12. Condensed Consolidating Financial Information

The following tables present the condensed consolidating financial information for (a) Medical Properties Trust, Inc. (“Parent” and a guarantor to our 2011 and 2012 Senior Unsecured Notes), (b) MPT Operating Partnership, L.P. and MPT Finance Corporation (“Subsidiary Issuer”), (c) on a combined basis, the guarantors of our 2011 and 2012 Senior Unsecured Notes (“Subsidiary Guarantors”), and (d) on a combined basis, the non-guarantor subsidiaries (“Non-Guarantor Subsidiaries”). Separate financial statements of the Subsidiary Guarantors are not presented because the guarantee by each 100% owned Subsidiary Guarantor is joint and several, and we believe separate financial statements and other disclosures regarding the Subsidiary Guarantors are not material to investors. Furthermore, there are no significant legal restrictions on the Parent’s ability to obtain funds from its subsidiaries by dividend or loan.

The guarantees by the Subsidiary Guarantors may be released and discharged upon: (1) any sale, exchange or transfer of all of the capital stock of a Subsidiary Guarantor; (2) the merger or consolidation of a Subsidiary Guarantor with a Subsidiary Issuer or any other Subsidiary Guarantor; (3) the proper designation of any Subsidiary Guarantor by the Subsidiary Issuers as “unrestricted” for covenant purposes under the indenture governing the 2011 and 2012 Senior Unsecured Notes; (4) the legal defeasance or covenant defeasance or satisfaction and discharge of the indenture; (5) a liquidation or dissolution of a Subsidiary Guarantor permitted under the indenture governing the 2011 and 2012 Senior Unsecured Notes; or (6) the release or discharge of the Subsidiary Guarantor from its guarantee obligations under our revolving credit facility.

Subsequent to December 31, 2011, certain of our subsidiaries were re-designated as guarantors of our 2011 and 2012 Senior Unsecured Notes (such subsidiaries were non-guarantors in 2011), while another subsidiary has been re-designated as a non-guarantor as the underlying property was sold in 2012 (such subsidiary was a guarantor during 2011). With these re-designations, we have restated the 2011 condensed consolidating financial information below to reflect these changes.

Condensed Consolidated Balance Sheet

June 30, 2012

(in thousands)


	Parent		Subsidiary Issuers		Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations		Total Consolidated
Assets
Real estate assets
Land, buildings and improvements and intangible lease assets	$	—	$	69	$	1,209,831		$	65,946		$	—	$	1,275,846
Mortgage loans		—		—		165,000			100,000			—		265,000
Net investment in direct financing leases		—		—		—			201,156			—		201,156

Gross investment in real estate assets		—		69		1,374,831			367,102			—		1,742,002
Accumulated depreciation and amortization		—		—		(113,670	)		(5,601	)		—		(119,271	)

Net investment in real estate assets				69		1,261,161			361,501			—		1,622,731
Cash & cash equivalents		—		125,655		1,565			419			—		127,639
Interest and rent receivable		—		513		25,677			11,848			—		38,038


Straight-line rent receivable		—		—		31,164			5,809			—			36,973
Other loans		—		177		—			159,541			—			159,718
Net intercompany receivable (payable)		26,728		1,229,630		(846,533	)		(409,825	)		—			—
Investment in subsidiaries		1,027,972		554,473		42,912			—			(1,625,357	)		—
Other assets		—		32,800		1,520			19,112			—			53,432

Total Assets	$	1,054,700	$	1,943,317	$	517,466		$	148,405		$	(1,625,357	)	$	2,038,531

Liabilities and Equity
Liabilities
Debt, net	$	—	$	885,889	$	—		$	14,315		$	—		$	900,204
Accounts payable and accrued expenses		27,118		28,931		2,362			675			—			59,087
Deferred revenue		—		524		20,830			1,142			—			22,496
Lease deposits and other obligations to tenants		—		—		28,125			1,037			—			29,161

Total liabilities		27,118		915,344		51,317			17,168			—			1,010,948
Total equity		1,027,583		1,027,973		466,149			131,236			(1,625,357	)		1,027,583

