raw_content: MEDICAL PROPERTIES TRUST INC
  Form S-11/A
  AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 3, 2005.
  FORM S-11
  FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
  OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES
  MEDICAL PROPERTIES TRUST, INC.
  (Exact name of registrant as specified in its governing instruments)
  1000 URBAN CENTER DRIVE, SUITE 501, BIRMINGHAM, ALABAMA 35242
  (Address, including zip code, and telephone number, including area code, of
  registrant's principal executive offices)
  EDWARD K. ALDAG, JR.
  CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
  (Name, address, including zip code, and telephone number, including area code,
  of agent for service)
  WITH A COPY TO:
  THOMAS O. KOLB                                      DANIEL M. LEBEY
  B.G. MINISMAN, JR.                                 EDWARD W. ELMORE, JR.
  BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, PC                 HUNTON & WILLIAMS LLP
  SUITE 1600                                 RIVERFRONT PLAZA, EAST TOWER
  420 20TH STREET NORTH                               951 EAST BYRD STREET
  BIRMINGHAM, ALABAMA 35203                         RICHMOND, VIRGINIA 23219-4074
  (205) 328-0480                                      (804) 788-8200
  APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  As soon
  as practicable after this registration statement becomes effective.
  If this Form is filed to register additional securities for an offering
  pursuant to Rule 462(b) under the Securities Act, please check the following box
  and list the Securities Act registration statement number of the earlier
  effective registration statement for the same offering: [ ] ____________
  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
  under the Securities Act, check the following box and list the Securities Act
  registration statement number of the earlier effective registration statement
  for the same offering: [ ] ____________
  If this Form is a post-effective amendment filed pursuant to Rule 462(d)
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
  please check the following box: [ ]
  TITLE OF SECURITIES                  PROPOSED MAXIMUM AGGREGATE
  BEING REGISTERED                        OFFERING PRICE(1)            AMOUNT OF REGISTRATION FEE(2)
  Common Stock, $.001 par value..................           $175,000,000                         $22,050
  (1) Estimated solely for the purpose of computing the registration fee in
  accordance with Rule 457(o) under the Securities Act.
  (2) Previously paid.
  THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
  DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
  FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
  STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
  THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
  EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
  PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
  The information in this prospectus is not complete and may be changed. We cannot
  sell any of the securities described in this prospectus until the registration
  statement that we have filed to cover the securities has become effective under
  the rules of the Securities and Exchange Commission. This prospectus is not an
  offer to sell the securities, nor is it a solicitation of an offer to buy the
  securities, in any state where an offer or sale of the securities is not
  SUBJECT TO COMPLETION, DATED JUNE 3, 2005
  11,365,000 SHARES OF COMMON STOCK
  (MEDICAL PROPERTIES TRUST LOGO)
  We are a self-advised real estate company that acquires, develops and
  net-leases healthcare facilities. We expect to qualify as a real estate
  investment trust, or REIT, for federal income tax purposes and will elect to be
  taxed as a REIT under the federal income tax laws.
  This is our initial public offering of common stock. No public market
  currently exists for our common stock. We are offering 11,365,000 shares of
  common stock and         shares of common stock are being offered by the selling
  stockholders described in this prospectus. We will not receive any of the
  proceeds from the sale of shares of common stock by the selling stockholders.
  We expect the initial public offering price to be between $10.00 and $12.00
  per share. We have applied to list our common stock on the New York Stock
  Exchange under the symbol "MPW."
  SEE "RISK FACTORS" BEGINNING ON PAGE 16 OF THIS PROSPECTUS FOR THE MOST
  SIGNIFICANT RISKS RELEVANT TO AN INVESTMENT IN OUR COMMON STOCK, INCLUDING,
  AMONG OTHERS:
  - We were formed in August 2003 and have a limited operating history; our
  management has a limited history of operating a REIT and a public company
  and may therefore have difficulty in successfully and profitably operating
  our business.
  - We may be unable to acquire or develop the facilities we have under letter
  of commitment or contract or facilities we have identified as potential
  candidates for acquisition or development as quickly as we expect or at
  all, which could harm our future operating results and adversely affect
  our ability to make distributions to our stockholders.
  - Our real estate investments will be concentrated in net-leased healthcare
  facilities, making us more vulnerable economically than if our investments
  were more diversified across several industries or property types.
  - Our facilities are currently leased to three tenants, two of which were
  recently organized and have limited or no operating histories, and the
  failure of any of these tenants to meet its obligations to us, including
  payment of rent, payment of loan commitment fees and repayment of loans we
  have made or intend to make to them, would have a material adverse effect
  on our revenues and our ability to make distributions to our stockholders.
  - Development and construction risks, including delays in construction,
  exceeding original estimates and failure to obtain financing, could
  adversely affect our ability to make distributions to our stockholders.
  - Reductions in reimbursement from third-party payors, including Medicare
  and Medicaid, could adversely affect the profitability of our tenants and
  hinder their ability to make rent or loan payments to us.
  - The healthcare industry is heavily regulated and existing and new laws or
  regulations, changes to existing laws or regulations, loss of licensure or
  certification or failure to obtain licensure or certification could result
  in the inability of our tenants to make lease or loan payments to us.
  - Failure to obtain or loss of our tax status as a REIT would have
  significant adverse consequences to us and the value of our common stock.
  - Our loans to Vibra could be recharacterized as equity, in which case our
  rental income from Vibra would not be qualifying income under the REIT
  rules and we could lose our REIT status.
  - Common stock eligible for future sale, including up to       shares that
  may be resold by our existing stockholders upon effectiveness of our
  resale registration statement, may result in increased selling which may
  have an adverse effect on our stock price.
  - If you purchase common stock in this offering, you will experience
  immediate dilution of approximately $    in net tangible book value per
  PER SHARE    TOTAL
  ---------   --------
  Public offering price.......................................
  Underwriting discount.......................................
  Proceeds, before expenses, to us............................
  Proceeds, before expenses, to selling stockholders..........
  The underwriters may also purchase up to an additional 1,704,750 shares of
  common stock from us at the public offering price, less the underwriting
  discount, within 30 days after the date of this prospectus solely to cover
  over-allotments, if any.
  NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
  COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
  PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
  CRIMINAL OFFENSE.
  We expect the shares of common stock to be available for delivery on or
  about         , 2005.
  FRIEDMAN BILLINGS RAMSEY                                                JPMORGAN
  THE DATE OF THIS PROSPECTUS IS         , 2005.
  SUMMARY......................................    1
  Our Company..................................    1
  Our Portfolio................................    2
  Competitive Strengths........................    6
  Summary Risk Factors.........................    7
  Market Opportunity...........................    8
  Our Target Facilities........................    8
  Our Formation Transactions...................    9
  Our Structure................................   10
  Registration Rights and Lock-Up Agreements...   11
  Selling Stockholders.........................   12
  Restrictions on Ownership of Our Common
  Stock......................................   12
  Distribution Policy..........................   12
  The Offering.................................   13
  Tax Status...................................   13
  Summary Financial Information................   13
  RISK FACTORS.................................   16
  Risks Relating to Our Business and Growth
  Strategy...................................   16
  Risks Relating to Real Estate Investments....   23
  Risks Relating to the Healthcare Industry....   27
  Risks Relating to Our Organization and
  Structure..................................   30
  Tax Risks Associated With Our Status as a
  REIT.......................................   34
  Risks Relating to This Offering..............   36
  A WARNING ABOUT FORWARD LOOKING STATEMENTS...   39
  USE OF PROCEEDS..............................   40
  CAPITALIZATION...............................   41
  DILUTION.....................................   42
  Net Tangible Book Value......................   42
  Dilution After This Offering.................   42
  Differences Between New and Existing
  Stockholders in Number of Shares and Amount
  Paid.......................................   43
  SELECTED FINANCIAL INFORMATION...............   45
  FINANCIAL CONDITION AND RESULTS OF
  OPERATIONS.................................   47
  OUR BUSINESS.................................   56
  Our Company..................................   56
  Market Opportunity...........................   58
  Our Target Facilities........................   60
  Underwriting Process.........................   61
  Asset Management.............................   62
  Our Formation Transactions...................   62
  Our Operating Partnership....................   63
  MPT Development Services, Inc. ..............   64
  Depreciation.................................   65
  Our Leases...................................   65
  Environmental Matters........................   65
  Competition..................................   66
  Healthcare Regulatory Matters................   66
  Insurance....................................   71
  Employees....................................   71
  Legal Proceedings............................   71
  OUR PORTFOLIO................................   71
  Our Current Portfolio........................   71
  Our Pending Acquisitions and Developments....   83
  Other Letters of Commitment..................   84
  Our Acquisition and Development Pipeline.....   92
  MANAGEMENT...................................   96
  Our Directors and Executive Officers.........   96
  Corporate Governance -- Board of Directors
  and Committees.............................   98
  Limited Liability and Indemnification........  101
  Director Compensation........................  101
  Executive Compensation.......................  102
  Employment Agreements........................  102
  Benefit Plans................................  105
  COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
  PARTICIPATION..............................  107
  INSTITUTIONAL TRADING OF OUR COMMON STOCK....  107
  PRINCIPAL STOCKHOLDERS.......................  108
  SELLING STOCKHOLDERS.........................  109
  REGISTRATION RIGHTS AND LOCK-UP AGREEMENTS...  109
  CERTAIN RELATIONSHIPS AND RELATED
  TRANSACTIONS...............................  112
  INVESTMENT POLICIES AND POLICIES WITH RESPECT
  TO CERTAIN ACTIVITIES......................  114
  DESCRIPTION OF CAPITAL STOCK.................  118
  Authorized Stock.............................  118
  Common Stock.................................  118
  Preferred Stock..............................  119
  Warrant......................................  119
  Power to Increase Authorized Stock and Issue
  Additional Shares of Our Common Stock and
  Preferred Stock............................  119
  Restrictions on Ownership and Transfer.......  119
  Transfer Agent and Registrar.................  121
  MATERIAL PROVISIONS OF MARYLAND LAW AND OF
  OUR CHARTER AND BYLAWS.....................  122
  The Board of Directors.......................  122
  Business Combinations........................  122
  Control Share Acquisitions...................  123
  Maryland Unsolicited Takeovers Act...........  124
  Amendment to Our Charter.....................  124
  Dissolution of Our Company...................  124
  Advance Notice of Director Nominations and
  New Business...............................  124
  Indemnification and Limitation of Directors'
  and Officers' Liability....................  125
  PARTNERSHIP AGREEMENT........................  127
  Management of Our Operating Partnership......  127
  Transferability of Interests.................  127
  Capital Contribution.........................  128
  Redemption Rights............................  128
  Distributions................................  129
  Allocations..................................  130
  Term.........................................  130
  Tax Matters..................................  130
  UNITED STATES FEDERAL INCOME TAX
  CONSIDERATIONS.............................  131
  Taxation of Our Company......................  131
  Requirements for Qualification...............  133
  Other Tax Consequences.......................  147
  Income Taxation of the Partnerships and Their
  Partners...................................  148
  UNDERWRITING.................................  151
  LEGAL MATTERS................................  155
  EXPERTS......................................  155
  WHERE YOU CAN FIND MORE INFORMATION..........  155
  INDEX TO FINANCIAL STATEMENTS................  F-1
  The following summary highlights information contained elsewhere in this
  prospectus. You should read the entire prospectus, including "Risk Factors" and
  our financial statements and pro forma financial information and related notes
  appearing elsewhere in this prospectus, before making a decision to invest in
  our common stock. In this prospectus, unless the context suggests otherwise,
  references to "MPT," "the company," "we," "us" and "our" mean Medical Properties
  Trust, Inc., including our operating partnership, MPT Operating Partnership,
  L.P., its general partner and our wholly-owned limited liability company,
  Medical Properties Trust, LLC, as well as our other direct and indirect
  subsidiaries. Unless otherwise indicated, the information included in this
  prospectus assumes no exercise by the underwriters of their over-allotment
  option to purchase up to an additional 1,704,750 shares of common stock and that
  the common stock to be sold in this offering is sold at $11.00 per share, which
  is the midpoint of the range set forth on the cover page of this prospectus.
  leases healthcare facilities providing state-of-the-art healthcare services. We
  lease our facilities to healthcare operators pursuant to long-term net-leases,
  which require the tenant to bear most of the costs associated with the property.
  From time to time, we also make loans to our tenants. We were formed in August
  2003 and completed a private placement of our common stock in April 2004 in
  which we raised net proceeds of approximately $233.5 million. Shortly after
  completion of our private placement, we began to acquire our current portfolio
  of nine facilities, consisting of seven facilities that are in operation and two
  facilities that are under development. We acquired six operating facilities in
  July and August of 2004 for an aggregate purchase price of $127.4 million,
  including acquisition costs, from Care Ventures, Inc. We also made loans of
  approximately $49.1 million to the new tenant of these facilities. One of the
  loans has been repaid and the remaining loan has a principal balance of
  approximately $41.4 million. We acquired one operating facility in February 2005
  for a purchase price of $28.0 million from Prime A Investments, LLC.
  We focus on acquiring and developing rehabilitation hospitals, long-term
  acute care hospitals, regional and community hospitals, women's and children's
  hospitals and ambulatory surgery centers as well as other specialized
  single-discipline and ancillary facilities. We believe that these types of
  facilities will capture an increasing share of expenditures for healthcare
  services. We believe that our strategy for acquisition and development of these
  types of net-leased facilities, which generally require a physician's order for
  patient admission, distinguishes us as a unique investment alternative among
  real estate investment trusts, or REITs.
  We believe that the U.S. healthcare delivery system is becoming
  decentralized and is evolving away from the traditional "one stop," large-scale
  acute care hospital. We believe that this change is the result of a number of
  trends, including increasing specialization and technological innovation within
  the healthcare industry and the desire of both physicians and patients to
  utilize more convenient facilities. We also believe that demographic trends in
  the U.S., including, in particular, an aging population, will result in
  continued growth in the demand for healthcare services, which in turn will lead
  to an increasing need for a greater supply of modern healthcare facilities. In
  response to these trends, we believe that healthcare operators increasingly
  prefer to conserve their capital for investment in operations and new
  technologies rather than investing in real estate and, therefore, increasingly
  prefer to lease, rather than own, their facilities. Given these trends and the
  size, scope and growth of this dynamic industry, we believe that there are
  significant opportunities to acquire and develop net-leased healthcare
  facilities at attractive, risk-adjusted returns.
  Our management team has extensive experience in acquiring, owning,
  developing, managing and leasing healthcare facilities; managing investments in
  healthcare facilities; acquiring healthcare companies; and managing real estate
  companies. Our management team also has substantial experience in healthcare
  operations and administration, which includes many years of service in executive
  positions for hospitals and other healthcare providers, as well as in physician
  practice management and hospital/physician relations.
  We believe that our management's ability to combine traditional real estate
  investment expertise with an understanding of healthcare operations enables us
  to successfully implement our strategy.
  We intend to make an election to be taxed as a REIT under the Internal
  Revenue Code, or the Code, commencing with our taxable year that began on April
  6, 2004 and ended on December 31, 2004.
  Our principal executive offices are located at 1000 Urban Center Drive,
  Suite 501, Birmingham, Alabama 35242. Our telephone number is (205) 969-3755.
  Our Internet address is www.medicalpropertiestrust.com. The information on our
  website does not constitute a part of this prospectus.
  OUR CURRENT PORTFOLIO OF FACILITIES
  Our current portfolio of facilities consists of nine healthcare facilities,
  seven of which are in operation and two of which are under development. Six of
  the facilities in operation, which consist of four rehabilitation hospitals and
  two long-term acute care hospitals, are leased to subsidiaries of Vibra
  Healthcare, LLC, or Vibra, formerly known as Highmark Healthcare, LLC, a
  recently formed specialty healthcare provider with operations in six states. We
  refer to these facilities in this prospectus as the Vibra Facilities. The
  seventh facility in operation, a community hospital which has an integrated
  medical office building, is leased to Desert Valley Hospital, Inc., or DVH. We
  refer to this facility in this prospectus as the Desert Valley Facility. The
  facilities under development are a community hospital, which we refer to in this
  prospectus as the West Houston Hospital, and an adjacent medical office
  building, which we refer to in this prospectus as the West Houston MOB, and are
  leased to Stealth, L.P., or Stealth, a recently organized healthcare facility
  operator with no current operations. We refer to the West Houston Hospital and
  the West Houston MOB together in this prospectus as the West Houston Facilities.
  All of the leases for the hospitals currently in operation have initial terms of
  15 years. The initial lease term for the West Houston Hospital began when
  construction commenced in July 2004 and will end 15 years after completion of
  construction. The initial lease term for the West Houston MOB began when
  construction. We target completion of construction of the West Houston MOB for
  August 2005 and completion of construction of the West Houston Hospital for
  October 2005. The leases for all of the facilities in our current portfolio
  provide for contractual base rent and an annual rent escalator. The leases for
  the Vibra Facilities also provide for "percentage rent," which means that once
  the tenant achieves a certain revenue threshold then, in addition to base rent,
  we will receive periodic rent payments based on an agreed percentage of the
  tenant's gross revenue. The following tables set forth information, as of March
  31, 2005, regarding our current portfolio of facilities:
  Operating Facilities                                                                        2005             2006
  2004        CONTRACTUAL       CONTRACTUAL
  NUMBER OF   ANNUALIZED         BASE             BASE
  LOCATION                        TYPE             TENANT       BEDS(1)     BASE RENT       RENT(2)           RENT(2)
  --------                  -----------------  --------------  ---------   -----------   --------------   ---------------
  Bowling Green,
  Kentucky...............  Rehabilitation     Vibra
  hospital           Healthcare,
  LLC(4)              60      $ 3,916,695    $ 4,294,990       $ 4,790,118
  Marlton, New
  Jersey(5)..............  Rehabilitation(6)  Vibra
  LLC(4)              76        3,401,791      3,730,354         4,160,390
  Victorville,
  California(7)..........  Community          Desert Valley
  hospital/medical   Hospital, Inc.      83               --      2,341,004         2,856,000
  New Bedford,
  Massachusetts..........  Long-term          Vibra
  acute care         Healthcare,
  hospital           LLC(4)              90        2,262,979      2,426,320         2,767,624
  Fresno, California......  Rehabilitation     Vibra
  Thornton, Colorado......  Rehabilitation     Vibra
  LLC(4)             117          870,377        933,200         1,064,471
  Operating Facilities
  PURCHASE          LEASE
  LOCATION                    PRICE(3)       EXPIRATION
  --------                  ------------   ---------------
  Kentucky...............
  $ 38,211,658      July 2019
  Jersey(5)..............
  32,267,622      July 2019
  California(7)..........
  28,000,000    February 2020
  Massachusetts..........
  22,077,847     August 2019
  Fresno, California......
  Thornton, Colorado......
  8,491,481     August 2019
  Kentfield, California...  Long-term          Vibra
  hospital           LLC(4)              60          783,339        858,998           958,024
  ---      -----------    -----------       -----------
  TOTAL...................         --                      --     548      $13,150,010    $16,684,639       $18,938,462
  ===      ===========    ===========       ===========
  Kentfield, California...
  7,642,332      July 2019
  TOTAL...................  $155,372,195                --
  (1) Based on the number of licensed beds.
  (2) Based on leases in place as of the date of this prospectus.
  (3) Includes acquisition costs.
  (4) The tenant in each case is a separate, wholly-owned subsidiary of Vibra
  Healthcare, LLC.
  (5) Our interest in this facility is held through a ground lease on the
  property. The purchase price shown for this facility does not include our
  payment obligations under the ground lease, the present value of which we
  have calculated to be $920,579. The calculation of the base rent to be
  received from Vibra for this facility takes into account the present value
  of the ground lease payments.
  (6) Thirty of the 76 beds are pediatric rehabilitation beds operated by HBA
  (7) At any time after February 28, 2007, the tenant has the option to purchase
  the facility at a purchase price equal to the sum of (i) the purchase price
  of the facility, and (ii) that amount determined under a formula that would
  provide us an internal rate of return of 10% per year, increased by 2% of
  such percentage each year, taking into account all payments of base rent
  received by us.
  Facilities Under
  2005             2006
  Houston, Texas..........  Community
  hospital(4)        Stealth, L.P.      105(5)   $        --    $   772,196       $ 4,749,005
  Houston, Texas..........  Medical office
  building(7)        Stealth, L.P.      n/a               --        670,840         2,052,769
  TOTAL...................         --                      --     105      $        --    $ 1,443,036       $ 6,801,774
  DEVELOPMENT         LEASE
  LOCATION                    COST(3)        EXPIRATION
  Houston, Texas..........
  $ 43,099,310   October 2020(6)
  20,855,119   August 2015(8)
  TOTAL...................  $ 63,954,429                --
  (2) Based on leases in place as of the date of this prospectus, estimated total
  development costs and estimated dates of completion. Assumes completion of
  construction in October 2005 for the West Houston Hospital and in August
  2005 for the West Houston MOB. Does not include rents that accrue during the
  construction period and are payable over the remaining lease term following
  the completion of construction.
  (4) Expected to be completed in October 2005.
  (5) Seventy-one of the 105 beds will be acute care beds operated by Stealth,
  L.P. and the remaining 34 beds will be long-term acute care beds operated by
  Triumph Southwest, L.P.
  (6) Following completion, the lease term will extend for a period of 15 years.
  At any time during the term of the lease, the tenant has the right to
  terminate the lease and purchase the community hospital from us at a
  purchase price equal to the greater of (i) that amount determined under a
  formula which would provide us an internal rate of return of at least 18% or
  (ii) appraised value assuming the lease is still in place.
  (7) Expected to be completed in August 2005.
  terminate the lease and purchase the medical office building from us at a
  OUR CURRENT LOANS AND FEES RECEIVABLE
  At the time we acquired the Vibra Facilities, we made a secured acquisition
  loan to Vibra, the parent entity of our current tenants in those facilities, to
  enable Vibra to acquire the healthcare operations at these locations. The
  principal balance of this loan is approximately $41.4 million and is to be
  repaid over 15 years. Payment of the acquisition loan is secured by pledges of
  membership interests in Vibra and its subsidiaries. In addition, we have
  obtained guaranty agreements from Brad E. Hollinger, the principal owner of
  Vibra, Vibra Management, LLC and The Hollinger Group that obligate them to make
  loan payments in the event that Vibra fails to do so. However, we do not believe
  that these parties have sufficient financial resources to satisfy a material
  portion of the loan obligations. Mr. Hollinger's guaranty is limited to $5.0
  million, and Vibra Management, LLC and The Hollinger Group do not have
  substantial assets. Vibra pays interest on this loan at an annual rate of 10.25%
  with interest only for the first three years and the principal balance amortizes
  over the remaining 12 year period. The acquisition loan may be prepaid at any
  time without penalty. In connection with the Vibra transactions, Vibra agreed to
  pay us commitment fees of approximately $1.5 million. We also made secured loans
  totaling approximately $6.2 million to Vibra and its subsidiaries for working
  capital purposes. The commitment fees were paid, and the working capital loans
  were repaid, on February 9, 2005.
  In connection with the development of the West Houston Facilities, Stealth
  has agreed to pay us a commitment fee of approximately $932,125, to be paid over
  15 years following completion of the West
  Houston Hospital. The commitment fee is based on a percentage of total
  development costs and may be adjusted upon completion of construction of the
  West Houston Facilities based on actual development costs. We have agreed to
  make a working capital loan to Stealth of up to $1.62 million, to be repaid over
  15 years. No funds have been borrowed by Stealth to date under the working
  capital loan. The promissory notes evidencing the loan and commitment fee
  provide for interest at an annual rate of 10.75% and are unsecured, but the
  promissory notes are cross-defaulted with our related facility leases with
  Stealth. Stealth is obligated to pay us a project inspection fee for
  construction coordination services of $100,000 in the case of the West Houston
  Hospital and $50,000 in the case of the adjacent West Houston MOB. These fees
  are to be paid, with interest at the rate of 10.75% per year, over a 15 year
  period beginning on the date that the West Houston Hospital is completed, which
  we expect to be in October 2005. The obligation to pay these fees is evidenced
  by promissory notes and is unsecured, but the promissory notes are
  cross-defaulted with our related facility leases with Stealth. Any of the fees
  or the working capital loan may be prepaid at any time without penalty, except
  that a minimum prepayment of $500,000 is required for the working capital loan.
  OUR PENDING ACQUISITIONS AND DEVELOPMENTS
  We intend to use the net proceeds of this offering and a portion of our
  available cash and cash equivalents to expand our portfolio by acquiring or
  developing additional net-leased healthcare facilities that we have under
  contract or letter of commitment and consider to be probable acquisitions or
  developments as of the date of this prospectus, which we refer to in this
  prospectus as our Pending Acquisition and Development Facilities. Under the
  terms of the contracts or letters of commitment relating to these facilities, we
  expect the leases for each of these facilities to provide for contractual base
  rent and an annual rent escalator. The letters of commitment constitute
  agreements of the parties to consummate the acquisition or development
  transactions and enter into leases on the terms set forth in the letters of
  commitment subject to the satisfaction of certain conditions, including the
  execution of mutually-acceptable definitive agreements. The following tables
  contain information regarding our Pending Acquisition and Development
  Operating Facilities -- Acquisitions
  YEAR ONE       MINIMUM        GROSS
  NUMBER OF   CONTRACTUAL   INCREASE IN    PURCHASE       LEASE
  LOCATION                              TYPE          TENANT        BEDS(1)     BASE RENT       RENT          PRICE      EXPIRATION
  --------                              ----      ---------------  ---------   -----------   -----------   -----------   ----------
  Covington, Louisiana*.............  Long-term   Gulf States          58      $1,170,750(2)    2.5%(3)    $11,500,000   June 2020(4)
  acute       Long Term Acute
  care        Care of
  hospital    Covington,
  L.L.C.
  Denham Springs, Louisiana*........  Long-term   Gulf States          59         630,000(2)    2.5%(3)      6,000,000   June 2020(4)
  care        Care of Denham
  hospital    Springs, L.L.C.
  ----      ----------                  -----------
  TOTAL.............................                                  117      $1,800,750                  $17,500,000          --
  ---------   ---------------    ----      ----------                  -----------   ---------
  * Under letter of commitment.
  (2) Year One is the 12 month period commencing on an expected closing date in
  (3) The annual rent increase is the greater of 2.5% and any change in the
  Consumer Price Index, or CPI.
  (4) The lease expiration is based upon a 15 year term commencing on an expected
  closing date in June 2005.
  Operating Facility -- Loan with Purchase Option
  NUMBER OF   CONTRACTUAL      LOAN        LEASE
  LOCATION                                               TYPE         TENANT       BEDS(1)     INTEREST       AMOUNT     EXPIRATION
  --------                                             ---------   -------------  ---------   -----------   ----------   ----------
  Hammond, Louisiana*(2).............................  Long-term   Hammond           40        $840,000(3)  $8,000,000   June 2021
  acute       Rehabilitation
  care        Hospital, LLC
  (2) On April 1, 2005, we entered into a letter of commitment with Hammond
  Healthcare Properties, LLC, or Hammond Properties, and Hammond
  Rehabilitation Hospital, LLC, or Hammond Hospital, pursuant to which we
  have agreed to lend Hammond Properties $8.0 million and have agreed to a
  put-call option pursuant to which, during the 90 day period commencing on
  the first anniversary of the date of the loan closing, we expect to
  purchase from Hammond Properties a long-term acute care hospital located in
  Hammond, Louisiana for a purchase price between $10.3 million and $11.0
  million. If we purchase the facility, we will lease it back to Hammond
  Hospital for an initial term of 15 years. The lease would be a net lease
  and would provide for contractual base rent and, beginning January 1, 2007,
  an annual rent escalator.
