MEDICAL PROPERTIES TRUST INC
For the period ended Dec 31, 2023. Filed Feb 29, 2024.
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FY2023 · Filed Feb 29, 2024
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Item 8. Financial Statements and Supplementary Data
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, 2023 and 2022, and the related consolidated statements of net income, of comprehensive (loss) income, of equity and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes and financial statement schedules listed in the index appearing under Item 15(a) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 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, 2023, 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 appearing under Item 9A. 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 matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate 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 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 matters below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Valuation of Steward’s Business – Impairment of Non-Real Estate Investments
As described in Notes 2, 3 and 10 to the consolidated financial statements, investments in entities in which the Company does not control nor has the ability to significantly influence and for which there is no readily determinable fair value (such as the investment in affiliates of Steward Health Care System LLC (“Steward”)) are accounted for at cost, less any impairment. The Company’s non-real estate investments in Steward include a 9.9% equity interest, approximately $212 million in working capital loans, an approximately $362 million loan, and a $219 million loan to the international joint venture which is collateralized by the equity of Steward. Management evaluates the 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. Due to the operational and liquidity challenges that Steward is facing, management assessed recovery of these investments by performing a valuation of Steward’s business at December 31, 2023. The valuation was performed with assistance from a third-party, independent valuation firm, using a market valuation approach including the selected revenue multiple range in reference to comparable transactions. Management compared the carrying value of the Company’s 9.9% equity interest to a 9.9% share of the fair value of Steward’s equity, which resulted in an impairment charge of $90 million. The Company’s equity investment in Steward was $36 million as of December 31, 2023. The value of the equity of Steward was sufficient to support the recovery on the loans to Steward and the international joint venture.
The principal considerations for our determination that performing procedures relating to the valuation of Steward’s business and the impairment of non-real estate investments is a critical audit matter are (i) the significant judgement by management when developing the fair value estimate of Steward’s business; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumption related to the selected revenue multiple range; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
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 evaluation of impairment indicators and controls over the methodologies, inputs and assumptions utilized in the valuation of Steward’s business. These procedures also included, among others (i) testing management’s process for developing the fair value estimate of Steward’s business; (ii) evaluating the appropriateness of the market valuation approach used by management; (iii) testing the completeness and accuracy of the underlying data used in the market valuation approach; and (iv) evaluating the reasonableness of the significant assumption used by management related to the selected revenue multiple range. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the market valuation approach and (ii) the reasonableness of the selected revenue multiple range assumption.
Equity Method Investment – PHP Holdings
As described in Notes 3 and 10 to the consolidated financial statements, on May 23, 2023, the Company restructured its investment in Prospect Medical Holdings, Inc. to obtain a non-controlling ownership interest in PHP Holdings of approximately $654 million, consisting of a $68 million equity investment and a $586 million loan convertible into equity of PHP Holdings. In regard to PHP Holdings, the Company has elected to account for its investment (both the equity investment and convertible loan) using the fair value option method. Each quarter, the Company marks the investment to fair value. The Company’s equity investment in PHP Holdings is recorded at fair value by using a discounted cash flow model, which requires significant estimates of the investee, such as projected revenue and expenses and appropriate consideration of the underlying risk profile of the forecasted assumptions associated with the investee (collectively, “forecasts of the investee”). For the discounted cash flow models, the unobservable inputs include a discount rate and an adjustment for marketability discount. The fair value of the investment in PHP Holdings was $700 million as of December 31, 2023.
The principal considerations for our determination that performing procedures relating to the equity method investment in PHP Holdings is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates of the investment in PHP Holdings on the acquisition date and December 31, 2023; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to forecasts of the investee, discount rates, and the adjustments for marketability discount; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
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 valuation of equity method investments. These procedures also included, among others, (i) testing management’s process for developing the fair value estimates of the investment in PHP Holdings; (ii) evaluating the appropriateness of the discounted cash flow models used by management at the valuation dates; (iii) testing the completeness and accuracy of the underlying data used in the discounted cash flow models; and (iv) evaluating the reasonableness of the significant assumptions used by management related to forecasts of the investee, discount rates and the adjustments for marketability discount. Evaluating management's assumption related to forecasts of the investee involved considering (i) current and past performance of the investee; (ii) the consistency with external market and industry data; (iii) whether the assumption was consistent with evidence obtained in other areas of the audit; and (iv) the movement in the long-term growth rate underpinning the assumption from the acquisition date to December 31, 2023. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the discounted cash flow models; (ii) the long-term growth rate underpinning the forecasts of the investee assumption as of the acquisition date; and (iii) the discount rates and the adjustments for marketability discount assumptions.
/s/PricewaterhouseCoopers LLP
Birmingham, Alabama
February 29, 2024
We have served as the Company’s auditor since 2008.
