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 September 30, 2012, certain of our subsidiaries were re-designated as non-guarantors of our 2011 and 2012 Senior Unsecured Notes as the underlying properties were sold in 2012 and the first half of 2013. With these re-designations, we have restated the 2012 condensed consolidating financial information below to reflect these changes.

In the second quarter of 2013, we revised our condensed consolidating balance sheets as of December 31, 2012 and 2011 to adjust negative net intercompany receivables (payable) balances from Total Assets to Total Liabilities. The impact of this revision, was to increase total assets (and, correspondingly increase total liabilities) as of December 31, 2012 and 2011 for Subsidiaries Guarantors by $1,010.4 million and $888.9 million, respectively, and also to increase total assets (and, correspondingly increase total liabilities) for Non-Guarantor Subsidiaries by $390.9 million and $5.5 million respectively, with an offset to Eliminations. This revision is not material to the related financial statements for any prior periods and had no impact on our consolidated balance sheet. As prior period financial information is presented in future filings, we will similarly revise the condensed consolidating balance sheets.

Condensed Consolidated Balance Sheet

September 30, 2013

(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	$	—	$	—		$	1,259,234		$	347,198		$	—		$	1,606,432
Mortgage loans		—		—			268,650			100,000			—			368,650
Net investment in direct financing leases		—		—			186,586			216,926			—			403,512


Gross investment in real estate assets		—		—			1,714,470			664,124			—			2,378,594
Accumulated depreciation and amortization		—		—			(142,939	)		(7,727	)		—			(150,666	)

Net investment in real estate assets		—		—			1,571,531			656,397			—			2,227,928
Cash and cash equivalents		—		11,391			—			733			—			12,124
Interest and rent receivable		—		715			29,284			24,506			—			54,505
Straight-line rent receivable		—		—			36,051			8,189			—			44,240
Other loans		—		178			—			161,067			—			161,245
Net intercompany receivable		32,053		1,639,081			—			—			(1,671,134	)		—
Investment in subsidiaries		1,358,959		783,441			43,557			—			(2,185,957	)		—
Other assets		—		32,534			980			29,594			—			63,108


Total Assets	$	1,391,012	$	2,467,340		$	1,681,403		$	880,486		$	(3,857,091	)	$	2,563,150


Liabilities and Equity
Liabilities
Debt, net	$	—	$	1,072,960		$	—		$	14,013		$	—		$	1,086,973
Accounts payable and accrued expenses		32,443		35,705			4,935			769			—			73,852
Net intercompany payable		—		—			998,987			672,147			(1,671,134	)		—
Deferred revenue		—		(284	)		17,970			5,543			—			23,229
Lease deposits and other obligations to tenants		—		—			17,923			2,604			—			20,527


Total liabilities		32,443		1,108,381			1,039,815			695,076			(1,671,134	)		1,204,581
Total equity		1,358,569		1,358,959			641,588			185,410			(2,185,957	)		1,358,569


Total Liabilities and Equity	$	1,391,012	$	2,467,340		$	1,681,403		$	880,486		$	(3,857,091	)	$	2,563,150

Condensed Consolidated Statements of Income

For the Three Months Ended September 30, 2013

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues
Rent billed	$	—		$	—		$	29,770	$	5,403		$	(3,295	)	$	31,878
Straight-line rent		—			—			2,189		664			—			2,853
Income from direct financing leases		—			—			10,519		5,750			(4,971	)		11,298
Interest and fee income		—			5,004			9,161		7,299			(7,037	)		14,427


Total revenues		—			5,004			51,639		19,116			(15,303	)		60,456
Expenses
Real estate depreciation and amortization		—			—			8,363		426			—			8,789
Property-related		—			182			251		8,291			(8,266	)		458
General and administrative		—			6,867			—		(487	)		—			6,380
Acquisition expenses		—			4,179			—		—			—			4,179


Total operating expenses		—			11,228			8,614		8,230			(8,266	)		19,806


Operating income (expense)		—			(6,224	)		43,025		10,886			(7,037	)		40,650
Other income (expense)
Other income (expense)		—			5			—		(2	)		—			3
Earnings from equity and other interests		—			—			454		389			—			843
Interest income (expense)		—			(16,055	)		454		(7,266	)		7,037			(15,830	)