  (3) Based on one year contractual interest at the rate of 10.5% per year on the
  $8.0 million mortgage loan to Hammond Properties. We expect to exercise our
  option to purchase the Hammond Facility in 2006. For the one year period
  following our purchase of the facility, contractual base rent would equal
  $1,079,925, based on 10.5% of an estimated purchase price of $10,285,000.
  Development Facilities
  MINIMUM      PROJECTED
  NUMBER OF   INCREASE IN   DEVELOPMENT      LEASE
  TYPE          TENANT        BEDS(1)       RENT           COST       EXPIRATION
  ----      ---------------  ---------   -----------   ------------   ----------
  Bensalem, Pennsylvania**.......................  Women's     Bucks County         30          2.5%(2)   $ 38,000,000      (3)
  hospital/   Oncoplastic
  medical     Institute, LLC
  Bloomington, Indiana*..........................  Community   Monroe               32          2.5%(2)     28,000,000      (3)
  hospital    Hospital, LLC
  Houston, Texas*................................  Community   North Cypress        64          2.5%(2)     51,000,000      (3)
  hospital    Medical Center
  Company, Ltd.
  ---                    ------------
  TOTAL..........................................         --                --     126                    $117,000,000           --
  ===                    ============
  ** Under contract.
  (2) The annual rent increase is the greater of 2.5% and any change in the CPI.
  (3) We expect that each of these leases will have a 15 year term commencing on
  the date that construction of the facility is completed.
  OUR ACQUISITION AND DEVELOPMENT PIPELINE
  We have also identified a number of opportunities to acquire or develop
  additional healthcare facilities. In some cases, we are actively negotiating
  agreements or letters of intent with the owners or prospective tenants. In other
  instances, we have only identified the potential opportunity and had preliminary
  discussions with the owner or prospective tenant. We cannot assure you that we
  will complete any of these potential acquisitions or developments.
  OUR DEBT
  We employ leverage in our capital structure in amounts we determine from
  time to time. At present, we intend to limit our debt to approximately 60% of
  the aggregate cost of our facilities, although we may exceed that level from
  time to time. We expect our borrowings to be a combination of long-term, fixed-
  rate, non-recourse mortgage loans, variable-rate secured term and revolving
  credit facilities, and other fixed and variable-rate short to medium-term loans.
  We borrowed $75.0 million from Merrill Lynch Capital under a loan agreement
  with a term of three years for acquisition and development of additional
  facilities and other working capital needs. The loan bears interest at one month
  LIBOR (3.15% at June 2, 2005) plus 300 basis points. The loan is secured by our
  interests in the Vibra Facilities and requires us to comply with certain
  financial covenants. There was $74.1 million outstanding under this loan as of
  March 31, 2005. We have accepted a term sheet from Merrill Lynch Capital for an
  up to $100.0 million senior secured revolving credit facility with a term of
  four years, with one 12-month extension option, to refinance the outstanding
  amount under our existing loan agreement with Merrill Lynch Capital and for
  general corporate purposes. If we enter into this facility, during the term of
  the loan we will have the right to increase the amount available under the
  facility by an amount up to $75.0 million, subject to no event of default
  continuing or occurring at the time of our request to increase the amount.
  We have also entered into construction loan agreements in an aggregate
  amount of $43.4 million with Colonial Bank to fund construction costs for the
  West Houston Facilities being developed in Houston, Texas. Each construction
  loan has a term of up to 18 months and an option on the part of the borrower to
  convert the loan to a 30-month term loan upon completion of construction of the
  West Houston Facility securing that loan. The loans are secured by mortgages on
  the West Houston Facilities, as well as assignments of rents and leases on those
  facilities, and require us to comply with certain financial
  covenants. The loans bear interest at one month LIBOR plus 225 basis points
  during the construction period and one month LIBOR plus 250 basis points
  thereafter. The Colonial Bank loans are cross-defaulted. As of the date of this
  prospectus, we have made no borrowings under the Colonial Bank loans.
  COMPETITIVE STRENGTHS
  We believe that the following competitive strengths will enable us to
  execute our business strategy successfully:
  - Experienced Management Team.  Our management team's experience enables us
  to offer innovative acquisition and net-lease structures that we believe
  will appeal to a variety of healthcare operators. We believe that our
  management's depth of experience in both traditional real estate
  investment and healthcare operations positions us favorably to take
  advantage of the available opportunities in the healthcare real estate
  - Comprehensive Underwriting Process.  Our underwriting process focuses on
  both real estate investment and healthcare operations. Our acquisition
  and development selection process includes a comprehensive analysis of a
  targeted healthcare facility's profitability, cash flow, occupancy and
  patient and payor mix, financial trends in revenues and expenses,
  barriers to competition, the need in the market for the type of
  healthcare services provided by the facility, the strength of the
  location and the underlying value of the facility, as well as the
  financial strength and experience of the tenant and the tenant's
  management team. Through our detailed underwriting of healthcare
  acquisitions, which includes an analysis of both the underlying real
  estate and ongoing or expected healthcare operations at the property, we
  expect to deliver attractive risk-adjusted returns to our stockholders.
  - Active Asset Management.  We actively monitor the operating results of
  our tenants by reviewing periodic financial reporting and operating data,
  as well as visiting each facility and meeting with the management of our
  tenants on a regular basis. Integral to our asset management philosophy
  is our desire to build long-term relationships with our tenants and,
  accordingly, we have developed a partnering approach which we believe
  results in the tenant viewing us as a member of its team.
  - Favorable Lease Terms.  We lease our facilities to healthcare operators
  pursuant to long-term net-lease agreements. A net-lease requires the
  tenant to bear most of the costs associated with the property, including
  property taxes, utilities, insurance and maintenance. Our current
  net-leases are for terms of at least 10 years, provide for annual base
  rental increases and, in the case of the Vibra Facilities, percentage
  rent. Similarly, we anticipate that our future leases will generally
  provide for base rent with annual escalators, tenant payment of operating
  costs and, when feasible and in compliance with applicable healthcare
  laws and regulations, percentage rent.
  - Diversified Portfolio Strategy.  We focus on a portfolio of several
  different types of healthcare facilities in a variety of geographic
  regions. We also intend to diversify our tenant base as we acquire and
  develop additional healthcare facilities.
  - Access to Investment Opportunities.  We believe our network of
  relationships in both the real estate and healthcare industries provides
  us access to a large volume of potential acquisition and development
  opportunities. The net proceeds of this offering will enhance our ability
  to capitalize on these and other investment opportunities.
  - Local Physician Investment.  When feasible and in compliance with
  applicable healthcare laws and regulations, we expect to offer physicians
  an opportunity to invest in the facilities that we own, thereby
  strengthening our relationship with the local physician community.
  SUMMARY RISK FACTORS
  You should carefully consider the matters discussed in the section "Risk
  Factors" beginning on page 16 prior to deciding whether to invest in our common
  stock. Some of these risks include:
  and may therefore have difficulty in successfully and profitably
  operating our business.
  - We may be unable to acquire or develop the Pending Acquisition and
  Development Facilities or facilities we have identified as potential
  - We expect to continue to experience rapid growth and may not be able to
  adapt our management and operational systems to integrate the net-leased
  facilities we have acquired and are developing or those that we expect to
  acquire and develop without unanticipated disruption or expense.
  facilities, making us more vulnerable economically than if our
  investments were more diversified across several industries or property
  - Failure by our tenants to repay loans currently outstanding or loans we
  have committed to make or to pay us commitment and other fees that they
  are obligated to pay, in an aggregate amount of approximately $44.1
  million, would have a material adverse effect on our revenues and our
  ability to make distributions to our stockholders.
  - Our facilities are currently leased to only three tenants, two of which
  were recently organized and have limited or no operating histories, and
  the failure of any of these tenants to meet its obligations to us,
  including payment of rent, payment of commitment fees and repayment of
  loans we have made or intend to make to them, would have a material
  adverse effect on our revenues and our ability to make distributions to
  our stockholders.
  regulations, changes to existing laws or regulations, loss of licensure
  or certification or failure to obtain licensure or certification could
  result in the inability of our tenants to make lease or loan payments to
  - Our use of debt financing will subject us to significant risks, including
  foreclosure and refinancing risks and the risk that debt service
  obligations will reduce the amount of cash available for distribution to
  our stockholders. We have entered into loan agreements pursuant to which
  we may borrow up to $117.5 million, $74.1 million of which was
  outstanding as of March 31, 2005. Our charter and other organizational
  documents do not limit the amount of debt we may incur.
  - Provisions of Maryland law, our charter and our bylaws may prevent or
  deter changes in management and third-party acquisition proposals that
  you may believe to be in our best interest, depress our stock price or
  cause dilution.
  - We depend on key personnel, the loss of any one of whom could threaten
  our ability to operate our business successfully.
  - There is currently no public market for our common stock, and an active
  trading market for our common stock may never develop.
  - Common stock eligible for future sale, including up to        shares that
  - Our engagement agreement with Friedman, Billings, Ramsey & Co., Inc. may
  preclude us from engaging investment banking firms other than Friedman,
  Billings, Ramsey & Co., Inc, until April 7, 2006 for future financing and
  other strategic transactions, and Friedman, Billings, Ramsey & Co., Inc.
  has an interest in this offering other than underwriting discounts and
  commissions.
  immediate dilution of approximately $2.04 in net tangible book value per
  According to the United States Department of Commerce, Bureau of Economic
  Analysis, healthcare is one of the largest industries in the U.S., and was
  responsible for approximately 15.3% of U.S. gross domestic product in 2003.
  Healthcare spending has consistently grown at rates greater than overall
  spending growth and inflation. We expect this trend to continue. According to
  the United States Department of Health and Human Services, Centers for Medicare
  and Medicaid Services, or CMS, healthcare expenditures are projected to increase
  by more than 7% in 2004 and 2005 to $1.8 trillion and $1.9 trillion,
  respectively, and are expected to reach $3.1 trillion by 2012.
  To satisfy this growing demand for healthcare services, a significant
  amount of new construction of healthcare facilities has been undertaken, and we
  expect significant construction of additional healthcare facilities in the
  future. In 2003 alone, $24.5 billion was spent on the construction of healthcare
  facilities, according to CMS. This represented more than a 9% increase over the
  $22.4 billion in healthcare construction spending for 2002. We believe that a
  significant part of this healthcare construction spending was for the types of
  facilities that we target.
  OUR TARGET FACILITIES
  The market for healthcare real estate is extensive and includes real estate
  owned by a variety of healthcare operators. We focus on acquiring, developing
  and net leasing to healthcare operators facilities that are designed to address
  what we view as the latest trends in healthcare delivery methods. These
  - Rehabilitation Hospitals:  Rehabilitation hospitals provide inpatient and
  outpatient rehabilitation services for patients recovering from multiple
  traumatic injuries, organ transplants, amputations, cardiovascular
  surgery, strokes, and complex neurological, orthopedic, and other
  conditions. These hospitals are often the best medical alternative to
  traditional acute care hospitals where under the Medicare prospective
  payment system there is pressure to discharge patients after relatively
  short stays.
  - Long-term Acute Care Hospitals:  Long-term acute care hospitals focus on
  extended hospital care, generally at least 25 days, for the
  medically-complex patient. Long-term acute care hospitals have arisen
  from a need to provide care to patients in acute care settings, including
  daily physician observation and treatment, before they are able to move
  to a rehabilitation hospital or return home. These facilities are
  reimbursed in a manner more appropriate for a longer length of stay than
  is typical for an acute care hospital.
  - Regional and Community Hospitals:  We define regional and community
  hospitals as general medical/surgical hospitals whose practicing
  physicians generally serve a market specific area,
  whether urban, suburban or rural. We intend to limit our ownership of
  these facilities to those with market, ownership, competitive or
  technological characteristics that provide barriers to entry for
  potential competitors.
  - Women's and Children's Hospitals:  These hospitals serve the specialized
  areas of obstetrics and gynecology, other women's healthcare needs,
  neonatology and pediatrics. We anticipate substantial development of
  facilities designed to meet the needs of women and children and their
  physicians as a result of the decentralization and specialization trends
  described above.
  - Ambulatory Surgery Centers:  Ambulatory surgery centers are freestanding
  facilities designed to allow patients to have outpatient surgery, spend a
  short time recovering at the center, then return home to complete their
  recoveries. Ambulatory surgery centers offer a lower cost alternative to
  general hospitals for many surgical procedures in an environment that is
  more convenient for both patients and physicians. Outpatient procedures
  commonly performed include those related to gastrointestinal, general
  surgery, plastic surgery, ear, nose and throat/audiology, as well as
  orthopedics and sports medicine.
  - Other Single-Discipline Facilities:  The decentralization and
  specialization trends in the healthcare industry are also creating
  demands and opportunities for physicians to practice in hospital
  facilities in which the design, layout and medical equipment are
  specifically developed, and healthcare professional staff are educated,
  for medical specialties. These facilities include heart hospitals,
  ophthalmology centers, orthopedic hospitals and cancer centers.
  - Medical Office Buildings:  Medical office buildings are office and clinic
  facilities occupied and used by physicians and other healthcare providers
  in the provision of healthcare services to their patients. The medical
  office buildings that we target are or will be master-leased and
  generally adjacent to our other targeted healthcare facilities.
  OUR FORMATION TRANSACTIONS
  The following is a summary of our formation transactions:
  - We were formed as a Maryland corporation on August 27, 2003 to succeed to
  the business of Medical Properties Trust, LLC, a Delaware limited
  liability company, which was formed by certain of our founders in
  December 2002. In connection with our formation, we issued our founders
  1,630,435 shares of our common stock in exchange for nominal cash
  consideration and the membership interests of Medical Properties Trust,
  LLC. Upon completion of our private placement in April 2004, 1,108,527
  shares of the 1,630,435 shares of common stock held by our founders were
  redeemed for nominal value and they now collectively hold 557,908 shares
  of our common stock, including shares purchased in our April 2004 private
  placement.
  - Our operating partnership, MPT Operating Partnership, L.P., was formed in
  September 2003. Our wholly-owned subsidiary, Medical Properties Trust,
  LLC, is the sole general partner of our operating partnership. We
  currently own all of the limited partnership interests in our operating
  partnership.
  - MPT Development Services, Inc., a Delaware corporation that we formed in
  January 2004, operates as our wholly-owned taxable REIT subsidiary.
  - In April 2004 we completed a private placement of 25,300,000 shares of
  common stock at an offering price of $10.00 per share. Friedman,
  Billings, Ramsey & Co., Inc., which is serving as a lead underwriter in
  this offering, acted as the initial purchaser and sole placement agent.
  The total net proceeds to us, after deducting fees and expenses of the
  offering, were approximately $233.5 million. The net proceeds of our
  private placement, together with borrowed funds, have been or will be
  used to acquire our current portfolio of nine facilities, consisting of
  seven facilities that are in operation and two that are under
  development, lend funds to one of our tenants, repay debt, pay
  pre-offering operating expenses and for working capital. Thus far we have
  utilized
  approximately $155.4 million to acquire our seven existing facilities,
  have loaned $47.6 million to Vibra to acquire the operations at the Vibra
  Facilities and for working capital purposes, $6.2 million of which has
  been repaid, and have funded approximately $35.1 million of a projected
  total of approximately $63.1 million of development costs for the West
  Houston Facilities. There are approximately 316 beneficial holders of our
  common stock as of the date of this prospectus.
  We conduct our business through a traditional umbrella partnership REIT, or
  UPREIT, in which our facilities are owned by our operating partnership, MPT
  Operating Partnership, L.P., and limited partnerships, limited liability
  companies or other subsidiaries of our operating partnership. Through our
  wholly-owned limited liability company, Medical Properties Trust, LLC, we are
  the sole general partner of our operating partnership and we presently own all
  of the limited partnership units of our operating partnership. In the future, we
  may issue limited partnership units to third parties from time to time in
  connection with facility acquisitions or developments. In addition, we may sell
  equity interests in subsidiaries of our operating partnership in connection with
  facility acquisitions or developments.
  MPT Development Services, Inc., our taxable REIT subsidiary, is authorized
  to engage in development, management, lending, including but not limited to
  acquisition and working capital loans to our tenants, and other activities that
  we are unable to engage in directly under applicable REIT tax rules. The
  following chart illustrates our structure upon completion of this offering:
  (1) We own and in the future expect to own interests in our facilities through
  wholly owned or majority owned subsidiaries of our operating partnership,
  MPT Operating Partnership, L.P. Our operating partnership is a limited
  partner of MPT West Houston MOB, L.P. and MPT West Houston Hospital, L.P.,
  which own, respectively, the West Houston MOB and the West Houston Hospital.
  MPT West Houston MOB, LLC and MPT West Houston Hospital, LLC, both of which
  are wholly-owned by our operating partnership, are, respectively, the
  general partners of these entities. We have sold limited partnership
  interests representing approximately 24% of the aggregate equity interests
  in MPT West Houston MOB, L.P. to physicians and others associated with our
  tenant or subtenants of the West Houston MOB. Stealth, the tenant of the
  West Houston Hospital, owns a 6% limited partnership interest in MPT West
  Houston Hospital, L.P.
  REGISTRATION RIGHTS AND LOCK-UP AGREEMENTS
  Registration Rights Agreement.  Pursuant to a registration rights agreement
  among us, Friedman, Billings, Ramsey & Co., Inc. and certain holders of our
  common stock, we were required, among other things, to file with the SEC by
  January 6, 2005 a resale shelf registration statement registering all of the
  shares of common stock sold in our April 2004 private placement, and all of the
  shares of common stock issued to Friedman, Billings, Ramsey & Co., Inc. for
  financial advisory services. We are required to use our reasonable best efforts
  to cause the resale registration statement to become effective under the
  Securities Act as promptly as practicable after the filing and to maintain the
  resale registration statement continuously effective under the Securities Act of
  1933, or the Securities Act, for a specified period.
  The resale registration statement was filed on January 6, 2005. If we
  default on our obligation to use reasonable best efforts to cause the
  effectiveness of, or fail to maintain the effectiveness of, the resale
  registration statement for the time periods described above, or certain other
  events occur, we may be
  required to pay the holders of registrable shares, other than our affiliates,
  liquidated damages during the period of the default.
  Lock-up Agreements.  All of our directors and executive officers, subject
  to limited exceptions, have agreed to be bound by lock-up agreements that
  prohibit these holders from selling or otherwise disposing of any of our common
  stock or securities convertible into our common stock that they own or acquire
  for 180 days after the date of this prospectus. In addition, the underwriters
  will require that all of our stockholders other than our executive officers and
  directors agree not to sell or otherwise dispose of any of the shares of our
  common stock or securities convertible into our common stock that they have
  acquired prior to the date of this prospectus and are not selling in this
  offering until 60 days after the date of this prospectus, subject to limited
  exceptions. Friedman, Billings, Ramsey & Co., Inc., on behalf of the
  underwriters, may, in its discretion, release all or any portion of the common
  stock subject to the lock-up agreements with our directors and executive
  officers at any time and without notice or stockholder approval, in which case
  our other stockholders would also be released from the restrictions under the
  registration rights agreement.
  SELLING STOCKHOLDERS
  Pursuant to, and subject to the terms and conditions of, the registration
  rights agreement among us, Friedman, Billings, Ramsey & Co., Inc. and certain
  holders of our common stock, persons who purchased our common stock in our
  private placement in April 2004 and their transferees have the right to sell
  their common stock in this offering. We are including           shares of our
  common stock in this offering to be sold by     selling stockholders.
  RESTRICTIONS ON OWNERSHIP OF OUR COMMON STOCK
  The Code imposes limitations on the concentration of ownership of REIT
  shares. Our charter generally prohibits any stockholder from actually or
  constructively owning more than 9.8% of our outstanding shares of common stock.
  The ownership limitation in our charter is more restrictive than the
  restrictions on ownership of our common stock imposed by the Code. Our board
  may, in its sole discretion, waive this ownership limitation with respect to
  particular stockholders if our board is presented with evidence satisfactory to
  it that the ownership will not then or in the future jeopardize our status as a
  REIT.
  We intend to distribute to our stockholders each year all or substantially
  all of our REIT taxable income so as to avoid paying corporate income tax and
  excise tax on our REIT income and to qualify for the tax benefits afforded to
  REITs under the Code. The actual amount and timing of distributions, if any,
  will be at the discretion of our board of directors and will depend upon our
  actual results of operations and a number of other factors discussed in the
  section "Distribution Policy."
  The table below is a summary of our distributions.
  DISTRIBUTION PER SHARE
  DECLARATION DATE      RECORD DATE       DATE OF DISTRIBUTION      OF COMMON STOCK
  ----------------      -----------       --------------------   ----------------------
  May 19, 2005       June 20, 2005        July 14, 2005                $0.16
  March 4, 2005      March 16, 2005       April 15, 2005               $0.11
  November 11, 2004  December 16, 2004     January 11, 2005              $0.11
  September 2, 2004  September 16, 2004    October 11, 2004              $0.10
  The two distributions declared in 2004, aggregating $0.21 per share, were
  comprised of approximately $0.13 per share in ordinary income and $0.08 per
  share in return of capital. For federal income tax purposes, our distributions
  were limited in 2004 to our tax basis earnings and profits of $0.13 per share.
  Accordingly, for tax purposes, $0.08 per share of the distributions we paid in
  January 2005 will be treated as a 2005 distribution; the tax character of this
  amount, along with that of the April 15, 2005 and July 14, 2005 distributions,
  will be determined subsequent to determination of our 2005 taxable income.
  Shares of common stock offered
  by us(1)......................   11,365,000 shares
  by selling stockholders.......             shares
  Shares of common stock to be
  outstanding after this
  offering(1)(2)................   37,635,862 shares
  Use of Proceeds...............   The net proceeds to us from the sale of the
  shares of common stock offered by this
  prospectus, after deducting the underwriting
  discount and the estimated offering expenses
  payable by us, will be approximately $115.0
  million, or approximately $132.3 million if the
  underwriters exercise their over-allotment
  option in full. We intend to use the net
  proceeds as follows:
  - approximately $51.0 million to fund the
  development of a community hospital in
  Houston, Texas that we have under letter of
  commitment;
  development of a women's hospital and
  integrated medical office building in
  Bensalem, Pennsylvania that we have under
  contract;
  - approximately $18.0 million to fund a portion
  of the development costs of a community
  hospital in Bloomington, Indiana that we have
  under letter of commitment; and
  - approximately $8.0 million to lend to Hammond
  Properties pursuant to a mortgage loan we
  have entered into a letter of commitment to
  provide.
  Pending these uses, we intend to invest the net
  offering proceeds in interest-bearing,
  short-term marketable investment grade
  securities or money-market accounts which are
  consistent with our intention to qualify as a
  Proposed NYSE symbol..........   MPW
  (1) Excludes up to 1,704,750 shares of common stock that may be issued by us
  upon exercise of the underwriters' overallotment option.
  (2) Based on 26,164,862 shares outstanding as of June 2, 2005. Includes 106,000
  shares of restricted common stock to be awarded upon completion of this
  offering under our Amended and Restated 2004 Equity Incentive Plan, which we
  refer to in this prospectus as our equity incentive plan. Excludes (i)
  100,000 shares of common stock issuable upon the exercise of stock options
  granted to our independent directors under our equity incentive plan,
  one-third of which are vested; (ii) 5,000 shares of common stock issuable in
  October 2007 and 7,500 shares of common stock issuable in March 2008
  pursuant to deferred stock units awarded under our equity incentive plan to
  our independent directors; (iii) 35,000 shares of common stock issuable upon
  the exercise of a warrant granted to an unaffiliated third-party; and (iv)
  490,680 shares of common stock available for future awards under our equity
  incentive plan.
  TAX STATUS
  As long as we qualify for and maintain our REIT status, we will generally
  not incur federal income tax on our income to the extent that we distribute this
  income to our stockholders. However, we will be subject to tax at normal
  corporate rates on net income or capital gains not distributed to stockholders.
  Moreover, our taxable REIT subsidiary will be subject to federal and state
  income taxation on its taxable income.
  SUMMARY FINANCIAL INFORMATION
  You should read the following pro forma and historical information in
  conjunction with "Management's Discussion and Analysis of Financial Condition
  and Results of Operations" and our historical and pro forma consolidated
  financial statements and related notes thereto included elsewhere in this
  prospectus.
  The following table sets forth our summary financial and operating data on
  an historical and pro forma basis. Our summary historical balance sheet
  information as of December 31, 2004, and the historical statement of operations
  and other data for the year ended December 31, 2004, have been derived from our
  historical financial statements audited by KPMG LLP, independent registered
  public accounting firm, whose report with respect thereto is included elsewhere
  in this prospectus. The historical balance sheet information as of March 31,
  2005 and the historical statement of operations and other data for the three
  months ended March 31, 2005 have been derived from our unaudited historical
  balance sheet as of March 31, 2005 and from our unaudited statement of
  operations for the three months ended March 31, 2005 included elsewhere in this
  prospectus. The unaudited historical financial statements include all
  adjustments, consisting of normal recurring adjustments, that we consider
  necessary for a fair presentation of our financial condition and results of
  operations as of such dates and for such periods under accounting principles
  generally accepted in the U.S.
  The unaudited pro forma consolidated balance sheet data as of March 31,
  2005 are presented as if completion of this offering and completion of our
  probable acquisitions had occurred on March 31, 2005.
  The unaudited pro forma consolidated statement of operations and other data
  for the three months ended March 31, 2005 are presented as if acquisition of the
  Desert Valley Facility, completion of this offering and completion of our
  probable acquisitions had occurred on January 1, 2005, and our December 31, 2004
  unaudited pro forma consolidated statement of operations are presented as if our
  acquisition of the current portfolio of facilities (the six Vibra Facilities and
  the Desert Valley Facility), our making of the Vibra loans, completion of this
  offering and completion of our probable acquisitions had occurred on January 1,
  2004. The pro forma information does not give effect to any of our facilities
  under development or probable development transactions. The pro forma
  information is not necessarily indicative of what our actual financial position
  or results of operations would have been as of the dates or for the periods
  indicated, nor does it purport to represent our future financial position or
  results of operations.
  FOR THE THREE MONTHS ENDED        FOR THE YEAR ENDED
  MARCH 31, 2005               DECEMBER 31, 2004
  ---------------------------   ---------------------------
  PRO FORMA      HISTORICAL     PRO FORMA      HISTORICAL
  ------------   ------------   ------------   ------------
  OPERATING INFORMATION:
  Rent income.....................  $  6,669,856   $  5,268,490   $ 25,101,257   $  8,611,344
  Interest income from loans......     1,212,038      1,212,038      5,037,049      2,282,115
  Total revenues..................     7,881,894      6,480,528     30,138,306     10,893,459
  Depreciation and amortization...     1,130,162        842,407      4,520,645      1,478,470
  General and administrative......     1,698,249      1,698,249      5,057,284      5,057,284
  Total operating expenses........     2,880,972      2,593,217     10,350,278      7,214,601
  Operating income................     5,000,922      3,887,311     19,788,028      3,678,858
  Net other income (expense)......      (327,377)      (327,377)       897,491        897,491
  Net income.........................     4,673,545      3,559,934     20,685,519      4,576,349
  Net income per share, basic and
  diluted.........................          0.12           0.14           0.67           0.24
  Weighted average shares
  outstanding -- basic............    37,652,195     26,099,195     30,863,833     19,310,833
  outstanding -- diluted..........    37,656,259     26,103,259     30,865,634     19,312,634
  AS OF MARCH 31, 2005           DECEMBER 31, 2004
  ------------------------------------   -----------------
  PRO FORMA               HISTORICAL       HISTORICAL
  ------------            ------------   -----------------
  BALANCE SHEET INFORMATION:
  Gross investment in real estate assets.........  $219,914,624            $192,129,624     $151,690,293
  Net investment in real estate..................   217,593,747             189,808,747      150,211,823
  Construction in progress.......................    36,757,429              36,757,429       24,318,098
  Cash and cash equivalents......................   162,226,562              82,053,255       97,543,677
  Loans receivable...............................    42,498,111              42,498,111       50,224,069(1)
  Total assets...................................   434,262,386             326,304,079      306,506,063
  Total debt.....................................    74,141,667              74,141,667       56,000,000
  Total liabilities..............................    89,178,201              92,047,316       73,777,619
  Total stockholders' equity.....................   343,321,685             232,494,263      231,728,444
  Total liabilities and stockholders' equity.....   434,262,386             326,304,079      306,506,063
  FOR THE THREE MONTHS ENDED    FOR THE YEAR ENDED DECEMBER 31,
  MARCH 31, 2005                       2004
  ---------------------------   -------------------------------
  PRO FORMA     HISTORICAL       PRO FORMA       HISTORICAL
  -----------   -------------   -------------   ---------------
  Funds from operations(2).............  $5,803,707    $  4,402,341     $25,206,164     $   6,054,819
  Cash Flows:
  Provided by operating
  activities......................                   1,643,836                         9,918,898
  Used for investing activities.....                 (32,729,071)                     (195,600,642)
  Provided by financing
  activities......................                  15,594,813                       283,125,421
  (1) Includes $1.5 million in commitment fees payable to us by Vibra.