Report of Independent Registered Public Accounting Firm
To the Partners of MPT Operating Partnership, L.P.:
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of MPT Operating Partnership, L.P. and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of net income, of comprehensive (loss) income, of capital and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes and financial statement schedules listed in the index appearing under Item 15(a) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 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, 2023, 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 appearing under Item 9A. 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 matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate 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 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 matters below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Valuation of Steward’s Business – Impairment of Non-Real Estate Investments
As described in Notes 2, 3 and 10 to the consolidated financial statements, investments in entities in which the Company does not control nor has the ability to significantly influence and for which there is no readily determinable fair value (such as the investment in affiliates of Steward Health Care System LLC (“Steward”)) are accounted for at cost, less any impairment. The Company’s non-real estate investments in Steward include a 9.9% equity interest, approximately $212 million in working capital loans, an approximately $362 million loan, and a $219 million loan to the international joint venture which is collateralized by the equity of Steward. Management evaluates the 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. Due to the operational and liquidity challenges that Steward is facing, management assessed recovery of these investments by performing a valuation of Steward’s business at December 31, 2023. The valuation was performed with assistance from a third-party, independent valuation firm, using a market valuation approach including the selected revenue multiple range in reference to comparable transactions. Management compared the carrying value of the Company’s 9.9% equity interest to a 9.9% share of the fair value of Steward’s equity, which resulted in an impairment charge of $90 million. The Company’s equity investment in Steward was $36 million as of December 31, 2023. The value of the equity of Steward was sufficient to support the recovery on the loans to Steward and the international joint venture.
The principal considerations for our determination that performing procedures relating to the valuation of Steward’s business and the impairment of non-real estate investments is a critical audit matter are (i) the significant judgement by management when developing the fair value estimate of Steward’s business; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumption related to the selected revenue multiple range; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
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 evaluation of impairment indicators and controls over the methodologies, inputs and assumptions utilized in the valuation of Steward’s business. These procedures also included, among others (i) testing management’s process for developing the fair value estimate of Steward’s business; (ii) evaluating the appropriateness of the market valuation approach used by management; (iii) testing the completeness and accuracy of the underlying data used in the market valuation approach; and (iv) evaluating the reasonableness of the significant assumption used by management related to the selected revenue multiple range. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the market valuation approach and (ii) the reasonableness of the selected revenue multiple range assumption.
Equity Method Investment – PHP Holdings
As described in Notes 3 and 10 to the consolidated financial statements, on May 23, 2023, the Company restructured its investment in Prospect Medical Holdings, Inc. to obtain a non-controlling ownership interest in PHP Holdings of approximately $654 million, consisting of a $68 million equity investment and a $586 million loan convertible into equity of PHP Holdings. In regard to PHP Holdings, the Company has elected to account for its investment (both the equity investment and convertible loan) using the fair value option method. Each quarter, the Company marks the investment to fair value. The Company’s equity investment in PHP Holdings is recorded at fair value by using a discounted cash flow model, which requires significant estimates of the investee, such as projected revenue and expenses and appropriate consideration of the underlying risk profile of the forecasted assumptions associated with the investee (collectively, “forecasts of the investee”). For the discounted cash flow models, the unobservable inputs include a discount rate and an adjustment for marketability discount. The fair value of the investment in PHP Holdings was $700 million as of December 31, 2023.
The principal considerations for our determination that performing procedures relating to the equity method investment in PHP Holdings is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates of the investment in PHP Holdings on the acquisition date and December 31, 2023; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to forecasts of the investee, discount rates, and the adjustments for marketability discount; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
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 valuation of equity method investments. These procedures also included, among others, (i) testing management’s process for developing the fair value estimates of the investment in PHP Holdings; (ii) evaluating the appropriateness of the discounted cash flow models used by management at the valuation dates; (iii) testing the completeness and accuracy of the underlying data used in the discounted cash flow models; and (iv) evaluating the reasonableness of the significant assumptions used by management related to forecasts of the investee, discount rates and the adjustments for marketability discount. Evaluating management's assumption related to forecasts of the investee involved considering (i) current and past performance of the investee; (ii) the consistency with external market and industry data; (iii) whether the assumption was consistent with evidence obtained in other areas of the audit; and (iv) the movement in the long-term growth rate underpinning the assumption from the acquisition date to December 31, 2023. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the discounted cash flow models; (ii) the long-term growth rate underpinning the forecasts of the investee assumption as of the acquisition date; and (iii) the discount rates and the adjustments for marketability discount assumptions.
/s/PricewaterhouseCoopers LLP
Birmingham, Alabama
February 29, 2024
We have served as the Company’s auditor since 2008.
