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 other subsidiaries have been re-designated as non-guarantors as the underlying properties were sold in 2012 (such subsidiaries were guarantors during 2011). With these re-designations, we have restated the 2011 condensed consolidating financial information below to reflect these changes.

Condensed Consolidated Balance Sheet

September 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	$	—	$	42	$	1,185,920		$	65,947		$	—		$	1,251,909
Real estate held for sale		—		—		17,432			—			—			17,432
Mortgage loans		—		—		268,650			100,000			—			368,650
Net investment in direct financing leases		—		—		110,000			202,050			—			312,050

Gross investment in real estate assets		—		42		1,582,002			367,997			—			1,950,041
Accumulated depreciation and amortization		—		—		(114,188	)		(6,027	)		—			(120,215	)

Net investment in real estate assets				42		1,467,814			361,970			—			1,829,826
Cash & cash equivalents		—		34,371		1,565			227			—			36,163
Interest and rent receivable		—		540		27,881			13,673			—			42,094
Straight-line rent receivable		—		—		31,882			6,183			—			38,065
Other loans		—		176		—			158,001			—			158,177
Net intercompany receivable (payable)		26,750		1,410,629		(1,039,740	)		(397,639	)		—			—
Investment in subsidiaries		1,033,548		602,443		43,693			—			(1,679,684	)		—
Other assets		—		32,330		1,148			20,596			—			54,074

Total Assets	$	1,060,298	$	2,080,531	$	534,243		$	163,011		$	(1,679,684	)	$	2,158,399

Liabilities and Equity
Liabilities
Debt, net	$	—	$	1,010,925	$	—		$	14,258		$	—		$	1,025,183
Accounts payable and accrued expenses		27,140		35,958		731			468			—			64,297
Deferred revenue		—		100		18,796			1,478			—			20,374
Lease deposits and other obligations to tenants		—		—		14,372			1,015			—			15,387

Total liabilities		27,140		1,046,983		33,899			17,219			—			1,125,241
Total equity		1,033,158		1,033,548		500,344			145,792			(1,679,684	)		1,033,158

Total Liabilities and Equity	$	1,060,298	$	2,080,531	$	534,243		$	163,011		$	(1,679,684	)	$	2,158,399

Condensed Consolidated Statements of Income

For the Three Months Ended September 30, 2012

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues
Rent billed	$	—		$	—		$	29,256	$	4,162		$	(2,335	)	$	31,083
Straight-line rent		—			—			2,387		375			—			2,762
Income from direct financing leases		—			—			5,238		5,394			(4,859	)		5,773
Interest and fee income		—			5,242			8,917		6,943			(7,065	)		14,037

Total revenues		—			5,242			45,798		16,874			(14,259	)		53,655
Expenses
Real estate depreciation and amortization		—			—			8,066		425			—			8,491
Property-related		—			88			121		7,203			(7,194	)		218
General and administrative		—			6,332			—		720			—			7,052
Acquisition expenses		—			410			—		—			—			410

Total operating expenses		—			6,830			8,187		8,348			(7,194	)		16,171

Operating income (expense)		—			(1,588	)		37,611		8,526			(7,065	)		37,484
Other income (expense)
Interest and other income (expense)		—			(21	)		—		(2	)		—			(23	)
Earnings from equity and other interests		—			—			330		735			—			1,065
Interest expense		—			(15,203	)		389		(7,297	)		7,065			(15,046	)

Net other income (expense)		—			(15,224	)		719		(6,564	)		7,065			(14,004	)

Income (loss) from continuing operations		—			(16,812	)		38,330		1,962			—			23,480
Income (loss) from discontinued operations		—			—			1,069		6,959			—			8,028
Equity in earnings of consolidated subsidiaries net of income taxes		31,508			48,320			1,129		—			(80,957	)		—

Net income (loss)		31,508			31,508			40,528		8,921			(80,957	)		31,508
Net income (loss) attributable to non-controlling interests		(44	)		(44	)		—		—			44			(44	)

Net income (loss) attributable to MPT common stockholders	$	31,464		$	31,464		$	40,528	$	8,921		$	(80,913	)	$	31,464

Condensed Consolidated Statements of Income

For the Nine Months Ended September 30, 2012

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues
Rent billed	$	—		$	—		$	87,579		$	12,447		$	(6,926	)	$	93,100
Straight-line rent		—			—			4,354			1,119			—			5,473
Income from direct financing leases		—			—			11,730			12,600			(11,351	)		12,979
Interest and fee income		—			13,219			20,621			17,357			(17,711	)		33,486

