##### 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, 2009
 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.
 (Exact Name of Registrant as Specified in Its Charter)
 MARYLAND
    
    20-0191742(State or other jurisdiction
    
    (I. R. S. Employerof incorporation or organization)
    
    Identification No.)1000 URBAN CENTER DRIVE, SUITE 501
    
    35242BIRMINGHAM, AL
    
    (Zip Code)(Address of principal executive offices)
 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, 2009
 Table of Contents
  
 PagePART I  FINANCIAL INFORMATIONItem 1
Financial Statements (unaudited)
    
    
    3Condensed Consolidated Balance Sheets at March 31, 2009 and December 31, 2008
    
    
    3Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2009 and 2008
    
    
    4Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2009 and 2008
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3 Quantitative and Qualitative Disclosures about Market Risk
    
    
    15Item 4 Controls and Procedures
    
    
    16PART II  OTHER INFORMATIONItem 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 Submission of Matters to a Vote of Security Holders
    
    
    17Item 5 Other Information
    
    
    17Item 6 Exhibits
    
    
    17SIGNATURES
    
    
    19INDEX TO EXHIBITS
    
    
    20EX-31.1EX-31.2EX-32
  2




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
 
  March 31, 2009
    
    
    December 31, 2008(In thousands, except per share amounts)
    
    (Unaudited)
    
    
    (Note 2)AssetsReal estate assetsLand, buildings and improvements, and intangible lease assets
    
    $
    992,344
    
    
    $
    996,965Mortgage loans
    
    
    185,000
    
    
    
    185,000Gross investment in real estate assets
    
    
    1,177,344
    
    
    
    1,181,965Accumulated depreciation and amortization
    
    
    (41,675
    )
    
    
    (40,334
    )Net investment in real estate assets
    
    
    1,135,669
    
    
    
    1,141,631Cash and cash equivalents
    
    
    11,209
    
    
    
    11,748Interest and rent receivable
    
    
    12,815
    
    
    
    13,837Straight-line rent receivable
    
    
    20,906
    
    
    
    19,003Other loans
    
    
    114,003
    
    
    
    108,523Assets of discontinued operations
    
    
    1,171
    
    
    
    2,385Other assets
    
    
    13,881
    
    
    
    14,246Total Assets
    
    $
    1,309,654
    
    
    $
    1,311,373Liabilities and EquityLiabilitiesDebt
    
    $
    563,010
    
    
    $
    630,557Accounts payable and accrued expenses
    
    
    28,872
    
    
    
    24,718Deferred revenue
    
    
    12,928
    
    
    
    16,110Lease deposits and other obligations to tenants
    
    
    14,520
    
    
    
    13,645Total liabilities
    
    
    619,330
    
    
    
    685,030Medical
Properties Trust, Inc. Stockholders equityPreferred 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
 78,505 shares at March 31, 2009, and 65,056 shares at December 31, 2008
    
    
    79
    
    
    
    65Additional paid in capital
    
    
    755,607
    
    
    
    686,238Distributions in excess of net income
    
    
    (65,336
    )
    
    
    (59,941
    )Treasury shares, at cost
    
    
    (262
    )
    
    
    (262
    )Total Medical Properties Trust, Inc. stockholders equity
    
    
    690,088
    
    
    
    626,100Non-controlling interests
    
    
    236
    
    
    
    243Total equity
    
    
    690,324
    
    
    
    626,343Total Liabilities and Equity
    
    $
    1,309,654
    
    
    $
    1,311,373
  3




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MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
 
   For the Three Months Ended March 31,(In thousands, except per share amounts)
    
    2009
    
    
    2008RevenuesRent billed
    
    $
    23,086
    
    
    $
    14,971Straight-line rent
    
    
    1,864
    
    
    
    1,660Interest and fee income
    
    
    7,423
    
    
    
    6,710Total revenues
    
    
    32,373
    
    
    
    23,341ExpensesReal estate depreciation and amortization
    
    
    6,246
    
    
    
    3,528Property-related
    
    
    919
    
    
    
    56General and administrative
    
    
    5,678
    
    
    
    4,358Total operating expenses
    
    
    12,843
    
    
    
    7,942Operating income
    
    
    19,530
    
    
    
