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, 2012 and 2013 Senior Unsecured Notes), (b) MPT Operating Partnership, L.P. and MPT Finance Corporation (“Subsidiary Issuers”), (c) on a combined basis, the guarantors of our 2011, 2012 and 2013 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, 2012 and 2013 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, 2012 and 2013 Senior Unsecured Notes; or (6) the release or discharge of the Subsidiary Guarantor from its guarantee obligations under our revolving credit facility.

Subsequent to March 31, 2013, certain of our subsidiaries were re-designated as non-guarantors of our 2011, 2012 and 2013 Senior Unsecured Notes as the underlying properties were sold in 2013. In addition, certain of our subsidiaries previously classified as non-guarantors are guarantors as of March 31, 2014. With these re-designations, we have restated the 2013 consolidating financial information below to reflect these changes.

Condensed Consolidated Balance Sheets

March 31, 2014

(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	$	—	$	—		$	1,940,880		$	67,542		$	—		$	2,008,422
Net investment in direct financing leases		—		—			213,244			219,413						432,657
Mortgage loans		—		—			288,650			100,000			—			388,650

Gross investment in real estate assets		—		—			2,442,774			386,955			—			2,829,729
Accumulated depreciation and amortization		—		—			(164,898	)		(8,577	)		—			(173,475	)

Net investment in real estate assets		—		—			2,277,876			378,378			—			2,656,254
Cash and cash equivalents		—		31,104			18,564			641			—			50,309
Interest and rent receivables		—		537			32,735			29,902			—			63,174
Straight-line rent receivables		—		—			38,416			9,607			—			48,023
Other loans		—		178			1,100			140,274			—			141,552
Net intercompany receivable		35,608		1,999,835			—			—			(2,035,443	)		—
Investment in subsidiaries		1,431,370		851,636			42,326			—			(2,325,332	)		—
Other assets		—		36,088			1,169			30,023			—			67,280

Total Assets	$	1,466,978	$	2,919,378		$	2,412,186		$	588,825		$	(4,360,775	)	$	3,026,592

Liabilities and Equity
Liabilities
Debt, net	$	—	$	1,458,165		$	—		$	13,880		$	—		$	1,472,045
Accounts payable and accrued expenses		35,998		29,974			7,713			499			—			74,184
Net intercompany payable		—		—			1,649,895			385,548			(2,035,443	)		—
Deferred revenue		—		(131	)		19,373			6,177			—			25,419
Lease deposits and other obligations to tenants		—		—			20,265			3,699			—			23,964

Total liabilities		35,998		1,488,008			1,697,246			409,803			(2,035,443	)		1,595,612

Total Equity		1,430,980		1,431,370			714,940			179,022			(2,325,332	)		1,430,980

Total Liabilities and Equity	$	1,466,978	$	2,919,378		$	2,412,186		$	588,825		$	(4,360,775	)	$	3,026,592

Condensed Consolidated Statements of Income

For the Year Ended March 31, 2014

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues
Rent billed	$	—		$	—		$	40,975		$	5,660		$	(3,678	)	$	42,957
Straight-line rent		—			—			1,357			791			—			2,148
Income from direct financing leases		—			—			11,609			5,872			(5,266	)		12,215
Interest and fee income		—			10,132			15,255			7,858			(17,476	)		15,769

Total revenues		—			10,132			69,196			20,181			(26,420	)		73,089
Expenses
Real estate depreciation and amortization		—			—			13,265			425			—			13,690
Impairment charge		—			—			—			20,496			—			20,496
Property-related		—			172			432			9,078			(8,944	)		738
Acquisition expenses		—			375			137			—			—			512
General and administrative		—			8,149			201			609			—			8,959

Total operating expenses		—			8,696			14,035			30,608			(8,944	)		44,395

Operating income		—			1,436			55,161			(10,427	)		(17,476	)		28,694
Other income (expense)
Other income (expense)		—			(46	)		—			(4	)		—			(50	)
Earnings from equity and other interests		—			—			—			220			—			220
Interest expense		—			(21,823	)		(9,919	)		(7,346	)		17,476			(21,612	)
Income tax (expense) benefit		—			—			65			(8	)		—			57

Net other expense		—			(21,869	)		(9,854	)		(7,138	)		17,476			(21,385	)

Income (loss) from continuing operations		—			(20,433	)		45,307			(17,565	)		—			7,309
Loss from discontinued operations		—			—			—			(2	)		—			(2	)

Equity in earnings of consolidated subsidiaries net of income taxes		7,307			27,740			1,121			—			(36,168	)		—