  (2) Funds from operations, or FFO, represents net income (computed in accordance
  with GAAP), excluding gains (or losses) from sales of property, plus real
  estate related depreciation and amortization (excluding amortization of loan
  origination costs) and after adjustments for unconsolidated partnerships and
  joint ventures. Management considers funds from operations a useful
  additional measure of performance for an equity REIT because it facilitates
  an understanding of the operating performance of our properties without
  giving effect to real estate depreciation and amortization, which assumes
  that the value of real estate assets diminishes predictably over time. Since
  real estate values have historically risen or fallen with market conditions,
  we believe that funds from operations provides a meaningful supplemental
  indication of our performance. We compute funds from operations in
  accordance with standards established by the Board of Governors of the
  National Association of Real Estate Investment Trusts, or NAREIT, in its
  March 1995 White Paper (as amended in November 1999 and April 2002), which
  may differ from the methodology for calculating funds from operations
  utilized by other equity REITs and, accordingly, may not be comparable to
  such other REITs. FFO does not represent amounts available for management's
  discretionary use because of needed capital replacement or expansion, debt
  service obligations, or other commitments and uncertainties, nor is it
  indicative of funds available to fund our cash needs, including our ability
  to make distributions. Funds from operations should not be considered as 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 FFO to net income for the
  three months ended March 31, 2005 and for the year ended December 31, 2004 on
  an actual and pro forma basis.
  FOR THE THREE MONTHS        FOR THE YEAR ENDED
  ENDED MARCH 31, 2005        DECEMBER 31, 2004
  -----------------------   ------------------------
  PRO FORMA    HISTORICAL    PRO FORMA    HISTORICAL
  ----------   ----------   -----------   ----------
  FUNDS FROM OPERATIONS:
  Net income.................................................  $4,673,545   $3,559,934   $20,685,519   $4,576,349
  Depreciation and amortization..............................  1,130,162      842,407     4,520,645     1,478,470
  Funds from operations......................................  $5,803,707   $4,402,341   $25,206,164   $6,054,819
  ==========   ==========   ===========   ==========
  An investment in our common stock involves a number of risks. Before making
  an investment decision, you should carefully consider all of the risks described
  below and the other information contained in this prospectus. If any of the
  risks discussed in this prospectus actually occurs, our business, financial
  condition and results of operations could be materially adversely affected. If
  this were to occur, the value of our common stock could decline and you may lose
  all or part of your investment.
  RISKS RELATING TO OUR BUSINESS AND GROWTH STRATEGY
  WE WERE FORMED IN AUGUST 2003 AND HAVE A LIMITED OPERATING HISTORY; OUR
  MANAGEMENT HAS A LIMITED HISTORY OF OPERATING A REIT AND A PUBLIC COMPANY AND
  MAY THEREFORE HAVE DIFFICULTY IN SUCCESSFULLY AND PROFITABLY OPERATING OUR
  We have only recently been organized and have a limited operating history.
  We are subject to the risks generally associated with the formation of any new
  business, including unproven business models, untested plans, uncertain market
  acceptance and competition with established businesses. Our management has
  limited experience in operating a REIT and a public company. Therefore, you
  should be especially cautious in drawing conclusions about the ability of our
  management team to execute our business plan.
  WE MAY NOT BE SUCCESSFUL IN DEPLOYING THE NET PROCEEDS OF THIS OFFERING FOR
  THEIR INTENDED USES AS QUICKLY AS WE INTEND OR AT ALL, WHICH COULD HARM OUR CASH
  FLOW AND ABILITY TO MAKE DISTRIBUTIONS TO OUR STOCKHOLDERS.
  Upon completion of this offering, we will experience a capital infusion
  from the net offering proceeds, which we intend to use to develop additional
  net-leased facilities. If we are unable to use the net proceeds in this manner,
  we will have no specific designated use for a substantial portion of the net
  proceeds from this offering. In that case, or in the event we allocate a portion
  of the net proceeds to other uses during the pendency of the developments, you
  would be unable to evaluate the manner in which we invest the net proceeds or
  the economic merits of the assets acquired with the proceeds. We may not be able
  to invest this capital on acceptable terms or timeframes, or at all, which may
  harm our cash flow and ability to make distributions to our stockholders.
  WE MAY BE UNABLE TO ACQUIRE OR DEVELOP THE PENDING ACQUISITION AND DEVELOPMENT
  FACILITIES, WHICH COULD HARM OUR FUTURE OPERATING RESULTS AND ADVERSELY AFFECT
  Our future success depends in large part on our ability to continue to grow
  our business through the acquisition or development of additional facilities. We
  cannot assure you that we will acquire or develop any of the Pending Acquisition
  and Development Facilities on the terms described, or at all, because each of
  these transactions is subject to a variety of conditions, including, in the case
  of facilities under contract, our satisfactory completion of due diligence and
  the satisfaction of customary closing conditions, including the obtaining of any
  required government approvals and consents and, in the case of facilities under
  letters of commitment, execution of mutually-acceptable definitive agreements,
  our satisfactory completion of due diligence, receipt of appraisals and other
  third-party reports, receipt of government and third-party approvals and
  consents, approval by our board of directors and other customary closing
  conditions. In addition, our development of one of the Pending Acquisition and
  Development Facilities is dependent upon our proposed tenant's completion of the
  acquisition of the property on which the facilities are to be built from the
  current owner. We have incurred losses of $585,345 in connection with
  acquisitions that we were unable to complete, consisting primarily of legal
  fees, costs of third-party reports and travel expenses. If we are unsuccessful
  in completing the acquisition or development of additional facilities in the
  future, we will incur similar costs without achieving corresponding revenues,
  our future operating results will not meet expectations and our ability to make
  distributions to our stockholders will be adversely affected.
  WE MAY NOT CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY OUR OTHER ARRANGEMENTS,
  WHICH COULD ADVERSELY AFFECT OUR ABILITY TO MAKE DISTRIBUTIONS TO OUR
  STOCKHOLDERS.
  We have entered into letter agreements with DVH to fund a $20.0 million
  expansion of the Desert Valley Facility and with DSI to fund $50.0 million of
  acquisitions and development facilities. Our funding of the expansion of the
  Desert Valley Facility is subject to receipt of a development agreement from DVH
  which we may not receive until February 28, 2006. DVH is not obligated to
  present us with a development agreement, and, if it does not, we have no
  obligation to provide funding to DVH for the expansion. If we enter into a
  development agreement, we may not begin construction on the expansion for
  several months after that time and the expansion could take up to approximately
  one year to complete. Any acquisition or development of facilities pursuant to
  the DSI commitment is subject to DSI's identification, and our approval, of
  acquisition or development facilities. DSI is not required to identify
  facilities for acquisition or development and, if it does not, we have no
  obligation to provide funding to DSI. We have also entered into arrangements
  with Vibra and Prime Healthcare to acquire hospital facilities in California for
  an aggregate amount of $45.8 million, subject to our tenants' acquisition of
  those facilities. One of those potential tenants only has a non-binding letter
  of intent to acquire the property we intend to purchase from it and the other
  has no agreement or letter of intent to acquire the property. Each of these
  arrangements is subject to a number of additional conditions. Thus we may not
  engage in any of these transactions in the near future, or at all, and may not
  in the near future, or ever, generate any revenues from these arrangements.
  WE MAY BE UNABLE TO ACQUIRE OR DEVELOP ANY OF THE FACILITIES WE HAVE IDENTIFIED
  AS POTENTIAL CANDIDATES FOR ACQUISITION OR DEVELOPMENT, WHICH COULD HARM OUR
  FUTURE OPERATING RESULTS AND ADVERSELY AFFECT OUR ABILITY TO MAKE DISTRIBUTIONS
  TO OUR STOCKHOLDERS.
  We have identified numerous other facilities that we believe would be
  suitable candidates for acquisition or development; however, we cannot assure
  you that we will be successful in completing the acquisition or development of
  any of these facilities. Consummation of any of these acquisitions or
  developments is subject to, among other things, the willingness of the parties
  to proceed with a contemplated transaction, negotiation of mutually acceptable
  definitive agreements, satisfactory completion of due diligence and satisfaction
  of customary closing conditions. If we are unsuccessful in completing the
  acquisition or development of additional facilities in the future, our future
  operating results will not meet expectations and our ability to make
  WE EXPECT TO CONTINUE TO EXPERIENCE RAPID GROWTH AND MAY NOT BE ABLE TO ADAPT
  OUR MANAGEMENT AND OPERATIONAL SYSTEMS TO INTEGRATE THE NET-LEASED FACILITIES WE
  HAVE ACQUIRED AND ARE DEVELOPING OR THOSE THAT WE MAY ACQUIRE OR DEVELOP IN THE
  FUTURE WITHOUT UNANTICIPATED DISRUPTION OR EXPENSE.
  We are currently experiencing a period of rapid growth. We cannot assure
  you that we will be able to adapt our management, administrative, accounting and
  operational systems, or hire and retain sufficient operational staff, to
  integrate and manage the facilities we have acquired and are developing and
  those that we may acquire or develop. Our failure to successfully integrate and
  manage our current portfolio of facilities or any future acquisitions or
  developments could have a material adverse effect on our results of operations
  and financial condition and our ability to make distributions to our
  WE MAY BE UNABLE TO ACCESS CAPITAL, WHICH WOULD SLOW OUR GROWTH.
  Our business plan contemplates growth through acquisitions and developments
  of facilities. As a REIT, we are required to make cash distributions which
  reduces our ability to fund acquisitions and developments with retained
  earnings. We are dependent on acquisition financings and access to the capital
  markets for cash to make investments in new facilities. Due to market or other
  conditions, there will be times when we will have limited access to capital from
  the equity and debt markets. During such periods, virtually all of our available
  capital will be required to meet existing commitments and to reduce existing
  debt. We may not be able to obtain additional equity or debt capital or dispose
  of assets, on favorable terms, if at all, at the time we need additional capital
  to acquire healthcare properties on a competitive
  basis or to meet our obligations. Our ability to grow through acquisitions and
  developments will be limited if we are unable to obtain debt or equity
  financing, which could have a material adverse effect on our results of
  operations and our ability to make distributions to our stockholders.
  DEPENDENCE ON OUR TENANTS FOR RENT MAY ADVERSELY IMPACT OUR ABILITY TO MAKE
  DISTRIBUTIONS TO OUR STOCKHOLDERS.
  We expect to qualify as a REIT and, accordingly, as a REIT operating in the
  healthcare industry, we are not permitted by current tax law to operate or
  manage the businesses conducted in our facilities. Accordingly, we rely almost
  exclusively on rent payments from our tenants for cash with which to make
  distributions to our stockholders. We have no control over the success or
  failure of these tenants' businesses. Significant adverse changes in the
  operations of any facility, or the financial condition of any tenant, could have
  a material adverse effect on our ability to collect rent payments and,
  accordingly, on our ability to make distributions to our stockholders. Facility
  management by our tenants and their compliance with state and federal healthcare
  laws could have a material impact on our tenants' operating and financial
  condition and, in turn, their ability to pay rent to us. Failure on the part of
  a tenant to comply materially with the terms of a lease could give us the right
  to terminate our lease with that tenant, repossess the applicable facility,
  cross default certain other leases with that tenant and enforce the payment
  obligations under the lease. However, we then would be required to find another
  tenant-operator.
  On March 31, 2005, the leases for the Vibra Facilities were amended to
  provide (i) that the testing of certain financial covenants will be deferred
  until the quarter beginning July 1, 2006 and ending September 30, 2006, (ii)
  that these same financial covenants will be tested on a consolidated basis for
  all of the Vibra Facilities, (iii) that the reduction, based on loan principal
  reductions, in the rate of percentage rent will be made on a monthly rather than
  annual basis and (iv) that Vibra will escrow insurance premiums and taxes at our
  request. Prior to execution of this amendment, Vibra was not in compliance with
  certain of the financial covenants in all of its leases with us.
  The transfer of most types of healthcare facilities is highly regulated,
  which may result in delays and increased costs in locating a suitable
  replacement tenant. The sale or lease of these properties to entities other than
  healthcare operators may be difficult due to the added cost and time of
  refitting the properties. 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. 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. Defaults
  by our tenants under our leases may adversely affect the timing of and our
  FAILURE BY OUR TENANTS TO REPAY LOANS CURRENTLY OUTSTANDING OR LOANS WE HAVE
  COMMITTED TO MAKE OR TO PAY US COMMITMENT OR OTHER FEES THAT THEY ARE OBLIGATED
  TO PAY, IN AN AGGREGATE AMOUNT OF APPROXIMATELY $44.1 MILLION, WOULD HAVE A
  MATERIAL ADVERSE EFFECT ON OUR REVENUES AND OUR ABILITY TO MAKE DISTRIBUTIONS TO
  In connection with the acquisition of the Vibra Facilities, our taxable
  REIT subsidiary made a secured loan to Vibra of approximately $41.4 million to
  acquire the operations at the Vibra Facilities. Payment of this loan is secured
  by pledges of equity interests in Vibra and its subsidiaries that are tenants of
  ours. The Vibra leases and loan are cross-defaulted. If Vibra defaulted on this
  loan, our primary recourse would be to foreclose on the equity interests in
  Vibra and its affiliates. This recourse may be impractical because of
  limitations imposed by the REIT tax rules on our ability to own these interests.
  Failure to adhere to these limitations could cause us to lose our REIT status.
  We have obtained guaranty agreements from Mr. Hollinger, Vibra Management, LLC
  and The Hollinger Group that obligate them to make loan payments in the event
  that Vibra fails to do so. However, we do not believe that these parties have
  sufficient financial resources to satisfy a material portion of the loan
  obligations. Mr. Hollinger's guaranty is limited to $5.0 million and Vibra
  Management, LLC and The Hollinger Group do not have
  substantial assets. Vibra has entered into a $14 million credit facility with
  Merrill Lynch, and that loan is secured by an interest in Vibra's receivables.
  There was approximately $11 million outstanding under the facility on March 31,
  2005. At March 31, 2005, Vibra was not in compliance with a facility rent
  coverage covenant under its Merrill Lynch credit facility. The Merrill Lynch
  credit facility documents were subsequently amended to retroactively change the
  rent coverage covenant from a by-facility rent coverage to a consolidated rent
  coverage calculation, so that Vibra was in compliance with the amended covenant
  at March 31, 2005. Our loan is subordinate to Merrill Lynch with respect to
  Vibra's receivables.
  We have also agreed to make a working capital loan to Stealth of up to
  $1.62 million, although no amounts have been loaned to date. Stealth also owes
  us commitment and other fees of approximately $1.1 million. Payment of these
  fees and loan amounts is unsecured. We have also agreed to make a mortgage loan
  in the amount of $8.0 million to Hammond Properties. We are dependent upon the
  ability of these two tenants and Hammond Properties to repay these loans and
  fees. Failure by these tenants or Hammond Properties to meet these obligations
  would have a material adverse effect on our revenues and our ability to make
  ACCOUNTING RULES MAY REQUIRE CONSOLIDATION OF ENTITIES IN WHICH WE INVEST AND
  OTHER ADJUSTMENTS TO OUR FINANCIAL STATEMENTS.
  The Financial Accounting Standards Board, or FASB, issued FASB
  Interpretation No. 46, "Consolidation of Variable Interest Entities, an
  interpretation of Accounting Research Bulletin No. 51 (ARB No. 51)," in January
  2003, and a further interpretation of FIN 46 in December 2003 (FIN 46-R, and
  collectively FIN 46). FIN 46 clarifies the application of ARB No. 51,
  "Consolidated Financial Statements," to certain entities in which equity
  investors do not have the characteristics of a controlling financial interest or
  do not have sufficient equity at risk for the entity to finance its activities
  without additional subordinated financial support from other parties, referred
  to as variable interest entities. FIN 46 generally requires consolidation by the
  party that has a majority of the risk and/or rewards, referred to as the primary
  beneficiary. FIN 46 applies immediately to variable interest entities created
  after January 31, 2003. Under certain circumstances, generally accepted
  accounting principles may require us to account for loans to thinly capitalized
  companies such as Vibra as equity investments. The resulting accounting
  treatment of certain income and expense items may adversely affect our results
  of operations, and consolidation of balance sheet amounts may adversely affect
  any loan covenants.
  THE BANKRUPTCY OR INSOLVENCY OF OUR TENANTS UNDER OUR LEASES COULD SERIOUSLY
  HARM OUR OPERATING RESULTS AND FINANCIAL CONDITION.
  Two of our existing tenants, Stealth and Vibra, are, and some of our
  prospective tenants may be, newly organized, have limited or no operating
  history and may be dependent on loans from us to acquire the facility's
  operations and for initial working capital. Any bankruptcy filings by or
  relating to one of our tenants 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 could delay our efforts to
  collect past due balances under our leases and loans, and could ultimately
  preclude collection of these sums. If a lease is assumed by a tenant in
  bankruptcy, we expect that all pre-bankruptcy balances due under the lease would
  be paid to us in full. However, if a lease is rejected by a tenant in
  bankruptcy, we would have only a general unsecured 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 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.
  OUR FACILITIES ARE CURRENTLY LEASED TO ONLY THREE TENANTS, TWO OF WHICH WERE
  RECENTLY ORGANIZED AND HAVE LIMITED OR NO OPERATING HISTORIES, AND FAILURE OF
  ANY OF THESE TENANTS AND THE GUARANTORS OF THEIR LEASES TO MEET THEIR
  OBLIGATIONS TO US WOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR REVENUES AND OUR
  Our existing facilities and the facilities we have under development are
  currently leased to subsidiaries of Vibra, DVH and Stealth. Vibra and Stealth
  were recently organized, have limited or no operating histories and Vibra was
  dependent on us for an aggregate amount of $47.6 million in loans to acquire
  operations at the facilities and for initial working capital needs. As of
  December 31, 2004, Vibra had total assets of approximately $59 million (of which
  approximately $28.8 million were goodwill and other intangible assets), total
  liabilities of approximately $62.8 million, a deficit in owner's capital of
  approximately $3.8 million, and for the period from inception through December
  31, 2004 had a loss from operations of approximately $5.1 million and a net loss
  of approximately $3.8 million. Stealth had approximately $5.7 million in equity
  as of December 31, 2004 and will have substantial pre-opening and start-up costs
  upon completion of construction of its facilities. We cannot assure you that,
  should Stealth's equity be insufficient to cover its costs, it could access
  additional debt or equity financing. Each Vibra lease is guaranteed by Brad E.
  Hollinger, chief executive officer of The Hollinger Group, Vibra, Vibra
  Management, LLC and The Hollinger Group. However, we do not believe that these
  parties have sufficient financial resources to satisfy a material portion of the
  total lease obligations. Mr. Hollinger's guaranty is limited to $5.0 million,
  Vibra Management, LLC and The Hollinger Group do not have substantial assets,
  and Vibra's assets are substantially comprised of the Vibra Facilities. As of
  December 31, 2004, DVH had tangible assets of approximately $18.4 million,
  liabilities of approximately $18.4 million and $0 stockholders' equity, and for
  the year ended December 31, 2004 had net income of approximately $8.3 million.
  The lease for the Desert Valley Facility is guaranteed by Desert Valley Health
  System, Inc., Desert Valley Medical Group, Inc. and Prime A Investments, LLC. If
  any of our tenants were to experience financial difficulties, the tenant may not
  be able to pay its rent. Guarantors of our lease with DVH may not have
  sufficient assets for us to recover amounts due to us under that lease. The
  failure of our tenants and their guarantors to meet their obligations to us
  OUR BUSINESS IS HIGHLY COMPETITIVE AND WE MAY BE UNABLE TO COMPETE SUCCESSFULLY.
  We compete for development opportunities and opportunities to purchase
  healthcare facilities with, among others:
  - private investors;
  - healthcare providers, including physicians;
  - other REITs;
  - real estate partnerships;
  - financial institutions; and
  - local developers.
  Many of these competitors have substantially greater financial and other
  resources than we have and may have better relationships with lenders and
  sellers. Competition for healthcare facilities from competitors, including other
  REITs, may adversely affect our ability to acquire or develop healthcare
  facilities and the prices we pay for those facilities. If we are unable to
  acquire or develop facilities or if we pay too much for facilities, our revenue
  and earnings growth and financial return could be materially adversely affected.
  Certain of our facilities and additional facilities we may acquire or develop
  will face competition from other nearby facilities that provide services
  comparable to those offered at our facilities and additional facilities we may
  acquire or develop. Some of those facilities are owned by governmental agencies
  and supported by tax revenues, and others are owned by tax-exempt corporations
  and may be supported to a large extent by endowments and charitable
  contributions. Those types of support are not
  available to our facilities and additional facilities we may acquire or develop.
  In addition, competing healthcare facilities located in the areas served by our
  facilities and additional facilities we may acquire or develop may provide
  healthcare services that are not available at our facilities and additional
  facilities we may acquire or develop. From time to time, referral sources,
  including physicians and managed care organizations, may change the healthcare
  facilities to which they refer patients, which could adversely affect our rental
  revenues.
  OUR USE OF DEBT FINANCING WILL SUBJECT US TO SIGNIFICANT RISKS, INCLUDING
  REFINANCING RISK AND THE RISK OF INSUFFICIENT CASH AVAILABLE FOR DISTRIBUTION TO
  Our charter and other organizational documents do not limit the amount of
  debt we may incur. We have targeted our debt level at up to approximately 60% of
  our aggregate facility acquisition and development costs. However, we may modify
  our target debt level at any time without stockholder or board of director
  approval. We cannot assure you that our use of financial leverage will prove to
  be beneficial. We borrowed $75 million from Merrill Lynch Capital under a loan
  agreement. We have also entered into loan agreements with Colonial Bank for
  construction loans in an aggregate amount of $43.4 million. As of March 31,
  2005, we had $74.1 million of long-term debt outstanding. We have received a
  term sheet from Merrill Lynch Capital for an up to $100.0 million senior secured
  revolving credit facility with a term of four years, with one 12-month extension
  option, to refinance the outstanding amount under our existing loan agreement
  with Merrill Lynch Capital and for general corporate purposes. We will have the
  right to increase the amount available under the facility by an amount up to
  $75.0 million.
  We may borrow from other lenders in the future, or we may issue corporate
  debt securities in public or private offerings. The loans from Merrill Lynch
  Capital and Colonial Bank are secured by the Vibra Facilities and our facilities
  under construction in Houston, Texas, respectively. Some of our other borrowings
  in the future may be secured by additional facilities we may acquire or develop.
  In addition, in connection with debt financing from Merrill Lynch Capital and
  Colonial Bank we are, and in connection with other debt financing in the future
  we may be, subject to covenants that may restrict our operations. We cannot
  assure you that we will be able to meet our debt payment obligations or
  restrictive covenants and, to the extent that we cannot, we risk the loss of
  some or all of our facilities to foreclosure. In addition, debt service
  obligations will reduce the amount of cash available for distribution to our
  We anticipate that much of our 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 refinance
  then-existing debt 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 or sales of facilities, our cash flow may not be
  sufficient to repay all maturing debt in years when significant balloon payments
  come due. Additionally, we may incur significant penalties if we choose to
  prepay the debt.
  FAILURE TO HEDGE EFFECTIVELY AGAINST INTEREST RATE CHANGES MAY ADVERSELY AFFECT
  OUR RESULTS OF OPERATIONS AND OUR ABILITY TO MAKE DISTRIBUTIONS TO OUR
  Upon completion of this offering, we expect to have $          in variable
  interest rate debt. We may seek to manage our exposure to interest rate
  volatility by using interest rate hedging arrangements that involve risk,
  including the risk that counterparties may fail to honor their obligations under
  these arrangements, that these 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. 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 results of operations and our ability to make
  OUR CURRENT TENANTS HAVE, AND PROSPECTIVE TENANTS MAY HAVE, AN OPTION TO
  PURCHASE THE FACILITIES WE LEASE TO THEM WHICH COULD DISRUPT OUR OPERATIONS.
  Our current tenants have, and some prospective tenants will have, the
  option to purchase the facilities we lease to them. At the expiration of each
  Vibra lease, each tenant will have the option to purchase the facility at a
  purchase price equal to the greater of (i) the appraised value of the facility,
  determined assuming the lease is still in place, or (ii) the purchase price we
  paid for the facility, including acquisition costs, increased by 2.5% per year
  from the date of purchase. At any time after February 28, 2007, so long as DVH,
  and its affiliates are not in default under any lease with us or any of the
  leases with its subtenants, DVH will have the option, upon 90 days' prior
  written notice, to purchase the Desert Valley Facility at a purchase price equal
  to the sum of (i) the purchase price of the facility, and (ii) that amount
  determined under a formula that would provide us an internal rate of return of
  10% per year, increased by 2% of such percentage each year, taking into account
  all payments of base rent received by us. If during the term of the lease we
  receive from the previous owner or any of its affiliates, a written offer to
  purchase the Desert Valley Facility and we are willing to accept the offer, so
  long as DVH and its affiliates are not in default under any lease with us or any
  of the subleases with its subtenants, we must first present the offer to DVH and
  allow DVH the right to purchase the facility upon the same price, terms and
  conditions as set forth in the offer; however, if the offer is made after
  February 28, 2007, in lieu of exercising its right of first refusal, DVH may
  exercise its option to purchase as provided above. After the first full 12 month
  period after construction of the West Houston MOB and the West Houston Hospital,
  respectively, as long as Stealth is not in default under either of its leases
  with us or any of the leases with its physician subtenants, it has the right to
  purchase the West Houston MOB or the West Houston Hospital at a price equal to
  the greater of (i) that amount determined under a formula that would provide us
  an internal rate of return of at least 18% and (ii) the appraised value based on
  a 15 year lease in place. Upon written notice to us within 90 days of the
  expiration of the applicable lease, as long as Stealth is not in default under
  either of its leases with us or any of the leases with its physician subtenants,
  Stealth will have the option to purchase the West Houston MOB or the West
  Houston Hospital at a price equal to the greater of (i) the total development
  costs (including any capital additions funded by us, but excluding any capital
  additions funded by Stealth) increased by 2.5% per year, and (ii) the appraised
  value based on a 15 year lease in place. The Stealth leases also provide that
  under certain limited circumstances, Stealth will have the right to present us
  with a choice of one out of three proposed exchange facilities to be substituted
  for the leased facility.
  All of our arrangements which provide or will provide tenants the option to
  purchase the facilities we lease to them are subject to regulatory requirements
  that such purchases be at fair market value. We cannot assure you that the
  formulas we have developed for setting the purchase price will yield a fair
  market value purchase price. Any purchase not at fair market value may present
  risks of challenge from healthcare regulatory authorities.
