ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation s
Unless otherwise indicated, references to “our,” “we,” and “us” in this management’s discussion and analysis of financial condition and results of operations refer to Medical Properties Trust, Inc. and its consolidated subsidiaries, including MPT Operating Partnership, L.P.
Overview
We are a self-advised healthcare REIT that was incorporated in Maryland on August 27, 2003, primarily for the purpose of investing in and owning healthcare facilities to be leased to healthcare operators under long-term net leases. We may also make mortgage loans to healthcare operators that are collateralized by the underlying real estate. We conduct our business operations in one segment. We currently have healthcare investments in the U.S., Europe, and South America. Our existing tenants are, and our prospective tenants will generally be, healthcare operating companies and other healthcare providers that use substantial real estate assets in their operations. We offer financing to these operators through 100% lease and mortgage financing and generally seek lease and loan terms on a long-term basis (typically at least 15 years) with a series of shorter renewal terms, generally in five year increments, at the option of our tenants and borrowers. We also have included and intend to include in our lease and loan agreements annual contractual minimum rate increases. Our existing portfolio’s minimum escalators are typically 2.0%. In addition, most of our leases and loans include rate increases based on the general rate of inflation (based on CPI or similar indices) if greater than the minimum contractual increases. Beyond rent or mortgage interest, our leases and loans typically require our tenants to pay all operating costs and expenses associated with the facility. Finally, from time-to-time, we may make noncontrolling investments in our tenants, typically in conjunction with larger real estate transactions with the tenant, that give us a right to share in such tenant’s profits and losses and provide for certain minority rights and protections.
We may make other loans to certain of our operators through our TRSs, which the operators use for working capital. Although it represents approximately 1% of our total assets at December 31, 2025, we consider our lending business an important element of our overall business strategy for two primary reasons: (1) it provides opportunities to make income-earning investments that could yield attractive risk-adjusted returns in an industry in which our management has expertise, and (2) by making debt capital available to certain qualified operators, we believe we create a competitive advantage for our company over other buyers of, and financing sources for, healthcare facilities.
At December 31, 2025, our portfolio (including real estate assets in joint ventures) consisted of 384 properties, of which 373 properties are leased or loaned to 52 operators, including facilities under development or in the form of mortgage loans.
The information set forth in this Item 7 is intended to provide readers with an understanding of our financial condition, changes in financial condition, and results of operations. This section generally discusses the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 3, 2025.
Selected Financial Data
The following sets forth selected consolidated financial and operating data. You should read the following selected financial data in conjunction with the consolidated financial statements and notes thereto of each of Medical Properties Trust, Inc. and MPT Operating Partnership, L.P. and their respective subsidiaries included in Item 8 of this Annual Report on Form 10-K.
For the Years Ended December 31,
(In thousands except per share data)
OPERATING DATA
Total revenues
Expenses:
Interest
Real estate depreciation and amortization
Property-related
General and administrative
Total expenses
Other (expense) income:
Gain on sale of real estate
Real estate and other impairment charges, net
Earnings (loss) from equity interests
Debt refinancing and unutilized financing costs
Other (including fair value adjustments on securities)
Income tax expense
Net loss
Net income attributable to non-controlling interests
Net loss attributable to MPT common stockholders
Net loss attributable to MPT common stockholders per
diluted share
Weighted-average shares outstanding — basic and diluted
OTHER DATA
Dividends declared per common share
FFO(1)
Normalized FFO(1)
Normalized FFO per share(1)
Cash paid for acquisitions and other related investments
December 31,
(In thousands)
BALANCE SHEET DATA
Real estate assets — at cost
Real estate accumulated depreciation/amortization
Cash and cash equivalents
Investments in unconsolidated real estate joint ventures
Investments in unconsolidated operating entities
Other loans
Other
Total assets
Debt, net
Other liabilities
Total Medical Properties Trust, Inc. stockholders’ equity
Non-controlling interests
Total equity
Total liabilities and equity
See section titled “Non-GAAP Financial Measures” for an explanation of why these non-GAAP financial measures are useful along with a reconciliation to our GAAP earnings.
2025 Highlights
In 2025, our primary objectives were to manage our near-term debt maturities, securing as much value as possible while exiting our relationship with Prospect, restructuring our investments in Vibra, and continuing the ramp up of rents on the re-tenanted properties formerly leased to Steward. In regard to our near-term debt maturities, we made significant progress in refinancing our debt in 2025, clearing all debt maturities through June 30, 2027 (as we expect the revolving portion of our Credit Facility will be extended to June 2027), other than one issue of unsecured notes of €500 million due in October 2026 which we believe can be paid off with cash on-hand and/or availability under the revolving portion of our Credit Facility – see “Contractual Commitments” in Item 7 of this Annual Report on Form 10-K for further details of our debt maturity schedule.
See below for details of our 2025 activities:
Financing activities:
Repaid the remaining outstanding balance of the British pound sterling term loan due 2025 at maturity in January 2025 of £493 million, with a combination of cash on hand and available capacity under the revolving portion of our Credit Facility;
Completed a private notes offering of $1.5 billion in aggregate principal amount of senior secured notes due 2032 and €1.0 billion aggregate principal amount of senior secured notes due 2032, proceeds of which were used to fund the redemption in full of our 3.325% Senior Unsecured Notes due 2025, 2.500% Senior Unsecured Notes due 2026, and 5.250% Senior Unsecured Notes due 2026, including related accrued interest, fees and expenses. Remaining proceeds were used to pay down the revolving portion of our Credit Facility;
Concurrent with the notes offering, we amended our Credit Facility which, among other things, (i) modified certain financial covenants and eliminated others including the minimum consolidated tangible net worth covenant; (ii) lowered borrowing spreads from 300 basis points to 225 basis points; (iii) removed the limitation on the payment of dividends in cash of $0.08 per share in any fiscal quarter; and (iv) provided for the Credit Facility to be secured and guaranteed ratably with the newly issued secured notes – see Note 4 to Item 8 of this Annual Report on Form 10-K for more information regarding this amendment;
Provided notice that we plan to exercise both of our 6-month extension options such that the maturity of the revolving portion of our Credit Facility would move to June 30, 2027 (subject to the satisfaction of certain conditions, with the primary condition of not being in default at the time of each extension option date);
Replaced the €655 million secured debt in our MEDIAN joint venture on June 17, 2025, that was due on June 30, 2025, with a new €702.5 million nonrecourse, 10-year non-amortizing secured debt;
Entered into an at-the-market equity offering program (the "ATM Program") on August 11, 2025, which provides for the sale, from time to time, of up to $500 million of our common stock with a commission rate up to 2%;
Our Board of Directors approved a stock repurchase program in October 2025 for up to $150 million, for which we acquired 4.5 million shares for $23.4 million in 2025; and
Increased our quarterly cash dividend by $0.01 to $0.09 per share as declared in November 2025.
Tenant and property activity:
As more fully described in “Significant Tenants” in Item 1 of this Annual Report on Form 10-K, Prospect filed for Chapter 11 bankruptcy on January 11, 2025. On March 20, 2025, the bankruptcy court approved a global settlement (including a recovery waterfall) between us, Prospect, and other stakeholders. As part of the global settlement, we re-leased six California properties to NOR in December 2025. In addition, five of the remaining seven properties previously operated by Prospect have been sold to-date with the remaining two expected to be sold later in 2026.
We expect to receive our remaining investment of $61 million in 2026. With that said, Prospect's bankruptcy proceedings are continuing, and the ultimate outcome of such proceedings is uncertain. At this time, we cannot assure you that we will be able to recover in full our remaining investment in Prospect as of December 31, 2025. In addition, the bankruptcy court approved an order for up to $70 million in additional advances which we may be required to fund. However, any funds advanced are expected to be secured by recoveries, if any, from causes of action owned by the debtor;
Completed a restructuring of our relationship with Vibra including entering into a new 20-year master lease agreement covering several properties, the acquisition of one post-acute property for $32 million, and the cash receipt of approximately $18 million for past obligations that we recognized as revenue in the 2025 fourth quarter. We plan to continue accounting for revenue from Vibra on a cash basis at this time;
Continued the ramp up of cash rents on the re-tenanted properties formerly operated by Steward. Through 2025, these new tenants are fully current on cash rents, except for three facilities in Ohio and Pennsylvania. Excluding these three facilities, the new tenants are currently paying 59% of contractual rents, which is expected to increase to 100% by the 2026 fourth quarter; and
Increased our investment in the Swiss Medical Network joint venture by approximately CHF 52 million, inclusive of a CHF 25 million short-term loan, in April 2025 to facilitate the acquisition of a Swiss general acute facility and repayment of debt.
Disposal transactions:
Completed the sale of nine facilities (including two former Steward-operated facilities that were being leased to College Health for nominal rent) along with certain ancillary land and facilities for aggregate cash proceeds of approximately $121 million, resulting in a gain on real estate of approximately $5.5 million.
Subsequent to December 31, 2025, the following activities took place:
Closed and funded the acquisition of one property in Germany for approximately €23 million to be leased to MEDIAN;
Sold one property previously leased to Vibra for $12 million, proceeds of which we received in 2025 in anticipation of such closing;
Seven additional entities in the U.K. were added to our U.K. REIT effective February 1, 2026, which we expect to result in an approximate $40 million one-time tax benefit in the first quarter of 2026;
Our Board of Directors approved a $0.09 dividend in February 2026 to be paid in April 2026; and
In conjunction with completing 20 years trading on the New York Stock Exchange, commenced trading under ticker symbol "MPT."
2024 Highlights
In 2024, our focus was on improving our liquidity position, managing our near-term debt maturities, and securing as much value as possible while exiting our relationship with Steward. In regard to improving liquidity, we set a target to generate $2 billion of liquidity in 2024, which we surpassed by approximately $800 million through a combination of real estate asset sales (discussed below) that resulted in approximately $500 million of gains on sale and closing on a new secured loan facility with a 10-year term for approximately £631 million (approximately $800 million). In addition, we reduced our dividend from $0.15 per share to $0.08 per share for the last two quarters of the year, which resulted in cash savings of approximately $40 million per quarter. In regard to Steward, the bankruptcy court approved a global settlement in September 2024 between Steward, its lenders, the unsecured creditors committee, and us. The settlement is more fully described in "Significant Tenants"; however, in summary, the settlement effectively ended our relationship with Steward and allowed us to regain control of 23 of our properties and begin the process of re-tenanting the properties as discussed below.
See below for more detail on our 2024 activities:
Disposal transactions:
Generated approximately $130 million from the sale of our interest in the Priory syndicated term loan and remaining minority interest in Lifepoint Behavioral in the 2024 first quarter;
Sold five properties in April 2024 to Prime Healthcare Services, Inc. ("Prime") for $350 million, including a $100 million interest-bearing mortgage loan that was subsequently fully paid in August 2024, realizing a gain on sale of approximately $53 million;
Sold our controlling interest in five Utah hospitals in April 2024 for an aggregate agreed valuation of approximately $1.2 billion to a newly formed joint venture with an institutional asset manager. We recognized a gain on sale of the real estate of approximately $380 million and retained an approximately 25% interest in the partnership valued initially at approximately $108 million. In conjunction with this transaction closing, the joint
venture placed new non-recourse secured debt on the properties, providing $190 million of additional cash to us. In total, we received approximately $1.1 billion of cash proceeds from this transaction;
Completed the sale of eight properties to Dignity Health in July 2024 for approximately $160 million, realizing a gain on sale of $85 million;
Completed the sale of 11 properties to UCHealth in August 2024 for approximately $86 million, realizing a gain on sale of $40 million;
Completed the sale of Watsonville Community Hospital in Watsonville, California in October 2024 for proceeds of approximately $40 million, and two freestanding emergency department facilities in Texas for approximately $5 million. In addition, we received approximately $47 million in October 2024 from proceeds generated by the sale of three Space Coast properties as previously described in “Significant Tenants”; and
Completed several small transactions that resulted in approximately $9 million in net proceeds.
Additional financing transactions:
Paid off the remaining A$470 million (approximately $306 million) Australian term loan facility in April 2024;
Funded and early discharged our British pound sterling secured term loan of approximately £105 million that was due in December 2024; and
Amended our Credit Facility in April and August 2024 which reduced revolving commitments thereunder from $1.8 billion to $1.28 billion and modified certain covenants, among other things – see Note 4 to Item 8 of this Annual Report on Form 10-K for more information regarding these amendments.
Tenant and property activity:
Incurred approximately $2.4 billion of impairment charges and negative fair value adjustments in 2024 primarily related to Steward and Prospect as more fully described in Note 3 to Item 8 of this Annual Report on Form 10-K;
Re-leased 18 of the former 23 Steward operated facilities to six operators including Honor Health, Quorum Health, HSA, Insight Health, College Health, and Tenor Health (effective January 2025);
Recovered from our casualty insurers cash in excess of our recovery receivable related to the 2020 storm losses at our Norwood redevelopment;
Completed a building improvement project on an existing general acute care facility in Idaho Falls, Idaho in October 2024 for a total amount of approximately $50 million and commenced collection of rent; and
Entered into a new forbearance and restructuring agreement in December 2024 with Vibra and received $10 million at the signing of this agreement for unpaid rent.
Selected as one of Newsweek’s Most Responsible Companies in 2024.
Critical Accounting Estimates
In order to prepare financial statements in conformity with GAAP in the U.S., we must make estimates about certain types of transactions and account balances. We believe that our estimates of the amount and timing of credit losses, fair value adjustments (either as part of a purchase price allocation, recurring accounting for those investments that we have elected the fair value option method, or impairment analyses), and periodic depreciation of our real estate assets, along with our assessment as to whether investments we make in certain businesses/entities should be consolidated with our results, have significant effects on our financial statements. Each of these items involves estimates that require us to make subjective judgments. We rely on our experience, collect historical and current market data, and develop relevant assumptions to arrive at what we believe to be reasonable estimates. Under different conditions or assumptions, materially different amounts could be reported related to these critical accounting policies as described below. In addition, application of these critical accounting policies involves the exercise of judgment on the use of assumptions as to future uncertainties and, as a result, actual results could materially differ from these estimates. See Note 2 to Item 8 of this Annual Report on Form 10-K for more information regarding our accounting policies and recent accounting developments. Our accounting estimates include the following:
Credit Losses:
Losses from Rent Receivables : For our leases, we review tenant provided financial data and monitor the performance of our tenants in areas generally consisting of: admission levels and surgery/procedure volumes by type; current operating margins; ratio of our tenant's operating margins both to facility rent and to facility rent plus other fixed costs; trends in revenue, cash collections, patient
mix; and the effect of evolving healthcare regulations, adverse economic and political conditions, such as inflation and interest rates, and other events ongoing on a tenant's profitability and liquidity.
Operating Lease Receivables: We utilize the information above along with the tenant's payment and default history in evaluating (on a lease-by-lease basis) whether or not lease payments are deemed probable of collection. If not deemed probable of collection, rent revenue, under lease accounting guidance, is constrained to the lower of 1) the revenue that would have been recognized if collection were probable and 2) the amount of lease payments received in cash.
Financing Lease Receivables: We apply a forward-looking “expected credit loss” model to all of our financing receivables, including financing leases. To do this, we group our financial instruments into two primary pools of similar credit risk: secured and unsecured. The secured instruments include our investments in financing receivables as all are secured by the underlying real estate, among other collateral. Within the two primary pools, we further group our instruments into sub-pools based on several tenant/borrower characteristics, including years of experience in the healthcare industry and in a particular market or region and overall capitalization. We then determine a credit loss percentage per pool based on our history over a period of time that closely matches the remaining terms of the financial instruments being analyzed and adjust as needed for current trends or unusual circumstances. We apply these credit loss percentages to the cost basis of the related instruments to establish a credit loss reserve on our financing lease receivables and such credit loss reserve (including the underlying assumptions) is reviewed and adjusted quarterly. If a financing receivable is underperforming and is deemed uncollectible based on the lessee’s overall financial condition, we will adjust the credit reserve based on the fair value of the underlying collateral.
We exclude interest receivables from the credit loss reserve model. Instead, such receivables are impaired and an allowance recorded when it is deemed probable that we will be unable to collect all amounts due. The need for an allowance is based upon our assessment of the lessee’s overall financial condition, economic resources and payment record, the prospects for support from any financially responsible guarantors, and, if appropriate, the realizable value of any collateral. Financing leases are placed on non-accrual status when we determine that the collectibility of contractual amounts is not reasonably assured. If on non-accrual status, we generally account for the financing lease on a cash basis, in which income is recognized only upon receipt of cash.
Loans : Loans consist of mortgage loans, working capital loans, and other loans. Mortgage loans are collateralized by interests in real property. Working capital and other loans are generally collateralized by interests in receivables and/or personal property and may include corporate and individual guarantees. We record loans at cost. Like our financing lease receivables, we establish credit loss reserves on all outstanding loans based on historical credit losses of similar instruments. Such credit loss reserves, including the underlying assumptions, are reviewed and adjusted quarterly. If a loan’s performance worsens and foreclosure is deemed probable for our collateral-based loans (after considering the borrower’s overall financial condition as described above for leases), we will adjust the allowance for expected credit losses based on the current fair value of such collateral at the time the loan is deemed uncollectible. If the loan is not collateralized, the loan will be reserved for/written-off once it is determined that such loan is no longer collectible.
Interest receivables on loans are excluded from the forward-looking credit loss reserve model; however, an allowance is recorded when it is deemed probable that we will be unable to collect all amounts due. Loans are placed on non-accrual status when we determine that the collectibility of contractual amounts is not reasonable assured. If on non-accrual status, we generally account for the loan on a cash basis, in which income is recognized only upon receipt of cash.
Investments in Real Estate: We maintain our investments in real estate at cost, and we capitalize improvements and replacements when they extend the useful life or improve the efficiency of the asset. While our tenants are generally responsible for all operating costs at a facility, in the event we incur costs of repairs and maintenance, we expense those costs as incurred. We compute depreciation using the straight-line method over the estimated useful lives of the assets, which at December 31, 2025, the weighted-average life is approximately 38.6 years for buildings and improvements.
When circumstances indicate a possible impairment of the value of our real estate investments, we review the recoverability of the facility’s carrying value. The review of the recoverability is generally based on our estimate of the future undiscounted cash flows from the facility’s use and eventual disposition. Our forecast of these cash flows considers factors such as expected future operating income, market and other applicable trends, and residual value, as well as the effects of leasing demand, competition, and other factors. If impairment exists due to the inability to recover the carrying value of a facility on an undiscounted basis, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the facility. In making estimates of fair value for purposes of impairment assessments, we will look to a number of sources including independent appraisals, available broker data, or our internal data from recent transactions involving similar properties in similar markets. Given the highly specialized aspects of our properties, no assurance can be given that future impairment charges will not be needed.
Acquired Real Estate Purchase Price Allocation: For properties acquired for operating leasing purposes, we currently account for such acquisitions based on asset acquisition accounting rules. Under this accounting method, we allocate the purchase price of acquired properties to net tangible and identified intangible assets acquired based on their relative fair values. In making estimates of fair value for purposes of allocating purchase prices of acquired real estate, we may utilize a number of sources, including available real estate broker data, independent appraisals that may be obtained in connection with the acquisition or financing of the respective property, internal data from previous acquisitions or developments, and other market data, including market comparables for significant assumptions such as market rents, capitalization, and discount rates. We also consider information obtained about each property as a result of our pre-acquisition due diligence, marketing, and leasing activities in estimating the fair value of the tangible and intangible assets acquired.
We record above-market and below-market in-place lease values, if any, for the facilities we own which are based on the present value of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the lease. We amortize any resulting capitalized above-market lease values as a reduction of rental income over the lease term. We amortize any resulting capitalized below-market lease values as an increase to rental income over the lease term. Because our strategy to a large degree involves the origination and acquisition of long-term lease arrangements at market rates with independent parties, we do not expect the above-market or below-market in-place lease values to be significant for many of our transactions.
We measure the aggregate value of other lease intangible assets to be acquired based on the difference between (i) the property valued with new or in-place leases adjusted to market rental rates and (ii) the property valued as if vacant when acquired. Management’s estimates of value are made using methods similar to those used by independent appraisers ( e.g. , discounted cash flow analysis). Factors considered by management in our analysis include an estimate of carrying costs during hypothetical expected lease-up periods, considering current market conditions, and costs to execute similar leases. We also consider information obtained about each targeted facility as a result of our pre-acquisition due diligence, marketing, and leasing activities in estimating the fair value of the intangible assets acquired. In estimating carrying costs, management includes real estate taxes, insurance, and other operating expenses, and estimates of lost rentals at market rates during the expected lease-up periods, which we expect to be about six months (based on experience) but can be longer depending on specific local market conditions. Management also estimates costs to execute similar leases including leasing commissions, legal costs, and other related expenses to the extent that such costs are not already incurred in connection with a new lease origination.
Other intangible assets acquired may include customer relationship intangible values, which are based on management’s evaluation of the specific characteristics of each prospective tenant’s lease and our overall relationship with that tenant. Characteristics to be considered by management in allocating these values include the nature and extent of our existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality, and expectations of lease renewals, including those existing under the terms of the lease agreement, among other factors. At December 31, 2025, we have not assigned any value to customer relationship intangibles.
We amortize the value of lease intangibles to expense over the term of the respective leases, which have a weighted-average useful life of 28.2 years at December 31, 2025. If a lease is terminated early, the unamortized portion of the lease intangible is charged to expense, as was the case in 2023 with the re-leasing of the Utah properties to CommonSpirit as more fully described in Note 3 to Item 8 of this Annual Report on Form 10-K.
Investments in Unconsolidated Entities: Investments in entities in which we have the ability to significantly influence (but not control) are accounted for by the equity method. This includes the five investments in unconsolidated real estate joint ventures at December 31, 2025. Under the equity method of accounting, our share of the investee’s earnings or losses are included in the “Earnings (loss) from equity interests” line of our consolidated statements of net income. Except for our joint venture with Primotop Holdings S.à.r.l. (“Primotop”) (for which we handle the accounting of), we have elected to record our share of such investee’s earnings or losses on a lag basis (not to exceed three months). The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the interest in the investee entity. Subsequently, our investments are increased/decreased by our share in the investees’ earnings/losses and decreased by cash distributions from our investees. To the extent that our cost basis is different from the basis reflected at the investee entity level, the basis difference is generally amortized over the lives of the related assets and liabilities, and such amortization is included in our share of equity in earnings of the investee.
We evaluate our equity method investments for impairment based upon a comparison of the fair value of the equity method investment to its carrying value, when impairment indicators exist. If we determine a decline in the fair value of an investment in an unconsolidated investee entity below its carrying value is other-than-temporary, an impairment is recorded.
Investments in entities in which we do not control nor do we have the ability to significantly influence and for which there is no readily determinable fair value are accounted for at cost, less any impairment, plus or minus changes resulting from observable price
changes in orderly transactions involving the investee. Cash distributions on these types of investments are recorded to either income upon receipt (if a return on investment) or as a reduction of our investment (if the distributions received are in excess of our share of the investee’s earnings). For similar investments but for which there are readily determinable fair values, such investments are measured at fair value, with unrealized gains and losses recorded in income.
Fair Value Option Election: We elected to account for certain investments using the fair value option method, which means we mark these investments to fair market value on a recurring basis. At December 31, 2025, the fair value amount of investments recorded using the fair value option was less than $150 million made up of loans and equity investments (see Note 10 to Item 8 of this Annual Report on Form 10-K for additional details). Our loans are recorded at fair value based on Level 2 or Level 3 inputs by discounting the estimated cash flows using the market rates which similar loans would be made to borrowers with similar credit ratings and the same remaining maturities.
For our equity investment in the international joint venture at December 31, 2025, fair value was determined based on Level 3 inputs, by using a market approach, which requires significant estimates of our investee such as projected revenue, expenses, and working capital and appropriate consideration of the underlying risk profile of the forecasted assumptions associated with the investee. We classify our valuation of this investment as Level 3, as we use certain unobservable inputs to the valuation methodology that are significant to the fair value measurement, and the valuation requires management judgment due to the absence of quoted market prices. In regard to the underlying projections used in the discounted cash flow model, such projections are provided by the investees. However, we may modify such projections as needed based on our review and analysis of historical results, meetings with key members of management, and our understanding of trends and developments within the healthcare industry. See Note 10 to Item 8 of this Annual Report on Form 10-K for additional details.
Principles of Consolidation: Property holding entities and other subsidiaries of which we own 100% of the equity or have a controlling financial interest evidenced by ownership of a majority voting interest are consolidated. All inter-company balances and transactions are eliminated. For entities in which we own less than 100% of the equity interest, we consolidate the property if we have the direct or indirect ability to control the entity’s activities based upon the terms of the respective entity's ownership agreements. For these entities, we record a non-controlling interest representing equity held by non-controlling interests.
