EX-99.1 2 d869658dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

 

   Contact: Drew Babin, CFA, CMA
   Head of Financial Strategy and Investor Relations
   Medical Properties Trust, Inc.
   (646) 884-9809
   dbabin@medicalpropertiestrust.com

MEDICAL PROPERTIES TRUST, INC. REPORTS SECOND QUARTER RESULTS

Successfully Executed More than $2.5 Billion in Year-to-Date Liquidity Transactions

Modified Credit Facility Terms and Conditions

Birmingham, AL – August 8, 2024 – Medical Properties Trust, Inc. (the “Company” or “MPT”) (NYSE: MPW) today announced financial and operating results for the second quarter ended June 30, 2024, as well as certain events occurring subsequent to quarter end.

Second Quarter Financial Highlights

 

   

Net loss of ($0.54) and Normalized Funds from Operations (“NFFO”) of $0.23 for the 2024 second quarter on a per share basis;

 

   

Second quarter net loss included approximately $400 million in real estate gains, offset by approximately $700 million in impairments and negative fair value adjustments.

Corporate Updates During and Subsequent to the Second Quarter

 

   

Closed on the sale of five previously leased hospitals to Prime Healthcare for total consideration of $350 million in April;

 

   

Closed on the sale of a 75% interest in five Utah hospitals leased to CommonSpirit to a new joint venture with an institutional investor in April for total proceeds of $1.1 billion;

 

   

Completed a £631 million (~$800 million) secured financing of 27 U.K. hospitals leased to Circle Health in May;

 

   

Sold for approximately $160 million seven freestanding emergency department (“FSED”) facilities as well as one general acute hospital in Arizona to Dignity Health in July;

 

   

Repaid approximately $1.5 billion in debt, including all 2024 maturities; and

 

   

Paid a regular quarterly dividend of $0.15 per share.

Edward K. Aldag, Jr., Chairman, President and Chief Executive Officer, said, “MPT took decisive action to generate more than $2.5 billion of liquidity year-to-date – well above our initial target for the year – as well as to expedite debt paydown. The vast majority of our portfolio continues to perform well, and we remain focused on executing our strategy to demonstrate the tremendous value embedded in our platform.”

Included in the financial tables accompanying this press release is information about the Company’s assets and liabilities, operating results, and reconciliations of net loss to NFFO, including per share amounts, all on a basis comparable to 2023 results.

 

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CAPITAL ALLOCATION UPDATE

Subsequent to the end of the quarter, MPT amended its credit facility to reflect recent disposition and financing transactions and better align with the Company’s current capital allocation strategy, as well as to accommodate the expected timing of sales and re-tenanting transactions that Steward Health Care (“Steward”) is pursuing through its court-supervised restructuring process.

The amendment includes the reduction of MPT’s revolver commitment from $1.4 billion to $1.28 billion, a permanent resetting of the facility’s consolidated net worth covenant from approximately $6.7 billion to $5.0 billion, and modifications to certain other covenants through September 30, 2025. In addition, MPT has agreed to limit the cash component of total quarterly dividends to no more than $0.08 per share. In the event that Steward’s hospital operations are transitioned to other operators more rapidly, the Company has the right to terminate the amendment provisions earlier than September 30, 2025.

PORTFOLIO UPDATE

Medical Properties Trust has total assets of approximately $16.2 billion, including $10.0 billion of general acute facilities, $2.4 billion of behavioral health facilities and $1.7 billion of post-acute facilities. As of June 30, 2024, MPT’s portfolio included 435 properties and approximately 42,000 licensed beds leased to or mortgaged by 53 hospital operating companies across the United States as well as in the United Kingdom, Switzerland, Germany, Spain, Finland, Colombia, Italy and Portugal.

MPT’s European general acute portfolio continues to benefit from the broadening role of private hospitals in addressing rapidly growing care needs, particularly in the U.K. Further, increasing reimbursement rates and acuity levels have largely kept pace with ongoing expense pressures. Swiss Medical Network is reporting success in broadening its presence in Switzerland by successfully marketing new integrated care programs. Behavioral and post-acute operations have remained consistent, with MEDIAN reporting increasing occupancy and profit margins and Priory continuing to execute its plans in the U.K. to meet market demands for more high-acuity services. 

