##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-32559
 MEDICAL PROPERTIES TRUST, INC.
  MARYLAND
(State or other jurisdiction 
of incorporation or organization)
    
    20-0191742
(I. R. S. Employer
Identification No.)1000 URBAN CENTER DRIVE, SUITE 501
BIRMINGHAM, AL
(Address of principal executive offices)
    
    35242
(Zip Code)
 REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE: (205) 969-3755
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



MEDICAL PROPERTIES TRUST, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010
 Table of Contents
 PagePART I  FINANCIAL INFORMATION
    
    
    3Item 1 Financial Statements
    
    
    3Condensed Consolidated Balance Sheets at March 31, 2010 and December 31, 2009
    
    
    3Condensed
Consolidated Statements of Operations for the Three Months Ended March 31, 2010 and 2009
    
    
    4Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010 and 2009
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3 Quantitative and Qualitative Disclosures about Market Risk
    
    
    16Item 4 Controls and Procedures
    
    
    16PART II  OTHER INFORMATION
    
    
    17Item 1 Legal Proceedings
    
    
    17Item 1A Risk Factors
    
    
    17Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    17Item 3 Defaults Upon Senior Securities
    
    
    17Item 4
(Removed and Reserved)
    
    
    17Item 5 Other Information
    
    
    17Item 6 Exhibits
    
    
    17SIGNATURE
    
    
    18INDEX TO EXHIBITS
    
    
    19EX-31.1EX-31.2EX-32
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
 
  March 31, 2010
    
    
    December 31, 2009(In thousands, except per share amounts)
    
    (Unaudited)
    
    
    (Note 2)AssetsReal estate assetsLand, buildings and improvements, and intangible lease assets
    
    $
    984,076
    
    
    $
    983,475Mortgage loans
    
    
    200,299
    
    
    
    200,164Gross investment in real estate assets
    
    
    1,184,375
    
    
    
    1,183,639Accumulated depreciation and amortization
    
    
    (67,182
    )
    
    
    (60,302
    )Net investment in real estate assets
    
    
    1,117,193
    
    
    
    1,123,337Cash and cash equivalents
    
    
    10,798
    
    
    
    15,307Interest and rent receivable
    
    
    26,166
    
    
    
    19,845Straight-line rent receivable
    
    
    29,456
    
    
    
    27,539Other loans
    
    
    91,635
    
    
    
    110,842Assets of discontinued operations
    
    
    1,185
    
    
    
    1,185Other assets
    
    
    11,878
    
    
    
    11,843Total Assets
    
    $
    1,288,311
    
    
    $
    1,309,898Liabilities and EquityLiabilitiesDebt, net
    
    $
    565,222
    
    
    $
    576,678Accounts payable and accrued expenses
    
    
    30,079
    
    
    
    29,247Deferred revenue
    
    
    10,832
    
    
    
    15,350Lease deposits and other obligations to tenants
    
    
    18,670
    
    
    
    17,048Total liabilities
    
    
    624,803
    
    
    
    638,323EquityPreferred stock, $0.001 par value. Authorized 10,000 shares; no shares outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value. Authorized 150,000 shares; issued and outstanding
 79,882 shares at March 31, 2010, and 78,725 shares at December 31, 2009
    
    
    80
    
    
    
    79Additional paid in capital
    
    
    770,804
    
    
    
    759,721Distributions in excess of net income
    
    
    (107,240
    )
    
    
    (88,093
    )Treasury shares, at cost
    
    
    (262
    )
    
    
    (262
    )Total Medical Properties Trust, Inc. stockholders equity
    
    
    663,382
    
    
    
    671,445Non-controlling interests
    
    
    126
    
    
    
    130Total equity
    
    
    663,508
    
    
    
    671,575Total Liabilities and Equity
    
    $
    1,288,311
    
    
    $
    1,309,898
  3




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##### Table of Contents



MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
 
   For the Three MonthsEnded March 31,(In thousands, except per share amounts)
    
