MEDICAL PROPERTIES TRUST INC

Previous wording

This Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or future performance, achievements or transactions or events to be materially different from those expressed or implied by such forward-looking statements, including, but not limited to, the risks described in our Annual Report on Form 10-K and as updated in our quarterly reports on Form 10-Q for future periods, and current reports on Form 8-K as we file them with the SEC under the Exchange Act. Such factors include, among others, the following:

Current wording

This Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements can generally be identified by the use of forward-looking words such as "may", "will", "would", "could", "expect", "intend", "plan", "estimate", "target", "anticipate", "believe", "objectives", "outlook", "guidance", or other similar words, and include statements regarding our strategies, objectives, asset sales and other liquidity transactions (including the use of proceeds thereof), expected returns on investments and financial performance, expected trends and performance across our various markets, and expected outcomes from Steward's restructuring process. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or future performance, achievements or transactions or events to be materially different from those expressed or implied by such forward-looking statements, including, but not limited to, the risks described in our Annual Report on Form 10-K and as updated in our quarterly reports on Form 10-Q for future periods, and current reports on Form 8-K as we file them with the SEC under the Exchange Act. Such factors include, among others, the following:

Previous wording

the risk that Steward's bankruptcy prevents us from being able to recover deferred rent or our other investments in Steward and its affiliates at full value, within a reasonable time period or at all;

Current wording

the risk that Steward's bankruptcy prevents us from being able to recover deferred rent or our other investments in Steward and its affiliates at full value, within a reasonable time period or at all, and the risk that we may not be able to find replacement operators that we deem adequate for the facilities currently leased to Steward on our desired timeline;

Previous wording

Refer to our 2023 Annual Report on Form 10-K for a discussion of our critical accounting policies, which include investments in real estate, purchase price allocation, loans, credit losses, losses from rent and interest receivables, investments accounted for under the fair value option election, and our accounting policy on consolidation. During the three months ended March 31, 2024, there were no material changes to these policies.

Current wording

Refer to our 2023 Annual Report on Form 10-K for a discussion of our critical accounting policies, which include investments in real estate, purchase price allocation, loans, credit losses, losses from rent and interest receivables, investments accounted for under the fair value option election, and our accounting policy on consolidation. During the six months ended June 30, 2024, there were no material changes to these policies.

Previous wording

At March 31, 2024, our portfolio consisted of 436 properties leased or loaned to 53 operators, of which three are under development. We manage our business as a single business segment.

Current wording

At June 30, 2024, our portfolio consisted of 435 properties leased or loaned to 53 operators, of which three are under development. We manage our business as a single business segment.

Previous wording

At March 31, 2024, affiliates of Steward lease 28 of our facilities across five different markets under a master lease totaling approximately $2.4 billion, along with eight properties pursuant to a separate master lease agreement that are part of the Massachusetts partnership with Macquarie Asset Management ("Macquarie") (our investment in this partnership approximates $406 million). In addition to the master leases, we hold working capital and other secured loans totaling approximately $346 million, which the working capital loan consists of multiple tranches with varying terms. We also have a $362 million loan due from affiliates of Steward that was made in 2021, proceeds of which were used to redeem a similarly sized convertible loan held by Steward's former private equity sponsor. Finally, we hold a 9.9% equity investment in Steward.

Current wording

Through June 30, 2024, affiliates of Steward leased 28 of our facilities across five different markets under a master lease, along with eight properties pursuant to a separate master lease agreement that are part of the Massachusetts partnership with Macquarie Asset Management ("Macquarie"). In addition to the master leases, we hold working capital and other secured loans, which the working capital loan consists of multiple tranches with varying terms. We also have a loan due from affiliates of Steward that was made in 2021, proceeds of which were used to redeem a similarly sized convertible loan held by Steward's former private equity sponsor. Finally, we hold a 9.9% equity investment in Steward.

Previous wording

According to Steward, its cash flows from operations have been impacted by challenges related to insufficient reimbursement revenue, increased costs and expenses, revenue cycle management, and a backlog of accounts payable. With a single exception, Steward historically paid rent timely until its late payment of a portion of September 2023. Earlier in 2023, Steward’s management had described to us its plans for continued improvements to profitability, improvements to collections of billed revenue, access to working capital liquidity, and sales of certain non-core assets. Based on these initiatives, the reported profitability of Steward's operations at our facilities, our cross-defaulted master lease structure, and the additional security of our overall collateral interests, we believed that Steward would be able to satisfy its rental obligations over the full term of our master leases. However, despite Steward obtaining additional working capital financing and selling its non-core laboratory business in the 2023 fourth quarter, Steward informed us in December 2023 that its cash collection challenges had become more pronounced and coupled with significant changes to vendor payment terms, their liquidity had been negatively impacted. To improve its liquidity position, Steward stated in December 2023 that it would be pursuing several strategic transactions, including the sale or re-tenanting of certain hospital operations and working with a third-party capital partner to divest of its managed care business. In addition, Steward stated it planned to intensify measures to improve cash collections and overall governance, including the establishment of a transformation committee comprised of newly appointed independent directors.