    15,399Other income (expense)Interest and other income
    
    
    
    
    
    
    103Interest expense
    
    
    (9,463
    )
    
    
    (7,455
    )Net other expense
    
    
    (9,463
    )
    
    
    (7,352
    )Income from continuing operations
    
    
    10,067
    
    
    
    8,047Income from discontinued operations
    
    
    650
    
    
    
    2,853Net income
    
    
    10,717
    
    
    
    10,900Net income attributable to non-controlling interests
    
    
    (7
    )
    
    
    (2
    )Net income attributable to MPT common stockholders
    
    $
    10,710
    
    
    $
    10,898Earnings per common share  basicIncome from
continuing operations attributable to MPT common stockholders
    
    $
    0.13
    
    
    $
    0.15Income from discontinued operations attributable to MPT common stockholders
    
    
    0.01
    
    
    
    0.05Net income
attributable to MPT common stockholders
    
    $
    0.14
    
    
    $
    0.20Weighted average shares outstanding  basic
    
    
    76,432
    
    
    
    52,992Earnings per share  dilutedIncome from continuing operations attributable to MPT common stockholders
    
    $
    0.13
    
    
    $
    0.15Income from discontinued operations attributable to MPT common stockholders
    
    
    0.01
    
    
    
    0.05Net income
attributable to MPT common stockholders
    
    $
    0.14
    
    
    $
    0.20Weighted average shares outstanding  diluted
    
    
    76,432
    
    
    
    53,002Dividends
declared per common share
    
    $
    0.20
    
    
    $
    0.27
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MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
 
   For the Three Months EndedMarch 31,2009
    
    
    2008Operating activitiesNet income
    
    $
    10,717
    
    
    $
    10,900Adjustments to reconcile net income to net cash provided by operating activitiesDepreciation and amortization
    
    
    6,343
    
    
    
    4,012Straight-line rent revenue
    
    
    (1,903
    )
    
    
    (2,238
    )Share-based compensation
    
    
    1,487
    
    
    
    1,873Other adjustments
    
    
    1,667
    
    
    
    (596
    )Net cash provided by operating activities
    
    
    18,311
    
    
    
    13,951Investing activitiesReal estate acquired
    
    
    (438
    )
    
    
    Principal received on loans receivable
    
    
    236
    
    
    
    455Investment in loans receivable
    
    
    (5,081
    )
    
    
    (1,880
    )Escrow deposits paid for future acquisitions
    
    
    
    
    
    
    (4,000
    )Construction in progress and other
    
    
    (910
    )
    
    
    (147
    )Net cash used for investing activities
    
    
    (6,193
    )
    
    
    (5,572
    )Financing activitiesAdditions to debt
    
    
    
    
    
    
    78,875Payments of debt
    
    
    (68,305
    )
    
    
    (144,205
    )Distributions paid
    
    
    (13,282
    )
    
    
    (14,490
    )Sale of
common stock, net
    
    
    67,890
    
    
    
    128,602Lease deposits and other obligations to tenants
    
    
    683
    
    
    
    825Other financing activities
    
    
    357
    
    
    
    (5,199
    )Net cash provided by financing activities
    
    
    (12,657
    )
    
    
    44,408Increase in cash and cash equivalents for period
    
    
    (539
    )
    
    
    52,787Cash and cash equivalents at beginning of period
    
    
    11,748
    
    
    
    94,215Cash and cash equivalents at end of period
    
    $
    11,209
    
    
    $
    147,002Interest paid
    
    $
    5,026
    
    
    $
    4,477Supplemental schedule of non-cash investing activities:Construction in progress transferred to land and building
    
    $
    
    
    
    $
    200Interest and other receivables recorded as deferred revenue
    
    
    
    
    
    
    12Interest and other receivables transferred to loans receivable
    
    
    
    
    
    
    91Supplemental schedule of non-cash financing activities:Distributions declared, unpaid
    
    $
    16,043
    
    
    $
    14,598Other non-cash financing activities
    
    
    5
    
    
    
