MPT 10-K & 10-Q changes, risk factors and insider trading

The risks and uncertainties described herein are not the only ones facing us. There may be additional risk factors that we do not presently know of or that we currently consider not likely to have a significant impact on us, and it is not possible for us to assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may affect our business. Investors should also refer to our quarterly reports on Form 10-Q for future periods and current reports on Form 8-K for material updates to these risk factors. All of these risk factors could adversely affect our business, results of operations, financial condition, and our ability to service our debt and make distributions to our stockholders. Some statements in this report,Annual Report, including statements in the following risk factors, constitute forward-looking statements. See “A Warning About Forward Looking Statements” at the beginning of this Annual Report.

Economic or financial crises, significant concerns over energy costscosts, andinflation inflation,or the impact of tariff or similar policies, elevated interest rates, the availability and cost of credit, geopolitical issues (including as a result of theexisting and potential armed conflict between Russia and Ukraine, recent escalation in the conflict between the State of Israel and Hamas, and other potential conflicts amongst countries in the Middle East and North Africa), the availability and cost of credit, or a declining real estate market in the U.S. or abroad have in the past, and may in the future, contribute to increased volatility, diminished expectations for the economy and the markets, reduced capital availability, shortage of available healthcare workers and related increased labor costs, and high levels of unemployment by historical standards. AsSome wasor the case from 2008 through 2010, as well as mostall of 2022 and 2023, these factors, combined with volatile oil prices and fluctuating business and consumer confidence, can precipitate an economic decline.

reduced values of our properties may limit our ability to dispose of assets at attractive prices, or at all, or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans; and our ability to obtain financing on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and redevelopment opportunities, refinance existing debt, reduce our returns from our acquisition and redevelopment activities, reduce our ability to sell properties or re-tenant properties at favorable terms, and increase our future interest expense.

Public health crises, pandemics and epidemics, such as those caused by viruses such as H5N1 (avian flu), severe acute respiratory syndrome (SARS), and COVID-19, could adversely impact our and our tenants’ business by disrupting supply chains and transactional activities, creating labor shortages,shortages and increasing operating expenses, and negatively impacting local, national, or global economies.economies, including the availability of capital.

Our revenues are dependent upon our relationships with and success of our tenants, particularly our largest tenants, like Circle, Priory, HSA, LifepointSwiss Behavioral,Medical, and SwissLifepoint Medical.Behavioral.

For example, weWe recorded approximately $1.6 billion of real estate and other impairment charges along with negative fair value adjustments in 2024 and 2025 related to Steward in 2024 due to operational and liquidity challenges.Prospect. For more information,information includingon reserves and impairmentthese charges, see Note 3 to Item 8 of this Annual Report on Form 10-K.Report. We are dependent upon the ability of our tenants to make rent and loan payments to us, and any failure to meet these obligations could have a material adverse effect on our financial condition and results of operations. As of December 31, 2024,2025, our largest tenants – Circle, Priory, HSA, LifepointSwiss Behavioral,Medical, and SwissLifepoint MedicalBehavioral – represented 14.2%,14.1%, 8.6%,8.7%, 8.3%,8.0%, 5.7%,5.8%, and 5.1%,5.4%, respectively, of our total assets.

We rely on our tenants to provide us with accurate financial and other information under the terms of our leases or in the ordinary course of our business relationship, which we, in turn, use for making business decisions, assessing riskrisk, and calculating and reporting tenant coverage and other data. Because most of our tenants are private companies, the financial information they provide us with might not be audited. If the financial or other information provided to us by our tenants is not accurate,accurate or timely, our reported tenant coverage and other data, which is based on such tenant-provided informationinformation, might prevent us from making a timely or accurate business decision or adequately assessing risk in connection with a tenant, which could adversely impact our financial condition, results of operations, stock price, and reputation.

In addition, our tenants operate in the healthcare industry, which is highly regulated by U.S. federal, state, and local laws along with laws in Europe and South America and changes in applicable laws and regulations may temporarily impact our tenants’ operations until they are able to make the appropriate adjustments to their business. Any adverse result to our tenants (particularly Circle, Priory, HSA, LifepointSwiss Behavioral,Medical, and SwissLifepoint MedicalBehavioral) in regulatory proceedings or financial or operational setbacks (including cybersecurity incidents affecting electronic health records, billing functions, telehealth platforms, or other systems containing patient data that may result in reputational harm, regulatory investigations or enforcement actions, litigation and remediation costs, among others) may have a material adverse effect on the relevant tenant’s operations and on its ability to make required lease and loan payments to us.

We have made investments in certain operators of our healthcare facilities and the cash flows (and related returns) from these investments are subject to more volatility than our properties with the traditional net leasing structure.structures.