Current wording

According to Steward, its cash flows from operations had been impacted by challenges related to insufficient reimbursement revenue, increased costs and expenses, revenue cycle management, and a backlog of accounts payable. With a single exception, Steward historically paid rent timely until its late payment of a portion of September 2023. Earlier in 2023, Steward’s management had described to us its plans for continued improvements to profitability, improvements to collections of billed revenue, access to working capital liquidity, and sales of certain non-core assets. Based on these initiatives, the reported profitability of Steward's operations at our facilities, our cross-defaulted master lease structure, and the additional security of our overall collateral interests, we believed that Steward would be able to satisfy its rental obligations over the full term of our master leases. However, despite Steward obtaining additional working capital financing and selling its non-core laboratory business in the 2023 fourth quarter, Steward informed us in December 2023 that its cash collection challenges had become more pronounced and coupled with significant changes to vendor payment terms, their liquidity had been negatively impacted. To improve its liquidity position, Steward stated in December 2023 that it would be pursuing several strategic transactions, including the sale or re-tenanting of certain hospital operations and working with a third-party capital partner to divest of its managed care business. In addition, Steward stated it planned to intensify measures to improve cash collections and overall governance, including the establishment of a transformation committee comprised of newly appointed independent directors.

Previous wording

Separately, we engaged financial and legal advisors in the 2023 fourth quarter to advise us on options to maximize the ultimate recovery of our investments, including the recovery of unpaid rent and interest. To this point and while Steward was working to execute its stated plan, we agreed to fund a $60 million bridge loan (which we funded in January 2024) secured by our existing collateral as well as new second liens on the managed care business of Steward. In addition, we and certain of Steward’s asset backed lenders agreed to a new bridge facility in February 2024 and have funded an additional $75 million each to Steward during the 2024 first quarter (of which, up to $60 million advanced by certain of Steward's asset backed lenders could be put to us in 2025 if not previously paid by Steward or through liquidation of Steward's collateral). In addition to these fundings, we agreed to a forbearance agreement in which we consented to the deferral of unpaid rent and interest through December 2023, as well as a limited and tapering deferral of rent in 2024.

Current wording

Separately, we engaged financial and legal advisors in the 2023 fourth quarter to advise us on options to maximize the ultimate recovery of our investments, including the recovery of unpaid rent and interest. To this point and while Steward was working to execute its stated plan, we agreed to fund a $60 million bridge loan (which we funded in January 2024) secured by our existing collateral as well as new second liens on the managed care business of Steward. In addition, we and certain of Steward’s asset backed lenders agreed to a new bridge facility in February 2024 and funded an additional $75 million each to Steward during the 2024 first quarter (of which, up to $60 million advanced by certain of Steward's asset backed lenders could be put to us in 2025 if not previously paid by Steward or through liquidation of Steward's collateral). In addition to these fundings, we agreed to a forbearance agreement in which we consented to the deferral of unpaid rent and interest through December 2023, as well as a limited and tapering deferral of rent in 2024. In the 2024 second quarter, we funded an additional $80 million in secured loans, of which $75 million represented debtor-in-possession financing.

Previous wording

Due to the operational and liquidity challenges that Steward is experiencing, we moved to the cash basis of accounting for our leases and loans with Steward effective December 31, 2023. This resulted in the reserving of all unpaid rent and interest receivables at December 31, 2023 and the reversal of previously recognized straight-line rent receivables. In addition, we recorded impairment charges on certain real estate assets and on our 9.9% equity interest. In total, we recorded approximately $714 million of impairment and other charges in 2023.

Current wording

Due to Steward's operational and liquidity challenges, we moved to the cash basis of accounting for our leases and loans with Steward effective December 31, 2023. This resulted in the reserving of all unpaid rent and interest receivables at December 31, 2023 and the reversal of previously recognized straight-line rent receivables. In addition, we recorded impairment charges on certain real estate assets and on our 9.9% equity interest. In total, we recorded approximately $714 million of impairment and other charges in 2023.