Total Liabilities and Equity	$	1,054,700	$	1,943,317	$	517,466		$	148,405		$	(1,625,357	)	$	2,038,531

Condensed Consolidated Statements of Income

For the Three Months Ended June 30, 2012

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues
Rent billed	$	—		$	—		$	30,701		$	4,153		$	(2,131	)	$	32,723
Straight-line rent		—			—			1,053			375			—			1,428
Income from direct financing leases		—			—			4,839			5,371			(4,839	)		5,371
Interest and fee income		—			5,034			6,530			7,007			(7,023	)		11,548

Total revenues		—			5,034			43,123			16,906			(13,993	)		51,070
Expenses
Real estate depreciation and amortization		—			—			8,363			425			—			8,788
Property-related		—			130			420			7,059			(6,970	)		639
General and administrative		—			6,773			—			(76	)		—			6,697
Acquisition expenses		—			279			—			—			—			279

Total operating expenses		—			7,182			8,783			7,408			(6,970	)		16,403

Operating income (expense)		—			(2,148	)		34,340			9,498			(7,023	)		34,667
Other income (expense)
Interest and other income (expense)		—			(14	)		(2	)		4,839			(4,839	)		(17	)
Earnings from equity and other interests		—			—			453			426			—			879
Interest expense		—			(14,913	)		254			(12,092	)		11,862			(14,889	)

Net other income (expense)		—			(14,927	)		704			(6,827	)		7,023			(14,027	)

Income (loss) from continuing operations		—			(17,077	)		35,045			2,671			—			20,640
Income (loss) from discontinued operations		—			—			—			(1,280	)		—			(1,280	)
Equity in earnings of consolidated subsidiaries net of income taxes		19,360			36,437			1,117			—			(56,914	)		—

Net income (loss)		19,360			19,360			36,162			1,392			(56,914	)		19,360
Net income (loss) attributable to non-controlling interests		(44	)		(44	)		—			—			44			(44	)

Net income (loss) attributable to MPT common stockholders	$	19,316		$	19,316		$	36,162		$	1,392		$	(56,870	)	$	19,316

Condensed Consolidated Statements of Income

For the Six Months Ended June 30, 2012

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues
Rent billed	$	—		$	—		$	60,677		$	8,285		$	(4,591	)	$	64,370
Straight-line rent		—			—			2,133			744			—			2,877
Income from direct financing leases		—			—			6,492			10,312			(6,492	)		7,206
Interest and fee income		—			7,978			11,744			7,308			(10,646	)		19,490

Total revenues		—			7,978			81,046			26,649			(21,729	)		93,943
Expenses
Real estate depreciation and amortization		—			—			16,570			850			—			17,420
Property-related		—			261			522			11,172			(11,083	)		871
General and administrative		—			13,736			—			553			—			14,289
Acquisition expenses		—			3,704			—			—			—			3,704

Total operating expenses		—			17,701			17,092			12,575			(11,083	)		36,284

Operating income (expense)		—			(9,723	)		63,954			14,074			(10,646	)		57,659
Other income (expense)
Interest and other income (expense)		—			(28	)		(1	)		(3	)		—			(32	)
Earnings from equity and other interests		—			—			452			426			—			879
Interest expense		—			(27,702	)		478			(11,106	)		10,646			(27,684	)

Net other income (expense)		—			(27,730	)		929			(10,683	)		10,646			(26,837	)

Income (loss) from continuing operations		—			(37,453	)		64,883			3,391			—			30,822
Income (loss) from discontinued operations		—			—			—			(854	)		—			(855	)
Equity in earnings of consolidated subsidiaries net of income taxes		29,967			67,420			2,238			—			(99,625	)		—

Net income (loss)		29,967			29,967			67,121			2,537			(99,625	)		29,967
Net income (loss) attributable to non-controlling interests		(87	)		(87	)		—			—			87			(87	)

Net income (loss) attributable to MPT common stockholders	$	29,880		$	29,880		$	67,121			2,537		$	(99,538	)	$	29,880