Net other income (expense)		—			(16,050	)		908		(6,879	)		7,037			(14,984	)


Income (loss) from continuing operations		—			(22,274	)		43,933		4,007			—			25,666
Income from discontinued operations		—			—			—		37			—			37

Equity in earnings of consolidated subsidiaries, net of income taxes		25,703			47,977			1,114		—			(74,794	)		—


Net income		25,703			25,703			45,047		4,044			(74,794	)		25,703
Net income (loss) attributable to non-controlling interests		(55	)		(55	)		—		—			55			(55	)


Net income attributable to MPT common stockholders	$	25,648		$	25,648		$	45,047	$	4,044		$	(74,739	)	$	25,648

Condensed Consolidated Statements of Income

For the Nine Months Ended September 30, 2013

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues
Rent billed	$	—		$	—		$	89,149		$	14,970		$	(9,045	)	$	95,074
Straight-line rent		—			—			6,617			1,643			—			8,260
Income from direct financing leases		—			—			27,387			16,744			(14,847	)		29,284
Interest and fee income		—			15,112			27,565			21,816			(21,211	)		43,282


Total revenues		—			15,112			150,718			55,173			(45,103	)		175,900
Expenses
Real estate depreciation and amortization		—			—			24,775			1,276			—			26,051
Property-related		—			458			792			24,162			(23,892	)		1,520
General and administrative		—			21,286			—			137			—			21,423
Acquisition expenses		—			6,457			—			—			—			6,457


Total operating expenses		—			28,201			25,567			25,575			(23,892	)		55,451


Operating income (expense)		—			(13,089	)		125,151			29,598			(21,211	)		120,449
Other income (expense)
Other income (expense)		—			(37	)		—			(208	)		—			(245	)
Earnings from equity and other interests		—			—			687			1,824			—			2,511
Interest income (expense)		—			(46,298	)		1,083			(21,892	)		21,211			(45,896	)


Net other income (expense)		—			(46,335	)		1,770			(20,276	)		21,211			(43,630	)


Income (loss) from continuing operations		—			(59,424	)		126,921			9,322			—			76,819
Income from discontinued operations		—			—			(4	)		2,502			—			2,498
Equity in earnings of consolidated subsidiaries net of income taxes		79,317			138,741			3,356			—			(221,414	)		—


Net income		79,317			79,317			130,273			11,824			(221,414	)		79,317
Net income (loss) attributable to non-controlling interests		(165	)		(165	)		—			—			165			(165	)


Net income attributable to MPT common stockholders	$	79,152		$	79,152		$	130,273		$	11,824		$	(221,249	)	$	79,152

Condensed Consolidated Statements of Comprehensive Income

For the Three Months Ended September 30, 2013

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net income	$	25,703		$	25,703		$	45,047	$	4,044	$	(74,794	)	$	25,703
Other comprehensive income:
Unrealized gain on interest rate swap		182			182			—		—		(182	)		182


Total comprehensive income		25,885			25,885			45,047		4,044		(74,976	)		25,885
Comprehensive income attributable to non-controlling interests		(55	)		(55	)		—		—		55			(55	)


Comprehensive income attributable to MPT common stockholders	$	25,830		$	25,830		$	45,047	$	4,044	$	(74,921	)	$	25,830

Condensed Consolidated Statements of Comprehensive Income

For the Nine Months Ended September 30, 2013

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net income	$	79,317		$	79,317		$	130,273	$	11,824	$	(221,414	)	$	79,317
Other comprehensive income:
Unrealized gain on interest rate swap		2,788			2,788			—		—		(2,788	)		2,788


Total comprehensive income		82,105			82,105			130,273		11,824		(224,202	)		82,105
Comprehensive income attributable to non-controlling interests		(165	)		(165	)		—		—		165			(165	)


Comprehensive income attributable to MPT common stockholders	$	81,940		$	81,940		$	130,273	$	11,824	$	(224,037	)	$	81,940