Previous wording

Steward signed a letter of intent for the sale of its managed care business ("Stewardship") in February 2024. However, the sale price of Stewardship was less than what was anticipated earlier in 2024, and important regulatory and anti-trust approvals have not yet been forthcoming as soon as earlier planned. These circumstances have created a level of uncertainty about the likelihood, valuation, and timing of Steward's realizations of Stewardship. Moreover, as of the end of the first quarter of 2024, Steward had not signed any agreements for possible sales of its operations in or the re-tenanting of our hospital real estate. Meanwhile, Steward’s working capital deficit has continued to increase from December 31, 2023, despite the influx of cash and rent concessions from us and certain of Steward’s asset backed lenders as described earlier, which culminated in Steward's filing for reorganization relief under Chapter 11 protection of the United States Bankruptcy Code in the Southern District of Texas on May 6, 2024.

Current wording

Steward signed a letter of intent for the sale of its managed care business ("Stewardship") in February 2024. However, the sale price of Stewardship was less than what was anticipated in December 2023, and certain regulatory and anti-trust approvals were still needed. These circumstances created a level of uncertainty about the likelihood, valuation, and timing of Steward's realizations of Stewardship. Moreover, as of the end of the first quarter of 2024, Steward had not signed any agreements for possible sales of its operations in or the re-tenanting of our hospital real estate. Meanwhile, Steward’s working capital deficit had continued to increase from December 31, 2023, despite the influx of cash and rent concessions from us and certain of Steward’s asset backed lenders as described earlier, which culminated in Steward's filing for reorganization relief under Chapter 11 protection of the United States Bankruptcy Code in the Southern District of Texas on May 6, 2024.

Previous wording

Due to the uncertainty concerning the sale of Stewardship, status of sales of Steward operations or the re-tenanting of our real estate, the ongoing operational and liquidity challenges, and new bankruptcy filing, we have recorded approximately $470 million of additional impairment charges in the quarter ending March 31, 2024, that fully reserve for the remaining value of our 9.9% equity investment in Steward and the $362 million loan due from affiliates of Steward along with the accrual for property taxes and other obligations not paid by Steward under its master leases. The equity investment and loan to Steward affiliates were included in “Investments in unconsolidated operating entities” on our condensed consolidated balance sheets and were adjusted for after comparing our carrying value of these investments to an updated fair value analysis of the underlying collateral, with assistance from a third-party, independent valuation firm.

Current wording

Due to the uncertainty concerning the sale of Stewardship, status of sales of Steward operations or the re-tenanting of our real estate, the ongoing operational and liquidity challenges, and new bankruptcy filing, we recorded approximately $470 million of additional impairment charges in the quarter ending March 31, 2024, that fully reserved for the remaining value of our 9.9% equity investment in Steward and the $362 million loan due from affiliates of Steward along with the accrual for property taxes and other obligations not paid by Steward under its master leases. The equity investment and loan to Steward affiliates were included in “Investments in unconsolidated operating entities” on our condensed consolidated balance sheets and were adjusted after comparing our carrying value of these investments to an updated fair value analysis of the underlying collateral, with assistance from a third-party, independent valuation firm.

Previous wording

At March 31, 2024, we have approximately $346 million of non-real estate investments in Steward, consisting of the working capital loan and other secured loans advanced in 2024. Based on the analysis discussed above, we believe these investments are fully recoverable at this time. However, no assurances can be given that we will not have any additional impairments in future periods.

Current wording

During the 2024 second quarter and subsequently thereafter, the initial deal to sell Stewardship fell through and it appears likely that the potential value of this business has declined further. In addition, the bid process to re-tenant or sell our real estate has begun. However, no properties have been transitioned at this time. For Massachusetts, we have seen an unexpectedly low value on bids for each of the eight facilities due to a variety of factors, including regulatory matters. Due to this, we recognized additional impairment charges of $490 million in the 2024 second quarter, of which $410 million related to our Macquarie joint venture bringing our equity interest in this joint venture to zero. At June 30, 2024, we have approximately $430 million of non-real estate investments in Steward, consisting of the working capital loan and other secured loans advanced in 2024. In addition, we have approximately $2.3 billion in real estate that is expected to be re-leased or sold as part of the ongoing bankruptcy process. We believe these investments are fully recoverable at this time. However, no assurances can be given that we will not have any additional impairments in future periods.

Previous wording

Our total revenues for the 2024 first quarter are down $78.9 million, or 23%, over the same period in the prior year. This decrease is made up of the following:

Current wording

Our total revenues for the 2024 second quarter are down $70.8 million, or 21%, over the same period in the prior year. This decrease is made up of the following:

Previous wording

Income from financing leases – up $3.2 million primarily due to receiving cash of approximately $7 million for rent revenue from Prospect in the first quarter of 2024, whereas we did not receive any cash from this cash basis tenant in the 2023 first quarter. In addition, financing lease income was higher by $0.5 million from the increase in CPI above the lease contractual minimum escalations. These increases were partially offset by a $3.9 million decrease from the disposal of three Prime financing leases in the third quarter of 2023 as described in Note 3 to the condensed consolidated financial statements.

