rent receivables due to the early
termination of certain properties’ expected lease terms.
Summary of Operations for Disposed Assets in 2022
The properties sold during 2022 do not meet the definition of discontinued operations. However, the following represents the operating
results from these properties for the periods presented (in thousands):
For the Years Ended December 31,
Revenues (1)
Real estate depreciation and amortization (2)
Property-related expenses
Other income (3)
2022
2021
2020
$
17,831
$
180,549
$
174,362
(4,683)
(1,588)
536,813
(28,579)
(5,065)
181
(38,059)
(12,509)
1,228
Income from real estate dispositions, net
$
548,373
$
147,086
$
125,022
(1) Includes approximately $42 million of straight-line rent and other write-offs associated with the non-Macquarie disposal transactions for the year ended
December 31, 2022.
(2) Lower in 2022 as we stopped depreciating the properties making up the Macquarie Transaction once deemed held for sale in September 2021.
(3) Includes $536.8 million of gains (net of $125 million write-off of straight-line rent receivables related to the Macquarie Transaction) for the year ended
December 31, 2022.
s fo
isp
2021 Activity
During the 2021 fourth quarter, we sold our interest in the operations of three operators (two of which were in Germany) for proceeds of
approximately $54.5 million, resulting in a net gain of approximately $40 million.
During 2021, we also completed the sale of 16 facilities and an ancillary property for approximately $246 million, resulting in a net gain on
real estate of approximately $52.5 million.
2020 Activity
During 2020, we completed the sale of nine facilities and six ancillary properties for approximately $94 million, resulting in a net loss of $2.8 million.
INTANGIBLE ASSETS
At December 31, 2022 and 2021, our intangible lease assets were $1.4 billion ($1.2 billion, net of accumulated amortization) and $1.4 billion
($1.3 billion, net of accumulated amortization), respectively.
We recorded amortization expense related to intangible lease assets of $55.9 million, $56.0 million, and $42.4 million in 2022, 2021, and 2020,
respectively, and expect to recognize amortization expense from existing lease intangible assets as follows (amounts in thousands):
For the Years Ended December 31,
2023
2024
2025
2026
2027
As of December 31, 2022, capitalized lease intangibles have a weighted-average remaining life of 23.7 years.
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MEDICAL PROPERTIES TRUST, INC.
$ 56,740
56,683
56,535
56,266
55,932
LEASING OPERATIONS (LESSOR)
We acquire and develop healthcare facilities and lease the facilities to healthcare operating companies. The initial fixed lease terms of these
infrastructure-type assets are typically at least 15 years, and most include renewal options at the election of our tenants, generally in five year
increments. Over 99% of our leases provide annual rent escalations based on increases in the CPI (or similar indices outside the U.S.) and/
or fixed minimum annual rent escalations. Many of our domestic leases contain purchase options with pricing set at various terms but in no
case less than our total initial investment. For three properties with a carrying value of approximately $110 million at December 31, 2022,
our leases require a residual value guarantee from the tenant. Our leases typically require the tenant to handle and bear most of the costs
associated with our properties including repair/maintenance, property taxes, and insurance. We routinely inspect our properties to ensure
our assets are being maintained properly and in compliance with the terms of our leases.
The following table summarizes total future minimum lease payments to be received, excluding operating expense reimbursements, from
tenants under noncancelable leases as of December 31, 2022 (amounts in thousands):
2023
2024
2025
2026
2027
Thereafter
Total Under
Operating
Leases
Total Under
Financing
Leases
Total
$
984,353
$
161,079
$
1,145,432
1,001,456
1,016,367
1,031,717
1,048,409
164,357
167,701
171,112
174,591
1,165,813
1,184,068
1,202,829
1,223,000
25,851,987
4,376,304
30,228,291
$
30,934,289
$
5,215,144
$
36,149,433
For all of our properties subject to lease, we are the legal owner of the property and the tenant's right to use and possess such property is
guided by the terms of a lease. At December 31, 2022, we account for all of these leases as operating leases, except where GAAP requires
alternative classification, including leases on 13 Ernest facilities and three Prime facilities that are accounted for as DFLs and leases on 13
of our Prospect facilities and five of our Ernest facilities that are accounted for as a financing. The components of our total investment in
financing leases consisted of the following (in thousands):
As of December 31,
Minimum lease payments receivable
Estimated unguaranteed residual values
Less: Unearned income and allowance for credit loss
Net investment in direct financing leases
Other financing leases (net of allowance for credit loss)
Total investment in financing leases
2022
2021
$
880,253
$
1,183,855
203,818
(731,915)
352,156
203,818
(918,584)
469,089
1,339,167
1,584,238
$
1,691,323
$
2,053,327
The decrease in total investment in financing leases during 2022 is primarily related to financing leases associated with two properties sold
on September 1, 2022 associated with the Prime repurchase transaction, along with the impairment associated with our Prospect properties,
as discussed further below.
COVID-19 Rent Deferrals
Due to the COVID-19 pandemic and its impact on our tenants’ business, we agreed to defer collection of a certain amount of rent for a few
tenants. Pursuant to our agreements with these tenants, we expect repayments of previously deferred rent to continue, with the remaining
outstanding deferred rent balance of approximately $14.6 million as of December 31, 2022, to be paid over specified periods in the future
with interest.
2022 ANNUAL REPORT
53
Prospect Medical Holdings
In August 2019, we invested in a portfolio of 14 acute care hospitals in three states (California, Pennsylvania, and Connecticut) operated by
Prospect for a combined purchase price of approximately $1.5 billion. In addition, we originated a $112.9 million term loan secured by a
parent guaranty. In the 2022 second quarter, we funded an additional $100 million towards the existing mortgage loan that is secured by a
first lien on a California hospital.
Prospect (like other healthcare systems around the world) struggled through the COVID-19 pandemic, starting in early 2020 and continuing
through much of the 2022 first quarter with the impact from the Omicron variant. Although admissions, surgeries, and ER visits are back above
pre-COVID levels at their California and Connecticut properties, Prospect’s four Pennsylvania facilities are still trailing. Now with the impact of
higher labor and other costs due to inflation, Prospect has experienced a decline in cash flows during 2022. Prospect has been working through
various restructuring plans to manage their cash flow. Some of these plans have made it to the binding commitment stage, including the
expected sale of their Connecticut properties to Yale New Haven Health (“Yale”) announced in October 2022, while others have not.
Until the 2022 fourth quarter, Prospect was current on its rent and interest obligations under the various agreements. However, with rent and
interest now past due and certain of Prospect’s restructuring plans yet to be finalized, we recorded an approximate $280 million impairment
charge in the 2022 fourth quarter, as shown in “Real estate and other impairment charges, net” on the consolidated statements of net
income. As part of this charge, we reduced the carrying value of the underperforming Pennsylvania properties by approximately $170 million
(to approximately $250 million) and reserved all non-cash rent for a total of $112 million. We expect to record rent on our Prospect leases
on a cash basis for the foreseeable future. At December 31, 2022, we believe our remaining investment in the Prospect real estate and other
assets are fully recoverable, but no assurances can be given that we will not have any further impairments in future periods.
Pipeline Health System
On October 2, 2022, Pipeline filed for reorganization relief under Chapter 11 protection of the United States Bankruptcy Code in the Southern
District of Texas, while keeping its hospitals open to continue providing care to the communities served. On February 6, 2023, Pipeline
emerged from bankruptcy. Per the bankruptcy settlement, Pipeline’s current lease of our California assets remains in place, and we were
repaid on February 7, 2023 for all rent that was outstanding at December 31, 2022, along with what was due for January and February 2023.