  In the event our tenants and prospective tenants determine to purchase the
  facilities they lease either during the lease term or after their expiration,
  the timing of those purchases will be outside of our control and we may not be
  able to re-invest the capital on as favorable terms, or at all. Any of these
  purchases would disrupt our cash flow by eliminating lease payments from these
  tenants. Our inability to effectively manage the turn-over of our facilities
  could materially adversely affect our ability to execute our business plan and
  our results of operations.
  PROPERTY OWNED IN LIMITED LIABILITY COMPANIES AND PARTNERSHIPS IN WHICH WE ARE
  NOT THE SOLE EQUITY HOLDER MAY LIMIT OUR ABILITY TO ACT EXCLUSIVELY IN OUR
  We own, and in the future expect to own, interests in our facilities
  through wholly or majority owned subsidiaries of our operating partnership.
  Stealth, L.P., the tenant of our West Houston Hospital, owns a 6% limited
  partnership interest in MPT West Houston Hospital, L.P., which owns the West
  Houston Hospital. We have sold limited partnership interests representing
  approximately 24% of the aggregate equity interests in MPT West Houston MOB,
  L.P., the entity that owns our West Houston MOB, to physicians and others
  associated with our tenant or subtenants of the West Houston MOB. We may offer
  limited liability company and limited partnership interests to tenants,
  subtenants and physicians in the
  future. Investments in partnerships, limited liability companies or other
  entities with co-owners may, under certain circumstances, involve risks not
  present were a co-owner not involved, including the possibility that partners or
  other co-owners might become bankrupt or fail to fund their share of required
  capital contributions. Partners or other co-owners may have economic or other
  business interests or goals that are inconsistent with our business interests or
  goals, and may be in a position to take actions contrary to our policies or
  objectives. Such investments may also have potential risks pertaining to
  healthcare regulatory compliance, particularly when partners or other co-owners
  are physicians, and of impasses on major decisions, such as sales or mergers,
  because neither we nor our partners or other co-owners would have full control
  over the partnership, limited liability company or other entity. Disputes
  between us and our partners or other co-owners may result in litigation or
  arbitration that would increase our expenses and prevent our officers and
  directors from focusing their time and effort on our business. Consequently,
  actions by or disputes with our partners or other co-owners might result in
  subjecting facilities owned by the partnership, limited liability company or
  other entity to additional risk. In addition, we may in certain circumstances be
  liable for the actions of our partners or other co-owners. The occurrence of any
  of the foregoing events could have a material adverse effect on our results of
  TERRORIST ATTACKS, SUCH AS THE ATTACKS THAT OCCURRED IN NEW YORK AND WASHINGTON,
  D.C. ON SEPTEMBER 11, 2001, U.S. MILITARY ACTION AND THE PUBLIC'S REACTION TO
  THE THREAT OF TERRORISM OR MILITARY ACTION COULD ADVERSELY AFFECT OUR RESULTS OF
  OPERATIONS AND THE MARKET ON WHICH OUR COMMON STOCK WILL TRADE.
  There may be future terrorist threats or attacks against the United States
  or U.S. businesses. These attacks may directly impact the value of our
  facilities through damage, destruction, loss or increased security costs. Losses
  due to wars or terrorist attacks may be uninsurable, or insurance may not be
  available at a reasonable price. More generally, any of these events could cause
  consumer confidence and spending to decrease or result in increased volatility
  in the United States and worldwide financial markets and economies.
  RISKS RELATING TO REAL ESTATE INVESTMENTS
  OUR REAL ESTATE INVESTMENTS WILL BE CONCENTRATED IN NET-LEASED HEALTHCARE
  FACILITIES, MAKING US MORE VULNERABLE ECONOMICALLY THAN IF OUR INVESTMENTS WERE
  MORE DIVERSIFIED.
  We have acquired and are developing and expect to continue acquiring and
  developing net-leased healthcare facilities. 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 in net-leased 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 and, consequently, our ability to meet debt
  service obligations or make distributions to our stockholders. These adverse
  effects could be more pronounced than if we diversified our investments outside
  of real estate or outside of healthcare facilities.
  OUR NET-LEASED FACILITIES AND TARGETED NET-LEASED FACILITIES MAY NOT HAVE
  EFFICIENT ALTERNATIVE USES, WHICH COULD IMPEDE OUR ABILITY TO FIND REPLACEMENT
  TENANTS IN THE EVENT OF TERMINATION OR DEFAULT UNDER OUR LEASES.
  All of the facilities in our current portfolio are and all of the
  facilities we acquire or develop in the future will be net-leased healthcare
  facilities. If we or our tenants terminate the leases for these facilities or if
  these tenants lose their regulatory authority to operate these facilities, we
  may not be able to locate suitable replacement tenants to lease the facilities
  for their specialized uses. Alternatively, we may be required to spend
  substantial amounts to adapt the facilities to other uses. Any loss of revenues
  or additional capital expenditures occurring as a result could have a material
  adverse effect on our financial
  condition and results of operations and could hinder our ability to meet debt
  service obligations or make distributions to our stockholders.
  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.
  Real estate investments are relatively illiquid. Our ability to quickly
  sell or exchange any of our facilities in response to changes in economic and
  other conditions will be limited. No assurances can be given that we will
  recognize full value for any facility that we are required to sell for liquidity
  reasons. Our inability to respond rapidly to changes in the performance of our
  investments could adversely affect our financial condition and results of
  DEVELOPMENT AND CONSTRUCTION RISKS COULD ADVERSELY AFFECT OUR ABILITY TO MAKE
  We are developing a community hospital and an adjacent medical office
  building in Houston, Texas which we expect to complete in 2005. We have entered
  into letters of commitment and contracts to develop properties in the future.
  Our development and related construction activities may subject us to the
  following risks:
  - we may have to compete for suitable development sites;
  - our ability to complete construction is dependent on there being no
  title, environmental or other legal proceedings arising during
  construction;
  - we may be subject to delays due to weather conditions, strikes and other
  contingencies beyond our control;
  - we may be unable to obtain, or suffer delays in obtaining, necessary
  zoning, land-use, building, occupancy healthcare regulatory and other
  required governmental permits and authorizations, which could result in
  increased costs, delays in construction, or our abandonment of these
  projects;
  - we may incur construction costs for a facility which exceed our original
  estimates due to increased costs for materials or labor or other costs
  that we did not anticipate; and
  - we may not be able to obtain financing on favorable terms, which may
  render us unable to proceed with our development activities.
  We expect the net proceeds of this offering allocated to development
  projects to be applied to these projects over time. Additionally, the time frame
  required for development and construction of these facilities means that we may
  have to wait years for a significant cash return. Because we are required to
  make cash distributions to our stockholders, if the cash flow from operations or
  refinancings is not sufficient, we may be forced to borrow additional money to
  fund distributions. We cannot assure you that we will complete our current
  construction projects on time or within budget or that future development
  projects will not be subject to delays and cost overruns. Risks associated with
  our development projects may reduce anticipated rental revenue which could
  affect the timing of, and our ability to make, distributions to our
  OUR FACILITIES MAY NOT ACHIEVE EXPECTED RESULTS OR WE MAY BE LIMITED IN OUR
  ABILITY TO FINANCE FUTURE ACQUISITIONS, WHICH MAY HARM OUR FINANCIAL CONDITION
  AND OPERATING RESULTS AND OUR ABILITY TO MAKE THE DISTRIBUTIONS TO OUR
  STOCKHOLDERS REQUIRED TO MAINTAIN OUR REIT STATUS.
  Acquisitions and developments entail risks that investments will fail to
  perform in accordance with expectations and that estimates of the costs of
  improvements necessary to acquire and develop facilities will prove inaccurate,
  as well as general investment risks associated with any new real estate
  investment. We anticipate that future acquisitions and developments will largely
  be financed through externally generated funds such as borrowings under credit
  facilities and other secured and unsecured debt financing and from issuances of
  equity securities. Because we must distribute at least 90% of our REIT taxable
  income, excluding net capital gain, each year to maintain our qualification as a
  REIT, our ability to rely upon income from operations or cash flow from
  operations to finance our growth and acquisition activities will be limited.
  Accordingly, if we are unable to obtain funds from borrowings or the capital
  markets to finance our acquisition and development activities, our ability to
  grow would likely be curtailed, amounts available for distribution to
  stockholders could be adversely affected and we could be required to reduce
  distributions, thereby jeopardizing our ability to maintain our status as a
  Newly-developed or newly-renovated facilities do not have the operating
  history that would allow our management to make objective pricing decisions in
  acquiring these facilities (including facilities that may be acquired from
  certain of our executive officers, directors and their affiliates). The purchase
  prices of these facilities will be based in part upon projections by management
  as to the expected operating results of the facilities, subjecting us to risks
  that these facilities may not achieve anticipated operating results or may not
  achieve these results within anticipated time frames.
  IF WE SUFFER LOSSES THAT ARE NOT COVERED BY INSURANCE OR THAT ARE IN EXCESS OF
  OUR INSURANCE COVERAGE LIMITS, WE COULD LOSE INVESTMENT CAPITAL AND ANTICIPATED
  PROFITS.
  We have purchased general liability insurance (lessor's risk) that provides
  coverage for bodily injury and property damage to third parties resulting from
  our ownership of the healthcare facilities that are leased to and occupied by
  our tenants. Our leases require our tenants to carry general liability,
  professional liability, loss of earnings, all risk, and extended coverage
  insurance in amounts sufficient to permit the replacement of the facility in the
  event of a total loss, subject to applicable deductibles. However, there are
  certain types of losses, generally of a catastrophic nature, such as
  earthquakes, floods, hurricanes and acts of terrorism, that may be uninsurable
  or not insurable at a price we or our tenants can afford. Inflation, changes in
  building codes and ordinances, environmental considerations and other factors
  also might make it impracticable to use insurance proceeds to replace a facility
  after it has been damaged or destroyed. Under such circumstances, the insurance
  proceeds we receive might not be adequate to restore our economic position with
  respect to the affected facility. If any of these or similar events occur, it
  may reduce our return from the facility and the value of our investment.
  CAPITAL EXPENDITURES FOR FACILITY RENOVATION MAY BE GREATER THAN ANTICIPATED AND
  MAY ADVERSELY IMPACT RENT PAYMENTS BY OUR TENANTS AND OUR ABILITY TO MAKE
  DISTRIBUTIONS TO STOCKHOLDERS.
  Facilities, particularly those that consist of older structures, have an
  ongoing need for renovations and other capital improvements, including periodic
  replacement of furniture, fixtures and equipment. Although our leases require
  our tenants to be primarily responsible for the cost of such expenditures,
  renovation of facilities involves certain risks, including the possibility of
  environmental problems, construction cost overruns and delays, uncertainties as
  to market demand or deterioration in market demand after commencement of
  renovation and the emergence of unanticipated competition from other facilities.
  All of these factors could adversely impact rent and loan payments by our
  tenants, could have a material adverse effect on our financial condition and
  results of operations and could adversely effect our ability to make
  ALL OF OUR HEALTHCARE FACILITIES ARE SUBJECT TO PROPERTY TAXES THAT MAY INCREASE
  IN THE FUTURE AND ADVERSELY AFFECT OUR BUSINESS.
  Our facilities are subject to real and personal property taxes that may
  increase as property tax rates change and as the facilities are assessed or
  reassessed by taxing authorities. Our leases generally provide that the property
  taxes are charged to our tenants as an expense related to the facilities that
  they occupy. As the owner of the facilities, however, we are ultimately
  responsible for payment of the taxes to the government. If property taxes
  increase, our tenants may be unable to make the required tax payments,
  ultimately requiring us to pay the taxes. If we incur these tax liabilities, our
  ability to make expected distributions to our stockholders could be adversely
  affected.
  OUR PERFORMANCE AND THE PRICE OF OUR COMMON STOCK WILL BE AFFECTED BY RISKS
  ASSOCIATED WITH THE REAL ESTATE INDUSTRY.
  Factors that may adversely affect the economic performance and price of our
  common stock include:
  - changes in the national, regional and local economic climate, including
  but not limited to changes in interest rates;
  - local conditions such as an oversupply of, or a reduction in demand for,
  rehabilitation hospitals, long-term acute care hospitals, ambulatory
  surgery centers, medical office buildings, specialty hospitals and
  treatment centers;
  - attractiveness of our facilities to healthcare providers and other types
  of tenants; and
  - competition from other rehabilitation hospitals, long-term acute care
  facilities, medical office buildings, outpatient treatment facilities,
  ambulatory surgery centers and specialty hospitals and treatment centers.
  AS THE OWNER AND LESSOR OF REAL ESTATE, WE ARE SUBJECT TO RISKS UNDER
  ENVIRONMENTAL LAWS, THE COST OF COMPLIANCE WITH WHICH AND ANY VIOLATION OF WHICH
  COULD MATERIALLY ADVERSELY AFFECT US.
  Our operating expenses could be higher than anticipated due to the cost of
  complying with existing and future environmental and occupational health and
  safety laws and regulations. Various environmental laws may impose liability on
  a current or prior owner or operator of real property for removal or remediation
  of hazardous or toxic substances. Current or prior owners or operators may also
  be liable for government fines and damages for injuries to persons, natural
  resources and adjacent property. These environmental laws often impose liability
  whether or not the owner or operator knew of, or was responsible for, the
  presence or disposal of the hazardous or toxic substances. The cost of complying
  with environmental laws could materially adversely affect amounts available for
  distribution to our stockholders and could exceed the value of all of our
  facilities. In addition, the presence of hazardous or toxic substances, or the
  failure of our tenants to properly dispose of or remediate such substances,
  including medical waste generated by physicians and our other healthcare
  tenants, may adversely affect our tenants or our ability to use, sell or rent
  such property or to borrow using such property as collateral which, in turn,
  could reduce our revenue and our financing ability. We have obtained on all
  facilities we have acquired and are developing and intend to obtain on all
  future facilities we acquire Phase I environmental assessments. However, even if
  the Phase I environmental assessment reports do not reveal any material
  environmental contamination, it is possible that material environmental
  liabilities may exist of which we are unaware.
  In April 2003, Stealth, which then owned the property on which the West
  Houston Facilities are being constructed, arranged for a Phase I environmental
  assessment to be performed. The assessor recommended further investigation based
  on field screening of soil samples collected during a geotechnical
  investigation. Accordingly, the tenant arranged for a Phase II environmental
  soil sampling to be performed in June 2003 to assess shallow soils for the
  presence of petroleum hydrocarbons and volatile organic compounds. Based on the
  findings of this sampling, the tenant was advised that no further tests were
  warranted and that the property was suitable for the proposed development.
  In April 2005, we arranged for a Phase I environmental assessment to be
  performed at the Denham Springs, Louisiana property. The assessor recommended
  further soil and groundwater sampling due to the property's previous use as a
  hospital that involved X-ray and photochemical developing activities.
  Accordingly, we arranged for a Phase II environmental soil and groundwater
  sampling. On May 19, 2005, we received a Phase II report which concluded that
  one groundwater sample was at or exceeded Louisiana Department of Environmental
  Quality (LDEQ) Numerical Acute and Chronic Criteria standards for several
  metals. Concentrations of metals in the soil samples were either below
  quantification limits or below LDEQ regulatory guidelines. Based on this
  sampling, we were advised to present the findings to LDEQ for review and
  determination. We were also advised that additional action or investigation may
  be required by the agency. We cannot predict the action, if any, that may be
  taken by state or federal
  regulatory enforcement agencies with respect to these findings or the exposure
  to us for costs of clean-up or fines.
  Although the leases for our facilities generally require our tenants to
  comply with laws and regulations governing their operations, including the
  disposal of medical waste, and to indemnify us for certain environmental
  liabilities, the scope of their obligations may be limited. We cannot assure you
  that our tenants would be able to fulfill their indemnification obligations and,
  therefore, any violation of environmental laws could have a material adverse
  affect on us. In addition, environmental and occupational health and safety laws
  constantly are evolving, and changes in laws, regulations or policies, or
  changes in interpretations of the foregoing, could create liabilities where none
  exists today.
  COSTS ASSOCIATED WITH COMPLYING WITH THE AMERICANS WITH DISABILITIES ACT OF 1993
  MAY ADVERSELY AFFECT OUR FINANCIAL CONDITION AND OPERATING RESULTS.
  Under the Americans with Disabilities Act of 1993, all public
  accommodations are required to meet certain federal requirements related to
  access and use by disabled persons. While our facilities are generally in
  compliance with these requirements, a determination that we are not in
  compliance with the Americans with Disabilities Act of 1993 could result in
  imposition of fines or an award of damages to private litigants. In addition,
  changes in governmental rules and regulations or enforcement policies affecting
  the use and operation of the facilities, including changes to building codes and
  fire and life-safety codes, may occur. If we are required to make substantial
  modifications at our facilities to comply with the Americans with Disabilities
  Act of 1993 or other changes in governmental rules and regulations, this may
  have a material adverse effect on our financial condition and results of
  operations and could adversely affect our ability to make distributions to our
  OUR FACILITIES MAY CONTAIN OR DEVELOP HARMFUL MOLD OR SUFFER FROM OTHER AIR
  QUALITY ISSUES, WHICH COULD LEAD TO LIABILITY FOR ADVERSE HEALTH EFFECTS AND
  COSTS OF REMEDIATING THE PROBLEM.
  When excessive moisture accumulates in buildings or on building materials,
  mold growth may occur, particularly if the moisture problem remains undiscovered
  or is not addressed over a period of time. Some molds may produce airborne
  toxins or irritants. Indoor air quality issues can also stem from inadequate
  ventilation, chemical contamination from indoor or outdoor sources and other
  biological contaminants such as pollen, viruses and bacteria. Indoor exposure to
  airborne toxins or irritants above certain levels can be alleged to cause a
  variety of adverse health effects and symptoms, including allergic or other
  reactions. As a result, the presence of significant mold or other airborne
  contaminants at any of our facilities could require us to undertake a costly
  remediation program to contain or remove the mold or other airborne contaminants
  from the affected facilities or increase indoor ventilation. In addition, the
  presence of significant mold or other airborne contaminants could expose us to
  liability from our tenants, employees of our tenants and others if property
  damage or health concerns arise.
  OUR INTERESTS IN FACILITIES THROUGH GROUND LEASES EXPOSE US TO THE LOSS OF THE
  FACILITY UPON BREACH OR TERMINATION OF THE GROUND LEASE AND MAY LIMIT OUR USE OF
  THE FACILITY.
  We have acquired our interest in one of our facilities by acquiring a
  leasehold interest in the land on which the facility is located rather than an
  ownership interest in the facility, and we may acquire additional facilities in
  the future through ground leases. As lessee under ground leases, we are exposed
  to the possibility of losing the property upon termination, or an earlier breach
  by us, of the ground lease. Ground leases may also restrict our use of
  facilities. Our current ground lease in Marlton, New Jersey limits our use of
  the property to operation of a 76 bed rehabilitation hospital. This restriction
  and any similar future restrictions in ground leases will limit our flexibility
  in renting the facility and may impede our ability to sell the property.
  RISKS RELATING TO THE HEALTHCARE INDUSTRY
  REDUCTIONS IN REIMBURSEMENT FROM THIRD-PARTY PAYORS, INCLUDING MEDICARE AND
  MEDICAID, COULD ADVERSELY AFFECT THE PROFITABILITY OF OUR TENANTS AND HINDER
  THEIR ABILITY TO MAKE RENT PAYMENTS TO US.
  Sources of revenue for our tenants and operators may include the federal
  Medicare program, state Medicaid programs, private insurance carriers and health
  maintenance organizations, among others. Efforts by such payors to reduce
  healthcare costs will likely continue, which may result in reductions or slower
  growth in reimbursement for certain services provided by some of our tenants. In
  addition, the failure of any of our tenants to comply with various laws and
  regulations could jeopardize their ability to continue participating in
  Medicare, Medicaid and other government-sponsored payment programs.
  The healthcare industry continues to face various challenges, including
  increased government and private payor pressure on healthcare providers to
  control or reduce costs. We believe that our tenants will continue to experience
  a shift in payor mix away from fee-for-service payors, resulting in an increase
  in the percentage of revenues attributable to managed care payors, government
  payors and general industry trends that include pressures to control healthcare
  costs. Pressures to control healthcare costs and a shift away from traditional
  health insurance reimbursement have resulted in an increase in the number of
  patients whose healthcare coverage is provided under managed care plans, such as
  health maintenance organizations and preferred provider organizations. In
  addition, due to the aging of the population and the expansion of governmental
  payor programs, we anticipate that there will be a marked increase in the number
  of patients reliant on healthcare coverage provided by governmental payors.
  These changes could have a material adverse effect on the financial condition of
  some or all of our tenants, which could have a material adverse effect on our
  financial condition and results of operations and could negatively affect our
  THE HEALTHCARE INDUSTRY IS HEAVILY REGULATED AND EXISTING AND NEW LAWS OR
  CERTIFICATION OR FAILURE TO OBTAIN LICENSURE OR CERTIFICATION COULD RESULT IN
  THE INABILITY OF OUR TENANTS TO MAKE LEASE PAYMENTS TO US.
  The healthcare industry is highly regulated by federal, state and local
  laws, and is directly affected by federal conditions of participation, state
  licensing requirements, facility inspections, state and federal reimbursement
  policies, regulations concerning capital and other expenditures, certification
  requirements and other such laws, regulations and rules. In addition,
  establishment of healthcare facilities and transfers of operations of healthcare
  facilities are subject to regulatory approvals not required for establishment of
  or transfers of other types of commercial operations and real estate. Sanctions
  for failure to comply with these regulations and laws include, but are not
  limited to, loss of or inability to obtain licensure, fines and loss of or
  inability to obtain certification to participate in the Medicare and Medicaid
  programs, as well as potential criminal penalties. The failure of any tenant to
  comply with such laws, requirements and regulations could affect its ability to
  establish or continue its operation of the facility or facilities and could
  adversely affect the tenant's ability to make lease payments to us which could
  operations and could negatively affect our ability to make distributions to our
  stockholders. In addition, restrictions and delays in transferring the
  operations of healthcare facilities, in obtaining new third-party payor
  contracts including Medicare and Medicaid provider agreements, and in receiving
  licensure and certification approval from appropriate state and federal agencies
  by new tenants may affect our ability to terminate lease agreements, remove
  tenants that violate lease terms, and replace existing tenants with new tenants.
  Furthermore, these matters may affect new tenants ability to obtain
  reimbursement for services rendered, which could adversely affect their ability
  to pay rent to us and to pay principal and interest on their loans from us.
  ADVERSE TRENDS IN HEALTHCARE PROVIDER OPERATIONS MAY NEGATIVELY AFFECT OUR LEASE
  REVENUES AND OUR ABILITY TO MAKE DISTRIBUTIONS TO OUR STOCKHOLDERS.
  We believe that the healthcare industry is currently experiencing:
  - changes in the demand for and methods of delivering healthcare services;
  - changes in third-party reimbursement policies;
  - significant unused capacity in certain areas, which has created
  substantial competition for patients among healthcare providers in those
  areas;
  - continuing pressure by private and governmental payors to reduce payments
  to providers of services; and
  - increased scrutiny by federal and state authorities of billing, referral
  and other practices.
  These factors may adversely affect the economic performance of some or all
  of our tenants and, in turn, our revenues. Accordingly, these factors could have
  a material adverse effect on our financial condition and results of operations
  and could negatively affect our ability to make distributions to our
  OUR TENANTS ARE SUBJECT TO FRAUD AND ABUSE LAWS, THE VIOLATION OF WHICH BY A
  TENANT MAY JEOPARDIZE THE TENANT'S ABILITY TO MAKE LEASE AND LOAN PAYMENTS TO
  The federal government and numerous state governments have passed laws and
  regulations that attempt to eliminate healthcare fraud and abuse by prohibiting
  business arrangements that induce patient referrals or the ordering of specific
  ancillary services. In addition, the Balanced Budget Act of 1997 strengthened
  the federal anti-fraud and abuse laws to provide for stiffer penalties for
  violations. Violations of these laws may result in the imposition of criminal
  and civil penalties, including possible exclusion from federal and state
  healthcare programs. Imposition of any of these penalties upon any of our
  tenants could jeopardize any tenant's ability to operate a facility or to make
  lease and loan payments, thereby potentially adversely affecting us.
  In the past several years, federal and state governments have significantly
  increased investigation and enforcement activity to detect and eliminate fraud
  and abuse in the Medicare and Medicaid programs. In addition, legislation has
  been adopted at both state and federal levels which severely restricts the
  ability of physicians to refer patients to entities in which they have a
  financial interest. It is anticipated that the trend toward increased
  investigation and enforcement activity in the area of fraud and abuse, as well
  as self-referrals, will continue in future years and could adversely affect our
  prospective tenants and their operations, and in turn their ability to make
  lease and loan payments to us.
  We cannot assure you that we will meet all the conditions for the safe
  harbor for space rental in structuring lease arrangements involving facilities
  in which local physicians are investors and tenants, and it is unlikely that we
  will meet all conditions for the safe harbor in those instances in which
  percentage rent is contemplated and we have physician investors. In addition,
  federal regulations require that our tenants with purchase options pay fair
  market value purchase prices for facilities in which we have physician
  investment. We cannot assure you that all of our purchase options will be at
  fair market value. Any purchase not at fair market value may present risks of
  challenge from healthcare regulatory authorities.
  Vibra has accepted, and prospective tenants may accept, an assignment of
  the previous operator's Medicare provider agreement. Vibra and other
  new-operator tenants that take assignment of Medicare provider agreements might
  be subject to federal or state regulatory, civil and criminal investigations of
  the previous owner's operations and claims submissions. While we conduct due
  diligence in connection with the acquisition of such facilities, these types of
  issues may not be discovered prior to purchase. Adverse decisions, fines or
  recoupments might negatively impact our tenants' financial condition.
  CERTAIN OF OUR LEASE ARRANGEMENTS MAY BE SUBJECT TO FRAUD AND ABUSE OR PHYSICIAN
  SELF-REFERRAL LAWS.
  Local physician investment in our operating partnership or our subsidiaries
  that own our facilities could subject our lease arrangements to scrutiny under
  fraud and abuse and physician self-referral laws. Under the federal Ethics in
  Patient Referrals Act of 1989, or Stark Law, and regulations adopted thereunder,
  if our lease arrangements do not satisfy the requirements of an applicable
  exception, that noncompliance could adversely affect the ability of our tenants
  to bill for services provided to Medicare beneficiaries pursuant to referrals
  from physician investors and subject us and our tenants to fines, which could
  impact their ability to make lease and loan payments to us. On March 26, 2004
  CMS issued Phase II final rules under the Stark Law, which, together with the
  2001 Phase I final rules, set forth CMS' current interpretation and application
  of the Stark Law prohibition on referrals of designated health
  services, or DHS. These rules provide us additional guidance on application of
  the Stark Law through the implementation of "bright-line" tests, including
  additional regulations regarding the indirect compensation exception, but do not
  eliminate the risk that our lease arrangements and business strategy of
  physician investment may violate the Stark Law. Finally, the Phase II rules
  implemented an 18-month moratorium on physician investment in specialty
  hospitals imposed by the Medicare Prescription Drug, Improvement and
  Modernization Act. We intend to use our good faith efforts to structure our
  lease arrangements to comply with these laws; however, if we are unable to do
  so, this failure may restrict our ability to permit physician investment or,
  where such physicians do participate, may restrict the types of lease
  arrangements into which we may enter, including our ability to enter into
  percentage rent arrangements.
  STATE CERTIFICATE OF NEED LAWS MAY ADVERSELY AFFECT OUR DEVELOPMENT OF
  FACILITIES AND THE OPERATIONS OF OUR TENANTS.
