MEDICAL PROPERTIES TRUST INC

This Annual Report on Form 10-K includes 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. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans, and objectives. Statements regarding the following subjects, among others, are forward-looking by their nature:

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our business strategy;

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our projected operating results;

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our ability to raise funds through disposals of properties and other liquidity transactions, including our ability to dispose of properties on favorable terms or at all;

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our ability to raise funds through offerings of debt and equity securities and joint venture arrangements;

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our ability to obtain future financing arrangements (including refinancing of existing financing arrangements);

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our ability to close on any pending transactions or complete current development projects on the time schedule or terms described or at all;

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our ability to acquire, develop, and/or manage additional facilities in the United States (“U.S.”), Europe, South America, or other foreign locations;

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availability of suitable facilities to acquire or develop;

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our ability to enter into, and the terms of, our prospective leases and loans;

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our ability to re-lease facilities at similar rates as vacancies occur;

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estimates relating to, and our ability to pay, future distributions;

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our ability to service our debt and comply with all of our debt covenants;

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our ability to compete in the marketplace;

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lease rates and interest rates;

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market trends;

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projected capital expenditures; and

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the impact of technology on our facilities, operations, and business.

Forward-looking statements are based on our beliefs, assumptions, and expectations of our future performance, taking into account information currently available to us. These beliefs, assumptions, and expectations can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our common stock and other securities, along with, among others, the following factors that could cause actual results to vary from our forward-looking statements:

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macroeconomic conditions, including due to geopolitical conditions and instability, which may lead to a disruption of or lack of access to the capital markets, disruptions and instability in the banking and financial services industries, rising inflation and movements in currency exchange rates, and may negatively impact the financial condition of our tenants;

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the risk that property sales, loan repayments, and other capital recycling transactions do not occur as anticipated or at all, including the transactions described in Note 3 to Item 8 of this Annual Report on Form 10-K;

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the risk that the outcome and terms of the bankruptcy restructurings of affiliates of Prospect Medical Holdings, Inc. (collectively, "Prospect") will not be consistent with those we anticipate and the risk that we are unable to recover the value of our real estate and other investments in the Prospect portfolio as a result of the bankruptcy restructuring, within a reasonable timeframe or at all;

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the risk that we are unable to successfully re-tenant or sell the remaining former Steward Health Care System ("Steward") hospitals, on the terms we expect or at all;

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the risk that governments may exercise powers adverse to our ownership and other rights in our properties;

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the risk that we are not able to attain our leverage, liquidity, and cost of capital objectives within a reasonable time period or at all;

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our ability to obtain debt financing on attractive terms or at all, as a result of changes in interest rates and other factors, which may adversely impact our ability to pay down, refinance, restructure, or extend our indebtedness as it becomes due, or pursue acquisition and development opportunities;

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our ability to remain in compliance with our financial covenants under our debt facilities and obtain additional debt covenant relief under our Credit Facility;

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any downgrades in our credit ratings;

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the ability of our tenants, operators, and borrowers (including those of our joint ventures) to satisfy their obligations under their respective contractual arrangements with us;

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the ability of our tenants and operators to operate profitably and generate positive cash flow, remain solvent, comply with applicable laws, rules and regulations in the operation of our properties, to deliver high-quality services, to attract and retain qualified personnel, and to attract patients;

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the cooperation of our joint venture partners, including adverse developments affecting the financial health of such joint venture partners or the joint venture itself;

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the economic, political and social impact of, and uncertainty relating to, the potential impact from epidemics, pandemics or other public health crises (like COVID-19), which may adversely affect our and our tenants’ business, financial condition, results of operations, and liquidity;

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our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate, and integrate acquisitions and investments;

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the nature and extent of our current and future competition;

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factors affecting the real estate industry generally or the healthcare real estate industry in particular;

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our ability to maintain our status as a real estate investment trust ("REIT") for income tax purposes in the U.S. and United Kingdom ("U.K.");

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changes in federal, state, or local tax laws in the U.S., Europe, South America, or other jurisdictions in which we may own healthcare facilities or transact business;

