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”). 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 and debt repayment 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 Prospect's bankruptcy 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 to be materially different from those expressed or implied by such forward-looking statements, including, but not limited to, the risks described in our 2025 Annual Report and as updated in our Quarterly Reports on Form 10-Q for future periods, and on Form 8-K filed with the SEC. 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 and debt repayment transactions (including the use of proceeds thereof), expected returns on investments and financial performance, and expected trends and performance across our various markets. 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 to be materially different from those expressed or implied by such forward-looking statements, including, but not limited to, the risks described in our 2025 Annual Report and as updated in our Quarterly Reports on Form 10-Q for future periods, and on our Current Reports on Form 8-K filed with the SEC. Such factors include, among others, the following:

Previous wording

the risk that property sales, loan repayments, and other capital recycling transactions do not occur as anticipated or at all;

Current wording

the risk that property sales (including those discussed in Note 12 to the condensed consolidated financial statements), loan repayments, and other capital recycling transactions do not occur as anticipated or at all;

Previous wording

Refer to our 2025 Annual Report 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, 2026, there were no material changes to these policies.

Current wording

Refer to our 2025 Annual Report 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, 2026, there were no material changes to these policies and estimates.

Previous wording

At March 31, 2026, our portfolio consisted of 378 properties leased or loaned to 51 operators, and all of our investments are located in the U.S., Europe, and South America. Our total assets are made up of the following (dollars in thousands):

Current wording

At June 30, 2026, our portfolio consisted of 373 properties leased or loaned to 51 operators, and all of our investments are located in the U.S., Europe, and South America. Our total assets are made up of the following (dollars in thousands):

Previous wording

Our total revenues for the 2026 first quarter increased $28.3 million, or 12.6%, over the same period in the prior year. This increase is made up of the following:

Current wording

Our total revenues for the 2026 second quarter increased $18.9 million, or 7.9%, over the same period in the prior year. This increase is made up of the following:

Previous wording

Operating lease revenue (includes rent billed and straight-line rent) – up $26.4 million from the same period in the prior year, primarily due to $15.5 million more of lease revenue earned from the retenanting of the former Steward-operated facilities, approximately $2.5 million of additional cash received from acquisitions in 2025 and 2026, an increase of $1.7 million due to increases in CPI above the contractual minimum escalations in our leases, $7.5 million of favorable foreign currency fluctuations, and $1.1 million from the completion of capital additions and development projects in 2025 and 2026. These increases were offset by approximately $1.9 million lower revenues from property sales in 2025 and 2026.

Current wording

Operating lease revenue (includes rent billed and straight-line rent) – up $19.2 million from the same period in the prior year, primarily due to $16.4 million more of lease revenue earned from the retenanting of the former Steward and Prospect-operated facilities, approximately $4.4 million of additional cash received from acquisitions in 2025 and 2026, an increase of $2.1 million due to increases in CPI above the contractual minimum escalations in our leases, $0.9 million of favorable foreign currency fluctuations, and $1.1 million from the completion of capital additions and development projects in 2025 and 2026. These increases were offset by approximately $5.5 million lower revenues from property sales in 2025 and 2026.

Previous wording

Income from financing leases – up $0.2 million primarily due to the increase in CPI above the lease contractual minimum escalations.

Current wording

Income from financing leases – up approximately $0.1 million primarily due to the increase in CPI above the lease contractual minimum escalations.

Previous wording

Interest from loans – up $1.7 million, primarily due to approximately $0.8 million of additional revenue from the funding of new loans and $0.9 million from increases in interest rates between periods.

Current wording

Interest from loans – up $0.3 million, primarily due to additional revenue from new loans between periods, and to a lesser extent, from the escalation of interest rates between periods.

Previous wording

Other income – consistent with the prior year and represents direct reimbursements from tenants for ground leases, property taxes, and insurance.

Current wording

Other income – down $0.7 million from the prior year as we had less direct reimbursements from tenants for ground leases, property taxes, and insurance.

Previous wording

Property-related expenses totaled $9.9 million and $7.0 million for the quarters ended March 31, 2026 and 2025, respectively. Of the property expenses in the first quarter of 2026 and 2025, approximately $1.9 million and $1.9 million, respectively, represents costs that were reimbursed by our tenants and included in the “Interest and other income” line of the condensed consolidated statements of net income. The remaining non-reimbursed property expenses are higher primarily due to ongoing expenses (such as property taxes, insurance, maintenance, etc.) incurred at our vacant facilities.