Consolidated Balance Sheets
| December 31, | ||
|---|---|---|
| 2023 | 2022 | |
| (Amounts in thousands,except for per share data) | ||
| ASSETS | ||
| Real estate assets | ||
| Land | $1,806,765 | $1,948,216 |
| Buildings and improvements | 10,395,612 | 10,519,728 |
| Intangible lease assets | 1,034,810 | 1,394,471 |
| Investment in financing leases | 1,231,630 | 1,691,323 |
| Mortgage loans | 309,315 | 364,101 |
| Gross investment in real estate assets | 14,778,132 | 15,917,839 |
| Accumulated depreciation | (1,227,619) | (1,008,340) |
| Accumulated amortization | (180,352) | (184,972) |
| Net investment in real estate assets | 13,370,161 | 14,724,527 |
| Cash and cash equivalents | 250,016 | 235,668 |
| Interest and rent receivables | 45,059 | 167,035 |
| Straight-line rent receivables | 635,987 | 787,166 |
| Investments in unconsolidated real estate joint ventures | 1,474,455 | 1,497,903 |
| Investments in unconsolidated operating entities | 1,778,640 | 1,444,872 |
| Other loans | 292,615 | 227,839 |
| Other assets | 457,911 | 572,990 |
| Total Assets | $18,304,844 | $19,658,000 |
| LIABILITIES AND EQUITY | ||
| Liabilities | ||
| Debt, net | $10,064,236 | $10,268,412 |
| Accounts payable and accrued expenses | 412,178 | 621,324 |
| Deferred revenue | 37,962 | 27,727 |
| Obligations to tenants and other lease liabilities | 156,603 | 146,130 |
| Total Liabilities | 10,670,979 | 11,063,593 |
| 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 — 598,991 shares at December 31, 2023 and 597,476 shares at December 31, 2022 | 599 | 597 |
| Additional paid-in capital | 8,560,309 | 8,535,140 |
| Retained (deficit) earnings | (971,809) | 116,285 |
| Accumulated other comprehensive income (loss) | 42,501 | (59,184) |
| Total Medical Properties Trust, Inc. stockholders’ equity | 7,631,600 | 8,592,838 |
| Non-controlling interests | 2,265 | 1,569 |
| Total Equity | 7,633,865 | 8,594,407 |
| Total Liabilities and Equity | $18,304,844 | $19,658,000 |
Consolidated Statem ents of Net Income
| For the Years Ended December 31, | |||
|---|---|---|---|
| 2023 | 2022 | 2021 | |
| (Amounts in thousands,except for per share data) | |||
| Revenues | |||
| Rent billed | $803,375 | $968,874 | $931,942 |
| Straight-line rent | (127,894) | 204,159 | 241,433 |
| Income from financing leases | 127,141 | 203,580 | 202,599 |
| Interest and other income | 69,177 | 166,238 | 168,695 |
| Total revenues | 871,799 | 1,542,851 | 1,544,669 |
| Expenses | |||
| Interest | 411,171 | 359,036 | 367,393 |
| Real estate depreciation and amortization | 603,360 | 332,977 | 321,249 |
| Property-related | 41,567 | 45,697 | 39,098 |
| General and administrative | 145,588 | 160,494 | 145,638 |
| Total expenses | 1,201,686 | 898,204 | 873,378 |
| Other (expense) income | |||
| (Loss) gain on sale of real estate | (1,815) | 536,755 | 52,471 |
| Real estate and other impairment charges, net | (376,907) | (268,375) | (39,411) |
| Earnings from equity interests | 13,967 | 40,800 | 28,488 |
| Debt refinancing and unutilized financing benefit (costs) | 285 | (9,452) | (27,650) |
| Other (including fair value adjustments on securities) | 7,586 | 15,344 | 45,699 |
| Total other (expense) income | (356,884) | 315,072 | 59,597 |
| (Loss) income before income tax | (686,771) | 959,719 | 730,888 |
| Income tax benefit (expense) | 130,679 | (55,900) | (73,948) |
| Net (loss) income | (556,092) | 903,819 | 656,940 |
| Net income attributable to non-controlling interests | (384) | (1,222) | (919) |
| Net (loss) income attributable to MPT common stockholders | $(556,476) | $902,597 | $656,021 |
| Earnings per common share — basic and diluted | |||
| Net (loss) income attributable to MPT common stockholders | $(0.93) | $1.50 | $1.11 |
| Weighted average shares outstanding — basic | 598,518 | 598,634 | 588,817 |
| Weighted average shares outstanding — diluted | 598,518 | 598,837 | 590,139 |
Consolidated Statementsof Comprehensive (Loss) Income
| For the Years Ended December 31, | |||
|---|---|---|---|
| (In thousands) | 2023 | 2022 | 2021 |
| Net (loss) income | $(556,092) | $903,819 | $656,940 |
| Other comprehensive (loss) income: | |||