    2010
    
    
    2009RevenuesRent billed
    
    $
    23,925
    
    
    $
    22,686Straight-line rent
    
    
    1,851
    
    
    
    1,864Interest and fee income
    
    
    7,934
    
    
    
    7,423Total revenues
    
    
    33,710
    
    
    
    31,973ExpensesReal estate depreciation and amortization
    
    
    6,880
    
    
    
    6,184Property-related
    
    
    1,066
    
    
    
    915Loan
impairment charge
    
    
    12,000
    
    
    
    General and administrative
    
    
    6,169
    
    
    
    5,678Total operating expenses
    
    
    26,115
    
    
    
    12,777Operating income
    
    
    7,595
    
    
    
    19,196Other income (expense)Interest and other income (expense)
    
    
    (15
    )
    
    
    Interest expense
    
    
    (9,458
    )
    
    
    (9,463
    )Net other expense
    
    
    (9,473
    )
    
    
    (9,463
    )Income
(loss) from continuing operations
    
    
    (1,878
    )
    
    
    9,733Income (loss) from discontinued operations
    
    
    (935
    )
    
    
    984Net income
(loss)
    
    
    (2,813
    )
    
    
    10,717Net income
(loss) attributable to non-controlling interests
    
    
    (9
    )
    
    
    (7
    )Net
income (loss) attributable to MPT common stockholders
    
    $
    (2,822
    )
    
    $
    10,710Earnings
per common share  basic and dilutedIncome
(loss) from continuing operations attributable to MPT common stockholders
    
    $
    (0.03
    )
    
    $
    0.13Income (loss) from discontinued operations attributable to MPT common stockholders
    
    
    (0.01
    )
    
    
    0.01Net income (loss) attributable to MPT common stockholders
    
    $
    (0.04
    )
    
    $
    0.14Weighted average shares outstanding
    
    
    79,176
    
    
    
    76,432Dividends declared per common share
    
    $
    0.20
    
    
    $
    0.20
  4




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##### Table of Contents



MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
 
   For the Three Months EndedMarch 31,2010
    
    
    2009Operating activitiesNet income (loss)
    
    $
    (2,813
    )
    
    $
    10,717Adjustments
to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization
    
    
    7,038
    
    
    
    6,343Straight-line rent revenue
    
    
    (1,851
    )
    
    
    (1,864
    )Share-based compensation
    
    
    1,529
    
    
    
    1,487Increase (decrease) in accounts payable and accrued liabilities
    
    
    618
    
    
    
    1,336Increase
(decrease) in interest and rent receivable
    
    
    (3,090
    )
    
    
    2,413Loan impairment charge
    
    
    12,000
    
    
    
    Amortization of deferred financing costs and debt discount
    
    
    1,477
    
    
    
    1,362Other adjustments
    
    
    (3,838
    )
    
    
    (3,483
    )Net cash provided by operating activities
    
    
    11,070
    
    
    
    18,311Investing activitiesReal estate acquired
    
    
    
    
    
    
    (438
    )Principal received on loans receivable
    
    
    5,247
    
    
    
    236Investment in loans receivable
    
    
    (2,348
    )
    
    
    (5,081
    )Construction in progress and other
    
    
    (1,448
    )
    
    
    (910
    )Net cash used for investing activities
    
    
    1,451
    
    
    
    (6,193
    )Financing activitiesRevolving credit facilities, net
    
    
    (12,000
    )
    
    
    (68,000
    )Payments of term debt
    
    
    (285
    )
    
    
    (305
    )Distributions paid
    
    
    (16,110
    )
    
    
    (13,282
    )Sale of common stock, net
    
    
    9,555
    
    
    
    67,890Lease deposits and other obligations to tenants
    
    
    2,179
    
    
    
    683Other financing activities
    
    
    (369
    )
    
    
    357Net cash used for financing activities
    
    
    (17,030
    )
    
    
    (12,657
    )Decrease in cash and cash equivalents for period
    
    
    (4,509
    )
    