    
  5




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MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
    1. Organization
   Disclosures about Segments of an Enterprise and Related Information
 2. Summary of Significant Accounting Policies
 Unaudited Interim Condensed Consolidated Financial Statements
  New Accounting Pronouncements
 Interim Disclosures about
Fair Value of Financial Instruments
 Reclassifications: Noncontrolling Interests in
Consolidated Financial Statements
 3. Real Estate and Lending Activities
 Acquisitions
  6




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2008Total revenues
    
    $
    33,748Net income
    
    
    12,425Income per share-diluted
    
    $
    0.18
 Leasing Operations
  4. Debt
  As of March 31,
    
    
    As of December 31,2009
    
    
    2008Balance
    
    
    Interest Rate
    
    
    Balance
    
    
    Interest RateRevolving credit facilities
    
    $
    125,000
    
    
    Variable
    
    $
    193,000
    
    
    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% - 9.25%
    
    
    220,000
    
    
    6.125% - 9.25%Unamortized
discount
    
    
    (10,660
    )
    
    
    
    
    
    
    (11,418
    )209,340
    
    
    
    
    
    208,582Term loans
    
    
    103,670
    
    
    Various
    
    
    103,975
    
    
    Various$
    563,010
    
    
    
    
    
    
    $
    630,557
  2009
    
    $
    1,7062010
    
    
    114,273
    (1)2011
    
    
    202,9332012
    
    
    39,8932013
    
    
    89,865Thereafter
    
    
    125,000Total
    
    $
    573,670
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(1)
    
    $83,000 of the revolving credit facilities due in 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 elected to extend, we will be required
to pay an aggregate extension fee equal to 0.25% of the existing revolving commitments.   Accounting for Convertible Debt
Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlements)
 5. Common Stock
    6. Stock Awards
  7. Discontinued Operations
  8




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For the Three MonthsEnded March 31,2009
    
    2008Revenues
    
    $
    
    
    
    $
    3,649Net income
    
    
    650
    
    
    
    2,853Earnings per
share  diluted
    
    $
    0.01
    
    
    $
    0.05
 8. Earnings Per Share
 Determining Whether
Instruments Granted in Share-Based Payment Transactions Are
Participating Securities
 For the Three MonthsEnded March 31,2009
    
    
    2008Numerator:Income from
continuing operations
    
    $
    10,067
    
    
    $
    8,047Non-controlling
interests share in continuing operations
    
    
    (9)
    
    
    
    Participating
securities share in earnings
    
    
    (333
    )
    
    
    (413
    )Income from
continuing operations attributable to MPT common stockholders
    
    
    9,725
    

    
    
    7,634Income from
discontinued operations
    
    
    650
    
    
    
    2,853Non-controlling
interests share in discontinued operations
    
    
    2
    
    
    
    (2
    )Income from
discontinued operations attributable to MPT common stockholders
    
    
    652
    
    
    
    2,851Net income
attributable to MPT common stockholders
    
    $
    10,377
    
    
    $
    10,485Denominator:Basic weighted-average common shares
    
    
    76,432
    
    
    
    52,992Dilutive
stock options
    
    
    
    
    
    
    10Diluted
weighted-average common shares
    
    
    76,432
    
    
    
    53,002
  9. Contingencies
   9




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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 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
    
    The impact of the current credit crisis and global economic slowdown, which is having 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.
 Overview
  10




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Key Factors that May Affect Our Operations
   
 
 
 
  
 11




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
 
 
 
   12




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CRITICAL ACCOUNTING POLICIES
  LIQUIDITY AND CAPITAL RESOURCES
   Short-term Liquidity Requirements:
 Long-term Liquidity Requirements:
  
    
    Property sales  we believe we have several assets that, even in the current credit
environment, may attract purchasers willing and able to pay acceptable prices. However, we
believe any possible sale transactions will be conditional on the purchasers ability to
obtain acceptable financing, and there is no assurance that such financing will be
available.
    
    Incremental borrowings  we have recently successfully demonstrated our ability to access
property level debt with attractive terms, providing liquidity for reduction of earlier
maturing loans and debt. Moreover, our $30.0 million term loan that matures in 2010 is
prepayable without penalty and is collateralized by properties with an estimated aggregate
value of more than $340 million. Payment of this loan would make such collateral available
for incremental borrowings. Because availability of credit is presently highly
uncertain there is no assurance that we could obtain such incremental borrowings.
    