At December 31, 2024,2025, we havehad approximately $0.4$0.3 billion of investments in unconsolidated operating entities, or 3%2% of our total assets. These investments include loans but also equity investments that generate returns dependent upon the operator’s performance. As a result, the cash flowflows and returns from these investments may be more volatile than that of our traditional triple-netnet leasing structure.structures.

As disclosed elsewhere in this Annual Report, operational challenges for certain operators have in the past, and may in the future, impact our ability to recover our investments, in part or at all, and therefore could have a material adverse impact on our financial condition, results of operations, stock price, and ability to service our debt and make distributions to our stockholders. See the risk factor titled “Our revenues are dependent upon our relationships with and success of our tenants, particularly our largest tenants, like Circle, Priory, HSA, LifepointSwiss Behavioral,Medical, and SwissLifepoint MedicalBehavioral” and Item 7 of this Annual Report on Form 10-K.Report.

The bankruptcy or insolvency of our tenants or investees could harm our operatingresults resultsof operations, financial condition, and financial condition.liquidity.

Any bankruptcy filing by one of our tenants (such as Steward in 2024 and Prospect in 2025) could harm our operating results and financial condition. A bankruptcy filing could bar us from collecting pre-bankruptcy debts from that tenant or their property, unless we receive an order permitting us to do so from the bankruptcy court. A tenant bankruptcy canis be expectedlikely to delay our efforts to collect past due balances under our leases and loans, and could ultimately preclude collection of thesesuch sums.balances. If a lease is assumed by a tenant in bankruptcy (as inwas the case ofwith Pipeline Health System, LLC ("Pipeline") in 2022), we expect that all pre-bankruptcy balances due under the lease would be paid to us in full. However, if we are required to seek one or more replacement operators for our facilities, this may result in delays and increase costs as transferring operations of healthcare facilities is highly regulated. If a lease is rejected by a tenant in bankruptcy, we could have only a secured claim for damages. Any secured claims we have against our tenants may only be paid to the extent of the value of the collateral, which may not cover any or all of our losses. Any unsecured claim (such as our equity interests in our tenants) we hold against a bankrupt entity may be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. We may recover none or substantially less than the full value of any unsecured claims, which would harm our financial condition. In addition, any bankruptcy filing by one of our tenants may require a disproportionate amount of our management’s attentionattention, andcause resultus into incur increased professional fees that may not be recovered.recovered, and negatively impact our reputation and the market price of our common stock.

Declines in the fair value of our assets may force us to recognize impairment charges, which could adversely impact our results of operations, financial condition, liquidityliquidity, and resultsthe market price of operations.our common stock.

We periodically evaluate our investments for impairment under generally accepted accounting principles (“GAAP”) in the U.S. based on factors such as market conditions, tenant performanceperformance, and investment structure. If we determine that an impairment has occurred, we are required to make a downward adjustment to the net carrying value of the property. For example, the early termination of, or default under, a lease by a tenant or operator may lead to an impairment charge with respect to the relevant asset. During the year ended December 31, 2024, we incurred approximately $2 billion of aggregate impairment charges and negative fair value adjustments relating to our investments in Steward and Prospect.Prospect and additional charges relating to our investments in Prospect in 2025. For more information,information includingon reservesthese impairment charges and impairmentnegative charges,fair value adjustments, see Note 3 to Item 8 of this Annual Report on Form 10-K.Report.

Impairment charges also indicate a potential permanent adverse change in the fundamental operating characteristics of the impaired asset. There is no assurance that adverse impairment charges will be reversed in the future and the decline in the impaired asset’s value could be permanent. There can be no assurance that we will not take additional impairment charges in the future. Any future impairment could have a material adverse effect on our results of operations, financial condition, liquidity, results of operations and the market price of our common stock.

It may be costly to replace defaulting tenants or find new tenants when lease terms end, and we may not be able to replace such tenants with suitablefind replacements on comparable or otherwise suitable terms.

FailureIf ona tenant-operator defaults and we choose to terminate the partlease, ofor if a tenant fails to renew or extend the lease at the end of its fixed termterm, couldwe resultwould inbe us havingrequired to searchfind for,another negotiatetenant-operator with,or andto executesell newthe lease agreements.facility. The process of finding and negotiating with a new tenant, along with costs (such as maintenance, property taxes, utilities, ground lease expenses, etc.) that we will incur while the facility is potentially untenanted, may be costly and require a disproportionate amount of our management’s attention. Additionally, the transfer of healthcare facilities is highly regulated, which may result in delays and increased costs in locating a suitable replacement tenant. There can be no assurance that we would be able to find another tenant in a timely fashion, or at all, or that, if another tenant were found, we would be able to enter into a new lease on favorable terms. If we are unable to re-let the properties to healthcare operators, we may be forced to sell the properties at a loss due to the repositioning expenses likely to be incurred by non-healthcare purchasers. Alternatively, we may be required to spend substantial amounts to adapt the facility to other uses. Thus, defaults under or the non-renewal or extensionnon-extension of leases may adversely affect our results of operations, financial condition, and our ability to service our debt and make distributions to our stockholders. This risk is even greater for those properties under master leases (like Circle and Prospect) because several properties have the same lease ending dates. See Item 2 for our lease and loan maturity schedule.