    
    (539
    )Cash and cash equivalents at beginning of period
    
    
    15,307
    
    
    
    11,748Cash and cash equivalents at end of period
    
    $
    10,798
    
    
    $
    11,209Interest paid
    
    $
    3,862
    
    
    $
    5,026Supplemental schedule of non-cash financing activities:Distributions declared, unpaid
    
    $
    16,325
    
    
    $
    16,043Other non-cash financing activities
    
    
    
    
    
    
    5
  5




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##### Table of Contents



MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
 
 1. Organization
    2. Summary of Significant Accounting Policies
 Unaudited Interim Condensed Consolidated Financial Statements
   3. Real Estate and Lending Activities
 Leasing Operations
  6




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4. Debt
  As of March 31,
    
    As of December 31,2010
    
    2009Balance
    
    
    Interest Rate
    
    Balance
    
    
    Interest RateRevolving credit facilities
    
    $
    125,200
    
    
    Variable
    
    $
    137,200
    
    
    VariableSenior unsecured notes  fixed
rate through July and October
2011, due July and October 2016
    
    
    125,000
    
    
    7.333% - 7.871%
    
    
    125,000
    
    
    7.333% - 7.871%Exchangeable senior notes:Principal amount
    
    
    220,000
    
    
    6.125% - 9.250%
    
    
    220,000
    
    
    6.125% - 9.250%Unamortized discount
    
    
    (7,435
    )
    
    
    
    
    (8,265
    )212,565
    
    
    
    
    
    211,735Term loans
    
    
    102,457
    
    
    Various
    
    
    102,743
    
    
    Various$
    565,222
    
    
    
    
    $
    576,678
  2010
    
    $
    114,967
    (A)2011
    
    
    211,0902012
    
    
    39,6002013
    
    
    82,0002014
    
    
    Thereafter
    
    
    125,000Total
    
    $
    572,657
 7




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##### Table of Contents



(A)
    
    $84,000 of the revolving credit facilities due in November 2010 may be
extended until 2011 provided that we give written notice to the
Administrative Agent at least 60 days prior to the termination date
and as long as no default has occurred. If we elect to extend, we will
be required to pay an aggregate extension fee equal to 0.25% of the
existing revolving commitments.   5. Common Stock
    6. Stock Awards
  7. Fair Value of Financial Instruments
  8




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##### Table of Contents



March 31,
    
    December 31,2010
    
    2009Book
    
    Fair
    
    Book
    
    FairAsset (Liability)
    
    Value
    
    Value
    
    Value
    
    ValueInterest and Rent Receivables
    
    $
    26,166
    
    
    $
    18,473
    
    
    $
    19,845
    
    
    $
    16,712Loans
    
    
    291,934
    
    
    
    278,185
    
    
    
    311,006
    
    
    
    299,133Debt
    
    
    (565,222
    )
    
    
    (533,456
    )
    
    
    (576,678
    )
    
    
    (547,242
    )
 8. Discontinued Operations
    For the Three MonthsEnded March 31,2010
    
    2009Revenues
    
    $
    
    
    
    $
    400Net income (loss)
    
    
    (935
    )
    
    
    984Earnings per share  diluted
    
    $
    (0.01
    )
    
    $
    0.01
 9




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##### Table of Contents



9. Earnings Per Share
  For the Three MonthsEnded March 31,2010
    
    
    2009Numerator:Income
(loss) from continuing operations
    
    $
    (1,878
    )
    
    $
    9,733Non-controlling interests share in continuing operations
    
    
    (9
    )
    
    
    (9
    )Participating securities share in earnings
    
    
    (351
    )
    
    
    (390
    )Income (loss) from continuing operations, less participating securities share in earnings
    
    
    (2,238
    )
    
    
    9,334Income (loss) from discontinued operations
    
    
    (935
    )
    
    
    984Non-controlling interests share in discontinued operations
    
    
    
    
    
    
    2Income (loss) from discontinued operations attributable to MPT common stockholders
    