We have agreed to defer $5.6 million, or approximately 30%, of rent in 2023 to be paid in 2024 with interest. We also agreed to provide
approximately $11 million in capital funding for Pipeline to complete their behavioral facility addition to the Coast Plaza Hospital, which will
result in increased rent to us upon completion. As of December 31, 2022, assets leased to Pipeline represent 1% of our total assets, which we
believe are fully recoverable at this time. However, no assurances can be given that we will not have any write-offs or impairments in future
periods.
Watsonville Community Hospital
On September 30, 2019, we acquired the real estate of Watsonville Community Hospital in Watsonville, California for $40 million, which
was then leased to Halsen Healthcare. In addition, we made a working capital loan to Halsen Healthcare. The hospital operator faced
significant financial challenges over a two-year period that were worsened by the COVID-19 pandemic. During this time, we increased the
loan in an effort to support the operator of this facility, allowing it to continue to serve the community’s needs. On December 5, 2021, Halsen
Healthcare filed Chapter 11 bankruptcy in order to reorganize, while keeping the hospital open. As such, we recorded a credit loss reserve
of approximately $40 million against the estimated uncollectible portion of the loan and wrote off approximately $2.5 million of billed and
straight-line rent receivables.
On February 23, 2022, the bankruptcy court approved the bid by Pajaro Valley Healthcare District Corporation (“Pajaro”) to purchase the
operations of the Watsonville Community Hospital and lease the real estate from us. On August 31, 2022, Pajaro completed this purchase
of the operations of the Watsonville Community Hospital. As a result of this transaction, we were repaid approximately $32 million of the
loans previously provided to the hospital. This loan repayment resulted in a net credit loss recovery of approximately $15 million in 2022 and
reflected in the “Real estate and other impairment charges, net” line of the consolidated statements of net income. To date, Pajaro has been
current on its monthly rental payments to us.
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MEDICAL PROPERTIES TRUST, INC.
OTHER LEASING ACTIVITIES
2022 Activity
At December 31, 2022, 99% of our properties are occupied by tenants, leaving five properties as vacant, representing less than 0.3% of total
assets. We are in various stages of either releasing or selling these vacant properties, for one of which we received and recorded a significant
termination fee in 2019.
2021 Activity
On December 23, 2021, Lifepoint Health, Inc. (“Lifepoint”) announced the completion of the transaction with Kindred Healthcare
(“Kindred”), in which Lifepoint acquired Kindred, and announced the related launch of ScionHealth, a new healthcare company made up
of a combination of former Kindred and Lifepoint hospitals. With this transaction, we have eight properties leased to ScionHealth and nine
properties leased to Lifepoint.
2020 Activity
On July 24, 2020, we re-leased our five San Antonio, Texas free standing emergency facilities (with a total investment of approximately $30
million) to Methodist Healthcare System of San Antonio, a joint venture between HCA and Methodist Healthcare Ministries of South Texas,
pursuant to a long-term master lease. As a result, we recorded an approximate $1.5 million write-off of straight-line rent in the 2020 third quarter.
INVESTMENTS IN UNCONSOLIDATED ENTITIES
Investments in Unconsolidated Real Estate Joint Ventures
Our primary business strategy is to acquire real estate and lease to providers of healthcare services. Typically, we directly own 100% of
such investment. However, from time-to-time, we will co-invest with other investors that share a similar view that hospital real estate is a
necessary infrastructure-type asset in communities. In these types of investments, we will own undivided interests of less than 100% of the
real estate and share control over the assets through unconsolidated real estate joint ventures. The underlying real estate and leases in these
unconsolidated real estate joint ventures are structured similarly and carry a similar risk profile to the rest of our real estate portfolio.
The following is a summary of our investments in unconsolidated real estate joint ventures by operator (amounts in thousands):
As of December 31,
OPERATOR
MEDIAN
Swiss Medical Network
Steward (Macquarie Transaction)
Policlinico di Monza
HM Hospitales
Total
OWNERSHIP
PERCENTAGE
50%
70%
50%
50%
45%
2022
2021
$
482,735
$
517,648
454,083
417,701
86,245
57,139
476,193
—
95,468
63,618
$ 1,497,903
$ 1,152,927
For the increase in our investments in unconsolidated real estate joint ventures since December 31, 2021, see “New Investments” section in
this same Note 3 for a discussion of the Macquarie Transaction.
Investments in Unconsolidated Operating Entities
Our investments in unconsolidated operating entities are noncontrolling investments that are typically made in conjunction with larger real
estate transactions in which the operators are vetted as part of our overall underwriting process. In many cases, we would not be able to
acquire the larger real estate portfolio without such investments in operators. These investments also offer the opportunity to enhance our
overall return and provide for certain minority rights and protections.
2022 ANNUAL REPORT
55
The following is a summary of our investments in unconsolidated operating entities (amounts in thousands):
As of December 31,
Steward (loan investment)
International joint venture
Springstone
Priory
Swiss Medical Network
Steward (equity investment)
Prospect
Aevis Victoria SA (“Aevis”)
Aspris Children's Services (“Aspris”)
Caremax
Total
2022
2021
$
362,831
$
360,164
231,402
200,827
156,575
157,145
125,862
112,777
72,904
16,023
8,526
219,387
187,450
42,315
159,208
139,000
112,283
61,271
8,356
—
$ 1,444,872
$ 1,289,434
The increase during 2022 is primarily due to our investment in the Priory syndicated term loan as described under “New Investments” in this
Note 3. In the 2022 fourth quarter, Steward sold its managed care business to Caremax and received shares of Caremax plus cash, along with
the potential for additional stock contingent on performance. As part of this transaction, we received a dividend of Caremax shares that are
marked to fair value each period.
Pursuant to our approximate 5% stake in Aevis and other investments marked to fair value, we recorded a $2.3 million favorable non-cash
fair value adjustment during 2022 as shown in the “Other (including fair value adjustments on securities)” line of the consolidated statements
of net income; whereas, this was an $8.2 million favorable non-cash fair value adjustment in 2021. We also earned approximately $4 million
of dividend income from our Switzerland investments during 2022.
Pursuant to our existing 9.9% equity interest in Steward, we received an $11 million cash distribution during 2021, which was accounted for
as a return of capital.
OTHER INVESTMENT ACTIVITIES
In the 2022 second quarter, we loaned $150 million to Steward pursuant to a five-year secured loan. The loan bears interest at a current
market rate (comparable to recent lease rates) plus a component of additional interest upon repayment. The loan is prepayable without
penalty and is mandatorily prepayable upon certain sales of Steward assets and operations.
Concentration of Credit Risks
We monitor concentration risk in several ways due to the nature of our real estate assets that are vital to the communities in which they are
located and given our history of being able to replace inefficient operators of our facilities, if needed, with more effective operators:
1)
Facility concentration – At December 31, 2022 and December 31, 2021, our largest single property represented approximately 2.7% of our
total assets.
2) Operator concentration – For the years ended December 31, 2022 and December 31, 2021, revenue from each of Steward, Circle, and
Prospect individually represented more than 10% of our total revenues.