Total revenues		—			13,219			124,284			43,523			(35,988	)		145,038
Expenses
Real estate depreciation and amortization		—			—			24,117			1,275			—			25,392
Property-related		—			349			597			18,375			(18,277	)		1,044
General and administrative		—			20,067			—			1,274			—			21,341
Acquisition expenses		—			4,115			—			—			—			4,115

Total operating expenses		—			24,531			24,714			20,924			(18,277	)		51,892

Operating income (expense)		—			(11,312	)		99,570			22,599			(17,711	)		93,146
Other income (expense)
Interest and other income (expense)		—			(49	)		(2	)		(4	)		—			(55	)
Earnings from equity and other interests		—			—			783			1,161			—			1,944
Interest expense		—			(42,905	)		867			(18,403	)		17,711			(42,730	)

Net other income (expense)		—			(42,954	)		1,648			(17,246	)		17,711			(40,841	)

Income (loss) from continuing operations		—			(54,266	)		101,218			5,353			—			52,305
Income (loss) from discontinued operations		—			—			2,363			6,806			—			9,169
Equity in earnings of consolidated subsidiaries net of income taxes		61,474			115,740			3,367			—			(180,581	)		—

Net income (loss)		61,474			61,474			106,948			12,159			(180,581	)		61,474
Net income (loss) attributable to non-controlling interests		(130	)		(130	)		—			—			130			(130	)

Net income (loss) attributable to MPT common stockholders	$	61,344		$	61,344		$	106,948		$	12,159		$	(180,451	)	$	61,344

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the Three Months Ended September 30, 2012

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net income	$	31,508		$	31,508		$	40,528	$	8,921	$	(80,957	)	$	31,508
Other comprehensive income:
Unrealized loss on interest rate swap		(443	)		(443	)		—		—		443			(443	)

Total comprehensive income		31,065			31,065			40,528		8,921		(80,514	)		31,065
Comprehensive income attributable to non-controlling interests		(44	)		(44	)		—		—		44			(44	)

Comprehensive income attributable to MPT common stockholders	$	31,021		$	31,021		$	40,528	$	8,921	$	(80,470	)	$	31,021

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the Nine Months Ended September 30, 2012

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net income	$	61,474		$	61,474		$	106,948	$	12,159	$	(180,581	)	$	61,474
Other comprehensive income:
Unrealized loss on interest rate swap		(989	)		(989	)		—		—		989			(989	)

Total comprehensive income		60,485			60,485			106,948		12,159		(179,592	)		60,485
Comprehensive income attributable to non-controlling interests		(130	)		(130	)		—		—		130			(130	)

Comprehensive income attributable to MPT common stockholders	$	60,355		$	60,355		$	106,948	$	12,159	$	(179,462	)	$	60,355

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 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	$	16		$	(38,780	)	$	114,073		$	(600	)	$	—		$	74,709
Investing Activities
Cash paid for acquisitions and other related investments		—			—			(410,000	)		(196,500	)		—			(606,500	)
Principal received on loans receivable		—			—			5,491			4,016			—			9,507
Net proceeds from sales of real estate		—			—			800			33,300			—			34,100
Investments in and advances to subsidiaries		(143,554	)		(540,016	)		377,472			162,560			143,538			—
Investments in loans receivable		—			—			—			(1,293	)		—			(1,293	)
Construction in progress and other		—			(59	)		(34,349	)		(1,512	)		—			(35,920	)

Net cash provided by (used in) investing activities		(143,554	)		(540,075	)		(60,586	)		571			143,538			(600,106	)
Financing Activities
Revolving credit facilities, net		—			75,000			(39,600	)		—			—			35,400
Additions to term debt		—			300,000			—			—			—			300,000
Payments of term debt		—			—			—			(171	)		—			(171	)
Distributions paid		(76,569	)		(76,770	)		—			—			76,569			(76,770	)
Sale of common stock, net		220,107			220,107			—			—			(220,107	)		220,107
Lease deposits and other obligations to tenants		—			—			(13,731	)		340			—			(13,391	)
Debt issuance costs paid and other financing activities		—			(6,341	)		—			—			—			(6,341	)

Net cash provided by (used in) financing activities		143,538			511,996			(53,331	)		169			(143,538	)		458,834