    
    (935
    )
    
    
    986Net income
(loss), less participating securities share in earnings
    
    $
    (3,173
    )
    
    $
    10,320
  10. Contingencies
      11. Subsequent Events
   10




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Forward-Looking Statements.
  
    
    national and local economic, business, real estate and other market conditions;
    
    the competitive environment in which we operate;
    
    the execution of our business plan;
    
    financing risks;
    
    acquisition and development risks;
    
    potential environmental, contingencies, and other liabilities;
    
    other factors affecting the real estate industry generally or the healthcare real estate industry in particular;
    
    our ability to maintain our status as a REIT for federal and state income tax purposes;
    
    our ability to attract and retain qualified personnel;
    
    federal and state healthcare regulatory requirements; and
 11




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
    
    the impact of the recent credit crisis and global economic slowdown, which has had and may continue to have a
negative effect on the following, among other things:
 
    
    the financial condition of our tenants, our lenders, counterparties to
our capped call transactions and institutions that hold our cash
balances, which may expose us to increased risks of default by these
parties;
    
    our ability to obtain debt financing on attractive terms or at all,
which may adversely impact our ability to pursue acquisition and
development opportunities and refinance existing debt and our future
interest expense; and
    
    the value of our real estate assets, which may limit our ability to
dispose of assets at attractive prices or obtain or maintain debt
financing secured by our properties or on an unsecured basis.
 Key Factors that May Affect Our Operations
   
    
    the historical and prospective operating margins (measured by a tenants earnings before
interest, taxes, depreciation, amortization and facility rent) of each tenant or borrower and
at each facility;
 
    
    the ratio of our tenants and borrowers operating earnings both to facility rent and to
facility rent plus other fixed costs, including debt costs;
 
    
    trends in the source of our tenants or borrowers revenue, including the relative mix of
Medicare, Medicaid/MediCal, managed care, commercial insurance, and private pay patients; and
 
    
    the effect of evolving healthcare regulations on our tenants and borrowers profitability.
  
    
    trends in the cost and availability of capital, including market interest rates, that our
prospective tenants may use for their real estate assets instead of financing their real
estate assets through lease structures;
 
    
    changes in healthcare regulations that may limit the opportunities for physicians to
participate in the ownership of healthcare providers and healthcare real estate;
 
    
    reductions in reimbursements from Medicare, state healthcare programs, and commercial
insurance providers that may reduce our tenants profitability and our lease rates;
 
    
    competition from other financing sources; and
 
    
    the ability of our tenants and borrowers to access funds in the credit markets.
 12




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES
  Overview
    Revenue by property type:
 For the Three
    
    
    
    
    
    
    For the ThreeMonths Ended
    
    
    
    
    
    
    Months EndedMarch 31,
    
    
    % of
    
    
    March 31,
    
    
    % of2010
    
    
    Total
    
    
    2009
    
    
    TotalGeneral Acute Care Hospitals
    
    $
    23,317
    
    
    
    69.2
    %
    
    $
    21,824
    
    
    
    68.3
    %Long-term Acute Care Hospitals
    
    
    6,485
    
    
    
    19.2
    %
    
    
    6,577
    
    
    
    20.6
    %Rehabilitation Hospitals
    
    
    2,807
    
    
    
    8.3
    %
    
    
    2,540
    
    
    
    7.9
    %Wellness Centers
    
    
    675
    
    
    
    2.0
    %
    
    
    617
    
    
    
    1.9
    %Medical Office Buildings
    
    
    426
    
    
    
    1.3
    %
    
    
    415
    
    
    
    1.3
    %Total revenue
    
    $
    33,710
    
    
    
    100.0
    %
    
    $
    31,973
    
    
    
    100.0
    %
   13




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##### Table of Contents



Results of Operations
 Three months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009
   Year over% of
    
    
    
    
    
    
    % of
    
    
    Year2010
    
    
    Total
    
    
    2009
    
    
    Total
    
    
    ChangeBase rents
    
    $
    23,396
    
    
    