We continually evaluate all of our transactions and investments to determine if they represent variable interests in a variable interest entity. If we determine that we have a variable interest in a variable interest entity, we then evaluate if we are the primary beneficiary of the variable interest entity. The evaluation is a qualitative assessment as to whether we have the ability to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance. We consolidate each variable interest entity in which we, by virtue of or transactions with our investments in the entity, are considered to be the primary beneficiary. At December 31, 2025 and 2024, we determined that we were not the primary beneficiary of any variable interest entity in which we hold a variable interest because we do not control the activities (such as the day-to-day operations) that most significantly impact the economic performance of these entities.
Liquidity and Capital Resources
Our typical sources of cash include our monthly rent and interest receipts, distributions from our real estate joint ventures, borrowings under our revolving Credit Facility, public and private issuances of debt, public issuances of our equity securities, and proceeds from bank debt, asset dispositions (either one-off or group asset sales through joint venture transactions), and principal payments on loans. Our primary uses of cash include dividend distributions, debt service (including principal and interest), new investments (including acquisitions, developments, or capital improvement projects), loan advances, property expenses, and general and administrative expenses.
Absent our requirements to make distributions to maintain our REIT qualification (as described earlier and further described in Note 5 within Item 8 of this Annual Report on Form 10-K) and our current contractual commitments discussed later in this section, we do not have any material off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources.
See below for highlights of our sources and uses of cash for the past two years:
2025 Cash Flow Activity
We generated cash of approximately $231 million from operating activities during 2025, consisting of rent and interest along with distributions from our real estate joint ventures. Our 2025 operating cash flows were lower than the prior year primarily due to an approximately $38 million increase in interest paid in 2025 compared to 2024, partially offset by increases in cash received due to inflation based escalators in our leases, among other things. We used these operating cash flows, proceeds from the revolving portion of our Credit Facility, and proceeds from asset sales to fund our dividends and other investing activities.
See below for further details of these transactions along with additional liquidity activity in 2025:
Repaid the remaining outstanding balance of the British pound sterling term loan due 2025 of £493 million, with a combination of cash on hand and proceeds from the revolving portion of our Credit Facility;
Completed a private offering in February 2025 of $1.5 billion in aggregate principal amount of senior secured notes due 2032 and €1.0 billion aggregate principal amount of senior secured notes due 2032. The net proceeds from the offering were approximately $2.5 billion after deducting discounts, commissions, and other offering related expenses. We used the net proceeds from the offering to fund the redemption of our 3.325% Senior Unsecured Notes due 2025, 2.500% Senior Unsecured Notes due 2026, and 5.250% Senior Unsecured Notes due 2026, with the remainder of net proceeds used to pay down the revolving portion of our Credit Facility by approximately $800 million;
As more fully described in “Significant Tenants” in Item 1 of this Annual Report on Form 10-K, Prospect filed for Chapter 11 bankruptcy on January 11, 2025. On March 20, 2025, the bankruptcy court approved a global settlement (including a recovery waterfall) between us, Prospect, and other stakeholders. In line with terms of this global settlement, we re-leased the six California properties to NOR in December 2025 pursuant to a 15-year lease with annual rents scheduled to ramp up to $45 million in December 2026. We expect to receive our remaining investment of $61 million in 2026. With that said, Prospect's bankruptcy proceedings are continuing, and the ultimate outcome of such proceedings is uncertain. At this time, we cannot assure you that we will be able to recover in full our remaining investment in Prospect. In addition, the bankruptcy court approved an order for up to $70 million in additional advances which we may be required to fund. However, any funds advanced are expected to be secured by recoveries, if any, from causes of action owned by the debtor. At this time, we cannot predict with full certainty as to the amount or timing of such recoveries from these causes of action;
Completed the sale of nine facilities (including two former Steward-operated facilities that were being leased to College Health for nominal rent) along with certain ancillary land and facilities for aggregate cash proceeds of approximately $121 million;
Continued the ramp up of cash rents on the re-tenanted properties formerly operated by Steward. In 2025, these new tenants paid a total of approximately $53 million of rent, and through 2025, all were fully current on cash rents, except for three facilities in Ohio and Pennsylvania with annual rents of less than 1% of total revenues. Excluding these three facilities, the new tenants are currently paying 59% of contractual rents, and we expect this will increase to 100% by the 2026 fourth quarter;
Increased our investment in the Swiss Medical Network joint venture by approximately CHF 52 million, inclusive of a CHF 25 million short-term loan, in April 2025 to facilitate the acquisition of a Swiss general acute facility and repayment of debt;
Received approximately $63 million in dividends from our investments in real estate joint ventures in 2025, which is up overall from 2024 but dividends from our MEDIAN joint venture were lower than prior year as we replaced the €655 million secured debt with a less than 3% blended interest rate, on June 17, 2025, that was due on June 30, 2025, with a new €702.5 million nonrecourse, 10-year non-amortizing secured debt with a 5.1% fixed interest rate;
Entered into an at-the-market equity offering program (the "ATM Program") on August 11, 2025, which provides for the sale, from time to time, of up to $500 million of our common stock with a commission rate up to 2%. There were no sales in 2025;
Established a stock repurchase program in October 2025 for up to $150 million through December 31, 2026, under which we acquired 4.5 million shares for $23.4 million in 2025; and
Completed a restructuring of our relationship with Vibra including entering into a new 20-year master lease agreement covering several properties, the acquisition of one post-acute property for $32 million, and the cash receipt of approximately $18 million for past obligations that we recognized as revenue in the 2025 fourth quarter.
Subsequent to December 31, 2025, the following events occurred:
Closed and funded the acquisition of one property in Germany for approximately €23 million to be leased to MEDIAN;
Sold one property previously leased to Vibra for $12 million, proceeds of which we received in 2025 in anticipation of such closing; and
Our Board of Directors approved a $0.09 dividend in February 2026 to be paid in April 2026.
2024 Cash Flow Activity
We generated cash of approximately $245 million from operating activities during 2024, primarily consisting of rent and interest from mortgage and other loans and distributions from our real estate joint ventures. In addition to operating cash flows, we generated approximately $1.85 billion from the Utah Transaction and the sale of about 30 properties (as further discussed in Note 3 to Item 8 of this Annual Report on Form 10-K), along with approximately $130 million from the sale of our interest in the syndicated Priory term
loan and remaining minority interest in Lifepoint Behavioral. In May 2024, we closed on a new secured term loan, generating proceeds of approximately $800 million. We used our operating cash flows, asset sale proceeds, and term loan proceeds to fund our investment activities and our dividends of $321 million, pay down over $1 billion of our revolving credit facility and £207 million (or $266 million) on our British pound sterling term loan due 2025, and to pay off both of our Australian term loan facility of A$470 million (or $306 million) and our British pound sterling secured term loan due 2024 of £105 million (or $134 million).
See below for further details of these transactions along with additional liquidity activity in 2024:
we completed the sales of 11 properties to UCHealth for approximately $86 million of proceeds and eight properties to Dignity Health for approximately $160 million of proceeds;
we completed the sale of five properties to Prime for cash proceeds of $250 million along with a $100 million interest-bearing mortgage loan that was fully repaid on August 29, 2024;
we completed the Utah Transaction (as discussed in Note 3 to Item 8 of this Annual Report on Form 10-K) that generated cash proceeds of approximately $1.1 billion. With the proceeds from these asset sales, we paid off and terminated our $306 million Australian term loan facility that was due in May 2024 and paid down a portion of our revolving credit facility;
on May 24, 2024, we closed on a secured loan facility with a consortium of institutional investors for an aggregate principal amount of approximately £631 million (approximately $800 million) secured by a portfolio of 27 properties located in the U.K. currently leased to affiliates of Circle. See Note 4 to Item 8 of this Annual Report on Form 10-K for further details. We used the majority of the net proceeds of the facility to pay down portions of our revolving credit facility and British pound sterling term loan due 2025, and to pay off our British pound sterling secured term loan due 2024;
received cash related to our Norwood property that exceeded our recovery receivables (as discussed in Note 3 to Item 8 of this Annual Report on Form 10-K);
completed the sale of Watsonville Community Hospital in Watsonville, California in October 2024 for proceeds of approximately $40 million, and two freestanding emergency department facilities in Texas for approximately $5 million. In addition, we received approximately $47 million in October 2024 from proceeds generated by the sale of three Space Coast properties as previously described in “Significant Tenants”; and
reduced revolving commitments under our revolving credit facility from $1.8 billion to $1.28 billion as part of a series of amendments more fully described below under “Debt Amendments, Restrictions, and Covenant Compliance”.
Debt Amendments, Restrictions, and Covenant Compliance
Our debt facilities impose certain restrictions on us, including, but not limited to, restrictions on our ability to: incur debt; create or incur liens; provide guarantees in respect of obligations of any other entity; make redemptions and repurchases of our capital stock; prepay, redeem, or repurchase debt; engage in mergers or consolidations; enter into affiliated transactions; dispose of real estate or other assets; and change our business. In addition, the credit agreement governing our Credit Facility limits the amount of dividends we can pay as a percentage of normalized adjusted funds from operations ("NAFFO"), as defined in the agreements, on a rolling four quarter basis to 95% of NAFFO. The indentures governing our senior notes also limit the amount of dividends we can pay based on the sum of 95% of NAFFO, proceeds of equity issuances, and certain other net cash proceeds. Finally, our senior notes require us to maintain total unencumbered assets (as defined in the related indenture) of not less than 150% of our unsecured indebtedness.
In addition to these restrictions, the Credit Facility contains customary financial and operating covenants, along with customary events of default, including among others, nonpayment of principal or interest, material inaccuracy of representations, and failure to comply with our covenants. If an event of default occurs and is continuing under the facility, the entire outstanding balance may become immediately due and payable.
On April 12, 2024, we amended the Credit Facility and certain other agreements to, among other things, (i) reduce revolving commitments from $1.8 billion to $1.4 billion, (ii) lower the maximum permitted secured leverage ratio from 40% to 25%, and (iii) waive the 10% cap on unencumbered asset value attributable to tenants subject to a bankruptcy event for purposes of determining compliance with the unsecured leverage ratio for the trailing four fiscal quarter period ended June 30, 2024.
On August 6, 2024, we entered into an amendment to the Credit Facility and the British pound sterling term loan due 2025 to, among other things, (i) further reduce our maximum borrowing in the Credit Facility from $1.4 billion to $1.28 billion, (ii) increase borrowing spreads to 300 basis points during the Modified Covenant Period (defined below) and then to 225 basis points after the
Modified Covenant Period, and (iii) require that proceeds of certain future asset sales and debt transactions (during the Modified Covenant Period) be applied to repay certain outstanding obligations.
The amendments also amended certain covenants from June 30, 2024 to September 30, 2025 (the “Modified Covenant Period”) at which point the credit agreement provided that covenants would automatically reset to their prior levels. The amendments also limited the payment of dividends in cash during the Modified Covenant Period to $0.08 per share in any fiscal quarter, but the amendments did not provide any additional restrictions on the payment of dividends outside of the Modified Covenant Period.
On February 13, 2025 and concurrent with the closing of our private notes offering discussed previously, we further amended the Credit Facility and (i) removed the Modified Covenant Period and any restrictions related thereto from the existing Credit Facility, (ii) permanently removed financial covenants regarding minimum consolidated tangible net worth, maximum unsecured indebtedness to unencumbered asset value and minimum unsecured net operating income to unsecured interest expense, (iii) amended certain definitions used in the financial covenant regarding maximum total indebtedness to total asset value to conform to corresponding definitions in our existing unsecured indentures and the secured notes issued concurrently and set the covenant level at 60%, (iv) provided notice that we plan to exercise both of our 6-month extension options such that the maturity of the revolving portion of our Credit Facility would move to June 30, 2027 (subject to the satisfaction of certain conditions with the primary condition of not being in default at the time of each extension option date), (v) reset the interest rate to SOFR plus 225 basis points, (vi) provided for the loans thereunder to be secured and guaranteed ratably with the secured notes issued in February 2025, (vii) set the maximum secured leverage ratio at 40%, and (viii) added mandatory prepayments of senior debt or addition of additional collateral in connection with any failure to (x) maintain a 65% maximum ratio of secured first lien debt to the undepreciated real estate value of the secured pool properties or (y) maintain a minimum senior secured debt service coverage ratio of 1.15:1.00 (which increases to 1.30:1.00 starting in March 2026).
As of December 31, 2025, we are in compliance with all financial and operating covenants.
Short-term Liquidity Requirements:
Our short-term liquidity requirements typically consist of general and administrative expenses, dividends in order to comply with REIT requirements, interest payments on our debt, and planned funding commitments on development and capital improvement projects for the next twelve months. Our monthly rent and interest receipts and distributions from our joint venture arrangements are typically enough to cover our short-term liquidity requirements.
Over the next twelve months, we expect our monthly rent and interest receipts to increase with our contractually required annual escalations, from the ramp up of cash rents from certain of the tenants that last year replaced Steward, and expected ramping up of rent revenue from the replacement tenant of the six Prospect California facilities. We would expect these rent and interest increases to outpace the higher interest cost from the 2025 refinancings.
At February 23, 2026, we only have €500 million of our 0.993% Senior Unsecured Notes due 2026 coming due in the next twelve months, as we have provided notice of our intent (and believe we will meet all conditions to do so) to extend the revolving portion of our Credit Facility to June 2027. In addition, we have liquidity of $1.0 billion (including cash on hand and availability under the $1.28 billion revolving portion of our Credit Facility). We believe this liquidity along with the expected cash receipts of rent and interest pursuant to our contractual agreements with our tenants/borrowers and distributions from our joint venture arrangements is sufficient to fund our short-term liquidity requirements (including the payoff of the notes coming due in 2026 as discussed above).
However, as noted earlier, we have access to an ATM program for the sale of up to $500 million of our common stock, if needed.
Long-term Liquidity Requirements:
Our long-term liquidity requirements generally consist of the same requirements described above under “Short-term Liquidity Requirements” along with new investments in real estate and the funding of debt maturities coming due after the next twelve months. At this time, we do not expect any material new investments in real estate in the foreseeable future.
As described previously, we believe our monthly rent and interest receipts and distributions from our joint venture arrangements along with our current liquidity of approximately $1.0 billion at February 23, 2026, is enough to cover our short-term liquidity requirements. However, to further improve cash flows and to fund future debt maturities, we will need to look to other sources, which may include one or a combination of the following:
property sales and/or the monetization of a portion of our real estate joint ventures;
monetizing our investments in operators;
reducing our dividend (or moving to a stock dividend), while still complying with REIT requirements and Credit Facility covenants;
identifying and implementing cost reduction opportunities;
entering into additional secured loans on real estate;
extending the maturity or refinancing of our existing Credit Facility and other term loans;
entering into new bank term loans or issuing new USD, EUR, or GBP denominated debt securities; and
sale of equity securities (including through the use of our ATM program).
However, there is no assurance that conditions will be favorable for such possible transactions or that our plans will be successful.
Contractual Commitments
The following table summarizes known material contractual commitments including debt service commitments (principal and interest payments) as of February 23, 2026 (amounts in thousands):
Commitments (1)
Thereafter
Total
Senior unsecured notes
Senior secured notes
Revolving credit
facility(3)
Term loan
British pound secured
loan facility
Operating lease
commitments(4)
Purchase obligations(5)
Totals
We used the exchange rates at February 23, 2026 in preparing this table. For any variable rate debt, we have assumed that the interest rate in effect at February 23, 2026 remains in effect through maturity.
Includes the debt principal maturity on October 15, 2026 for €500 million.
As of February 23, 2026, we have a $1.28 billion revolving credit facility. This table assumes the balance outstanding under the revolver (which was approximately $440 million as of February 23, 2026) is due at initial maturity on June 30, 2026. However, as noted earlier, we can extend the revolver by up to one year, which we noticed the lenders of our plan to do so as part of our February 13, 2025 Credit Facility amendment. Such extension is at our election as long as certain conditions are met with the primary condition of not being in default at the time of each extension option date.
Much of our contractual obligations to make operating lease payments are related to ground leases for which we are reimbursed by our tenants along with corporate office and equipment leases.
Includes approximately $32 million of future expenditures related to development projects, $157 million of future expenditures on committed capital improvement projects (including the $60 million commitment to NOR for seismic purposes), and approximately $62 million of remaining amounts due to Prospect, per court order, that is secured by recovery, if any, from causes of action.
Results of Operations
Our operating results may vary significantly from year-to-year due to a variety of reasons including acquisitions made during the year, incremental revenues and expenses from acquisitions made in the prior year, revenues and expenses from completed development properties, property disposals, annual escalation provisions, cash rents received from cash basis tenants (particularly those that are in a period of ramp up), interest rate changes, foreign currency exchange rate changes, new or amended debt agreements, issuances of shares through an equity offering, impact from accounting changes, lease terminations/re-tenanting, etc. Thus, our operating results for the current year are not necessarily indicative of the results that may be expected in future years.
Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024
Net loss for the year ended December 31, 2025, was $(0.3) billion ($(0.46) per share) compared to net loss of $(2.4) billion ($(4.02) per share) for the year ended December 31, 2024. This change in net loss was primarily driven by a total of $2.8 billion of impairment charges and negative fair value adjustments in 2024 primarily related to Steward (including our Massachusetts-based partnership), Prospect (including our investment in PHP), and the international joint venture, whereas, we incurred approximately $340 million in 2025, primarily related to Prospect (including our investment in PHP). See below for further details of these charges and where reflected in the consolidated statements of net income. This change was partially offset by approximately $479 million of gains on real estate sales in 2024. Normalized FFO, after adjusting for certain items (as more fully described in the section titled “Non-GAAP Financial Measures” in this Item 7 of this Annual Report on Form 10-K), was $346 million for 2025, or $0.58 per share, as compared to $483 million, or $0.80 per share, for 2024. This 28% decrease in Normalized FFO is primarily due to lower revenues as a result of various disposals in 2024 and 2025, along with less cash revenue received from Steward and Prospect, and higher interest expense from our recent refinancing activities.
A comparison of revenues for the years ended December 31, 2025 and 2024 is as follows (dollar amounts in thousands):
Change
Rent billed
Straight-line rent
Income from financing leases
Interest and other income
Total revenues
Our total revenues for 2025 decreased by $24 million or 2.4% over the prior year. This change is made up of the following:
Operating lease revenue (includes rent billed and straight-line rent) — up $5.5 million from the prior year, primarily due to $55 million of operating lease revenue earned from the retenanting of the former Steward-operated facilities, an increase of $13.6 million due to increases in CPI above the contractual minimum escalations in our leases, $13.4 million of favorable foreign currency fluctuations, approximately $20 million more cash received from other cash-basis tenants (including approximately $18 million received from Vibra in the 2025 fourth quarter for past obligations), and a $2.4 million increase due to the completion of capital addition and development projects in 2024 and 2025. This increase was partially offset by approximately $66 million less operating lease revenue due to property sales in 2024 and 2025 and $33 million from rent collected from Steward in 2024 (none in 2025).
See Note 3 to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for more details regarding the transaction activity above.
Income from financing leases — down $23.9 million primarily due to not receiving any cash rent from Prospect (cash-basis tenant) in 2025, whereas we received $25 million of rent for this tenant in 2024. This decrease was partially offset by approximately $1 million from the increase in CPI above the lease contractual minimum escalations.
Interest and other income — down $5.2 million from the prior year due to the following:
Interest from loans — down $3.8 million, primarily due to an approximate $5.1 million decrease from the sale of our interest in the Priory syndicated term loan in the first quarter of 2024 and other loan payoffs, including the Prime mortgage loan that was repaid on August 29, 2024 (as further described in Note 3 to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K) and approximately $5.2 million less interest received from cash-basis tenants in 2025 compared to 2024, partially offset by approximately $3.8 million of additional revenue from the funding of new loans and $2.5 million of higher income from annual escalations due to increases in CPI.
Other income — down $1.4 million from the prior year as we had less direct reimbursements from our cash- basis tenants for ground leases, property taxes, and insurance.
Interest Expense
Interest expense for 2025 and 2024 totaled $510.4 million and $417.8 million, respectively. This increase is primarily related to higher interest from our February 2025 debt refinancing activities (see Note 4 to the consolidated financial statements for further details), partially offset by lower interest expense from the decrease in average borrowings on our Credit Facility in 2025, compared to 2024, along with the payoff of our £493 million British pound sterling term loan in the first quarter of 2025. Overall, our weighted-average interest rate was 5.2% for 2025, compared to 4.3% for 2024.
Real Estate Depreciation and Amortization
Real estate depreciation and amortization during 2025 decreased to $265.4 million from $447.7 million in 2024 primarily due to $170 million of additional amortization expense recorded in 2024 primarily to fully amortize the intangibles associated with two master leases, including the Steward master lease that was terminated effective September 11, 2024. The remaining decrease is due to the sale of various properties in 2024 and 2025.
Property-related
Property-related expenses for 2025 increased to $36.4 million, compared to $27.3 million in 2024. Of the property expenses in 2025 and 2024, approximately $12.3 million and $13.7 million, respectively, represents costs (primarily property taxes and insurance premiums) that were reimbursed by our tenants and included in the “Interest and other income” line on our consolidated statements of net income. The remaining non-reimbursed property expenses are higher year-over-year primarily due to ongoing expenses (such as property taxes, insurance, maintenance, etc.) incurred at our vacant facilities.
General and Administrative
General and administrative expenses was $130.4 million in 2025, compared to $133.8 million in 2024 as share-based compensation expense declined to $25.7 million in 2025, compared to $32.9 million in 2024. The decrease in share-based compensation expense is primarily due to the $10.9 million adjustment from changes in estimated payouts of certain performance awards.
As more fully described in Note 7 to Item 8 of this Annual Report on Form 10-K, we have certain performance awards granted in 2025 and 2024 that have cash-settlement features. Awards that can be cash settled are required to be adjusted each quarter to fair value in determining share-based compensation expense; whereas, an award without cash settlement features (which is our typical award structure) are expensed based on the grant date fair value. Although we did not have significant fluctuations in expense year-over-year from these awards, we did have significant volatility from quarter to quarter and would expect further volatility in future years until the service period for these awards ends.
Gain on Sale of Real Estate
During 2025, the gain on sale of real estate of $5.5 million primarily related to the disposal of nine properties. During 2024, the gain on sale of real estate of $478.7 million primarily related to the disposal of five Prime facilities, the sale of a 75% interest in five Utah facilities as part of the Utah Transaction, and the sale of eight Dignity Health facilities and 11 UCHealth facilities. See Note 3 to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for more details regarding these disposals.
Real Estate and Other Impairment Charges, Net
In 2025, we recognized $193.9 million of real estate and other impairment charges, primarily associated with our investments in Prospect and three hospitals in Colombia, as well as, ongoing property taxes and other obligations not paid by our cash basis tenants. In 2024, we recognized $1.8 billion of real estate and other impairment charges and negative fair value adjustments, primarily associated with our investments in Steward, Prospect, and the international joint venture. See Note 3 to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for more information about these charges.
Earnings (loss) from Equity Interests
Earnings from equity interests was $97.9 million for 2025, compared to a loss of ($366.6) million in 2024. This increase is primarily due to the $410 million charge in the second quarter of 2024 associated with the real estate impairment in our Massachusetts-based partnership with Macquarie. In addition, our share of income increased year-over-year in the Utah partnership that was formed in the 2024 second quarter by approximately $48.7 million, as prior year only included three months of activity versus a full year in 2025 and the year ended December 31, 2025 included approximately $49 million of positive fair value adjustments (primarily real estate related) compared to $6.9 million in 2024. Finally, our share of income in the MEDIAN joint venture increased by approximately $7.4 million year-over-year, primarily driven by the $13 million deferred tax benefit from the reduction in future German tax rates, partially offset by higher interest expense from the refinancing in 2025.
Debt Refinancing and Unutilized Financing Costs
Debt refinancing and unutilized financing costs were $3.6 million for 2025. These costs were incurred primarily as a result of the early redemption of our 3.325% Senior Unsecured Notes due 2025, 2.500% Senior Unsecured Notes due 2026, and 5.250% Senior
Unsecured Notes due 2026. For 2024, we incurred $4.3 million as a result of the reduction in revolving commitments under our Credit Facility and partial paydown of our British pound sterling term loan due 2025.
Other (Including Fair Value Adjustments on Securities)
Other expense for 2025 was $172.6 million, compared to $615.6 million in the prior year. We recognized approximately $147 million of unfavorable fair value adjustments to our investment in PHP Holdings in 2025, compared to approximately $550 million of unfavorable fair value adjustments in 2024. In addition, we incurred approximately $13.5 million in 2025 of legal and other professional expenses associated with the Prospect and Steward bankruptcies and responding to certain defamatory statements published by certain parties, among other things, compared to $51.3 million in 2024. We also incurred a $7.8 million economic loss in 2024 from the sale of our interest in the Priory syndicated term loan.