Increase in cash and cash equivalents for period		—			(66,859	)		156			140			—			(66,563	)
Cash and cash equivalents at beginning of period		—			101,230			1,409			87			—			102,726

Cash and cash equivalents at end of period	$	—		$	34,371		$	1,565		$	227		$	—		$	36,163

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	$	—	$	37	$	1,151,574		$	65,948		$	—		$	1,217,559
Real estate held for sale		—		—		22,008			26,917			—			48,925
Mortgage loans		—		—		165,000			—			—			165,000

Gross investment in real estate assets		—		37		1,338,582			92,865			—			1,431,484
Accumulated depreciation and amortization		—		—		(90,072	)		(4,750	)		—			(94,822	)

Net investment in real estate assets		—		37		1,248,510			88,115			—			1,336,662
Cash & cash equivalents		—		101,230		1,409			87			—			102,726
Interest and rent receivable		—		399		22,528			6,935			—			29,862
Straight-line rent receivable		—		—		27,388			6,605			—			33,993
Other loans		—		178		5,491			69,170			—			74,839
Net intercompany receivable (payable)		21,955		872,380		(862,281	)		(32,054	)		—			—
Investment in subsidiaries		829,205		489,858		43,008			—			(1,362,071	)		—
Other assets		—		27,285		2,151			14,356			—			43,792

Total Assets	$	851,160	$	1,491,367	$	488,204		$	153,214		$	(1,362,071	)	$	1,621,874

Liabilities and Equity
Liabilities
Debt, net	$	—	$	635,820	$	39,600		$	14,429		$	—		$	689,849
Accounts payable and accrued expenses		22,345		25,783		2,578			419			—			51,125
Deferred revenue		—		559		21,372			1,376			—			23,307
Lease deposits and other obligations to tenants		—		—		28,103			675			—			28,778

Total liabilities		22,345		662,162		91,653			16,899			—			793,059
Total equity		828,815		829,205		396,551			136,315			(1,362,071	)		828,815

Total Liabilities and Equity	$	851,160	$	1,491,367	$	488,204		$	153,214		$	(1,362,071	)	$	1,621,874

Condensed Consolidated Statements of Income

For the Three Months Ended September 30, 2011

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues
Rent billed	$	—		$	—		$	25,903	$	2,188		$	(331	)	$	27,760
Straight-line rent		—			—			1,219		424			—			1,643
Interest and fee income		—			1,351			4,146		920			(1,188	)		5,229

Total revenues		—			1,351			31,268		3,532			(1,519	)		34,632
Expenses
Real estate depreciation and amortization		—			—			7,212		488			—			7,700
Property-related		—			87			171		333			(331	)		260
General and administrative		18			6,348			—		(629	)		—			5,737
Acquisition expenses		—			513			469		(452	)		—			530

Total operating expenses		18			6,948			7,852		(260	)		(331	)		14,227

Operating income (loss)		(18	)		(5,597	)		23,416		3,792			(1,188	)		20,405
Other income (expense)
Interest and other income (expense)		—			44			—		(2	)		—			42
Earnings from equity and other interests		—			—			84		(75	)		—			9
Debt refinancing costs		—			(10,425	)		—		—			—			(10,425	)
Interest expense		—			(11,735	)		63		(1,451	)		1,188			(11,935	)

Net other income (expense)		—			(22,116	)		147		(1,528	)		1,188			(22,309	)

Income (loss) from continuing operations		(18	)		(27,713	)		23,563		2,264			—			(1,904	)
Income (loss) from discontinued operations		—			—			787		1,585			—			2,372
Equity in earnings of consolidated subsidiaries net of income taxes		486			28,199			1,112		—			(29,797	)		—

Net income (loss)		468			486			25,462		3,849			(29,797	)		468
Net income (loss) attributable to non-controlling interests		(43	)		(43	)		—		—			43			(43	)

Net income attributable to MPT common stockholders	$	425		$	443		$	25,462	$	3,849		$	(29,754	)	$	425

Condensed Consolidated Statements of Income

For the Nine Months Ended September 30, 2011

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues
Rent billed	$	—		$	—		$	76,284		$	5,796		$	(994	)	$	81,086
Straight-line rent		—			—			3,974			1,344			—			5,318
Interest and fee income		—			4,118			13,087			2,597			(4,088	)		15,714