WeOur haveemployees experiencedare rapidresponsible growthfor all aspects of managing our portfolio of over the380 years,properties fromacross addingnine new tenants to expanding our global footprint,countries, and our failure to effectively manage our properties along with any growth may adversely impact our financial condition and cash flows, which could negatively affect our ability to service our debt and make distributions.

InWe pastcurrently years,employ we121 haveemployees experiencedthat growthare throughresponsible for identifying, underwriting and closing new investments; inmanaging healthcareexisting properties and expansionthose intounder development; and handling all finance and accounting duties; among other things for a portfolio of over 380 properties across nine countries and three continents. We continually evaluate property acquisition and development opportunities as they arise.countries. There is no assurance that we will be able to adapt our management, administrative, accounting, and operational systems, or hire and retain sufficient operational staff, to manage anyour existing portfolio or facilities that we may acquire or develop in the future. Additionally, investing in real estate located in foreign countries creates risks associated with the uncertainty of foreign laws, economies, and markets, and exposes us to local economic downturns and adverse market developments. Our failure to manage our growthportfolio effectively may adversely impact our financial condition and cash flows, which could negatively affect our ability to service our debt and make distributions to our stockholders. Our growth could also increase our capital requirements, which may require us to issue potentially dilutive equity securities and/or incur additional debt.

At December 31, 2024,2025, we had approximately 47.8%50.3% of our total assets located in eight different countries outside the U.S. We have less experience investing in healthcare properties or other real estate-related assets located outside the U.S. Investing in real estate located in foreign countries creates risks associated with the uncertainty of foreign laws and markets including, without limitation, laws respecting foreign ownership, the enforceability of loan and lease documents, and foreclosure laws. Foreign real estate and tax laws are complex and subject to change, and we cannot assure you we will always be in compliance with those laws or that compliance will not expose us to additional expense. The properties we have acquired internationally will face risks in connection withwith, among others, unexpected changes in regulatory requirements, political and economic instability, potential imposition of adverse or confiscatory taxes, possible challenges to the anticipated tax treatment of the structures that allow us to acquire and hold investments, possible currency transfer restrictions, the difficulty in enforcing obligations in otherforeign countries, the impact from Brexit and future developments in the European Union,jurisdictions, and the burden of complying with a wide variety of foreign laws. In addition, to qualify as a REIT, we generally will be required to operate any non-U.S. investments in accordance with the rules applicable to U.S. REITs, which may be inconsistent with local practices. We may also be subject to fluctuations in local real estate values or markets or the economy as a whole, which may adversely affect our investments.

In addition, the revenues and expenses incurred internationally are denominated in either euros, British pounds, Swiss francs, or Colombian pesos, which could expose us to losses resulting from fluctuations in exchange rates to the extent we have not hedged our position, which in turn could adversely affect our revenues, operating margins, and dividends, and may also affect the book value of our assets and the amount of stockholders’ equity. While we may hedge some of our foreign currency risk, we may not be able to do so successfully and may incur losses on our investments as a result of exchange rate fluctuations. Furthermore, we are subject to laws and regulations, such as the Foreign Corrupt Practices Act and similar local anti-bribery laws, which generally prohibit companies and their employees, agents, and contractors from making improper payments to governmental officials for the purpose of obtaining or retaining business. Failure to comply with these laws could subject us to civil and criminal penalties that could materially and adversely affect our results of operations, the value of our international investments, and our ability to service our debt and make distributions to our stockholders.

Many of our tenants have the option to purchase the facilities we lease to them. There is no assurance that the formulas we have developed for setting the purchase price will yield a fair market value purchase price. In the event our tenants decide to purchase the facilities at the end of the lease term, we may not be able to re-invest the capital on as favorable terms, or at all. Our inability to effectively manage the turnover of our facilities could materially adversely affect ourthe abilityexecution to executeof our business plan and our results of operations.

We have 10090 leased properties that are subject to purchase options as of December 31, 2024.2025. For 8584 of these properties, the purchase option generally allows the lessee to purchase the real estate at the end of the lease term, assuming not currently in default,default at that time, at a price equivalent to the greater of (i) fair market value or (ii) our original purchase price (increased, in some cases, by a certain annual rate of return from the lease commencement date). The lease agreements generally provide for an appraisal process to determine fair market value. For eighttwo of these properties, the purchase option generally allows the lessee to purchase the real estate at the end of the lease term, assuming not currently in default,default at that time, at our purchase price (increased, in some cases, by a certain annual rate of return from lease commencement date). For the remaining sevenfour properties, the purchase options approximate fair value.