Net income (loss)		7,307			7,307			46,428			(17,567	)		(36,168	)		7,307
Net income (loss) attributable to non-controlling interests		(66	)		(66	)		—			—			66			(66	)

Net income attributable to MPT common stockholders	$	7,241		$	7,241		$	46,428		$	(17,567	)	$	(36,102	)	$	7,241

Condensed Consolidated Statements of Comprehensive Income

For the Year Ended March 31, 2014

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Net income	$	7,307		$	7,307		$	46,428	$	(17,567	)	$	(36,168	)	$	7,307
Other comprehensive income:
Unrealized gain on interest rate swap		721			721			—		—			(721	)		721
Foreign currency translation loss		(28	)		(28	)		—		—			28			(28	)

Total comprehensive income		8,000			8,000			46,428		(17,567	)		(36,861	)		8,000
Comprehensive income attributable to non-controlling interests		(66	)		(66	)		—		—			66			(66	)

Comprehensive income attributable to MPT common stockholders	$	7,934		$	7,934		$	46,428	$	(17,567	)	$	(36,795	)	$	7,934

Condensed Consolidated Statements of Cash Flows

For the Year Ended March 31, 2014

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Operating Activities
Net cash provided by (used in) operating activities	$	234		$	(23,272	)	$	43,606		$	(2,286	)	$	—		$	18,282
Investing Activities
Cash paid for acquisitions and other related investments		—			—			(115,000	)		—			—			(115,000	)
Principal received on loans receivable		—			—			—			1,469			—			1,469
Investments in loans receivable		—			—			—			(2,385	)		—			(2,385	)
Construction in progress and other		—			205			(27,303	)		(827	)		—			(27,925	)

Net cash provided by (used in) investing activities		—			205			(142,303	)		(1,743	)		—			(143,841	)
Financing Activities
Revolving credit facilities, net		—			50,000			—			—			—			50,000
Payments of term debt		—			—			—			(68	)		—			(68	)
Distributions paid		(35,717	)		(35,778	)		—			—			35,717			(35,778	)
Lease deposits and other obligations to tenants		—			—			1,970			1,410			—			3,380
Net payments relating to intercompany financing		(77,100	)		(91,208	)		88,184			3,258			76,866			—
Proceeds from sale of common shares, net of offering costs		112,583			112,583			—			—			(112,583	)		112,583
Debt issuance costs paid and other financing activities		—			(241	)		—			—			—			(241	)

Net cash provided by (used in) financing activities		(234	)		35,356			90,154			4,600			—			129,876

Increase (decrease) in cash and cash equivalents for period		—			12,289			(8,543	)		571			—			4,317
Effect of exchange rate changes		—			—			13			—			—			13
Cash and cash equivalents at beginning of period		—			18,815			27,094			70			—			45,979

Cash and cash equivalents at end of period	$	—		$	31,104		$	18,564		$	641		$	—		$	50,309

Condensed Consolidated Balance Sheets

December 31, 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	$	—	$	—	$	1,796,411		$	69,044		$	—		$	1,865,455
Net investment in direct financing leases		—		—		212,543			218,481						431,024
Mortgage loans		—		—		288,650			100,000			—			388,650

Gross investment in real estate assets		—		—		2,297,604			387,525			—			2,685,129
Accumulated depreciation and amortization		—		—		(151,624	)		(8,152	)		—			(159,776	)

Net investment in real estate assets		—		—		2,145,980			379,373			—			2,525,353
Cash and cash equivalents		—		18,815		27,094			70			—			45,979
Interest and rent receivables		—		336		31,462			26,701			—			58,499
Straight-line rent receivables		—		—		37,015			8,814			—			45,829
Other loans		—		178		1,100			159,712			—			160,990
Net intercompany receivable		35,363		1,907,474		—			—			(1,942,837	)		—
Investment in subsidiaries		1,344,598		825,153		42,407			—			(2,212,158	)		—
Other assets		—		37,311		1,165			29,444			—			67,920

Total Assets	$	1,379,961	$	2,789,267	$	2,286,223		$	604,114		$	(4,154,995	)	$	2,904,570

Liabilities and Equity
Liabilities
Debt, net	$	—	$	1,407,733	$	—		$	13,948		$	—		$	1,421,681
Accounts payable and accrued expenses		35,753		36,887		20,522			1,149			—			94,311
Net intercompany payable		—		—		1,560,039			382,798			(1,942,837	)		—
Deferred revenue		—		49		17,785			5,953			—			23,787
Lease deposits and other obligations to tenants		—		—		18,139			2,444			—			20,583