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the Three Months Ended June 30, 2012

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net income	$	19,360		$	19,360		$	36,162	$	1,392	$	(56,914	)	$	19,360
Other comprehensive income (loss):
Unrealized loss on interest rate swap		(1,045	)		(1,045	)		—		—		1,045			(1,045	)

Total comprehensive income (loss)		18,315			18,315			36,162		1,392		(55,869	)		18,315
Comprehensive income attributable to non-controlling interests		(44	)		(44	)		—		—		44			(44	)

Comprehensive income (loss) attributable to MPT common stockholders	$	18,271		$	18,271		$	36,162	$	1,392	$	(55,825	)	$	18,271

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the Six Months Ended June 30, 2012

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net income	$	29,967		$	29,967		$	67,121	$	2,537	$	(99,625	)	$	29,967
Other comprehensive income (loss):
Unrealized loss on interest rate swap		(546	)		(546	)		—		—		546			(546	)

Total comprehensive income (loss)		29,421			29,421			67,121		2,537		(99,079	)		29,421
Comprehensive income attributable to non-controlling interests		(87	)		(87	)		—		—		87			(87	)

Comprehensive income (loss) attributable to MPT common stockholders	$	29,334		$	29,334		$	67,121	$	2,537	$	(98,992	)	$	29,334

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2012

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Operating Activities
Net cash provided by (used in) operating activities	$	—		$	(30,512	)	$	75,358		$	(423	)	$	—		$	44,423
Investing Activities
Cash paid for acquisitions and other related investments		—			—			(200,000	)		(196,500	)		—			(396,500	)
Principal received on loans receivable		—			—			5,491			2,475			—			7,966
Proceeds from sales of real estate		—			—			—			16,000			—			16,000
Investments in and advances to subsidiaries		(170,705	)		(359,319	)		179,010			180,309			170,705			—
Investments in loans receivable		—			—			—			(1,293	)		—			(1,293	)
Construction in progress and other		—			(47	)		(19,970	)		(638	)		—			(20,655	)

Net cash provided by (used in) investing activities		(170,705	)		(359,366	)		(35,469	)		353			170,705			(394,482	)
Financing Activities
Revolving credit facilities, net		—			(50,000	)		(39,600	)		—			—			(89,600	)
Additions to term debt		—			300,000			—			—			—			300,000
Payments of term debt		—			—			—			(114	)		—			(114	)
Distributions paid		(49,455	)		(49,589	)		—			—			49,455			(49,589	)
Sale of common stock, net		220,160			220,160			—			—			(220,160	)		220,160
Lease deposits and other obligations to tenants		—			—			(133	)		516			—			383


Debt issuance costs paid and other financing activities		—		(6,268	)		—			—		—			(6,268	)

Net cash provided by financing activities		170,705		414,303			(39,733	)		402		(170,705	)		374,972

Increase (decrease) in cash and cash equivalents for period		—		24,425			155			332		—			24,913
Cash and cash equivalents at beginning of period		—		101,230			1,409			87		—			102,726

Cash and cash equivalents at end of period	$	—	$	125,655		$	1,565		$	419	$	—		$	127,639

Condensed Consolidated Balance Sheet

December 31, 2011

(in thousands)


	Parent		Subsidiary Issuers		Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations		Total Consolidated
Assets
Real estate assets
Land, buildings and improvements and intangible lease assets	$	—	$	—	$	1,189,891		$	65,947		$	—	$	1,255,876
Real estate held for sale		—		—		—			17,637			—		17,637
Mortgage loans		—		—		165,000			—			—		165,000

Gross investment in real estate assets		—		—		1,068,630			83,584			—		1,438,513
Accumulated depreciation and amortization		—		—		(97,099	)		(4,751	)		—		(101,851	)