Current wording

Property-related expenses totaled $11.2 million and $10.9 million for the quarters ended June 30, 2026 and 2025, respectively. Of the property-related expenses in the second quarter of 2026 and 2025, approximately $4.4 million and $5.1 million, respectively, represent costs that were reimbursed by our tenants and included in the "Interest and other income" line of the condensed consolidated statements of net income. The remaining non-reimbursed property expenses are higher quarter over quarter primarily due to ongoing expenses (such as property taxes, insurance, maintenance, etc.) incurred at our vacant facilities.

Previous wording

General and administrative expenses were $32.2 million for the 2026 first quarter, compared to $41.9 million for the 2025 first quarter. The decrease quarter-over-quarter is due to lower share-based compensation expense. Share-based compensation expense was $0.6 million for the first quarter of 2026, compared to $17.7 million in the 2025 first quarter, primarily due to the change in fair value of the performance awards that contain a cash-settlement feature and are marked to fair value quarterly, partially offset by additional expense from stock awards granted in 2025 and the 2026 first quarter.

Current wording

General and administrative expenses were $34.8 million for the 2026 second quarter, compared to $26.2 million for the 2025 second quarter. Of these amounts, share-based compensation expense was $4.9 million for the second quarter of 2026, compared to $0.8 million in the 2025 second quarter, primarily due to less benefit in the 2026 period from the change in fair value of the performance awards that contain a cash-settlement feature and are marked to fair value quarterly, along with additional expense from new stock awards granted in 2025 and the 2026 first quarter.

Previous wording

Excluding share-based compensation, general and administrative expenses for the 2026 first quarter were higher than the prior year due to non-cash depreciation and other costs associated with our completed headquarters facility in Birmingham, Alabama and higher travel expenses.

Current wording

Excluding share-based compensation, general and administrative expenses for the 2026 second quarter were higher than the prior year due to non-cash depreciation and other costs associated with our completed headquarters facility in Birmingham, Alabama and higher travel expenses.

Previous wording

(Loss) Gain on Sale of Real Estate

Current wording

Gain on Sale of Real Estate

Previous wording

During the three months ended March 31, 2026, the loss on sale of real estate of ($0.8) million primarily relates to the sale of two facilities as described in Note 3 to the condensed consolidated financial statements. During the three months ended March 31, 2025, we disposed of two facilities and an ancillary facility resulting in a net gain of $8.1 million.

Current wording

During the three months ended June 30, 2026, the gain on sale of real estate of $6.5 million primarily relates to the Scion/Lifepoint Transaction as described in Note 3 to the condensed consolidated financial statements. During the three months ended June 30, 2025, the gain on sale of real estate of $5.2 million relates to the sale of one facility.

Previous wording

Earnings from equity interests was $15.7 million for the quarter ended March 31, 2026, compared to earnings of $14.0 million for the same period in 2025. Our share of income in the Utah partnership included a $7.2 million positive fair value adjustment in the first quarter of 2026, primarily related to a fair value increase in its real estate (as further described in Note 3 to the condensed consolidated financial statements), compared to $6 million primarily related to its interest rate swap in the same period last year.

Current wording

Earnings from equity interests was $11.4 million for the quarter ended June 30, 2026, compared to earnings of $25.3 million for the same period in 2025. Our share of income in the Utah partnership included a $1.6 million positive fair value adjustment in the second quarter of 2026, primarily related to its interest rate swap; while, the 2025 second quarter included a $15 million favorable fair value adjustment in real estate.

Previous wording

Other expense for the first quarter of 2026 was $2.5 million, compared to expense of $45.2 million in the prior year period. For 2025, we recognized approximately $30 million in unfavorable non-cash fair value adjustments from our investments marked to fair value, primarily due to an approximate $18 million unfavorable adjustment to our investment in PHP Holdings and approximately $12 million related to our investment in Aevis.

Current wording

Other expense for the second quarter of 2026 was $1.9 million, compared to other expense of $124.4 million in the prior year period. For the 2025 second quarter, we recognized approximately $125 million in unfavorable non-cash fair value adjustments from our investments marked to fair value, primarily due to an approximate $129 million unfavorable adjustment to our investment in PHP Holdings, partially offset by a favorable adjustment of approximately $4 million related to our investment in Aevis.