In certain circumstances, a prospective purchaser of our hospital real estate may be deemed to be subject to Anti-Kickback and Stark statutes, which are described in the “Healthcare Regulatory Matters” section in Item 1 of this Annual Report on Form 10-K.Report. In such event, it may not be practicable for us to sell a property to such prospective purchaser at a price other than fair market value.

The healthcare industry continues to experience consolidation, including among owners of real estate and healthcare providers. We compete with other healthcare REITs, healthcare providers, healthcare lenders, real estate partnerships, banks, insurance companies, private equity firms, and other investors that pursue a variety of investments, which may include investments in our tenants. We have historically developed strong, long-term relationships with many of our tenants. A competitor’s investment in one of our tenants, any change of control of a tenant, or a change in the tenant’s management team could enable our competitor to influence or control that tenant’s business and strategy. This influence could have a material adverse effect on us by impairing our relationship with the tenant, negatively affecting our interest, or impacting the tenant’s financial and operational performance, including their ability to pay us rent or interest. Depending on our contractual agreements and the specific facts and circumstances, we may have consent rights, termination rights, remedies upon default, or other rights and remedies related to a competitor’s investment in, a change of control of, or other transactions impacting a tenant. In deciding whether to exercise our rights and remedies, including termination rights or remedies upon default, we assess numerous factors, including legal, contractual, regulatory, business, and other relevant considerations.

We have investments in five unconsolidated real estate joint ventures with independent parties that total approximately $1.2$1.4 billion at December 31, 2024.2025. Joint venture arrangements involve risks including the possibility that the other party may refuse or not be able to make capital contributions if needed, that our partner might have economic or other interests that are inconsistent with the joint venture’s interests, or that we may become engaged in a dispute with our partner. If any of these events occur, we may need to provide additional funding to the joint ventures to meet itsour obligations, incur additional expenses to resolve disputes, or be forced to buy out the partner’s interest or to sell our interestsinterest at a time that is not advantageous to us. Any loss of income, cash flow,flows, or disruption of management’s time could have a negative impact on the rest of our business.

Increased scrutinyscrutiny, politicization, and changing expectations from investors, employees, tenants, and other stakeholders regarding our corporate responsibility practices and reportingsustainability could cause us to incur additional costs, devote additional resources, and expose us to additional risks, whichmatters could adversely impact our reputation, tenant and employee acquisition and retention, and access to capital.

Our indebtedness could adversely affect our financial conditioncondition, and may otherwise adversely impact our business operations and our ability to make distributions to stockholders.

As of February 28,23, 2025,2026, we had approximately $9.0$9.6 billion of debt outstanding - see "Contractual Commitments" in Item 7 of this Annual Report on Form 10-K for a schedule of our debt coming due over the next five years. Our indebtedness could have significant adverse effects on our business, including by:

requiring us to use a substantial portion (or all) of our cash flowflows from operations to service our indebtedness, which would reduce available cash flowflows to fund working capital, development projects, and other general corporate purposes, as well as cash distributions;

Our futureFuture borrowings under our loan facilities may bear interest at variable rates in addition to the $0.3$0.6 billion in variable interest rate debt that we had outstanding as of February 28,23, 2025.2026. If interest rates increase significantly, our operating results would decline along with the cash available for distributions to our stockholders.

In addition, most of our current debt is, and we anticipate that much of our future debt will be, non-amortizing and payable in balloon payments. Therefore, we will likely need to refinance at least a portion of that debt as it matures. There is a risk that we may not be able to refinanceextend, refinance, or pay off debt maturing in 2026 and future years or that the terms of any refinancing will not be as favorable as the terms of the then-existing debt. If principal payments due at maturity cannot be refinanced, extended, or repaid with proceeds from other sources, such as new equity capital, joint venture proceeds, or sales of facilities, our cash flowflows may not be sufficient to repay all maturing debt in years when significant balloon payments come due. Any failure to make required payments when due could result in an event of default, which could lead to, among other things, the acceleration of some or all of our indebtedness, the imposition of default interest and other charges, the termination of commitments under our Credit Facility, and, where applicable, the exercise of remedies against collateral, any of which could materially adversely affect our financial condition, business operations, and ability to make distributions to our stockholders. See Item 7 of this Annual Report on Form 10-K for further information on our debt maturities.

