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, 2013 and 2014 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, 2013 and 2014 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, 2013 and 2014 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, 2013 and 2014 Senior Unsecured Notes; or (6) the release or discharge of the Subsidiary Guarantor from its guarantee obligations under our revolving credit facility.

Subsequent to June 30, 2013, certain of our subsidiaries were re-designated as non-guarantors of our 2011, 2012, 2013 and 2014 Senior Unsecured Notes as the underlying properties were sold in 2013 or related mortgage loans paid off in 2014. In addition, certain of our subsidiaries previously classified as non-guarantors are guarantors as of June 30, 2014. With these re-designations, we have restated the 2013 consolidating financial information below to reflect these changes.

Condensed Consolidated Balance Sheet

June 30, 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	$	—	$	—		$	1,959,605		$	66,654		$	—		$	2,026,259
Mortgage loans		—		—			285,100			100,000			—			385,100
Net investment in direct financing leases		—		—			213,966			220,345			—			434,311


Gross investment in real estate assets		—		—			2,458,671			386,999			—			2,845,670
Accumulated depreciation and amortization		—		—			(169,260	)		(9,002	)		—			(178,262	)

Net investment in real estate assets		—		—			2,289,411			377,997			—			2,667,408
Cash and cash equivalents		—		120,030			26,705			50,288			—			197,023
Interest and rent receivables		—		832			18,655			26,866			—			46,353
Straight-line rent receivables		—		—			40,900			10,293			—			51,193
Other loans		—		—			1,100			139,370			—			140,470
Net intercompany receivable		35,785		2,028,913			—			—			(2,064,698	)		—
Investment in subsidiaries		1,413,344		880,837			43,159			—			(2,337,340	)		—
Other assets		—		46,340			857			40,400			—			87,597


Total Assets	$	1,449,129	$	3,076,952		$	2,420,787		$	645,214		$	(4,402,038	)	$	3,190,044


Liabilities and Equity
Liabilities
Debt, net	$	—	$	1,626,537		$	—		$	13,816		$	—		$	1,640,353
Accounts payable and accrued expenses		36,175		37,438			10,103			515			—			84,231
Net intercompany payable		—		—			1,620,097			444,601			(2,064,698	)		—
Deferred revenue		—		220			21,046			6,159			—			27,425
Lease deposits and other obligations to tenants		—		(587	)		21,579			4,089			—			25,081


Total liabilities		36,175		1,663,608			1,672,825			469,180			(2,064,698	)		1,777,090
Total equity		1,412,954		1,413,344			747,962			176,034			(2,337,340	)		1,412,954


Total Liabilities and Equity	$	1,449,129	$	3,076,952		$	2,420,787		$	645,214		$	(4,402,038	)	$	3,190,044

Condensed Consolidated Statements of Operations

For the Three Months Ended June 30, 2014

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues
Rent billed	$	—		$	—		$	43,592		$	6,240		$	(3,904	)	$	45,928
Straight-line rent		—			—			2,491			687			—			3,178
Income from direct financing leases		—			—			11,652			5,898			(5,287	)		12,263
Interest and fee income		—			8,360			13,666			7,422			(14,257	)		15,191


Total revenues		—			8,360			71,401			20,247			(23,448	)		76,560

Expenses
Real estate depreciation and amortization		—			—			11,940			502			—			12,442
Impairment charges		—			289			21,975			7,367			—			29,631
Property-related		—			168			(105	)		9,090			(9,191	)		(38	)
General and administrative		—			8,500			55			(349	)		—			8,206
Acquisition expenses		—			2,510			25			—			—			2,535


Total operating expenses		—			11,467			33,890			16,610			(9,191	)		52,776


Operating income (expense)		—			(3,107	)		37,511			3,637			(14,257	)		23,784
Other income (expense)
Other income (expense)		—			19			—			—			—			19
Earnings from equity and other interests		—			—			111			575			—			686
Interest income (expense)		—			(24,724	)		(6,636	)		(7,259	)		14,257			(24,362	)
Debt refinancing costs		—			(290	)		—			—			—			(290	)
Income tax benefit (expense)		—			—			(32	)		(8	)		—			(40	)


Net other income (expense)		—			(24,995	)		(6,557	)		(6,692	)		14,257			(23,987	)


Income (loss) from continuing operations		—			(28,102	)		30,954			(3,055	)		—			(203	)
Income from discontinued operations		—			—			—			—			—			—

Equity in earnings of consolidated subsidiaries, net of income taxes		(203	)		27,899			1,042			—			(28,738	)		—


Net income		(203	)		(203	)		31,996			(3,055	)		(28,738	)		(203	)
Net income (loss) attributable to non-controlling interests		—			—			—			—			—			—


Net income attributable to MPT common stockholders	$	(203	)	$	(203	)	$	31,996		$	(3,055	)	$	(28,738	)	$	(203	)