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2013

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Operating Activities
Net cash provided by (used in) operating activities	$	91		$	(38,891	)	$	156,913		$	(16,549	)	$	—		$	101,564
Investing Activities
Cash paid for acquisitions and other related investments		—			—			(95,000	)		(276,500	)		—			(371,500	)
Principal received on loans receivable		—			—			—			4,694			—			4,694
Net proceeds from sale of real estate		—			—			—			18,409			—			18,409
Investments in and advances to subsidiaries		(225,683	)		(267,545	)		(1,506	)		269,142			225,592			—
Investments in loans receivable		—			—			—			(1,445	)		—			(1,445	)
Construction in progress and other		—			(765	)		(63,691	)		1,034			—			(63,422	)


Net cash provided by (used in) investing activities		(225,683	)		(268,310	)		(160,197	)		15,334			225,592			(413,264	)
Financing Activities
Revolving credit facilities, net		—			(80,000	)		—			—			—			(80,000	)
Additions to term debt, net of discount		—			153,000			—			—			—			153,000
Payments of term debt		—			(11,000	)		—			(185	)		—			(11,185	)
Distributions paid		(87,727	)		(87,928	)		—			—			87,727			(87,928	)
Proceeds from sale of common shares/units, net of offering costs		313,319			313,319			—			—			(313,319	)		313,319
Lease deposits and other obligations to tenants		—			—			1,719			1,870			—			3,589
Debt issuance costs paid and other financing activities		—			(4,282	)		—			—			—			(4,282	)


Net cash provided by financing activities		225,592			283,109			1,719			1,685			(225,592	)		286,513


Increase (decrease) in cash and cash equivalents for period		—			(24,092	)		(1,565	)		470			—			(25,187	)
Cash and cash equivalents at beginning of period		—			35,483			1,565			263			—			37,311


Cash and cash equivalents at end of period	$	—		$	11,391		$	—		$	733		$	—		$	12,124

Condensed Consolidated Balance Sheet

December 31, 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	$	—	$	28	$	1,196,124		$	65,947		$	—		$	1,262,099
Real estate held for sale		—		—		—			16,497			—			16,497
Mortgage loans		—		—		268,650			100,000			—			368,650
Investment in direct financing leases		—		—		110,155			204,257			—			314,412


Gross investment in real estate assets		—		28		1,574,929			386,701			—			1,961,658
Accumulated depreciation and amortization		—		—		(118,163	)		(6,452	)		—			(124,615	)


Net investment in real estate assets		—		28		1,456,766			380,249			—			1,837,043
Cash and cash equivalents		—		35,483		1,565			263			—			37,311
Interest and rent receivable		—		212		29,159			15,918			—			45,289
Straight-line rent receivable		—		—		29,314			6,546			—			35,860
Other loans		—		177		—			159,066			—			159,243
Net intercompany receivable		27,393		1,373,941		—			—			(1,401,334	)		—
Investment in subsidiaries		1,050,204		647,029		42,666			—			(1,739,899	)		—
Other assets		—		31,097		1,522			31,521			—			64,140


Total Assets	$	1,077,597	$	2,087,967	$	1,560,992		$	593,563		$	(3,141,233	)	$	2,178,886


Liabilities and Equity
Liabilities
Debt, net	$	—	$	1,010,962	$	—		$	14,198		$	—		$	1,025,160
Accounts payable and accrued expenses		27,783		26,658		10,492			1,028			—			65,961
Net intercompany payable		—		—		1,000,117			401,217			(1,401,334	)		—
Deferred revenue		—		143		19,621			845			—			20,609
Lease deposits and other obligations to tenants		—		—		16,606			736			—			17,342


Total liabilities		27,783		1,037,763		1,046,836			418,024			(1,401,334	)		1,129,072
Total equity		1,049,814		1,050,204		514,156			175,539			(1,739,899	)		1,049,814


Total Liabilities and Equity	$	1,077,597	$	2,087,967	$	1,560,992		$	593,563		$	(3,141,233	)	$	2,178,886

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	$	—		$	—		$	28,470		$	4,163		$	(2,335	)	$	30,298
Straight-line rent		—			—			2,371			374			—			2,745
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			44,996			16,874			(14,259	)		52,853
Expenses
Real estate depreciation and amortization		—			—			7,883			425			—			8,308
Property-related		—			88			116			7,204			(7,194	)		214
General and administrative		—			6,332			—			720			—			7,052
Acquisition expenses		—			410			—			—			—			410