| Unrealized (loss) gain on interest rate swaps, net of tax | (34,932) | 100,550 | 52,288 |
| Reclassification of interest rate swap gain from AOCI, net of tax | (28,553) | — | — |
| Foreign currency translation gain (loss) | 162,680 | (123,007) | (37,691) |
| Reclassification of foreign currency translation loss from AOCI | 2,490 | — | — |
| Total comprehensive (loss) income | (454,407) | 881,362 | 671,537 |
| Comprehensive income attributable to non-controlling interests | (384) | (1,222) | (919) |
| Comprehensive (loss) income attributable to MPT common stockholders | $(454,791) | $880,140 | $670,618 |
Consolidated Stat ements of Equity
For the Years Ended December 31, 2023, 2022 and 2021
| Preferred · Common | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except per share amounts) | Shares | ParValue | Shares | ParValue | AdditionalPaid-inCapital | Retained (Deficit)Earnings | AccumulatedOtherComprehensiveIncome (Loss) | Non-ControllingInterests | TotalEquity |
| Balance at December 31, 2020 | — | $— | 541,353 | $541 | $7,460,726 | $(71,411) | $(51,324) | $5,325 | $7,343,857 |
| Net income | — | — | — | — | — | 656,021 | — | 919 | 656,940 |
| Unrealized gain on interest rate swaps, net of tax | — | — | — | — | — | — | 52,288 | — | 52,288 |
| Foreign currency translation loss | — | — | — | — | — | — | (37,691) | — | (37,691) |
| Stock vesting and amortization of stock-based compensation | — | — | 2,332 | 3 | 52,107 | — | — | — | 52,110 |
| Distributions to non-controlling interests | — | — | — | — | — | — | — | (761) | (761) |
| Proceeds from offering (net of offering costs) | — | — | 53,063 | 53 | 1,051,176 | — | — | — | 1,051,229 |
| Dividends declared ($1.12 per common share) | — | — | — | — | — | (672,301) | — | — | (672,301) |
| Balance at December 31, 2021 | — | $— | 596,748 | $597 | $8,564,009 | $(87,691) | $(36,727) | $5,483 | $8,445,671 |
| Net income | — | — | — | — | — | 902,597 | — | 1,222 | 903,819 |
| Unrealized gain on interest rate swaps, net of tax | — | — | — | — | — | — | 100,550 | — | 100,550 |
| Foreign currency translation loss | — | — | — | — | — | — | (123,007) | — | (123,007) |
| Stock vesting and amortization of stock-based compensation | — | — | 3,675 | 3 | 49,418 | — | — | — | 49,421 |
| Stock vesting - satisfaction of tax withholdings | — | — | (1,302) | (1) | (29,921) | — | — | — | (29,922) |
| Repurchase of common stock | — | — | (1,645) | (2) | (17,938) | — | — | — | (17,940) |
| Acquisition of non-controlling interest | — | — | — | — | (30,428) | — | — | (4,594) | (35,022) |
| Issuance of non-controlling interests | — | — | — | — | — | — | — | 1,054 | 1,054 |
| Distributions to non-controlling interests | — | — | — | — | — | — | — | (1,596) | (1,596) |
| Dividends declared ($1.16 per common share) | — | — | — | — | — | (698,621) | — | — | (698,621) |
| Balance at December 31, 2022 | — | $— | 597,476 | $597 | $8,535,140 | $116,285 | $(59,184) | $1,569 | $8,594,407 |
| Net (loss) income | — | — | — | — | — | (556,476) | — | 384 | (556,092) |
| Unrealized loss on interest rate swaps, net of tax | — | — | — | — | — | — | (34,932) | — | (34,932) |
| Reclassification of interest rate swap gain to earnings, net of tax | — | — | — | — | — | — | (28,553) | — | (28,553) |
| Foreign currency translation gain | — | — | — | — | — | — | 162,680 | — | 162,680 |
| Reclassification of foreign currency translation loss to earnings | — | — | — | — | — | — | 2,490 | — | 2,490 |
| Stock vesting and amortization of stock-based compensation | — | — | 2,457 | 2 | 33,248 | — | — | — | 33,250 |
| Stock vesting - satisfaction of tax withholdings | — | — | (942) | — | (8,079) | — | — | — | (8,079) |
| Issuance of non-controlling interests | — | — | — | — | — | — | — | 1,375 | 1,375 |
| Distributions to non-controlling interests | — | — | — | — | — | — | — | (1,063) | (1,063) |
| Dividends declared ($0.88 per common share) | — | — | — | — | — | (531,618) | — | — | (531,618) |
| Balance at December 31, 2023 | — | $— | 598,991 | $599 | $8,560,309 | $(971,809) | $42,501 | $2,265 | $7,633,865 |
Consolidated Statem ents of Cash Flows
| For the Years Ended December 31, | |||
|---|---|---|---|
| 2023 | 2022 | 2021 | |
| (Amounts in thousands) | |||