    69.4
    %
    
    $
    22,450
    
    
    
    70.2
    %
    
    
    4.2
    %Straight-line rents
    
    
    1,851
    
    
    
    5.5
    %
    
    
    1,864
    
    
    
    5.8
    %
    
    
    (0.7
    )%Percentage rents
    
    
    529
    
    
    
    1.6
    %
    
    
    236
    
    
    
    0.8
    %
    
    
    124.2
    %Fee income
    
    
    106
    
    
    
    0.3
    %
    
    
    127
    
    
    
    0.4
    %
    
    
    (16.5
    )%Interest from loans
    
    
    7,828
    
    
    
    23.2
    %
    
    
    7,296
    
    
    
    22.8
    %
    
    
    7.3
    %Total revenue
    
    $
    33,710
    
    
    
    100.0
    %
    
    $
    31,973
    
    
    
    100.0
    %
    
    
    5.4
    %
        LIQUIDITY AND CAPITAL RESOURCES
   14




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##### Table of Contents



Short-term Liquidity Requirements:
 Long-term
Liquidity Requirements:
 2010
    
    $
    9972011
    
    
    9,2362012
    
    
    39,6002013
    
    
    82,0002014
    
    
    Thereafter
    
    
    275,000Total
    
    $
    406,833
 Distribution Policy
  15




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##### Table of Contents



Declaration Date
    
    Record Date
    
    Date of Distribution
    
    Distribution per ShareFebruary 18, 2010
    
    March 18, 2010
    
    April 14, 2010
    
    $
    0.20November 19, 2009
    
    December 17, 2009
    
    January 14, 2010
    
    $
    0.20August 20, 2009
    
    September 17, 2009
    
    October 15, 2009
    
    $
    0.20May 21, 2009
    
    June 11, 2009
    
    July 14, 2009
    
    $
    0.20February 24, 2009
    
    March 19, 2009
    
    April 9, 2009
    
    $
    0.20December 4, 2008
    
    December 23, 2008
    
    January 22, 2009
    
    $
    0.20August 21, 2008
    
    September 18, 2008
    
    October 16, 2008
    
    $
    0.27May 22, 2008
    
    June 13, 2008
    
    July 11, 2008
    
    $
    0.27
  
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
   
 Item 4.
    
    Controls and Procedures.
    16




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings.
    
 Item 1.A.
    
    Risk Factors.
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
 (a)
    
    Not applicable.
 (b)
    
    Not applicable.
 (c)
    
    Not applicable.
 
 Item 3.
    
    Defaults Upon Senior Securities.
  
 Item 4.
    
    (Removed and Reserved).
 
 Item 5.
    
    Other Information.
  
 Item 6.
    
    Exhibits.
  ExhibitNumber
    
    Description31.1
    
    

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.31.2
    
    

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.32
    
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the
Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.99.1
    (1)
    
    Consolidated Financial Statements of Prime Healthcare Services, Inc. as of December 31, 2009 and 2008.
 
 (1)
    
    Incorporated by reference to Registrants annual report on Form 10-K/A for the period ended
December 31, 2009, filed with the Commission on April 9, 2010. 17




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##### Table of Contents



SIGNATURE
  MEDICAL PROPERTIES TRUST, INC.By:
    /s/ R. Steven HamnerR. Steven HamnerDate: May 7, 2010
    
    Executive Vice President and Chief Financial Officer
(On behalf of the Registrant and as the Registrants
Principal Financial and Accounting Officer) 18




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##### Table of Contents



ExhibitNumber
    
    Description31.1
    
    

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.31.2
    
    

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.32
    
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the
Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.99.1
    (1)
    

Consolidated Financial Statements of Prime Healthcare Services, Inc. as of December 31, 2009 and 2008.
 
 (1)
    
    Incorporated by reference to Registrants annual report on Form 10-K/A for the period ended
December 31, 2009, filed with the Commission on April 9, 2010. 19