3) Geographic concentration – At December 31, 2022, investments in the U.S., Europe, Australia, and South America represented
approximately 61%, 33%, 5%, and 1%, respectively, of our total assets compared to 64%, 30%, 5%, and 1%, respectively, of our total
assets at December 31, 2021.
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MEDICAL PROPERTIES TRUST, INC.
4)
Facility type concentration – For the year ended December 31, 2022, approximately 76% of our revenues were generated from our
general acute care facilities, while revenues from our behavioral and rehabilitation facilities made up 13% and 7%, respectively.
Freestanding ER/urgent care facilities and long-term acute care facilities combined to make up the remaining 4%. In comparison,
general acute care, behavioral, and rehabilitation facilities made up 81%, 8%, and 7%, respectively, of our total revenues for the year
ended December 31, 2021. Revenues from our freestanding ER/urgent care, and long-term acute care facilities combined to make up
approximately 4% for the year ended December 31, 2021.
(For geographic and facility type concentration metrics above, we allocate our investments in operating entities pro rata based on the gross
book value of the real estate. Such pro rata allocations are subject to change from period to period.)
Related Party Transactions
Lease and interest revenue earned from tenants and real estate joint ventures in which we had an equity interest (accounted for under either the
equity or fair value option methods) during the year were $135.5 million, $63.9 million, and $29.8 million for 2022, 2021, and 2020, respectively.
See subsections “New Investments” and “Disposals” in this Note 3 as it relates to our investments in Springstone and the international and
Infracore ventures for other related party transactions during 2022, 2021, and 2020.
4. Debt
The following is a summary of debt (dollar amounts in thousands):
As of December 31,
Revolving credit facility (A)
Interim credit facility
Term loan
British pound sterling term loan due 2024 (B)
British pound sterling term loan due 2025 (B)
Australian term loan facility (B)
2.550% Senior Unsecured Notes due 2023 (B)
3.325% Senior Unsecured Notes due 2025 (B)
0.993% Senior Unsecured Notes due 2026 (B)
2.500% Senior Unsecured Notes due 2026 (B)
5.250% Senior Unsecured Notes due 2026
5.000% Senior Unsecured Notes due 2027
3.692% Senior Unsecured Notes due 2028 (B)
4.625% Senior Unsecured Notes due 2029
3.375% Senior Unsecured Notes due 2030 (B)
3.500% Senior Unsecured Notes due 2031
Debt issue costs and discount, net
2022
2021
$
929,584
$
730,000
—
200,000
126,690
845,810
817,560
483,320
535,250
535,250
604,150
500,000
869,606
200,000
—
947,240
871,560
541,280
568,500
568,500
676,600
500,000
1,400,000
1,400,000
724,980
900,000
422,905
811,920
900,000
473,620
1,300,000
1,300,000
$ 10,325,499
$ 11,358,826
(57,087)
(76,056)
$ 10,268,412
$ 11,282,770
(A) Includes £90 million of GBP-denominated borrowings and €253 million of Euro-denominated borrowings that reflect the exchange rate at December 31,
2022.
(B) Non-U.S. dollar denominated debt that reflects the exchange rate at period-end.
2022 ANNUAL REPORT
57
As of December 31, 2022, principal payments due on our debt (which exclude the effects of any discounts, premiums, or debt issue costs
recorded) are as follows (amounts in thousands):
2023
2024
2025
2026
2027
Thereafter
Total
CREDIT FACILITY
$
483,320
944,250
1,381,060
2,568,984
1,600,000
3,347,885
$
10,325,499
On May 6, 2022, we increased the amount of our unsecured credit facility (“Credit Facility”) by $500 million by exercising the accordion feature.
In addition, our revolver and U.S. dollar term loan were modified with Secured Overnight Financing Rate as a replacement reference rate to U.S.
dollar LIBOR. Currently, our Credit Facility includes a $1.8 billion unsecured revolving loan facility and a $200 million unsecured term loan facility.
On June 29, 2022, we amended our Credit Facility. The amendment extended the maturity date of our revolving facility to June 30, 2026 with our
option to extend for an additional 12 months. The maturity date of our $200 million unsecured term loan facility was extended to June 30, 2027.
Additionally, we may request incremental term loan and/or revolving loan commitments in an aggregate amount not to exceed $1 billion.
In addition, the amendment improved interest rate spreads for both facilities. Under the amended Credit Facility and at our election, loans
may be made as either ABR Loans or Term Benchmark Loans. The applicable margin for term loans that are ABR Loans is adjustable on a
sliding scale from 0.00% to 0.70% based on current credit rating. The applicable margin for term loans that are Term Benchmark Loans is
adjustable on a sliding scale from 0.875% to 1.70% based on current credit rating. The applicable margin for revolving loans that are ABR
Loans is adjustable on a sliding scale from 0.00% to 0.50% based on current credit rating. The applicable margin for revolving loans that are
Term Benchmark Loans or RFR Loans, as defined in the Credit Facility agreement, is adjustable on a sliding scale from 0.80% to 1.50% based
on current credit rating. The facility fee is adjustable on a sliding scale from 0.125% to 0.30% (currently 0.25%) based on current credit rating
and is payable on the revolving loan facility.
At December 31, 2022, we had $929.6 million outstanding on the revolving credit facility, whereas, we had $730.0 million outstanding on our
revolving credit facility at December 31, 2021. At December 31, 2022 and 2021, our availability under our revolving credit facility was $0.9 billion
and $0.6 billion, respectively. The weighted-average interest rate on the revolving facility was 3.8% and 1.3% during 2022 and 2021, respectively.
At December 31, 2022 and 2021, the interest rate in effect on our term loan was 5.70% and 1.56%, respectively.
INTERIM CREDIT FACILITIES
January 2021 Interim Credit Facility
On January 15, 2021, we entered into a $900 million interim credit facility (“January 2021 Interim Credit Facility”), of which we borrowed
£500 million to partially fund the Priory Group Transaction. We paid off and terminated this facility on March 26, 2021 with proceeds from the
issuance of the 2.500% Senior Unsecured Notes due 2026 and the 3.375% Senior Unsecured Notes due 2030.
July 2021 Interim Credit Facility
On July 27, 2021, we entered into a $1 billion interim credit facility with Barclays Bank PLC as administrative agent (“July 2021 Interim Credit
Facility”), and several lenders from time-to-time are parties thereto. We used this facility to partially fund the acquisition of five South Florida
facilities in August 2021 and the Springstone investments in October 2021. At December 31, 2021, the outstanding balance under this facility
was $869.6 million.
On March 15, 2022, we paid off and terminated the July 2021 Interim Credit Facility with proceeds from the Macquarie Transaction as more
fully described in Note 3 to the consolidated financial statements.
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MEDICAL PROPERTIES TRUST, INC.
NON-U.S. TERM LOANS
British Pound Sterling Term Loan due 2024
On December 9, 2022, we entered into a £105 million unsecured sterling-denominated term loan, of which we used to partially fund the
Priory acquisition on the same date. This term loan matures on December 9, 2024, and has a fixed interest rate of 5.250%.
British Pound Sterling Term Loan due 2025
On January 6, 2020, we entered into a £700 million unsecured sterling-denominated term loan with Bank of America, N.A., as administrative
agent, and several lenders from time-to-time are parties thereto. The term loan matures on January 15, 2025. The applicable margin under
the term loan is adjustable based on a pricing grid from 0.85% to 1.65% dependent on our current credit rating. On March 4, 2020, we
entered into an interest rate swap transaction (effective March 6, 2020) to fix the interest rate to approximately 0.70% for the duration of the
loan. The current applicable margin for the pricing grid (which can vary based on our credit rating) is 1.25% for an all-in fixed rate of 1.95%.