Total revenues		—			4,118			93,345			9,737			(5,082	)		102,118
Expenses
Real estate depreciation and amortization		—			—			21,216			1,292			—			22,508
Property-related		—			87			213			1,040			(994	)		346
General and administrative		62			18,356			—			2,011			—			20,429
Acquisition expenses		—			2,717			469			—			—			3,186

Total operating expenses		62			21,160			21,898			4,343			(994	)		46,469

Operating income (loss)		(62	)		(17,042	)		71,447			5,394			(4,088	)		55,649
Other income (expense)
Interest income and other		—			42			2			(56	)		—			(12	)
Earnings from equity and other interests		—			—			84			(14	)		—			70
Debt refinancing costs		—			(14,109	)		(105	)		—			—			(14,214	)
Interest expense		—			(31,750	)		(31	)		(4,769	)		4,088			(32,462	)

Net other income (expense)		—			(45,817	)		(50	)		(4,839	)		4,088			(46,618	)

Income (loss) from continuing operations		(62	)		(62,859	)		71,397			555			—			9,031
Income (loss) from discontinued operations		—			—			263			4,681			—			4,944
Equity in earnings of consolidated subsidiaries net of income taxes		14,037			76,896			3,457			—			(94,390	)		—

Net income (loss)		13,975			14,037			75,117			5,236			(94,390	)		13,975
Net income (loss) attributable to non-controlling interests		(131	)		(131	)		—			—			131			(131	)

Net income attributable to MPT common stockholders	$	13,844		$	13,906		$	75,117		$	5,236		$	(94,259	)	$	13,844

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the Three Months Ended September 30, 2011

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net income (loss)	$	468		$	486		$	25,462	$	3,849	$	(29,797	)	$	468
Other comprehensive income (loss):
Unrealized loss on interest rate swap		(5,272	)		(5,272	)		—		—		5,272			(5,272	)

Total comprehensive income (loss)		(4,804	)		(4,786	)		25,462		3,849		(24,525	)		(4,804	)
Comprehensive income attributable to non-controlling interests		(43	)		(43	)		—		—		43			(43	)


Comprehensive income (loss) attributable to MPT common stockholders	$	(4,847	)	$	(4,829	)	$	25,462	$	3,849	$	(24,482	)	$	(4,847	)

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the Nine Months Ended September 30, 2011

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net income	$	13,975		$	14,037		$	75,117	$	5,236	$	(94,390	)	$	13,975
Other comprehensive income:
Unrealized loss on interest rate swap		(8,341	)		(8,341	)		—		—		8,341			(8,341	)

Total comprehensive income		5,634			5,696			75,117		5,236		(86,049	)		5,634
Comprehensive income attributable to non-controlling interests		(131	)		(131	)		—		—		131			(131	)

Comprehensive income attributable to MPT common stockholders	$	5,503		$	5,565		$	75,117	$	5,236	$	(85,918	)	$	5,503

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 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	$	(124	)	$	(26,727	)	$	86,364		$	7,615		$	—		$	67,128
Investing Activities
Cash paid for acquisitions and other related investments		—			—			(191,625	)		(17,288	)		—			(208,913	)
Principal received on loans receivable		—			—			—			2,898			—			2,898
Investments in and advances to subsidiaries		67,126			(89,763	)		81,565			8,074			(67,002	)		—
Investments in loans receivable		—			(205	)		(3,314	)		(879	)		—			(4,398	)
Construction in progress and other		—			—			(12,297	)		—			—			(12,297	)

Net cash provided by (used in) investing activities		67,126			(89,968	)		(125,671	)		(7,195	)		(67,002	)		(222,710	)
Financing Activities
Revolving credit facilities, net		—			—			39,600			—			—			39,600
Additions to term debt		—			450,000			—			—			—			450,000
Payments of term debt		—			(229,271	)		(8,433	)		(106	)		—			(237,810	)
Distributions paid		(67,002	)		(67,194	)		—			—			67,002			(67,194	)
Lease deposits and other obligations to tenants		—			—			8,140			(527	)		—			7,613
Debt issuance costs paid and other financing activities		—			(20,530	)		—			(137	)		—			(20,667	)

Net cash provided by (used in) financing activities		(67,002	)		133,005			39,307			(770	)		67,002			171,542

Increase (decrease) in cash and cash equivalents for period		—			16,310			—			(350	)		—			15,960
Cash and cash equivalents at beginning of period		—			96,822			—			1,586			—			98,408

Cash and cash equivalents at end of period	$	—		$	113,132		$	—		$	1,236		$	—		$	114,368