Total operating expenses		—			6,830			7,999			8,349			(7,194	)		15,984


Operating income (loss)		—			(1,588	)		36,997			8,525			(7,065	)		36,869
Other income (expense)
Other income (expense)		—			(21	)		(2	)		—			—			(23	)
Earnings from equity and other interests		—			—			331			734			—			1,065
Interest income (expense)		—			(15,203	)		388			(7,296	)		7,065			(15,046	)


Net other income (expense)		—			(15,224	)		717			(6,562	)		7,065			(14,004	)


Income (loss) from continuing operations		—			(16,812	)		37,714			1,963			—			22,865
Income (loss) from discontinued operations		—			—			314			8,329			—			8,643
Equity in earnings of consolidated subsidiaries, net of income taxes		31,508			48,320			1,129			—			(80,957	)		—


Net income		31,508			31,508			39,157			10,292			(80,957	)		31,508
Net income (loss) attributable to non-controlling interests		(44	)		(44	)		—			—			44			(44	)


Net income attributable to MPT common stockholders	$	31,464		$	31,464		$	39,157		$	10,292		$	(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	$	—		$	—		$	85,160		$	12,446		$	(6,926	)	$	90,680
Straight-line rent		—			—			4,310			1,119			—			5,429
Income from direct financing leases		—			—			11,730			12,600			(11,351	)		12,979
Interest and fee income		—			13,219			20,620			17,358			(17,711	)		33,486


Total revenues		—			13,219			121,820			43,523			(35,988	)		142,574
Expenses
Real estate depreciation and amortization		—			—			23,551			1,275			—			24,826
Property-related		—			349			580			18,375			(18,277	)		1,027
General and administrative		—			20,067			—			1,274			—			21,341
Acquisition expenses		—			4,115			—			—			—			4,115


Total operating expenses		—			24,531			24,131			20,924			(18,277	)		51,309


Operating income (loss)		—			(11,312	)		97,689			22,599			(17,711	)		91,265
Other income (expense)
Other income (expense)		—			(49	)		(2	)		(4	)		—			(55	)
Earnings from equity and other interests		—			—			783			1,161			—			1,944
Interest income (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	)		99,337			5,353			—			50,424
Income (loss) from discontinued operations		—			—			106			10,944			—			11,050
Equity in earnings of consolidated subsidiaries net of income taxes		61,474			115,740			3,367			—			(180,581	)		—


Net income		61,474			61,474			102,810			16,297			(180,581	)		61,474
Net income (loss) attributable to non-controlling interests		(130	)		(130	)		—			—			130			(130	)


Net income attributable to MPT common stockholders	$	61,344		$	61,344		$	102,810		$	16,297		$	(180,451	)	$	61,344

Condensed Consolidated Statements of Comprehensive Income

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		$	39,157	$	10,292	$	(80,957	)	$	31,508
Other comprehensive income (loss):
Unrealized loss on interest rate swap		(443	)		(443	)		—		—		443			(443	)


Total comprehensive income		31,065			31,065			39,157		10,292		(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		$	39,157	$	10,292	$	(80,470	)	$	31,021

Condensed Consolidated Statements of Comprehensive Income

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		$	102,810	$	16,297	$	(180,581	)	$	61,474
Other comprehensive income (loss):
Unrealized loss on interest rate swap		(989	)		(989	)		—		—		989			(989	)


Total comprehensive income		60,485			60,485			102,810		16,297		(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		$	102,810	$	16,297	$	(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	)	$	109,018		$	4,455		$	—		$	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 sale of real estate		—			—			800			33,300			—			34,100
Investments in and advances to subsidiaries		(143,554	)		(540,016	)		380,605			159,427			143,538			—
Investments in loans receivable		—			—			—			(1,293	)		—			(1,293	)
Construction in progress and other		—			(59	)		(33,869	)		(1,992	)		—			(35,920	)


Net cash used in investing activities		(143,554	)		(540,075	)		(56,973	)		(3,042	)		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	)
Proceeds from sale of common stock/units, net of offering costs		220,107			220,107			—			—			(220,107	)		220,107
Lease deposits and other obligations to tenants		—			—			(12,289	)		(1,102	)		—			(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			(51,889	)		(1,273	)		(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