| Operating activities | |||
| Net (loss) income | $(556,092) | $903,819 | $656,940 |
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||
| Depreciation and amortization | 616,127 | 345,577 | 333,781 |
| Amortization of deferred financing costs and debt discount | 15,775 | 17,045 | 16,856 |
| Straight-line rent revenue and other | (233,703) | (282,504) | (288,717) |
| Stock-based compensation | 33,250 | 49,421 | 52,110 |
| Loss (gain) on sale of real estate | 1,815 | (536,755) | (52,471) |
| Real estate and other impairment charges, net | 376,907 | 268,375 | 39,411 |
| Straight-line rent and other write-off | 649,911 | 34,605 | 7,213 |
| Debt refinancing and unutilized financing (benefit) costs | (285) | 9,452 | 27,650 |
| Gain on sale of equity investments | — | — | (40,945) |
| Tax rate changes and other | (167,332) | 10,697 | 34,796 |
| Non-cash revenue from debt and equity securities received | (81,706) | — | — |
| Other adjustments | (23,870) | 6,108 | 11,913 |
| Changes in: | |||
| Interest and rent receivables | (141,729) | (116,420) | (23,867) |
| Other assets | 13,750 | (4,029) | (4,375) |
| Accounts payable and accrued expenses | (4,599) | 33,576 | 54,058 |
| Deferred revenue | 7,567 | 43 | (12,697) |
| Net cash provided by operating activities | 505,786 | 739,010 | 811,656 |
| Investing activities | |||
| Cash paid for acquisitions and other related investments | (235,187) | (1,332,962) | (5,350,239) |
| Net proceeds from sale of real estate | 897,500 | 2,185,574 | 246,468 |
| Principal received on loans receivable | 501,630 | 53,322 | 1,595,708 |
| Investment in loans receivable | (250,223) | (207,542) | (58,932) |
| Construction in progress and other | (114,425) | (109,237) | (67,725) |
| Proceeds from sale and return of equity investment | 12,430 | 14,295 | 65,546 |
| Capital additions and other investments, net | (294,167) | (207,394) | (289,239) |
| Net cash provided by (used for) investing activities | 517,558 | 396,056 | (3,858,413) |
| Financing activities | |||
| Proceeds from term debt, net of discount | — | 128,536 | 3,407,535 |
| Payments of term debt | (988,162) | (869,606) | (1,390,994) |
| Revolving credit facilities, net | 567,910 | 203,576 | 559,985 |
| Dividends paid | (615,390) | (698,535) | (643,473) |
| Lease deposits and other obligations to tenants | 10,139 | (5,020) | 17,815 |
| Proceeds from sale of common shares, net of offering costs | — | — | 1,051,229 |
| Repurchase of common stock | — | (17,940) | — |
| Stock vesting - satisfaction of tax withholdings | (8,079) | (29,922) | — |
| Other financing activities, payment of debt refinancing, and deferred financing costs | 13,255 | (53,612) | (54,489) |
| Net cash (used for) provided by financing activities | (1,020,327) | (1,342,523) | 2,947,608 |
| Increase (decrease) in cash, cash equivalents, and restricted cash for the year | 3,017 | (207,457) | (99,149) |
| Effect of exchange rate changes | 11,397 | (12,887) | 4,662 |
| Cash, cash equivalents, and restricted cash at beginning of year | 241,538 | 461,882 | 556,369 |
| Cash, cash equivalents, and restricted cash at end of year | $255,952 | $241,538 | $461,882 |
| Interest paid, including capitalized interest of $14,178 in 2023, $6,454 in 2022, and $3,289 in 2021 | $406,141 | $353,838 | $326,406 |
| Supplemental schedule of non-cash investing activities: | |||
| Debt and equity securities received for certain obligations, real estate, and revenue | $804,520 | $— | $— |
| Certain obligations and receivables satisfied and real estate sold | 722,814 | — | — |
| Supplemental schedule of non-cash financing activities: | |||
| Dividends declared, unpaid | $92,808 | $176,580 | $176,494 |
| Cash, cash equivalents, and restricted cash are comprised of the following: | |||
| Beginning of period: | |||
| Cash and cash equivalents | $235,668 | $459,227 | $549,884 |
| Restricted cash, included in Other assets | 5,870 | 2,655 | 6,485 |
| $241,538 | $461,882 | $556,369 | |
| End of period: | |||
| Cash and cash equivalents | $250,016 | $235,668 | $459,227 |
| Restricted cash, included in Other assets | 5,936 | 5,870 | 2,655 |
| $255,952 | $241,538 | $461,882 | |