  Certain healthcare facilities in which we invest may also be subject to
  state laws which require regulatory approval in the form of a certificate of
  need prior to initiation of certain projects, including, but not limited to, the
  establishment of new or replacement facilities, the addition of beds, the
  addition or expansion of services and certain capital expenditures. State
  certificate of need laws are not uniform throughout the United States and are
  subject to change. We cannot predict the impact of state certificate of need
  laws on our development of facilities or the operations of our tenants.
  In addition, certificate of need laws often materially impact the ability
  of competitors to enter into the marketplace of our facilities. Finally, in
  limited circumstances, loss of state licensure or certification or closure of a
  facility could ultimately result in loss of authority to operate the facility
  and require re-licensure or new certificate of need authorization to
  re-institute operations. As a result, a portion of the value of the facility may
  be related to the limitation on new competitors. In the event of a change in the
  certificate of need laws, this value may markedly decrease.
  RISKS RELATING TO OUR ORGANIZATION AND STRUCTURE
  PROVISIONS OF MARYLAND LAW, OUR CHARTER AND OUR BYLAWS MAY PREVENT OR DETER
  CHANGES IN MANAGEMENT AND THIRD-PARTY ACQUISITION PROPOSALS THAT YOU MAY BELIEVE
  TO BE IN YOUR BEST INTEREST, DEPRESS OUR STOCK PRICE OR CAUSE DILUTION.
  Our charter contains ownership limitations that may restrict business
  combination opportunities, inhibit change of control transactions and reduce the
  value of our stock.  To qualify as a REIT under the Code, no more than 50% in
  value of our outstanding stock, after taking into account options to acquire
  stock, may be owned, directly or indirectly, by five or fewer persons during the
  last half of each taxable year, other than our first REIT taxable year. Our
  charter generally prohibits direct or indirect ownership by any person of more
  than 9.8% in value or in number, whichever is more restrictive, of outstanding
  shares of any class or series of our securities, including our common stock.
  Generally, common stock owned by affiliated owners will be aggregated for
  purposes of the ownership limitation. Any transfer of our common stock that
  would violate the ownership limitation will be null and void, and the intended
  transferee will acquire no rights in such stock. Instead, such common stock will
  be designated as "shares-in-trust" and transferred automatically to a trust
  effective on the day before the purported transfer of such stock. The
  beneficiary of that trust will be one or more charitable organizations named by
  us. The ownership limitation could have the effect of delaying, deterring or
  preventing a change in control or other transaction in which holders of common
  stock might receive a premium for their common stock over the then-current
  market price or which such holders otherwise might believe to be in their best
  interests. The ownership limitation provisions also may make our common stock an
  unsuitable investment vehicle for any person seeking to obtain, either alone or
  with others as a group, ownership of more than 9.8% of either the value or
  number of the outstanding shares of our common stock. Our board of directors, in
  its sole discretion, may waive or modify, subject to limitations, the ownership
  limit with respect to one or more stockholders if it is satisfied that ownership
  in excess of their limit will not jeopardize our status as a REIT. See
  "Description of Capital Stock -- Restrictions on Ownership and Transfer."
  Certain provisions of Maryland law may limit the ability of a third party
  to acquire control of our company.  Certain provisions of the Maryland General
  Corporation Law, or the MGCL, could have the effect of inhibiting a third party
  from making a proposal to acquire us or of impeding a change of control under
  circumstances that otherwise could provide the holders of shares of our common
  stock with the opportunity to realize a premium over the then-prevailing market
  price of such shares, including:
  - "business combination" provisions that, subject to limitations, prohibit
  certain business combinations between us and an "interested stockholder"
  (defined generally as a person who beneficially owns 10% or more of the
  voting power of our shares or an affiliate thereof) for five years after
  the most recent date on which the stockholder becomes an interested
  stockholder, and thereafter imposes special appraisal rights and special
  stockholder voting requirements on these combinations; and
  - "control share" provisions that provide that "control shares" of our
  company (defined as shares which, when aggregated with other shares
  controlled by the stockholder, entitle the stockholder to exercise one of
  three increasing ranges of voting power in electing directors) acquired
  in a "control share acquisition" (defined as the direct or indirect
  acquisition of ownership or control of "control shares") have no voting
  rights except to the extent approved by our stockholders by the
  affirmative vote of the holders of at least two-thirds of all the votes
  entitled to be cast on the matter, excluding all interested shares.
  We have opted out of these provisions of the MGCL pursuant to provisions in
  our charter. However, we may, by amendment to our charter with approval of our
  stockholders, opt in to the business combination and control share provisions of
  the MGCL in the future.
  Additionally, Title 8, Subtitle 3 of the MGCL permits our board of
  directors, without stockholder approval and regardless of what is currently
  provided in our charter and our amended and restated bylaws, or bylaws, to
  implement takeover defenses, some of which (for example, a classified board) we
  do not presently have. These provisions may have the effect of inhibiting a
  third party from making an acquisition proposal for our company or of delaying,
  deferring or preventing a change of control of our company under circumstances
  that otherwise could provide the holders of our common stock with the
  opportunity to realize a premium over the then-current market price of our
  common stock.
  Maryland law does not impose heightened standards on directors in takeover
  situations. The MGCL provides that an act of a director relating to or affecting
  an acquisition or potential acquisition of control of a corporation may not be
  subject to a higher duty or greater scrutiny than is applied to any other act of
  a director. Therefore, directors of a Maryland corporation are not required to
  act in the same manner as directors of a Delaware corporation in takeover
  Our charter and bylaws contain provisions that may impede third-party
  acquisition proposals that may be in your best interests.  Our charter and
  bylaws also provide that our directors may only be removed by the affirmative
  vote of the holders of two-thirds of our stock, that stockholders are required
  to give us advance notice of director nominations and new business to be
  conducted at our annual meetings of stockholders and that special meetings of
  stockholders can only be called by our president, our board of directors or the
  holders of at least 25% of stock entitled to vote at the meetings. These and
  other charter and bylaw provisions may delay or prevent a change of control or
  other transaction in which holders of our common stock might receive a premium
  for their common stock over the then-current market price or which such holders
  otherwise might believe to be in their best interests.
  Our board of directors may issue additional shares that may cause dilution
  and could deter change of control transactions that you may believe to be in
  your best interest.  Our charter authorizes our board, without stockholder
  approval, to:
  - issue up to 10,000,000 shares of preferred stock, having preferences,
  conversion or other rights, voting powers, restrictions, limitations as
  to distribution, qualifications, or terms or conditions of redemption as
  determined by the board;
  - amend the charter to increase or decrease the aggregate number of shares
  of capital stock or the number of shares of stock of any class or series
  that we have the authority to issue;
  - cause us to issue additional authorized but unissued shares of common
  stock or preferred stock; and
  - classify or reclassify any unissued shares of common or preferred stock
  by setting or changing in any one or more respects, from time to time
  before the issuance of such shares, the preferences, conversion or other
  rights and other terms of such classified or reclassified shares,
  including the issuance of additional shares of common stock or preferred
  stock that have preference rights over the common stock with respect to
  dividends, liquidation, voting and other matters.
  WE DEPEND ON KEY PERSONNEL, THE LOSS OF ANY ONE OF WHOM MAY THREATEN OUR ABILITY
  TO OPERATE OUR BUSINESS SUCCESSFULLY.
  We depend on the services of Edward K. Aldag, Jr., William G. McKenzie,
  Emmett E. McLean, R. Steven Hamner and Michael G. Stewart to carry out our
  business and investment strategy. If we were to lose any of these executive
  officers, it may be more difficult for us to locate attractive acquisition
  targets, complete our acquisitions and manage the facilities that we have
  acquired or are developing. Additionally, as we expand, we will continue to need
  to attract and retain additional qualified officers and employees. The loss of
  the services of any of our executive officers, or our inability to recruit and
  retain qualified personnel in the future, could have a material adverse effect
  on our business and financial results.
  WE MAY EXPERIENCE CONFLICTS OF INTEREST WITH OUR OFFICERS AND DIRECTORS, WHICH
  COULD RESULT IN OUR OFFICERS AND DIRECTORS ACTING OTHER THAN IN OUR BEST
  INTEREST.
  As described below, our officers and directors may have conflicts of
  interest in connection with their duties to us and the limited partners of our
  operating partnership and with allocation of their time between our business and
  affairs and their other business interests. In addition, from time to time, we
  may acquire or develop facilities in transactions involving prospective tenants
  in which our directors or officers have an interest. In transactions of this
  nature, there will be conflicts between our interests and the interests of the
  director or officer involved, and that director or officer may be in a position
  to influence the terms of those transactions.
  In the event we purchase properties from executive officers or directors in
  exchange for units of limited partnership in our operating partnership, the
  interests of those persons with the interests of the company may conflict. Where
  a unitholder has unrealized gains associated with his limited partnership
  interests in our operating partnership, these holders may incur adverse tax
  consequences in the event of a sale or refinancing of those properties.
  Therefore the interest of these executive officers or directors of our company
  could be different from the interests of the company in connection with the
  disposition or refinancing of a property. Conflicts of interest with our
  officers and directors could result in our officers and directors acting other
  than in our best interest.
  OUR EXECUTIVE OFFICERS HAVE AGREEMENTS THAT PROVIDE THEM WITH BENEFITS IN THE
  EVENT THEIR EMPLOYMENT IS TERMINATED BY US WITHOUT CAUSE, BY THE EXECUTIVE FOR
  GOOD REASON, OR UNDER CERTAIN CIRCUMSTANCES FOLLOWING A CHANGE OF CONTROL
  TRANSACTION THAT YOU MAY BELIEVE TO BE IN YOUR BEST INTEREST.
  We have entered into agreements with certain of our executive officers that
  provide them with severance benefits if their employment is terminated by us
  without cause, by them for good reason (which includes, among other reasons,
  failure to be elected to the board for Mr. Aldag and failure to have their
  agreements automatically renewed for Messrs. Aldag, McLean, Hamner, McKenzie and
  Stewart), or under certain circumstances following a change of control of our
  company. Certain of these benefits and the related tax indemnity could prevent
  or deter a change of control of our company that might involve a premium price
  for our common stock or otherwise be in the best interests of our stockholders.
  THE VICE CHAIRMAN OF OUR BOARD OF DIRECTORS, WILLIAM G. MCKENZIE, HAS OTHER
  BUSINESS INTERESTS THAT MAY HINDER HIS ABILITY TO ALLOCATE SUFFICIENT TIME TO
  THE MANAGEMENT OF OUR OPERATIONS, WHICH COULD JEOPARDIZE OUR ABILITY TO EXECUTE
  OUR BUSINESS PLAN.
  Our employment agreement with the vice chairman of our board of directors,
  Mr. McKenzie, permits him to continue to own, operate and control facilities
  that he owned as of the date of his employment agreement and requires that he
  only provide a limited amount of his time per month to our company. In
  addition, the terms of Mr. McKenzie's employment agreement permit him to compete
  against us with respect to these previously owned healthcare facilities.
  ALL MANAGEMENT RIGHTS ARE VESTED IN OUR BOARD OF DIRECTORS AND OUR STOCKHOLDERS
  HAVE LIMITED RIGHTS.
  Our board of directors is responsible for our management and strategic
  business direction, and management is responsible for our day-to-day operations.
  Our major policies, including our policies with respect to REIT qualification,
  acquisitions and developments, leasing, financing, growth, operations, debt
  limitation and distributions, are determined by our board of directors. Our
  board of directors may amend or revise these and other policies from time to
  time without a vote of our stockholders. Investment and operational policy
  changes could adversely affect the market price of our common stock and our
  THE ABILITY OF OUR BOARD OF DIRECTORS TO REVOKE OUR REIT STATUS WITHOUT
  STOCKHOLDER APPROVAL MAY CAUSE ADVERSE CONSEQUENCES TO OUR STOCKHOLDERS.
  Our charter provides that our board of directors may revoke or otherwise
  terminate our REIT election, without the approval of our stockholders, if it
  determines that it is no longer in our best interest to continue to qualify as a
  REIT. If we cease to be a REIT, we would become subject to federal income tax on
  our taxable income and would no longer be required to distribute most of our
  taxable income to our stockholders, which may have adverse consequences on total
  return to our stockholders.
  OUR RIGHTS AND THE RIGHTS OF OUR STOCKHOLDERS TO TAKE ACTION AGAINST OUR
  DIRECTORS AND OFFICERS ARE LIMITED.
  Maryland law provides that a director or officer has no liability in that
  capacity if he or she performs his or her duties in good faith, in a manner he
  or she reasonably believes to be in our best interests and with the care that an
  ordinarily prudent person in a like position would use under similar
  circumstances. In addition, our charter eliminates our directors' and officers'
  liability to us and our stockholders for money damages except for liability
  resulting from actual receipt of an improper benefit in money, property or
  services or active and deliberate dishonesty established by a final judgment and
  which is material to the cause of action. Our bylaws and indemnification
  agreements require us to indemnify our directors and officers for liability
  resulting from actions taken by them in those capacities to the maximum extent
  permitted by Maryland law. As a result, we and our stockholders may have more
  limited rights against our directors and officers than might otherwise exist
  under common law. In addition, we may be obligated to fund the defense costs
  incurred by our directors and officers. See "Certain Provisions of Maryland Law
  and of Our Charter and Bylaws -- Indemnification and Limitation of Directors'
  and Officers' Liability." Directors may be removed with or without cause by the
  affirmative vote of the holders of two-thirds of the votes entitled to be cast
  in the election of directors.
  OUR UPREIT STRUCTURE MAY RESULT IN CONFLICTS OF INTEREST BETWEEN OUR
  STOCKHOLDERS AND THE HOLDERS OF OUR OPERATING PARTNERSHIP UNITS.
  We are organized as an UPREIT, which means that we hold our assets and
  conduct substantially all of our operations through an operating limited
  partnership, and may in the future issue limited partnership units to third
  parties. Persons holding operating partnership units would have the right to
  vote on certain amendments to the partnership agreement of our operating
  partnership, as well as on certain other matters. Persons holding these voting
  rights may exercise them in a manner that conflicts with the interests of our
  stockholders. Circumstances may arise in the future, such as the sale or
  refinancing of one of our facilities, when the interests of limited partners in
  our operating partnership conflict with the interests of our stockholders. As
  the general partner of our operating partnership, we have fiduciary duties to
  the limited partners of our operating partnership that may conflict with
  fiduciary duties our officers and directors owe to our stockholders. These
  conflicts may result in decisions that are not in your best interest.
  THROUGH WHOLLY-OWNED SUBSIDIARIES, WE ARE THE GENERAL PARTNER OF OUR OPERATING
  PARTNERSHIP AND OUR OPERATING PARTNERSHIP, THROUGH WHOLLY-OWNED SUBSIDIARIES, IS
  THE GENERAL PARTNER OF OTHER SUBSIDIARIES WHICH OWN OUR FACILITIES AND, SHOULD
  ANY OF THESE WHOLLY-OWNED GENERAL PARTNERS BE DISREGARDED, THEN WE OR OUR
  OPERATING PARTNERSHIP COULD BECOME LIABLE FOR THE DEBTS AND OTHER OBLIGATIONS OF
  OUR SUBSIDIARIES BEYOND THE AMOUNT OF OUR INVESTMENT.
  Through our wholly-owned subsidiary, Medical Properties Trust, LLC, we are
  the sole general partner of our operating partnership, and also currently own
  100% of the limited partnership interests in the operating partnership. In
  addition, our operating partnership, through other wholly-owned subsidiaries, is
  the general partner of other subsidiaries which own our facilities. If any of
  our wholly-owned subsidiaries which act as general partner were disregarded, we
  would be liable for the debts and other obligations of the subsidiaries that own
  our facilities. In such event, if any of these subsidiaries were unable to pay
  their debts and other obligations, we would be liable for such debts and other
  obligations beyond the amount of our investment in these subsidiaries. These
  obligations could include unforeseen contingent liabilities.
  TAX RISKS ASSOCIATED WITH OUR STATUS AS A REIT
  FAILURE TO ATTAIN OR LOSS OF OUR TAX STATUS AS A REIT WOULD HAVE SIGNIFICANT
  ADVERSE CONSEQUENCES TO US AND THE VALUE OF OUR COMMON STOCK.
  We expect to qualify as a REIT for federal income tax purposes and will
  elect to be taxed as a REIT under the federal income tax laws commencing with
  our taxable year that began on April 6, 2004 and ended on December 31, 2004. Our
  qualification as a REIT will depend on our ability to meet various requirements
  concerning, among other things, the ownership of our outstanding common stock,
  the nature of our assets, the sources of our income and the amount of our
  distributions to our stockholders. The REIT qualification requirements are
  extremely complex, and interpretations of the federal income tax laws governing
  qualification as a REIT are limited. Accordingly, there is no assurance that we
  will be successful in operating so as to qualify as a REIT. At any time, new
  laws, regulations, interpretations or court decisions may change the federal tax
  laws relating to, or the federal income tax consequences of, qualification as a
  REIT. It is possible that future economic, market, legal, tax or other
  considerations may cause our board of directors to revoke the REIT election,
  which it may do without stockholder approval.
  If we fail to achieve, lose or revoke our REIT status, we will face serious
  tax consequences that will substantially reduce the funds available for
  distribution because:
  - we would not be allowed a deduction for distributions to stockholders in
  computing our taxable income; therefore we would be subject to federal
  income tax at regular corporate rates and we might need to borrow money
  or sell assets in order to pay any such tax;
  - we also could be subject to the federal alternative minimum tax and
  possibly increased state and local taxes; and
  - unless we are entitled to relief under statutory provisions, we also
  would be disqualified from taxation as a REIT for the four taxable years
  following the year during which we ceased to qualify.
  As a result of all these factors, a failure to achieve or a loss or
  revocation of our REIT status could have a material adverse effect on our
  financial condition and results of operations and would adversely affect the
  value of our common stock.
  FAILURE TO MAKE REQUIRED DISTRIBUTIONS WOULD SUBJECT US TO TAX.
  In order to qualify as a REIT, each year we must distribute to our
  stockholders at least 90% of our REIT taxable income, excluding net capital
  gain. To the extent that we satisfy the distribution requirement, but distribute
  less than 100% of our taxable income, we will be subject to federal corporate
  income tax on our undistributed income. In addition, we will incur a 4%
  nondeductible excise tax on the amount, if any, by which our distributions in
  any year are less than the sum of:
  - 85% of our ordinary income for that year;
  - 95% of our capital gain net income for that year; and
  - 100% of our undistributed taxable income from prior years.
  We intend to pay out our income to our stockholders in a manner that
  satisfies the distribution requirement and avoids corporate income tax and the
  4% excise tax. We may be required to make distributions to stockholders at
  disadvantageous times or when we do not have funds readily available for
  distribution. Differences in timing between the recognition of income and the
  related cash receipts or the effect of required debt amortization payments could
  require us to borrow money or sell assets to pay out enough of our taxable
  income to satisfy the distribution requirement and to avoid corporate income tax
  and the 4% excise tax in a particular year. In the future, we may borrow to pay
  distributions to our stockholders and the limited partners of our operating
  partnership. Any funds that we borrow would subject us to interest rate and
  other market risks.
  WE WILL PAY SOME TAXES AND THEREFORE MAY HAVE LESS CASH AVAILABLE FOR
  DISTRIBUTION TO OUR STOCKHOLDERS.
  Even if we qualify as a REIT for U.S. federal income tax purposes, we will
  be required to pay some U.S. federal, state and local taxes on the income from
  the operations of our taxable REIT subsidiary, MPT Development Services, Inc. A
  taxable REIT subsidiary is a fully taxable corporation and may be limited in its
  ability to deduct interest payments made to us. In addition, we will be subject
  to a 100% penalty tax on certain amounts if the economic arrangements among our
  tenants, our taxable REIT subsidiary and us are not comparable to similar
  arrangements among unrelated parties. To the extent that we are or our taxable
  REIT subsidiary is required to pay U.S. federal, state or local taxes, we will
  have less cash available for distribution to stockholders.
  COMPLYING WITH REIT REQUIREMENTS MAY CAUSE US TO FOREGO OTHERWISE ATTRACTIVE
  To qualify as a REIT for federal income tax purposes, we must continually
  satisfy tests concerning, among other things, the sources of our income, the
  nature and diversification of our assets, the amounts we distribute to our
  stockholders and the ownership of our stock. In order to meet these tests, we
  may be required to forego attractive business or investment opportunities.
  Overall, no more than 20% of the value of our assets may consist of securities
  of one or more taxable REIT subsidiaries, and no more than 25% of the value of
  our assets may consist of securities that are not qualifying assets under the
  test requiring that 75% of a REIT's assets consist of real estate and other
  related assets. Further, a taxable REIT subsidiary may not directly or
  indirectly operate or manage a healthcare facility. For purposes of this
  definition a "healthcare facility" means a hospital, nursing facility, assisted
  living facility, congregate care facility, qualified continuing care facility,
  or other licensed facility which extends medical or nursing or ancillary
  services to patients and which is operated by a service provider that is
  eligible for participation in the Medicare program under Title XVIII of the
  Social Security Act with respect to the facility. Thus, compliance with the REIT
  requirements may limit our flexibility in executing our business plan.
  OUR LOAN TO VIBRA COULD BE RECHARACTERIZED AS EQUITY, IN WHICH CASE OUR RENTAL
  INCOME FROM VIBRA WOULD NOT BE QUALIFYING INCOME UNDER THE REIT RULES AND WE
  COULD LOSE OUR REIT STATUS.
  REIT subsidiary made a loan to Vibra in an aggregate amount of approximately
  $41.4 million to acquire the operations at the Vibra Facilities. Our taxable
  REIT subsidiary also made a loan of approximately $6.2 million to Vibra and its
  subsidiaries for working capital purposes, which has been paid in full. The
  acquisition loan bears interest at an annual rate of 10.25%. Our operating
  partnership loaned the funds to our taxable REIT subsidiary to make these loans.
  The loan from our operating partnership to our taxable REIT subsidiary bears
  interest at an annual rate of 9.25%.
  The Internal Revenue Service, or IRS, may take the position that the loans
  to Vibra should be treated as equity interests in Vibra rather than debt, and
  that our rental income from Vibra should not be treated as qualifying income for
  purposes of the REIT gross income tests. If the IRS were to successfully treat
  the loans to Vibra as equity interests in Vibra, Vibra would be a "related party
  tenant" with respect to our company and the rent that we receive from Vibra
  would not be qualifying income for purposes of the REIT gross income tests. As a
  result, we could lose our REIT status. In addition, if the IRS were to
  successfully treat the loans to Vibra as interests held by our operating
  partnership rather than by our taxable REIT subsidiary and to treat the loans as
  other than straight debt, we would fail the 10% asset test with respect to such
  interests and, as a result, could lose our REIT status, which would subject us
  to corporate level income tax and adversely affect our ability to make
  RISKS RELATING TO THIS OFFERING
  THERE IS CURRENTLY NO PUBLIC MARKET FOR OUR COMMON STOCK, AND AN ACTIVE TRADING
  MARKET FOR OUR COMMON STOCK MAY NEVER DEVELOP FOLLOWING THIS OFFERING.
  There has not been any public market for our common stock prior to this
  offering. We have applied to list our common stock on the NYSE in connection
  with this offering, but even if our shares are approved for listing, an active
  trading market for our common stock may never develop or be sustained. The last
  trade of our common stock on The Portal(SM) Market, a subsidiary of The Nasdaq
  Stock Market, Inc. which permits secondary sales of eligible securities to
  qualified institutional buyers in accordance with Rule 144A under the Securities
  Act, occurred on May 25, 2005 at a price of $10.05 per share, which may not be
  indicative of the prices at which our shares of common stock will trade after
  this offering.
  THE MARKET PRICE AND TRADING VOLUME OF OUR COMMON STOCK MAY BE VOLATILE
  FOLLOWING THIS OFFERING.
  Even if an active trading market develops for our common stock after this
  offering, the market price of our common stock may be highly volatile and be
  subject to wide fluctuations. In addition, the trading volume in our common
  stock may fluctuate and cause significant price variations to occur. If the
  market price of our common stock declines significantly, you may be unable to
  resell your shares at or above the initial public offering price.
  We cannot assure you that the market price of our common stock will not
  fluctuate or decline significantly in the future. Some of the factors that could
  negatively affect our share price or result in fluctuations in the price or
  trading volume of our common stock include:
  - actual or anticipated variations in our quarterly operating results or
  distributions;
  - changes in our funds from operations or earnings estimates or publication
  of research reports about us or the real estate industry;
  - increases in market interest rates that lead purchasers of our shares of
  common stock to demand a higher yield;
  - changes in market valuations of similar companies;
  - adverse market reaction to any increased indebtedness we incur in the
  future;
  - additions or departures of key management personnel;
  - actions by institutional stockholders;
  - speculation in the press or investment community; and
  - general market and economic conditions.
  BROAD MARKET FLUCTUATIONS COULD NEGATIVELY IMPACT THE MARKET PRICE OF OUR COMMON
  In addition, the stock market has experienced extreme price and volume
  fluctuations that have affected the market price of many companies in industries
  similar or related to ours and that have been unrelated to these companies'
  operating performances. These broad market fluctuations could reduce the market
  price of our common stock. Furthermore, our operating results and prospects may
  be below the expectations of public market analysts and investors or may be
  lower than those of companies with comparable market capitalizations, which
  could lead to a material decline in the market price of our common stock.
  COMMON STOCK ELIGIBLE FOR FUTURE SALE MAY HAVE ADVERSE EFFECTS ON OUR STOCK
  We cannot predict the effect, if any, of future sales of common stock, or
  the availability of shares for future sales, on the market price of our common
  stock. Sales of substantial amounts of common stock, or the perception that
  these sales could occur, may adversely affect prevailing market prices for our
  common stock. In addition, under a registration rights agreement, we have
  granted holders of the 25,300,000 shares of our common stock issued in our April
  2004 private placement the right to have their shares registered for resale
  under the Securities Act. If any or all of these holders sell a large number of
  securities in the public market, the sale could reduce the trading price of our
  common stock and could impede our ability to raise future capital. We also may
  issue from time to time additional common stock or units of our operating
  partnership in connection with the acquisition of facilities and we may grant
  additional demand or piggyback registration rights in connection with these
  issuances. Sales of substantial amounts of common stock or the perception that
  these sales could occur may adversely effect the prevailing market price for our
  common stock. In addition, the sale of these shares could impair our ability to
  raise capital through a sale of additional equity securities.
  YOU SHOULD NOT RELY ON THE UNDERWRITERS' LOCK-UP AGREEMENTS TO LIMIT THE NUMBER
  OF SHARES OF COMMON STOCK SOLD INTO THE MARKET.
  All of our directors and executive officers, subject to limited exceptions,
  have agreed to be bound by lock-up agreements that prohibit these holders from
  selling or otherwise disposing of any of our common stock or securities
  convertible into our common stock that they own or acquire for 180 days after
  the date of this prospectus. In addition, the underwriters will require that all
  of our stockholders other than our executive officers and directors not sell or
  otherwise dispose of any of the shares of our common stock or securities
  convertible into our common stock that they have acquired prior to the date of
  this prospectus and are not selling in this offering until 60 days after the
  date of this prospectus, subject to limited exceptions. Friedman, Billings,
  Ramsey & Co., Inc., on behalf of the underwriters, may, in its discretion,
  release all or any portion of the common stock subject to the lock-up agreements
  with our directors and executive officers, at any time and without notice or
  stockholder approval, in which case our other stockholders would also be
  released from the restrictions under the registration rights agreement. There
  are no present agreements between the underwriters and us or any of our
  executive officers, directors or stockholders releasing them or us from these
  lock-up agreements. However, we cannot predict the circumstances or timing under
  which Friedman, Billings, Ramsey & Co., Inc. may waive these restrictions.