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federal and state healthcare and other regulatory requirements, as well as those in the foreign jurisdictions where we own properties;

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the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain equity or debt financing secured by our properties or on an unsecured basis;

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loss of property owned through ground leases upon breach or termination of the ground leases;

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potential environmental contingencies and other liabilities;

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the risks and uncertainties of litigation or other regulatory proceedings and investigations;

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the accuracy of our methodologies and estimates regarding corporate responsibility metrics and targets, tenant willingness and ability to collaborate towards reporting such metrics and meeting such goals and targets, and the impact of governmental regulation on our and our tenants’ corporate responsibility efforts; and

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other factors referenced in this Annual Report on Form 10-K, including those set forth under the sections captioned “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business.”

Any forward-looking statements speak only as of the date hereof. You should not place undue reliance on these forward-looking statements. Except as required by law, we disclaim any obligation to update such statements or to publicly announce the result of any revisions to any of the forward-looking statements contained in this Annual Report on Form 10-K.

SUMMARY RISK FACTORS

Set forth below is a summary of the risks described under Item 1A. Risk Factors in the Report on Form 10-K.

RISKS RELATED TO OUR BUSINESS, TENANTS, AND STRATEGY

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Adverse U.S. and global market, economic and political conditions, health crises and other events beyond our control could have a material adverse effect on our business, results of operations, and financial condition.

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Our revenues are dependent upon our relationships with and success of our tenants, particularly our largest tenants, like Circle, Priory, HSA, Lifepoint Behavioral, and Swiss Medical Network.

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We have made investments in certain operators of our healthcare facilities and the cash flows (and related returns) from these investments are subject to more volatility than our properties with the traditional net leasing structure.

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The bankruptcy or insolvency of our tenants or investees could harm our operating results and financial condition.

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Declines in the fair value of our assets may force us to recognize impairment charges, which could adversely impact our financial condition, liquidity, and results of operations.

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It may be costly to replace defaulting tenants and we may not find suitable replacements on suitable terms.

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It may be costly to find new tenants when lease terms end, and we may not be able to replace such tenants with suitable replacements on suitable terms.

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We have experienced rapid growth over the years, from adding new tenants to expanding our global footprint, and our failure to effectively manage our growth may adversely impact our financial condition and cash flows, which could negatively affect our ability to service our debt and make distributions.

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We have less experience with healthcare facilities located outside the U.S.

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We and our tenants have exposure to contingent rent escalators, which could impact profitability.

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Our business is highly competitive, and we may be unable to compete successfully.

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Many of our tenants have an option to purchase the facilities we lease to them, which could disrupt our operations.

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Merger and acquisition activity or consolidation in the healthcare industry may result in a change of control of, or a competitor’s investment in, one or more of our tenants or operators, which could have a material adverse effect on us.

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Our investments in joint ventures could be adversely affected by our lack of control, our partners’ failure to meet their obligations, and disputes with our partners.

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Increased scrutiny and changing expectations from investors, employees, and other stakeholders regarding our corporate responsibility practices and reporting could cause us to incur additional costs, devote additional resources, and expose us to additional risks, which could adversely impact our reputation, tenant and employee acquisition and retention, and access to capital.

FINANCING RISKS

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Our indebtedness could adversely affect our financial condition and may otherwise adversely impact our business operations and our ability to make distributions to stockholders.

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Covenants in our debt instruments limit our operational flexibility, and a breach of these covenants could materially affect our financial condition and results of operations.

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Failure to hedge effectively against interest rate changes may adversely affect our results of operations and our ability to make distributions to our stockholders.

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The market price and trading volume of our common stock may be volatile and may decline regardless of our operating performance, and you may lose all or part of your investment.

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Future sales of common stock may have adverse effects on our stock price.

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Downgrades in our credit ratings could have a material adverse effect on our cost and availability of capital.

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An increase in market interest rates may have an adverse effect on the market price of our securities.