Total liabilities		35,753		1,444,669		1,616,485			406,292			(1,942,837	)		1,560,362

Total Equity		1,344,208		1,344,598		669,738			197,822			(2,212,158	)		1,344,208

Total Liabilities and Equity	$	1,379,961	$	2,789,267	$	2,286,223		$	604,114		$	(4,154,995	)	$	2,904,570

Condensed Consolidated Statements of Income

For the Year Ended March 31, 2013

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues
Rent billed	$	—		$	—		$	29,630		$	4,504		$	(2,635	)	$	31,499
Straight-line rent		—			—			2,277			374			—			2,651
Income from direct financing leases		—			—			8,204			5,485			(4,933	)		8,756
Interest and fee income		—			5,057			9,208			7,531			(7,089	)		14,707

Total revenues		—			5,057			49,319			17,894			(14,657	)		57,613
Expenses
Real estate depreciation and amortization		—			—			8,044			425			—			8,469
Property-related		—			172			190			7,616			(7,569	)		409
Acquisition expenses		—			191			—			—			—			191
General and administrative		—			6,744			—			1,022			—			7,766

Total operating expenses		—			7,107			8,234			9,063			(7,569	)		16,835

Operating income		—			(2,050	)		41,085			8,831			(7,088	)		40,778
Other income (expense)
Other income (expense)		—			(22	)		(2,635	)		(204	)		2,636			(225	)
Earnings from equity and other interests		—			—			—			492			—			492
Interest expense		—			(15,517	)		2,946			(7,305	)		4,452			(15,424	)
Income tax expense		—			—			—			(52	)		—			(52	)

Net other (expense) income		—			(15,539	)		311			(7,069	)		7,088			(15,209	)

Income (loss) from continuing operations		—			(17,589	)		41,396			1,762			—			25,569
Income (loss) from discontinued operations		—			—			(4	)		645			—			641

Equity in earnings of consolidated subsidiaries net of income taxes		26,210			43,799			1,121			—			(71,130	)		—

Net income (loss)		26,210			26,210			42,513			2,407			(71,130	)		26,210
Net income (loss) attributable to non-controlling interests		(54	)		(54	)		—			—			54			(54	)

Net income attributable to MPT common stockholders	$	26,156		$	26,156		$	42,513		$	2,407		$	(71,076	)	$	26,156

Condensed Consolidated Statements of Comprehensive Income

For the Year Ended March 31, 2013

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net income	$	26,210		$	26,210		$	42,513	$	2,407	$	(71,130	)	$	26,210
Other comprehensive income:
Unrealized gain on interest rate swap		827			827			—		—		(827	)		827

Total comprehensive income		27,037			27,037			42,513		2,407		(71,957	)		27,037
Comprehensive income attributable to non-controlling interests		(54	)		(54	)		—		—		54			(54	)

Comprehensive income attributable to MPT common stockholders	$	26,983		$	26,983		$	42,513	$	2,407	$	(71,903	)	$	26,983

Condensed Consolidated Statements of Cash Flows

For the Year Ended March 31, 2013

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Operating Activities
Net cash provided by (used in) operating activities	$	213		$	(9,099	)	$	36,434		$	(497	)	$	—		$	27,051
Investing Activities
Principal received on loans receivable		—			—			—			2,090			—			2,090
Investments in loans receivable		—			—			—			(800	)		—			(800	)
Construction in progress and other		—			331			(13,245	)		(612	)		—			(13,526	)

Net cash provided by (used in) investing activities		—			331			(13,245	)		678			—			(12,236	)
Financing Activities
Payments of term debt		—			—			—			(64	)		—			(64	)
Revolving credit facilities, net		—			(125,000	)		—			—			—			(125,000	)
Distributions paid		(27,719	)		(27,786	)		—			—			27,719			(27,786	)
Lease deposits and other obligations to tenants		—			—			921			2,628			—			3,549
Net payments relating to intercompany financing		(145,408	)		27,048			(24,109	)		(2,726	)		145,195			—
Proceeds from sale of common shares, net of offering costs		172,914			172,914			—			—			(172,914	)		172,914
Debt issuance costs paid and other financing activities		—			(64	)		—			—			—			(64	)

Net cash provided by (used in) financing activities		(213	)		47,112			(23,188	)		(162	)		—			23,549

Increase (decrease) in cash and cash equivalents for period		—			38,344			1			19			—			38,364
Cash and cash equivalents at beginning of period		—			35,483			1,565			263			—			37,311

Cash and cash equivalents at end of period	$	—		$	73,827		$	1,566		$	282		$	—		$	75,675