Income Tax Expense
Income tax expense includes U.S. federal and state income taxes on our TRS entities, as well as non-U.S. income based or withholding taxes on certain investments located in jurisdictions outside the U.S. The $38.6 million of income tax expense for 2025 is primarily based on the income generated by our investments in the U.K. and Germany and is less than the $44.1 million of income tax expense in 2024 due to $5 million of additional tax expense in the second quarter of 2024 as a result of the gain on the interest rate swap associated with the internal restructuring of the British pound sterling term loan due 2025.
We utilize the asset and liability method of accounting for income taxes. Deferred tax assets are recorded to the extent we believe these assets will more likely than not be realized. In making such determination, all available positive and negative evidence is considered, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Based upon our review of all positive and negative evidence, including our three-year cumulative pre-tax book loss position in certain entities, we concluded that a valuation allowance of approximately $490 million should be reflected against certain of our international and domestic net deferred tax assets at December 31, 2025. In the future, if we determine that it is more likely than not that we will realize our net deferred tax assets, we will reverse the applicable portion of the valuation allowance, recognize an income tax benefit in the period in which such determination is made, and potentially incur higher income tax expense in future periods as income is earned. For more detailed information, see Note 5 to Item 8 of this Annual Report on Form 10-K.
Subsequent to December 31, 2025, we moved seven additional U.K. property holding legal entities into our U.K. REIT that was formed on July 1, 2023. With this move, we plan to adjust the deferred tax liabilities associated with these entities, which we expect will result in an approximate $40 million one-time tax benefit in the first quarter of 2026. Going forward, these U.K. entities (like the others in the U.K. REIT) will be subject only to a withholding tax on earnings upon distribution out of the U.K. REIT.
Non-GAAP Financial Measures
We consider non-GAAP financial measures to be useful supplemental measures of our operating performance. A non-GAAP financial measure is a measure of financial performance, financial position, or cash flows that excludes or includes amounts that are not so excluded from or included in the most directly comparable measure calculated and presented in accordance with GAAP. Described below are the non-GAAP financial measures used by management to supplement our evaluation of operating performance and that we consider useful to investors, together with reconciliations of these measures to the most directly comparable GAAP measures.
Funds From Operations and Normalized Funds From Operations
Investors and analysts following the real estate industry utilize funds from operations, or FFO, as a supplemental performance measure. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets, which assumes that the value of real estate diminishes predictably over time. We compute FFO in accordance with the definition provided by the National Association of Real Estate Investment Trusts, or Nareit, which represents net income (loss) (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairment charges on real estate assets, plus real estate depreciation and amortization, including amortization related to in-place lease intangibles, and after adjustments for unconsolidated partnerships and joint ventures.
In addition to presenting FFO in accordance with the Nareit definition, we disclose normalized FFO, which adjusts FFO for items that relate to unanticipated or non-core events or activities or accounting changes that, if not noted, would make comparison to prior period results and market expectations less meaningful to investors and analysts.
We believe that the use of FFO, combined with the required GAAP presentations, improves the understanding of our operating results among investors and the use of normalized FFO makes comparisons of our operating results with prior periods and other companies more meaningful. While FFO and normalized FFO are relevant and widely used supplemental measures of operating and
financial performance of REITs, they should not be viewed as a substitute measure of our operating performance since the measures do not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs (if any are not paid by our tenants) to maintain the operating performance of our properties, which can be significant economic costs that could materially impact our results of operations. FFO and normalized FFO should not be considered an alternative to net income (loss) (computed in accordance with GAAP) as indicators of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.
The following table presents a reconciliation of net loss attributable to MPT common stockholders to FFO and Normalized FFO for the years ended December 31, 2025 and 2024 (in thousands except per share data):
For the Years Ended December 31,
FFO Information
Net loss attributable to MPT common stockholders
Participating securities’ share in earnings
Net loss, less participating securities’ share in earnings
Depreciation and amortization
Gain on sale of real estate
Real estate impairment charges
Funds from operations
Other impairment charges, net
Litigation, bankruptcy and other costs
Share-based compensation (fair value adjustments) (1)
Non-cash fair value adjustments
Tax rate changes and other
Debt refinancing and unutilized financing costs
Normalized funds from operations
Per diluted share data
Net loss, less participating securities’ share in earnings
Depreciation and amortization
Gain on sale of real estate
Real estate impairment charges
Funds from operations
Other impairment charges, net
Litigation, bankruptcy and other costs
Share-based compensation (fair value adjustments) (1)
Non-cash fair value adjustments
Tax rate changes and other
Debt refinancing and unutilized financing costs
Normalized funds from operations
Total share-based compensation expense for GAAP purposes was $25.7 million and $33.0 million for the years ended December 31, 2025 and 2024, respectively, (including the impact from changes in estimated payouts of performance awards and fair value adjustments on certain awards that are to be settled in cash). Cash-settled awards are recorded in accordance with GAAP at fair value and measured at each balance sheet date until settlement. The resulting fluctuations, which are primarily driven by changes in our stock price rather than operational performance, can introduce significant volatility in our earnings. To enhance comparability and provide a more stable view of performance over time, normalized FFO reflects $10.3 million of additional expense in 2025 to arrive at total share-based compensation expense of $36.0 million for the year ended December 31, 2025 using grant date fair value for all awards (including cash-settled awards) and removing the positive impact in the period from the change in estimate of the payout of our 2023 performance award.
Distribution Policy
We have elected to be taxed as a REIT commencing with our taxable year that began on April 6, 2004 and ended on December 31, 2004. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute (in the form of cash or stock) at least 90% of our REIT taxable income, excluding net capital gains, to our stockholders. It is our current intention to comply with these requirements and maintain such status going forward.
The table below is a summary of our distributions declared (and paid in cash) during the three year period ended December 31, 2025:
Declaration Date
Record Date
Date of Distribution
Distribution per Share
November 17, 2025
December 11, 2025
January 8, 2026
August 14, 2025
September 11, 2025
October 9, 2025
May 29, 2025
June 18, 2025
July 17, 2025
February 13, 2025
March 10, 2025
April 10, 2025
November 21, 2024
December 12, 2024
January 9, 2025
August 22, 2024
September 9, 2024
October 10, 2024
May 30, 2024
June 10, 2024
July 9, 2024
April 12, 2024
April 22, 2024
May 1, 2024
November 9, 2023
December 7, 2023
January 11, 2024
August 21, 2023
September 14, 2023
October 12, 2023
April 27, 2023
June 15, 2023
July 13, 2023
February 16, 2023
March 16, 2023
April 13, 2023
On February 12, 2026, we announced that our Board of Directors declared a regular quarterly cash dividend of $0.09 per share of common stock to be paid on April 9, 2026, to shareholders of record on March 12, 2026.
We intend to pay to our stockholders, within the time periods prescribed by the Code, all or substantially all of our annual taxable income, including taxable gains from the sale of real estate and recognized gains on the sale of securities. It is our policy to make sufficient distributions to stockholders in order for us to maintain our status as a REIT under the Code and to efficiently manage corporate income and excise taxes on undistributed income, although there is no assurance as to further dividends because they depend on future earnings, capital requirements, and our financial condition. Although we have only made cash distributions historically, we may consider making stock dividends in the future for liquidity purposes, while still complying with REIT requirements. In addition, our Credit Facility limits the amount of cash dividends we can make — see Note 4 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K for further information.
ITEM 7A. Quantitative a nd Qualitative Disclosures about Market Risk
Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices, and other market changes that affect market sensitive instruments. We seek to mitigate the effects of fluctuations in interest rates by matching the terms of new investments with new long-term fixed rate borrowings to the extent possible. We may or may not elect to use financial derivative instruments to hedge interest rate or foreign currency exposure. For interest rate hedging, these decisions are principally based on our policy to match investments with comparable borrowings, but are also based on the general trend in interest rates at the applicable dates and our perception of the future volatility of interest rates. For foreign currency hedging, these decisions are principally based on how our investments are financed, the long-term nature of our investments, the need to repatriate earnings back to the U.S., and the general trend in foreign currency exchange rates.
In addition, the value of our facilities are subject to fluctuations based on changes in local and regional economic conditions and changes in the ability of our tenants to generate profits.
Our primary exposure to market risks relates to fluctuations in interest rates and foreign currency. The following analyses present the sensitivity of the market value, earnings, and cash flows of our significant financial instruments to hypothetical changes in interest rates and exchange rates as if these changes had occurred. The hypothetical changes chosen for these analyses reflect our view of changes that are reasonably possible over a one-year period. These forward looking disclosures are selective in nature and only address the potential impact from these hypothetical changes. They do not include other potential effects which could impact our business as a result of changes in market conditions. In addition, they do not include measures we may take to minimize our exposure such as entering into future interest rate swaps to hedge against interest rate increases on our variable rate debt.
Interest Rate Sensitivity
For fixed rate debt, interest rate changes affect the fair market value but do not impact net income to common stockholders or cash flows. Conversely, for floating rate debt, interest rate changes generally do not affect the fair market value but do impact net income to common stockholders and cash flows, assuming other factors are held constant. At December 31, 2025, our outstanding debt totaled $9.8 billion (excluding debt issue costs and discounts), which consisted of fixed-rate debt of approximately $9.0 billion and variable rate debt of $0.8 billion. If market interest rates increase or decrease by 10%, the fair value of our debt at December 31,
2025 would decrease or increase by approximately $220 million. Changes in the fair value of our fixed rate debt will not have any impact on us unless we decided to repurchase the debt in the open market.
If market rates of interest on our variable rate debt increase by 10%, the increase in annual interest expense on our variable rate debt would decrease future earnings and cash flows by $5.1 million per year. If market rates of interest on our variable rate debt decrease by 10%, the decrease in interest expense on our variable rate debt would increase future earnings and cash flows by $5.1 million per year. This assumes that the average amount outstanding under our variable rate debt for a year is $0.8 billion, the balance of such variable rate debt at December 31, 2025.
Foreign Currency Sensitivity
With our investments in the U.K., Germany, Spain, Italy, Portugal, Switzerland, Finland, and Colombia, we are subject to fluctuations in the British pound, euro, Swiss franc, and Colombian peso to U.S. dollar currency exchange rates. Although we generally deem investments in these countries to be of a long-term nature, are typically able to match any non-U.S. dollar borrowings with investments in such currencies, and historically have not needed to repatriate a material amount of earnings back to the U.S., increases or decreases in the value of the respective non-U.S. dollar currencies to U.S. dollar exchange rates may impact our financial condition and/or our results of operations. Based on our 2025 results, a 10% increase or decrease in exchange rates would decrease or increase our net loss by $8.1 million.
ITEM 8. Financial St atements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Medic al Properties Trust, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Medical Properties Trust, Inc. and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of net income, of comprehensive loss, of equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes and financial statement schedules listed in the index appearing under Item 15(a) (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Impairment Assessment of Real Estate Investments
As described in Notes 2 and 3 to the consolidated financial statements, the carrying value of the Company’s real estate investments was $10.5 billion as of December 31, 2025, including land, buildings and improvements net of accumulated depreciation and intangible assets net of accumulated amortization. Management reviews real estate investments for impairment when events and circumstances indicate that the assets may not be recoverable. Management analyzes recoverability by comparing the carrying value of the real estate assets to a probability-weighted set of estimated undiscounted cash flows to be generated by those assets, including an estimated liquidation amount, during the expected holding periods. Assumptions used in determining undiscounted cash flows may include, but are not limited to, market rental rates, capitalization rates, and holding periods. If the recoverability analysis indicates that the carrying value of the real estate asset is greater than the expected future undiscounted cash flows, impairment losses are measured as the difference between carrying value and fair value of the assets. Estimated future cash flows used in such analysis are based on the Company’s plans for the real estate asset and their view of market economic conditions. Assumptions used in determining fair value may include, but are not limited to, market rental rates, discount rates, and capitalization rates.
The principal considerations for our determination that performing procedures relating to the impairment assessment of real estate investments is a critical audit matter are (i) the significant judgment by management when developing the undiscounted cash flows to be generated by the assets, and developing the fair value estimate, and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures related to evaluating management’s undiscounted cash flows to be generated by the assets and significant assumptions related to market rental rates and the holding period used in developing the undiscounted cash flows, and the market rental rates and capitalization rates, used in the fair value estimate.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the Company’s impairment assessment, including controls over the development of the undiscounted cash flows to be generated by the assets and fair value estimate. These procedures also included, among others, (i) testing management’s process for developing the estimated future undiscounted cash flows and for developing the fair value used in the impairment assessment of real estate investments, (ii) evaluating the appropriateness of the undiscounted cash flows and direct capitalization models, (iii) testing the completeness and accuracy of underlying data used in the models, and (iv) evaluating the reasonableness of the significant assumptions used by management related to the market rental rates and holding period used in the undiscounted cash flow model and the market rental rates and capitalization rates used in the direct capitalization model. Evaluating management's assumptions related to market rental rates, capitalization rates and holding period involved evaluating whether the assumptions used by management were reasonable considering the consistency with external market data and comparable transactions.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Birmingham, Alabama
February 26, 2026
We have served as the Company’s auditor since 2008.
Report of Independent Registered Public Accounting Firm
To the Partners of MPT Ope rating Partnership, L.P.:
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of MPT Operating Partnership, L.P. and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of net income, of comprehensive loss, of capital and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes and financial statement schedules listed in the index appearing under Item 15(a) (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Impairment Assessment of Real Estate Investments
As described in Notes 2 and 3 to the consolidated financial statements, the carrying value of the Company’s real estate investments was $10.5 billion as of December 31, 2025, including land, buildings and improvements net of accumulated depreciation and intangible assets net of accumulated amortization. Management reviews real estate investments for impairment when events and circumstances indicate that the assets may not be recoverable. Management analyzes recoverability by comparing the carrying value of the real estate assets to a probability-weighted set of estimated undiscounted cash flows to be generated by those assets, including an estimated liquidation amount, during the expected holding periods. Assumptions used in determining undiscounted cash flows may include, but are not limited to, market rental rates, capitalization rates, and holding periods. If the recoverability analysis indicates that the carrying value of the real estate asset is greater than the expected future undiscounted cash flows, impairment losses are measured as the difference between carrying value and fair value of the assets. Estimated future cash flows used in such analysis are based on the Company’s plans for the real estate asset and their view of market economic conditions. Assumptions used in determining fair value may include, but are not limited to, market rental rates, discount rates, and capitalization rates.
The principal considerations for our determination that performing procedures relating to the impairment assessment of real estate investments is a critical audit matter are (i) the significant judgment by management when developing the undiscounted cash flows to be generated by the assets, and developing the fair value estimate, and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures related to evaluating management’s undiscounted cash flows to be generated by the assets and significant assumptions related to market rental rates and the holding period used in developing the undiscounted cash flows, and the market rental rates and capitalization rates, used in the fair value estimate.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the Company’s impairment assessment, including controls over the development of the undiscounted cash flows to be generated by the assets and fair value estimate. These procedures also included, among others, (i) testing management’s process for developing the estimated future undiscounted cash flows and for developing the fair value used in the impairment assessment of real estate investments, (ii) evaluating the appropriateness of the undiscounted cash flows and direct capitalization models, (iii) testing the completeness and accuracy of underlying data used in the models, and (iv) evaluating the reasonableness of the significant assumptions used by management related to the market rental rates and holding period used in the undiscounted cash flow model and the market rental rates and capitalization rates used in the direct capitalization model. Evaluating management's assumptions related to market rental rates, capitalization rates and holding period involved evaluating whether the assumptions used by management were reasonable considering the consistency with external market data and comparable transactions.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Birmingham, Alabama
February 26, 2026
We have served as the Company’s auditor since 2008.
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Consolidated B alance Sheets
December 31,
(Amounts in thousands,
except for per share data)
ASSETS
Real estate assets
Land
Buildings and improvements
Intangible lease assets
Investment in financing leases
Real estate held for sale
Mortgage loans
Gross investment in real estate assets
Accumulated depreciation
Accumulated amortization
Net investment in real estate assets
Cash and cash equivalents
Interest and rent receivables
Straight-line rent receivables
Investments in unconsolidated real estate joint ventures
Investments in unconsolidated operating entities
Other loans
Other assets
Total Assets
LIABILITIES AND EQUITY
Liabilities
Debt, net
Accounts payable and accrued expenses
Deferred revenue
Obligations to tenants and other lease liabilities
Total Liabilities
Commitments and Contingencies
Equity
Preferred stock, $ 0.001 par value. Authorized 10,000 shares; no shares outstanding
Common stock, $ 0.001 par value. Authorized 750,000 shares; issued and outstanding —
597,008 shares at December 31, 2025 and 600,403 shares at December 31, 2024
Additional paid-in capital
Retained deficit
Accumulated other comprehensive income (loss)
Total Medical Properties Trust, Inc. stockholders’ equity
Non-controlling interests
Total Equity
Total Liabilities and Equity
See accompanying notes to consolidated financial statements.
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Consolidated Statem ents of Net Income
For the Years Ended December 31,
(Amounts in thousands,
except for per share data)
Revenues
Rent billed
Straight-line rent
Income from financing leases
Interest and other income
Total revenues
Expenses
Interest
Real estate depreciation and amortization
Property-related
General and administrative
Total expenses
Other (expense) income
Gain (loss) on sale of real estate
Real estate and other impairment charges, net
Earnings (loss) from equity interests
Debt refinancing and unutilized financing (costs) benefit
Other (including fair value adjustments on securities)
Total other expense
Loss before income tax
Income tax (expense) benefit
Net loss
Net income attributable to non-controlling interests
Net loss attributable to MPT common stockholders
Earnings per common share — basic and diluted
Net loss attributable to MPT common stockholders
Weighted average shares outstanding — basic
Weighted average shares outstanding — diluted
See accompanying notes to consolidated financial statements.
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Loss
For the Years Ended December 31,
(In thousands)
Net loss
Other comprehensive (loss) income:
Unrealized loss on interest rate hedges, net of tax
Reclassification of interest rate hedges gain from AOCI to
earnings, net of tax
Foreign currency translation gain (loss)
Reclassification of foreign currency translation loss from
AOCI to earnings
Total comprehensive loss
Comprehensive income attributable to non-controlling interests
Comprehensive loss attributable to MPT common stockholders
See accompanying notes to consolidated financial statements.
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Consolidated Stat ements of Equity
For the Years Ended December 31, 2025, 2024 and 2023
Preferred
Common
(In thousands, except per share amounts)
Shares
Par
Value
Shares
Par
Value
Additional
Paid-in
Capital
Retained
Earnings
(Deficit)
Accumulated
Other
Comprehensive
(Loss) Income
Non-
Controlling
Interests
Total
Equity
Balance at December 31, 2022
Net (loss) income
Unrealized loss on interest rate hedges, net of tax
Reclassification of interest rate hedge gain to
earnings, net of tax
Foreign currency translation gain
Reclassification of foreign currency translation
loss to earnings
Stock vesting and amortization of stock-based compensation
Stock vesting - satisfaction of tax withholdings
Issuance of non-controlling interests
Distributions to non-controlling interests
Dividends declared ($ 0.88 per common share)
Balance at December 31, 2023
Net (loss) income
Unrealized loss on interest rate hedges, net of tax
Reclassification of interest rate hedge gain to
earnings, net of tax
Foreign currency translation loss
Stock vesting and amortization of stock-based compensation
Stock vesting - satisfaction of tax withholdings
Acquisitions of non-controlling interests
Distributions to non-controlling interests
Dividends declared ($ 0.46 per common share)
Balance at December 31, 2024
Net (loss) income
Unrealized loss on interest rate hedges, net of tax
Foreign currency translation gain
Stock vesting and amortization of stock-based compensation
Stock vesting - satisfaction of tax withholdings
Repurchase of common stock
Distributions to non-controlling interests
Offering costs
Dividends declared ($ 0.33 per common share)
Balance at December 31, 2025
See accompanying notes to consolidated financial statements.
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Consolidated Statem ents of Cash Flows
For the Years Ended December 31,
(Amounts in thousands)
Operating activities
Net loss
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
Amortization of deferred financing costs and debt discount
Straight-line rent revenue and other
Stock-based compensation
(Gain) loss on sale of real estate
Real estate and other impairment charges, net
Equity interest real estate impairment
Straight-line rent and other write-off
Debt refinancing and unutilized financing costs (benefit)
Tax rate changes and other
Non-cash fair value adjustments
Non-cash revenue from debt and equity securities received
Other adjustments
Changes in:
Interest and rent receivables
Other assets
Accounts payable and accrued expenses
Deferred revenue
Net cash provided by operating activities
Investing activities
Cash paid for acquisitions and other related investments
Net proceeds from sale of real estate
Principal received from sale and repayment of loans receivable
Investment in loans receivable
Construction in progress and other
Proceeds from sale and return of equity investments
Capital additions and other investments, net
Net cash (used for) provided by investing activities
Financing activities
Proceeds from term debt
Payments of term debt
Revolving credit facilities, net
Dividends paid
Lease deposits and other obligations to tenants
Offering costs
Repurchase of common stock
Stock vesting - satisfaction of tax withholdings
Payment of debt refinancing and deferred financing costs and other financing activities
Net cash provided by (used for) financing activities
Increase in cash, cash equivalents, and restricted cash for the year
Effect of exchange rate changes
Cash, cash equivalents, and restricted cash at beginning of year
Cash, cash equivalents, and restricted cash at end of year
Interest paid, including capitalized interest of $ 12,920 in 2025, $ 7,642 in 2024,
and $ 14,178 in 2023
Supplemental schedule of non-cash investing activities:
Debt and equity securities received for certain obligations, real estate, and revenue
Certain obligations and receivables satisfied and real estate sold
Lease incentive provided
Supplemental schedule of non-cash financing activities:
Dividends declared, unpaid
Cash, cash equivalents, and restricted cash are comprised of the following:
Beginning of period:
Cash and cash equivalents
Restricted cash, included in Other assets
End of period:
Cash and cash equivalents
Restricted cash, included in Other assets
See accompanying notes to consolidated financial statements.
MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
Consoli dated Balance Sheets
December 31,
(Amounts in thousands,
except for per unit data)
ASSETS
Real estate assets
Land
Buildings and improvements
Intangible lease assets
Investment in financing leases
Real estate held for sale
Mortgage loans
Gross investment in real estate assets
Accumulated depreciation
Accumulated amortization
Net investment in real estate assets
Cash and cash equivalents
Interest and rent receivables
Straight-line rent receivables
Investments in unconsolidated real estate joint ventures
Investments in unconsolidated operating entities
Other loans
Other assets
Total Assets
LIABILITIES AND CAPITAL
Liabilities
Debt, net
Accounts payable and accrued expenses
Deferred revenue
Obligations to tenants and other lease liabilities
Payable due to Medical Properties Trust, Inc.
Total Liabilities
Commitments and Contingencies
Capital
General Partner — issued and outstanding — 5,972 units at December 31, 2025 and
6,006 units at December 31, 2024
Limited Partners — issued and outstanding — 591,036 units at December 31,
2025 and 594,397 units at December 31, 2024
Accumulated other comprehensive income (loss)
Total MPT Operating Partnership, L.P. capital
Non-controlling interests
Total Capital
Total Liabilities and Capital
See accompanying notes to consolidated financial statements.
MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
Conso lidated Statements of Net Income
For the Years Ended December 31,
(Amounts in thousands,
except for per unit data)
Revenues
Rent billed
Straight-line rent
Income from financing leases
Interest and other income
Total revenues
Expenses
Interest
Real estate depreciation and amortization
Property-related
General and administrative
Total expenses
Other (expense) income
Gain (loss) on sale of real estate
Real estate and other impairment charges, net
Earnings (loss) from equity interests
Debt refinancing and unutilized financing (costs) benefit
Other (including fair value adjustments on securities)
Total other expense
Loss before income tax
Income tax (expense) benefit
Net loss
Net income attributable to non-controlling interests
Net loss attributable to MPT Operating Partnership partners
Earnings per unit — basic and diluted
Net loss attributable to MPT Operating Partnership partners
Weighted average units outstanding — basic
Weighted average units outstanding — diluted
See accompanying notes to consolidated financial statements.
MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Loss
For the Years Ended December 31,
(In thousands)
Net loss
Other comprehensive (loss) income:
Unrealized loss on interest rate hedges, net of tax
Reclassification of interest rate hedges gain from AOCI to
earnings, net of tax
Foreign currency translation gain (loss)
Reclassification of foreign currency translation loss from
AOCI to earnings
Total comprehensive loss
Comprehensive income attributable to non-controlling interests
Comprehensive loss attributable to MPT Operating Partnership partners
See accompanying notes to consolidated financial statements.
MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
Consolidated Stat ements of Capital
For the Years Ended December 31, 2025, 2024 and 2023
General
Limited
Accumulated
Partner
Partners
Other
Non-
(In thousands, except per unit amounts)
Units
Unit
Value
Units
Unit
Value
Comprehensive
(Loss) Income
Controlling
Interests
Total
Capital
Balance at December 31, 2022
Net (loss) income
Unrealized loss on interest rate hedges, net of tax
Reclassification of interest rate hedge gain to
earnings, net of tax
Foreign currency translation gain
Reclassification of foreign currency translation
loss to earnings
Unit vesting and amortization of unit-based compensation
Unit vesting - satisfaction of tax withholdings
Issuance of non-controlling interests
Distributions to non-controlling interests
Distributions declared ($ 0.88 per unit)
Balance at December 31, 2023
Net (loss) income
Unrealized loss on interest rate hedges, net of tax
Reclassification of interest rate hedge gain to
earnings, net of tax
Foreign currency translation loss
Unit vesting and amortization of unit-based compensation
Unit vesting - satisfaction of tax withholdings
Acquisitions of non-controlling interests
Distributions to non-controlling interests
Distributions declared ($ 0.46 per unit)
Balance at December 31, 2024
Net (loss) income
Unrealized loss on interest rate hedges, net of tax
Foreign currency translation gain
Unit vesting and amortization of unit-based compensation
Unit vesting - satisfaction of tax withholdings
Repurchase of units
Distributions to non-controlling interests
Offering costs
Distributions declared ($ 0.33 per unit)
Balance at December 31, 2025
See accompanying notes to consolidated financial statements.
MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
Consolidated Statem ents of Cash Flows
For the Years Ended December 31,
(Amounts in thousands)
Operating activities
Net loss
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
Amortization of deferred financing costs and debt discount
Straight-line rent revenue and other
Unit-based compensation
Gain (loss) on sale of real estate
Real estate and other impairment charges, net
Equity interest real estate impairment
Straight-line rent and other write-off
Debt refinancing and unutilized financing costs (benefit)
Tax rate changes and other
Non-cash fair value adjustments
Non-cash revenue from debt and equity securities received
Other adjustments
Changes in:
Interest and rent receivables
Other assets
Accounts payable and accrued expenses
Deferred revenue
Net cash provided by operating activities
Investing activities
Cash paid for acquisitions and other related investments
Net proceeds from sale of real estate
Principal received from sale and repayment of loans receivable
Investment in loans receivable
Construction in progress and other
Proceeds from sale and return of equity investments
Capital additions and other investments, net
Net cash (used for) provided by investing activities
Financing activities
Proceeds from term debt
Payments of term debt
Revolving credit facilities, net
Distributions paid
Lease deposits and other obligations to tenants
Offering costs
Repurchase of units
Unit vesting - satisfaction of tax withholdings
Payment of debt refinancing and deferred financing costs and other financing activities
Net cash provided by (used for) financing activities
Increase in cash, cash equivalents, and restricted cash for the year
Effect of exchange rate changes
Cash, cash equivalents, and restricted cash at beginning of year
Cash, cash equivalents and restricted cash at end of year
Interest paid, including capitalized interest of $ 12,920 in 2025, $ 7,642 in 2024,
and $ 14,178 in 2023
Supplemental schedule of non-cash investing activities:
Debt and equity securities received for certain obligations, real estate, and revenue
Certain obligations and receivables satisfied and real estate sold
Lease incentive provided
Supplemental schedule of non-cash financing activities:
Distributions declared, unpaid
Cash, cash equivalents, and restricted cash are comprised of the following:
Beginning of period:
Cash and cash equivalents
Restricted cash, included in Other assets
End of period:
Cash and cash equivalents
Restricted cash, included in Other assets
See accompanying notes to consolidated financial statements.
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
Notes To Consolidated Financial Statements
1. Orga nization
Medical Properties Trust, Inc., a Maryland corporation, was formed on August 27, 2003, under the Maryland General Corporation Law for the purpose of engaging in the business of investing in, owning, and leasing healthcare real estate. Our operating partnership subsidiary, MPT Operating Partnership, L.P. (the “Operating Partnership”), through which we conduct substantially all of our operations, was formed in September 2003. At present, we own, directly and indirectly, all of the partnership interests in the Operating Partnership and have elected to report our required disclosures and that of the Operating Partnership on a combined basis, except where material differences exist.
We operate as a real estate investment trust (“REIT”). Accordingly, we are generally not subject to United States (“U.S.”) federal income tax on our REIT taxable income, provided that we continue to qualify as a REIT and our distributions to our stockholders equal or exceed such taxable income. Similarly, the majority of our real estate operations in the United Kingdom ("U.K.") operate as a REIT and generally are subject only to a withholding tax on earnings upon distribution out of the U.K. REIT. Certain non-real estate activities we undertake in the U.S. are conducted by entities which we elected to be treated as taxable REIT subsidiaries (“TRS”). Our TRS entities are subject to both U.S. federal and state income taxes. For our properties located outside the U.S. (excluding those assets that are in the U.K. REIT), we are subject to the local income taxes of the jurisdictions where our properties reside and/or legal entities are domiciled; however, we do not expect to incur additional taxes, of a significant nature, in the U.S. from foreign-based income as the majority of such income flows through our REIT.
Our primary business strategy is to acquire and develop healthcare facilities and lease the facilities to healthcare operating companies under long-term net leases, which require the tenant to bear most of the costs associated with the property. The majority of our leased assets are owned 100 %; however, we do own some leased assets through joint ventures with other partners that share our view that healthcare facilities are part of the infrastructure of any community, which we refer to as investments in unconsolidated real estate joint ventures. We also may make mortgage loans to healthcare operators collateralized by their real estate. In addition, we may make noncontrolling investments in our tenants (which we refer to as investments in unconsolidated operating entities), from time-to-time, typically in conjunction with larger real estate transactions with the tenant, which may enhance our overall return and provide for certain minority rights and protections.
Our business model facilitates acquisitions and recapitalizations, and allows operators of healthcare facilities to unlock the value of their real estate to fund facility improvements, technology upgrades, and other investments in operations. At December 31, 2025 , we have investments in 384 facilities in 31 states in the U.S., in seven countries in Europe, and one country in South America. Our properties consist of general acute care hospitals, behavioral health facilities, post acute care facilities (including inpatient physical rehabilitation facilities and long-term acute care hospitals), and freestanding ER/urgent care facilities.
2. Summary of Signific ant Accounting Policies
Use of Estimates: The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We believe the estimates and assumptions underlying our consolidated financial statements at December 31, 2025 are reasonable and supportable based on the information available (particularly as it relates to our assessments of the recoverability of our real estate and the adequacy of our credit loss reserves on loans and financing receivables). Actual results could differ from those estimates.
Principles of Consolidation: Property holding entities and other subsidiaries of which we own 100 % of the equity or have a controlling financial interest evidenced by ownership of a majority voting interest are consolidated. All inter-company balances and transactions are eliminated. For entities in which we own less than 100% of the equity interest, we consolidate the property if we have the direct or indirect ability to control the entities’ activities based upon the terms of the respective entities’ ownership agreements. For these entities, we record a non-controlling interest representing equity held by non-controlling interests.
We continually evaluate all of our transactions and investments to determine if they represent variable interests in a variable interest entity ("VIE"). If we determine that we have a variable interest in a VIE, we then evaluate if we are the primary beneficiary of the VIE. The evaluation is a qualitative assessment as to whether we have the ability to direct the activities of a VIE that most significantly impact the entity’s economic performance. We consolidate each VIE in which we, by virtue of or transactions with our investments in the entity, are considered to be the primary beneficiary.
At December 31, 2025, we had loans and/or equity investments in certain VIEs, which may also be tenants of our facilities. We have determined that we were not the primary beneficiary of these VIEs. The carrying value and classification of the related assets and maximum exposure to loss as a result of our involvement with these VIEs at December 31, 2025 are presented below (in thousands):
VIE Type
Carrying
Amount(1)
Asset Type
Classification
Maximum Loss
Exposure(2)
Loans, net and equity investments
Investments in Unconsolidated
Operating Entities
Loans, net
Mortgage and other loans
Carrying amount only reflects the net book value (which has been reduced by any impairments or negative fair value adjustments) of our loan or equity investment in the VIE.
Our maximum loss exposure related to loans with VIEs represents our current aggregate net book value of the loan plus accrued interest and any other related assets (such as rent receivables), less any liabilities. Our maximum loss exposure related to our equity investments in VIEs represents the net book values of such investments plus any other related assets (such as rent receivables), less any liabilities.
For the VIE types above, we do not consolidate the VIEs because we do not have the ability to control the activities (such as the day-to-day healthcare operations of our borrowers or investees) that most significantly impact the VIE's economic performance. As of December 31, 2025, we were not required to provide financial support through a liquidity arrangement or otherwise to our unconsolidated VIEs, including circumstances in which they could be exposed to further losses (e.g. cash short falls).
Investments in Unconsolidated Entities: Investments in entities in which we have the ability to significantly influence (but not control) are accounted for by the equity method. This includes the five investments in unconsolidated real estate joint ventures at December 31, 2025. Under the equity method of accounting, our share of the investee’s earnings or losses are included in the “Earnings (loss) from equity interests” line of our consolidated statements of net income. Except for our joint venture with Primotop Holdings S.à.r.l. (“Primotop”) (for which we handle the accounting of), we have elected to record our share of such investee’s earnings or losses on a lag basis (not to exceed three months). The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the interest in the investee entity. Subsequently, our investments are increased/decreased by our share in the investees’ earnings/losses and decreased by cash distributions from our investees. To the extent that our cost basis is different from the basis reflected at the investee entity level, the basis difference is generally amortized over the lives of the related assets and liabilities, and such amortization is included in our share of equity in earnings of the investee.
We evaluate our equity method investments for impairment based upon a comparison of the fair value of the equity method investment to its carrying value, when impairment indicators exist. If we determine a decline in the fair value of an investment in an unconsolidated investee entity below its carrying value is other-than-temporary, an impairment is recorded.
Investments in entities in which we do not control nor do we have the ability to significantly influence and for which there is no readily determinable fair value are accounted for at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions involving the investee. Cash distributions on these types of investments are recorded to either income upon receipt (if a return on investment) or as a reduction of our investment (if the distributions received are in excess of our share of the investee’s earnings). For similar investments but for which there are readily determinable fair values, such investments are measured at fair value, with unrealized gains and losses recorded in income.
Cash and Cash Equivalents: Certificates of deposit, short-term investments with original maturities of three months or less, and money-market mutual funds are considered cash equivalents. The majority of our cash and cash equivalents are held at major commercial banks, which at times may exceed the Federal Deposit Insurance Corporation limit. We have not experienced any losses to-date on our invested cash. Cash and cash equivalents which have been restricted as to its use are recorded in other assets.
Revenue Recognition: Our revenues are primarily from leases and loans. For leases, we follow Accounting Standards Codification (“ASC”) 842, “Leases”, (“ASC 842”). ASC 842 sets out the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract (i.e. lessees and lessors). For lessors, we apply this standard as follows:
Operating Lease Revenue
We receive income from operating leases based on the fixed required rents (base rents) per the lease agreements. Rent revenue from base rents is recorded on the straight-line method, when collectibility of the lease payments is deemed probable, over the terms of the related lease agreements for new leases and the remaining terms of existing leases for those acquired as part of a property
acquisition. The straight-line method records the periodic average amount of base rents earned over the term of a lease, taking into account contractual rent increases over the lease term. The straight-line method typically has the effect of recording more rent revenue from a lease than a tenant is required to pay early in the term of the lease. During the later parts of a lease term, this effect reverses with less rent revenue recorded than a tenant is required to pay. Rent revenue, as recorded on the straight-line method, in our consolidated statements of net income is presented as two amounts: rent billed and straight-line rent. Rent billed revenue is the amount of base rent actually billed to our tenants each period as required by the lease. Straight-line rent revenue is the difference between rent revenue earned based on the straight-line method and the amount recorded as rent billed revenue. We record the difference between rent revenues earned and amounts due per the respective lease agreements, as applicable, as an increase or decrease to straight-line rent receivables.
In instances where collectibility of the lease payments is not deemed probable, rent revenue is constrained to the lower of 1) the revenue that would have been recognized if collection were probable (i.e., straight-line method) and 2) the amount of lease payments received in cash.
Rental payments received prior to their recognition as income are classified as deferred revenue.
Financing Lease Revenue
Under ASC 842, if an acquisition and subsequent lease of a property back to the seller does not meet the definition of a sale, we must account for the transaction as a financing lease with income recognized using the imputed interest method.
Another type of financing lease is a direct financing lease (“DFL”). For leases accounted for as DFLs, the future minimum lease payments are recorded as a receivable at lease inception, while, the difference between the future minimum lease payments and the estimated residual values less the cost of the properties is recorded as unearned income. Unearned income is deferred and amortized to income over the lease term to provide a constant yield when collectability of the lease payments is reasonably assured. Investments in DFLs are presented net of unearned income.
Other Leasing Revenue
We begin recording base rent income from our development projects when the lessee takes physical possession of the facility, which may be different from the stated start date of the lease. Also, during construction of our development projects, we may be entitled to accrue rent based on the cost paid during the construction period (construction period rent). We accrue construction period rent as a receivable with a corresponding offset to deferred revenue during the construction period. When the lessee takes physical possession of the facility, we begin recognizing the deferred construction period revenue on the straight-line method over the term of the lease.
We also receive additional rent (contingent rent) under some leases based on increases in the consumer price index (“CPI”) (or similar index outside the U.S.) or when CPI exceeds the annual minimum percentage increase as stipulated in the lease. Contingent rents are recorded as rent billed revenue in the period earned.
Tenant payments for ground leases along with other operating expenses, such as property taxes and insurance, that are paid directly by us and reimbursed by our tenants are presented on a gross basis with the related revenues recorded in “Interest and other income” and the related expenses in “Property-related” in our consolidated statements of net income. All payments of other operating expenses made directly by the tenant to the applicable government or appropriate third-party vendor are recorded on a net basis.
Interest Revenue
We receive interest income from our tenants/borrowers on mortgage loans, working capital loans, and other loans. Interest income from these loans is recognized as earned based upon the principal outstanding and terms of the loans.
Other Revenue
Commitment fees received on operating leases for development and leasing services are initially recorded as deferred revenue and recognized as income over the initial term of a lease on the straight-line method. Commitment and origination fees from lending services are also recorded as deferred revenue initially and recognized as income over the life of the loan using the interest method.
Acquired Real Estate Purchase Price Allocation: We account for acquisitions of real estate under asset acquisition accounting rules. Under this accounting standard, we allocate the purchase price (including any third-party transaction costs directly related to the acquisition) of acquired properties to tangible and identified intangible assets acquired and liabilities assumed (if any) based on their
relative fair values. In making estimates of fair values for purposes of allocating purchase prices of acquired real estate, we may utilize a number of sources, from time-to-time, including available real estate broker data, independent appraisals that may be obtained in connection with the acquisition, internal data from previous acquisitions or developments, and other market data, including market comparables for significant assumptions such as market rents, capitalization, and discount rates. We also consider information obtained about each property as a result of our pre-acquisition due diligence, marketing, and leasing activities in estimating the fair value of the tangible and intangible assets acquired.
We measure the aggregate value of lease intangible assets acquired based on the difference between (i) the property valued with new or in-place leases adjusted to market rental rates and (ii) the property valued as if vacant. Management’s estimates of value are made using methods similar to those used by independent appraisers (e.g., discounted cash flow analysis). Factors considered by management in our analysis include an estimate of carrying costs during hypothetical expected lease-up periods, considering current market conditions, and costs to execute similar leases. We also consider information obtained about each targeted facility as a result of our pre-acquisition due diligence, marketing, and leasing activities in estimating the fair value of the intangible assets acquired. In estimating carrying costs, management includes real estate taxes, insurance, and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, which we expect to be about six months , but can be longer depending on specific local market conditions. Management also estimates costs to execute similar leases including leasing commissions, legal costs, and other related expenses to the extent that such costs are not already incurred in connection with a new lease origination as part of the transaction.
Other intangible assets acquired may include customer relationship intangible values which are based on management’s evaluation of the specific characteristics of each prospective tenant’s lease and our overall relationship with that tenant. Characteristics to be considered by management in allocating these values include the nature and extent of our existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality, and expectations of lease renewals, including those existing under the terms of the lease agreement, among other factors.
We amortize the value of our lease intangible assets to expense over the term of the respective leases. If a lease is terminated early, the unamortized portion of the lease intangibles are charged to expense. This amortization expense is included in the "Real estate depreciation and amortization" line of our consolidated statements of net income.
We record above-market and below-market in-place lease values, if any, for our facilities, which are based on the present value of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. We amortize any resulting capitalized above-market lease values as a reduction of rental income over the lease term. We amortize any resulting capitalized below-market lease values as an increase to rental income over the lease term. If a lease is terminated early, the unamortized portion of the capitalized above/below market lease value is recognized in rental income at that time.
Real Estate and Depreciation: Real estate, consisting of land, buildings and improvements, is maintained at cost. Although typically paid by our tenants, any expenditure for ordinary maintenance and repairs that we pay are expensed to operations as incurred. Significant renovations and improvements, which improve and/or extend the useful life of the asset, are capitalized and depreciated over their estimated useful lives. We review real estate investments for impairment when events and circumstances indicate that the assets may not be recoverable. We analyze recoverability by comparing the carrying value of the real estate assets to a probability-weighted set of estimated undiscounted cash flows to be generated by those assets, including an estimated liquidation amount, during the expected holding periods. Assumptions used in determining undiscounted cash flows may include, but are not limited to, market rental rates, capitalization rates, and holding periods. If the recoverability analysis indicates that the carrying value of the real estate asset is greater than the expected future undiscounted cash flows, impairment losses are measured as the difference between carrying value and fair value of the assets. Future cash flows are discounted when determining fair value of an asset. Estimated future cash flows used in such analysis are based on our plans for the real estate asset and our view of market economic conditions. Assumptions used in determining fair value may include, but are not limited to, market rental rates, discount rates, and capitalization rates.
When a real estate investment is designated as held for sale, we cease recording depreciation expense and adjust the assets’ value to the lower of its carrying value or fair value, less cost of disposal. Fair value is typically based on estimated cash flows discounted at a risk-adjusted rate of interest. We classify real estate assets as held for sale when we have commenced an active program to sell the assets, and in the opinion of management, it is probable the asset will be sold within the next 12 months.
Construction in progress includes the cost of land, the cost of construction of buildings, improvements, and fixed equipment, and costs for design and engineering. Other costs, such as interest, legal, property taxes, and corporate project supervision, which can be directly associated with the project during construction, are also included in construction in progress. We commence capitalization of costs associated with a development project when the development of the future asset is probable and activities necessary to get the
underlying property ready for its intended use have been initiated. We stop the capitalization of costs when the property is substantially complete and ready for its intended use.
Depreciation is calculated on the straight-line method over the estimated useful lives of the related real estate and other assets. Our weighted-average useful lives at December 31, 2025 are as follows:
Buildings and improvements
38.6 years
Lease intangibles
28.2 years
Leasehold improvements
14.3 years
Furniture, equipment, and other
5.0 years
Credit Losses:
Losses from Rent Receivables: For our leases, we review tenant provided financial data and monitor the performance of our tenants in areas generally consisting of: admission levels and surgery/procedure volumes by type; current operating margins; ratio of our tenant's operating margins both to facility rent and to facility rent plus other fixed costs; trends in revenue, cash collections, patient mix; and the effect of evolving healthcare regulations, adverse economic and political conditions, such as inflation and interest rates, and other events ongoing on a tenant's profitability and liquidity.
Operating Lease Receivables: We utilize the information above along with the tenant’s payment and default history in evaluating (on a lease-by-lease basis) whether or not lease payments are deemed probable of collection. As noted earlier, if not deemed probable of collection, rent revenue, under lease accounting rules, is constrained to the lesser of 1) the revenue that would have been recognized if collection were probable (i.e., straight-line method) and 2) the amount of lease payments received in cash.
Financing Lease Receivables: We apply a forward-looking “expected credit loss” model to all of our financing receivables, including financing leases and loans. To do this, we group our financial instruments into two primary pools of similar credit risk: secured and unsecured. The secured instruments include our investments in financing receivables as all are secured by the underlying real estate, among other collateral. Within the two primary pools, we further group our instruments into sub-pools based on several tenant/borrower characteristics, including years of experience in the healthcare industry and in a particular market or region and overall capitalization. We then determine a credit loss percentage per pool based on our history over a period of time that closely matches the remaining terms of the financial instruments being analyzed and adjust as needed for current trends or unusual circumstances. We apply these credit loss percentages to the book value of the related instruments to establish a credit loss reserve on our financing lease receivables and such credit loss reserve (including the underlying assumptions) is reviewed and adjusted quarterly. If a financing receivable is under performing and is deemed uncollectible based on the lessee’s overall financial condition, we will adjust the credit reserve based on the fair value of the underlying collateral.
We made the accounting policy election to exclude interest receivables from the credit loss reserve model. Instead, such receivables are impaired and an allowance recorded when it is deemed probable that we will be unable to collect all amounts due. The need for an allowance is based upon our assessment of the lessee’s overall financial condition, economic resources and payment record, the prospects for support from any financially responsible guarantors, and, if appropriate, the realizable value of any collateral. Financing leases are placed on non-accrual status when we determine that the collectability of contractual amounts is not reasonably assured. If on non-accrual status, we generally account for the financing lease on a cash basis, in which income is recognized only upon receipt of cash.
Loans : Loans consist of mortgage loans, working capital loans, and other loans. Mortgage loans are collateralized by interests in real property. Working capital and other loans are typically collateralized by interests in receivables, personal property, and corporate and individual guarantees. We record loans at cost. Like our financing lease receivables, we establish credit loss reserves on all outstanding loans based on historical credit losses of similar instruments. Such credit loss reserves, including the underlying assumptions, are reviewed and adjusted quarterly. If a loan’s performance worsens and foreclosure is deemed probable for our collateral-based loans (after considering the borrower’s overall financial condition as described above for leases), we will adjust the allowance for expected credit losses based on the current fair value of such collateral at the time the loan is deemed uncollectible. If the loan is not collateralized, the loan will be reserved for/written-off once it is determined that such loan is no longer collectible.
Interest receivables on loans are excluded from the forward looking credit loss reserve model; however, an allowance is recorded when it is deemed probable that we will be unable to collect all amounts due. Loans are placed on non-accrual status when we determined that the collectibility of contractual amounts is not reasonably assured. If on non-accrual status, we generally account for the loan on the cash basis, in which income is recognized only upon receipt of cash.
The following table summarizes our credit loss reserves (in thousands):
December 31, 2025
December 31, 2024
Balance at beginning of the year
Provision for credit loss, net
Expected credit loss reserve written off or related to financial
instruments sold, repaid, or satisfied
Balance at end of year
Earnings Per Share/Units: Basic earnings per common share/unit is computed by dividing net income by the weighted-average number of shares/units outstanding during the period. Diluted earnings per common share/unit is calculated by including the effect of dilutive securities.
Our unvested restricted stock awards contain non-forfeitable rights to dividends, and accordingly, these awards are deemed to be participating securities. These participating securities are included in the earnings allocation in computing both basic and diluted earnings per common share/unit.
Income Taxes: We conduct our business as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (“the Code”). To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute to stockholders at least 90 % of our REIT’s ordinary taxable income. As a REIT, we generally pay little U.S. federal and state income tax because of the dividends paid deduction that we are allowed to take. If we fail to qualify as a REIT in any taxable year, we will then be subject to U.S. federal income taxes on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for four years following the year during which qualification is lost, unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to stockholders. However, we intend to operate in such a manner so that we will remain qualified as a REIT for U.S. federal income tax purposes.
Our financial statements include the operations of TRS entities. None of our TRS entities are entitled to a dividends paid deduction and are subject to U.S. federal, state, and local income taxes. Our TRS entities are authorized to provide property development, leasing, and management services for third-party owned properties, and we will make non-mortgage loans to and/or investments in our lessees through these entities.
With the property acquisitions and investments in Europe and South America, we are subject to income taxes internationally. However, we do not expect to incur any additional income taxes, of a significant nature, in the U.S. as the majority of such income from our international properties flows through our REIT income tax returns. For our TRS entities and international subsidiaries, we determine deferred tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Any increase or decrease in our deferred tax assets/liabilities that results from a change in circumstances and that causes us to change our judgment about expected future tax consequences of events, is reflected in our tax provision when such changes occur. Deferred income taxes also reflect the impact of operating loss carryforwards. A valuation allowance is provided if we believe it is more likely than not that all or some portion of our deferred tax assets will not be realized. Any increase or decrease in the valuation allowance that results from a change in circumstances, and that causes us to change our judgment about our ability to realize the related deferred tax asset, is reflected in our tax provision when such changes occur.