The terms of our credit facility ("Credit Facility") and the indentures governing our outstanding senior notes and other debt instruments that we may enter into in the future are subject to customary financial, operational, and reporting covenants. For example, our Credit Facility imposes certain restrictions on us, including 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; and change our business. In addition, our Credit Facility and senior notes limit the amount of dividends we can pay. Furthermore, 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, and the terms of our senior secured notes issued in February 2025 limit the amount of first lien debt that can be secured on the collateral of such notes. Finally, our Credit Facility requires compliance with certain borrowing base conditions, as well as maintenance of maximum total leverage and unsecuredsecured leverage ratios and a minimum unsecuredfixed interestcharge coverage ratio. From time-to-time, the lenders of our Credit Facility may adjust certain covenants to give us more flexibility (as was done in April and August of 2024, and most recently in February 20252024); however, such modified covenants could be temporary, and we must be in a position to meet the lowered reset covenants in the future. Our continued ability to incur debt and operate our business is subject to compliance with the covenants in our debt instruments. Breaches of these covenants could result in defaults under applicable debt instruments and other debt instruments due to cross-default provisions, even if payment obligations are satisfied. Financial and other covenants, among others, that limit our operational flexibility, as well as defaults resulting from a breach of any of these covenants in our debt instruments, could have a material adverse effect on our financial condition and results of operations.

As of February 28,23, 2025,2026, we had approximately $0.3$0.6 billion in variable interest rate debt along with €655 million in our joint venture arrangement with Primotop Holdings S.à.r.l. (“Primotop”).debt. This variable rate debt subjects us to interest rate volatility. To manage this interest rate volatility, we from time-to-timetime-to-time, we have entered into interest rate swaps to fix the interest rate. However, these hedging arrangements involve risk, including the risk that counterparties may fail to honor their obligations, and that thesethe arrangements may not be effective in reducing our exposure to interest rate changes, and that these arrangements may result in higher interest rates than we would otherwise have (in the case of our interest rate swaps).have. Moreover, no hedging activity can completely insulate us from the risks associated with changes in interest rates. Failure to hedge effectively against interest rate changes may materially adversely affect our results of operations and our ability to service our debt and make distributions to our stockholders.

As observed in 2024recent and 2023,years, the market price of our common stock may be highly volatile and subject to wide fluctuations. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur. A variety of factors may cause significant price variations, including, we believe, the amount and status of short interest in our securities and any coordinated trading activities or large derivative positions in our common stock. For example, the potential for a "short squeeze" whereby a number of investors take a short position in a stock and have to buy the borrowed securities to close out the position at a time that other short sellers of the same security also want to close out their positions, may result in volatility in our stock price. If the market price of our common stock declines significantly, you may be unable to sell your shares at or above your purchase price.

changes in our earnings estimates, or publications of research, news, or other reports about us or the real estate industryor healthcare industries;

Future sales of common stock may haveadversely adverse effects onaffect our stock price.

During 2024, our credit ratings were lowered by both S&P Global and Moody's Investors Service. As of February 28,23, 2025,2026, S&P Global rates Medical Properties Trust and our unsecured notes at CCC+. Our corporate family rating for Moody's was upgraded in February 2025 to B3 and Moody's assigned a B2 rating to the new secured debt that was issued in February 2025 (see Note 144 to Item 8 of this Annual Report on Form 10-K for more information on this offering). However, S&P currently has a negative outlook on our ratings, and there can be no assurance that we will be able to maintain or improve our current credit ratings. Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse effect on our cost and availability of capital, which could in turn have a material adverse effect on our financial condition and results of operations.

An increase in marketElevated interest rates may haveadversely an adverse effect onaffect the market price of our securities.

One of the factors that investors may consider in deciding whether to buy or sell our securities is our dividend rate as a percentage of our price per share of common stock, relative to market interest rates. In recent years, elevated inflation has prompted central banks to tighten monetary policies and raise interest rates, which can create headwinds to economic growth. Previous rate hikes enacted by the Federal Reserve in 2022 and 2023 have had a significant impact on interest rate indexes, such as SOFR and the Prime Rate. In 2024, and amid cooling inflation, the Federal Reserve cut interest rates three times.rates. However, if market interest rates remain elevated or if they were to begin rising again, prospective investors may desire a higher distribution on our securities or seek securities paying higher distributions. The market price of our common stock likely will be based primarily on the earnings that we derive from rental and interest income with respect to our facilities and our related distributions to stockholders, and not from the underlying appraised value of the facilities themselves. As a result, interest rate fluctuations and capital market conditions can affect the market price of our common stock. In addition, risingelevated interest rates would result in increased interest expense on our variable-rate debt and any refinancing of existing debt, thereby adversely affecting cash flowflows and our ability to service our indebtedness and make distributions.