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 $529 million should be reflected against certain of our international and domestic net deferred tax assets at March 31, 2026. 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 $541 million should be reflected against certain of our international and domestic net deferred tax assets at June 30, 2026. 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 income for the three months ended March 31, 2026, was $32.8 million, or $0.05 per share compared to a net loss of ($118.3) million, or ($0.20) per share, for the three months ended March 31, 2025. This increase in net income is primarily driven by (i) a $28.3 million increase in revenue as discussed in detail below, (ii) an approximately $43 million one-time tax benefit in the first quarter of 2026 from moving seven additional U.K. entities into our U.K. REIT as described in Note 5 to the condensed consolidated financial statements, and (iii) $76 million of impairment charges primarily related to Prospect and certain of our Colombia assets along with $30 million of unfavorable fair value adjustments primarily related to our investments in PHP Holdings and Aevis in the 2025 first quarter, as compared to $19 million of impairment charges and $2 million of unfavorable non-cash fair value adjustments in the 2026 first quarter. The increase in net income was partially offset by higher interest expense and depreciation expense quarter over quarter. Normalized 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 $82.2 million for the 2026 first quarter, or $0.14 per diluted share, and in line with the $81.1 million, or $0.14 per diluted share, for the 2025 first quarter.

Current wording

Net income for the six months ended June 30, 2026, was $30.2 million, or $0.05 per share compared to a net loss of ($216.6) million, or ($0.36) per share, for the six months ended June 30, 2025. This increase in net income is primarily driven by (i) a $47.2 million increase in revenue as discussed in detail below, (ii) an approximately $43 million one-time tax benefit in the first quarter of 2026 from moving seven additional U.K. entities into our U.K. REIT as described in Note 5 to the condensed consolidated financial statements, (iii) $77.5 million of impairment charges primarily related to Prospect and certain of our Colombia assets along with $156 million of unfavorable fair value adjustments primarily related to our investments in PHP Holdings and Aevis in the first half of 2025, as compared to $36 million of impairment charges and $6 million of unfavorable non-cash fair value adjustments in the same period of 2026. The increase in net income was partially offset by higher interest expense and depreciation expense period over period. Normalized 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 $174.5 million for the first six months of 2026, or $0.29 per diluted share, as compared to $162.5 million, or $0.27 per diluted share, for the same period of 2025.

Previous wording

Interest and other income – up approximately $1.7 million from the prior year due to the following:

Current wording

Interest and other income – up approximately $1.3 million from the same period in the prior year due to the following:

Previous wording

Interest expense for the quarters ended March 31, 2026 and 2025 totaled $133.3 million and $115.8 million, respectively. This increase is primarily related to a full quarter of interest in the 2026 first quarter related to our February 2025 debt refinancing activities (see Note 4 to the condensed consolidated financial statements for further details) and higher interest expense from the increase in average borrowings on our Credit Facility in the first quarter of 2026, compared to the same period of 2025. Overall, our weighted-average interest rate was 5.2% for the quarter ended March 31, 2026, compared to 4.9% for the same period in 2025.

Current wording

Interest expense for the six months ended June 30, 2026 and 2025 totaled $268.6 million and $245.5 million, respectively. This increase is primarily related to a full six months of interest in 2026 related to our February 2025 debt refinancing activities (see Note 4 to the condensed consolidated financial statements for further details) and from the increase in average borrowings on our Credit Facility in the first half of 2026, compared to the same period of 2025. Overall, our weighted-average interest rate was 5.3% for the six months ended June 30, 2026, compared to 5.1% for the same period in 2025.

Previous wording

Real estate depreciation and amortization during the first quarter of 2026 increased to $69.7 million from $64.6 million in 2025. This increase is primarily due to the six California properties, leased to NOR, that were reclassified as operating leases in December 2025, along with acquisition and capital addition activity during 2025 (as disclosed in previous filings) and the 2026 first quarter as more fully described in Note 3 to the condensed consolidated financial statements.

Current wording

Real estate depreciation and amortization for the first six months of 2026 increased to $139.2 million from $131.3 million for the same period of the prior year. This increase is primarily due to the six California properties, leased to NOR, that were reclassified as operating leases in December 2025, along with capital addition activity and net acquisition and disposal activity during 2025 (as disclosed in previous filings) and the first half of 2026 as more fully described in Note 3 to the condensed consolidated financial statements.