In the Company’s U.S. portfolio, excluding facilities operated by Steward and Prospect Medical Holdings (“Prospect”), general acute revenue trends are strong and benefitting from higher admissions, acuity mix and reimbursement rates, while the behavioral segment is reporting steady growth in volumes and moderating expenses. Most notably, MPT’s portfolio of general acute hospitals operated by Lifepoint Health recorded its highest total admissions in nearly three years in the first quarter and continues to see increasing profitability. Overall performance of the post-acute segment, which combines inpatient rehabilitation (“IRF”) and long-term acute care (“LTACH”) facilities, remained stable with strong performance across well-established IRF properties offsetting the anticipated ramping of operations at newly developed IRF properties.

As expected, Steward paid May and June cash rent of approximately $19 million with respect to the consolidated master lease and remained current on its obligations to the Company’s Massachusetts partnership with Macquarie Asset Management (together with its affiliates, “Macquarie”). Steward also made July payments as scheduled for all leased facilities.

 

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Due to unanticipated restrictions imposed by regulators that impacted the process of transitioning ownership of eight hospitals operated by Steward in Massachusetts, MPT – which owns a 50% interest in these properties through a partnership that has a separate master lease agreement with Steward – expects to relinquish its ownership of those properties to the non-recourse secured lender. As a result, MPT has fully impaired its equity investment in the partnership. The NFFO contribution of the joint venture in the second quarter was approximately $7 million, or $0.01 per diluted share.

During the second quarter of 2024, Prospect paid cash rent of $18 million and cash interest of $4 million, fully satisfying past-due amounts from the first quarter as well as all amounts due in the second quarter.

OPERATING RESULTS

Net loss for the second quarter ended June 30, 2024 was ($321 million), or ($0.54) per share, compared to net loss of ($42 million), or ($0.07) per share, in the year earlier period. Net loss for the quarter ended June 30, 2024 included approximately $400 million in real estate gains resulting from joint venture and asset sales transactions as well as approximately $700 million in impairments and negative fair value adjustments that primarily included:

 

   

The impairment of MPT’s approximate $400 million equity stake in the Massachusetts partnership with Macquarie (included on the income statement in earnings from equity interests); and

 

   

A $163 million negative fair market value adjustment to the Company’s investment in PHP due to changes in third-party valuations and other discounting assumptions.

NFFO for the second quarter ended June 30, 2024 was $139 million, or $0.23 per share, compared to $285 million, or $0.48 per share in the year earlier period.

A reconciliation of net loss to FFO and NFFO, including per share amounts, can be found in the financial tables accompanying this press release.

CONFERENCE CALL AND WEBCAST

The Company has scheduled a conference call and webcast for August 8, 2024 at 11:00 a.m. Eastern Time to present the Company’s financial and operating results for the quarter ended June 30, 2024. The dial-in numbers for the conference call are 877-883-0383 (U.S.) and 412-902-6506 (International) along with passcode 1112764. The conference call will also be available via webcast in the Investor Relations section of the Company’s website, www.medicalpropertiestrust.com.

A telephone and webcast replay of the call will be available beginning shortly after the call’s completion. The telephone replay will be available through August 22, 2024, using dial-in numbers 877-344-7529 (U.S.), 855-669-9658 (Canada) and 412-317-0088 (International) along with passcode 6602146. The webcast replay will be available for one year following the call’s completion on the Investor Relations section of the Company’s website.

The Company’s supplemental information package for the current period will also be available on the Company’s website in the Investor Relations section.

The Company uses, and intends to continue to use, the Investor Relations page of its website, which can be found at www.medicalpropertiestrust.com, as a means of disclosing material nonpublic information and of complying with its disclosure obligations under Regulation FD, including, without limitation, through the

 

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posting of investor presentations that may include material nonpublic information. Accordingly, investors should monitor the Investor Relations page, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

About Medical Properties Trust, Inc.

Medical Properties Trust, Inc. is a self-advised real estate investment trust formed in 2003 to acquire and develop net-leased hospital facilities. From its inception in Birmingham, Alabama, the Company has grown to become one of the world’s largest owners of hospital real estate with 435 facilities and approximately 42,000 licensed beds in nine countries and across three continents as of June 30, 2024. MPT’s financing model facilitates acquisitions and recapitalizations and allows operators of hospitals to unlock the value of their real estate assets to fund facility improvements, technology upgrades and other investments in operations. For more information, please visit the Company’s website at www.medicalpropertiestrust.com.