  If the restrictions under the lock-up agreements and the registration
  rights agreement are waived or terminated, up to approximately           shares
  of common stock will be available for sale into the market, subject only to
  applicable securities rules and regulations, which could reduce the market price
  for our common stock.
  AN INCREASE IN MARKET INTEREST RATES MAY HAVE AN ADVERSE EFFECT ON 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 distribution rate as a percentage of our price per
  share of common stock, relative to market interest rates. If market interest
  rates increase, prospective investors may desire a higher distribution or
  interest rate on our securities or seek securities paying higher distributions
  or interest. The market price of our common stock likely will be based primarily
  on the earnings that we derive from rental 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, rising interest rates would result in increased
  interest expense on our variable-rate debt, thereby adversely affecting cash
  flow and our ability to service our indebtedness and make distributions.
  IF YOU PURCHASE COMMON STOCK IN THIS OFFERING, YOU WILL EXPERIENCE IMMEDIATE
  DILUTION.
  We expect the initial public offering price of our common stock to be
  higher than the book value per share of our outstanding common stock. Assuming
  that the common stock sold in this offering is sold at $11.00 per share, if you
  purchase common stock in this offering, you will experience immediate dilution
  approximately $2.04 in net tangible book value per share. This means that
  investors who purchase our common stock in this offering:
  - will likely pay a price per share that exceeds the book value of our
  assets after subtracting our liabilities; and
  - will have contributed, in the aggregate, approximately 32.9% of our
  funding since inception but will own only 30.1% of our fully diluted
  equity interests.
  OUR ENGAGEMENT AGREEMENT WITH FRIEDMAN, BILLINGS, RAMSEY & CO., INC. MAY
  BILLINGS, RAMSEY & CO., INC. UNTIL APRIL 7, 2006 FOR FUTURE FINANCING AND OTHER
  STRATEGIC TRANSACTIONS, AND FRIEDMAN, BILLINGS, RAMSEY & CO., INC. HAS INTERESTS
  IN THIS OFFERING OTHER THAN UNDERWRITING DISCOUNTS AND COMMISSIONS.
  Friedman, Billings, Ramsey & Co., Inc. has an interest in the successful
  completion of this offering beyond the underwriting discounts and commissions it
  will receive. Friedman, Billings, Ramsey Group, Inc., an affiliate of Friedman,
  Billings, Ramsey & Co., Inc., is currently our largest stockholder, owning
  approximately 10.9% of our common stock outstanding prior to completion of this
  offering. In addition, on November 13, 2003, we entered into an engagement
  letter agreement with Friedman, Billings, Ramsey & Co., Inc. The engagement
  letter gives Friedman, Billings, Ramsey & Co., Inc., the right to serve in the
  following capacities until April 7, 2006:
  - as our financial advisor with respect to any future mergers, acquisitions
  or other business combinations;
  - as the sole book running and lead underwriter or sole placement agent in
  connection with any public or private offering of equity or any public
  offering of debt securities; and
  - as our agent in connection with the exercise of our warrants or options,
  other than warrants or options held by management or by Friedman,
  Billings, Ramsey & Co., Inc.
  Our engagement letter with Friedman, Billings, Ramsey & Co., Inc. may
  preclude us until April 7, 2006 from using competing investment banks or
  financial advisors for many financial and strategic transactions. Accordingly,
  in planning and completing some transactions, including public offerings of our
  stock, we may not be able to utilize the services of competitors of Friedman,
  Billings, Ramsey & Co., Inc. and thereby obtain pricing, distribution and other
  benefits that we otherwise could and we may be dependent on the ability of
  Friedman, Billings, Ramsey & Co., Inc. to execute certain financing and other
  strategic transactions on our behalf. As a result of Friedman, Billings, Ramsey
  Group, Inc.'s position as a large holder of our common stock, Friedman, Billings
  Ramsey & Co., Inc. will have an interest in the successful completion of this
  offering beyond underwriting discounts and commissions it will receive. Although
  not required under the Conduct Rules of the National Association of Securities
  Dealers, Inc., this offering is being made using a "qualified independent
  underwriter" as contemplated by Rule 2720(b)(15) of the Conduct Rules of the
  National Association of Securities Dealers, Inc. J.P. Morgan Securities Inc. has
  assumed the responsibilities of acting as a qualified independent underwriter.
  In this role, J.P. Morgan Securities Inc. performed a due diligence
  investigation of us and participated in the preparation of this prospectus and
  the registration statement of which this prospectus is a part. The initial
  public offering price of the shares of common stock will be no higher than the
  price recommended by J.P. Morgan Securities Inc.
  A WARNING ABOUT FORWARD LOOKING STATEMENTS
  We make forward-looking statements in this prospectus that are subject to
  risks and uncertainties. These forward-looking statements include information
  about possible or assumed future results of our business, financial condition,
  liquidity, results of operations, plans and objectives. Statements regarding the
  following subjects, among others, are forward-looking by their nature:
  - our business strategy;
  - our projected operating results;
  - our ability to acquire or develop net-leased facilities;
  - availability of suitable facilities to acquire or develop;
  - our ability to enter into, and the terms of, our prospective leases;
  - our ability to use effectively the proceeds of this offering;
  - our ability to obtain future financing arrangements;
  - estimates relating to, and our ability to pay, future distributions;
  - our ability to compete in the marketplace;
  - market trends;
  - projected capital expenditures; and
  - the impact of technology on our facilities, operations and business.
  The forward-looking statements are based on our beliefs, assumptions and
  expectations of our future performance, taking into account all information
  currently available to us. These beliefs, assumptions and expectations can
  change as a result of many possible events or factors, not all of which are
  known to us. If a change occurs, our business, financial condition, liquidity
  and results of operations may vary materially from those expressed in our
  forward-looking statements. You should carefully consider these risks before you
  make an investment decision with respect to our common stock, along with, among
  others, the following factors that could cause actual results to vary from our
  - the factors referenced in this prospectus, including those set forth
  under the sections captioned "Risk Factors," "Management's Discussion and
  Analysis of Financial Condition and Results of Operations;" "Our
  Business" and "Our Portfolio;"
  - general volatility of the capital markets and the market price of our
  common stock;
  - changes in our business strategy;
  - changes in healthcare laws and regulations;
  - availability, terms and development of capital;
  - availability of qualified personnel;
  - changes in our industry, interest rates or the general economy; and
  - the degree and nature of our competition.
  When we use the words "believe," "expect," "may," "potential,"
  "anticipate," "estimate," "plan," "will," "could," "intend" or similar
  expressions, we are identifying forward-looking statements. You should not place
  undue reliance on these forward-looking statements. We are not obligated to
  publicly update or revise any forward-looking statements, whether as a result of
  new information, future events or otherwise.
  The safe harbor protections provided by the Private Securities Litigation
  Reform Act of 1995 and Section 27A of the Securities Act do not apply to the
  forward-looking statements contained in this prospectus.
  We expect to receive net proceeds from the sale of the shares of common
  stock offered by this prospectus, after deducting the underwriting discount and
  estimated offering expenses payable by us, of approximately $115.0. If the
  underwriters exercise their over-allotment option in full, we expect to receive
  net proceeds of approximately $132.3 million. We expect to use the net proceeds
  - approximately $51.0 million to fund the development of a community
  hospital in Houston, Texas that we have under letter of commitment;
  - approximately $38.0 million to fund the development of a women's
  hospital and integrated medical office building in Bensalem,
  Pennsylvania that we have under contract;
  - approximately $18.0 million to fund a portion of the development costs
  of a community hospital in Bloomington, Indiana that we have under
  letter of commitment; and
  - approximately $8.0 million to lend to Hammond Properties pursuant to a
  mortgage loan we have entered into a letter of commitment to provide.
  Net proceeds of the offering that we allocate to our pending development
  facilities will be applied over time according to the terms of development
  agreements we expect to enter into as described in this prospectus. We cannot
  assure you that we will complete these transactions on the terms described or at
  all. See "Our Portfolio -- Our Pending Acquisitions and Developments" for a
  discussion of the conditions with respect to these transactions. Pending these
  uses, we intend to invest the net offering proceeds in interest-bearing,
  short-term marketable investment grade securities or money-market accounts that
  are consistent with our intention to qualify as a REIT. These investments may
  include, for example, government and government agency securities, certificates
  of deposit, interest-bearing bank deposits and mortgage loan participations.
  The following table sets forth:
  - our actual capitalization as of March 31, 2005; and
  - our pro forma capitalization, as adjusted to give effect to the sale of
  shares of common stock in this offering at an assumed public offering
  price of $11.00 per share and our declaration of a distribution of $0.16
  per share of common stock on May 19, 2005, which is payable on July 14,
  PRO FORMA,
  HISTORICAL    AS ADJUSTED
  ------------   ------------
  LONG TERM DEBT..............................................  $ 74,141,667   $ 74,141,667
  MINORITY INTERESTS..........................................     1,762,500      1,762,500
  Preferred stock, $0.001 par value. 10,000,000 shares
  authorized; no shares issued and outstanding...........            --             --
  authorized; 26,082,862 shares issued and outstanding at
  March 31, 2005; 37,635,862 shares issued and
  outstanding, as adjusted...............................        26,083         37,636(1)
  Additional paid in capital.............................   233,701,690    350,771,937
  Accumulated deficit....................................    (1,233,510)    (7,487,888)
  Total stockholders' equity...........................   232,494,263    343,321,685
  Total capitalization.................................  $308,398,430   $419,225,852
  ============   ============
  (1) Includes 106,000 shares of restricted common stock to be awarded upon
  completion of this offering and 82,000 shares of restricted common stock
  awarded to our employees in April 2005 under our equity incentive plan.
  Excludes (i) 1,704,750 shares of common stock that may be issued by us upon
  exercise of the underwriters' overallotment option; (ii) 100,000 shares of
  common stock issuable upon the exercise of stock options granted to our
  independent directors under our equity incentive plan, one-third of which
  are vested; (iii) 35,000 shares of common stock issuable upon the exercise
  of a vested warrant granted to an unaffiliated third party; (iv) 5,000
  shares of common stock issuable in October 2007 and 7,500 shares of common
  stock issuable in March 2008 pursuant to deferred stock units awarded under
  our equity incentive plan to our independent directors and (v) 490,680
  shares of common stock available for future awards under our equity
  NET TANGIBLE BOOK VALUE
  As of March 31, 2005, we had a net tangible book value of approximately
  $222.3 million, or approximately $8.52 per share. Net tangible book value per
  share represents the amount of our total tangible assets less our total
  liabilities and total minority interests, divided by the number of shares of our
  common stock outstanding.
  DILUTION AFTER THIS OFFERING
  Dilution in net tangible book value per share represents the difference
  between the amount per share paid by purchasers of common stock in this offering
  and the net tangible book value per share of common stock immediately after this
  offering and the application of the estimated net offering proceeds. After
  giving effect to:
  - the sale of the common stock offered by us under this prospectus at an
  assumed initial public offering price of $11.00 per share, and our
  receipt of approximately $115.0 million in net proceeds from this
  offering, after deducting the underwriting discount and estimated
  offering expenses payable by us;
  - the issuance of 82,000 shares of restricted common stock to our employees
  in April 2005;
  - the issuance of 106,000 shares of restricted stock to our senior
  management team upon completion of this offering;
  - the issuance of 100,000 shares of common stock issuable upon the exercise
  of outstanding stock options granted to our independent directors and
  35,000 shares of common stock issuable upon the exercise of a warrant
  granted to an unaffiliated third party; and
  - the issuance of 12,500 shares of common stock underlying deferred stock
  units awarded to our independent directors,
  our pro forma net tangible book value as of March 31, 2005 would have been
  approximately $338.6 million (includes the proceeds to be received from the
  exercise of options for common stock), or $8.96 per share of common stock. This
  amount represents an immediate increase in net tangible book value of $.49 per
  share to existing stockholders prior to this offering and an immediate dilution
  in pro forma net tangible book value of $2.04 per share to investors in this
  offering. The following table illustrates this per share dilution:
  Assumed initial public offering price per share.............          $11.00
  Net tangible book value per share as of March 31,
  2005(1)................................................   8.52
  Increase in pro forma net tangible book value per share to
  existing stockholders attributable to this
  offering(2)............................................    .49
  Decrease in pro forma net tangible book value per share to
  existing stockholders attributable to the issuance of
  restricted stock.......................................   (.05)
  Change in pro forma net tangible book value per share to
  existing stockholders attributable to the exercise of
  stock options, deferred stock units and warrant........    .00
  Pro forma net tangible book value per share after this
  offering(3)...............................................            8.96
  Dilution in pro forma net tangible book value per share to
  new investors(4)..........................................          $ 2.04
  (1) Net tangible book value per share of common stock is determined by dividing
  net tangible book value as of March 31, 2005 (net book value of the tangible
  assets consisting of total assets less accrued rental income, intangible
  assets, and deferred costs) by the number of shares of common stock
  outstanding prior to the offering.
  (2) After deducting the underwriting discount and other expenses of this
  offering.
  (3) Based on pro forma net tangible book value attributable to common
  stockholders of approximately $338.6 million divided by the sum of
  37,447,862 shares of our common stock to be outstanding, the issuance of
  106,000 shares of restricted stock, the issuance of 135,000 shares of common
  stock issuable upon the exercise of outstanding stock options and warrants,
  the issuance of 12,500 shares of common stock underlying deferred stock
  units awarded to our independent directors and the issuance of 82,000 shares
  of restricted common stock awarded to our employees.
  (4) Dilution is determined by subtracting (i) pro forma net tangible book value
  per share of our common stock after giving effect to this offering and the
  application of the net proceeds therefrom from (ii) the initial public
  offering price per share paid by a new investor in this offering.
  DIFFERENCES BETWEEN NEW AND EXISTING STOCKHOLDERS IN NUMBER OF SHARES AND AMOUNT
  The table below summarizes, as of March 31, 2005, on the pro forma basis
  discussed above but excluding options and warrants to purchase 135,000 shares of
  common stock that will be outstanding upon completion of this offering, the
  differences between the number of shares of common stock purchased from us, the
  total consideration paid and the average price per share paid by existing
  stockholders and by the new investors purchasing common stock in this offering.
  The options and warrants described in the preceding sentence are exercisable at
  a weighted average exercise price of $9.82 per share and will remain outstanding
  upon the completion of this offering. To the extent that these outstanding
  options are exercised in the future, there will be further dilution to new
  investors. We used an assumed initial public offering price of $11.00 per share,
  and we have not deducted estimated underwriting discounts and commissions and
  estimated offering expenses in our calculations.
  SHARES ISSUED                  TOTAL CONSIDERATION
  ------------------------   -------------------------------------
  NUMBER      PERCENTAGE      AMOUNT      PERCENTAGE   PER SHARE
  -----------   ----------   ------------   ----------   ---------
  Existing stockholders......   26,082,862       70%      $251,870,968       67%       $ 9.56
  New investors in the
  offering.................   11,365,000       30%       125,015,000       33%       $11.00
  Total......................   37,447,862      100%      $376,885,968      100%
  We intend to make regular quarterly distributions to our stockholders so
  that we distribute each year all or substantially all of our REIT taxable
  income, if any, so as to avoid paying corporate level income tax and excise tax
  on our REIT income and to qualify for the tax benefits accorded to REITs under
  the Code. In order to qualify as a REIT, we must distribute to our stockholders
  an amount at least equal to 90% of our REIT taxable income, excluding net
  capital gain. See "United States Federal Income Tax Considerations." The
  distributions will be authorized by our board of directors and declared by us
  based upon a number of factors, including:
  - our actual results of operations;
  - the rent received from our tenants;
  - the ability of our tenants to meet their other obligations under their
  leases and their obligations under their loans from us;
  - debt service requirements;
  - capital expenditure requirements for our facilities;
  - our taxable income;
  - the annual distribution requirement under the REIT provisions of the
  Code; and
  - other factors that our board of directors may deem relevant.
  To the extent not inconsistent with maintaining our REIT status, we may
  retain accumulated earnings of our taxable REIT subsidiaries in those
  subsidiaries. Our ability to make distributions to our stockholders will depend
  on our receipt of distributions from our operating partnership.
  The table below is a summary of our distributions. We cannot assure you
  that we will have cash available for future quarterly distributions at these
  levels, or at all. See "Risk Factors."
  DECLARATION DATE      RECORD DATE      DATE OF DISTRIBUTION     OF COMMON STOCK
  ----------------      -----------      --------------------  ----------------------
  May 19, 2005       June 20, 2005       July 14, 2005               $0.16
  March 4, 2005      March 16, 2005      April 15, 2005              $0.11
  November 11, 2004  December 16, 2004    January 11, 2005             $0.11
  September 2, 2004  September 16, 2004   October 11, 2004             $0.10
  SELECTED FINANCIAL INFORMATION
  The following table sets forth our selected financial and operating data on
  an historical and pro forma basis. Our selected historical balance sheet
  2005, are presented as if completion of this offering and completion of our
  for the three months ended March 31, 2005 are presented as if our acquisition of
  the Desert Valley Facility, completion of this offering and completion of our
  FOR THE THREE MONTHS ENDED      FOR THE YEAR ENDED
  MARCH 31, 2005             DECEMBER 31, 2004
  --------------------------   -------------------------
  PRO FORMA     HISTORICAL     PRO FORMA    HISTORICAL
  -----------    -----------   -----------   -----------
  Rent income..............................  $ 6,669,856    $ 5,268,490   $25,101,257   $ 8,611,344
  Interest income from loans...............    1,212,038      1,212,038     5,037,049     2,282,115
  Total revenues...........................    7,881,894      6,480,528    30,138,306    10,893,459
  Depreciation and amortization............    1,130,162        842,407     4,520,645     1,478,470
  General and administrative...............    1,698,249      1,698,249     5,057,284     5,057,284
  Total operating expenses.................    2,880,972      2,593,217    10,350,278     7,214,601
  Operating income.........................    5,000,922      3,887,311    19,788,028     3,678,858
  Net other income (expense)...............     (327,377)      (327,377)      897,491       897,491
  Net income.................................    4,673,545      3,559,934    20,685,519     4,576,349
  Net income per share, basic and diluted....         0.12           0.14          0.67          0.24
  outstanding -- basic.....................   37,652,195     26,099,195    30,863,833    19,310,833
  outstanding -- diluted...................   37,656,259     26,103,259    30,865,634    19,312,634
  AS OF MARCH 31, 2005       DECEMBER 31, 2004
  ---------------------------   -----------------
  PRO FORMA      HISTORICAL       HISTORICAL
  ------------   ------------   -----------------
  Gross investment in real estate assets............  $219,914,624   $192,129,624     $151,690,293
  Net investment in real estate.....................   217,593,747    189,808,747      150,211,823
  Construction in progress..........................    36,757,429     36,757,429       24,318,098
  Cash and cash equivalents.........................   162,226,562     82,053,255       97,543,677
  Loans receivable..................................    42,498,111     42,498,111       50,224,069(1)
  Total assets......................................   434,262,386    326,304,079      306,506,063
  Total debt........................................    74,141,667     74,141,667       56,000,000
  Total liabilities.................................    89,178,201     92,047,316       73,777,619
  Total stockholders' equity........................   343,321,685    232,494,263      231,728,444
  Total liabilities and stockholders' equity........   434,262,386    326,304,079      306,506,063
  PRO FORMA     HISTORICAL      PRO FORMA     HISTORICAL
  -----------   -------------   -----------   -------------
  Funds from operations(2)...............  $5,803,707    $  4,402,341    $25,206,164   $   6,054,819
  Provided by operating activities.....                   1,643,836                      9,918,898
  Used for investing activities........                 (32,729,071)                  (195,600,642)
  Provided by financing activities.....                  15,594,813                    283,125,421
  FOR THE THREE MONTHS ENDED       FOR THE YEAR ENDED
  ---------------------------   ------------------------
  PRO FORMA      HISTORICAL     PRO FORMA    HISTORICAL
  -----------     -----------   -----------   ----------
  Net income............................................  $4,673,545      $3,559,934    $20,685,519   $4,576,349
  Depreciation and amortization.........................   1,130,162         842,407      4,520,645    1,478,470
  ----------      ----------    -----------   ----------
  Funds from operations.................................  $5,803,707      $4,402,341    $25,206,164   $6,054,819
  ==========      ==========    ===========   ==========
  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
  AND RESULTS OF OPERATIONS
  We were recently formed and did not commence revenue generating operations
  until June 2004. Please see "Risk Factors -- Risks Relating to Our Business and
  Growth Strategy" for a discussion of risks relating to our limited operating
  history. The following discussion should be read in conjunction with our audited
  financial statements and the related notes thereto included elsewhere in this
  We were incorporated under Maryland law on August 27, 2003 primarily for
  the purpose of investing in and owning net-leased healthcare facilities. Our
  existing tenants are, and our prospective tenants will generally be, hospital
  operating companies and other healthcare providers that use substantial real
  estate assets in their operations. We offer financing for these operators' real
  estate through 100% lease financing and generally seek lease terms of at least
  10 years with a series of shorter renewal terms at the option of our tenants; we
  also intend to include annual contractual rental rate increases that in the
  current market range from 1.5% to 3.0%. Our existing portfolio escalators range
  from 2.0% to 2.5%. In addition to the base rent, our leases generally require
  our tenants to pay all operating costs and expenses associated with the
  We conduct substantially all of our operations through our operating
  partnership. We own all of the membership interests in the sole general partner
  of our operating partnership and thereby control the operating partnership. At
  present, we also own 100% of the limited partnership interests, although we may
  issue units of limited partnership in exchange for interests in healthcare
  facilities from time to time in the future. Sellers of healthcare facilities who
  receive limited partnership units of our operating partnership in exchange for
  interests in their facilities may be able to defer recognition of any gain that
  would be recognized in a cash sale until such time that they redeem the
  operating partnership units. Upon their election to redeem their units, we may
  redeem them either for cash or shares of our common stock on a one-for-one
  basis. In addition, we may sell equity interests in subsidiaries of our
  operating partnership in connection with the acquisition or development of
  facilities.
  Whenever we issue shares of our common stock for cash, we are obligated to
  contribute any net proceeds we receive from the sale of the stock to our
  operating partnership and our operating partnership is, in turn, obligated to
  issue an equivalent number of limited partnership units to us. Our operating
  partnership distributes the income it generates from its operations to us. In
  turn, we expect to distribute a substantial majority of the amounts we receive
  from our operating partnership to our stockholders in the form of quarterly cash
  distributions. We intend to qualify as a REIT for federal tax purposes, thereby
  generally avoiding federal and state corporate income taxes on most of the
  earnings that we distribute to our stockholders.
  We conduct business operations in one segment. We acquire and develop
  healthcare facilities and lease the facilities to healthcare operating companies
  under long-term net leases. At December 31, 2004 our real estate and loan assets
  comprised approximately 49% and 16%, respectively, of our total assets. We do
  not expect our loan assets to exceed this level in the future. Our lending
  business is important to our overall business strategy for two primary reasons:
  (1) it provides opportunities to make income-earning investments that 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 for our company a competitive advantage over
  other buyers of, and financing sources for, healthcare facilities.
  We currently own four rehabilitation hospitals and two long-term acute care
  hospitals that are leased to a single operating company and one community
  hospital with an integrated medical office building leased to another operating
  company and we are developing a community hospital and an adjacent medical
  office building that are leased to a separate operating company. We have also
  made and in the future may make loans to our tenants to facilitate the
  acquisition of healthcare businesses and for working capital and from time to
  time may make mortgage loans to facility owners.
  Our revenues are derived from rents we earn pursuant to the lease
  agreements we have with our tenants and from interest income from loans we make
  to our tenants and other facility owners. Our tenants operate in the healthcare
  industry, generally providing medical, surgical and rehabilitative care to
  patients. The capacity of our tenants to pay our rents and interest is dependent
  upon their ability to conduct their operations at profitable levels. We believe
  that the business environment of the industry segments in which our tenants
  operate in is generally positive for efficient operators. However, our tenants'
  operations are subject to economic, regulatory and market conditions that may
  affect their profitability. Accordingly, we monitor certain key factors, changes
  to which we believe may provide early indications of conditions that may affect
  the level of risk in our lease and loan portfolio.
  Key factors that we consider in underwriting prospective tenants and in
  monitoring the performance of existing tenants include the following:
  - the historical and prospective operating margins (measured by a tenant's
  earnings before interest, taxes, depreciation, amortization and facility
  rent) of each tenant and at each facility;
  - the ratio of our tenants' operating earnings to facility rent and to
  facility rent plus other fixed costs, including debt costs;
  - trends in the source of our tenants' revenue, including the relative mix
  of Medicare, Medicaid/MediCal, commercial insurance, and private pay
  patients;
  - the effect of evolving healthcare regulations on our tenants'
  Certain business factors, in addition to those described above that
  directly affect our tenants, will likely materially influence our future results
  of operations. These factors include:
  - trends in the cost and availability of capital, including market interest
  rates, that our prospective tenants may use for their real estate assets
  instead financing their real estate assets through lease structures;
  - unforeseen changes in healthcare regulations that may limit the
  opportunities for physicians to participate in the ownership of
  healthcare providers and healthcare real estate;
  - reductions in reimbursements from Medicare, state healthcare programs and
  commercial insurance providers that may reduce our tenants' profitability
  and our lease rates; and
  - competition from other financing sources.
  CRITICAL ACCOUNTING POLICIES
  In order to prepare financial statements in conformity with accounting
  principles generally accepted in the United States, we must make estimates about
  certain types of transactions and account balances. We believe that our
  estimates of the amount and timing of lease revenues, credit losses, fair values
  and periodic depreciation of our real estate assets, stock compensation expense,
  and the effects of any derivative and hedging activities will have significant
  effects on our financial statements. Each of these items involves estimates that
  require us to make judgments that are subjective in nature. We intend to rely on
  our experience, collect historical data and current market data, and develop
  relevant assumptions in order to arrive at what we believe to be reasonable
  estimates. Under different conditions or assumptions, materially different
  amounts could be reported related to the accounting policies described below. In
  addition, application of these accounting policies involves the exercise of
  judgments on the use of assumptions as to future uncertainties and, as a result,
  actual results could materially differ from these estimates. Our accounting
  estimates will include the following:
  Revenue Recognition.  Our revenues, which are comprised largely of rental
  income, include rents that each tenant pays in accordance with the terms of its
  respective lease reported on a straight-line basis over the initial term of the
  lease. Since some of our leases provide for rental increases at specified
  intervals, straight-line basis accounting requires us to record as an asset, and
  include in revenues, unbilled rent that we will only receive if the tenant makes
  all rent payments required through the expiration of the term of the lease.
  Accordingly, our management must determine, in its judgment, to what extent the
  unbilled rent
  receivable applicable to each specific tenant is collectible. We will review
  each tenant's unbilled rent receivable on a quarterly basis and take into
  consideration the tenant's payment history, the financial condition of the
  tenant, business conditions in the industry in which the tenant operates and
  economic conditions in the area in which the facility is located. In the event
  that the collectibility of unbilled rent with respect to any given tenant is in
  doubt, we are required to record an increase in our allowance for uncollectible
  accounts or record a direct write-off of the specific rent receivable, which
  would have an adverse effect on our net income for the year in which the reserve
  is increased or the direct write-off is recorded and would decrease our total
  assets and stockholders' equity.
  We make loans to our tenants and from time to time may make mortgage loans
  to facility owners. We recognize interest income on loans as earned based upon
  the principal amount outstanding. These loans are generally secured by interests
  in real estate, receivables, equity interests of a tenant or corporate and
  individual guarantees. As with unbilled rent receivables, our management must
  also periodically evaluate loans to determine what amounts may not be
  collectible. Accordingly, a provision for losses on loans receivable is recorded
  when it becomes probable that the loan will not be collected in full. The
  provision is an amount which reduces the loan to its estimated net receivable
  value based on a determination of the eventual amounts to be collected either
  from the debtor or from the collateral, if any. At that time, we discontinue
  recording interest income on the loan to the tenant.