Current wording

Income from financing leases – down $40.8 million primarily due to receiving cash of approximately $18 million for rent revenue from Prospect (cash basis tenant) in the second quarter of 2024, whereas we recorded $55.3 million of rent for this tenant in the 2023 second quarter as part of the Prospect Transaction as described in Note 3 to the condensed consolidated financial statements. In addition, financing lease income was lower due to a $3.8 million decrease from the disposal of three Prime financing leases in the third quarter of 2023. These decreases were partially offset by a $0.5 million from the increase in CPI above the lease contractual minimum escalations.

Previous wording

Interest and other income – down $21.3 million from the prior year due to the following:

Current wording

Interest and other income – down $44.0 million from the prior year due to the following:

Previous wording

Other income – down $1.9 million from the prior year as we had less direct reimbursements from our tenants for ground leases, property taxes, and insurance.

Current wording

Other income – down $16.2 million from the prior year as we had less direct reimbursements from our cash basis tenants for ground leases, property taxes, and insurance.

Previous wording

Property-related expenses totaled $4.8 million and $7.1 million for the quarters ended March 31, 2024 and 2023, respectively. Of the property expenses in the first quarter of 2024 and 2023, approximately $2.3 million and $4.2 million, respectively, represents costs that were reimbursed by our tenants and included in the “Interest and other income” line on our condensed consolidated statements of net income.

Current wording

Property-related expenses totaled $7.7 million and $24.7 million for the quarters ended June 30, 2024 and 2023, respectively. Of the property expenses in the second quarter of 2024 and 2023, approximately $4.9 million and $21.1 million, respectively, represents costs that were reimbursed by our tenants and included in the “Interest and other income” line on our condensed consolidated statements of net income.

Previous wording

(Loss) Gain on Sale of Real Estate

Current wording

Gain on Sale of Real Estate

Previous wording

Other expense for the first three months of 2024 was $229.3 million, compared to $5.2 million in the prior year. For 2024, we recognized approximately $216 million in unfavorable non-cash fair value adjustments from our investments marked to fair value, primarily due to an approximate $201 million unfavorable adjustment to our investment in PHP Holdings. The remaining expense in the 2024 first quarter included a $7.8 million economic loss from the sale of our interest in the Priory syndicated term loan and approximately $5.9 million of expenses associated with responding to certain defamatory statements published by certain parties, including those who are defendants to a lawsuit we filed on March 30, 2023. For 2023, we incurred $8 million of expenses associated with responding to defamatory statements previously mentioned, partially offset by approximately $4 million of favorable non-cash fair value adjustments on our investment in Aevis and other investments marked to fair value during the first quarter of 2023.

Current wording

Other expense for the second quarter of 2024 was $167.7 million, compared to $10.5 million in the prior year. For 2024, we recognized an approximate $160 million unfavorable non-cash fair value adjustment to our investment in PHP Holdings. The remaining expense in the 2024 second quarter included approximately $11.7 million of legal and other professional expenses associated with, among other things, responding to certain defamatory statements published by certain parties, including those who are defendants to a lawsuit we filed on March 30, 2023, partially offset by a favorable fair value adjustment to our Aevis investment. For 2023, we incurred $2.5 million of expenses associated with responding to defamatory statements previously mentioned, and approximately $8 million of unfavorable non-cash fair value adjustments on our investment in Aevis and other investments marked to fair value during the second quarter of 2023.

Previous wording

Income tax expense includes U.S. federal and state income taxes on our TRS entities, as well as non-U.S. income based or withholding taxes on certain investments located in jurisdictions outside the U.S. The $10.9 million income tax expense for the three months ended March 31, 2024 is primarily based on the income generated by our investments in the U.K., Colombia, and Germany. In comparison, we incurred $3.5 million in income tax expense in the first quarter of 2023 that was net of a $5.0 million tax benefit recognized from the Australia Transaction.

Current wording

Income tax expense includes U.S. federal and state income taxes on our TRS entities, as well as non-U.S. income based or withholding taxes on certain investments located in jurisdictions outside the U.S. The $14.6 million income tax expense for the three months ended June 30, 2024 is primarily based on the income generated by our investments in the U.K. and Germany, and included a $5 million additional tax expense in the second quarter of 2024 as a result of the gain on the interest rate swap associated with the internal restructuring of the British pound sterling term loan due 2025. In comparison, we had a $148.3 million income tax benefit in the second quarter of 2023 primarily based on the $158 million benefit received by entering the U.K. REIT regime.