Forward-Looking Statements

This press release 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. 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. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results or future events to differ materially from those expressed in or underlying such forward-looking statements, including, but not limited to: (i) the risk that the bankruptcy restructuring of Steward, the Company’s largest tenant, does not result in MPT recovering deferred rent or its other investments in Steward at full value, within a reasonable time period or at all; (ii) 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; (iii) the risk that previously announced or contemplated property sales, loan repayments, and other capital recycling transactions do not occur as anticipated or at all; (iv) the risk that MPT is not able to attain its leverage, liquidity and cost of capital objectives within a reasonable time period or at all; (v) MPT’s 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 its ability to pay down, refinance, restructure or extend its indebtedness as it becomes due, or pursue acquisition and development opportunities; (vi) the ability of our tenants, operators and borrowers to satisfy their obligations under their respective contractual arrangements with us; (vii) the economic, political and social impact of, and uncertainty relating to, the potential impact from health crises (like COVID-19), which may adversely affect MPT’s and its tenants’ business, financial condition, results of operations and liquidity; (viii) our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate and integrate acquisitions and investments; (ix) the nature and extent of our current and future competition; (x) international, national and local economic, real estate and other market conditions, which may negatively impact, among other things, the financial condition of our tenants, lenders and institutions that hold our cash balances, and may expose us to increased risks of default by these parties; (xi) factors affecting the real estate industry generally or the healthcare real estate industry in particular; (xii) our ability to maintain our status as a REIT for income tax purposes in the U.S. and U.K.; (xiii) federal and state healthcare and other regulatory requirements, as well as those in the foreign jurisdictions where we own properties; (xiv) 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

 

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by our properties or on an unsecured basis; (xv) 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; (xvi) potential environmental contingencies and other liabilities; (xvii) the risk that expected asset sales do not occur at the agreed upon terms or at all; (xviii) the risk that we are unable to monetize our investments in certain tenants at full value within a reasonable time period or at all; (xix) the cooperation of our joint venture partners, including adverse developments affecting the financial health of such joint venture partners or the joint venture itself; and (xx) the risks and uncertainties of litigation or other regulatory proceedings.

The risks described above are not exhaustive and additional factors could adversely affect our business and financial performance, including the risk factors discussed under the section captioned “Risk Factors” in our most recent Annual Report on Form 10-K and our Form 10-Q, and as may be updated in our other filings with the SEC. Forward-looking statements are inherently uncertain and actual performance or outcomes may vary materially from any forward-looking statements and the assumptions on which those statements are based. Readers are cautioned to not place undue reliance on forward-looking statements as predictions of future events. We disclaim any responsibility to update such forward-looking statements, which speak only as of the date on which they were made.

# # #

 

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MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

 

(Amounts in thousands, except for per share data)             
     June 30, 2024     December 31, 2023  
     (Unaudited)     (A)  

Assets

    

Real estate assets

    

Land, buildings and improvements, intangible lease assets, and other

   $ 11,949,385     $ 13,237,187  

Investment in financing leases

     1,181,959       1,231,630  

Mortgage loans

     399,150       309,315  
  

 

 

   

 

 

 

Gross investment in real estate assets

     13,530,494       14,778,132  

Accumulated depreciation and amortization

     (1,417,910     (1,407,971
  

 

 

   

 

 

 

Net investment in real estate assets

     12,112,584       13,370,161  

Cash and cash equivalents

     606,550       250,016  

Interest and rent receivables

     39,471       45,059  

Straight-line rent receivables

     664,271       635,987  

Investments in unconsolidated real estate joint ventures

     1,143,231       1,474,455  

Investments in unconsolidated operating entities

     635,206       1,778,640  

Other loans

     505,942       292,615  

Other assets

     487,488       457,911  
  

 

 

   

 

 

 

Total Assets

   $ 16,194,743     $ 18,304,844  
  

 

 

   

 

 

 

Liabilities and Equity

    

Liabilities

    

Debt, net

   $ 9,369,064     $ 10,064,236  

Accounts payable and accrued expenses

     446,893       412,178  

Deferred revenue

     25,700       37,962  

Obligations to tenants and other lease liabilities

     160,009       156,603  
  

 

 

   

 

 

 

Total Liabilities

     10,001,666       10,670,979  

Equity

    

Preferred stock, $0.001 par value. Authorized 10,000 shares; no shares outstanding

     —        —   

Common stock, $0.001 par value. Authorized 750,000 shares; issued and outstanding - 600,057 shares at June 30, 2024 and 598,991 shares at December 31, 2023

     600       599  

Additional paid-in capital

     8,571,662       8,560,309  

Retained deficit

     (2,348,170     (971,809

Accumulated other comprehensive (loss) income

     (33,910     42,501  
  

 

 

   

 

 

 

Total Medical Properties Trust, Inc. Stockholders’ Equity

     6,190,182       7,631,600  

Non-controlling interests

     2,895       2,265  
  

 

 

   

 

 

 

Total Equity

     6,193,077       7,633,865  
  

 

 

   

 

 

 

Total Liabilities and Equity

   $ 16,194,743     $ 18,304,844  
  

 

 

   

 

 

 

 

(A)

Financials have been derived from the prior year audited financial statements.


MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

 

(Amounts in thousands, except for per share data)    For the Three Months Ended     For the Six Months Ended  
     June 30, 2024     June 30, 2023     June 30, 2024     June 30, 2023  

Revenues

        

Rent billed

   $ 183,764     $ 247,491     $ 383,063     $ 495,648  

Straight-line rent

     38,381       (39,329     83,117       17,364  

Income from financing leases

     27,641       68,468       44,034       81,663  

Interest and other income

     16,774       60,765       27,662       92,931  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     266,560       337,395       537,876       687,606  

Expenses

        

Interest

     101,430       104,470       210,115       202,124  

Real estate depreciation and amortization

     102,240       364,403       177,826       448,263  

Property-related (A)

     7,663       24,676       12,481       31,786  

General and administrative

     35,327       35,604       68,675       77,328  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     246,660       529,153       469,097       759,501  

Other (expense) income

        

Gain on sale of real estate

     384,824       167       383,401       229  

Real estate and other impairment charges, net

     (137,419     —        (830,507     (89,538

(Loss) earnings from equity interests

     (401,757     12,224       (391,208     23,576  

Debt refinancing and unutilized financing costs

     (2,964     (816     (2,964     (816

Other (including fair value adjustments on securities)

     (167,686     (10,512     (397,031     (15,678
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other (expense) income

     (325,002     1,063       (1,238,309     (82,227
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income tax

     (305,102     (190,695     (1,169,530     (154,122

Income tax (expense) benefit

     (14,557     148,262       (25,506     144,719  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (319,659     (42,433     (1,195,036     (9,403

Net (income) loss attributable to non-controlling interests

     (976     396       (1,224     160  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to MPT common stockholders

   $ (320,635   $ (42,037   $ (1,196,260   $ (9,243
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share - basic and diluted:

        

Net loss attributable to MPT common stockholders

   $ (0.54   $ (0.07   $ (1.99   $ (0.02
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding - basic

     600,057       598,344       600,181       598,323  

Weighted average shares outstanding - diluted

     600,057       598,344       600,181       598,323  

Dividends declared per common share

   $ 0.30     $ 0.29     $ 0.30     $ 0.58  

 

(A)

Includes $4.9 million and $21.1 million of ground lease and other expenses (such as property taxes and insurance) paid directly by us and reimbursed by our tenants for the three months ended June 30, 2024 and 2023, respectively, and $7.2 million and $25.3 million for the six months ended June 30, 2024 and 2023, respectively.


MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Reconciliation of Net Loss to Funds From Operations

(Unaudited)

 

(Amounts in thousands, except for per share data)    For the Three Months Ended     For the Six Months Ended  
     June 30, 2024     June 30, 2023     June 30, 2024     June 30, 2023  

FFO information:

        

Net loss attributable to MPT common stockholders

   $ (320,635   $ (42,037   $ (1,196,260   $ (9,243

Participating securities’ share in earnings

     (654     (469     (654     (984
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss, less participating securities’ share in earnings

   $ (321,289   $ (42,506   $ (1,196,914   $ (10,227
  

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation and amortization

     117,239       382,244       211,482       484,204  

Gain on sale of real estate

     (384,824     (167     (383,401     (229

Real estate impairment charges

     499,324       —        499,324       52,104  
  

 

 

   

 

 

   

 

 

   

 

 

 

Funds from operations

   $ (89,550   $ 339,571     $ (869,509   $ 525,852  
  

 

 

   

 

 

   

 

 

   

 

 

 

Write-off of billed and unbilled rent and other

     1,188       95,642       3,005       135,268  

Other impairment charges, net

     48,885       —        741,973       —   

Litigation and other

     11,738       2,502       17,608       10,228  

Share-based compensation adjustments

     —        (4,363     —        (4,363

Non-cash fair value adjustments

     159,247       8,374       380,523       4,253  

Tax rate changes and other

     4,895       (157,230     4,588       (164,535

Debt refinancing and unutilized financing costs

     2,964       816       2,964       816  
  

 