The calculation of our income taxes involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. An income tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of technical merits. However, if a more likely than not position cannot be reached, we record a liability as an offset to the tax benefit and adjust the liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the uncertain tax position liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.
Stock-Based Compensation: We adopted the 2019 Equity Incentive Plan (the “Equity Incentive Plan”) during the second quarter of 2019, which was amended during the second quarter of 2022. Equity awards of restricted stock with service conditions are valued at the average stock price per share on the date of grant and are amortized to compensation expense over the service periods (typically three years ), using the straight-line method. Equity awards that contain market conditions are valued on the grant date using a Monte Carlo valuation model and are amortized to compensation expense over the derived service periods, which correspond to the periods over which we estimate the awards will be earned, which generally range from three to five years , using the straight-line method.
Equity awards with performance conditions are valued at the average stock price per share on the date of grant and are amortized using the straight-line method over the service period, adjusted for the probability of achieving the performance conditions. In 2024 and 2025, certain market-based restricted stock units ("RSUs") were issued with cash-settlement features. These liability-type awards are adjusted to fair value (using a Monte Carlo valuation model) on a quarterly basis and amortized over the derived service period, which is also adjusted on a quarterly basis. Forfeitures of stock-based awards are recognized as they occur.
Deferred Costs: Costs incurred that directly relate to the offerings of stock are deferred and netted against proceeds received from the offering. Leasing commissions and other third-party leasing costs that would not have been incurred if the lease was not obtained are capitalized as deferred leasing costs and amortized on the straight-line method over the terms of the related lease agreements. Costs identifiable with loans made to borrowers are capitalized and recognized as a reduction in interest income over the life of the loan.
Deferred Financing Costs: We generally capitalize financing costs incurred in connection with new financings and refinancings of debt. These costs are amortized over the lives of the related debt as an addition to interest expense. For debt with defined principal re-payment terms, the deferred costs are amortized to produce a constant effective yield on the debt (interest method) and are included within “Debt, net” on our consolidated balance sheets. For debt without defined principal repayment terms, such as our revolving credit facility, the deferred costs are amortized on the straight-line method over the term of the debt and are included as a component of “Other assets” on our consolidated balance sheets.
Foreign Currency Translation and Transactions: Certain of our international subsidiaries’ functional currencies are the local currencies of their respective countries. We translate the results of operations of our foreign subsidiaries into U.S. dollars using average rates of exchange in effect during the period, and we translate balance sheet accounts using exchange rates in effect at the end of the period. We record resulting currency translation adjustments in accumulated other comprehensive income (loss), a component of stockholders’ equity/partnership capital on our consolidated balance sheets.
Certain of our U.S. subsidiaries will enter into short-term and long-term transactions denominated in a foreign currency from time-to-time. Gains or losses resulting from these foreign currency transactions are revalued into U.S. dollars at the rates of exchange prevailing at the dates of the transactions. The effects of revaluation gains or losses on our short-term transactions are included in other income (expense) in the consolidated statements of income, while the revaluation effects on our long-term investments are recorded in accumulated other comprehensive income (loss) on our consolidated balance sheets.
Derivative Financial Investments and Hedging Activities: During our normal course of business, we may use certain types of derivative instruments for the purpose of managing interest rate and/or foreign currency risk. We record our derivative and hedging instruments at fair value on the balance sheet. Changes in the estimated fair value of derivative instruments that are not designated as hedges or that do not meet the criteria for hedge accounting are recognized in earnings. For derivatives designated as cash flow hedges, the change in the estimated fair value of the effective portion of the derivative is recognized in accumulated other comprehensive income (loss) on our consolidated balance sheets, whereas the change in the estimated fair value of the ineffective portion is recognized in earnings. For derivatives designated as fair value hedges, the change in the estimated fair value of the effective portion of the derivative offsets the change in the estimated fair value of the hedged item, whereas the change in the estimated fair value of the ineffective portion is recognized in earnings.
To qualify for hedge accounting, we formally document all relationships between hedging instruments and hedged items, as well as our risk management objective and strategy for undertaking the hedge prior to entering into a derivative transaction. This process includes specific identification of the hedging instrument and the hedge transaction, the nature of the risk being hedged and how the hedging instrument’s effectiveness in hedging the exposure to the hedged transaction’s variability in cash flows attributable to the hedged risk will be assessed. Both at the inception of the hedge and on an ongoing basis, we assess whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows or fair values of hedged items. In addition, for cash flow hedges, we assess whether the underlying forecasted transaction will occur. We discontinue hedge accounting if a derivative is not determined to be highly effective as a hedge or that it is probable that the underlying forecasted transaction will not occur.
Fair Value Measurement: We measure and disclose the estimated fair value of financial assets and liabilities utilizing a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. Observable inputs reflect market data obtained from independent sources, while unobservable inputs
reflect our market assumptions. This hierarchy requires the use of observable market data when available. These inputs have created the following fair value hierarchy:
Level 1 — quoted prices for identical instruments in active markets;
Level 2 — quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and
Level 3 — fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable .
We measure fair value using a set of standardized procedures that are outlined herein for all assets and liabilities which are required to be measured at their estimated fair value on either a recurring or non-recurring basis. When available, we utilize quoted market prices from an independent third party source to determine fair value and classify such items in Level 1. In some instances where a market price is available, but the instrument is in an inactive or over-the-counter market, we apply the dealer (market maker) pricing estimate and classify the asset or liability in Level 2.
If quoted market prices or inputs are not available, fair value measurements are based upon valuation models that utilize current market or independently sourced market inputs, such as interest rates, option volatilities, credit spreads, market capitalization rates, etc. Items valued using such internally-generated valuation techniques are classified according to the lowest level input that is significant to the fair value measurement. As a result, the asset or liability could be classified in either Level 2 or 3 even though there may be some significant inputs that are readily observable. Internal fair value models and techniques that have been used by us include discounted cash flow, market approach valuations, and Monte Carlo valuation models. We also consider counterparty’s and our own credit risk on derivatives and other liabilities measured at their estimated fair value.
Fair Value Option Election: For our equity investment in the international joint venture and PHP Holdings (which we sold on July 1, 2025), along with any related investments such as loans (see Note 10 for more details), we elected to account for these investments at fair value due to the size of the investments and because we believed this method was more reflective of current values. We have not made a similar election for other investments that exist at December 31, 2025 .
Leases (Lessee)
Pursuant to ASC 842, we are required to apply a dual approach, classifying leases (in which we are the lessee) as either financing or operating leases based on the principle of whether or not the lease is effectively a financed purchase. This classification determines whether lease expense is recognized based on an effective interest method (for finance leases) or on a straight-line basis (for operating leases) over the term of the lease. We record a right-of-use asset and a lease liability for all material leases with a term greater than 12 months regardless of their classification. Leases with a term of 12 months or less are off balance sheet with lease expense recognized on a straight-line basis over the lease term.
Segment Reporting
In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" ("ASU 2023-07") to improve reportable segment disclosure requirements. We adopted this guidance in the fourth quarter of 2024 and have included the required disclosures within Note 13 - Segment Disclosures .
Reclassifications: Certain amounts in the consolidated financial statements for prior periods have been reclassified to conform to the current period presentation.
Recent Accounting Developments
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" ("ASU 2024-03") to improve the disclosures about a public company's expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. ASU 2024-03 is effective for annual periods beginning after December 15, 2026. We are currently evaluating the potential impact of the adoption of this standard on our consolidated financial statements.
3. Real Esta te and Other Activities
New Investments
For the years ended December 31, 2025, 2024, and 2023, we acquired or invested in the following net assets (in thousands):
Land and land improvements
Buildings
Intangible lease assets — subject to amortization
(weighted-average useful life of 19.9 years in 2025 and 24.8 years in 2023)
Investments in unconsolidated real estate joint ventures
Investments in unconsolidated operating entities
Other loans
Liabilities assumed
Loans repaid(1)
Total net assets acquired
The 2023 column includes a $ 23 million mortgage loan that was converted to fee simple ownership of one property as described under the Lifepoint Transaction below.
2025 Activity
In 2025, our real estate and other investments totaling approximately $ 142 million included:
the acquisition of one post-acute property for $ 32 million in November 2025 to be leased to Vibra Healthcare (“Vibra”);
a new investment in April 2025 of CHF 52 million (or approximately $ 63 million), inclusive of a CHF 25 million (or approximately $ 30 million) short-term loan, in the Swiss Medical Network real estate joint venture, proceeds of which, along with fundings from our joint venture partner, were used to facilitate the acquisition and leasing of one general acute care facility in Switzerland and repayment of debt; and
the funding of approximately $ 47 million to the secured lender in the Steward bankruptcy in March 2025 in order to obtain control over certain real estate assets for use by our new tenants.
2024 Activity
Utah Transaction
On April 12, 2024, we sold our interests in five Utah hospitals for an aggregate agreed valuation of approximately $ 1.2 billion to a newly formed joint venture (the "Utah partnership") with an institutional asset manager (the "Fund"), which we call the Utah Transaction, and we recognized a gain on real estate of approximately $ 380 million, partially offset by a $ 20 million write-off of unbilled straight-line rent receivables. We retained an approximately 25 % interest in the Utah partnership valued initially at approximately $ 108 million, which is being accounted for on the equity method on a quarterly lag basis and included in the "Investments in unconsolidated real estate joint ventures" line of the consolidated balance sheets. The Fund purchased an approximate 75 % interest for $ 886 million. In conjunction with this transaction closing, the Utah partnership placed new non-recourse secured financing, providing $ 190 million of additional cash to us. In total, the Utah Transaction generated $ 1.1 billion of cash to us. The Utah lessee (an affiliate of CommonSpirit Health ("CommonSpirit")) may acquire the leased real estate at a price equal to the greater of fair market value and the approximate $ 1.2 billion lease base at the fifth or tenth anniversary of the 2023 master lease commencement. We granted the Fund certain limited and conditional preferences based on the possible execution of the purchase option, which we accounted for as a derivative liability with an initial value of approximately $ 2.3 million.
2023 Activity
Lifepoint Transaction
On February 7, 2023, a subsidiary of Lifepoint Health, Inc. ("Lifepoint") acquired a majority interest in Springstone (now Lifepoint Behavioral Health, "Lifepoint Behavioral") (the "Lifepoint Transaction") based on an enterprise value of $ 250 million. As part of the transaction, we received approximately $ 205 million in full satisfaction of our initial acquisition loan, including accrued interest, and we retained (at that time) our minority equity investment in the operations of Lifepoint Behavioral. Separately, we
converted an approximate $ 23 million mortgage loan (made as part of our initial acquisition in 2021) into the fee simple ownership of a property in Washington, which is leased, along with other behavioral health hospitals, to Lifepoint Behavioral, under a master lease agreement. In connection with the Lifepoint Transaction, Lifepoint extended its lease on eight existing general acute care hospitals by five years to 2041 .
In the first quarter of 2024, we sold our minority equity investment in Lifepoint Behavioral for approximately $ 12 million.
Other Transactions
In the second quarter of 2023, we acquired three inpatient rehabilitation facilities for a total of approximately € 70 million (approximately $ 77 million). These hospitals are leased to Median Kliniken S.á.r.l ("MEDIAN") pursuant to a long-term master lease with annual inflation-based escalators.
On April 14, 2023, we acquired five behavioral health hospitals located in the U.K. for approximately £ 44 million (approximately $ 58 million). These hospitals are leased to Priory pursuant to five separate lease agreements with annual inflation-based escalators.
In the first quarter of 2023, we originated a $ 50 million convertible loan to PHP Holdings, the managed care business of Prospect at that time. See subheading "Leasing Operations (Lessor)" in this Note 3 for further updates on Prospect.
Development and Capital Addition Activities
See table below for a status summary of our current development and capital addition projects (in thousands):
Property
Commitment
Costs
Paid as of
December 31, 2025
Cost Remaining
IMED Hospitales ("IMED") (Spain)
Healthcare Systems of America (Florida)
IMED (Spain)
Lifepoint Behavioral (Arizona)
Other (Various)
We have two other development projects ongoing in Texas (Texarkana development) and Massachusetts (Norwood redevelopment). These are not highlighted above; however, we have completed construction to the stage where the building is "weathered in" and environmentally secure so as to physically protect our investment while we actively market the hospitals for sale or lease. As of December 31, 2025, we estimate that the cost of additional construction that we believe will be more efficient if completed in the near-term (such as electing to accelerate completion of a parking structure at one hospital), approximates between $ 10 million and $ 15 million.
Separately, on the Norwood redevelopment, we recovered from our casualty insurers cash in November 2024 that was in excess of our recovery receivable related to the 2020 storm losses (included in "Other assets" in the consolidated balance sheets), resulting in a $ 24 million additional recovery in the 2024 third quarter.
2025 Activity
During 2025, we completed construction, and began recording rental income, on three projects totaling approximately $ 46.5 million, two of which are leased to Lifepoint Behavioral and the other to Surgery Partners.
2024 Activity
During the fourth quarter of 2024, we completed construction and began recording rental income on an existing general acute care facility located in Idaho Falls, Idaho for a total amount of approximately $ 50 million.
During the first quarter of 2024, we completed construction, and began recording rental income, on a $ 35.4 million behavioral health facility located in McKinney, Texas, that is leased to Lifepoint Behavioral. We also completed construction and began recording rental income on a € 46 million (approximately $ 49.0 million) general acute care facility located in Spain that is leased to IMED.
2023 Activity
During 2023, we completed construction and began recording rental income on one inpatient rehabilitation facility located in Lexington, South Carolina, which commenced rent on July 1, 2023, and another inpatient rehabilitation facility located in Stockton, California, which commenced rent on May 1, 2023. Both of these facilities are leased to Ernest Health, Inc. ("Ernest") pursuant to an existing long-term master lease.
Disposals
2025 Activity
During 2025, we completed the sale of nine facilities (including two former Steward-operated facilities that were being leased to College Health for nominal rent) along with certain ancillary land and facilities for aggregate cash proceeds of approximately $ 121 million, resulting in a gain on real estate of approximately $ 5.5 million. For one of the properties sold, we agreed for the tenant to retain the cash proceeds of approximately $ 50 million as an incentive to close on a substitute property and keep cash rents the same. The $ 50 million lease incentive will be amortized over the remaining 16-year master lease term as a reduction of revenue.
2024 Activity
During 2024, we had the following disposal activities:
See Utah Transaction above for a discussion of the five Utah hospitals sold on April 12, 2024.
On April 9, 2024, we sold five properties to Prime Healthcare Services, Inc. ("Prime") for total proceeds of approximately $ 250 million along with a $ 100 million interest-bearing mortgage loan (which was fully repaid on August 29, 2024). This transaction resulted in a gain on real estate of approximately $ 53 million, partially offset by a non-cash straight-line rent write-off of approximately $ 30 million. As part of this sale transaction, we extended the lease maturity of four other facilities with Prime to 2044. This amended lease has inflation-based escalators, collared between 2 % and 4 %, and a purchase option on or prior to August 26, 2028 for a value of $ 238 million, which is greater than our net book value for these properties. After August 26, 2028, this option price reverts to $ 260 million (subject to annual escalations).
On July 23, 2024, we sold the 50 -bed Arizona General Hospital in Mesa, Arizona and seven freestanding emergency departments to Dignity Health ("Dignity") for $ 160 million. This sale resulted in a gain on real estate of approximately $ 85 million, partially offset by a non-cash straight-line rent write-off of approximately $ 20 million.
On August 14, 2024, we sold 11 freestanding emergency departments to UCHealth for $ 86 million. This sale resulted in a gain on real estate of approximately $ 40 million, partially offset by a non-cash straight-line rent write-off of approximately $ 16 million.
As a result of our global settlement with Steward Health Care System ("Steward") as discussed further under "Leasing Operations (Lessor)" under this same Note 3 , we consented to the sale of three facilities located in Florida ("Space Coast" properties) to Orlando Health, which closed on October 23, 2024. In accordance with the terms of the global settlement, the Steward bankruptcy estate retained $ 395 million of the approximately $ 440 million total proceeds, and we retained the remaining proceeds and recognized an approximate $ 2 million gain in the fourth quarter of 2024.
In the fourth quarter of 2024, we sold the Watsonville facility resulting in cash proceeds of approximately $ 40 million and an approximate $ 4 million gain.
During 2024, we also completed the sale of six other facilities and two ancillary facilities for approximately $ 14 million.
2023 Activity
On March 30, 2023, we entered into a definitive agreement to sell our 11 general acute care facilities located in Australia and operated by Healthscope Ltd. ("Healthscope") (the "Australia Transaction") to affiliates of HMC Capital for cash proceeds of approximately A$ 1.2 billion. As a result, we designated the Australian portfolio as held for sale in the first quarter of 2023 and recorded approximately $ 79 million of net impairment charges at that time, which included $ 37.4 million of straight-line rent receivable write-offs and approximately $ 8 million in fees to sell the hospitals, partially offset by approximately $16 million of gains from our interest rate swap and foreign currency translation amounts in accumulated other comprehensive income that were reclassified to earnings in 2023 as part of the transaction. This transaction closed in two phases. The first phase closed on May 18, 2023, in which we sold seven of the 11 facilities for A$ 730 million, and the final phase closed on October 10, 2023, in which we sold the remaining four facilities for approximately A$ 470 million.
On March 8, 2023, we received notice that Prime planned to exercise its right to repurchase from us the real estate associated with one master lease for approximately $ 100 million. As such, we recorded an approximate $ 11 million impairment charge in the first quarter of 2023 related to non-cash rent receivables on the three facilities that were sold on July 11, 2023.
Intangible Assets
At December 31, 2025 and 2024 , our intangible lease assets were $ 0.9 billion ($ 0.6 billion, net of accumulated amortization) and $ 0.8 billion ($ 0.6 billion, net of accumulated amortization), respectively.
We recorded amortization expense related to intangible lease assets of $ 30.4 million, $ 205.6 million (including $ 170 million for accelerating the amortization of the in-place lease intangibles associated with two master leases, including the Steward master lease that was terminated effective September 18, 2024), and $ 332.5 million (including $ 286 million for accelerating the amortization of the in-place lease intangibles related to re-leasing the Utah properties to CommonSpirit as described in this same Note 3 ), in 2025, 2024, and 2023, respectively, and expect to recognize amortization expense from existing lease intangible assets as follows (amounts in thousands):
For the Year Ended December 31:
As of December 31, 2025 , capitalized lease intangibles have a weighted-average remaining life of 22.7 years.
Leasing Operations (Lessor)
We acquire and develop healthcare facilities and lease the facilities to healthcare operating companies. The initial fixed lease terms of these infrastructure-type assets are typically at least 15 years, and most include renewal options at the election of our tenants, generally in five year increments. Over 99 % of our leases provide annual rent escalations based on increases in the CPI (or similar indices outside the U.S.) and/or fixed minimum annual rent escalations. Many of our domestic leases contain purchase options with pricing set at various terms but in no case less than our total initial investment. Our leases typically require the tenant to handle and bear most of the costs associated with our properties including repair/maintenance, property taxes, and insurance.
The following table summarizes total future contractual minimum lease payments, excluding operating expense reimbursements, tenant recoveries, and other lease-related adjustments to revenue (i.e., straight-line rents, deferred revenues, or reserves/write-offs), from tenants under noncancelable leases as of December 31, 2025 (amounts in thousands):
Total Under
Operating Leases
Total Under
Financing Leases
Total
Thereafter
For all of our properties subject to lease, we are the legal owner of the property and the tenant's right to use and possess such property is guided by the terms of a lease. At December 31, 2025 , we account for all of these leases as operating leases, except where generally accepted accounting principles (“GAAP”) requires alternative classification, including leases on certain Ernest Health, Inc. ("Ernest") and Prospect facilities that are accounted for as either direct financing or other financing type leases. The components of our total investment in financing leases consisted of the following (in thousands):
As of December 31, 2025
As of December 31, 2024
Minimum lease payments receivable
Estimated unguaranteed residual values
Less: Unearned income and allowance for credit loss
Net investment in direct financing leases
Other financing leases (net of allowance for credit loss)
Total investment in financing leases
The decrease in our investment in financing leases is primarily due to the re-leasing of six California properties formerly operated by Prospect, with a net book value of approximately $ 510 million, to NOR Healthcare Systems Corporation ("NOR") as a result of their successful bid to acquire the hospital operations. These six properties are now accounted for as operating leases as further discussed in this same Note 3 .
Other Leasing Activities
At December 31, 2025, our vacant properties (excluding developments) represent less than 1 % of total assets. We are in various stages of either re-leasing or selling these vacant properties.
Our tenants’ financial performance and resulting ability to satisfy their lease and loan obligations to us are material to our financial results and our ability to service our debt and make distributions to our stockholders. Our tenants operate in the healthcare industry, which is highly regulated, and changes in regulation (or delays in enacting regulation) may temporarily impact our tenants’ operations until they are able to make the appropriate adjustments to their business. In addition, our tenants may experience operational challenges from time-to-time as a result of many factors, including those external to them, such as cybersecurity attacks, public health crises, economic issues resulting in high inflation and spikes in labor costs, extreme or severe weather and climate-related events, and adverse market and political conditions. We monitor our tenants' operating results and the potential impact from these challenges. We may elect to provide support to our tenants from time-to-time in the form of short-term rent deferrals to be paid back in full, or in the form of temporary loans. See below for an update on some of our tenants.
Steward Health Care System
Steward filed for Chapter 11 bankruptcy on May 6, 2024 with the United States Bankruptcy Court for the Southern District of Texas. On September 18, 2024, the bankruptcy court approved a global settlement between Steward, its lenders, the unsecured creditors committee, and the Company. The order provided for the following: a) termination of our master lease with Steward; b) the release of claims against 23 of our properties allowing us to begin the process of re-tenanting these properties; and c) a full release of claims against us from all parties. In return, we consented to the sale of the operations and our real estate in three facilities in the Space Coast region of Florida (as discussed earlier), along with a full release of our claims in Steward including claims to past due rent and interest, outstanding loans, and our equity investment.
In regard to our real estate partnership with Macquarie that owned and leased eight properties in Massachusetts to Steward, the bankruptcy court approved the termination of the master lease with Steward during the 2024 third quarter. We and Macquarie entered into an agreement with the mortgage lender of the joint venture to transition the eight properties to them along with cash proceeds of approximately $ 40 million (representing our share), in return for full payment of the underlying mortgage debt and a release of claims against each party.
With this global settlement and termination of the joint venture master lease, our relationship with Steward effectively ended.
Impairment Charges
Due to the events discussed above, we recorded various impairment charges during 2024 and 2023, which included the following (in millions):
For the Years Ended December 31,
Description
Income Statement
Classification
Reserve for unpaid rent and interest and straight-line
rent receivables
Total revenues
Working capital and other loans(1)
Real estate and other
impairment charges, net
Investment in Massachusetts partnership(2)
Earnings (loss) from
equity interests
Real estate(2)
Real estate and other
impairment charges, net
Equity investment and other(1)
Real estate and other
impairment charges, net
Total
For our non-real estate investments in Steward, we compared our carrying value of all such investments to the fair value of the underlying collateral, which had no value after the global settlement and our release of claims against Steward as discussed above.
The three Space Coast properties and certain excess properties previously leased to Steward were deemed held for sale in the 2024 third quarter. We recognized a real estate impairment charge of approximately $ 180 million to adjust our net book value to align with fair value less cost to sell based on expected proceeds, including from a binding agreement for the Space Coast properties. For the other real estate held for use, we made a comparison of the projected undiscounted future cash flows with the net book value of each asset. For those properties where the carrying value was deemed not recoverable, we recorded an impairment charge to reduce the carrying value to its estimated fair value. For the real estate in the Massachusetts partnership, there was no fair value as we transitioned those properties to the mortgage lender to satisfy the mortgage debt. For the remaining properties (less than 10 in total in 2024 and 2023), we, along with assistance from a third-party, independent valuation firm, estimated fair value using a combination of cost, market, and income approaches using Level 3 inputs. The cost approach used comparable sales to value the land and cost manuals to value the improvements. The value derived from the market approach was based on sale prices of similar properties. For the income approach, we divided the expected operating income (rent revenue less expenses, if any) from the property by a market capitalization rate (range from 8 % to 10 %).
In addition with the lease termination discussed above, we fully amortized the related in-place lease intangibles resulting in $ 149 million of amortization expense in 2024 as reflected in the real estate depreciation and amortization line of our consolidated statements of net income.