Previous wording

We utilize the asset and liability method of accounting for income taxes. Deferred tax assets are recorded to the extent we believe these assets will more likely than not be realized. In making such determination, all available positive and negative evidence is considered, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Based upon our review of all positive and negative evidence, including our three-year cumulative pre-tax book loss position in certain entities, we concluded that a valuation allowance of approximately $152 million should be reflected against certain of our international and domestic net deferred tax assets at March 31, 2024. In the future, if we determine that it is more likely than not that we will realize our net deferred tax assets, we will reverse the applicable portion of the valuation allowance, recognize an income tax benefit in the period in which such determination is made, and potentially incur higher income tax expense in future periods as income is earned.

Current wording

We utilize the asset and liability method of accounting for income taxes. Deferred tax assets are recorded to the extent we believe these assets will more likely than not be realized. In making such determination, all available positive and negative evidence is considered, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Based upon our review of all positive and negative evidence, including our three-year cumulative pre-tax book loss position in certain entities, we concluded that a valuation allowance of approximately $253 million should be reflected against certain of our international and domestic net deferred tax assets at June 30, 2024. In the future, if we determine that it is more likely than not that we will realize our net deferred tax assets, we will reverse the applicable portion of the valuation allowance, recognize an income tax benefit in the period in which such determination is made, and potentially incur higher income tax expense in future periods as income is earned.

Previous wording

Net loss for the three months ended March 31, 2024, was ($875.6) million, or ($1.46) per share compared to net income of $32.8 million, or $0.05 per diluted share, for the three months ended March 31, 2023. This decrease in net income is primarily driven by the $693 million of impairment charges in the first quarter of 2024 related to Steward and the international joint venture and an approximate $201 million unfavorable fair value adjustment to our investment in PHP Holdings, as described in Note 3 to the condensed consolidated financial statements, along with lower rent and interest from Steward. Normalized funds from operations (“FFO”), after adjusting for certain items (as more fully described in the section titled “Reconciliation of Non-GAAP Financial Measures” in Item 2 of this Quarterly Report on Form 10-Q), was $141.8 million for the 2024 first quarter, or $0.24 per diluted share, as compared to $222.2 million, or $0.37 per diluted share, for the 2023 first quarter. This 36% decrease in Normalized FFO is primarily due to lower revenues from Steward moving to the cash basis of accounting on December 31, 2023, higher interest expense, and lower revenues as a result of various disposals in 2023.

Current wording

Net loss for the six months ended June 30, 2024, was ($1.2) billion, or ($1.99) per share compared to a net loss of ($9.2) million, or ($0.02) per diluted share, for the six months ended June 30, 2023. This decrease in net income is primarily driven by the $693 million of impairment charges and negative fair value adjustments in the first quarter of 2024 primarily related to Steward and the international joint venture and $137.4 million of charges in the 2024 second quarter (all included in "Real estate and other impairment charges, net" line of the condensed consolidated statements of net income). In addition, we had an approximate $360 million unfavorable fair value adjustment to our investment in PHP Holdings in the first six months of 2024 and reflected in "Other (including fair value adjustments on securities), and the $410 million of impairment charges related to our Massachusetts-based partnership in the second quarter of 2024 reflected in "(Loss) earnings from equity interests" line of the condensed consolidated statements of net income, all further described in Note 3 to the condensed consolidated financial statements. These decreases were partially offset by $383 million of gains on real estate sales in the first six months of 2024. Normalized funds from operations (“FFO”), after adjusting for certain items (as more fully described in the section titled “Reconciliation of Non-GAAP Financial Measures” in Item 2 of this Quarterly Report on Form 10-Q), was $281.2 million for the first half of 2024, or $0.47 per diluted share, as compared to $507.5 million, or $0.85 per diluted share, for the same period of 2023. This 45% decrease in Normalized FFO is primarily due to lower revenues from Steward moving to the cash basis of accounting on December 31, 2023, higher interest expense, and lower revenues as a result of various disposals in 2023 and 2024.

Previous wording

Operating lease revenue (includes rent billed and straight-line rent) – down $60.8 million over the prior year, of which approximately $57 million is due to less revenue from our operators on a cash basis in the first quarter of 2024 as compared to the prior year. The majority of this decline is due to Steward as we recognized $60 million of rent revenue in the 2023 first quarter (excluding revenue on Utah properties now leased to CommonSpirit), while receiving and recording only $9 million of rent revenue in the first three months of 2024.