Condensed Consolidated Statements of Operations

For the Six Months Ended June 30, 2014

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues
Rent billed	$	—		$	—		$	84,543		$	11,928		$	(7,582	)	$	88,889
Straight-line rent		—			—			3,888			1,478			—			5,366
Income from direct financing leases		—			—			23,261			11,770			(10,552	)		24,479
Interest and fee income		—			18,492			28,863			15,293			(31,733	)		30,915


Total revenues		—			18,492			140,555			40,469			(49,867	)		149,649
Expenses
Real estate depreciation and amortization		—			—			25,204			927			—			26,131
Impairment charges		—			289			21,975			27,864			—			50,128
Property-related		—			339			325			18,170			(18,134	)		700
General and administrative		—			16,649			258			258			—			17,165
Acquisition expenses		—			2,886			161			—			—			3,047


Total operating expenses		—			20,163			47,923			47,219			(18,134	)		97,171


Operating income (expense)		—			(1,671	)		92,632			(6,750	)		(31,733	)		52,478
Other income (expense)
Other income (expense)		—			(30	)		—			—			—			(30	)
Earnings from equity and other interests		—			—			111			794			—			905
Interest income (expense)		—			(46,546	)		(16,533	)		(14,628	)		31,733			(45,974	)
Debt refinancing costs		—			(290	)		—			—			—			(290	)
Income tax benefit expense		—			—			32			(16	)		—			16


Net other income (expense)		—			(46,866	)		(16,390	)		(13,850	)		31,733			(45,373	)


Income (loss) from continuing operations		—			(48,537	)		76,242			(20,600	)		—			7,105
Income (loss) from discontinued operations		—			—			—			(2	)		—			(2	)
Equity in earnings of consolidated subsidiaries net of income taxes		7,103			55,640			2,163			—			(64,906	)		—


Net income		7,103			7,103			78,405			(20,602	)		(64,906	)		7,103
Net income (loss) attributable to non-controlling interests		(65	)		(65	)		—			—			65			(65	)


Net income attributable to MPT common stockholders	$	7,038		$	7,038		$	78,405		$	(20,602	)	$	(64,841	)	$	7,038

Condensed Consolidated Statements of Comprehensive Income

For the Three Months Ended June 30, 2014

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Net income (loss)	$	(203	)	$	(203	)	$	31,996	$	(3,055	)	$	(28,738	)	$	(203	)
Other comprehensive income:
Unrealized gain on interest rate swap		486			486			—		—			(486	)		486
Foreign currency translation gain		73			73			—		—			(73	)		73


Total comprehensive income		356			356			31,996		(3,055	)		(29,297	)		356
Comprehensive income attributable to non-controlling interests		—			—			—		—			—			—


Comprehensive income attributable to MPT common stockholders	$	356		$	356		$	31,996	$	(3,055	)	$	(29,297	)	$	356

Condensed Consolidated Statements of Comprehensive Income

For the Six Months Ended June 30, 2014

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Net income (loss)	$	7,103		$	7,103		$	78,405	$	(20,602	)	$	(64,906	)	$	7,103
Other comprehensive income:
Unrealized gain on interest rate swap		1,206			1,206			—		—			(1,206	)		1,206
Foreign currency translation gain		46			46			—		—			(46	)		46


Total comprehensive income		8,355			8,355			78,405		(20,602	)		(66,158	)		8,355
Comprehensive income attributable to non-controlling interests		(65	)		(65	)		—		—			65			(65	)


Comprehensive income attributable to MPT common stockholders	$	8,290		$	8,290		$	78,405	$	(20,602	)	$	(66,093	)	$	8,290

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2014

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Operating Activities
Net cash provided by (used in) operating activities	$	(35	)	$	(41,011	)	$	106,136		$	(14,835	)	$	—		$	50,255
Investing Activities
Cash paid for acquisitions and other related investments		—			—			(115,000	)		—			—			(115,000	)
Principal received on loans receivable		—			—			—			6,829			—			6,829
Net proceeds from sale of real estate		—			—			—			—			—			—
Investments in loans receivable		—			—			—			(5,601	)		—			(5,601	)
Construction in progress and other		—			(382	)		(53,671	)		(1,106	)		—			(55,159	)


Net cash provided by (used in) investing activities		—			(382	)		(168,671	)		122			—			(168,931	)
Financing Activities
Revolving credit facilities, net		—			(105,000	)		—			—			—			(105,000	)
Additions to term debt, net of discount		—			425,000			—			—			—			425,000
Payments of term debt		—			(100,000	)		—			(132	)		—			(100,132	)
Distributions paid		(71,686	)		(71,809	)		—			—			71,686			(71,809	)
Proceeds from sale of common shares/units, net of offering costs		128,332			128,332			—			—			(128,332	)		128,332
Lease deposits and other obligations to tenants		—			(404	)		3,645			1,669			—			4,910
Net payments relating to intercompany financing		(56,611	)		(122,015	)		58,586			63,394			56,646			—
Debt issuance costs paid and other financing activities		—			(11,496	)		—			—			—			(11,496	)