Re-tenanting Activity
Subsequent to the release of claims on the 23 properties as part of the global settlement, we reached definitive agreements with six operators (Healthcare Systems of America, Honor Health, Insight Health ("Insight"), Quorum, College Health, and Tenor Health ("Tenor")) to lease 18 of these facilities. These leases included a rent ramp up period. In the 2025 first quarter, cash rents received from these operators were approximately $ 3.4 million, ramping up to $ 11 million in the 2025 second quarter, approximately $ 12 million in the 2025 third quarter, and $ 26.1 million in the 2025 fourth quarter. Based on these lease contracts (adjusted for the sale of the two properties to College Health in 2025), rent payments are to increase to approximately 79 % of contractual rent by second quarter 2026, and 100 % of contractual rent starting October 2026. As of December 31, 2025, all of these new operators have paid the rent due under their respective leases, except for cash-basis tenants Insight/Tenor who represent less than 1 % of our annual revenues.
As of December 31, 2025, we have provided approximately $ 140 million in working capital related loans to these operators to assist in the takeover of these operations and the transition of certain services (such as revenue cycle management). These loans are
generally secured by accounts receivables and/or other assets (like personal property). Our maximum loss exposure to these tenants at December 31, 2025 is the loan carrying value along with up to $ 30 million, which reflects the remaining amount available under the loans.
The remaining five former Steward properties (with a net book value of approximately 4 % of our total assets), including two developments (see "Development and Capital Addition Activities" above), are in various stages of being re-tenanted or sold.
Other Activity
During 2024, we received and recorded rent and interest revenue from Steward of $ 40 million for the year ended December 31, 2024. In addition, we were benefited from rent paid by Steward to the Massachusetts joint venture of $ 76 million ($ 38 million representing our share) for the year ended December 31, 2024.
Prospect
In August 2019, we invested in a portfolio of 14 acute care hospitals in three states (California, Pennsylvania, and Connecticut) operated by and master leased to or mortgaged by Prospect Medical Holdings, Inc. ("Prospect") for a combined investment of approximately $ 1.6 billion.
On May 23, 2023, Prospect completed a recapitalization plan, which included receiving $ 375 million in new financing from several lenders. Along with this new capital from third-party lenders, we agreed to the following restructuring of our then $ 1.7 billion investment including: a) maintaining the master lease covering six California hospitals without any changes in rental rates or escalator provisions, b) transitioning the Pennsylvania properties back to Prospect in return for a $ 150 million first lien mortgage, c) providing up to $ 75 million in a loan secured by a first lien on Prospect's accounts receivable and certain other assets, and d) obtaining a non-controlling ownership interest in PHP Holdings in exchange for unpaid rent and interest, among other things.
Prospect filed for Chapter 11 bankruptcy on January 11, 2025 with the United States Bankruptcy Court for the Northern District of Texas. On March 20, 2025, the bankruptcy court approved a global settlement (including a recovery waterfall) between us, Prospect, and other stakeholders. Due to the bankruptcy, we recorded more than $ 400 million of impairment charges and negative fair value adjustments associated with our investments in Prospect in the 2024 fourth quarter, resulting in a full reserve of the asset-backed loan and our Pennsylvania mortgage loan, along with a decrease in the value in our Connecticut properties. No charge was recorded on our California properties. In determining the impairment charges needed for these investments, we compared the carrying value of each investment to the fair value of the underlying collateral less costs to sell and factored in the priority of claims associated with the bankruptcy. In estimating the fair value of real estate, we, along with assistance from a third-party independent valuation firm, used a combination of cost, market, and income approaches using Level 3 inputs. The cost approach used comparable sales to value the land and cost manuals to value the . The value derived from the market approach was based on sales prices of similar properties. For the income approach, we divided the expected operating income from the property by an estimated market capitalization rate (ranging from 8.25 % to 8.5 %).
In 2025 and in accordance with the global settlement and the estimated recovery waterfall, we recorded approximately $ 140 million of additional impairment charges. In determining the 2025 impairment charges, we compared the carrying value of our investments to our current estimate of expected proceeds (net of any possible future cash outlays) to be received under the bankruptcy court approved recovery waterfall, factoring in an estimated recovery of Prospect assets (including our real estate assets as applicable) and applying the priority of claims associated with the bankruptcy. In estimating the fair value of the California, Pennsylvania, and Connecticut real estate, we applied the same approach as discussed above for the 2024 impairment charges, except we used bids received for valuing the Pennsylvania and Connecticut properties in the third and fourth quarters of 2025.
At December 31, 2025, our investment in Prospect is approximately $ 61 million with recoveries limited to collection of Connecticut accounts receivable and minor proceeds from remaining asset sales. Prospect's bankruptcy proceedings are continuing, and the ultimate outcome of such proceedings is uncertain. At this time, we cannot assure you that we will be able to recover our remaining investment in full as of December 31, 2025.
Possible Additional Funding
In 2025, the bankruptcy court approved an order for up to $ 70 million in additional advances which we may be required to fund. This possible loan advance is conditioned on other events occurring including the sale of the last Connecticut facility and the bankruptcy plan becoming effective. Any funds advanced are expected to be secured by recoveries, if any, from causes of action owned by the debtor. At this time, we cannot predict with full certainty as to the amount or timing of such recoveries from these causes of action.
Re-tenanting Activity
In December 2025, we re-leased the six California properties to NOR as a result of their successful bid to acquire the hospital operations. Terms of the lease include an initial annualized rent almost identical to the previous rent amount due from Prospect in 2025, annual inflation-based escalators starting in the 2027 first quarter, and an initial fixed term of 15 years . All rent is to be deferred for six months , and 50 % of rent is to be deferred for an additional six months, after which the aggregate deferred rent will be paid over the remaining lease term. We have committed to fund up to $ 60 million in seismic improvements that may be required by California regulators over the next four years , which will increase the lease base and result in additional rent.
PHP Investment
In regard to our investment in PHP Holdings, we accounted for this investment using the fair value option method. Each quarter, we marked such investment to fair value as more fully described in Note 10 to the consolidated financial statements. In 2025, we recorded an approximate $ 147 million negative fair value adjustment, whereas this adjustment was approximately $ 550 million in 2024. The adjustment in 2025 was made based on changes to the purchase agreement between PHP Holdings and Astrana Health and updates to PHP Holdings' working capital position. On July 1, 2025, we received $ 2.3 million from the sale of PHP Holdings to Astrana Health.
International Joint Venture
We placed our loan to the international joint venture on the cash basis of accounting in 2023, as we determined that it was no longer probable that the borrower would pay its future interest in full. This loan, accounted for under the fair value option method, was collateralized by the equity of Steward held by an investor in both Steward and the international joint venture. Consistent with the discussion above on non-real estate investments in Steward, we recorded a $ 225 million unfavorable fair value adjustment in the 2024 first quarter to fully reserve for the loan and related equity investment. These investments, which are included in “Investments in unconsolidated operating entities” on our consolidated balance sheets, were adjusted for after comparing our carrying value to an updated fair value analysis of the underlying collateral, with assistance from a third-party, independent valuation firm.
CommonSpirit
On May 1, 2023, Catholic Health Initiatives Colorado ("CHIC"), a wholly owned subsidiary of CommonSpirit, acquired the Utah hospital operations of five general acute care facilities previously operated by Steward. The new lease, at the time, for these Utah assets had an initial fixed term of 15 years with annual escalation provisions. As part of this transaction, we severed these facilities from the master lease with Steward, and accordingly accelerated the amortization of the associated in-place lease intangibles (approximately $ 286 million) and wrote-off approximately $ 95 million of straight-line rent receivables related to the former lease. As described earlier, these five properties make up the Utah Transaction.
Vibra
In the 2023 third quarter, we moved to cash basis of accounting for Vibra due to declines in operating results. As a result, we recorded a $ 49 million charge to reserve billed and straight-line rent receivables. During the 2024 third quarter, we terminated the lease with this tenant, resulting in the acceleration of lease intangible amortization of $ 22 million. On December 31, 2024, we entered into a forbearance and restructuring agreement with the former tenant, which was later amended. The substantive terms of the forbearance and restructuring agreement included, among other things, the repayment of $ 10 million of unpaid rent in cash, which we received on December 31, 2024 and recognized as revenue; Vibra's acquisition of certain of our facilities, one of which closed in early January 2025 for approximately $ 3 million (and we received payment in full); and entering into a new lease agreement.
In the 2025 fourth quarter, we completed the restructuring of our relationship with Vibra including entering into a new 20 -year master lease agreement with annual inflation escalators covering several properties; the acquisition by us of one post-acute property for $ 32 million that was joined to the master lease with Vibra; the transition of one post-acute property with a net book value of approximately $ 53 million to a new tenant (joint venture with Select Medical) that is subject to a 20 -year master lease agreement with annual inflation escalators; the cash receipt of approximately $ 18 million for past rent obligations that we recognized as revenue; and the sale of one post-acute property to Vibra for $ 12 million at a small gain in February 2026, proceeds of which we had previously received in advance of such sale. We are continuing to account for revenue associated from Vibra on a cash basis at this time.
Investments in Unconsolidated Entities
Investments in Unconsolidated Real Estate Joint Ventures
Our primary business strategy is to acquire real estate and lease to providers of healthcare services. Typically, we directly own 100 % of such investments. However, from time-to-time, we will co-invest with other investors that share a similar view that hospital
real estate is a necessary infrastructure-type asset in communities. In these types of investments, we will own undivided interests of less than 100 % of the real estate through unconsolidated real estate joint ventures. The underlying real estate and leases in these unconsolidated real estate joint ventures are generally structured similarly and carry a similar risk profile to the rest of our real estate portfolio.
The following is a summary of our investments in unconsolidated real estate joint ventures by operator (amounts in thousands):
Operator
Ownership Percentage
As of December 31, 2025
As of December 31, 2024
Swiss Medical Network
MEDIAN
CommonSpirit (Utah partnership)
Policlinico di Monza
HM Hospitales
Total
The increase in the Swiss Medical Network real estate joint venture is due to the new investment made in 2025 as described earlier in this same Note 3 along with the impact from foreign currency changes.
For our unconsolidated real estate joint venture that leases more than 70 healthcare facilities to MEDIAN, we, along with our joint venture partner, finalized a refinancing of the € 655 million secured debt on June 17, 2025, that was due on June 30, 2025. The new € 702.5 million non-recourse, 10-year non-amortizing secured debt has an approximately 5.1 % fixed rate, and the majority of the proceeds were used to fund the repayment of the prior € 655 million secured loan that carried a lower rate. In the 2025 third quarter, Germany enacted legislation that will reduce future income tax rates by 5 %, which resulted in a $ 13 million (our share) deferred income tax benefit in the period.
The Utah partnership applies specialized accounting and reporting for investment companies under Topic 946, which measures the underlying investments at fair value. For the year ended December 31, 2025, our share of the Utah partnership's income included a favorable fair value adjustment of approximately $ 49 million, primarily related to an unrealized gain on investments in real estate.
For 2025 and 2024, we received $ 62 million and $ 45 million, respectively, in dividends from these real estate joint ventures.
The following tables present summary financial information on a combined basis for our investments in unconsolidated real estate joint ventures (amounts in thousands):
For the Year Ended December 31,
Revenue
Net income (loss)
As of December 31,
Assets
Liabilities
The summary above by year reflects the financial information of all five of our current investments, except for the Utah Partnership that was formed in April 2024 with reporting starting in the 2024 third quarter. In addition, we have included financial information for the Macquarie partnership in 2023 and through the 2024 second quarter - see discussion under "Leasing Operations (Lessor)" in this same Note 3 for more details on this investment and its conclusion.
Investments in Unconsolidated Operating Entities
Our investments in unconsolidated operating entities are noncontrolling investments that are typically made in conjunction with larger real estate transactions in which the operators are vetted as part of our overall underwriting process. In many cases, we would
not be able to acquire the larger real estate portfolio without such investments in operators. These investments also offer the opportunity to enhance our overall return and provide for certain minority rights and protections.
The following is a summary of our investments in unconsolidated operating entities (amounts in thousands):
Operator
As of December 31,
As of December 31,
Swiss Medical Network
Aevis Victoria SA ("Aevis")
Priory
Aspris Children's Services ("Aspris")
PHP Holdings
Total
For our investments marked to fair value (including our investments in PHP Holdings (through the 2025 third quarter), Aevis, and the international joint venture), we recorded approximately $ 154 million of unfavorable non-cash fair value adjustments during 2025; whereas, this was an approximately $ 794 million of unfavorable non-cash fair value adjustments during 2024. The amount recorded in 2025 and included in "Other (including fair value adjustments on securities)" line of our consolidated statements of net income was primarily related to our investment in PHP Holdings, which was sold on July 1, 2025. The amount recorded in 2024 includes an approximate $ 550 million unfavorable fair market value adjustment to our investment in PHP Holdings - see "Prospect" subheading of this Note 3 for more information. In addition, we recorded a $ 225 million unfavorable fair value adjustment in the 2024 first quarter related to our international joint venture investments as described in Note 3 and included in the "Real estate and other impairment charges, net" line of the consolidated statements of net income.
In the first quarter of 2024, we sold our interest in the Priory syndicated term loan for £ 90 million (approximately $ 115 million), resulting in an approximate £ 6 million ($ 7.8 million) economic loss.
Other Investment Activities
In the third quarter of 2023, we invested approximately $ 105 million for a participation in Steward's syndicated asset-backed credit facility, and we loaned an additional $ 40 million. On August 17, 2023, we sold the $ 105 million interest to a global asset manager for approximately $ 100 million, and Steward paid approximately $ 2 million on November 3, 2023. The remainder was written off as part of the loan impairment charge in 2024 as discussed in the "Leasing Operations (Lessor)" section of this same Note 3 .
In the second quarter of 2023, we received repayment of the CHF 60 million mortgage loan from Infracore that was originally made in the fourth quarter of 2022.
Concentrations of Credit Risks
We monitor concentration risk in several ways due to the nature of our real estate assets that are vital to the communities in which they are located and given our history of being able to replace inefficient operators of our facilities, if needed, with more effective operators. See below for our concentration details (dollars in thousands):
Total Assets by Operator
As of December 31, 2025
As of December 31, 2024
Operators
Total Assets (1)
Percentage of
Total Assets
Total Assets (1)
Percentage of
Total Assets
Circle
Priory
Healthcare Systems of America
Swiss Medical Network
Lifepoint Behavioral
Other operators
Other assets
Total
Total assets by operator are generally comprised of real estate assets, mortgage loans, investments in unconsolidated real estate joint ventures, investments in unconsolidated operating entities, and other loans.
Total Assets by U.S. State and Country (1)
As of December 31, 2025
As of December 31, 2024
U.S. States and Other Countries
Total Assets
Percentage of
Total Assets
Total Assets
Percentage of
Total Assets
Texas
California
Florida
Ohio
Arizona
All other states
Other domestic assets
Total U.S.
United Kingdom
Switzerland
Germany
Spain
Finland
All other countries
Other international assets
Total international
Grand total
Total Assets by Facility Type (1)
As of December 31, 2025
As of December 31, 2024
Facility Types
Total Assets
Percentage of
Total Assets
Total Assets
Percentage of
Total Assets
General acute care hospitals
Behavioral health facilities
Post acute care facilities
Freestanding ER/urgent care facilities
Other assets
Total
For geographic and facility type concentration metrics in the tables above, we allocate our investments in unconsolidated operating entities pro rata based on the gross book value of the real estate. Such pro rata allocations are subject to change from period to period.
On an individual property basis, our largest investment in any single property was less than 2 % of our total assets as of December 31, 2025.
On a revenue basis, concentration for the year ended December 31, 2025 as compared to the two prior years is as follows:
The following shows those tenants that represented 10% or more of our total revenues by year (in thousands):
Operator
Total Revenues
Percentage of
Total Revenues
Circle
Priory
Operator
Total Revenues
Percentage of
Total Revenues
Circle
Priory
Operator
Total Revenues
Percentage of
Total Revenues
Circle
Priory
Total Revenues by Geographic Location
For the Years Ended December 31,
Geographic Location
Total Revenues
Percentage of
Total Revenues
Total Revenues
Percentage of
Total Revenues
Total Revenues
Percentage of
Total Revenues
Total U.S.
United Kingdom
All other countries
Grand total
Total Revenues by Facility Type
For the Years Ended December 31,
Facility Types
Total Revenues
Percentage of
Total Revenues
Total Revenues
Percentage of
Total Revenues
Total Revenues
Percentage of
Total Revenues
General acute care hospitals
Behavioral health facilities
Post acute care facilities
Freestanding ER/urgent care
facilities
Total
Related Party Transactions
Revenues earned from tenants and real estate joint ventures in which we had an equity interest (accounted for under either the equity or fair value option methods) during the year were $ 23.7 million, $ 33.9 million, and $ 83.0 million for 2025, 2024, and 2023, respectively.
4. Debt
The following is a summary of debt (dollar amounts in thousands):
As of December 31,
As of December 31,
Secured revolving credit facility(A)
Secured term loan
British pound sterling term loan due 2025(B)
British pound sterling secured term loan due 2034(B)
3.325 % Senior Unsecured Notes due 2025(B)
0.993 % Senior Unsecured Notes due 2026(B)
2.500 % Senior Unsecured Notes due 2026(B)
5.250 % Senior Unsecured Notes due 2026
5.000 % Senior Unsecured Notes due 2027
3.692 % Senior Unsecured Notes due 2028(B)
4.625 % Senior Unsecured Notes due 2029
3.375 % Senior Unsecured Notes due 2030(B)
3.500 % Senior Unsecured Notes due 2031
7.000 % Senior Secured Notes due 2032(B)
8.500 % Senior Secured Notes due 2032
Debt issue costs and discount, net
Includes € 100 million and € 303 million of Euro-denominated borrowings and CHF 52 million and CHF - million of Swiss franc-denominated borrowings that reflect the applicable exchange rates at December 31, 2025 and December 31, 2024, respectively.
Non-U.S. dollar denominated debt that reflects the exchange rates at period-end.
As of December 31, 2025, principal payments due on our debt (which exclude the effects of any discounts, premiums, or debt issue costs recorded) are as follows (amounts in thousands):
Thereafter
Total
$ 638 million (of which approximately $ 200 million was repaid in January 2026) represents the outstanding balance of the revolving portion of our credit facility for which we have provided notice of our intent to extend to 2027 - see "Credit Facility" subheading for further details.
2025 Activity
British Pound Sterling Term Loan due 2025
On January 15, 2025, we paid off the remaining £ 493 million balance of our British pound sterling term loan due 2025 . With this payoff, we also terminated the sterling-denominated term loan interest rate swap.
Senior Secured Notes due 2032
On February 13, 2025, we closed on a private offering that consisted of $ 1.5 billion aggregate principal amount of senior secured notes due 2032 (the "USD Notes") and € 1.0 billion aggregate principal amount of senior secured notes due 2032 (the "Euro Notes"). See section titled "Senior Notes" for a description of interest rates and maturity for both notes. We may redeem some or all of the notes at any time prior to February 15, 2028, at a redemption price equal to 100 % of the principal amount, plus an applicable “make whole” premium and accrued and unpaid interest. On or after February 15, 2028, we may redeem some or all of the notes at a premium that will decrease over time. In addition, at any time prior to February 15, 2028, we may redeem up to 40 % of the notes at a redemption price equal to 108.500 % and 107.000 % for the USD Notes and Euro Notes, respectively, of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, using proceeds from one or more equity offerings.
We used the net proceeds from the notes to fund the early redemption of our 3.325 % Senior Unsecured Notes due 2025 , 2.500 % Senior Unsecured Notes due 2026 , and 5.250 % Senior Unsecured Notes due 2026 . We used the remaining net proceeds to pay down the revolving portion of our Credit Facility.
2024 Activity
During 2024, we closed on a term loan with an aggregate principal amount of approximately £ 631 million (approximately $ 800 million) secured by a portfolio of properties in the U.K. We used the majority of the net proceeds of the facility to pay down our revolving credit facility by $ 375 million and British pound sterling term loan due 2025 by £ 105 million, and to pay off our British pound sterling secured term loan due 2024 (approximately £ 105 million). During the year, we also paid down an additional $ 756 million on our revolving credit facility and £ 102 million on our British pound sterling term loan due 2025 with cash proceeds from asset sales. In addition, on April 18, 2024, we paid off and terminated the remainder of the A$ 470 million (approximately $ 306 million) Australian term loan facility with proceeds from the Utah Transaction described in Note 3 .
2023 Activity
During 2023, we paid down, prior to maturity, A$ 730 million (approximately $ 475 million) of the A$ 1.2 billion Australian term loan with proceeds from the Australia Transaction as discussed in Note 3 . In addition, we purchased approximately £ 50 million of our 2.550 % Senior Unsecured Notes due 2023 at a discounted price and yield averaging approximately 13 %. As a result of this prepayment, we realized an approximate $ 1.1 million gain. On December 5, 2023, we fully paid off the remaining £ 350 million balance of our 2.550 % Senior Unsecured Notes due 2023 with cash on-hand and proceeds from the revolving portion of our credit facility.
Credit Facility
We have a multi-currency denominated revolver and a $ 200 million term loan that make up our Credit Facility (the "Credit Facility"). Our maximum borrowings under the revolving portion of the Credit Facility is $ 1.28 billion.
2025 Activity
At December 31, 2025 and 2024, we had $ 0.6 billion and $ 0.4 billion outstanding on the revolving portion of our Credit Facility, respectively. At December 31, 2025 and 2024, our availability under our revolver was $ 0.7 billion and $ 0.9 billion, respectively. The weighted-average interest rate on the revolver was 5.5 % and 6.6 % during 2025 and 2024, respectively.
At December 31, 2025 and 2024 , the interest rate in effect on our term loan was 6.1 % and 7.5 %, respectively.
On February 13, 2025 and concurrent with the closing of the Senior Secured Notes due 2032 discussed above, we amended the Credit Facility to among other things: (i) provide for the facility to be secured and guaranteed ratably with the senior notes issued concurrently, (ii) provide notice that we plan to exercise both of our maturity extension options such that the maturity of the revolving portion would move from June 30, 2026 to June 30, 2027, the same maturity date as our term loan facility (subject to the satisfaction of other conditions), (iii) reset the interest rate to the Secured Overnight Financing Rate (" SOFR ") plus 225 basis points (which had previously been moved to SOFR plus 300 basis points in August 2024), and (iv) amend certain covenants as described under "Covenants and Restrictions" in this same Note 4 .
In regard to the maturity of the revolving portion of our Credit Facility, we have two 6-month extension options available to move the maturity from June 30, 2026 to June 30, 2027. Although the extension options are at our election (and as noted above, we have given notice of our intention to exercise both extension options), there are certain conditions that must be satisfied, with the primary condition of not being in default at the time of each extension option date (and believe we will meet all conditions to do so).
2024 Activity
Prior to the 2024 amendments described below and at our election, loans were made as either alternate base rate loans ("ABR Loans") or loans for an interest period of either one, three, or six months ("Term Benchmark Loans"). The applicable margin for term
loans that were ABR Loans was adjustable on a sliding scale from 0.00 % to 0.70 % based on current credit rating. The applicable margin for term loans that were Term Benchmark Loans was adjustable on a sliding scale from 0.875 % to 1.70 % based on current credit rating. The applicable margin for revolving loans that were ABR Loans was adjustable on a sliding scale from 0.00 % to 0.50 % based on current credit rating. The applicable margin for revolving loans that were Term Benchmark Loans or risk-free rate loans ("RFR Loans"), as defined in the Credit Facility agreement, was adjustable on a sliding scale from 0.80 % to 1.50 % based on current credit rating. The facility fee was adjustable on a sliding scale from 0.125 % to 0.30 % based on current credit rating and was payable on the revolving loan facility. During 2023, our credit rating negatively changed, resulting in adjustments to the applicable margin by 0.375 % and an increase to the facility fee from 0.25 % to 0.30 %.
On April 12, 2024, we amended our Credit Facility and certain other agreements to (i) reduce revolving commitments from $ 1.8 billion to $ 1.4 billion, (ii) apply certain proceeds from asset sales and debt transactions to repay the Australian term loan facility and certain other outstanding obligations, including revolving loans under the Credit Facility to the extent necessary to reduce the outstanding borrowings to no more than the amended $ 1.4 billion commitment, and (iii) amend or waive certain covenants to our Credit Facility and British pound sterling term loan due 2025 as described under "Covenants and Restrictions" in this same Note 4 .
On August 6, 2024, we amended the Credit Facility and the British pound sterling term loan due 2025 to (i) further reduce revolving commitments in the Credit Facility from $ 1.4 billion to $ 1.28 billion, (ii) increase borrowing spreads to 300 basis points during the Modified Covenant Period (defined in "Covenants" section in this same Note 4 ) and then to 225 basis points after the Modified Covenant Period, (iii) require that proceeds of certain future asset sales and debt transactions (during the Modified Covenant Period) be applied to repay certain outstanding obligations, including our revolving loans (by 15 % of such proceeds but for which the revolving loans can be reborrowed) and our British pound sterling term loan due 2025 (by 50 % of such proceeds), and (iv) amend or waive certain covenants as described under "Covenants and Restrictions" in this same Note 4 .