Current wording

Operating lease revenue (includes rent billed and straight-line rent) – down $46.8 million over the prior year, of which approximately $105 million is due to less revenue from our operators on a cash basis in the first half of 2024 as compared to the prior year. The majority of this decline is due to Steward as we recognized $121 million of rent revenue in the 2023 first half (excluding revenue on Utah properties now leased to CommonSpirit), while receiving and recording approximately $30 million of rent revenue in the first half of 2024.

Previous wording

Operating lease revenues in the 2024 first quarter further declined by approximately $17 million due to disposals and other leasing transactions in 2023. These decreases are partially offset by approximately $5.5 million in incremental revenue from acquisitions in 2023, capital additions, and the commencement of rent on two development properties in 2024; $3.3 million of favorable foreign currency fluctuations; and approximately $4.5 million from increases in CPI above the contractual minimum escalations in our leases.

Current wording

Operating lease revenues in the first six months of 2024 further declined by approximately $60 million due to disposals and other leasing transactions in 2023 and 2024 (including $29 million from the Utah Transaction described in Note 3 to the condensed consolidated financial statements). These decreases are partially offset by approximately $95 million more straight-line rent write-offs in the first half of 2023 compared to the same period of 2024 (related to the Steward and CommonSpirit transaction in 2023 described in Note 3 to the condensed consolidated financial statements); approximately $9 million in incremental revenue from acquisitions in 2023, capital additions, and the commencement of rent on two development properties in 2024; $3.9 million of favorable foreign currency fluctuations; and approximately $10 million from increases in CPI above the contractual minimum escalations in our leases.

Previous wording

Interest from loans – down $19.4 million, primarily due to a $16 million decrease in interest income related to Steward and the international joint venture and an approximate $5 million decrease from loan payoffs (including $1.9 million from the sale of our interest in the Priory syndicated term loan in the first quarter of 2024). These decreases are partially offset by approximately $0.7 million of higher income from annual escalations due to increases in CPI and $0.8 million of favorable foreign currency fluctuations.

Current wording

Interest from loans – down $47.2 million, primarily due to a $32.6 million decrease in interest income related to Steward and the international joint venture with the move to cash basis on December 31, 2023, and an approximate $9.5 million decrease from loan payoffs (including $5.4 million from the sale of our interest in the Priory syndicated term loan in the first quarter of 2024). We also recorded $9.5 million more in the first half of 2023 compared to the same period of 2024 as a result of the Prospect Transaction as described in Note

Previous wording

Interest expense for the quarters ended March 31, 2024 and 2023 totaled $108.7 million and $97.7 million, respectively. This increase is primarily related to an increase in borrowings on our revolving credit facility that carried higher interest rates (as variable rate debt) compared to the lower fixed interest rates of debt that was repaid in 2023, including the A$730 million Australian term loan facility paid off in the 2023 second quarter and the 2.550% Senior Unsecured Notes paid off in December 2023. Overall, our weighted-average interest rate was 4.2% for the quarter ended March 31, 2024, compared to 3.7% for the same period in 2023, as general interest rates have trended higher post the 2023 first quarter and our specific rates have increased due to a credit rating adjustment in March 2023.

Current wording

Interest expense for the six months ended June 30, 2024 and 2023 totaled $210.1 million and $202.1 million, respectively. This increase is primarily related to an increase in borrowings on our revolving credit facility on average during the comparable periods that carried higher interest rates (as variable rate debt) compared to the lower fixed interest rates of debt that was repaid in 2023, including the A$730 million Australian term loan facility paid off in the 2023 second quarter and the 2.550% Senior Unsecured Notes paid off in December 2023. We closed on a new British pound sterling secured term loan in May 2024 that also partially contributed to higher interest expense period over period. Overall, our weighted-average interest rate was 4.1% for the six months ended June 30, 2024, compared to 3.8% for the same period in 2023, as general interest rates have trended higher post the 2023 second quarter and our specific rates have increased due to a credit rating adjustment in March 2023.

Previous wording

Excluding stock compensation expense, general and administrative expenses totaled $25.6 million in the 2024 first quarter, compared to $29.8 million in the prior year reflecting our ongoing efforts to manage our expenses.

Current wording

General and administrative expenses totaled $68.7 million for the first six months of 2024, compared to $77.3 million for the first six months of 2023. Excluding stock compensation expense, general and administrative expenses totaled $52.5 million in the first half of 2024, compared to $59.1 million in the prior year reflecting our ongoing efforts to manage expenses.

Previous wording

In the 2024 first quarter, we recognized $693 million of non-real estate impairment charges and fair value adjustments associated with our investments in Steward and the international joint venture as further described in Note 3 to the condensed consolidated financial statements. In the first quarter of 2023, we recorded an $89.5 million net impairment charge, of which $79 million related to the Australia Transaction and $11 million was a non-cash impairment charge on the three Prime properties as more fully described in Note 3 to the condensed consolidated financial statements.