Net investment in real estate assets		—		—		1,354,794			78,833			—		1,336,662
Cash & cash equivalents		—		101,230		—			87			—		102,726
Interest and rent receivable		—		399		22,529			6,934			—		29,862
Straight-line rent receivable		—		—		28,928			5,065			—		33,993
Other loans		—		178		—			69,171			—		74,839
Net intercompany receivable (payable)		21,955		872,380		(867,536	)		(26,800	)		—		—
Investment in subsidiaries		829,205		489,858		43,008			—			1,362,071		—
Other assets		—		27,285		2,151			14,357			—		43,792

Total Assets	$	851,160	$	1,491,366	$	493,772		$	165,766		$	1,362,071	$	1,621,874

Liabilities and Equity
Liabilities
Debt, net	$	—	$	635,820	$	39,600		$	8,433		$	—	$	689,849
Accounts payable and accrued expenses		22,345		25,783		2,581			403			—		51,125
Deferred revenue		—		559		21,499			4,875			—		23,307
Lease deposits and other obligations to tenants		—		—		28,258			1,618			—		28,778

Total liabilities		22,345		662,162		38,795			15,329			—		793,059
Total equity		828,815		829,205		282,765			150,437			1,362,071		828,815

Total Liabilities and Equity	$	851,160	$	1,272,746	$	321,560		$	165,766		$	1,362,071	$	1,621,874

Condensed Consolidated Statements of Income

For the Three Months Ended June 30, 2011

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues
Rent billed	$	—		$	—		$	26,068		$	1,905		$	(331	)	$	27,642
Straight-line rent		—			—			1,459			586			—			2,045
Interest and fee income		—			1,370			4,505			907			(1,513	)		5,269

Total revenues		—			1,370			32,032			3,398			(1,844	)		34,956
Expenses
Real estate depreciation and amortization		—			—			7,490			425			—			7,915
Real estate impairment charge		—			—			564			—			—			564
Property-related		—			(35	)		299			280			(331	)		212
General and administrative		(28	)		6,003			—			1,789			—			7,818
Acquisition expenses		—			579			—			—			—			616

Total operating expenses		(28	)		6,547			8,353			2,494			(331	)		17,125

Operating income (loss)		28			(5,177	)		23,679			904			(1,513	)		17,831
Other income (expense)
Interest and other income (expense)		—			22			(5	)		2			—			19
Earnings from equity and other interests		—			—			—			2			—			2
Debt refinancing costs		—			(3,684	)		(105	)		—			—			(3,789	)
Interest expense		—			(12,048	)		(40	)		(1,811	)		1,513			(12,387	)

Net other income (expense)		—			(15,710	)		(150	)		(1,807	)		1,513			(16,155	)


Income (loss) from continuing operations		28			(19,394	)		18,148			938			—			1,676
Income (loss) from discontinued operations		—			—			(154	)		909			—			1,007
Equity in earnings of consolidated subsidiaries net of income taxes		2,711			27,575			1,073			—			(27,575	)		—

Net income (loss)		2,683			2,711			24,893			(29	)		(27,575	)		2,683
Net income (loss) attributable to non-controlling interests		(43	)		(43	)		—			—			43			(43	)

Net income attributable to MPT common stockholders	$	2,640		$	2,667		$	24,893		$	(29	)	$	(27,531	)	$	2,640

Condensed Consolidated Statements of Income

For the Six Months Ended June 30, 2011

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues
Rent billed	$	—		$	—		$	51,613		$	3,606		$	(663	)	$	54,556
Straight-line rent		—			—			2,835			920			—			3,756
Interest and fee income		—			2,767			9,007			1,677			(2,899	)		10,550

Total revenues		—			2,767			63,455			6,203			(6,704	)		68,862
Expenses
Real estate depreciation and amortization		—			—			14,540			807			—			15,346
Real estate impairment charge		—			—			564			—			—			564
Property-related		—			—			194			707			(663	)		236
General and administrative		44			12,008			—			2,640			—			14,693
Acquisition expenses		—			2,204			—			452			—			2,656

