Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

5. Income Taxes

Medical Properties Trust, Inc.

We have maintained and intend to maintain our election as a REIT under the Code. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement to distribute at least 90% of our REIT taxable income to our stockholders. As a REIT, we generally will not be subject to U.S. federal income tax if we distribute 100% of our REIT taxable income to our stockholders and satisfy certain other requirements; instead, income tax is paid directly by our stockholders on the dividends distributed to them. If our REIT taxable income exceeds our dividends in a tax year, REIT tax rules allow us to designate dividends from the subsequent tax year in order to avoid current taxation on undistributed income. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes at regular corporate rates. Taxable income from non-REIT activities managed through our TRS entities is subject to applicable U.S. federal, state, and local income taxes. Our international subsidiaries are also subject to income taxes in the jurisdictions in which they operate.

From our TRS entities and our foreign operations, income tax (expense) benefit were as follows (in thousands):

	For the Years Ended December 31,
	2024			2023			2022
Current income tax (expense) benefit:
Domestic	$	477		$	(7,756	)	$	1,111
Foreign		(31,589	)		(24,257	)		(27,751	)
		(31,112	)		(32,013	)		(26,640	)
Deferred income tax (expense) benefit:
Domestic		(465	)		8,926			(15,628	)
Foreign		(12,524	)		153,766			(13,632	)
		(12,989	)		162,692			(29,260	)
Income tax (expense) benefit	$	(44,101	)	$	130,679		$	(55,900	)

A reconciliation of income tax (expense) benefit from the statutory income tax rate to the effective tax rate based on (loss) income before income taxes for the years ended December 31, 2024, 2023, and 2022 is as follows (in thousands):

	For the Years Ended December 31,
	2024			2023			2022
(Loss) income before income tax	$	(2,364,186	)	$	(686,771	)	$	959,719
Income tax benefit (expense) at the U.S. statutory federal rate		496,479			144,222			(201,541	)
Decrease (increase) in income tax resulting from:
Foreign rate differential		4,888			(4,122	)		1,826
State income taxes, net of federal benefit		—			1,275			(1,886	)
U.S. earnings not subject to federal income tax		(227,080	)		(115,189	)		165,705
Change in valuation allowance		(301,468	)		(45,692	)		(11,281	)
Statutory tax rate change		—			—			(941	)
Interest disallowance		(2,965	)		(3,421	)		(1,737	)
Tax Impact of UK REIT conversion		—			160,641			—
Other items, net		(13,955	)		(7,035	)		(6,045	)
Total income tax (expense) benefit	$	(44,101	)	$	130,679		$	(55,900	)

The foreign provision for income taxes is based on foreign profit before income taxes of $127.9 million, $6.3 million, and $159.6 million in 2024, 2023, and 2022, respectively.

The domestic provision for income taxes is based on (loss) income before income taxes of $(1.4) billion in 2024, $(144.5) million in 2023, and $10.8 million in 2022 from our TRS entities.

At December 31, 2024 and 2023, components of our deferred tax assets and liabilities were as follows (in thousands):

	2024			2023
Deferred tax assets:
Operating loss and interest deduction carry forwards	$	263,523		$	143,683
Depreciation		56,089			45,146
Partnership investments		112,892			15,768
Impairment and other loss reserves		101,834			11,790
Other		8,500			7,109
Total deferred tax assets		542,838			223,496
Valuation allowance		(418,659	)		(117,191	)
Total net deferred tax assets	$	124,179		$	106,305
Deferred tax liabilities:
Property and equipment	$	(145,835	)	$	(158,330	)
Net unbilled revenue		(82,170	)		(65,727	)
Partnership investments		(21,445	)		—
Other		(3,450	)		(10,687	)
Total deferred tax liabilities		(252,900	)		(234,744	)
Net deferred tax asset (liability)	$	(128,721	)	$	(128,439	)

At December 31, 2024, we had net operating losses ("NOL") and other tax attribute carryforwards as follows (in thousands):

	U.S.			Foreign
Gross NOL carryforwards	$	704,434		$	453,615
Tax-effected NOL carryforwards	$	151,942		$	112,111
Valuation allowance		(151,942	)		(6,273	)
Net deferred tax asset - NOL carryforwards	$	—		$	105,838
Expiration periods	2025-indefinite			indefinite

Valuation Allowance

A valuation allowance has been recorded on certain foreign and domestic net operating loss carryforwards and other net deferred tax assets that may not be realized. As of each reporting date, we consider all new evidence that could impact the future realization of our deferred tax assets. In the evaluation of the need for a valuation allowance on our deferred income tax assets, we consider all available positive and negative evidence, including scheduled reversals of deferred income tax liabilities, carryback of future period losses to prior periods, projected future taxable income, tax planning strategies, and recent financial performance.

During 2024, a valuation allowance of $301.5 million has been recorded against a portion of our deferred tax assets to recognize only the components of the deferred tax assets that is more likely than not to be realized. The valuation allowance was primarily recorded against deferred tax assets for NOLs, non-depreciable basis of real property, and other tax attributes that we believe will not be realized. Valuation allowance activity recorded generally follows the activity of the associated deferred tax asset that is not expected to be recognized. From time-to-time, we may acquire deferred tax assets as part of real estate transactions and will assess the need for a valuation allowance as part of the opening balance sheet. Additionally, valuation allowances will be remeasured for foreign currency translation fluctuations through other comprehensive income.

We have no material uncertain tax position liabilities and related interest or penalties.

REIT Status

We have met the annual REIT distribution requirements by payment of at least 90% of our REIT taxable income in 2024, 2023, and 2022. Earnings and profits, which determine the taxability of such distributions, will differ from net income reported for financial reporting purposes due primarily to differences in cost basis, differences in the estimated useful lives used to compute depreciation, and differences between the allocation of our net income and loss for financial reporting purposes and for tax reporting purposes.

A schedule of per share distributions we paid and reported to our stockholders is set forth in the following:

	For the Years Ended December 31,
Per share:	2024			2023		2022
Ordinary dividend (1)	$	—		$	1.0639	$	0.4703
Long-term capital gain (2)		—			0.1061		0.6797
Return of capital		0.3800			—		—
Total	$	0.3800	(3)	$	1.1700	$	1.1500

(1)For the years ended December 31, 2023 and 2022, includes Section 199A dividends of 1.0639 and 0.4703, respectively.

(2)For the years ended December 31, 2023 and 2022, includes Unrecaptured Section 1250 gains of 0.1061 and 0.2574, respectively.

(3)The dividend declared on November 21, 2024 and paid January 9, 2025 will be applicable to the 2025 tax year and thus is not reflected in the table above.

Similar to our U.S. REIT, we have met all requirements of our U.K. REIT as of December 31, 2024.

MPT Operating Partnership, L.P.

As a partnership, the allocated share of income of the Operating Partnership is included in the income tax returns of the general and limited partners. Accordingly, no accounting for income taxes is generally required for such income of the Operating Partnership. However, the Operating Partnership has formed TRS entities on behalf of Medical Properties Trust, Inc., which are subject to U.S. federal, state, and local income taxes at regular corporate rates, and its international subsidiaries are subject to income taxes in the jurisdictions in which they operate. See discussion above under Medical Properties Trust, Inc. for more details of income taxes associated with our TRS entities and international operations.