Current wording

In the first six months of 2024, we recognized $830.5 million of real estate and other impairment charges and fair value adjustments, primarily associated with our investments in Steward and the international joint venture as further described in Note 3 to the condensed consolidated financial statements. Of these charges, approximately $100 million were real estate related due to ongoing re-tenanting and potentially selling of properties associated with our cash-basis tenants. The remaining $730 million recognized in the first six months of 2024 represents non-real estate impairment charges and unfavorable fair value adjustments associated with our equity and loan investments in Steward and the international joint venture as further described in Note 3 to the condensed consolidated financial statements, along with ongoing property taxes and other obligations not paid by our cash-basis tenants. In the first six months of 2023, we recorded an $89.5 million net impairment charge, of which $79 million related to the Australia Transaction and $11 million was a non-cash impairment charge on the three Prime properties as more fully described in Note 3 to the condensed consolidated financial statements.

Previous wording

The following table presents a reconciliation of net (loss) income attributable to MPT common stockholders to FFO and Normalized FFO for the three months ended March 31, 2024 and 2023 (in thousands except per share data):

Current wording

The following table presents a reconciliation of net loss attributable to MPT common stockholders to FFO and Normalized FFO for the three and six months ended June 30, 2024 and 2023 (in thousands except per share data):

Previous wording

During the first three months of 2024, we generated approximately $74.3 million of cash flows from operating activities, primarily consisting of rent and interest from mortgage and other loans. In addition, we received approximately $133 million during the quarter from sales of our interest in the syndicated Priory term loan, the remaining minority equity interest in Lifepoint Behavioral, and certain real estate properties. We used our operating cash flows, asset sale proceeds, and cash on-hand and borrowings under our revolving credit facility to fund our dividends (declared in November 2023) of $92.8 million, approximately $135 million of advances to Steward, on a secured basis, in order to protect our investments in Steward (see Note 3 to the condensed consolidated financial statements for further discussion), and other investing activities.

Current wording

During the first six months of 2024, we generated approximately $110 million of cash flows from operating activities, primarily consisting of rent and interest from mortgage and other loans. In addition to operating cash flows, we received approximately $1.5 billion during the first half of 2024 from the Utah Transaction and the sale of five Prime properties (as further discussed in Note 3 to the condensed consolidated financial statements), along with approximately $130 million from the sale of our interest in the syndicated Priory term loan and remaining minority interest in Lifepoint Behavioral. In May 2024, we closed on a new secured term loan, generating proceeds of approximately $800 million. We used our operating cash flows, asset sale proceeds, and term loan proceeds to fund our dividends of $183 million, approximately $316 million of new loans (including $215 million of advances to Steward, on a secured basis, in order to protect our investments in Steward (see Note 3 to the condensed consolidated financial statements for further discussion)), pay down portions of our revolving credit facility and British pound sterling term loan due 2025, and to pay off our British pound sterling secured term loan due 2024.

Previous wording

we completed the sale of five properties to Prime for cash proceeds of $250 million along with a $100 million interest-bearing mortgage loan due in 2024;

Current wording

we completed the sale of five properties to Prime for cash proceeds of $250 million along with a $100 million interest-bearing mortgage loan due December 31, 2024;

Previous wording

we completed the Utah Transaction (as discussed in Note 10 to the condensed consolidated financial statements) that generated cash proceeds of approximately $1.1 billion. With the proceeds from these asset sales, we paid off and terminated our $306 million Australian term loan facility that was due in May 2024 and reduced the outstanding balance on the revolving credit facility by $500 million;

Current wording

we completed the Utah Transaction (as discussed in Note 3 to the condensed consolidated financial statements) that generated cash proceeds of approximately $1.1 billion. With the proceeds from these asset sales, we paid off and terminated our $306 million Australian term loan facility that was due in May 2024 and reduced the outstanding balance on our revolving credit facility;

Previous wording

on May 24, 2024, we closed on a secured loan facility with a consortium of institutional investors that provides for a term loan in aggregate principal amount of approximately £631 million (approximately $800 million) secured by a portfolio of 27 properties located in the U.K. currently leased to affiliates of Circle. The facility carries a fixed rate of 6.877% over its 10-year term, excluding fees and expenses, and is interest-only (payable quarterly in advance) through the maturity date. The facility is secured by first priority mortgages or similar security instruments on the relevant properties, including assignments of rents and security over accounts, and is non-recourse to us. We intend to use the majority of the net proceeds of the facility to pay down portions of our revolving credit facility and British pound sterling term loan due 2025, and to pay off our British pound sterling secured term loan due 2024 (approximately £105 million).