  Investments in Real Estate.  We record investments in real estate at cost,
  and capitalize improvements and replacements when they extend the useful life or
  improve the efficiency of the asset. To the extent that 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 life of 40
  years for buildings and improvements, five to seven years for equipment and
  fixtures and the shorter of the useful life or the remaining lease term for
  tenant improvements and leasehold interests.
  We are required to make subjective assessments as to the useful lives of
  our facilities for purposes of determining the amount of depreciation expense to
  record on an annual basis with respect to our investments in real estate
  improvements. These assessments have a direct impact on our net income because,
  if we were to shorten the expected useful lives of our investments in real
  estate improvements, we would depreciate these investments over fewer years,
  resulting in more depreciation expense and lower net income on an annual basis.
  We have adopted Statement of Financial Accounting Standards (SFAS) No. 144,
  Accounting for the Impairment or Disposal of Long-Lived Assets, which
  establishes a single accounting model for the impairment or disposal of
  long-lived assets including discontinued operations. SFAS No. 144 requires that
  the operations related to facilities that have been sold or that we intend to
  sell be presented as discontinued operations in the statement of operations for
  all periods presented, and facilities we intend to sell be designated as "held
  for sale" on our balance sheet.
  When circumstances such as adverse market conditions indicate a possible
  impairment of the value of a facility, we will review the recoverability of the
  facility's carrying value. The review of recoverability will be based on our
  estimate of the future undiscounted cash flows, excluding interest charges,
  expected to result from the facility's use and eventual disposition. Our
  forecast of these cash flows will consider 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, an
  impairment loss will be recorded to the extent that the carrying value exceeds
  the estimated fair value of the facility. We will be required to make subjective
  assessments as to whether there are impairments in the values of our investments
  in real estate.
  Purchase Price Allocation.  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 (using an interest rate which reflects the risks associated with
  the leases acquired) 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 remaining non-cancelable terms of the respective leases. We amortize
  any resulting capitalized below-market lease values (presented in the
  accompanying balance sheet as value of assumed lease obligations) as an increase
  to rental income over the initial term and any fixed-rate renewal periods in the
  respective leases. Because our strategy to a large degree involves the
  origination of long term lease arrangements at market rates, we do not expect
  the above-market and below-market in-place lease values to be significant for
  many of our anticipated transactions.
  We measure the aggregate value of other intangible assets to be acquired
  based on the difference between (i) the property valued with existing in-place
  leases adjusted to market rental rates and (ii) the property valued as if
  vacant. Management's estimates of value are expected to be made using methods
  similar to those used by independent appraisers (e.g., discounted cash flow
  analysis). Factors considered by management in its 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 tangible and intangible assets acquired. In estimating
  carrying costs, management also 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 range primarily from six to 18
  months, depending on specific local market conditions. Management also estimates
  costs to execute similar leases including leasing commissions, legal 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.
  The total amount of other intangible assets to be acquired, if any, is
  further allocated to in-place lease values and customer relationship intangible
  values 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 expect to amortize the value of in-place leases, if any, to expense over
  the initial term of the respective leases, which we expect to range primarily
  from 10 to 15 years. The value of customer relationship intangibles is amortized
  to expense over the initial term and any renewal periods in the respective
  leases, but in no event will the amortization period for intangible assets
  exceed the remaining depreciable life of the building. Should a tenant terminate
  its lease, the unamortized portion of the in-place lease value and customer
  relationship intangibles would be charged to expense.
  Accounting for Derivative Financial Investments and Hedging Activities.  We
  expect to account for our derivative and hedging activities, if any, using SFAS
  No. 133, Accounting for Derivative Instruments and Hedging Activities, as
  amended by SFAS No. 137 and SFAS No. 149, which requires all derivative
  instruments to be carried at fair value on the balance sheet.
  Derivative instruments designated in a hedge relationship to mitigate
  exposure to variability in expected future cash flows, or other types of
  forecasted transactions, are considered cash flow hedges. We expect to formally
  document all relationships between hedging instruments and hedged items, as well
  as our risk-management objective and strategy for undertaking each hedge
  transaction. We plan to review periodically the effectiveness of each hedging
  transaction, which involves estimating future cash flows. Cash flow hedges, if
  any, will be accounted for by recording the fair value of the derivative
  instrument on the balance sheet as either an asset or liability, with a
  corresponding amount recorded in other comprehensive income within stockholders'
  equity. Amounts will be reclassified from other comprehensive income to the
  income statement in the period or periods the hedged forecasted transaction
  affects earnings. Derivative instruments designated in a hedge relationship to
  mitigate exposure to changes in the fair value of an asset, liability, or firm
  commitment attributable to a particular risk, such as interest rate risk, are
  considered fair value hedges under SFAS No. 133. We are not currently a party to
  any derivatives contracts.
  Variable Interest Entities.  In January 2003, the FASB issued FASB
  Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities. In
  December 2003, the FASB issued a revision to FIN 46, which is termed FIN 46R.
  FIN 46R clarifies the application of Accounting Research Bulletin No. 51,
  Consolidated Financial Statements and provides guidance on the identification of
  entities for which control is achieved through means other than through voting
  rights and how to determine when and which business enterprise should
  consolidate such an entity. This model for consolidation applies to an entity in
  which either (1) the equity investors (if any) do not have a controlling
  financial interest or (2) the equity investment at risk is insufficient to
  finance that entity's activities without receiving additional subordinated
  financial support from other parties. We periodically evaluate the terms of our
  relationships with our tenants and borrowers to determine whether we are
  required to consolidate any tenants or borrowers.
  Stock Based Compensation.  We currently apply the intrinsic value method to
  account for the issuance of stock options under our equity incentive plan in
  accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees. In
  this regard, we anticipate that a substantial portion of our options will be
  granted to individuals who are our officers or directors. Accordingly, because
  the grants are expected to be at exercise prices that represent fair value of
  the stock at the date of grant, we do not currently record any expense related
  to the issuance of these options under the intrinsic value method. If the actual
  terms vary from the expected, the impact to our compensation expense could
  differ.
  In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment,"
  which is a revision of SFAS No. 123, "Accounting for Stock Based Compensation."
  SFAS No. 123(R) establishes standards for the accounting for transactions in
  which an entity exchanges it equity instruments for goods or services. The
  Statement focuses primarily on accounting for transactions in which an entity
  obtains employee services in share-based payment transactions. SFAS No. 123(R)
  requires that the fair value of such equity instruments be recognized as expense
  in the historical financial statements as services are performed. Prior to SFAS
  No. 123(R), only certain pro forma disclosures of fair value were required. SFAS
  No. 123(R) becomes effective for public companies with their first annual
  reporting period that begins after June 15, 2005. For non-public companies, the
  standard becomes effective for their first fiscal year beginning after December
  15, 2005. We are currently evaluating the impact of SFAS No. 123(R) on our
  financial position and results of operations. However, we do not expect that
  SFAS No. 123(R) will have a material effect on our financial position and
  results of operations. Our existing equity incentive plan allows for stock-based
  awards to be in the form of options, restricted stock, restricted stock units
  and deferred stock units. The impact of SFAS No. 123(R) will also be affected by
  the types of stock-based awards that our board of directors chooses to grant.
  DISCLOSURE OF CONTRACTUAL OBLIGATIONS
  The following table summarizes known material contractual obligations
  associated with investing and financing activities as of March 31, 2005:
  LESS THAN        2-3         4-5        AFTER
  CONTRACTUAL OBLIGATIONS                         1 YEAR         YEARS       YEARS      5 YEARS        TOTAL
  -----------------------                       -----------   -----------   --------   ----------   ------------
  Construction contracts......................  $26,998,993   $        --   $     --   $       --   $ 26,998,993
  Operating lease commitments.................      306,045       689,022    715,374    2,041,936      3,752,377
  Long-term debt..............................    3,750,000    70,391,667         --           --     74,141,667
  -----------   -----------   --------   ----------   ------------
  Total:....................................  $31,055,038   $71,080,689   $715,374   $2,041,936   $104,893,037
  ===========   ===========   ========   ==========   ============
  RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
  Investors and analysts following the real estate industry utilize funds
  from operations, or FFO, as a supplemental performance measure. While we believe
  net income available to common stockholders as defined by GAAP is the most
  appropriate measure, our management considers FFO an appropriate supplemental
  measure given its wide use by and relevance to investors and analysts. 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 assume that the value of real estate
  diminishes predictably over time.
  As defined by the National Association of Real Estate Investment Trusts, or
  NAREIT, FFO represents net income (loss) (computed in accordance with GAAP),
  excluding gains (losses) on sales of real estate, plus real estate related
  depreciation and amortization and after adjustments for unconsolidated
  partnerships and joint ventures. We compute FFO in accordance with the NAREIT
  definition. FFO should not be viewed as a substitute measure of our company's
  operating performance since it does not reflect either depreciation and
  amortization costs or the level of capital expenditures and leasing costs
  necessary to maintain the operating performance of our properties, which are
  significant economic costs that could materially impact our results of
  three months ended March 31, 2005 and for the year ended December 31, 2004 on an
  actual and pro forma basis.
  ------------   ------------   -----------   ----------
  Net income.......................    $4,673,545     $3,559,934    $20,685,519   $4,576,349
  Depreciation and amortization....     1,130,162        842,407      4,520,645    1,478,470
  ----------     ----------    -----------   ----------
  Funds from operations............    $5,803,747     $4,402,341    $25,206,164   $6,054,819
  ==========     ==========    ===========   ==========
  THREE MONTHS ENDED MARCH 31, 2005 AND MARCH 31, 2004
  Net income for the three months ended March 31, 2005 was $3,559,934
  compared to a net loss of $493,726 for the three months ended March 31, 2004.
  Three Months Ended March 31, 2005:  Revenue of $6,480,528 was comprised of
  rents (81%) and interest from loans (19%). During this quarter, we received
  percentage rents from Vibra of approximately $395,000. These percentage rents
  occurred due to an increase in patient census at the Vibra Facilities from the
  three months ended December 31, 2004 to the three months ended March 31, 2005.
  The higher census figures at the Vibra Facilities produced increased revenue
  which exceeded the thresholds on which percentage rent are based. Also, we
  acquired the Desert Valley Facility during the quarter, which added to our rent
  revenue. Interest income from loans decreased due to Vibra repaying one of its
  loans from us.
  Depreciation and amortization during the first quarter of 2005 are
  primarily attributable to the Vibra Facilities. The Desert Valley Facility
  contributed one month of depreciation and amortization during the quarter.
  Property expenses are comprised primarily of a ground lease payment on our
  rehabilitation hospital located in Marlton, New Jersey.
  General and administrative expenses during the quarter, which totaled
  $1,698,249, were comprised primarily of executive compensation of approximately
  $1.0 million, with the balance made up primarily of legal, office and other
  administrative expenses. During the three months ended March 31, 2005, we had 16
  full-time employees and one part-time employee.
  Other income of $383,772 consisted of interest and dividends, primarily
  from the temporary investment of the net proceeds of our April 2004 private
  placement and borrowings from Merrill Lynch Capital in mutual funds and other
  interest-bearing accounts.
  Interest expense from the borrowings under our Merrill Lynch Capital loan
  during the three months ended March 31, 2005 totaled $711,149. Capitalized
  interest of approximately $395,000 was recorded in the three months ended March
  31, 2005 for the construction of the West Houston Facilities.
  Three Months Ended March 31, 2004:  The loss in 2004 preceded our April
  2004 private placement and covered a period during which we incurred
  administrative costs consisting primarily of executive compensation expenses. At
  March 31, 2004, we had five employees, four of whom were executive officers.
  We had no operating properties and no development properties. Our activities in
  the first quarter of 2004 were concentrated in evaluating potential acquisitions
  and planning for the April 2004, private placement. Due to the lack of
  operations in the first quarter of 2004, there is limited comparability to the
  results for the same period in 2005.
  YEAR ENDED DECEMBER 31, 2004
  Net income for the year ended December 31, 2004 was $4,576,349. Revenue,
  which was $10,893,459, was comprised primarily of rents (79%) and interest from
  loans (21%). Interest and dividends, primarily from the temporary investment of
  the net proceeds of our April 2004 private placement, totaled $930,260. We
  completed our private placement of common stock in April 2004 and received
  proceeds, net of offering costs and fees, of approximately $233.5 million.
  Expenses during the year, which totalled $7,214,601, were comprised primarily of
  compensation of $3,700,442, depreciation and amortization of $1,517,530, other
  general and administrative expenses of $1,336,897 and approximately $585,345 of
  costs associated with unsuccessful acquisitions. These costs, which consisted
  primarily of legal fees, costs of third party reports and travel, related to a
  portfolio of five facilities that were subject to a letter of intent with a
  prospective operator. During the second quarter of 2004, we declined to pursue
  the acquisition.
  INCEPTION (AUGUST 27, 2003) THROUGH DECEMBER 31, 2003
  Our net loss for the period from inception (August 27, 2003) through
  December 31, 2003 was $1,023,276. Included in this loss is approximately
  $423,000 in accrued expenses that were incurred by Medical Properties Trust, LLC
  prior to August 27, 2003 and assumed by us in connection with our formation.
  These constitute all of the expenses of this company. We had no revenues during
  this period and substantially all of the expenses that comprised our net loss
  from inception through December 31, 2003 are related to start-up activities,
  including business development, identification of acquisition possibilities,
  legal, accounting, and consulting. We do not consider the results of our
  operations in this period to be meaningful with respect to an analysis of our
  expected operations.
  Our long-term liquidity requirements consist primarily of funds to pay the
  costs of acquiring and developing facilities and making distributions to our
  stockholders. We believe that our existing cash and cash equivalents, together
  with the net proceeds from this offering, cash flow from operations and
  borrowings under our Merrill Lynch and Colonial Bank loans, will be sufficient
  to acquire the Pending Acquisition and Development Facilities and to fund our
  cash requirements during the next 12 months. Our current portfolio of
  facilities, other than the Desert Valley Facility, serves as collateral for our
  current indebtedness.
  We received approximately $233.5 million, net of offering costs and fees,
  from our April 2004 private placement. We have acquired and committed to develop
  healthcare facilities with an aggregate estimated cost of $387.3 million and
  have provided approximately $41.4 million in acquisition financing to one of our
  tenants. As of March 31, 2005, we had stockholders' equity of approximately
  $232.5 million, including approximately $82.0 million in cash and cash
  equivalents.
  Our sources of funds for future acquisitions and developments will
  primarily be our uncommitted cash balances, the net proceeds of this offering,
  operating cash flows and borrowings. We intend to use these cash resources in
  the acquisition and development of our Pending Acquisition and Development
  Facilities and to pay our operating expenses for the foreseeable future. To
  maintain our status as a REIT under the Code, we must distribute annually at
  least 90% of our taxable income. These distribution requirements limit our
  ability to retain earnings and thereby replenish or increase capital for
  acquisitions, developments and operations. However, we believe that our current
  access to financings will provide us with financial flexibility at levels
  sufficient to meet current and anticipated capital requirements, including
  funding new acquisition and development opportunities.
  We intend to utilize various types of debt to finance a portion of the
  costs to complete our proposed development facilities and acquire and develop
  additional facilities. We expect this debt will include long-term, fixed-rate
  mortgage loans, variable-rate term loans, secured revolving lines of credit and
  construction financing facilities. We believe we will be able generally to
  finance up to approximately 60% of the cost of our healthcare facilities;
  however, there is no assurance that we will be able to obtain or maintain this
  level of debt on our portfolio of real estate assets on favorable terms in the
  We borrowed $75 million from Merrill Lynch under a loan agreement with a
  term of three years for acquisition and development of additional facilities and
  other working capital needs. The loan bears interest at one month LIBOR (3.15%
  at June 2, 2005) plus 300 basis points. There was $74.1 million outstanding
  under this loan as of March 31, 2005. The term loan is secured by our interests
  in the Vibra Facilities and requires us to comply with certain financial
  covenants.
  We have accepted a term sheet from Merrill Lynch Capital for an up to $100
  million senior secured revolving credit facility with a term of four years, with
  one 12-month extension option, to refinance the outstanding amount under our
  existing loan agreement with Merrill Lynch Capital and for general corporate
  purposes. During the term of the loan, we will have the right to increase the
  amount available under the facility by an amount up to $75.0 million, subject to
  no event of default continuing or occurring at the time of such increase. The
  facility will initially be secured by our interests in the Vibra Facilities, or
  the borrowing base properties. The maximum availability under the facility will
  be equal to 65% of the collateral value of the borrowing base properties. The
  facility will bear interest at one month LIBOR plus up to 275 basis points
  depending on the amount of the facility leveraged. We expect the facility with
  Merrill Lynch to include financial covenants requiring us to maintain a maximum
  total leverage ratio (ratio of consolidated indebtedness to gross asset value)
  of 65%, a minimum consolidated fixed charge coverage ratio of 1.65 to 1 and to
  maintain minimum tangible net worth equal to $200 million plus 75% of net
  proceeds from any additional equity issuances. Execution of this credit facility
  is subject to Merrill Lynch's underwriting and credit approval and completion of
  acceptable legal documentation.
  amount of $43.4 million with Colonial Bank to fund construction costs for our
  West Houston Facilities. Each construction loan has a term of 18 months and an
  option on the part of the borrower to convert the loan to a 30-month term loan
  upon completion of construction of the West Houston Facility securing that loan.
  The construction loans are secured by mortgages on the West Houston Facilities,
  as well as assignments of rents and leases on those facilities. The terms of the
  construction loan agreements require us to comply with a financial ratio
  relating to debt coverage. The construction loans bear interest at one month
  LIBOR plus 225 basis points, during the construction period and one month LIBOR
  plus 250 basis points, thereafter. The Colonial Bank loans are cross-defaulted.
  As of the date of this prospectus, we have made no borrowings under the Colonial
  Bank loans.
  Any other indebtedness we incur will likely be subject to continuing
  covenants, and we will likely be required to make continuing representations and
  warranties in connection with that debt. Moreover, some or all of our debt may
  be secured by some or all of our assets. If we default in the payment of
  interest or principal on any of our debt, breach any representation or warranty
  in connection with any borrowing or violate any covenant in any loan document,
  the lender may accelerate the maturity of the debt requiring us to immediately
  repay all outstanding principal and accrued interest. If we are unable to make
  the payment, our lender could foreclose on our assets that are pledged as
  collateral to the lender. The lender could also sue us or force us into
  bankruptcy. Any of these events would likely have a material adverse effect on
  the value of an investment in our common stock.
  Our real estate investments, like most commercial real estate investments,
  are relatively illiquid and our ability to sell one or more of our properties
  quickly and on favorable terms may be limited by a variety of factors beyond our
  control, including current market conditions, the cost and availability of debt
  financing, zoning and regulatory changes, and the need for capital improvements.
  Moreover, the length of our lease agreements, the specialized nature of our
  tenants' operations and the resulting design of our facilities and the risk that
  the nature and profitability of our tenants' operations may be affected by
  healthcare regulations may further impact the liquidity of our facilities.
  elect 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 at least 90% of our REIT taxable income, excluding net
  capital gain, to our stockholders. It is our current intention to comply with
  these requirements, elect REIT status and maintain such status going forward.
  See "United States Federal Income Tax Considerations."
  DECLARATION DATE      RECORD DATE       DATE OF DISTRIBUTION   DISTRIBUTION PER SHARE
  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 cash distributions to
  stockholders in order for us to maintain our status as a REIT under the Code and
  to avoid corporate income and excise tax on undistributed income.
  Our leases contain provisions designed to mitigate the adverse impact of
  inflation. These provisions generally increase rental rates during the terms of
  the leases either at fixed rates or indexed escalations (based on the Consumer
  Price Index or other measures). In addition, all of our existing leases, and we
  intend that most of our new leases will, require the tenant to pay the operating
  expenses of the facility, including common area maintenance costs, real estate
  taxes and insurance. This may reduce our exposure to increases in costs and
  operating expenses resulting from inflation. However, if inflation rates exceed
  the contractual rental increases, our results of operations may be adversely
  affected, and inflation may also adversely impact our revenue from any leases
  that do not contain escalation provisions.
  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. In pursuing our
  business plan, we expect that the primary market risk to which we will be
  exposed is interest rate risk.
  We may be exposed to the effects of interest rate changes primarily as a
  result of long-term debt used to maintain liquidity and to fund expansion of our
  portfolio and operations. Our interest rate risk-management objectives will be
  to limit the impact of interest rate changes on earnings and cash flows and to
  lower overall borrowing costs. To achieve our objectives, we will borrow
  primarily at fixed rates or variable rates with the lowest margins available
  and, in some cases, with the ability to convert variable rates to fixed rates.
  We may also enter into derivative financial instruments such as interest rate
  swaps and caps in order to mitigate our interest rate risk on a related
  financial instrument. We do not intend to enter into derivative transactions for
  speculative purposes.
  In addition to changes in interest rates, the value of our facilities will
  be subject to fluctuations based on changes in local and regional economic
  conditions and changes in the ability of our tenants to generate profits, all of
  which may affect our ability to refinance our debt if necessary.
  From time to time, we also make loans to our tenants. We believe that the United
  States healthcare delivery system is becoming decentralized and is evolving away
  from the traditional "one stop," large-scale acute care hospital. We believe
  that this change is the result of a number of trends, including increasing
  specialization and technological innovation and the desire of both physicians
  and patients to utilize more convenient facilities. We also believe that
  demographic trends in the United States, including in particular an aging
  population, will result in continued growth in the demand for healthcare
  services, which in turn will lead to an increasing need for a greater supply of
  modern healthcare facilities. In response to these trends, we believe that
  healthcare operators increasingly prefer to conserve their capital for
  investment in operations and new technologies rather than investing in real
  estate and, therefore, increasingly prefer to lease, rather than own, their
  facilities. Given these trends and the size, scope and growth of this dynamic
  industry, we believe there are significant opportunities to acquire and develop
  net-leased healthcare facilities that are integral components of local
  healthcare delivery systems.
  Our strategy is to lease the facilities that we acquire or develop to
  experienced healthcare operators pursuant to long-term net-leases. We focus on
  acquiring and developing rehabilitation hospitals, long-term acute care
  hospitals, ambulatory surgery centers, cancer hospitals, women's and children's
  hospitals and regional and community hospitals, as well as other specialized
  single-discipline facilities and ancillary facilities. We believe that these
  types of facilities will capture an increasing share of expenditures for
  healthcare services. We believe that our strategy for acquisition and
  development of these types of net-leased facilities, which generally require a
  physician's order for patient admission, distinguish us as a unique investment
  alternative among REITs.
  practice management and hospital/physician relations. Therefore, in addition to
  understanding investment characteristics and risk levels typically important to
  real estate investors, our management understands the changing healthcare
  delivery environment, including changes in healthcare regulations, reimbursement
  methods and patient demographics, as well as the technological innovations and
  other advances in healthcare delivery generally. We believe that this experience
  gives us the specialized knowledge necessary to select attractively-located
  net-leased facilities, underwrite our tenants, analyze facility-level operations
  and understand the issues and potential problems that may affect the healthcare
  industry generally and the tenant service area and facility in particular. We
  believe that our management's experience in healthcare operations and real
  estate management and finance will enable us to take advantage of numerous
  attractive opportunities to acquire, develop and lease healthcare facilities.
  We completed a private placement of our common stock in April 2004 in which
  we raised net proceeds of approximately $233.5 million. Shortly after completion
  of our private placement, we began to acquire our current portfolio of nine
  facilities, consisting of seven facilities that are in operation and two
  facilities that are under development. Four of the facilities that are in
  operation are rehabilitation hospitals, two are long-term acute care hospitals
  and one is a community hospital with an integrated medical office building. The
  facilities under development are a community hospital and an adjacent medical
  office building. With the net proceeds of this offering, along with our
  available cash and cash equivalents, we intend to expand our portfolio of
  facilities by acquiring or developing additional net-leased healthcare
  We employ leverage in our capital structure in amounts determined from time
  to time by our board of directors. At present, we intend to limit our debt to
  approximately 60% of the aggregate costs of our facilities, although we may
  temporarily exceed that level from time to time. We expect our borrowings to be
  a combination of long-term, fixed-rate, non-recourse mortgage loans,
  variable-rate secured term and revolving credit facilities, and other fixed and
  variable-rate short to medium-term loans.
  We borrowed $75 million from Merrill Lynch under a loan agreement which has
  a term of three years. We have used the loan proceeds for acquisition of our
  current portfolio of facilities and plan to use the loan proceeds for
  acquisition and development of additional facilities and other working capital
  needs. The loan bears interest at one month LIBOR (3.15% at June 2, 2005) plus
  300 basis points. There is $74.1 million outstanding under this loan as of March
  31, 2005. The loan is secured by our interests in the Vibra Facilities. The loan
  with Merrill Lynch includes financial covenants requiring us to meet an interest
  coverage ratio (ratio of our earnings before interest, taxes, depreciation and
  amortization to interest expense) of 2 to 1, a fixed charge coverage ratio
  (ratio of earnings before interest, taxes, depreciation and amortization to the
  sum of total debt service, assumed capital expenditures pertaining to the Vibra
  Facilities, income taxes and preferred dividends) greater than 1.65 to 1, a net
  debt to total asset valuation ratio (ratio of total net debt to the product of
  nine and the sum of net income, interest expense, depreciation and amortization
  minus management fees not exceeding 1% of net revenue and $300 per licensed bed
  per annum) not greater than 70%, and, for each Vibra Facility, a base rent
  coverage ratio (ratio of earnings of the applicable lessee of the Vibra Facility
  before interest, taxes, depreciation, amortization, rent and management fees to
  base rent payable by the lessee) equal to or greater than 1.25 to 1 and to
  maintain minimum tangible net worth of at least $200 million. As of the date of
  this prospectus, we are in compliance with all material financial covenants
  under our loan with Merrill Lynch.
  We have accepted a term sheet from Merrill Lynch Capital for an up to
  $100.0 million senior secured revolving credit facility with a term of four
  years, with one 12-month extension option, to refinance the outstanding amount
  under our existing loan agreement with Merrill Lynch Capital and for general
  corporate purposes. During the term of the loan, we will have the right to
  increase the amount available under the facility by an amount up to $75.0
  million, subject to no event of default continuing or occurring at the time of
  such increase. Merrill Lynch will syndicate the that increase in the amount to
  be available under the facility on a best efforts basis, and no lender will be
  required to increase its commitment to facilitate the increase in the amount
  available under the facility.
  The facility will initially be secured by our interests in the Vibra
  Facilities, or the borrowing base properties. The maximum availability under the
  facility will be equal to 65% of the collateral value of the borrowing base
  properties. The facility will bear interest at one month LIBOR plus up to 275
  basis points depending on the amount of the facility leveraged. We expect the
  facility with Merrill Lynch to include financial covenants requiring us to
  maintain a maximum total leverage ratio (ratio of consolidated indebtedness to
  gross asset value) of 65%, a minimum consolidated fixed charge coverage ratio of
  1.65 to 1 and to maintain minimum tangible net worth equal to $200 million plus
  75% of net proceeds from any additional equity issuances. Execution of this
  credit facility is subject to Merrill Lynch's underwriting and credit approval
  and completion of acceptable legal documentation.
  construction loan agreements prevent us from allowing the net operating income
  of the facility used as collateral for any calendar quarter to be less than 1.25
  times the principal and interest payments then due and payable under the
  promissory note for the designated period until the loan is paid in full. In the
  event that our net operating income falls below the minimum debt service
  requirement, we must prepay a portion of the principal balance of the promissory
  note so that the debt service requirement is satisfied and maintained within 10
  days of our non-compliance. The construction loans bear interest at the one
  month LIBOR plus 225 basis points during the construction period and one
  month LIBOR plus 250 basis points thereafter. The Colonial Bank loans are
  cross-defaulted. As of the date of this prospectus, we have made no borrowings
  under the Colonial Bank loans.
  our taxable year that began on April 6, 2004 and ended on December 31, 2004.