Total operating expenses		44			14,212			15,298			4,606			(705	)		33,495

Operating income (loss)		(44	)		(11,445	)		48,157			1,597			(5,999	)		35,367
Other income (expense)
Interest income and other		—			(2	)		1			(63	)		—			(64	)
Earnings from equity and other interests		—			—			—			70			—			70
Debt refinancing costs		—			(3,684	)		(105	)		—			—			(3,789	)
Interest expense		—			(20,014	)		(94	)		(3,317	)		2,900			(20,526	)

Net other income (expense)		—			(35,146	)		(198	)		(3,310	)		5,999			(24,309	)

Income (loss) from continuing operations		(44	)		(35,146	)		47,959			1,713			—			11,058
Income (loss) from discontinued operations		—			—			(98	)		2,351			—			2,449
Equity in earnings of consolidated subsidiaries net of income taxes		13,551			48,697			2,346			—			(64,593	)		—

Net income (loss)		13,507			13,551			50,403			638			(64,593	)		13,507
Net income (loss) attributable to non-controlling interests		(88	)		(88	)		—			—			88			(88	)

Net income attributable to MPT common stockholders	$	13,419		$	13,463		$	50,403		$	638		$	(64,506	)	$	13,419

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the Three Months Ended June 30, 2011

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Net income	$	2,683		$	2,711		$	24,893	$	(29	)	$	(27,575	)	$	2,683
Other comprehensive income (loss):
Unrealized loss on interest rate swap		(3,586	)		(3,586	)		—		—			3,586			(3,586	)

Total comprehensive income (loss)		(903	)		(875	)		24,893		(29	)		(23,989	)		(903	)
Comprehensive income attributable to non-controlling interests		(43	)		(43	)		—		—			43			(43	)


Comprehensive income (loss) attributable to MPT common stockholders	$	(946	)	$	(918	)	$	24,893	$	(29	)	$	(23,946	)	$	(946	)

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the Six Months Ended June 30, 2011

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net income	$	13,507		$	13,551		$	50,403	$	6,872	$	(64,593	)	$	13,507
Other comprehensive income (loss):
Unrealized loss on interest rate swap		(3,069	)		(3,069	)		—		—		3,069			(3,069	)

Total comprehensive income (loss)		10,438			10,482			50,403		6,872		(61,524	)		10,438
Comprehensive income attributable to non-controlling interests		(88	)		(88	)		—		—		88			(88	)

Comprehensive income (loss) attributable to MPT common stockholders	$	10,350		$	10,394		$	50,403	$	6,872	$	61,436		$	10,350

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2011

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Operating Activities
Net cash provided by (used in) operating activities	$	(158	)	$	(19,700	)	$	47,354		$	12,197		$	—		$	39,692
Investing Activities
Cash paid for acquisitions and other related investments		—			—			(168,600	)		(11,387	)		—			(179,987	)
Principal received on loans receivable		—			—			—			1,469			—			1,469
Investments in and advances to subsidiaries		44,818			(90,945	)		83,887			(6,900	)		(44,600	)		—
Investments in loans receivable		—			—			—			(229	)		—			(229	)
Construction in progress and other		—			(112	)		(7,368	)		(497	)		—			(7,976	)

Net cash provided by (used in) investing activities		44,818			49,861			(92,081	)		(3,744	)		44,660			(186,723	)
Financing Activities
Revolving credit facilities, net		—			—			39,600			—			—			39,600
Additions to term debt		—			450,000			—			(92,081	)		—			450,000
Payments of term debt		—			(149,250	)		—			(8,486	)		—			(157,736	)
Distributions paid		(44,660	)		(44,784	)		—			—			44,660			(44,784	)
Lease deposits and other obligations to tenants		—			—			5,127			(798	)		—			4,328
Debt issuance costs paid and other financing activities		—			(14,743	)		—			(136	)		—			(14,879	)

Net cash provided by financing activities		(44,660	)		241,222			44,727			(9,420	)		44,660			276,529

Increase in cash and cash equivalents for period		—			130,466			—			(968	)		—			129,498
Cash and cash equivalents at beginning of period		—			92,822			—			1,586			—			98,408

Cash and cash equivalents at end of period	$	—		$	227,288		$	—		$	618		$	—		$	227,906