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As a result of the 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 for sales of securities, including under an ATM program, which may impair our ability to raise capital on terms favorable to us, in a timely manner or at all.

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Limited access to capital may restrict our growth.

RISKS RELATING TO REAL ESTATE INVESTMENTS

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Our investments are and are expected to continue to be concentrated in a single industry segment, making us more vulnerable economically than if our investments were more diversified.

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Our facilities may not have efficient alternative uses, which could impede our ability to find replacement tenants in the event of termination or default under our leases.

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Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our facilities and harm our financial condition.

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Development and construction risks could adversely affect our ability to service debt and make distributions.

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We may be subject to risks arising from future acquisitions of real estate.

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Our facilities may not achieve expected results, which may harm our financial condition and operating results and our ability to service our debt and make the distributions to our stockholders required to maintain our REIT status.

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We may suffer losses that are not covered by insurance or that are in excess of our insurance coverage limits.

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Capital expenditures for facility renovation may be greater than anticipated and may adversely impact rent payments by our tenants and our ability to service debt and make distributions to stockholders.

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Certain of our healthcare facilities are subject to property taxes that may increase in the future and adversely affect our business.

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As the owner and lessor of real estate, we are subject to risks under environmental laws, the cost of compliance with which and any violation of which could materially adversely affect us.

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Our interests in facilities through ground leases expose us to the loss of the facility upon breach or termination of the ground lease, may limit our use of the facility, and may result in additional expense to us if our tenants vacate our facility.

RISKS RELATING TO THE HEALTHCARE INDUSTRY

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The continued pressure on healthcare reimbursement in the U.S. and other countries in which we do business, including shifts from fee-for-service reimbursement towards alternative payment models, other healthcare policy reforms and government cost cutting measures, could adversely affect the profitability of our tenants and hinder their ability to make payments to us.

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Significant regulation and loss of licensure or certification or failure to obtain licensure or certification could negatively impact our tenants' financial condition and results of operations and affect their ability to make payments to us.

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Our tenants are subject to fraud and abuse laws, the violation of which by a tenant may jeopardize the tenant’s ability to make payments to us and adversely affect their profitability.

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Certain of our lease arrangements may be subject to laws related to fraud and abuse or physician self-referrals.

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We may be required to incur substantial renovation costs to make our healthcare properties suitable for other tenants.

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State certificate of need laws may adversely affect our development of facilities and the operations of our tenants.

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Regulatory restrictions on REIT transactions could adversely affect our business.

RISKS RELATING TO OUR ORGANIZATION AND STRUCTURE

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We depend on key personnel, the loss of any one of whom may threaten our ability to operate our business successfully.

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Pursuant to Maryland law, our charter and bylaws contain provisions that may have the effect of deterring changes in management and third-party acquisition proposals, which in turn could depress the price of our common stock or cause dilution.

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We rely on information technology in our operations, and any material failure, inadequacy, interruption, or security failure of our technology (or that of our third-party vendors) could harm our business.

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Unfavorable resolution of pending and future litigation, regulatory proceedings, or governmental inquiries could have a material adverse effect on our and our tenants' business, results of operations, financial condition, and reputation.

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Changes in accounting pronouncements could adversely affect us and the reported financial performance of our tenants.

TAX RISKS

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Loss of our tax status as a REIT would have significant adverse consequences to us and the value of our common stock.

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Failure to make required distributions as a REIT would increase our tax burden.

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Complying with REIT requirements may cause us to forego otherwise attractive opportunities.

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If certain sale-leaseback transactions are not characterized by the Internal Revenue Service (“IRS”) or similar tax authorities internationally as “true leases,” we may be subject to adverse tax consequences.

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Transactions with TRSs may be subject to excise tax.

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Loans to our tenants could be characterized as equity, in which case our income from that tenant might not be qualifying income under the REIT rules and we could lose our REIT status.

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Certain transfers may generate prohibited transaction income, resulting in a penalty tax on gain attributable to the transaction.

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Changes in U.S. or foreign tax laws, regulations, including changes to tax rates, may adversely affect our results of operations.