Net cash provided by financing activities		35			142,608			62,231			64,931			—			269,805


Increase (decrease) in cash and cash equivalents for period		—			101,215			(304	)		50,218			—			151,129

Effects of exchange rate changes on cash		—			—			(85	)		—			—			(85	)
Cash and cash equivalents at beginning of period		—			18,815			27,094			70			—			45,979


Cash and cash equivalents at end of period	$	—		$	120,030		$	26,705		$	50,288		$	—		$	197,023

Condensed Consolidated Balance Sheet

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	$	—	$	—		$	1,796,415		$	69,040		$	—		$	1,865,455
Mortgage loans		—		—			285,106			103,650			—			388,756
Investment in direct financing leases		—		—			212,543			218,481			—			431,024


Gross investment in real estate assets		—		—			2,294,064			391,171			—			2,685,235
Accumulated depreciation and amortization		—		—			(151,624	)		(8,152	)		—			(159,776	)


Net investment in real estate assets		—		—			2,142,440			383,019			—			2,525,459
Cash and cash equivalents		—		18,815			27,094			70			—			45,979
Interest and rent receivables		—		336			31,492			26,737			—			58,565
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			1,096			29,466			—			67,873


Total Assets	$	1,379,961	$	2,789,267		$	2,282,644		$	607,818		$	(4,154,995	)	$	2,904,695


Liabilities and Equity
Liabilities
Debt, net	$	—	$	1,407,733		$	—		$	13,948		$	—		$	1,421,681
Accounts payable and accrued expenses		35,753		36,887			20,500			1,150			—			94,290
Net intercompany payable		—		—			1,556,634			386,203			(1,942,837	)		—
Deferred revenue		—		232			17,866			6,016			—			24,114
Lease deposits and other obligations to tenants		—		(183	)		18,163			2,422			—			20,402


Total liabilities		35,753		1,444,669			1,613,163			409,739			(1,942,837	)		1,560,487
Total equity		1,344,208		1,344,598			669,481			198,079			(2,212,158	)		1,344,208


Total Liabilities and Equity	$	1,379,961	$	2,789,267		$	2,282,644		$	607,818		$	(4,154,995	)	$	2,904,695

Condensed Consolidated Statements of Operations

For the Three Months Ended June 30, 2013

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues
Rent billed	$	—		$	—		$	29,051	$	5,088		$	(3,115	)	$	31,024
Straight-line rent		—			—			2,171		606			—			2,777
Income from direct financing leases		—			—			8,664		5,509			(4,943	)		9,230
Interest and fee income		—			5,052			9,120		7,006			(7,085	)		14,093


Total revenues		—			5,052			49,006		18,209			(15,143	)		57,124
Expenses
Real estate depreciation and amortization		—			—			8,229		414			—			8,643
Property-related		—			104			335		8,267			(8,057	)		649
General and administrative		—			7,674			—		(563	)		—			7,111
Acquisition expenses		—			2,088			—		—			—			2,088


Total operating expenses		—			9,866			8,564		8,118			(8,057	)		18,491


Operating income (loss)		—			(4,814	)		40,442		10,091			(7,086	)		38,633
Other income (expense)
Other income (expense)		—			(20	)		—		(2	)		—			(22	)
Earnings from equity and other interests		—			—			233		943			—			1,176
Interest income (expense)		—			(14,726	)		318		(7,319	)		7,086			(14,641	)
Income tax benefit (expense)		—			—			—		(115	)		—			(115	)


Net other income (expense)		—			(14,746	)		551		(6,493	)		7,086			(13,602	)


Income (loss) from continuing operations		—			(19,560	)		40,993		3,598			—			25,031
Income (loss) from discontinued operations		—			—			—		2,374			—			2,374
Equity in earnings of consolidated subsidiaries, net of income taxes		27,405			46,965			1,121		—			(75,491	)		—


Net income		27,405			27,405			42,114		5,972			(75,491	)		27,405
Net income (loss) attributable to non-controlling interests		(57	)		(57	)		—		—			57			(57	)


Net income attributable to MPT common stockholders	$	27,348		$	27,348		$	42,114	$	5,972		$	(75,434	)	$	27,348

Condensed Consolidated Statements of Operations

For the Six Months Ended June 30, 2013

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues
Rent billed	$	—		$	—		$	58,657	$	9,621		$	(5,750	)	$	62,528
Straight-line rent		—			—			4,489		979			—			5,468
Income from direct financing leases		—			—			16,868		10,994			(9,876	)		17,986
Interest and fee income		—			10,108			18,267		14,554			(14,174	)		28,755