Consoli dated Balance Sheets
| December 31, | ||
|---|---|---|
| 2023 | 2022 | |
| (Amounts in thousands,except for per unit data) | ||
| ASSETS | ||
| Real estate assets | ||
| Land | $1,806,765 | $1,948,216 |
| Buildings and improvements | 10,395,612 | 10,519,728 |
| Intangible lease assets | 1,034,810 | 1,394,471 |
| Investment in financing leases | 1,231,630 | 1,691,323 |
| Mortgage loans | 309,315 | 364,101 |
| Gross investment in real estate assets | 14,778,132 | 15,917,839 |
| Accumulated depreciation | (1,227,619) | (1,008,340) |
| Accumulated amortization | (180,352) | (184,972) |
| Net investment in real estate assets | 13,370,161 | 14,724,527 |
| Cash and cash equivalents | 250,016 | 235,668 |
| Interest and rent receivables | 45,059 | 167,035 |
| Straight-line rent receivables | 635,987 | 787,166 |
| Investments in unconsolidated real estate joint ventures | 1,474,455 | 1,497,903 |
| Investments in unconsolidated operating entities | 1,778,640 | 1,444,872 |
| Other loans | 292,615 | 227,839 |
| Other assets | 457,911 | 572,990 |
| Total Assets | $18,304,844 | $19,658,000 |
| LIABILITIES AND CAPITAL | ||
| Liabilities | ||
| Debt, net | $10,064,236 | $10,268,412 |
| Accounts payable and accrued expenses | 318,980 | 444,354 |
| Deferred revenue | 37,962 | 27,727 |
| Obligations to tenants and other lease liabilities | 156,603 | 146,130 |
| Payable due to Medical Properties Trust, Inc. | 92,808 | 176,580 |
| Total Liabilities | 10,670,589 | 11,063,203 |
| Commitments and Contingencies | ||
| Capital | ||
| General partner — issued and outstanding — 5,991 units at December 31, 2023 and 5,976 units at December 31, 2022 | 75,969 | 86,599 |
| Limited Partners — issued and outstanding — 593,000 units at December 31, 2023 and 591,500 units at December 31, 2022 | 7,513,520 | 8,565,813 |
| Accumulated other comprehensive income (loss) | 42,501 | (59,184) |
| Total MPT Operating Partnership, L.P. capital | 7,631,990 | 8,593,228 |
| Non-controlling interests | 2,265 | 1,569 |
| Total Capital | 7,634,255 | 8,594,797 |
| Total Liabilities and Capital | $18,304,844 | $19,658,000 |
Conso lidated Statements of Net Income
| For the Years Ended December 31, | |||
|---|---|---|---|
| 2023 | 2022 | 2021 | |
| (Amounts in thousands,except for per unit data) | |||
| Revenues | |||
| Rent billed | $803,375 | $968,874 | $931,942 |
| Straight-line rent | (127,894) | 204,159 | 241,433 |
| Income from financing leases | 127,141 | 203,580 | 202,599 |
| Interest and other income | 69,177 | 166,238 | 168,695 |
| Total revenues | 871,799 | 1,542,851 | 1,544,669 |
| Expenses | |||
| Interest | 411,171 | 359,036 | 367,393 |
| Real estate depreciation and amortization | 603,360 | 332,977 | 321,249 |
| Property-related | 41,567 | 45,697 | 39,098 |
| General and administrative | 145,588 | 160,494 | 145,638 |
| Total expenses | 1,201,686 | 898,204 | 873,378 |
| Other (expense) income | |||
| (Loss) gain on sale of real estate | (1,815) | 536,755 | 52,471 |
| Real estate and other impairment charges, net | (376,907) | (268,375) | (39,411) |
| Earnings from equity interests | 13,967 | 40,800 | 28,488 |
| Debt refinancing and unutilized financing benefit (costs) | 285 | (9,452) | (27,650) |
| Other (including fair value adjustments on securities) | 7,586 | 15,344 | 45,699 |
| Total other (expense) income | (356,884) | 315,072 | 59,597 |
| (Loss) income before income tax | (686,771) | 959,719 | 730,888 |
| Income tax benefit (expense) | 130,679 | (55,900) | (73,948) |
| Net (loss) income | (556,092) | 903,819 | 656,940 |
| Net income attributable to non-controlling interests | (384) | (1,222) | (919) |
| Net (loss) income attributable to MPT Operating Partnership partners | $(556,476) | $902,597 | $656,021 |
| Earnings per unit — basic and diluted | |||
| Net (loss) income attributable to MPT Operating Partnership partners | $(0.93) | $1.50 | $1.11 |
| Weighted average units outstanding — basic | 598,518 | 598,634 | 588,817 |
| Weighted average units outstanding — diluted | 598,518 | 598,837 | 590,139 |
Consolidated Statementsof Comprehensive (Loss) Income
| For the Years Ended December 31, | |||
|---|---|---|---|
| (In thousands) | 2023 | 2022 | 2021 |