Previous wording

In the 2026 first quarter, we recognized $19.0 million of real estate and other impairment charges, primarily associated with our working capital loans to Insight and Tenor and, to a lesser extent, the expected transition of three vacant properties back to the ground lessor and negative fair value adjustments on our investments in three hospitals in Colombia, along with non-real estate impairment charges for property taxes and other obligations not paid by our cash-basis tenants. In the same period of 2025, we recognized $76.1 million of real estate and other impairment charges, primarily associated with our investments in Prospect and three hospitals in Colombia. See Note 3 and Note 8 to the condensed consolidated financial statements for further details of these charges.

Current wording

In the first half of 2026, we recognized $35.8 million of real estate and other impairment charges, primarily associated with our working capital loans to Insight and Tenor and, to a lesser extent, the transition of three vacant properties back to the ground lessor and negative fair value adjustments on our investments in three hospitals in Colombia, along with non-real estate impairment charges for property taxes and other obligations not paid by our cash-basis tenants. In the same period of 2025, we recognized $77.5 million of real estate and other impairment charges, primarily associated with our investments in Prospect and three hospitals in Colombia, as well as ongoing property taxes and other obligations not paid by our cash-basis tenants.

Previous wording

Debt Refinancing and Unutilized Financing Costs

Current wording

Debt Refinancing and Unutilized Financing Benefit (Costs)

Previous wording

We incurred $3.8 million of debt refinancing costs in the 2025 first quarter as a result of the early redemption of our 3.325% Senior Unsecured Notes due 2025, 2.500% Senior Unsecured Notes due 2026, and 5.250% Senior Unsecured Notes due 2026. We did not incur any debt refinancing and unutilized financing costs in the first quarter of 2026.

Current wording

Debt refinancing and unutilized financing costs were $3.6 million for the first half of 2025. These costs were incurred primarily as a result of the early redemption of our 3.325% Senior Unsecured Notes due 2025, 2.500% Senior Unsecured Notes due 2026, and 5.250% Senior Unsecured Notes due 2026 - see Note 4 to the condensed consolidated financial statements for further discussion.

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 $32.8 million income tax benefit for the three months ended March 31, 2026 is largely due to moving seven additional U.K. property holding legal entities into our U.K. REIT that was formed on July 1, 2023. As part of this move, we adjusted the deferred tax liabilities associated with these entities, which resulted in an approximate $43 million one-time tax benefit in the first quarter of 2026. Going forward, these U.K. entities (like the others in the U.K. REIT) will be subject only to a withholding tax on earnings upon distribution out of the U.K. REIT. Excluding this one-time benefit, income tax expense for the 2026 first quarter was in line with the $9.4 million income tax expense for the three months ended March 31, 2025, which was primarily based on the income generated by our investments in the U.K. and Germany.

Current wording

We typically incur income tax expense related to 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 $22.7 million income tax benefit for the six months ended June 30, 2026, is largely due to moving seven additional U.K. property holding legal entities into our U.K. REIT that was formed on July 1, 2023. As part of this move, we adjusted the deferred tax liabilities associated with these entities, which resulted in an approximate $43 million one-time tax benefit in the first quarter of 2026. Going forward, these U.K. entities (like the others in the U.K. REIT) will be subject only to a withholding tax on earnings upon distribution out of the U.K. REIT. Excluding this one-time benefit, income tax expense for the first six months of 2026 was in line with the $19.2 million income tax expense in the first half of 2025.

Previous wording

The following table presents a reconciliation of net income (loss) attributable to MPT common stockholders to FFO and Normalized FFO for the three months ended March 31, 2026 and 2025 (in thousands except per share data):

Current wording

The following table presents a reconciliation of net (loss) income attributable to MPT common stockholders to FFO and Normalized FFO for the three and six months ended June 30, 2026 and 2025 (in thousands except per share data):

Previous wording

Total share-based compensation expense for GAAP purposes is $0.6 million and $17.7 million for the three months ended March 31, 2026 and 2025, respectively (including certain awards that are to be settled in cash). Cash-settled awards are typically recorded in accordance with GAAP at fair value and measured at each balance sheet date until settlement. The resulting fluctuations, which are primarily driven by changes in our stock price rather than operational performance, can introduce significant volatility in our earnings. To enhance comparability and provide a more stable view of performance over time, NFFO reflects an ($8.5) million and $9.5 million adjustment in the three months ended March 31, 2026 and 2025, respectively, to arrive at total share-based compensation expense using grant date fair value for all awards (including cash-settled awards) of $9.0 million and $8.1 million for the three months ended March 31, 2026 and 2025, respectively.