Our business plan contemplates growth through acquisitions and development of facilities. As a REIT, we are required to make distributions, which (if paid in cash) reduce our ability to fund acquisitions and developments with retained earnings. Thus, access to the capital markets, bank borrowingsborrowings, and other financing vehicles is important to fund new opportunistic investments. Due to market or other conditions, we may not be able to obtain additional equity or debt capital or dispose of assets on favorable terms, or at all, at the time we need additional capital to acquire healthcare properties, which could have a material adverse effect on our results of operations and our ability to service our debt and make distributions to our stockholders. Our continued ability to incur and refinance debt is subject to maintaining sufficient unencumbered assets, in the case of unsecured indebtedness, or additional collateral, in the case of secured indebtedness, to incur such debt and, if sufficient unencumbered assets or additional collateral cannot be provided, we may be unable to incur or refinance debt.

Our investments areare, and are expected to continue to bebe, concentrated in a single industry segment,industry, making us more vulnerable economically than if our investments were more diversified.

We acquire, develop, and make investments in healthcare real estate. In addition, we selectively make investments in healthcare operators. We are subject to risks inherent in concentrating investments in real estate. The risks resulting from a lack of diversification become even greater as a result of our business strategy to invest solely in healthcare facilities. A downturn in the real estate industry could materially adversely affect the value of our facilities. A downturn in the healthcare industry could negatively affect our tenants’ ability to make lease or loan payments to us as well as our return on our equity investments. Consequently, our ability to meet debt service obligations or make distributions to our stockholders is dependent on the real estate and healthcare industries.

IlliquidityThe illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our facilities and harm our financial condition.

Development and construction risks could adversely affect our ability to service our debt and make distributions.distributions to our stockholders.

We may make other loans to certain of our operators through our TRSs, which the operators use for working capital. Although it represents less thanapproximately 1% of our total assets at December 31, 2024,2025, 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.

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, 20242025 compared to the year ended December 31, 2023.2024. For a discussion of the year ended December 31, 20232024 compared to the year ended December 31, 2022,2023, please refer to Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023,2024, filed with the SEC on FebruaryMarch 29,3, 2024.2025.

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. With these liquidity proceeds in 2024 and those from our private offering of notes (discussed below) shortly after year-end, along with our ability to extend our revolving credit facility for an additional year (subject to certain conditions), we have successfully cleared all debt maturities through June 30, 2027, other than one issue of unsecured notes of €500 million due in October 2026. 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.

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 financingdebt 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;

Funded and early discharged our British pound sterling secured term loan of approximately £105 million that was due in December 2024; and Amended our creditCredit facilityFacility in April and August 2024 which (i) reduced revolving commitments thereunder from $1.8 billion to $1.28 billion,billion (ii)and modified certain covenants;covenants, (iii)among requiredother proceeds from asset sales and debt transactions be used to repay certain loans outstanding; (iv) increased borrowing spreads from 225 basis points to 300 basis points; and (v) limited the payment of dividends in cash to $0.08 per share in any fiscal quarterthings – see Note 4 to Item 8 of this Annual Report on Form 10-K for more information regarding these amendments.

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 a former tenant that represented approximately 1% of our total assetsVibra and received $10 million at the signing of this agreement for unpaid rent.

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 selected underelected 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 thethese 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 critical accounting estimates include the following:

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 rising inflation and interest rates, and other events ongoing on a tenant's profitability and liquidity.

Losses on Financing Lease Receivables: We apply a forward-looking “expected credit loss” model to all of our financing receivables, including financing leases and loans.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 bookcost valuebasis 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 loss 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. Like operating lease receivables, theThe 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 collectabilitycollectibility 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, we assess their collectability similar to how we assess collectability for interest receivables on financing leases described above.

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 weighted-averageestimated useful lives of the assets, which at December 31, 2025, the weighted-average life ofis 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 taken.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 rental,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 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. 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.

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, 2024.2025. 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.

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, 2024,2025, the fair value amount of investments recorded using the fair value option werewas approximatelyless $266than $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.

This Quarterly Report on Form 10-Q contains certain “"forward-looking statements”" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “"Exchange Act”"). Forward-looking statements can generally be identified by the use of forward-looking words such as "may", "will", "would", "could", "expect", "intend", "plan", "estimate", "target", "anticipate", "believe", "objectives", "outlook", "guidance", or other similar words, and include statements regarding our strategies, objectives, asset sales and other liquidity and debt repayment transactions (including the use of proceeds thereof), expected returns on investments and financial performance, and expected trends and performance across our various markets, and expected outcomes from Prospect's bankruptcy process.markets. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or future performance, achievements or transactions to be materially different from those expressed or implied by such forward-looking statements, including, but not limited to, the risks described in our 2025 Annual Report and as updated in our Quarterly Reports on Form 10-Q for future periods, and on our Current Reports on Form 8-K filed with the SEC. Such factors include, among others, the following:

the risk that property sales,sales (including those discussed in Note 12 to the condensed consolidated financial statements), loan repayments, and other capital recycling transactions do not occur as anticipated or at all;

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Refer to our 2025 Annual Report for a discussion of our critical accounting policies, which include investments in real estate, purchase price allocation, loans, credit losses, losses from rent and interest receivables, investments accounted for under the fair value option election, and our accounting policy on consolidation. During the threesix months ended MarchJune 31,30, 2026, there were no material changes to these policies.policies and estimates.