| Net (loss) income | $(556,092) | $903,819 | $656,940 |
| Other comprehensive (loss) income: | |||
| Unrealized (loss) gain on interest rate swaps, net of tax | (34,932) | 100,550 | 52,288 |
| Reclassification of interest rate swap gain from AOCI, net of tax | (28,553) | — | — |
| Foreign currency translation gain (loss) | 162,680 | (123,007) | (37,691) |
| Reclassification of foreign currency translation loss from AOCI | 2,490 | — | — |
| Total comprehensive (loss) income | (454,407) | 881,362 | 671,537 |
| Comprehensive income attributable to non-controlling interests | (384) | (1,222) | (919) |
| Comprehensive (loss) income attributable to MPT Operating Partnership partners | $(454,791) | $880,140 | $670,618 |
Consolidated Stat ements of Capital
For the Years Ended December 31, 2023, 2022 and 2021
| General · Limited · Accumulated | |||||||
|---|---|---|---|---|---|---|---|
| Partner · Partners · Other · Non- | |||||||
| (In thousands, except per unit amounts) | Units | UnitValue | Units | UnitValue | ComprehensiveIncome (Loss) | ControllingInterests | TotalCapital |
| Balance at December 31, 2020 | 5,414 | $73,977 | 535,939 | $7,316,269 | $(51,324) | $5,325 | $7,344,247 |
| Net income | — | 6,560 | — | 649,461 | — | 919 | 656,940 |
| Unrealized gain on interest rate swaps, net of tax | — | — | — | — | 52,288 | — | 52,288 |
| Foreign currency translation loss | — | — | — | — | (37,691) | — | (37,691) |
| Unit vesting and amortization of unit-based compensation | 23 | 521 | 2,309 | 51,589 | — | — | 52,110 |
| Distributions to non-controlling interests | — | — | — | — | — | (761) | (761) |
| Proceeds from offering (net of offering costs) | 531 | 10,512 | 52,532 | 1,040,717 | — | — | 1,051,229 |
| Distributions declared ($1.12 per unit) | — | (6,723) | — | (665,578) | — | — | (672,301) |
| Balance at December 31, 2021 | 5,968 | $84,847 | 590,780 | $8,392,458 | $(36,727) | $5,483 | $8,446,061 |
| Net income | — | 9,026 | — | 893,571 | — | 1,222 | 903,819 |
| Unrealized gain on interest rate swaps, net of tax | — | — | — | — | 100,550 | — | 100,550 |
| Foreign currency translation loss | — | — | — | — | (123,007) | — | (123,007) |
| Unit vesting and amortization of unit-based compensation | 37 | 494 | 3,638 | 48,927 | — | — | 49,421 |
| Unit vesting - satisfaction of tax withholdings | (13) | (299) | (1,289) | (29,623) | — | — | (29,922) |
| Repurchase of units | (16) | (179) | (1,629) | (17,761) | — | — | (17,940) |
| Acquisition of non-controlling interest | — | (304) | — | (30,124) | — | (4,594) | (35,022) |
| Issuance of non-controlling interests | — | — | — | — | — | 1,054 | 1,054 |
| Distributions to non-controlling interests | — | — | — | — | — | (1,596) | (1,596) |
| Distributions declared ($1.16 per unit) | — | (6,986) | — | (691,635) | — | — | (698,621) |
| Balance at December 31, 2022 | 5,976 | $86,599 | 591,500 | $8,565,813 | $(59,184) | $1,569 | $8,594,797 |
| Net (loss) income | — | (5,564) | — | (550,912) | — | 384 | (556,092) |
| Unrealized loss on interest rate swaps, net of tax | — | — | — | — | (34,932) | — | (34,932) |
| Reclassification of interest rate swap gain to earnings, net of tax | — | — | — | — | (28,553) | — | (28,553) |
| Foreign currency translation gain | — | — | — | — | 162,680 | — | 162,680 |
| Reclassification of foreign currency translation loss to earnings | — | — | — | — | 2,490 | — | 2,490 |
| Unit vesting and amortization of unit-based compensation | 25 | 332 | 2,432 | 32,918 | — | — | 33,250 |
| Unit vesting - satisfaction of tax withholdings | (10) | (81) | (932) | (7,998) | — | — | (8,079) |
| Issuance of non-controlling interests | — | — | — | — | — | 1,375 | 1,375 |
| Distributions to non-controlling interests | — | — | — | — | — | (1,063) | (1,063) |
| Distributions declared ($0.88 per unit) | — | (5,317) | — | (526,301) | — | — | (531,618) |
| Balance at December 31, 2023 | 5,991 | $75,969 | 593,000 | $7,513,520 | $42,501 | $2,265 | $7,634,255 |
Consolidated Statem ents of Cash Flows
| For the Years Ended December 31, | |||
|---|---|---|---|
| 2023 | 2022 | 2021 | |
| (Amounts in thousands) | |||
| Operating activities | |||
| Net (loss) income | $(556,092) | $903,819 | $656,940 |