Current wording

Total share-based compensation expense is $4.9 million and $0.9 million for the three months ended June 30, 2026 and 2025, respectively, and $5.4 million and $18.5 million for the six months ended June 30, 2026 and 2025, respectively, (including certain awards that are to be settled in cash). Cash-settled awards are typically recorded in accordance with GAAP at fair value and remeasured at each balance sheet date until settlement. The resulting fluctuations, which are primarily driven by changes in our stock price rather than operational performance, can introduce significant volatility in our earnings. To enhance comparability and provide a more stable view of performance over time, NFFO reflects additional expense of $4.8 million and $9.5 million in the three months ended June 30, 2026 and 2025, respectively, and $13.3 million and less than $0.1 million in the six months ended June 30, 2026 and 2025, respectively, to arrive at total share-based compensation expense using grant date fair value for all awards (including cash-settled awards) of $9.7 million and $10.4 million for the three months ended June 30, 2026 and 2025, respectively, and $18.7 million and $18.5 million for the six months ended June 30, 2026 and 2025, respectively.

Previous wording

We used cash on-hand, proceeds from the revolving portion of our Credit Facility, and proceeds from repayment of loans receivable and asset sales to fund our dividends and other investing activities. During the first three months of 2026, we completed the sale of two facilities for total proceeds of approximately $31 million, of which $12 million was received in advance of the sale in the first quarter of 2025, and we closed on the acquisition of one property in Germany for approximately €23 million.

Current wording

the sale of five facilities for total proceeds of approximately $31 million, of which $12 million was received in advance of the sale in the first quarter of 2025;

Previous wording

In the first quarter of 2026 (and as noted in Note 3 to the condensed consolidated financial statements), Prospect’s bankruptcy plan was deemed effective. We received approximately $45 million from Connecticut and Pennsylvania asset sales and collection of Connecticut accounts receivable during the quarter, while funding $45 million of the $70 million bankruptcy court approved funding commitment (as disclosed in our 2025 Annual Report) and expect to fund the remaining $25 million commitment in the 2026 second quarter. Although no assurances can be given as to the amount to be received or timing of such collections, we expect to collect our remaining loan of $61 million at March 31, 2026 plus the additional $25 million funding to be made in the 2026 second quarter from a combination of a) collection of remaining Connecticut accounts receivable, of which we received approximately $9 million in April 2026 and b) proceeds from certain of Prospect’s causes of action.

Current wording

progress towards the conclusion of the Prospect bankruptcy, which as discussed in Note 3 to the condensed consolidated financial statements, included the Prospect’s bankruptcy plan becoming effective. During the period, we received approximately $60 million from Connecticut and Pennsylvania asset sales and collection of Connecticut accounts receivable, while funding $62 million of the $65 million bankruptcy court approved funding commitment (as disclosed in our 2025 Annual Report) and expect to fund the remaining $3 million commitment in the 2026 third quarter. Although no assurances can be given as to the amount to be received or timing of such collections, we expect to collect our remaining loan of $67 million at June 30, 2026, from a combination of a) collection of remaining Connecticut accounts receivable and b) proceeds from certain of Prospect’s causes of action.

Previous wording

During the first three months of 2025, we generated approximately $0.4 million of cash flows from operating activities. We used these operating cash flows, proceeds from our revolving credit facility, and proceeds from asset sales to fund our dividends and other investing activities. During the 2025 first quarter, we repaid the remaining outstanding balance of the British pound sterling term loan due 2025 of £493 million, with a combination of cash on hand and available capacity under our revolving credit facility. We also completed a private offering of $1.5 billion in aggregate principal amount of senior secured notes due 2032 and €1.0 billion aggregate principal amount of senior secured notes due 2032. The net proceeds from the offering were approximately $2.5 billion after deducting discounts, commissions, and other offering related expenses. We used the net proceeds from the offering to fund the redemption of our 3.325% Senior Unsecured Notes due 2025, 2.500% Senior Unsecured Notes due 2026, and 5.250% Senior Unsecured Notes due 2026, with the remainder of net proceeds used to paydown our revolving credit facility by approximately $800 million.