Current wording

On May 24, 2024, we closed on a secured loan facility with a consortium of institutional investors that provides for a term loan in aggregate principal amount of approximately £631 million (approximately $800 million) secured by a portfolio of 27 properties located in the U.K. currently leased to affiliates of Circle. The facility carries a fixed rate of 6.877% over its 10-year term, excluding fees and expenses, and is interest-only (payable quarterly in advance) through the maturity date. The facility is secured by first priority mortgages or similar security instruments on the relevant properties, including assignments of rents and security over accounts, and is non-recourse to us. We used the majority of the net proceeds of the facility to pay down portions of our revolving credit facility and British pound sterling term loan due 2025, and to pay off our British pound sterling secured term loan due 2024 (approximately £105 million);

Previous wording

in May 2024, both S&P Global Ratings and Moody's downgraded our corporate ratings. These ratings declining could have a negative impact on us in the form of higher interest rates on any new or amended debt instruments we may enter into in the future;

Current wording

in May 2024, both S&P Global Ratings and Moody's downgraded our corporate ratings. These ratings declining could have a negative impact on us in the form of higher interest rates on any new or amended debt instruments we may enter into in the future; and

Previous wording

primarily as a result of this Quarterly Report on Form 10-Q not being filed timely, we are currently ineligible to file a new short-form registration statement on Form S-3 or access our existing registration statement on Form S-3 for sales of securities, including under our at-the-market ("ATM") program, until June 1, 2025, which may impair our ability to raise capital in the public markets. While we are able to use other registration avenues for public offerings, such avenues are less expeditious and efficient than a shelf registration statement on Form S-3. See "Risk Factors" for additional information; and

Current wording

primarily as a result of our Quarterly Report on Form 10-Q for the period ended March 31, 2024, not being filed timely, we are currently ineligible to file a new short-form registration statement on Form S-3 or access our existing registration statement on Form S-3 for sales of securities, including under our at-the-market ("ATM") program, until June 1, 2025, which may impair our ability to raise capital in the public markets. While we are able to use other registration avenues for public offerings, such avenues are less expeditious and efficient than a shelf registration statement on Form S-3. See "Risk Factors" in our Quarterly Report on Form 10-Q for the period ended March 31, 2024, for additional information.

Previous wording

During the first three months of 2023, we generated approximately $135.6 million of cash flows from operating activities, primarily consisting of rent and interest from mortgage and other loans. We used these operating cash flows (along with cash on-hand) to fund our dividends of $176.6 million.

Current wording

During the first six months of 2023, we generated approximately $212.2 million of cash flows from operating activities, primarily consisting of rent and interest from mortgage and other loans. We used these operating cash flows (along with cash on-hand and borrowings on our revolving credit facility) to fund our dividends of $350.3 million.

Previous wording

However, with increasing interest rates, loss of a substantial portion of cash rent and interest from Steward, possible debtor in possession financing ("DIP") of up to $75 million related to the Steward bankruptcy (of which we have funded $60 million to-date), and $1.4 billion of debt coming due within the next twelve months (post subsequent event activity discussed earlier), we have looked to other initiatives to improve cash flows including:

Current wording

However, with increasing interest rates, loss of a substantial portion of cash rent and interest from Steward, and $1.3 billion of debt coming due within the next twelve months (post subsequent event activity discussed earlier), we have looked to other initiatives to improve cash flows including:

Previous wording

in the first five months of 2024, we have raised $2.4 billion of liquidity (as previously discussed above under "2024 Cash Flow Activity") comfortably exceeding our initial full year liquidity target of $2.0 billion;

Current wording

through August 6, 2024, we have raised more than $2.5 billion of liquidity (as previously discussed above under "2024 Cash Flow Activity") comfortably exceeding our initial full year liquidity target of $2.0 billion;

Previous wording

completing the binding sale of three Connecticut facilities to Yale New Haven for $355 million, which has been approved by the state of Connecticut's Office of Health Strategy;

Current wording

completing the binding sale of three Connecticut facilities to Yale New Haven with a contract price of $355 million, which such sale has been approved by the state of Connecticut's Office of Health Strategy;

Previous wording

extending the maturity of existing term loans (including the British pound sterling loan due 2025); and

Current wording

extending the maturity of existing term loans; and

Previous wording

managing the form (cash or stock) and amount of our dividend requirements.

Current wording

managing the form (cash or stock) and amount of our dividend requirements in line with the credit facility amendment dated August 6, 2024 and REIT requirements.