Australian Term Loan
On May 23, 2019, we entered into an A$1.2 billion term loan with Bank of America, N.A., as administrative agent, and several lenders from
time-to-time are parties thereto. The term loan matures on May 23, 2024. The interest rate under the term loan is adjustable based on a
pricing grid from 0.85% to 1.65%, dependent on our current senior unsecured credit rating. On June 27, 2019, we entered into an interest rate
swap transaction (effective July 3, 2019) to fix the interest rate to approximately 1.20% for the duration of the loan as long as the reference
rate stays above 0.00%. The current applicable margin for the pricing grid (which can vary based on our credit rating) is 1.25% for an all-in
fixed rate of 2.45%.
Interest Rate Swaps
At December 31, 2022, we had a derivative asset of approximately $93.2 million related to the combination of the sterling-denominated
term loan interest rate swap and the Australian dollar term loan interest rate swap. At December 31, 2021, we had a derivative asset of
approximately $12.4 million related to the sterling-denominated term loan interest rate swap and a derivative liability of approximately $4.2
million related to the Australian dollar term loan interest rate swap. Derivative assets are included in “Other assets” while, the derivative
liabilities are included in “Accounts payable and accrued expenses” on our consolidated balance sheets.
SENIOR UNSECURED NOTES
The following are the basic terms of our senior unsecured notes at December 31, 2022 (par value amounts in thousands):
Offering
Completion Date
Maturity Date
Par Value
% of Par Value
Interest Payment
Frequency
2.550% Senior Unsecured Notes due 2023
December 5, 2019
December 5, 2023
£ 400,000
100.000%
3.325% Senior Unsecured Notes due 2025
March 24, 2017
March 24, 2025
€ 500,000
100.000%
0.993% Senior Unsecured Notes due 2026
October 6, 2021
October 15, 2026
€ 500,000
100.000%
2.500% Senior Unsecured Notes due 2026
March 24, 2021
March 24, 2026
£ 500,000
99.937%
Annually
Annually
Annually
Annually
5.250% Senior Unsecured Notes due 2026
July 22, 2016
August 1, 2026
$ 500,000
100.000%
Semi-annually
5.000% Senior Unsecured Notes due 2027
September 7, 2017
October 15, 2027
$ 1,400,000
100.000%
Semi-annually
3.692% Senior Unsecured Notes due 2028
December 5, 2019
June 5, 2028
£ 600,000
99.998%
Annually
4.625% Senior Unsecured Notes due 2029
July 26, 2019
August 1, 2029
$ 900,000
99.500%
Semi-annually
3.375% Senior Unsecured Notes due 2030
March 24, 2021
April 24, 2030
£ 350,000
99.448%
Annually
3.500% Senior Unsecured Notes due 2031
December 4, 2020
March 15, 2031
$ 1,300,000
100.000%
Semi-annually
2022 ANNUAL REPORT
59
We may repurchase, redeem, or refinance senior unsecured notes from time-to-time. We may purchase senior notes for cash through
open market purchases, privately negotiated transactions, or a tender offer. In some cases, we may redeem some or all of the notes at any
time, but may require a redemption premium that will decrease over time. In the event of a change of control, each holder of the notes
may require us to repurchase some or all of our notes at a repurchase price equal to 101% of the aggregate principal amount of the notes
plus accrued and unpaid interest to the date of purchase. Redemptions and repurchases of debt, if any, will depend on prevailing market
conditions, our liquidity requirements, contractual restrictions, and other factors.
DEBT REFINANCING AND UNUTILIZED FINANCING COSTS
2022
In 2022, we incurred approximately $9.5 million of debt refinancing costs. These costs were incurred as a result of the payoff of our July 2021
Interim Credit Facility with proceeds from the Macquarie Transaction on March 14, 2022, along with the amendment of our Credit Facility on
June 29, 2022.
2021
With the termination of our January 2021 Interim Credit Facility and other debt activity, we incurred approximately $7.3 million of debt
refinancing costs in 2021.
With proceeds from our 0.993% Senior Unsecured Notes due 2026 offering, on October 22, 2021, we redeemed all of our outstanding €500
million aggregate principal amount of 4.000% senior unsecured notes that were due in 2022, including accrued and unpaid interest. As a
result of this redemption, we incurred a charge of approximately $20 million (including redemption premiums and accelerated amortization
of deferred debt issuance costs).
2020
With proceeds from our 3.500% Senior Unsecured Notes due 2031 offering in 2020, we redeemed all of our outstanding $500.0 million
aggregate principal amount of 6.375% senior unsecured notes that were due in 2024 and $300.0 million aggregate principal amount of
5.500% senior unsecured notes that were due in 2024, including accrued and unpaid interest. As a result of these redemptions, we incurred a
charge of approximately $28 million (including redemption premiums and accelerated amortization of deferred debt issuance costs).
COVENANTS
Our debt facilities impose certain restrictions on us, including restrictions on our ability to: incur debts; create or incur liens; provide guarantees
in respect of obligations of any other entity; make redemptions and repurchases of our capital stock; prepay, redeem, or repurchase debt;
engage in mergers or consolidations; enter into affiliated transactions; dispose of real estate or other assets; and change our business. In
addition, the credit agreements governing our Credit Facility limit the amount of dividends we can pay as a percentage of normalized adjusted
funds from operations (“NAFFO”), as defined in the agreements, on a rolling four quarter basis. At December 31, 2022, the dividend restriction
was 95% of NAFFO. The indentures governing our senior unsecured notes also limit the amount of dividends we can pay based on the sum of
95% of NAFFO, proceeds of equity issuances, and certain other net cash proceeds. Finally, our senior 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, consolidated adjusted net worth, unsecured leverage ratio, and
unsecured interest coverage ratio. The Credit 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 Credit Facility, the entire outstanding balance may become immediately due and payable. At December 31, 2022, we
were in compliance with all such financial and operating covenants.
60
MEDICAL PROPERTIES TRUST, INC.
5. Income Taxes
We have maintained and intend to maintain our election as a REIT under the Code. To qualify as a REIT, we must meet a number of
organizational and operational requirements, including a requirement to distribute at least 90% of our REIT taxable income to our stockholders.
As a REIT, we generally will not be subject to U.S. federal income tax if we distribute 100% of our REIT taxable income to our stockholders and
satisfy certain other requirements; instead, income tax is paid directly by our stockholders on the dividends distributed to them. If our REIT
taxable income exceeds our dividends in a tax year, REIT tax rules allow us to designate dividends from the subsequent tax year in order to avoid
current taxation on undistributed income. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes at regular
corporate rates. Taxable income from non-REIT activities managed through our TRS entities is subject to applicable U.S. federal, state, and local
income taxes. Our international subsidiaries are also subject to income taxes in the jurisdictions in which they operate.