Current wording

During the first six months of 2025, we generated approximately $52 million of cash flows from operating activities. We used these operating cash flows, proceeds from our Credit Facility, and proceeds from asset sales to fund our dividends and other investing activities. During the first half of 2025, we repaid the remaining outstanding balance of the British pound sterling term loan due 2025 of £493 million, with a combination of cash on hand and available capacity under our Credit Facility. We also completed a private offering of $1.5 billion in aggregate principal amount of senior secured notes due 2032 and €1.0 billion aggregate principal amount of senior secured notes due 2032. The net proceeds from the offering were approximately $2.5 billion after deducting discounts, commissions, and other offering related expenses. We used the net proceeds from the offering to fund the redemption of our 3.325% Senior Unsecured Notes due 2025, 2.500% Senior Unsecured Notes due 2026, and 5.250% Senior Unsecured Notes due 2026, with the remainder of net proceeds used to pay down our Credit Facility by approximately $800 million.

Previous wording

Our short-term liquidity requirements typically consist of general and administrative expenses, dividends in order to comply with REIT requirements, interest payments on our debt, and planned funding commitments on development and capital improvement projects for the next twelve months. Our monthly rent and interest receipts and distributions from our joint venture arrangements are typically enough to cover our short-term liquidity requirements.

Current wording

Our short-term liquidity requirements typically consist of property-related expenses, general and administrative expenses, dividends in order to comply with REIT requirements, interest payments on our debt, and planned funding commitments on development and capital improvement projects for the next twelve months. Our monthly rent and interest receipts and distributions from our joint venture arrangements are typically enough to cover our short-term liquidity requirements.

Previous wording

Over the next twelve months, we expect our monthly rent and interest receipts to increase with our contractually required annual escalations, from the ramp up of cash rents from the tenants that replaced Steward, and expected cash rents from the replacement tenant of the Prospect California facilities. We would expect these rent and interest increases to outpace the higher interest cost that may be associated with refinancing maturities coming due within the next twelve months.

Current wording

Over the next twelve months, we expect our monthly rent and interest receipts to increase with our contractually required annual escalations, from the ramp up of cash rents from the tenants that replaced Steward and the Prospect California facilities, and from the completion of certain development projects. We expect these rent and interest increases to outpace the higher interest cost that may be associated with refinancing maturities coming due within the next twelve months; however, no assurances can be given.

Previous wording

As described previously, our monthly rent and interest receipts and distributions from our joint venture arrangements along with our current liquidity of approximately $1.0 billion at May 6, 2026, are typically enough to cover our short-term liquidity requirements. However, to further improve cash flows and to fund future debt maturities, we will need to look to other sources, which may include one or a combination of the following:

Current wording

As described previously, our monthly rent and interest receipts and distributions from our joint venture arrangements along with our current cash on-hand of approximately $0.3 billion at August 10, 2026, are typically enough to cover our short-term liquidity requirements. However, to further improve cash flows and to fund future debt maturities, including those coming due in the next 12 months discussed above, we will need to look to other sources, which may include one or a combination of the following:

Previous wording

further property sales or the monetization of a portion of our real estate joint ventures;

Current wording

property sales or the monetization of a portion of our real estate joint ventures;

Previous wording

Principal payments due on our debt (which exclude the effects of any discounts, premiums, or debt issue costs recorded) as of May 6, 2026 are as follows (in thousands):

Current wording

Principal payments due on our debt (which exclude the effects of any discounts, premiums, or debt issue costs recorded) as of August 10, 2026 (after completion of the $2.4 billion refinancing transaction discussed previously) are expected to be as follows (in thousands):

Previous wording

Approximately $524 million represents the outstanding balance of our revolving credit facility for which we have provided notice of our intent to extend to 2027 - see Note 4 to the condensed consolidated financial statements for further details.

Current wording

Represents the outstanding balance of our revolving credit facility for which we have an option to extend to June 30, 2027, subject to the satisfaction of certain conditions - see Note 4 to the condensed consolidated financial statements for further details.