Non-U.S. Term Loans
British Pound Sterling Secured Term Loan due 2034
On May 24, 2024, we completed a secured loan facility with a consortium of institutional investors that provides for a term loan in aggregate principal amount of approximately £ 631 million (approximately $ 800 million) secured by a portfolio of 27 properties located in the U.K. currently leased to affiliates of Circle. The facility carries a fixed rate of 6.877 % over its 10-year term, excluding fees and expenses, and is interest-only (payable quarterly in advance) through the maturity date. The facility is secured by first priority mortgages or similar security instruments on the relevant properties, including assignments of rents and security over accounts, and is non-recourse to us.
British Pound Sterling Term Loan due 2025
On January 6, 2020, we entered into a £ 700 million unsecured sterling-denominated term loan with Bank of America, N.A., as administrative agent, and several lenders from time-to-time are parties thereto. The applicable margin under the term loan was adjustable based on a pricing grid from 0.85 % to 1.65 % dependent on our credit rating. On March 4, 2020, we entered into an interest rate swap transaction (effective March 6, 2020 ) to fix the interest rate to approximately 0.70 % for the duration of the loan. The applicable margin for the pricing grid (which varied based on our credit rating) increased from 1.25 % to 1.65 % on March 10, 2023 with the change in our credit rating, for an all-in fixed rate at December 31, 2023 of 2.349 %. With the August 6, 2024 amendment discussed above, our all-in fixed rate increased to 3.70 %.
As noted earlier, we paid down the British pound sterling secured term loan due 2025 by £ 207 million in 2024 with proceeds from the British pound sterling secured term due 2034 and asset sales. The balance of this loan of £ 493 million was paid in full on January 15, 2025.
Senior Notes
The following are the basic terms of our senior notes at December 31, 2025 (par value amounts in thousands):
Offering
Completion Date
Maturity Date
Par Value
% of Par
Value
Interest Payment Frequency
0.993% Senior Unsecured Notes due 2026
October 6, 2021
October 15, 2026
Annually
5.000% Senior Unsecured Notes due 2027
September 21, 2017
October 15, 2027
Semi-annually
3.692% Senior Unsecured Notes due 2028
December 5, 2019
June 5, 2028
Annually
4.625% Senior Unsecured Notes due 2029
July 26, 2019
August 1, 2029
Semi-annually
3.375% Senior Unsecured Notes due 2030
March 24, 2021
April 24, 2030
Annually
3.500% Senior Unsecured Notes due 2031
December 4, 2020
March 15, 2031
Semi-annually
7.000% Senior Secured Notes due 2032
February 13, 2025
February 15, 2032
Semi-annually
8.500% Senior Secured Notes due 2032
February 13, 2025
February 15, 2032
Semi-annually
We may repurchase, redeem, or refinance senior notes from time-to-time. We may purchase senior notes for cash through open market purchases, privately negotiated transactions, or a tender offer. In some cases, we may redeem some or all of the notes at any time, but may require a redemption premium that will decrease over time. In the event of a change of control, each holder of the notes may require us to repurchase some or all of our notes at a repurchase price equal to 101 % of the aggregate principal amount of the notes plus accrued and unpaid interest to the date of purchase. Redemptions and repurchases of debt, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors.
In regard to the 0.993 % Senior Unsecured Notes due 2026 , management plans to repay these notes in full closer to the maturity date using a combination of available cash and borrowings under the revolving portion of our Credit Facility.
Debt Refinancing and Unutilized Financing Costs (Benefit)
2025 Activity
In 2025, we incurred $ 3.6 million of debt refinancing and unutilized financing costs. These costs were incurred primarily as a result of the early redemption of our 3.325 % Senior Unsecured Notes due 2025 , 2.500 % Senior Unsecured Notes due 2026 , and 5.250 % Senior Unsecured Notes due 2026 .
2024 Activity
In 2024, we incurred $ 4.3 million of debt refinancing and unutilized financing costs. These costs were incurred primarily as a result of the reduction in revolving commitments under our Credit Facility and partial paydowns of our British pound sterling term loan due 2025.
2023 Activity
As a result of the early redemption of a portion of the Australian term loan, we incurred approximately $ 0.8 million to accelerate the amortization of related debt issue costs in 2023. This charge was more than offset by the $ 1.1 million gain realized on the purchase of approximately £ 50 million of our 2.550 % Senior Unsecured Notes due 2023 at a discount in 2023.
Covenants and Restrictions
Our debt facilities impose certain restrictions on us, including, but not limited to, restrictions on our ability to: incur debts; create or incur liens; provide guarantees in respect of obligations of any other entity; make redemptions and repurchases of our capital stock; prepay, redeem, or repurchase debt; engage in mergers or consolidations; enter into affiliated transactions; dispose of real estate or other assets; and change our business. In addition, the credit agreement governing our Credit Facility limits the amount of dividends we can pay as a percentage of normalized adjusted funds from operations (“NAFFO”), as defined in the agreements, on a rolling four quarter basis to 95 % of NAFFO. The indentures governing our senior notes also limit the amount of dividends we can pay based on the sum of 95 % of NAFFO, proceeds of equity issuances, and certain other net cash proceeds. Finally, our senior notes require us to maintain total unencumbered assets (as defined in the related indenture) of not less than 150 % of our unsecured indebtedness.
In addition to these restrictions, the Credit Facility contains customary financial and operating covenants, including covenants relating to our total leverage ratio, fixed charge coverage ratio, secured leverage ratio, consolidated adjusted net worth, unsecured leverage ratio, and unsecured interest coverage ratio. On April 12, 2024, the Credit Facility was amended to waive the 10 % cap on
unencumbered asset value attributable to tenants subject to a bankruptcy event for purposes of determining compliance with the unsecured leverage ratio for the trailing four fiscal quarter period ended June 30, 2024.
On August 6, 2024, we entered into an amendment to the Credit Facility to increase the maximum total leverage ratio covenant from 60 % to 65 % and the maximum unsecured leverage ratio covenant from 65 % to 70 % and to decrease the minimum unsecured interest coverage ratio from 1.75 :1.00 to 1.45 :1.00. The amendment was effective as of June 30, 2024 and was to continue in effect through and including September 30, 2025 (the “Modified Covenant Period”) at which point the credit agreement provided that covenants would automatically reset to their prior levels. In addition, the amendment permanently reduced the minimum consolidated adjusted net worth covenant from approximately $ 6.7 billion to $ 5 billion, in each case plus the sum of certain equity proceeds. The amendment also limited the payment of dividends in cash during the Modified Covenant Period to $ 0.08 per share in any fiscal quarter, but the amendment did not provide any additional restrictions on the payment of dividends outside of the Modified Covenant Period.
On February 13, 2025 and concurrent with the closing of our private notes offering discussed previously, we further amended the Credit Facility and (i) removed the Modified Covenant Period and any restrictions related thereto from the existing Credit Facility, (ii) permanently removed financial covenants regarding minimum consolidated tangible net worth, maximum unsecured indebtedness to unencumbered asset value, and minimum unsecured net operating income to unsecured interest expense, (iii) amended certain definitions used in the financial covenant regarding maximum total indebtedness to total asset value to conform to corresponding definitions in our existing unsecured indentures and the secured notes issued concurrently and set the covenant level at 60 %, (iv) set the maximum secured leverage ratio at 40 %, and added mandatory prepayments of senior debt or addition of additional collateral in connection with any failure to (x) maintain a 65 % maximum ratio of secured first lien debt to the undepreciated real estate value of the secured pool properties or (y) maintain a minimum senior secured debt service coverage ratio of 1.15 :1.00 (which increases to 1.30 :1.00 starting in March 2026).
In addition to the covenants and restrictions discussed above, our Credit Facility contains customary events of default, including among others, nonpayment of principal or interest, material inaccuracy of representations, and failure to comply with our covenants. If an event of default occurs and is continuing under the Credit Facility, the entire outstanding balance may become immediately due and payable. At December 31, 2025 , we were in compliance with all financial and operating covenants.
5. Inco me Taxes
Medical Properties Trust, Inc.
We have maintained and intend to maintain our election as a U.S. REIT under the Code. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement to distribute at least 90 % of our REIT taxable income to our stockholders. As a REIT, we generally will not be subject to U.S. federal income tax if we distribute 100 % of our REIT taxable income to our stockholders and satisfy certain other requirements; instead, income tax is paid directly by our stockholders on the dividends distributed to them. If our REIT taxable income exceeds our dividends in a tax year, REIT tax rules allow us to designate dividends from the subsequent tax year in order to avoid current taxation on undistributed income. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes at regular corporate rates. Taxable income from non-REIT activities managed through our TRS entities is subject to applicable U.S. federal, state, and local income taxes. Our international subsidiaries are also subject to income or withholding taxes in the jurisdictions in which they operate.
Income Tax (Expense) Benefit
From our TRS entities and our foreign operations, income tax (expense) benefit were as follows (in thousands):
For the Years Ended December 31,
Current income tax (expense) benefit:
Domestic
Foreign
Deferred income tax (expense) benefit:
Domestic
Foreign
Income tax (expense) benefit
A reconciliation of income tax (expense) benefit from the statutory income tax rate to the effective tax rate based on our loss before income taxes for the years ended December 31, 2025, 2024, and 2023 is as follows (in thousands):
For the Years Ended December 31,
Amount
Percent
Amount
Amount
Loss before income tax
Income tax benefit at the U.S. statutory federal rate
State and local income tax, net of federal income tax effect
Foreign tax effects:
Statutory tax rate difference between U.K. and U.S.
Changes in valuation allowances
Tax impact of U.K. REIT conversion
Other
Colombia:
Statutory tax rate difference between Colombia and U.S.
Changes in valuation allowances
Other
Other foreign jurisdictions
Foreign rate differential
Interest disallowance
Changes in valuation allowances
Nontaxable or nondeductible items:
U.S. earnings not subject to federal income tax
Other adjustments
Total income tax (expense) benefit/effective tax rate
*Above is a reconciliation of the U.S. federal statutory income tax rate to our effective tax rate pursuant to the disclosure requirements of ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"), for the year ended December 31, 2025. As allowed by ASU 2023-09, the 2024 and 2023 columns have not been restated to conform to the 2025 presentation.
The foreign provision for income taxes is based on foreign profit before income taxes of $ 108.4 million, $ 127.9 million, and $ 6.3 million in 2025, 2024, and 2023, respectively.
The domestic provision for income taxes is based on loss before income taxes of $( 219.2 ) million in 2025 , $( 1.4 ) billion in 2024 , and $( 144.5 ) million in 2023 from our TRS entities.
Income Taxes Paid
The amounts of cash taxes we paid (net of refunds) are as follows (in thousands):
Year Ended December 31,
Federal
State
Foreign
Total
Income taxes paid (net of refunds) in the U.K. and Spain were $ 18.2 million and $ 1.5 million, respectively, and exceeded 5% of total income taxes paid (net of refunds).
Deferred Income Taxes
At December 31, 2025 and 2024, components of our deferred tax assets and liabilities were as follows (in thousands):
Deferred tax assets:
Operating loss and interest deduction carryforwards
Depreciation
Partnership investments
Impairment and other loss reserves
Other
Total deferred tax assets
Valuation allowance
Total net deferred tax assets
Deferred tax liabilities:
Property and equipment
Net unbilled revenue
Partnership investments
Other
Total deferred tax liabilities
Net deferred tax asset (liability)
At December 31, 2025, we had net operating losses ("NOL") and other tax attribute carryforwards as follows (in thousands):
Foreign
Gross NOL carryforwards
Tax-effected carryforwards and other attributes
Valuation allowance
Net deferred tax asset - carryforwards and other attributes
Expiration periods
2034 - indefinite
indefinite
Valuation Allowance
A valuation allowance has been recorded on certain foreign and domestic net operating loss carryforwards and other net deferred tax assets that may not be realized. As of each reporting date, we consider all new evidence that could impact the future realization of our deferred tax assets. In the evaluation of the need for a valuation allowance on our deferred income tax assets, we consider all available positive and negative evidence, including scheduled reversals of deferred income tax liabilities, carryback of future period losses to prior periods, projected future taxable income, tax planning strategies, and recent financial performance.
During 2025, an additional valuation allowance of $ 70.9 million has been recorded against a portion of our deferred tax assets to recognize only the components of the deferred tax assets that is more likely than not to be realized. The valuation allowance was primarily recorded against deferred tax assets for NOLs, non-depreciable basis of real property, and other tax attributes that we believe will not be realized. Valuation allowance activity recorded generally follows the activity of the associated deferred tax asset that is not expected to be recognized. From time-to-time, we may acquire deferred tax assets as part of real estate transactions and will assess the need for a valuation allowance as part of the opening balance sheet. Additionally, valuation allowances will be remeasured for foreign currency translation fluctuations through other comprehensive income.
Given the global nature of our business, we are currently and have in the past been subject to tax audits as part of normal course. However, at December 31, 2025, we have no material uncertain tax position liabilities and/or related interest or penalties.
REIT Status
We have met the annual U.S. REIT distribution requirements by payment of at least 90 % of our REIT taxable income in 2025, 2024, and 2023. Earnings and profits, which determine the taxability of such distributions, will differ from net income reported for financial reporting purposes due primarily to differences in cost basis, differences in the estimated useful lives used to compute depreciation, and differences between the allocation of our net income and loss for financial reporting purposes and for tax reporting purposes.
A schedule of per share distributions we paid and reported to our stockholders is set forth in the following:
For the Years Ended December 31,
Per share:
Ordinary dividend (1)
Long-term capital gain (2)
Return of capital
Total
For the year ended December 31, 2023, includes Section 199A dividends of 1.0639 .
For the year ended December 31, 2023, includes Unrecaptured Section 1250 gains of 0.1061 .
The dividend declared on November 17, 2025 and paid January 8, 2026 will be applicable to the 2026 tax year and thus is not reflected in the table above.
Similar to our U.S. REIT, we have met all requirements of our U.K. REIT as of December 31, 2025.
MPT Operating Partnership, L.P.
As a partnership, the allocated share of income of the Operating Partnership is included in the income tax returns of the general and limited partners. Accordingly, no accounting for income taxes is generally required for such income of the Operating Partnership. However, the Operating Partnership has formed TRS entities on behalf of Medical Properties Trust, Inc., which are subject to U.S. federal, state, and local income taxes at regular corporate rates, and its international subsidiaries are subject to income taxes in the jurisdictions in which they operate. See discussion above under Medical Properties Trust, Inc. for more details of income taxes associated with our TRS entities and international operations.
6. Earnings P er Share/Unit
Medical Properties Trust, Inc.
Our earnings per share were calculated based on the following (in thousands):
For the Years Ended December 31,
Numerator:
Net loss
Non-controlling interests’ share in earnings
Participating securities’ share in earnings
Net loss, less participating securities’ share in
earnings
Denominator:
Basic weighted-average common shares
Dilutive potential common shares(1)
Diluted weighted-average common shares
MPT Operating Partnership, L.P.
Our earnings per unit were calculated based on the following (in thousands):
For the Years Ended December 31,
Numerator:
Net loss
Non-controlling interests’ share in earnings
Participating securities’ share in earnings
Net loss, less participating securities’ share in
earnings
Denominator:
Basic weighted-average units
Dilutive potential units(1)
Diluted weighted-average units
The above computation of diluted earnings per share does not include 112,452 , 17,162, and 32,382 potential common shares/units for the years ended December 31, 2025, 2024, and 2023, respectively.
7. Stoc k Awards
Stock Awards
During the second quarter of 2022, we amended the 2019 Equity Incentive Plan (the "Equity Incentive Plan"), which authorizes the issuance of common stock options, restricted stock, RSUs, deferred stock units, stock appreciation rights, performance units, and awards of interests in our Operating Partnership. Our Equity Incentive Plan is administered by the Compensation Committee of the Board of Directors, and we have reserved 28.9 million shares of common stock for awards, of which 8.0 million shares remain available for future stock awards as of December 31, 2025 . The Equity Incentive Plan contains a limit of 5 million shares as the maximum number of shares of common stock that may be awarded to an individual in any fiscal year. Awards under the Equity Incentive Plan are subject to forfeiture due to termination of employment prior to vesting and/or from not achieving the respective performance/market conditions. In the event of a change in control, outstanding and unvested options will immediately vest, unless otherwise provided in the participant’s award or employment agreement, and restricted stock, restricted stock units, deferred stock units, and other stock-based awards will vest if so provided in the participant’s award agreement. The term of the awards is set by the Compensation Committee, though Incentive Stock Options may not have terms of more than ten years . Forfeited awards (along with shares withheld for payroll tax withholding purposes) are returned to the Equity Incentive Plan and are then available to be re-issued as future awards. For each share of common stock issued by Medical Properties Trust, Inc. pursuant to its Equity Incentive Plan, the Operating Partnership issues a corresponding number of Operating Partnership units.
For the past three years, we have only granted restricted stock and RSUs pursuant to our Equity Incentive Plan. These awards have been granted in the form of service-based awards, performance awards based on company-specific performance hurdles, and market-based awards. See below for further details on each of these awards:
Service-Based Awards
In 2025, 2024, and 2023 , the Compensation Committee granted service-based awards to employees and non-employee directors. Service-based awards vest as the employee/director provides the required service (typically over three years ). Dividends are generally paid on these awards prior to vesting.
Performance-Based Awards
In 2023, the Compensation Committee granted performance-based awards to employees. Generally, dividends are not paid on performance awards until the award is earned. See below for details of our 2023 performance-based award grants.
In 2023 , a target number of stock awards were granted to employees that could be earned based on the achievement of specific performance thresholds as set by our Compensation Committee. The performance thresholds were based on a three-year period with the opportunity to earn a portion of the award earlier. More or less shares than the target number of shares were available to be earned based on our performance compared to the set thresholds. At the end of each of the performance periods, any earned shares during such period vested on January 1 of the following calendar year. The performance thresholds were based on strategic transactions
(including new investments and proceeds from individual property disposals and larger asset disposals through joint venture transactions) and EBITDA.
Certain performance awards granted were subject to a modifier which increases or decreases the actual shares earned in each performance period. The modifier for the 2023 awards was based on two components: 1) how our total shareholder return (“TSR”) compared to the Dow Jones U.S. Real Estate Health Care Index and 2) how our TSR compared to a threshold set by the Compensation Committee.
The three-year performance period for these awards ended in 2025 and resulted in a $ 10.9 million reduction of expense as less shares were earned than our previous estimate.
Market-Based Awards
In 2025, 2024, and 2023, the Compensation Committee granted market-based awards to employees. Generally, dividends are not paid on market-based awards until the award is earned. See details below of such market-based award grants.
On September 24, 2025, a target number of market-based restricted stock awards were granted to employees other than the Company’s Chief Executive Officer and Chief Financial Officer. These shares will be earned at the target level only if the Company’s total shareholder return reaches 20 %, with the opportunity to earn up to three times target if the Company’s total shareholder return reaches higher hurdles during the three-year period ending April 14, 2028. The actual number of shares to be earned pursuant to these awards will be determined based on a total shareholder return achieved by a trailing 20-trading day average closing price of the Company’s common stock, assuming contemporaneous reinvestment in such common stock of all dividends and other distributions. The baseline price of common stock used in determining total shareholder return is $ 5.44 . Earned shares will vest in equal quarterly installments over one year following the date that the Compensation Committee makes a determination of achievement of the performance metrics, subject to the grantee’s continued employment through such date, provided that all unvested earned shares will vest in full following the end of the performance period.
On April 15, 2025, the Compensation Committee granted 621,061 market-based RSUs to the Company’s Chief Executive Officer and Chief Financial Officer at the target level of achievement. The RSUs may be settled only in cash, and the cash payment will be calculated based on the average closing price of the Company’s common stock on the five trading days ending on the vesting date. The RSUs are earned at the target level if the Company’s total shareholder return reaches 20 %, with the opportunity to earn up to three times target if the Company’s total shareholder return reaches higher hurdles during the three-year period ending on April 14, 2028. The actual number of RSUs to be earned pursuant to these awards will be determined based on a total shareholder return achieved by a trailing 20-trading day average closing price of the Company’s common stock, assuming contemporaneous reinvestment in such common stock of all dividends and other distributions. The baseline price of common stock used in determining total shareholder return is the closing price of the common stock on April 15, 2025, of $ 5.44 . Earned RSUs will become vested on the earlier of equal quarterly installments over the first year from the date the RSUs are earned or the date that the Committee makes a determination of of the performance metrics following the end of the three-year performance period, subject to the grantee’s continued employment through such date, provided that all unvested earned RSUs will vest in full following the end of the performance period.
On March 8, 2024, the Compensation Committee granted 2,700,000 market-based RSUs to the Company's Chief Executive Officer and Chief Financial Officer at the target level of achievement, which would represent a 67 % increase in the market price of our common stock at time of grant. The RSUs may be settled only in cash, and the cash payment will be calculated based on the average closing price of the Company's common stock on the five trading days ending on the vesting date. The RSUs will be earned at the target level only if the Company's share price increases to $ 7.00 per share, with the opportunity to earn up to three times target if the Company's share price reaches higher stock price hurdles. The actual number of shares to be earned pursuant to these awards will be determined based on a trailing 20-trading day average closing price of the Company's common stock during the four-year period ending December 31, 2027. Earned RSUs will become vested on the earlier of equal quarterly installments over the first year from the date the RSUs are earned or the date that the Committee makes a determination of achievement of the performance metrics following the end of the four-year performance period, subject to the grantee’s continued employment through such date, provided that all unvested earned RSUs will vest in full following the end of the performance period.
On December 8, 2023, the Compensation Committee approved market-based restricted stock awards to employees other than the Company's Chief Executive Officer and Chief Financial Officer of 2,500,000 shares of common stock at the target level of achievement. These shares will be earned at the target level only if the Company's share price increases to $ 7.00 per share, with the opportunity to earn more shares (up to three times target), based on higher stock price hurdles. The actual number of shares to be earned pursuant to these awards will be determined based on a trailing 20-trading day average closing price of the Company's common stock during the four-year period following the December 8, 2023 grant date or December 31, 2027, for certain awards granted after December 8, 2023. Earned shares will vest in equal quarterly installments over two years following the date that the Compensation Committee makes a determination of achievement of the performance metrics, subject to the grantee’s continued employment through such date, provided that all unvested earned shares will vest in full following the end of the performance period.
The following summarizes award activity in 2025 and 2024 (which includes awards granted in 2025, 2024, and any applicable prior years), respectively:
For the Year Ended December 31, 2025:
Vesting Based
on Service
Vesting Based on
Market/Performance
Conditions
Shares
Weighted-Average
Value at Award Date
Shares
Weighted-Average
Value at Award Date
Nonvested awards at beginning of the year
Awarded
Vested
Forfeited
Nonvested awards at end of year
Reflects the maximum share payout of certain market-based awards granted in 2023, 2024, and 2025. However, share payout at target level for these market-based awards would result in nonvested awards at December 31, 2025 of 3.1 million shares.
For the Year Ended December 31, 2024:
Vesting Based
on Service
Vesting Based on
Market/Performance
Conditions
Shares
Weighted-Average
Value at Award Date
Shares
Weighted-Average
Value at Award Date
Nonvested awards at beginning of the year
Awarded
Vested
Forfeited
Nonvested awards at end of year
Additionally, the market-based RSUs granted in 2025 and 2024 (not included in the tables above) with cash-settlement features are nonvested as of December 31, 2025. These liability-type awards are adjusted to fair value on a quarterly basis using a Monte Carlo valuation model, which used the following assumptions for grant date and quarterly valuations for the year ended December 31, 2025: (i) common stock price at measurement date, (ii) annual equity volatility ranging from 59.0 % to 62.0 %, (iii) risk-free rate ranging from 3.47 % to 3.89 %, and (iv) dividend yield ranging from 5.31 % to 7.42 %. The grant date fair value of the RSUs awarded April 15, 2025 was $ 8.1 million, and the fair value of the RSUs awarded March 8, 2024 was $ 13.3 million, and no ne of these RSUs were earned, vested, or forfeited as of December 31, 2025.
The value of stock-based awards is charged to compensation expense over the service periods. For the years ended December 31, 2025, 2024, and 2023 , we recorded $ 15.1 million, $ 28.4 million, and $ 33.3 million, respectively, of non-cash compensation expense. For the years ended December 31, 2025 and 2024, we also recorded $ 10.6 million and $ 4.6 million, respectively, of compensation expense for the RSUs with cash-settlement features, and we had a corresponding $ 15.2 million and $ 4.6 million liability as of December 31, 2025 and 2024, respectively.
The remaining unrecognized cost from equity-settled awards at December 31, 2025 , is $ 17.9 million, which will be recognized over a weighted-average period of 0.93 years. The remaining unrecognized cost from cash-settled awards at December 31, 2025, is $ 14.3 million, which will be recognized over a derived service period of 1.38 years as of December 31, 2025. Stock-based awards that vested in 2025, 2024, and 2023 , had a value of $ 7.7 million, $ 10.9 million, and $ 22.5 million, respectively.