From our TRS entities and our foreign operations, income tax (expense) benefit were as follows (in thousands):
For the Years Ended December 31,
Current income tax (expense) benefit:
Domestic
Foreign
Deferred income tax (expense) benefit:
Domestic
Foreign
2022
2021
2020
$
1,111
$ (1,559)
$
63
(27,751)
(26,640)
(15,628)
(13,632)
(29,260)
(18,964)
(20,523)
6,915
(60,340)
(53,425)
(10,203)
(10,140)
(10,680)
(10,236)
(20,916)
Income tax (expense)
$ (55,900)
$ (73,948)
$ (31,056)
A reconciliation of income tax (expense) benefit from the statutory income tax rate to the effective tax rate based on income before income
taxes for the years ended December 31, 2022, 2021, and 2020 is as follows (in thousands):
For the Years Ended December 31,
Income before income tax
2022
2021
2020
$
959,719
$
730,888
$
463,328
Income tax (expense) at the U.S. statutory federal rate (21% in 2022, 2021, and 2020)
(201,541)
(153,486)
(97,299)
Decrease (increase) in income tax resulting from:
Foreign rate differential
State income taxes, net of federal benefit
U.S. earnings not subject to federal income tax
Equity investments
Change in valuation allowance
Statutory tax rate change
Interest disallowance
Other items, net
Total income tax (expense)
1,826
(1,886)
2,742
—
165,705
132,266
—
(11,281)
(941)
(1,737)
(6,045)
—
(10,040)
(43,924)
(646)
(860)
2,160
970
82,921
380
(8,514)
(9,471)
—
(2,203)
$ (55,900)
$ (73,948)
$ (31,056)
2022 ANNUAL REPORT
61
In 2022, we incurred approximately $5 million of income tax expense from the credit loss recovery on loans made to the Watsonville
Community Hospital; whereas, in 2021, we recorded an approximate $10 million income tax benefit related to the initial loan impairment, as
more fully described in Note 3 of this Annual Report.
During the 2021 second quarter, the United Kingdom enacted an increase in its corporate income tax rates from 19% to 25% effective April 1,
2023, which resulted in a one-time adjustment to our net deferred tax liabilities of approximately $43 million.
The foreign provision for income taxes is based on foreign profit before income taxes of $159.6 million, $164.0 million, and $62.1 million in
2022, 2021, and 2020, respectively.
The domestic provision for income taxes is based on income (loss) before income taxes of $10.8 million in 2022, $(29.7) million in 2021, and
$6.4 million in 2020 from our TRS entities.
At December 31, 2022 and 2021, components of our deferred tax assets and liabilities were as follows (in thousands):
2022
2021
Operating loss and interest deduction carry forwards
$
175,922
$
197,876
Other
Total deferred tax assets
Valuation allowance
Total net deferred tax assets
Deferred tax liabilities:
Property and equipment
Net unbilled revenue
Partnership investments
Other
Total deferred tax liabilities
Net deferred tax asset (liability)
At December 31, 2022, we had net NOL and other tax attribute carryforwards as follows (in thousands):
Gross NOL carryforwards
Tax-effected NOL carryforwards
Valuation allowance
Net deferred tax asset - NOL carryforwards
Expiration periods
62
MEDICAL PROPERTIES TRUST, INC.
15,218
191,140
(71,499)
1,815
199,691
(61,747)
$
119,641
$
137,944
$ (294,181)
$ (320,546)
(63,324)
(26,268)
(27,153)
(43,366)
(15,963)
(3,836)
(410,926)
(383,711)
$ (291,285)
$ (245,767)
U.S.
Foreign
148,900
$
633,682
24,013
(13,864)
10,149
$
$
151,909
(57,635)
94,274
$
$
$
2024 - indefinite
indefinite
VALUATION ALLOWANCE
A valuation allowance has been recorded on certain foreign and domestic net operating loss carryforwards and other net deferred tax assets
that may not be realized. As of each reporting date, we consider all new evidence that could impact the future realization of our deferred
tax assets. In the evaluation of the need for a valuation allowance on our deferred income tax assets, we consider all available positive
and negative evidence, including scheduled reversals of deferred income tax liabilities, carryback of future period losses to prior periods,
projected future taxable income, tax planning strategies, and recent financial performance.
During 2022, a valuation allowance of $9.8 million has been recorded against a portion of our deferred tax assets to recognize only the components
of the deferred tax assets that is more likely than not to be realized. The valuation allowance was primarily recorded against deferred tax assets for
NOLs, non-depreciable basis of real property, and other tax attributes that we believe will not be realized. Valuation allowance activity recorded
generally follows the activity of the associated deferred tax asset that is not expected to be recognized. From time-to-time, we may acquire deferred
tax assets as part of real estate transactions and will assess the need for a valuation allowance as part of the opening balance sheet. Additionally,
valuation allowances will be remeasured for foreign currency translation fluctuations through other comprehensive income.
We have no material uncertain tax position liabilities and related interest or penalties.
REIT STATUS
We have met the annual REIT distribution requirements by payment of at least 90% of our REIT taxable income in 2022, 2021, and 2020.
Earnings and profits, which determine the taxability of such distributions, will differ from net income reported for financial reporting
purposes due primarily to differences in cost basis, differences in the estimated useful lives used to compute depreciation, and differences
between the allocation of our net income and loss for financial reporting purposes and for tax reporting purposes.
A schedule of per share distributions we paid and reported to our stockholders is set forth in the following:
For the Years Ended December 31,
2022
2021
2020
Per share:
Ordinary dividend (1)
Long-term capital gain (2)
Return of capital
Total
$
0.4703
$
0.7646
$
0.6030
0.6797
—
0.1654
0.1800
—
0.4670
$
1.1500
$
1.1100
$
1.0700
(1) For the years ended December 31, 2022, 2021, and 2020, includes Section 199A dividends of 0.4703, 0.7646, and 0.6030, respectively.
(2) For the years ended December 31, 2022, 2021, and 2020, includes Unrecaptured Section 1250 gains of 0.2574, 0.0583, and 0.0000, respectively.
6. Earnings Per Share
Our earnings per share were calculated based on the following (amounts in thousands):
For the Years Ended December 31,
Numerator:
Net income
Non-controlling interests’ share in earnings
Participating securities’ share in earnings
2022
2021
2020
$
903,819
$
656,940
$
432,272
(1,222)
(1,602)
(919)
(2,161)
(822)
(2,105)
Net income, less participating securities’ share in earnings
$
900,995
$
653,860
$
429,345
Denominator:
Basic weighted-average common shares
Dilutive potential common shares
Diluted weighted-average common shares
598,634
203
598,837
588,817
1,322
590,139
529,239
1,222
530,461
2022 ANNUAL REPORT
63
7. Stock Awards
STOCK AWARDS
During the second quarter of 2022, we amended the 2019 Equity Incentive Plan (the “Equity Incentive Plan”), which authorizes the issuance of
common stock options, restricted stock, restricted stock units, deferred stock units, stock appreciation rights, performance units, and awards
of interests in our Operating Partnership. Our Equity Incentive Plan is administered by the Compensation Committee of the Board of Directors.
Among other things, the recent amendment increased the number of shares of common stock registered and reserved for stock awards by 16
million to 28.9 million. As of December 31, 2022, 19.3 million shares remain available for future stock awards. The Equity Incentive Plan contains
a limit of 5 million shares as the maximum number of shares of common stock that may be awarded to an individual in any fiscal year. Awards
under the Equity Incentive Plan are subject to forfeiture due to termination of employment prior to vesting and/or from not achieving the
respective performance/market conditions. In the event of a change in control, outstanding and unvested options will immediately vest, unless
otherwise provided in the participant’s award or employment agreement, and restricted stock, restricted stock units, deferred stock units, and
other stock-based awards will vest if so provided in the participant’s award agreement. The term of the awards is set by the Compensation
Committee, though Incentive Stock Options may not have terms of more than ten years. Forfeited awards (along with shares withheld for payroll
tax withholding purposes) are returned to the Equity Incentive Plan and are then available to be re-issued as future awards.