At MarchJune 31,30, 2026, our portfolio consisted of 378373 properties leased or loaned to 51 operators, and all of our investments are located in the U.S., Europe, and South America. Our total assets are made up of the following (dollars in thousands):

Three Months Ended MarchJune 31,30, 2026 Compared to MarchJune 31,30, 2025

Net incomeloss for the three months ended MarchJune 31,30, 2026,2026 was $32.8($2.6) million, or $0.05($0.01) per shareshare, compared to a net loss of ($118.3$98.4) million, or ($0.20$0.16) per share, for the three months ended MarchJune 31,30, 2025. This increaseimprovement inquarter netover incomequarter is primarily driven by (i)an a $28.3$18.9 million increase in revenuerevenue, as discussed in detail below, (ii)and ana approximately $43$129 million one-time tax benefit in the first quarter of 2026 from moving seven additional U.K. entities into our U.K. REIT as described in Note 5 to the condensed consolidated financial statements, and (iii) $76 million of impairment charges primarily related to Prospect and certain of our Colombia assets along with $30 million of unfavorable fair value adjustments primarily relatedadjustment to our investmentsinvestment in PHP Holdings and Aevis in the 2025second first quarter, as compared to $19 millionquarter of impairment charges and $2 million of unfavorable non-cash fair value adjustments in the 2026 first quarter. The increase in net income was2025, partially offset by more impairment charges, higher interest expense and depreciationgeneral expenseand quarteradministrative overexpense, quarter.along with lower earnings from equity interests in 2026 compared to 2025. Normalized FFO, after adjusting for certain items (as more fully described in the section titled “"Reconciliation of Non-GAAP Financial Measures”" in Item 2 of this Quarterly Report on Form 10-Q), was $82.2$92.2 million for the 2026 firstsecond quarter, or $0.14$0.15 per diluted share, andas incompared lineto with the $81.1$81.4 million, or $0.14 per diluted share, for the 2025 firstsecond quarter.

A comparison of revenues for the three months ended MarchJune 31,30, 2026 and 2025 is as follows (dollar amounts in thousands):

Our total revenues for the 2026 firstsecond quarter increased $28.3$18.9 million, or 12.6%,7.9%, over the same period in the prior year. This increase is made up of the following:

Operating lease revenue (includes rent billed and straight-line rent) – up $26.4$19.2 million from the same period in the prior year, primarily due to $15.5$16.4 million more of lease revenue earned from the retenanting of the former Steward-operatedSteward and Prospect-operated facilities, approximately $2.5$4.4 million of additional cash received from acquisitions in 2025 and 2026, an increase of $1.7$2.1 million due to increases in CPI above the contractual minimum escalations in our leases, $7.5$0.9 million of favorable foreign currency fluctuations, and $1.1 million from the completion of capital additions and development projects in 2025 and 2026. These increases were offset by approximately $1.9$5.5 million lower revenues from property sales in 2025 and 2026.

Income from financing leases – up $0.2approximately $0.1 million primarily due to the increase in CPI above the lease contractual minimum escalations.

Interest and other income – updown approximately $1.7$0.4 million from the prior year due to the following:

Interest from loans – up $1.7$0.3 million, primarily due to approximately $0.8 million of additional revenue from the funding of new loans between periods, and $0.9to milliona lesser extent, from increasesthe inescalation of interest rates between periods.

Other income – consistentdown with$0.7 million from the prior year andas representswe had less direct reimbursements from tenants for ground leases, property taxes, and insurance.

Interest expense for the quarters ended MarchJune 31,30, 2026 and 2025 totaled $133.3$135.3 million and $115.8$129.7 million, respectively. This increase is primarily related to a full quarter of interest in the 2026 first quarter related to our February 2025 debt refinancing activities (see Note 4 to the condensed consolidated financial statements for further details) and higher interest expense from the increase in average borrowings on our Credit Facility in the firstsecond quarter of 2026, compared to the same period of 2025.2025, Overall,as our overall weighted-average interest rate wasstayed 5.2%consistent at 5.3% for theboth quarter ended March 31, 2026, compared to 4.9% for the same period in 2025.periods.

Real estate depreciation and amortization during the firstsecond quarter of 2026 increased to $69.7$69.5 million from $64.6$66.7 million in 2025. This increase is primarily due to the six California properties, leased to NOR, that were reclassified as operating leases in December 2025, along with net acquisition and capital additiondisposal activity duringsince the second quarter of 2025 (as disclosed in previous filingspreviously) and the 2026 first quarter as more fully described in Note 3 to the condensed consolidated financial statements..