8. Contingencies
As part of the global settlement with Steward discussed in Note 3 , upon completion of the transfers to the new operators and satisfaction of certain other conditions, in addition to approval by relevant state and local regulators, we and Steward agreed, subject to specified exceptions, to the mutual release of claims against each other. In connection with the global settlement and reciprocal release of claims, we have established an approximate $ 16 million reserve at December 31, 2025, for certain obligations due to third parties associated with properties formerly leased to Steward.
We are, or were, party to various lawsuits as described below:
Securities and Derivative Litigation
On April 13, 2023, we and certain of our executives were named as defendants in a putative federal securities class action lawsuit filed by a purported stockholder in the United States District Court for the Northern District of Alabama (Case No. 2:23-cv-00486). This class action complaint was amended on September 22, 2023 and alleged that we made material misstatements or omissions relating to the financial health of certain of our tenants. On September 26, 2024, the Court dismissed the amended complaint with prejudice, and the plaintiff thereafter moved the Court to alter its judgment. On August 14, 2025, the Court denied the plaintiff's motion and dismissed the amended complaint with prejudice.
Members of our Board of Directors were also named as defendants in two related shareholder derivative lawsuits filed by purported stockholders in the United States District Court for the Northern District of Alabama on October 19, 2023 (Case No. 2:23- cv-01415) and December 7, 2023 (Case No. 2:23-cv-01667). The Company was named as a nominal defendant in both complaints. These shareholder derivative complaints both made allegations similar to those made in the now-dismissed Alabama securities lawsuit described above relating to purported material misstatements or omissions relating to the financial health of certain of our tenants. After the related securities case was dismissed, the plaintiffs in these derivative actions each filed a notice of voluntary dismissal and these cases have now been without .
Members of our Board of Directors were also named as defendants in three related shareholder derivative lawsuits filed by purported stockholders in the United States District Court for the District of Maryland on February 16, 2024 (Case No. 1:24-cv-00471), June 28, 2024 (Case No. 1:24-cv-01899), and July 26, 2024 (Case No. 1 24-cv-02173). The Company was named as a nominal defendant. These shareholder derivative complaints made allegations similar to those made in the now-dismissed Alabama securities and derivative lawsuits described above relating to purported material misstatements or omissions relating to the financial health of certain of our tenants. After the related securities case was dismissed, the plaintiffs in these derivative actions each filed a notice of voluntary dismissal and each of these cases has now been dismissed without .
On September 29, 2023, we and certain of our executives were named as defendants in a putative federal securities class action lawsuit filed by a purported stockholder in the United States District Court for the Southern District of New York (Case No. 1:23-cv- 08597). The complaint seeks class certification on behalf of purchasers of our common stock between May 23, 2023 and August 17, 2023 and alleges false and/or misleading statements and/or omissions in connection with certain transactions involving Prospect. This class action complaint was amended on October 30, 2024 and alleges that we made material misstatements or omissions in connection with certain transactions involving Prospect. Defendants filed a motion to dismiss the amended complaint on January 14, 2025. That motion has been fully briefed and is currently pending before the Court.
Members of our Board of Directors were also named as defendants in two related shareholder derivative lawsuits filed by purported stockholders in the United States District Court for the Southern District of New York on December 18, 2023 (Case No. 1:23-cv-10934) and March 1, 2024 (Case No. 1:24-cv-01589). The Company was named as a nominal defendant in both complaints. These shareholder derivative complaints both make allegations similar to those made in the New York securities lawsuit described above relating to purported false and/or misleading statements and/or omissions in connection with certain transactions involving Prospect. The two cases have been consolidated and stayed pending further developments in the New York securities lawsuit described above. On February 21, 2024, members of our Board of Directors were named as defendants in a shareholder derivative lawsuit filed by a purported stockholder in the United States District Court for the District of Maryland (Case No. 1:24-cv-00527). The Company was named as a nominal . This shareholder derivative makes similar to those made in the New York securities and derivative lawsuits described above relating to and/or statements and/or in connection with certain transactions involving Prospect. This action has been stayed pending further developments in the New York securities action described above.
We believe these claims are without merit and intend to defend the remaining open cases vigorously. We have not recorded a liability related to the lawsuits above because, at this time, we are unable to determine whether an unfavorable outcome is probable or to estimate reasonably possible losses.
From time-to-time, we are a party to other legal proceedings, claims, or regulatory inquiries and investigations arising out of, or incidental to, our business. While we are unable to predict with certainty the outcome of any particular matter, in the opinion of management, after consultation with legal counsel, the ultimate liability, if any, with respect to those proceedings is not presently expected to materially affect our financial position, results of operations, or cash flows.
9. Common Stock/ Partner’s Capital
Medical Properties Trust, Inc.
On October 28, 2025, the Board of Directors of the Company authorized a stock repurchase program (the "Stock Repurchase Program") for up to $ 150 million of common stock, par value $ 0.001 per share. Under the Stock Repurchase Program, we may repurchase shares of our common stock from time to time in the open market or in privately negotiated transactions. In 2025, we repurchased 4.5 million shares for a total of $ 23.4 million.
On August 11, 2025, we entered into an at-the-market equity offering program (the "ATM Program"), which provides for the sale, from time to time, of up to $ 500 million of our common stock with a commission rate up to 2 %. As of December 31, 2025, we had no t sold any shares under the ATM Program.
MPT Operating Partnership, L.P.
At December 31, 2025 , the Operating Partnership is made up of a general partner, Medical Properties Trust, LLC (“General Partner”) and limited partners, including the Company (which owns 100 % of the General Partner) and MPT TRS, Inc. (which is 100 % owned by the General Partner). By virtue of its ownership of the General Partner, the Company has a 100 % ownership interest in the Operating Partnership.
In regard to distributions, the Operating Partnership shall distribute cash at such times and in such amounts as are determined by the General Partner in its sole and absolute discretion, to common unit holders who are common unit holders on the record date. However, per the Second Amended and Restated Agreement of Limited Partnership of MPT Operating Partnership, L.P. (“Operating Partnership Agreement”), the General Partner shall use its reasonable efforts to cause the Operating Partnership to distribute amounts sufficient to enable the Company to pay stockholder dividends that will allow the Company to (i) meet its distribution requirement for qualification as a REIT and (ii) avoid any U.S. federal income or excise tax liability imposed by the Code, other than to the extent the Company elects to retain and pay income tax on its net capital gain. In accordance with the Operating Partnership Agreement, LTIP units are treated as common units for distribution purposes.
The Operating Partnership’s net income will generally be allocated first to the General Partner to the extent of any cumulative losses and then to the partners in accordance with their respective percentage interests in the common units issued by the Operating Partnership. Any losses of the Operating Partnership will be allocated pro-rata to the partners in accordance with their respective percentage interests in the common units issued by the Operating Partnership until their adjusted capital balances are reduced to zero, then to the General Partner. In accordance with the Operating Partnership Agreement, LTIP units are treated as common units for purposes of income and loss allocations. Limited partners have the right to require the Operating Partnership to redeem part or all of their common units. It is at the Operating Partnership’s discretion to redeem such common units for cash based on the fair market value of an equivalent number of shares of the Company’s common stock at the time of redemption or, alternatively, redeem the common units for shares of the Company’s common stock on a one-for-one basis, subject to adjustment in the event of stock splits, stock dividends, or similar events. LTIP units must wait two years from the issuance of the LTIP units to be redeemed, and then converted to common units. No LTIP units exist at December 31, 2025.
For each share of common stock issued/repurchased by Medical Properties Trust, Inc., the Operating Partnership issues/repurchases a corresponding number of operating partnership units.
10. Fair Value of F inancial Instruments
We have various assets and liabilities that are considered financial instruments. We estimate that the carrying value of cash and cash equivalents and accounts payable and accrued expenses approximate their fair values. We estimate the fair value of our interest and rent receivables using Level 2 inputs such as discounting the estimated future cash flows using the current rates at which similar receivables would be made to others with similar credit ratings and for the same remaining maturities. The fair value of our mortgage loans and other loans are estimated by using Level 2 inputs such as discounting the estimated future cash flows using the current rates which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. We determine the fair value of our senior notes using Level 2 inputs such as quotes from securities dealers and market makers. We estimate the fair
value of our revolving credit facility and term loans using Level 2 inputs based on the present value of future payments, discounted at a rate which we consider appropriate for such debt.
Fair value estimates are made at a specific point in time, are subjective in nature, and involve uncertainties and matters of significant judgment. Settlement of such fair value amounts may not be a prudent management decision.
The following table summarizes fair value estimates for our financial instruments (in thousands):
December 31, 2025
December 31, 2024
Asset (Liability)
Book
Value
Fair
Value
Book
Value
Fair
Value
Interest and rent receivables
Loans(1)
Debt, net
Includes all loan investments other than those accounted for under the fair value option method, as noted below.
Includes $ 7.5 million and $ 7.9 million of mortgage loans, a $ 388.9 million and $ 315.5 million shareholder loans included in investments in unconsolidated real estate joint ventures, $ 45.4 million and $ 39.7 million of loans that are part of our investments in unconsolidated operating entities, and $ 182.4 million and $ 104.0 million of other loans at December 31, 2025 and December 31, 2024, respectively.
Items Measured at Fair Value on a Recurring Basis
Our equity investment and related loan to the international joint venture, our loan investment in the real estate of three hospitals operated by subsidiaries of the international joint venture in Colombia, and our investment in PHP Holdings (which was sold in July 2025) are measured at fair value on a recurring basis as we elected to account for these investments using the fair value option at the point of initial investment. We elected to account for these investments at fair value due to the size of the investments and because we believed this method was more reflective of current values.
At December 31, 2025 and 2024, the amounts recorded under the fair value option method were as follows (in thousands):
December 31, 2025
December 31, 2024
Asset (Liability)
Fair Value
Original
Cost
Fair Value
Original
Cost
Asset Type Classification
Mortgage loans
Mortgage loans
Equity investment and other loans
Investments in unconsolidated
operating entities/Other loans
Our loans to the international joint venture and its subsidiaries are recorded at fair value by discounting the estimated future contractual cash flows using a credit-adjusted rate of return, which is derived from market rates of return on similar loans with similar credit quality and remaining maturity. Our equity investment in the international joint venture and our investment in PHP Holdings (as of December 31, 2024 only) are recorded at fair value by using a market approach (for our equity investment in the international joint venture) and a market approach based on the agreed upon price in the transaction (for our investment in PHP Holdings), which requires significant estimates of our investee, such as projected revenue, expenses, and working capital, and appropriate consideration of the underlying risk profile of the forecasted assumptions associated with the investee. We classify our valuations of these investments as Level 3, as we use certain unobservable inputs to the valuation methodology that are significant to the fair value measurement, and the valuations require management judgment due to the absence of quoted market prices. For the market approach model used for our investment in PHP Holdings (as of December 31, 2024 only), our unobservable inputs include purchase price adjustments related to expected balance sheet values at the time of the transaction close, and an adjustment for a marketability discount ("DLOM") of 14.2 %. In regard to the underlying projections used in the discounted cash flow model for our investment in the international joint venture, such projections are provided by the investees. However, we may modify such projections as needed based on our review and analysis of historical results, meetings with key members of management, and our understanding of trends and developments within the healthcare industry.
In 2025, we recorded a net unfavorable adjustment to the investments accounted for under the fair value option method of approximately $ 169 million, primarily related to our investment in three hospitals in Colombia and our investment in PHP Holdings. In 2024, we recorded a net unfavorable adjustment to the investments accounted for under the fair value option method of approximately $ 790 million, primarily related to the loan to the international joint venture and our investment in PHP Holdings.
Items Measured at Fair Value on a Nonrecurring Basis
In addition to items that are measured at fair value on a recurring basis, we have assets and liabilities that are measured, from time-to-time, at fair value on a nonrecurring basis, such as for impairment purposes of our real estate, financial instruments, and for certain equity investments without a readily determinable fair value.
Impairment and Fair Value Adjustments of Non-Real Estate Investments
Prior to the global settlement in September 2024 (as described in Note 3 to the consolidated financial statements) in which our claims were released, our non-real estate investments in Steward and related affiliates included our 9.9 % equity investment, working capital and other secured loans, and a loan made to a Steward affiliate in 2021, proceeds of which were used to redeem a similarly sized convertible loan held by Steward’s former private equity sponsor. In addition, the loan to the international joint venture was collateralized by the equity of Steward held by an investor in both Steward and the international joint venture. To assess recovery of these investments, we performed a valuation of Steward’s business at March 31, 2024, with assistance from a third-party, independent valuation firm. The valuation approaches utilized included the cost, market, and income approaches. The fair value analysis was performed under a non-going concern, orderly liquidation premise of value and assuming normal exposure to market participants. We utilized this premise of value due to Steward’s ongoing financial distress and subsequent filing of bankruptcy. Accordingly, the valuation approaches used, including the Level 3 inputs, were based on the financial performance of the Steward assets. For profitable hospitals, Level 3 inputs included a weighted average EBITDA multiple of 6.48x from a selected range of 5x to 7x in reference to comparable transactions. We also used a weighted average discount rate of 15.03 % from a selected range of 15 % to 16 %. For hospitals, Level 3 inputs included a weighted average net revenue multiple of 0.275x from a selected range of 0.25x to 0.30x in reference to comparable transactions. We also considered the reported book values inclusive of various adjustments for hospitals. After reducing the derived fair value of Steward's business for Steward's secured debt (including our working capital and other secured loans) and their working capital , we arrived at only a nominal remaining value that could not support the carrying value of the loan to a Steward affiliate from 2021 or our remaining 9.9 % equity investment. In addition, the value of the investor's share of the remaining 90.1 % of Steward's equity that collateralized the loan to the international joint venture was deemed to support recovery of this investment. As a result, we recorded charges and fair value adjustments in the 2024 first quarter of approximately $ 625 million, as discussed further in Note 3 to the consolidated financial statements.
In the third quarter of 2024, as a result of the Company’s global settlement with Steward (as discussed further in Note 3 to the consolidated financial statements), the Company recorded impairment charges of approximately $ 425 million for the working capital loans and other secured loans previously advanced to Steward.
To assess recovery of our non-real estate investments in Steward in 2023, along with the $ 219 million loan to the international joint venture that was collateralized by the equity of Steward held by an investor in both Steward and the international joint venture, we performed a valuation of Steward's business at December 31, 2023, with assistance from a third-party, independent valuation firm, using a market valuation approach, with Level 3 inputs including the selected revenue multiple range of 0.50x to 0.60x in reference to comparable transactions. After reducing the derived fair value for the loans to Steward discussed above, we arrived at a fair value for Steward's equity. We then compared our equity investment's carrying value to our 9.9 % share of the fair value of Steward's equity, which resulted in the need for an impairment charge of approximately $ 90 million. The value of the investor's share of the remaining 90.1 % of Steward's equity that collateralized the loan to the international joint venture was deemed sufficient to support recovery of this investment at that time.
Impairment of Real Estate Investments
See the Steward and Prospect subheadings under "Leasing Operations (Lessor)" in Note 3 to the consolidated financial statements for a discussion around the use of fair value and related assumptions in the impairment of our real estate investments.
Equity Investments Without a Readily Determinable Fair Value
For our equity investment in Swiss Medical (which does not have a readily determinable fair value), we marked our investment to fair value in the 2023 third quarter based on the price paid by a new investor in the same security, resulting in a CHF 20 million favorable adjustment.
11. Lease s (Lessee)
We lease the land underlying certain of our facilities (for which we typically sublease to our tenants), along with certain corporate offices and equipment. Our leases have remaining lease terms that vary in years, and some of the leases have initial fixed terms (or renewal options available) that extend the leases up to, or just beyond, the depreciable life of the properties that occupy the leased land. Renewal options that we are reasonably certain to exercise are recognized in our right-of-use assets and lease liabilities. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at lease commencement date in determining the present value of future payments.
The following is a summary of our lease expense (in thousands):
Income Statement
For the Years Ended December 31,
Classification
Operating lease cost (1)
Finance lease cost:
Amortization of right-of-use assets
Real estate depreciation and amortization
Interest on lease liabilities
Interest
Sublease income
Other
Total lease cost
Includes short-term leases.
$ 4.1 million, $ 5.1 million, and $ 6.0 million included in “Property-related”, with the remainder reflected in the “General and administrative” line of our consolidated statements of net income for 2025, 2024, and 2023, respectively.
Fixed minimum payments due over the remaining lease term under non-cancelable leases of more than one year and amounts to be received in the future from non-cancelable subleases over their remaining lease term at December 31, 2025 are as follows (amounts in thousands):
Operating Leases
Finance Leases
Amounts To
Be Received
From
Subleases
Net
Payments
Thereafter
Total undiscounted minimum lease payments
Less: interest
Present value of lease liabilities
Reflects certain ground leases, in which we are the lessee, that have longer initial fixed terms than our existing sublease to our tenants. However, we would expect to either renew the related sublease, enter into a lease with a new tenant, or attempt to early terminate the ground lease to reduce or avoid any significant impact from such ground leases .
Supplemental balance sheet information is as follows (in thousands, except lease terms and discount rate):
Balance Sheet
Classification
December 31,
December 31,
Right of use assets:
Operating leases - real estate
Land
Finance leases - real estate
Land
Total real estate right of use assets
Operating leases - corporate
Other assets
Total right of use assets
Lease liabilities:
Operating leases
Obligations to tenants and
other lease liabilities
Financing leases
Obligations to tenants and
other lease liabilities
Total lease liabilities
Weighted-average remaining lease term:
Operating leases
Finance leases
Weighted-average discount rate:
Operating leases
Finance leases
The following is supplemental cash flow information (in thousands):
For the Years Ended December 31,
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases
Operating cash flows used for finance leases
12. Othe r Assets
The following is a summary of our other assets on our consolidated balance sheets (in thousands):
December 31,
Debt issue costs, net(1)
Other corporate assets
Prepaids and other assets
Total other assets
Relates to our revolving credit facility
Other corporate assets include building, land and land improvements associated with our corporate headquarters, furniture and fixtures, equipment, corporate vehicles, aircraft, enterprise and other software, deposits, and right-of-use assets associated with corporate leases. Included in prepaids and other assets is prepaid insurance, prepaid taxes, deferred income tax assets (net of valuation allowances, if any), non-tenant receivables, derivative assets, and lease incentives provided to tenants, among other items.
Other corporate assets increased in 2025 primarily due to additional funding of our new corporate headquarters, which we have recently completed. Remaining funding costs are estimated to be between $ 10 million and $ 15 million. Prepaids and other assets increased in 2025 primarily due to lease incentives provided to tenants as previously described in Note 3 to the consolidated financial statements.
13. Segment Disclosures
We manage our business and report financial results as one business segment. This is consistent with the manner in which our chief operating decision maker ("CODM"), our executive team made up of our Chief Executive Officer and Chief Financial Officer , evaluates performance and makes resource and operating decisions for the business.
Our primary business strategy and source of revenue is from the acquisition and development of healthcare facilities that are leased to healthcare operating companies under long-term net leases, which require the tenant to bear most of the costs associated with the property. The majority of our leased assets are owned 100 %; however, we do own some leased assets through joint ventures with other partners. We also may make mortgage loans to healthcare operators collateralized by their real estate. In addition, we may make noncontrolling investments in our tenants, from time-to-time, typically in conjunction with larger real estate transactions with the tenant, which may enhance our overall return and provide for certain minority rights and protections. Although we generate our revenues from these investments in the U.S. and eight other countries across multiple property types, we centrally manage these business activities on a consolidated basis. The accounting policies of our business segment are the same as those described in the summary of significant accounting policies.
The CODM evaluates performance and makes resource and operating decisions for the business on a consolidated basis using consolidated net income from our consolidated statements of net income as our primary GAAP profit measure supplemented by consolidated funds from operations ("FFO"). We use net income and FFO to monitor expected versus actual results to assess performance. The measure of segment assets is total assets as reported on our consolidated balance sheets. We compute FFO in accordance with the definition provided by the National Association of Real Estate Investment Trusts, which represents consolidated net (loss) income (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairment charges on real estate assets, plus real estate depreciation and amortization, including amortization related to in-place lease intangibles, and after adjustments for unconsolidated partnerships and joint ventures.
Given FFO excludes real estate related depreciation and amortization expense by definition and due to our typical net lease structure which requires our tenants to bear most of the costs associated with our properties (including property taxes, insurance, etc.) , the primary expenses reviewed by the CODM include general and administrative and interest expenses from our consolidated statements of net income .
See "Concentration of Credit Risks" in Note 3 to our consolidated financial statements for entity-wide disclosures around major customers, geographic areas, and property types.
14. Subsequent Events
Subsequent to December 31, 2025, we moved seven additional U.K. property holding legal entities into our U.K. REIT that was formed on July 1, 2023. With this move, we plan to adjust the deferred tax liabilities associated with these entities, which we expect will result in an approximate $ 40 million one-time tax benefit in the first quarter of 2026. Going forward, these U.K. entities (like the others in the U.K. REIT) will be subject only to a withholding tax on earnings upon distribution out of the U.K. REIT.
On February 12, 2026 , we announced that our Board of Directors declared a regular quarterly cash dividend of $ 0.09 per share of common stock to be paid on April 9, 2026 , to shareholders of record on March 12, 2026 .
On February 13, 2026, we closed on the acquisition of one property in Germany for approximately € 23 million to be leased to MED IAN.
ITEM 9. Changes in and Disagreement s With Accountants on Accounting and Financial Disclosure
None.
ITEM 9A. Cont rols and Procedures
Medical Properties Trust, Inc.
(a) Evaluation of Disclosure Controls and Procedures . Medical Properties Trust, Inc. maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) designed to provide reasonable assurance that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to its management, including its Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that no controls and procedures, no matter how well designed and operated, can provide absolute assurance of achieving the desired control objectives. As required by Rule 13a-15(b) under the Exchange Act, the management of Medical Properties Trust, Inc., with the participation of its Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based on the foregoing, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures are effective as of the end of the period covered by this report.
(b) Management’s Report on Internal Control over Financial Reporting .
The management of Medical Properties Trust, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting for Medical Properties Trust, Inc. (as such term is defined in Rule 13a-15(f) of the Exchange Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Medical Properties Trust, Inc.’s financial statements for external reporting purposes in accordance with GAAP.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has undertaken an assessment of the effectiveness of the internal control over financial reporting for Medical Properties Trust, Inc. as of December 31, 2025 based upon the framework established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has concluded that, as of December 31, 2025, the internal control over financial reporting for Medical Properties Trust, Inc. was effective.
The effectiveness of the internal control over financial reporting for Medical Properties Trust, Inc. as of December 31, 2025 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in this Annual Report on Form 10-K.
(c) Changes in Internal Controls over Financial Reporting . There has been no change in the internal control over financial reporting for Medical Properties Trust, Inc. during its most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
MPT Operating Partnership, L.P.
(a) Evaluation of Disclosure Controls and Procedures . MPT Operating Partnership, L.P. maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) designed to provide reasonable assurance that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to its management, including its Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), as appropriate, of Medical Properties Trust, Inc. (the sole general partner of MPT Operating Partnership, L.P.) to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that no controls and procedures, no matter how well designed and operated, can provide absolute assurance of achieving the desired control objectives. As required by Rule 13a-15(b) under the Exchange Act, the management of MPT Operating Partnership, L.P., with the participation of the Chief Executive Officer and Chief Financial Officer of Medical Properties Trust, Inc. (the sole general partner of MPT Operating Partnership, L.P.), carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based on the foregoing, the Chief Executive Officer and Chief Financial Officer of Medical Properties Trust, Inc. (the sole general partner of MPT Operating Partnership, L.P.) concluded that these disclosure controls and procedures are as of the end of the period covered by this report.
(b) Management’s Report on Internal Control over Financial Reporting .
The management of MPT Operating Partnership, L.P. is responsible for establishing and maintaining adequate internal control over financial reporting for MPT Operating Partnership, L.P. (as such term is defined in Rule 13a-15(f) of the Exchange Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of MPT Operating Partnership, L.P.’s financial statements for external reporting purposes in accordance with GAAP.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has undertaken an assessment of the effectiveness of the internal control over financial reporting for MPT Operating Partnership, L.P. as of December 31, 2025, based upon the framework established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has concluded that, as of December 31, 2025, the internal control over financial reporting for MPT Operating Partnership, L.P. was effective.
The effectiveness of the internal control over financial reporting for MPT Operating Partnership, L.P. as of December 31, 2025 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in this Annual Report on Form 10-K.
(c) Changes in Internal Controls over Financial Reporting . There has been no change in the internal control over financial reporting for MPT Operating Partnership, L.P. during its most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