For the past three years, we have only granted restricted stock and restricted stock units pursuant to our Equity Incentive Plan. These stock-
based awards have been granted in the form of service-based awards and performance awards based on company-specific performance
hurdles. See below for further details on each of these stock-based awards:
Service-Based Awards
In 2022, 2021, and 2020, the Compensation Committee granted service-based awards to employees and non-employee directors. Service-
based awards vest as the employee/director provides the required service (typically over three years). Dividends are generally paid on these
awards prior to vesting.
Performance-Based Awards
In 2022, 2021, and 2020, the Compensation Committee granted performance-based awards to employees. Generally, dividends are not paid
on performance awards until the award is earned. See below for details of such performance-based award grants:
In 2022, 2021, and 2020, a target number of stock awards were granted to employees that could be earned based on the achievement of
specific performance thresholds as set by our Compensation Committee. The performance thresholds were based on a three-year period
with the opportunity to earn a portion of the award earlier. More or less shares than the target number of shares are available to be earned
based on our performance compared to the set thresholds. At the end of each of the performance periods, any earned shares during such
period will vest on January 1 of the following calendar year. The performance thresholds for 2022, 2021, and 2020 awards were based on
funds from operations growth, EBITDA, and acquisitions.
Certain performance awards granted were subject to a modifier which increases or decreases the actual shares earned in each performance
period. The modifier for the 2022, 2021, and 2020 awards was based on two components: 1) how our total shareholder return (“TSR”) compared
to the SNL U.S. REIT Healthcare Index (“SNL Index”) and 2) how our TSR compared to a threshold set by the Compensation Committee.
The following summarizes stock-based award activity in 2022 and 2021 (which includes awards granted in 2022, 2021, 2020, and any
applicable prior years), respectively:
Vesting Based on Service
Vesting Based on Market/
Performance Conditions
Shares
Weighted-Average
Value at Award Date
Shares
Weighted-Average
Value at Award Date
922,954
659,393
(750,854)
(21,010)
810,483
$ 20.26
$ 21.18
$ 20.25
$ 20.06
$ 21.02
5,477,536
1,828,971
(2,924,722)
(32,704)
4,349,081
$ 15.86
$ 18.45
$ 13.87
$ 19.17
$ 18.26
For the Years Ended December 31,
Nonvested awards at beginning of the year
Awarded
Vested
Forfeited
Nonvested awards at end of year
64
MEDICAL PROPERTIES TRUST, INC.
For the Years Ended December 31,
Nonvested awards at beginning of the year
Awarded
Vested
Forfeited
Vesting Based on Service
Vesting Based on Market/
Performance Conditions
Shares
Weighted-Average
Value at Award Date
1,057,054
$ 18.79
651,113
$ 20.83
Shares
5,086,983
1,957,802
Weighted-Average
Value at Award Date
$ 14.41
$ 17.94
(781,076)
$ 18.77
(1,551,482)
$ 13.73
(4,137)
$ 18.69
(15,767)
$ 16.72
Nonvested awards at end of year
922,954
$ 20.26
5,477,536
$ 15.86
The value of stock-based awards is charged to compensation expense over the service periods. For the years ended December 31, 2022,
2021, and 2020, we recorded $49.4 million, $52.1 million, and $47.2 million, respectively, of non-cash compensation expense. The remaining
unrecognized cost from stock-based awards at December 31, 2022, is $47.1 million, which will be recognized over a weighted-average period of
1.2 years. Stock-based awards that vested in 2022, 2021, and 2020, had a value of $82.6 million, $49.9 million, and $58.9 million, respectively.
8. Commitments and Contingencies
COMMITMENTS
On October 5, 2022, we entered into definitive agreements to sell three Prospect facilities located in Connecticut to Yale for approximately
$457 million. This transaction is expected to close in 2023 subject to certain regulatory approvals and the completion of Yale’s acquisition of
the hospital operations from Prospect. No assurances can be given that this transaction will be consummated as described or at all.
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.
9. Common Stock
2022 ACTIVITY
On October 9, 2022, the board of directors of the Company authorized a stock repurchase program (the “Stock Repurchase Program”) for up
to $500 million of common stock, par value $0.001 per share. In 2022, we repurchased 1.6 million shares for a total of $17.9 million. The Stock
Repurchase Program expires on October 10, 2023.
2021 ACTIVITY
On January 11, 2021, we completed an underwritten public offering of 36.8 million shares of our common stock, resulting in net proceeds of
approximately $711 million, after deducting underwriting discounts and commissions and offering expenses.
In addition, we sold 16.3 million shares of common stock under our at-the-market equity offering program during 2021, resulting in net
proceeds of approximately $340 million.
2020 ACTIVITY
In 2020, we sold 21.0 million shares of common stock under our at-the-market equity offering program, resulting in net proceeds of
approximately $411 million.
2022 ANNUAL REPORT
65
10. Fair Value of Financial Instruments
We have various assets and liabilities that are considered financial instruments. We estimate that the carrying value of cash and cash
equivalents and accounts payable and accrued expenses approximate their fair values. We estimate the fair value of our interest and rent
receivables using Level 2 inputs such as discounting the estimated future cash flows using the current rates at which similar receivables
would be made to others with similar credit ratings and for the same remaining maturities. The fair value of our mortgage loans and other
loans are estimated by using Level 2 inputs such as discounting the estimated future cash flows using the current rates which similar loans
would be made to borrowers with similar credit ratings and for the same remaining maturities. We determine the fair value of our senior
unsecured notes using Level 2 inputs such as quotes from securities dealers and market makers. We estimate the fair value of our revolving
credit facility and term loans using Level 2 inputs based on the present value of future payments, discounted at a rate which we consider
appropriate for such debt.
Fair value estimates are made at a specific point in time, are subjective in nature, and involve uncertainties and matters of significant
judgment. Settlement of such fair value amounts may not be a prudent management decision.
The following table summarizes fair value estimates for our financial instruments (in thousands):
Asset (Liability)
December 31, 2022
December 31, 2021
Book Value
Fair Value
Book Value
Fair Value
Interest and rent receivables
$ 167,035
$ 163,101
$ 56,229
$ 56,564
Loans (1)
Debt, net
1,405,615 (2)
1,360,113
991,609 (2)
991,954
(10,268,412)
(8,697,042)
(11,282,770)
(11,526,388)
(1) Excludes the acquisition loan and mortgage loan made in October 2021 for our Springstone investment and the acquisition loan made in May 2020
related to our investment in the international joint venture, along with the related subsequent investment in the real estate of three hospitals in Colombia,
as these assets are accounted for under the fair value option method, as noted below.
(2) Includes $223.8 million and $70.1 million of mortgage loans, a $315.9 million and $335.6 million shareholder loan included in investments in
unconsolidated real estate joint ventures, $640.4 million and $521.4 million of loans that are part of our investments in unconsolidated operating entities,
and $225.5 million and $64.5 million of other loans at December 31, 2022 and 2021, respectively.