Property-related expenses totaled $9.9$11.2 million and $7.0$10.9 million for the quarters ended MarchJune 31,30, 2026 and 2025, respectively. Of the propertyproperty-related expenses in the firstsecond quarter of 2026 and 2025, approximately $1.9$4.4 million and $1.9$5.1 million, respectively, representsrepresent costs that were reimbursed by our tenants and included in the “"Interest and other income”" line of the condensed consolidated statements of net income. The remaining non-reimbursed property expenses are higher quarter over quarter primarily due to ongoing expenses (such as property taxes, insurance, maintenance, etc.) incurred at our vacant facilities.

General and administrative expenses were $32.2$34.8 million for the 2026 firstsecond quarter, compared to $41.9$26.2 million for the 2025 firstsecond quarter. TheOf decreasethese quarter-over-quarter is due to loweramounts, share-based compensation expense. Share-based compensation expense was $0.6$4.9 million for the firstsecond quarter of 2026, compared to $17.7$0.8 million in the 2025 firstsecond quarter, primarily due to less benefit in the 2026 period from the change in fair value of the performance awards that contain a cash-settlement feature and are marked to fair value quarterly, partiallyalong offset bywith additional expense from new stock awards granted in 2025 and the 2026 first quarter.

With certain performance awards granted in 2025 and 2024 having cash-settlement features, we expect there will be volatility in our stock compensation expense quarter-to-quarter. As of MarchJune 31,30, 2026, none of the 2025 or 2024 performance shares have been earned/vested and will not begin to earn/vest until, for 20 consecutive days, our total shareholder return reaches 20% (based on the April 15, 2025 grant date) for the 2025 performance award and our stock price reaches $7.00 per share for the 2024 performance award.

Excluding share-based compensation, general and administrative expenses for the 2026 firstsecond quarter were higher than the prior year due to non-cash depreciation and other costs associated with our completed headquarters facility in Birmingham, Alabama and higher travel expenses.

(Loss) Gain on Sale of Real Estate

During the three months ended MarchJune 31,30, 2026, the lossgain on sale of real estate of ($0.8)$6.5 million primarily relates to the saleScion/Lifepoint of two facilitiesTransaction as described in Note 3 to the condensed consolidated financial statements. During the three months ended MarchJune 31,30, 2025, wethe disposedgain on sale of tworeal facilities and an ancillary facility resulting in a net gainestate of $8.1$5.2 million.million relates to the sale of one facility.

In the 2026 firstsecond quarter, we recognized $19.0$16.8 million of real estate and other impairment charges, primarilyof associatedwhich with$15.2 million was recorded to further impair our working capital loans to Insight and TenorTenor. and,The toremaining acharges lesser extent,in the expectedquarter transitionconsisted of three vacant properties back to the ground lessor anda negative fair value adjustmentsadjustment on our investments in three hospitals in Colombia, along with non-real estate impairment charges for property taxes and other obligations not paid by our cash-basis tenants. In the same period of 2025, we recognized $76.1$1.4 million of real estate and other impairment charges, primarily associated with our investments in Prospect and three hospitals in Colombia.Colombia and non-real estate impairment charges, primarily property taxes and other obligations not paid by our cash-basis tenants. These charges in the 2025 second quarter were partially offset by an impairment recovery on our Prospect facilities. See Note 3 and Note 8 to the condensed consolidated financial statements for further details of these charges.

Earnings from equity interests was $15.7$11.4 million for the quarter ended MarchJune 31,30, 2026, compared to earnings of $14.0$25.3 million for the same period in 2025. Our share of income in the Utah partnership included a $7.2$1.6 million positive fair value adjustment in the firstsecond quarter of 2026, primarily related to a fair value increase in its real estate (as further described in Note 3 to the condensed consolidated financial statements), compared to $6 million primarily related to its interest rate swap; while, the 2025 second quarter included a $15 million favorable fair value adjustment in thereal same period last year.estate.

Other expense for the firstsecond quarter of 2026 was $2.5$1.9 million, compared to other expense of $45.2$124.4 million in the prior year period. For 2025,the 2025 second quarter, we recognized approximately $30$125 million in unfavorable non-cash fair value adjustments from our investments marked to fair value, primarily due to an approximate $18$129 million unfavorable adjustment to our investment in PHP HoldingsHoldings, andpartially offset by a favorable adjustment of approximately $12$4 million related to our investment in Aevis.

Income Tax (Expense) Benefit

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 $529$541 million should be reflected against certain of our international and domestic net deferred tax assets at MarchJune 31,30, 2026. 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.