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||
| Depreciation and amortization | 616,127 | 345,577 | 333,781 |
| Amortization of deferred financing costs and debt discount | 15,775 | 17,045 | 16,856 |
| Straight-line rent revenue and other | (233,703) | (282,504) | (288,717) |
| Unit-based compensation | 33,250 | 49,421 | 52,110 |
| (Loss) gain on sale of real estate | 1,815 | (536,755) | (52,471) |
| Real estate and other impairment charges, net | 376,907 | 268,375 | 39,411 |
| Straight-line rent and other write-off | 649,911 | 34,605 | 7,213 |
| Debt refinancing and unutilized financing (benefit) costs | (285) | 9,452 | 27,650 |
| Gain on sale of equity investments | — | — | (40,945) |
| Tax rate changes and other | (167,332) | 10,697 | 34,796 |
| Non-cash revenue from debt and equity securities received | (81,706) | — | — |
| Other adjustments | (23,870) | 6,108 | 11,913 |
| Changes in: | |||
| Interest and rent receivables | (141,729) | (116,420) | (23,867) |
| Other assets | 13,750 | (4,029) | (4,375) |
| Accounts payable and accrued expenses | (4,599) | 33,576 | 54,058 |
| Deferred revenue | 7,567 | 43 | (12,697) |
| Net cash provided by operating activities | 505,786 | 739,010 | 811,656 |
| Investing activities | |||
| Cash paid for acquisitions and other related investments | (235,187) | (1,332,962) | (5,350,239) |
| Net proceeds from sale of real estate | 897,500 | 2,185,574 | 246,468 |
| Principal received on loans receivable | 501,630 | 53,322 | 1,595,708 |
| Investment in loans receivable | (250,223) | (207,542) | (58,932) |
| Construction in progress and other | (114,425) | (109,237) | (67,725) |
| Proceeds from sale and return of equity investment | 12,430 | 14,295 | 65,546 |
| Capital additions and other investments, net | (294,167) | (207,394) | (289,239) |
| Net cash provided by (used for) investing activities | 517,558 | 396,056 | (3,858,413) |
| Financing activities | |||
| Proceeds from term debt, net of discount | — | 128,536 | 3,407,535 |
| Payments of term debt | (988,162) | (869,606) | (1,390,994) |
| Revolving credit facilities, net | 567,910 | 203,576 | 559,985 |
| Distributions paid | (615,390) | (698,535) | (643,473) |
| Lease deposits and other obligations to tenants | 10,139 | (5,020) | 17,815 |
| Proceeds from sale of units, net of offering costs | — | — | 1,051,229 |
| Repurchase of units | — | (17,940) | — |
| Unit vesting - satisfaction of tax withholdings | (8,079) | (29,922) | — |
| Other financing activities, payment of debt refinancing, and deferred financing costs | 13,255 | (53,612) | (54,489) |
| Net cash (used for) provided by financing activities | (1,020,327) | (1,342,523) | 2,947,608 |
| Increase (decrease) in cash, cash equivalents, and restricted cash for the year | 3,017 | (207,457) | (99,149) |
| Effect of exchange rate changes | 11,397 | (12,887) | 4,662 |
| Cash, cash equivalents, and restricted cash at beginning of year | 241,538 | 461,882 | 556,369 |
| Cash, cash equivalents and restricted cash at end of year | $255,952 | $241,538 | $461,882 |
| Interest paid, including capitalized interest of $14,178 in 2023, $6,454 in 2022, and $3,289 in 2021 | $406,141 | $353,838 | $326,406 |
| Supplemental schedule of non-cash investing activities: | |||
| Debt and equity securities received for certain obligations, real estate, and revenue | $804,520 | $— | $— |
| Certain obligations and receivables satisfied and real estate sold | 722,814 | — | — |
| Supplemental schedule of non-cash financing activities: | |||
| Dividends declared, unpaid | $92,808 | $176,580 | $176,494 |
| Cash, cash equivalents, and restricted cash are comprised of the following: | |||
| Beginning of period: | |||
| Cash and cash equivalents | $235,668 | $459,227 | $549,884 |
| Restricted cash, included in Other assets | 5,870 | 2,655 | 6,485 |
| $241,538 | $461,882 | $556,369 | |
| End of period: | |||
| Cash and cash equivalents | $250,016 | $235,668 | $459,227 |
| Restricted cash, included in Other assets | 5,936 | 5,870 | 2,655 |
| $255,952 | $241,538 | $461,882 | |
Notes To Consolidated Financial Statements
- Orga
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.