 

   

 

 

   

 

 

   

 

 

 

Normalized funds from operations

   $ 139,367     $ 285,312     $ 281,152     $ 507,519  
  

 

 

   

 

 

   

 

 

   

 

 

 

Certain non-cash and related recovery information:

        

Share-based compensation

   $ 8,521     $ 10,800     $ 16,154     $ 22,629  

Debt costs amortization

   $ 4,936     $ 5,203     $ 9,775     $ 10,324  

Non-cash rent and interest revenue (A)

   $ —      $ (129,494   $ —      $ (150,357

Cash recoveries of non-cash rent and interest revenue (B)

   $ 540     $ 2,380     $ 6,288     $ 33,736  

Straight-line rent revenue from operating and finance leases

   $ (40,786   $ (60,825   $ (88,032   $ (123,414

Per diluted share data:

        

Net loss, less participating securities’ share in earnings

   $ (0.54   $ (0.07   $ (1.99   $ (0.02
  

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation and amortization

     0.20       0.64       0.35       0.81  

Gain on sale of real estate

     (0.64     —        (0.64     —   

Real estate impairment charges

     0.83       —        0.83       0.09  
  

 

 

   

 

 

   

 

 

   

 

 

 

Funds from operations

   $ (0.15   $ 0.57     $ (1.45   $ 0.88  
  

 

 

   

 

 

   

 

 

   

 

 

 

Write-off of billed and unbilled rent and other

     —        0.16       0.01       0.23  

Other impairment charges, net

     0.08       —        1.24       —   

Litigation and other

     0.02       —        0.03       0.01  

Share-based compensation adjustments

     —        —        —        —   

Non-cash fair value adjustments

     0.27       0.01       0.63       —   

Tax rate changes and other

     0.01       (0.26     0.01       (0.27

Debt refinancing and unutilized financing costs

     —        —        —        —   
  

 

 

   

 

 

   

 

 

   

 

 

 

Normalized funds from operations

   $ 0.23     $ 0.48     $ 0.47     $ 0.85  
  

 

 

   

 

 

   

 

 

   

 

 

 

Certain non-cash and related recovery information:

        

Share-based compensation

   $ 0.01     $ 0.02     $ 0.03     $ 0.04  

Debt costs amortization

   $ 0.01     $ 0.01     $ 0.02     $ 0.02  

Non-cash rent and interest revenue (A)

   $ —      $ (0.22   $ —      $ (0.25

Cash recoveries of non-cash rent and interest revenue (B)

   $ —      $ —      $ 0.01     $ 0.06  

Straight-line rent revenue from operating and finance leases

   $ (0.07   $ (0.10   $ (0.15   $ (0.21

Notes:

Investors and analysts following the real estate industry utilize funds from operations (“FFO”) as a supplemental performance measure. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets, which assumes that the value of real estate diminishes predictably over time. We compute FFO in accordance with the definition provided by the National Association of Real Estate Investment Trusts, or Nareit, which represents net income (loss) (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairment charges on real estate assets, plus real estate depreciation and amortization, including amortization related to in-place lease intangibles, and after adjustments for unconsolidated partnerships and joint ventures.

In addition to presenting FFO in accordance with the Nareit definition, we disclose normalized FFO, which adjusts FFO for items that relate to unanticipated or non-core events or activities or accounting changes that, if not noted, would make comparison to prior period results and market expectations less meaningful to investors and analysts. We believe that the use of FFO, combined with the required GAAP presentations, improves the understanding of our operating results among investors and the use of normalized FFO makes comparisons of our operating results with prior periods and other companies more meaningful. While FFO and normalized FFO are relevant and widely used supplemental measures of operating and financial performance of REITs, they should not be viewed as a substitute measure of our operating performance since the measures do not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs (if any not paid by our tenants) to maintain the operating performance of our properties, which can be significant economic costs that could materially impact our results of operations. FFO and normalized FFO should not be considered an alternative to net income (loss) (computed in accordance with GAAP) as indicators of our results of operations or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.

Certain line items above (such as depreciation and amortization) include our share of such income/expense from unconsolidated joint ventures. These amounts are included with all activity of our equity interests in the “(Loss) earnings from equity interests” line on the consolidated statements of income.

(A) Includes revenue accrued during the period but not received in cash, such as deferred rent, payment-in-kind (“PIK”) interest or other accruals.

(B) Includes cash received to satisfy previously accrued non-cash revenue, such as the cash receipt of previously deferred rent or PIK interest.