ITEMS MEASURED AT FAIR VALUE ON A RECURRING BASIS
Our equity investment and related loan to the international joint venture, our loan investment in the real estate of three hospitals operated
by subsidiaries of the international joint venture in Colombia, and our equity investment and related loans in Springstone are measured at
fair value on a recurring basis as we elected to account for these investments using the fair value option at the point of initial investment.
We elected to account for these investments at fair value due to the size of the investments and because we believe this method was more
reflective of current values.
At December 31, 2022 and 2021, the amounts recorded under the fair value option method were as follows (in thousands):
Asset (Liability)
Fair Value
Original Cost
Fair Value
Original Cost
Asset Type Classification
As of December 31, 2022
As of December 31, 2021
Mortgage loans
$
140,260
$
140,260
$
143,068
$
143,068
Mortgage loans
Equity investment and other loans
434,609
441,943
409,638
409,638
Investments in
unconsolidated operating
entities/Other loans
66
MEDICAL PROPERTIES TRUST, INC.
Our loans to Springstone and the international joint venture and its subsidiaries are recorded at fair value based on Level 2 inputs by
discounting the estimated cash flows using the market rates at which similar loans would be made to borrowers with similar credit ratings
and the same remaining maturities, while also considering the value of the underlying collateral of each loan. Our equity investment in
Springstone and the international joint venture is 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 forecasted assumptions associated with the investee. We classify our valuations of 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
valuations require management judgment due to absence of quoted market prices. For the cash flow models, our observable inputs include
use of a capitalization rate and discount rate (which is based on a weighted-average cost of capital) and our unobservable input includes
an adjustment for a marketability discount (“DLOM”). In regards to the underlying projections used in the discounted cash flow model, such
projections are provided by the investees. However, we will modify such projections as needed based on our review and analysis of historical
results, meetings with key members of management, and our understanding of trends and developments within the healthcare industry.
In 2022, we recorded an unfavorable fair value adjustment of approximately $7 million to our investments, as shown in “Other (including fair
value adjustments on securities)” in our consolidated statements of net income. No fair value adjustment was recorded in 2021.
The DLOM on our Springstone investment was 40% at December 31, 2022. 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
-100 basis points
$ (43)
43
ITEMS MEASURED AT FAIR VALUE ON A NONRECURRING BASIS
In addition to items that are measured at fair value on a recurring basis, we have assets and liabilities that are measured, from time-to-time, at
fair value on a nonrecurring basis, such as for long-lived asset impairment purposes. In these cases, fair value may be based on estimated cash
flows discounted at a risk-adjusted rate of interest by using Level 2 inputs as more fully described in Note 2, or for our real estate, including for
the impairment analysis on our Prospect Pennsylvania real estate in 2022, we may use a market approach using level 2 inputs, whereby we will
divide the expected net operating income (i.e. rent revenue less expenses, if any) of the facility by a market capitalization rate.
2022 ANNUAL REPORT
67
11. Leases (Lessee)
We lease the land underlying certain of our facilities (for which we sublease to our tenants), along with corporate offices and equipment.
Our leases have remaining lease terms that vary in years, and some of the leases have initial fixed terms (or renewal options available) that
extend the leases up to, or just beyond, the depreciable life of the properties that occupy the leased land. Renewal options that we are
reasonably certain to exercise are recognized in our right-of-use assets and lease liabilities. As most of our leases do not provide an implicit
rate, we use our incremental borrowing rate based on the information available at lease commencement date in determining the present
value of future payments.
The following is a summary of our lease expense (in thousands):
For the Years Ended December 31,
2022
2021
Operating lease cost (1)
Finance lease cost:
INCOME STATEMENT CLASSIFICATION
(2)
$
12,175
$ 10,694
Amortization of right-of-use assets
Real estate depreciation and amortization
Interest on lease liabilities
Sublease income
Total lease cost
Interest
Other
51
128
51
128
(4,485)
(4,466)
$
7,869
$ 6,407
(1) Includes short-term leases.
(2) $5.7 million and $6.3 million included in “Property-related,” with the remainder reflected in the “General and administrative” line of our consolidated statements
of net income for 2022 and 2021, respectively.
Fixed minimum payments due over the remaining lease term under non-cancelable leases of more than one year and amounts to be received in
the future from non-cancelable subleases over their remaining lease term at December 31, 2022 are as follows (amounts in thousands):
2023
2024
2025
2026
2027
Thereafter
Total undiscounted minimum lease payments
Less: interest
Present value of lease liabilities
Operating
Leases
Finance Leases
Amounts to Be
Received from
Subleases
Net Payments
$
8,742
$
129
$ (4,416)
$ 4,455
8,880
8,289
7,884
7,873
130
131
133
134
(4,272)
(4,328)
(4,021)
(3,730)
4,738
4,092
3,996
4,277
235,940
4,516
(65,320)
175,136 (1)
$
277,608
(176,016)
$
101,592
$
$
5,173
$ (86,087)
$ 196,694
(3,235)
1,938
(1) Reflects certain ground leases, in which we are the lessee, that have longer initial fixed terms than our existing sublease to our tenants. However,
we would expect to either renew the related sublease, enter into a lease with a new tenant, or early terminate the ground lease to reduce or avoid any
significant impact from such ground leases.
68
MEDICAL PROPERTIES TRUST, INC.
Supplemental balance sheet information is as follows (in thousands, except lease terms and discount rate):
December 31,
2022
2021
Right of use assets:
Operating leases - real estate
Finance leases - real estate
Total real estate right of use assets
Operating leases - corporate
Total right of use assets
Lease liabilities:
Operating leases
Financing leases
Total lease liabilities
Weighted-average remaining lease term:
Operating leases
Finance leases
Weighted-average discount rate:
Operating leases
Finance leases
BALANCE SHEET CLASSIFICATION
Land
Land
Other assets
Obligations to tenants and other lease liabilities
Obligations to tenants and other lease liabilities
$
$
$
$
$
$
$
$
$
$
63,553
1,734
65,287
26,225
91,512
101,592
1,938
103,530
33.2
33.9
6.1%
6.6%
68,616
1,785
70,401
7,458
77,859
85,217
1,937
87,154
40.6
34.9
6.4%
6.6%
The following is supplemental cash flow information (in thousands):
For the Years Ended December 31,
2022
2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases
Operating cash flows used for finance leases
Non-cash activities - Right-of-use assets obtained in exchange for lease obligations:
$
7,169
$
128
7,330
126
Operating leases
23,066
1,120
2022 ANNUAL REPORT
69
12. Other Assets
The following is a summary of our other assets on our consolidated balance sheets (in thousands):
As of December 31,
Debt issue costs, net (1)
Other corporate assets
Prepaids and other assets
Total other assets
(1) Relates to our revolving credit facility
2022
2021
$ 12,036
$ 5,488
256,438
231,731
304,516
96,261
$ 572,990
$ 333,480
Other corporate assets include land and land improvements associated with our corporate offices, furniture and fixtures, equipment,
corporate vehicles, aircraft, enterprise and other software, deposits, and right-of-use assets associated with corporate leases. Included in
prepaids and other assets is prepaid insurance, prepaid taxes, deferred income tax assets (net of valuation allowances, if any), non-tenant
receivables, derivative assets, and lease inducements made to tenants, among other items.
Prepaids and other assets are higher in 2022 due to an approximate $80 million increase in derivative assets (associated with our interest rate
swaps) and recovery receivables associated with flood damage of our Norwood facility, among other things.