Total revenues		—			10,108			98,281		36,148			(29,800	)		114,737
Expenses
Real estate depreciation and amortization		—			—			16,262		850			—			17,112
Property-related		—			276			537		15,875			(15,626	)		1,062
General and administrative		—			14,419			—		458			—			14,877
Acquisition expenses		—			2,278			—		—			—			2,278


Total operating expenses		—			16,973			16,799		17,183			(15,626	)		35,329


Operating income (loss)		—			(6,865	)		81,482		18,965			(14,174	)		79,408
Other income (expense)
Other income (expense)		—			(42	)		—		(206	)		—			(248	)
Earnings from equity and other interests		—			—			233		1,435			—			1,668
Interest income (expense)		—			(30,243	)		628		(14,624	)		14,174			(30,065	)
Income tax benefit (expense)		—			—			—		(167	)		—			(167	)


Net other income (expense)		—			(30,285	)		861		(13,562	)		14,174			(28,812	)


Income (loss) from continuing operations		—			(37,150	)		82,343		5,403			—			50,596
Income (loss) from discontinued operations		—			—			—		3,018			—			3,018
Equity in earnings of consolidated subsidiaries net of income taxes		53,614			90,764			2,242		—			(146,620	)		—


Net income		53,614			53,614			84,585		8,421			(146,620	)		53,614
Net income (loss) attributable to non-controlling interests		(110	)		(110	)		—		—			110			(110	)


Net income attributable to MPT common stockholders	$	53,504		$	53,504		$	84,585	$	8,421		$	(146,510	)	$	53,504

Condensed Consolidated Statements of Comprehensive Income

For the Three Months Ended June 30, 2013

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net income	$	27,405		$	27,405		$	42,114	$	5,972	$	(75,491	)	$	27,405
Other comprehensive income:
Unrealized gain on interest rate swap		1,779			1,779			—		—		(1,779	)		1,779


Total comprehensive income		29,184			29,184			42,114		5,972		(77,270	)		29,184
Comprehensive income attributable to non-controlling interests		(57	)		(57	)		—		—		57			(57	)


Comprehensive income attributable to MPT common stockholders	$	29,127		$	29,127		$	42,114	$	5,972	$	(77,213	)	$	29,127

Condensed Consolidated Statements of Comprehensive Income

For the Six Months Ended June 30, 2013

(in thousands)


	Parent			Subsidiary Issuers			Subsidiary Guarantors		Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net income	$	53,614		$	53,614		$	84,585	$	8,421	$	(146,620	)	$	53,614
Other comprehensive income:
Unrealized gain on interest rate swap		2,606			2,606			—		—		(2,606	)		2,606


Total comprehensive income		56,220			56,220			84,585		8,421		(149,226	)		56,220
Comprehensive income attributable to non-controlling interests		(110	)		(110	)		—		—		110			(110	)


Comprehensive income attributable to MPT common stockholders	$	56,110		$	56,110		$	84,585	$	8,421	$	(149,116	)	$	56,110

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 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	$	(35	)	$	(29,090	)	$	83,872		$	1,498		$	—		$	56,245

Investing Activities
Cash paid for acquisitions and other related investments		—			—			(75,000	)		—			—			(75,000	)
Principal received on loans receivable		—			—			—			3,293			—			3,293
Net proceeds from sale of real estate		—			—			—			18,409			—			18,409
Investments in loans receivable		—			—			—			(1,300	)		—			(1,300	)
Construction in progress and other		—			(621	)		(33,144	)		594			—			(33,171	)


Net cash used in investing activities		—			(621	)		(108,144	)		20,996			—			(87,769	)
Financing Activities
Revolving credit facilities, net		—			(85,000	)		—			—			—			(85,000	)
Payments of term debt		—			(11,000	)		—			(124	)		—			(11,124	)
Distributions paid		(57,712	)		(57,846	)		—			—			57,712			(57,846	)
Proceeds from sale of common stock/units, net of offering costs		172,853			172,853			—			—			(172,853	)		172,853
Lease deposits and other obligations to tenants		—			(159	)		558			1,117			—			1,516

Net payments relating to intercompany financing		(115,106	)		1,417			22,149			(23,601	)		115,141			—

Debt issuance costs paid and other financing activities		—			(114	)		—			—			—			(114	)


Net cash provided by (used in) financing activities		35			20,151			22,707			(22,608	)		—			20,285


Increase in cash and cash equivalents for period		—			(9,560	)		(1,565	)		(114	)		—			(11,239	)
Cash and cash equivalents at beginning of period		—			35,483			1,565			263			—			37,311

Cash and cash equivalents at end of period	$	—		$	25,923		$	—		$	149		$	—		$	26,072