    Extension of existing maturities  we expect that as market conditions improve, our
existing lenders may be willing to offer additional extension options as our facilities
mature. There is no assurance, however, that conditions will improve or that our lenders
will offer extensions; moreover, pricing and other terms that may be associated with any
such extensions may not be attractive to us.
  Results of Operations
 Three months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008
  13




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Year over% of
    
    
    
    
    
    
    % of
    
    
    Year2009
    
    
    Total
    
    
    2008
    
    
    Total
    
    
    ChangeBase rents
    
    $
    22,850
    
    
    
    70.6
    %
    
    $
    14,923
    
    
    
    64.0
    %
    
    
    53.1
    %Straight-line rents
    
    
    1,864
    
    
    
    5.8
    %
    
    
    1,660
    
    
    
    7.1
    %
    
    
    12.3
    %Percentage rents
    
    
    236
    
    
    
    0.7
    %
    
    
    48
    
    
    
    0.2
    %
    
    
    391.7
    %Fee income
    
    
    127
    
    
    
    0.4
    %
    
    
    126
    
    
    
    0.5
    %
    
    
    0.8
    %Interest from loans
    
    
    7,296
    
    
    
    22.5
    %
    
    
    6,584
    
    
    
    28.2
    %
    
    
    10.8
    %Total revenue
    
    $
    32,373
    
    
    
    100.0
    %
    
    $
    23,341
    
    
    
    100.0
    %
    
    
    38.7
    %
       Reconciliation of Non-GAAP Financial Measures
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For the Three Months EndedMarch 31,2009
    
    
    2008Net income attributable to MPT common stockholders
    
    $
    10,710
    
    
    $
    10,898Depreciation and amortizationContinuing operations
    
    
    6,246
    
    
    
    3,528Discontinued operations
    
    
    
    
    
    
    568Funds from operations
    
    $
    16,956
    
    
    $
    14,994
 Per diluted share amounts:
 For the Three Months EndedMarch 31,2009
    
    
    2008Net income
attributable to MPT common stockholders
    
    $
    0.14
    
    
    $
    0.20Depreciation and amortizationContinuing operations
    
    
    0.08
    
    
    
    0.06Discontinued operations
    
    
    
    
    
    
    0.01Funds from operations
    
    $
    0.22
    
    
    $
    0.27
  Distribution Policy
   Declaration Date
    
    Record Date
    
    Date of Distribution
    
    Distribution per ShareFebruary 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
    
    $
    0.27February 28, 2008
    
    March 13, 2008
    
    April 11, 2008
    
    $
    0.27November 16, 2007
    
    December 13, 2007
    
    January 11, 2008
    
    $
    0.27August 16, 2007
    
    September 14, 2007
    
    October 19, 2007
    
    $
    0.27May 17, 2007
    
    June 14, 2007
    
    July 12, 2007
    
    $
    0.27
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
   15




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Item 4.
Controls and Procedures.
    16




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PART II  OTHER INFORMATION
 
 Item 1.
Legal Proceedings.
  
 Item 1.A.
Risk Factors.
  
 Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
    
 Item 3.
Defaults Upon Senior Securities.
  
 Item 4.
Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  
 Item 6.
Exhibits.
  17




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ExhibitNumber
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 193431.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 193432
    
    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 135099.1(1)
    
    Consolidated Financial Statements
of Prime Healthcare Services, Inc. as of December 31, 2008 and
2007.
 
 (1)
    
    Incorporated by reference to Registrant's annual
report on Form 10-K/A for period ended December 31, 2008, filed with
the Commission on May 11, 2009.
 18




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SIGNATURE
  MEDICAL PROPERTIES TRUST, INC.By:
    /s/ R. Steven HamnerR.  Steven HamnerExecutive Vice President and Chief Financial Officer
(On behalf of the Registrant and as the Registrants
Principal Financial and Accounting Officer)  19




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ExhibitNumber
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 193431.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 193432
    
    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 135099.1(1)
    
    Consolidated Financial Statements
of Prime Healthcare Services, Inc. as of December 31, 2008 and
 2007
 
 (1)
    
    Incorporated by reference to Registrant's annual
report on Form 10-K/A for period ended December 31, 2008, filed with
the Commission on May 11, 2009.
 20