13. Subsequent Events
On February 7, 2023, a subsidiary of Lifepoint acquired a majority interest in Springstone (the “Lifepoint Transaction”) based on an
enterprise value of $250 million. We received approximately $205 million in full satisfaction of our initial acquisition loan to Springstone,
including accrued interest. We also retained our minority equity interest in the operations of Springstone and will continue to own and lease
Springstone’s behavioral hospitals. As part of the Lifepoint Transaction, Lifepoint agreed to extend its current lease with us on eight existing
general acute care hospitals by five years to 2041.
On February 15, 2023, we agreed to lease five general acute care facilities located in Utah currently leased to Steward to Catholic Health
Initiatives Colorado (“CHIC”), a wholly owned subsidiary of CommonSpirit Health, subsequent to CHIC’s pending acquisition of the Utah
hospital business currently operated by Steward. Centura Health will manage the facilities for CHIC. The consummation of this transaction,
which is subject to regulatory approval, is expected in 2023. The initial 15 year lease with CHIC for these Utah assets (approximately 5.5% of
our total assets at December 31, 2022) will generate an initial cash yield of 7.8%, bump annually by 3%, and include repurchase options at
the greater of fair value or our gross investment.
70
MEDICAL PROPERTIES TRUST, INC.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures.
Medical Properties Trust, Inc. maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange
Act) designed to provide reasonable assurance that information required to be disclosed in its Exchange Act reports 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 its management, including its Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal
financial officer), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls
and procedures, we recognize that no controls and procedures, no matter how well designed and operated, can provide absolute assurance
of achieving the desired control objectives. As required by Rule 13a-15(b) under the Exchange Act, the management of Medical Properties
Trust, Inc., with the participation of its Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of
our disclosure controls and procedures. Based on the foregoing, the Chief Executive Officer and Chief Financial Officer concluded that these
disclosure controls and procedures are effective as of the end of the period covered by this report.
Management’s Report on Internal Control over Financial Reporting.
The management of Medical Properties Trust, Inc. is responsible for establishing and maintaining adequate internal control over financial
reporting for Medical Properties Trust, Inc. (as such term is defined in Rule 13a-15(f) of the Exchange Act). Internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
Medical Properties Trust, Inc.’s financial statements for external reporting purposes in accordance with GAAP.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.
Management has undertaken an assessment of the effectiveness of the internal control over financial reporting for Medical Properties
Trust, Inc. as of December 31, 2022 based upon the framework established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has concluded that, as of
December 31, 2022, the internal control over financial reporting for Medical Properties Trust, Inc. was effective.
The effectiveness of the internal control over financial reporting for Medical Properties Trust, Inc. as of December 31, 2022 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in this Annual Report.
Changes in Internal Controls over Financial Reporting.
There has been no change in the internal control over financial reporting for Medical Properties Trust, Inc. during its most recent fiscal
quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
2022 ANNUAL REPORT
71
Performance Graph
The following graph provides comparison of cumulative total stockholder return for the period from December 31, 2017 through December
31, 2022, among us, the S&P 500 Index, MSCI U.S. REIT Index, and Dow Jones U.S. Real Estate Health Care Index. The stock performance
graph assumes an investment of $100 in us and the three indices, and the reinvestment of dividends. The historical information below is not
indicative of future performance.
250
200
150
100
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
12/31/22
Medical Properties
Trust, Inc.
S&P 500 Index
MSCI U.S. REIT
Index
Dow Jones U. S. Real
Estate Health Care Index
Period Ending
INDEX
Medical Properties Trust, Inc.
S&P 500 Index
MSCI U.S. REIT Index
Dow Jones U.S. Real Estate Health Care Index
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
12/31/22
100.00
100.00
100.00
100.00
125.03
95.62
95.43
107.51
173.20
125.72
120.09
130.61
188.88
148.85
110.99
117.81
215.82
191.58
158.79
136.94
110.06
156.88
119.87
107.01
72
MEDICAL PROPERTIES TRUST, INC.
CORPORATE &
SHAREHOLDER INFORMATION
OFFICERS
Edward K. Aldag, Jr.
Chairman, President and
Chief Executive Officer
R. Steven Hamner
Executive Vice President
and Chief Financial Officer
Emmett E. McLean
Executive Vice President,
Chief Operating Officer and Secretary
J. Kevin Hanna
Senior Vice President, Controller
and Chief Accounting Officer
Rosa H. Hooper
Senior Vice President of Operations
and Assistant Secretary
Charles R. Lambert
Vice President, Treasurer and
Managing Director of Capital Markets
Larry H. Portal
Senior Vice President, Senior Advisor
to the CEO
R. Lucas Savage
Vice President, Head of Global
Acquisitions
DIRECTORS
Edward K. Aldag, Jr.
Chairman, President and
Chief Executive Officer
G. Steven Dawson
Private Investor
R. Steven Hamner
Executive Vice President
and Chief Financial Officer
Caterina A. Mozingo, CPA, PFS
Shareholder, Taxation at Aldridge,
Borden & Company, PC
Emily W. Murphy
Former Administrator, U.S. General
Services Administration
Elizabeth N. Pitman, JD, CHPC
Partner at Holland & Knight, LLP
D. Paul Sparks, Jr.
Retired Senior Vice President
Energen Corporation
Michael G. Stewart
Private Investor
C. Reynolds Thompson III
Chairman and Chief Investment
Officer of Select Strategies Realty
LEGAL COUNSEL
Baker, Donelson, Bearman,
Caldwell & Berkowitz, PC
Birmingham, AL
Goodwin Procter, LLP
New York, NY
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
Birmingham, AL
ANNUAL MEETING
The Annual Meeting of Shareholders
of Medical Properties Trust, Inc., is
scheduled for May 25, 2023, at 10:30
a.m. CDT at the UAB Collat School of
Business, 710 13th St. S. Birmingham,
AL 35233.
CERTIFICATIONS
Medical Properties Trust, Inc.’s Chief
Executive Officer and Chief Financial
Officer have filed their certifications
required by the SEC regarding the
quality of the company’s public
disclosure (these are included in the
2022 Annual Report on Form 10-K
filed with the Securities and Exchange
Commission). Further, the company’s
Chief Executive Officer has certified to
the NYSE that he is not aware of any
violation by Medical Properties Trust,
Inc., of NYSE corporate governance
listing standards, as required by
Section 303A.12(a) of the NYSE listing
standards.
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American Stock Transfer & Trust
Company, LLC
6201 15th Avenue,
Brooklyn, NY 11219
800.937.5449
help@astfinancial.com
www.astfinancial.com
TTY: (Teletypewriter for the
hearing impaired) 718.921.8386
or 866.703.9077
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Medical Properties Trust, Inc.
1000 Urban Center Drive,
Suite 501
Birmingham, AL 35242
Main: 205.969.3755
Fax: 205.969.3756
www.medicalpropertiestrust.com
The MPT Annual Report on
Form 10-K for the year ended
December 31, 2022, has been
filed with the Securities and
Exchange Commission and may
be obtained without charge
by any shareholder (including
beneficial owners) upon written
request to Investor Relations,
Medical Properties Trust, Inc.,
1000 Urban Center Drive, Suite
501, Birmingham, AL 35242.
2022 ANNUAL REPORT
73
1000 Urban Center Drive, Suite 501
Birmingham, Alabama 35242
NYSE: MPW