  Analysis, healthcare is one of the largest industries in the United States, and
  was responsible for approximately 15.3% of United States gross domestic product
  in 2003. Healthcare spending has consistently grown at rates greater than
  overall spending growth and inflation. As the chart below reflects, healthcare
  expenditures are projected to increase by more than 7% in 2004 and 2005 to $1.8
  trillion and $1.9 trillion, respectively, and are expected to reach $3.1
  trillion by 2012.
  (GRAPH)
  We believe that the fundamental reasons for this growth in the demand for
  healthcare services include the aging and growth of the United States
  population, the advances in medical technology and treatments, and the increase
  in life expectancy. As illustrated by the chart below, the projected compound
  annual growth rate (or CAGR), from 2000 to 2030 of the population of senior
  citizens is three times the rate projected for the total United States
  population. This demographic trend is projected to result in an increase in the
  percentage of United States citizens who are age 65 or older from 12.4% in 2000
  to 19.6% in 2030.
  Source: United States Bureau of the Census
  To satisfy this growing demand for healthcare services, there is a
  significant amount of new construction of healthcare facilities. In 2003 alone,
  $24.5 billion was spent on the construction of healthcare facilities, according
  to CMS. This represented more than a 9% increase over the $22.4 billion in
  healthcare construction spending for 2002. The following chart reflects the
  growth and expected growth in healthcare construction expenditures over the
  period that began in 1990 and ends in 2012:
  We believe that the United States healthcare delivery system is evolving
  away from reliance on the traditional "one-stop," large-scale acute care
  hospital to one that relies on specialty hospitals and healthcare facilities
  that focus on single disciplines. We believe that there will be an increasing
  demand for more accessible, specialized and technologically-advanced healthcare
  delivery services as the population grows and ages. We own and have targeted for
  acquisition and development net-leased healthcare facilities
  providing state-of-the-art healthcare services because we believe these types of
  facilities represent the future of healthcare delivery.
  We believe that United States healthcare operators are in the early stages
  of a long-term evolution from a model that favors ownership of healthcare
  facilities to one that favors long-term net leasing of these facilities. We see
  two primary reasons for this:
  - First, in our experience, financial arrangements such as bond financing
  gave non-profit healthcare providers access to inexpensive capital,
  usually at 100% of the building cost. However, budget constraints on
  local governments and tighter underwriting standards have greatly reduced
  the availability of this very inexpensive capital.
  - Second, in our experience, healthcare providers were reimbursed on
  cost-based reimbursement plans (calculated in part by reference to a
  provider's total cost in plant and equipment) which provided no incentive
  for healthcare providers to make efficient use of their capital. With the
  evolution of the prospective payment reimbursement system, which
  reimburses healthcare providers for specific procedures or diagnoses and
  thus rewards the most efficient providers, healthcare providers are no
  longer assured of returns on investments in non-revenue producing assets
  such as the real estate where they operate. Accordingly, in recent years,
  healthcare providers have begun to convert their owned facilities to
  long-term lease arrangements thereby accessing substantial amounts of
  previously unproductive capital to invest in high margin operations and
  In summary, the following market trends have shaped our investment
  - Decentralization:  We believe that healthcare services are increasingly
  delivered through smaller, more accessible facilities that are designed
  for specific treatments and medical conditions and that are located near
  physicians and their patients. Based upon our experience, more healthcare
  services are delivered in specialized facilities than in acute care
  hospitals.
  - Specialization:  In our experience, the percentage of physicians and
  other healthcare professionals who practice in a recognized specialty or
  subspecialty has been increasing for many years. We believe that this
  creates opportunities for development of additional specialized
  healthcare facilities as advances in technologies and recognition of new
  practice specialties result in new treatments for difficult medical
  - Convenient Patient Care:  We believe that healthcare service providers
  are increasingly seeking to provide specific services in a single
  location for the convenience of both patients and physicians. These
  single-discipline centers are primarily located in suburban areas, near
  patients and physicians, as opposed to the traditional urban hospital
  setting.
  - Aging Population:  We believe that demographic trends in the United
  States, including in particular an aging population, will result in
  continued growth in the demand for healthcare services, which in turn
  will lead to an increasing need for a greater supply of modern healthcare
  - Use of Capital:  We believe that healthcare operators increasingly prefer
  to conserve their capital for investment in their operations and for new
  technologies rather than investing it in real estate.
  owned by a variety of healthcare operators. We focus on acquiring and developing
  those net-leased facilities that are specifically designed to reflect the latest
  trends in healthcare delivery methods. These facilities include:
  physicians generally serve a market specific area, whether urban,
  suburban or rural. We intend to limit our ownership of these facilities
  to those with market, ownership, competitive and technological
  characteristics that provide barriers to entry for potential competitors.
  in the provision of outpatient healthcare services to their patients. The
  medical office buildings that we target are or will be master-leased and
  UNDERWRITING PROCESS
  Our real estate and loan underwriting process focuses on healthcare
  operations and real estate investment. This process is described in a written
  policy that requires, among other things, completion of specific elements of due
  diligence at the appropriate stages, including appraisals, engineering
  evaluations and environmental assessments, all provided by qualified and
  independent third parties. All of our executive officers are involved in the
  acquisition and due diligence process.
  Our acquisition and development selection process includes a comprehensive
  analysis of the targeted healthcare facility's profitability, financial trends
  in revenues and expenses, barriers to competition, the need in the market for
  the type of healthcare services provided by the facility, the strength of the
  location and the underlying value of the facility, as well as the financial
  strength and experience of the prospective tenant and the tenant's management
  team. We also analyze the operating history of the specific facility, including
  the facility's earnings, cash flow, occupancy and patient and payor mix, in
  order to evaluate its financial and operating strength.
  When we identify an attractive acquisition or development opportunity based
  on historical operations and market conditions, we determine the financial value
  of a potential long-term net-lease arrangement based on our target long-term
  net-lease capitalization rates, which currently range from 9.5% to 11%, and
  fixed charge coverage ratios. We compare that financial value to the replacement
  costs that we estimate by consulting with major healthcare construction
  contractors, engaging construction engineers or facility
  assessment consultants as appropriate, and reviewing recent cost studies. In
  addition, our due diligence process includes obtaining and evaluating title,
  environmental and other customary third-party reports. In certain instances we
  have acquired or may acquire a facility from a tenant or proposed tenant at a
  purchase price in excess of what our tenant or proposed tenant recently paid or
  expects to pay for that same facility. Our current policy requires the approval
  of the investment committee of our board of directors for acquisitions or
  developments of facilities that exceed $10.0 million.
  We seek to build tenant relationships with healthcare operators that we
  believe are positioned to prosper in the changing healthcare environment. We
  seek tenant relationships with operators who, based on our financial and
  operating analyses, have demonstrated the ability to manage in good and bad
  economic conditions. In certain cases, we lend funds to prospective tenants to
  assist them with their acquisition of the operations at the facilities that we
  intend to acquire and lease to them and for initial working capital needs. See
  "Our Portfolio -- Our Current Portfolio of Facilities." In these instances,
  where feasible and in compliance with applicable healthcare laws and
  regulations, we seek to obtain percentage rents based on the prospective
  tenant's revenues in addition to our base rent. Through our detailed
  underwriting of healthcare operations and real estate, we expect to deliver
  attractive risk-adjusted returns to our stockholders.
  We actively monitor our facilities, including reviewing periodic financial
  reporting and operating data, as well as visiting each facility and meeting with
  the management of our tenants on a regular basis. Integral to our asset
  management philosophy is our desire to build long-term relationships with the
  tenants and, accordingly, we have developed a partnering approach which we
  believe results in the tenant viewing us as a member of its team. We understand
  that in order to maximize the value of our investments, our tenants must
  prosper. Therefore, we expect to work closely with our tenants throughout the
  terms of our leases in order to foster a long-term working relationship and to
  maximize the possibility of new business opportunities. For example, we and our
  prospective tenants typically conduct due diligence in a coordinated manner and
  share with each other the results of our respective due diligence
  investigations. During the lease term, we conduct joint evaluations of local
  facility operations and participate in discussions about strategic plans that
  may ultimately require our approval pursuant to the terms of our lease
  agreements. Our chief executive officer, chief financial officer and chief
  operating officer also communicate frequently with their counterparts at our
  tenants in order to maintain knowledge about changing regulatory and business
  conditions. We believe this knowledge equips us to anticipate changes in our
  tenants' operations in sufficient time to strategically and financially plan
  for, rather than react to, changing conditions.
  In addition to our ongoing analyses of our tenants' operations, our
  management team actively monitors and researches each healthcare segment in
  which we own and lease facilities in order to help us recognize changing
  economic, market and regulatory conditions. Our senior management is not only
  involved in the underwriting of each asset upon acquisition or development, but
  is also involved in the asset management process during the entire period in
  which we own the facility.
  consideration, the membership interests of Medical Properties Trust, LLC
  were transferred to us and Medical Properties Trust, LLC became our
  wholly-owned subsidiary. Upon its formation in September 2003, our
  operating partnership assumed certain obligations of Medical Properties
  Trust, LLC. Upon completion of our private placement in April 2004,
  1,108,527 shares of the 1,630,435 shares of common stock held by our
  founders were redeemed and they now collectively hold 557,908 shares of
  our common stock, including shares purchased in our April 2004 private
  placement. Our founders agreed to the
  redemption of a portion of their shares of our common stock for nominal
  consideration primarily in order to facilitate the completion of our
  April 2004 private placement.
  September 2003. Through our wholly-owned subsidiary, Medical Properties
  Trust, LLC, we are the sole general partner of our operating partnership.
  We currently own all of the limited partnership interests in our
  operating partnership.
  Billings, Ramsey & Co., Inc. acted as the initial purchaser and sole
  placement agent. The total net proceeds to us, after deducting fees and
  expenses of the offering, were approximately $233.5 million. The net
  proceeds of our private placement, together with borrowed funds, have
  been or will be used to acquire our current portfolio of nine facilities,
  consisting of seven facilities that are in operation and two that are
  under development, repay debt, pay pre-offering operating expenses and
  for working capital. Thus far we have utilized approximately $155.4
  million to acquire our seven existing facilities, have loaned $47.6
  million to Vibra to acquire the operations at the Vibra Facilities and
  for working capital purposes, $6.2 million of which has been repaid, and
  have funded $35.1 million of a projected total of $63.1 million of
  development costs for the West Houston Facilities. There are
  approximately 316 beneficial holders of our common stock as of the date
  of this prospectus.
  Edward K. Aldag, Jr., William G. McKenzie, Emmett E. McLean, R. Steven
  Hamner and James P. Bennett may be considered our founders. Mr. Aldag is serving
  as chairman of our board of directors and as our president and chief executive
  officer. Mr. McKenzie is serving as our vice chairman of the board. Mr. McLean
  is serving as our executive vice president, chief operating officer, treasurer
  and assistant secretary. Mr. Hamner is serving as our executive vice president
  and chief financial officer. Mr. Bennett formerly was an owner, officer,
  director of and consultant to the company's predecessor, Medical Properties
  Trust, LLC, but has not been affiliated with us since August 2003.
  OUR OPERATING PARTNERSHIP
  We own our facilities and conduct substantially all of our business through
  our operating partnership, MPT Operating Partnership, L.P., and its
  subsidiaries. MPT Operating Partnership, L.P. is a Delaware limited partnership
  organized by us in September 2003. Our wholly-owned limited liability company,
  Medical Properties Trust, LLC, serves as the sole general partner of, and holds
  a 1% interest in, our operating partnership. We also currently own all of the
  limited partnership interests in our operating partnership, constituting a 99%
  partnership interest, but may issue limited partnership units from time to time
  in connection with facility acquisitions and developments. Where permitted by
  applicable law, we intend to sell equity interests in subsidiaries of our
  operating partnership in connection with, or subsequent to, the acquisition and
  development of facilities.
  Holders of limited partnership units of our operating partnership, other
  than us, would be entitled to redeem their partnership units for shares of our
  common stock on a one-for-one basis, subject to adjustments for stock splits,
  dividends, recapitalizations and similar events. At our option, in lieu of
  issuing shares of common stock upon redemption of limited partnership units, we
  may redeem the partnership units tendered for cash in an amount equal to the
  then-current value of the shares of common stock. Holders of limited partnership
  units would be entitled to receive distributions equivalent to the dividends we
  pay to holders of our shares of common stock. As the sole owner of the general
  partner of our operating partnership, we have the power to manage and conduct
  our operating partnership's business, subject to the limitations described in
  the first amended and restated agreement of limited partnership of our operating
  partnership. See "Partnership Agreement."
  MPT Operating Partnership, L.P. is a limited partner of MPT West Houston
  MOB, L.P. and MPT West Houston Hospital, L.P., which respectively own the
  Houston medical office building and the Houston community hospital in our
  portfolio which are under development. MPT West Houston MOB,
  LLC and MPT West Houston Hospital, LLC, our wholly-owned subsidiaries, are the
  respective general partners of these entities. We have sold limited partnership
  interests representing approximately 24% of the aggregate equity interests in
  MPT West Houston MOB, L.P. to physicians and others associated with our tenant
  or subtenants of the West Houston MOB. Stealth, L.P., the tenant of the Houston
  community hospital under development and an entity majority-owned by physicians,
  owns a 6% limited partnership interest in MPT West Houston Hospital, L.P.
  In general, the management and control of the limited partnerships or
  limited liability companies that own our properties, such as MPT West Houston
  MOB, L.P. and MPT West Houston Hospital, L.P., rests with our operating
  partnership or its subsidiaries. The limited partners or other minority owners
  in these entities will not participate in the management or control of the
  business of the partnership or other entity. Although the partnership agreements
  or limited liability company agreements for future limited partnerships or
  limited liability companies may vary, our current limited partnership agreements
  require approval of the limited partners holding a majority of the units in the
  partnership other than the general partner and its affiliates to:
  - amend the partnership agreement in a manner that would:
  - adversely affect the financial or other rights of the limited partners
  who are not affiliates of the general partner or positively affect the
  financial rights or other rights of the general partner or reduce the
  general partner's obligations and responsibilities under the limited
  partnership agreement;
  - impose on the limited partners who are not affiliates of the general
  partner any obligation to make additional capital contributions to the
  partnership;
  - adversely affect the rights of certain limited partners without
  similarly affecting the rights of other limited partners;
  - merge, consolidate or combine with another entity; or
  - determine the terms and the amount of consideration payable for any
  issuances of additional partnership units to our operating partnership,
  the general partner or any of their respective affiliates.
  In general, each partner or other equity owner will share in the
  partnership's profits, losses and available cash flow pro rata based upon his
  percentage interest in the partnership. We may hold properties we develop or
  acquire in the future through structures similar to the structure through which
  we hold the Houston facilities in our portfolio.
  MPT DEVELOPMENT SERVICES, INC.
  MPT Development Services, Inc., our taxable REIT subsidiary, was
  incorporated in January 2004 as a Delaware corporation. MPT Development
  Services, Inc. is authorized to provide third-party facility planning, project
  management, medical equipment planning and implementation services, medical
  office building management services, lending services, including but not limited
  to acquisition and working capital loans to our tenants, and other services that
  neither we nor our operating partnership can undertake directly under applicable
  REIT tax rules. Overall, no more than 20% of the value of our assets may consist
  of securities of one or more taxable REIT subsidiaries, and no more than 25% of
  the value of our assets may consist of securities that are not qualifying assets
  under the test requiring that 75% of a REIT's assets consist of real estate and
  other related assets. Further, a taxable REIT subsidiary may not directly or
  Social Security Act with respect to the facility.
  MPT Development Services, Inc. will pay federal, state and local income
  taxes at regular corporate rates on its taxable income. MPT Development
  Services, Inc. has made, and from time to time may make, loans to tenants or
  prospective tenants to assist them with the acquisition of the operations at
  leased or to be leased to them and for initial working capital needs. There are
  currently approximately $41.4 million in such loans outstanding. See "Our
  Portfolio -- Our Current Portfolio of Facilities."
  Generally, the federal tax basis for our facilities used to determine
  depreciation for federal income tax purposes will be our acquisition costs for
  such facilities. To the extent facilities are acquired with units of our
  operating partnership or its subsidiaries, we will acquire a carryover basis in
  the facilities. For federal income tax purposes, depreciation with respect to
  the real property components of our facilities, other than land, generally will
  be computed using the straight-line method over a useful life of 40 years, for a
  depreciation rate of 2.50% per year.
  OUR LEASES
  The leases for our facilities are "net" leases with terms requiring the
  tenant to pay all ongoing operating and maintenance expenses of the facility,
  including property, casualty, general liability and other insurance coverages,
  utilities and other charges incurred in the operation of the facilities, as well
  as real estate taxes, ground lease rent and the costs of capital expenditures,
  repairs and maintenance. Our leases also provide that our tenants will indemnify
  us for environmental liabilities. Our current leases range from 11 to 16 years
  and provide for annual rent escalation and, in the case of the Vibra Facilities,
  percentage rent. Our leases require periodic reports and financial statements
  from our tenants. In addition, our leases contain customary default,
  termination, and subletting and assignment provisions. See "Our Portfolio -- Our
  Current Portfolio of Facilities." We anticipate that our future leases will have
  similar terms, including percentage rent where feasible and in compliance with
  applicable healthcare laws and regulations.
  ENVIRONMENTAL MATTERS
  Under various federal, state and local environmental laws and regulations,
  a current or previous owner, operator or tenant of real estate may be required
  to investigate and clean up hazardous or toxic substances or petroleum product
  releases or threats of releases at such property and may be held liable to a
  government entity or to third parties for property damage and for investigation,
  clean-up and monitoring costs incurred by such parties in connection with the
  actual or threatened contamination, including substances currently unknown, that
  may have been released on the real estate. These laws may impose clean-up
  responsibility and liability without regard to fault, or whether or not the
  owner, operator or tenant knew of or caused the presence of the contamination.
  The liability under these laws may be joint and several for the full amount of
  the investigation, clean-up and monitoring costs incurred or to be incurred or
  actions to be undertaken, although a party held jointly and severally liable
  might be able to obtain contributions from other identified, solvent,
  responsible parties of their fair share toward these costs. Investigation,
  clean-up and monitoring costs may be substantial and can exceed the value of the
  property. The presence of contamination, or the failure to properly remediate
  contamination, on a property may adversely affect the ability of the owner,
  operator or tenant to sell or rent that property or to borrow funds using such
  property as collateral and may adversely impact our investment in that property.
  In addition, if hazardous substances are located on or released from our
  properties, we could incur substantial liabilities through a private party
  personal injury claim, a property damage claim by an adjacent property owner, or
  claims by a governmental entity or others for other damages, such as natural
  resource damages. This liability may be imposed under environmental laws or
  common-law principles.
  Federal regulations require building owners and those exercising control
  over a building's management to identify and warn, via signs and labels, of
  potential hazards posed by workplace exposure to installed asbestos-containing
  materials and potentially asbestos-containing materials in their building. The
  regulations also set forth employee training, record keeping and due diligence
  requirements pertaining to asbestos-containing materials and potentially
  asbestos-containing materials. Government entities can assess significant fines
  for violation of these regulations. Building owners and those exercising control
  over a building's management may be subject to an increased risk of personal
  injury lawsuits by workers and others exposed to asbestos-containing materials
  and potentially asbestos-containing materials as a result of these regulations.
  The regulations may affect the value of a building containing
  asbestos-containing materials and potentially asbestos-containing materials in
  which we have invested. Federal, state and local
  laws and regulations also govern the removal, encapsulation, disturbance,
  handling and disposal of asbestos-containing materials and potentially
  asbestos-containing materials when such materials are in poor condition or in
  the event of construction, remodeling, renovation or demolition of a building.
  Such laws and regulations may impose liability for improper handling or a
  release to the environment of asbestos-containing materials and potentially
  asbestos-containing materials and may provide for fines to, and for third
  parties to seek recovery from, owners or operators of real property for personal
  injury or improper work exposure associated with asbestos-containing materials
  and potentially asbestos-containing materials.
  Prior to closing any facility acquisition, we obtain Phase I environmental
  assessments in order to attempt to identify potential environmental concerns at
  the facilities. These assessments will be carried out in accordance with an
  appropriate level of due diligence and will generally include a physical site
  inspection, a review of relevant federal, state and local environmental and
  health agency database records, one or more interviews with appropriate
  site-related personnel, review of the property's chain of title and review of
  historic aerial photographs and other information on past uses of the property.
  We may also conduct limited subsurface investigations and test for substances of
  concern where the results of the Phase I environmental assessments or other
  information indicates possible contamination or where our consultants recommend
  such procedures.
  While we may purchase many of our facilities on an "as is" basis, we intend
  for all of our purchase contracts to contain an environmental contingency
  clause, which permits us to reject a facility because of any environmental
  hazard at the facility.
  We compete in acquiring and developing facilities with financial
  institutions, institutional pension funds, real estate developers, other REITs,
  other public and private real estate companies and private real estate
  investors. Among the factors adversely affecting our ability to compete are the
  - we may have less knowledge than our competitors of certain markets in
  which we seek to purchase or develop facilities;
  - many of our competitors have greater financial and operational resources
  than we have; and
  - our competitors or other entities may determine to pursue a strategy
  similar to ours.
  To the extent that we experience vacancies in our facilities, we will also
  face competition in leasing those facilities to prospective tenants. The actual
  competition for tenants varies depending on the characteristics of each local
  market. Virtually all of our facilities operate in a competitive environment,
  and patients and referral sources, including physicians, may change their
  preferences for a healthcare facilities from time to time.
  HEALTHCARE REGULATORY MATTERS
  The following discussion describes certain material federal healthcare laws
  and regulations that may affect our operations and those of our tenants.
  However, the discussion does not address state healthcare laws and regulations,
  except as otherwise indicated. These state laws and regulations, like the
  federal healthcare laws and regulations, could affect our operations and those
  of our tenants. Moreover, the discussion relating to reimbursement for
  healthcare services addresses matters that are subject to frequent review and
  revision by Congress and the agencies responsible for administering federal
  payment programs. Consequently, predicting future reimbursement trends or
  changes is inherently difficult.
  Ownership and operation of hospitals and other healthcare facilities are
  subject, directly and indirectly, to substantial federal, state and local
  government healthcare laws and regulations. Our tenants' failure to comply with
  these laws and regulations could adversely affect their ability to meet their
  lease obligations. Physician investment in us or in our facilities also will be
  subject to such laws and regulations. We intend for all of our business
  activities and operations to conform in all material respects with all
  applicable laws and regulations.
  Anti-Kickback Statute.  42 U.S.C. sec.1320a-7b(b), or the Anti-Kickback
  Statute, prohibits, among other things, the offer, payment, solicitation or
  acceptance of remuneration directly or indirectly in return
  for referring an individual to a provider of services for which payment may be
  made in whole or in part under a federal healthcare program, including the
  Medicare or Medicaid programs. Violation of the Anti-Kickback Statute is a crime
  and is punishable by criminal fines of up to $25,000 per violation, five years
  imprisonment or both. Violations may also result in civil sanctions, including
  civil penalties of up to $50,000 per violation, exclusion from participation in
  federal healthcare programs, including Medicare and Medicaid, and additional
  monetary penalties in amounts treble to the underlying remuneration.
  The Anti-Kickback Statute defines the term "remuneration" very broadly and,
  accordingly, local physician investment in our facilities could trigger scrutiny
  of our lease arrangements under the Anti-Kickback Statute. In addition to
  certain statutory exceptions, the Office of Inspector General of the Department
  of Health and Human Services, or OIG, has issued "Safe Harbor Regulations" that
  describe practices that will not be considered violations of the Anti-Kickback
  Statute. These include a safe harbor for space rental arrangements which
  protects payments made by a tenant to a landlord under a lease arrangement
  meeting certain conditions. We intend to use our commercially reasonable efforts
  to structure lease arrangements involving facilities in which local physicians
  are investors and tenants so as to satisfy, or meet as closely as possible, the
  conditions for the safe harbor for space rental. We cannot assure you, however,
  that we will meet all the conditions for the safe harbor, and it is unlikely
  that we will meet all conditions for the safe harbor in those instances in which
  investment. We intend our lease agreement purchase option prices to be fair
  market value; however, we cannot assure you that all of our purchase options
  will be at fair market value. Any purchase not at fair market value may present
  risks of challenge from healthcare regulatory authorities. The fact that a
  particular arrangement does not fall within a statutory exception or safe harbor
  does not mean that the arrangement violates the Anti-Kickback Statute. The
  statutory exception and Safe Harbor Regulations simply provide a guaranty that
  qualifying arrangements will not be prosecuted under the Anti-Kickback Statute.
  The implication of the Anti-Kickback Statute could limit our ability to include
  local physicians as investors or tenants or restrict the types of leases into
  which we may enter if we wish to include such physicians as investors having
  direct or indirect ownership interests in our facilities.
  Federal Physician Self-Referral Statute.  Any physicians investing in our
  company or its subsidiary entities could also be subject to the Ethics in
  Patient Referrals Act of 1989, or the Stark Law (codified at 42 U.S.C.
  sec. 1395nn). Unless subject to an exception, the Stark Law prohibits a
  physician from making a referral to an "entity" furnishing "designated health
  services" paid by Medicare or Medicaid if the physician or a member of his
  immediate family has a "financial relationship" with that entity. A reciprocal
  prohibition bars the entity from billing Medicare or Medicaid for any services
  furnished pursuant to a prohibited referral. Financial relationships are defined
  very broadly to include relationships between a physician and an entity in which
  the physician or the physician's family member has (i) a direct or indirect
  ownership or investment interest that exists in the entity through equity, debt
  or other means and includes an interest in an entity that holds a direct or
  indirect ownership or investment interest in any entity providing designated
  health services; or (ii) a direct or indirect compensation arrangement with the
  entity.
  The Stark Law as originally enacted in 1989 only applied to referrals for
  clinical laboratory tests reimbursable by Medicare. However, the law was amended
  in 1993 and 1994 and, effective January 1, 1995, became applicable to referrals
  for an expanded list of designated health services reimbursable under Medicare
  or Medicaid.
  The Stark Law specifies a number of substantial sanctions that may be
  imposed upon violators. Payment is to be denied for Medicare claims related to
  designated health services referred in violation of the Stark Law. Further, any
  amounts collected from individual patients or third-party payors for such
  designated health services must be refunded on a timely basis. A person who
  presents or causes to be presented a claim to the Medicare program in violation
  of the Stark Law is also subject to civil monetary penalties of up to $15,000
  per claim, civil money penalties of up to $100,000 per arrangement and possibly
  even exclusion from participation in the Medicare and Medicaid programs.
  Final regulations applicable only to physician referrals for clinical
  laboratory services were published in August 1995. A proposed rule applicable to
  physician referrals for all designated health services was published in January
  1998. In January 2001, CMS published the "Phase I" final rule, which finalized a
  significant portion of the 1998 proposed rule. On March 26, 2004, CMS issued the
  second phase of its final regulations addressing physician referrals to entities
  with which they have a financial relationship (the "Phase II" rule). The Phase
  II rule addresses and interprets a number of exceptions for ownership and
  compensation arrangements involving physicians, including the exceptions for
  space and equipment rentals and the exception for indirect compensation
  arrangements. The Phase II rule also includes exceptions for physician ownership
  and investment, including physician ownership of rural providers and hospitals.
  The new regulation revises the hospital ownership exception to reflect the
  18-month moratorium that began December 8, 2003 on physician ownership of
  specialty hospitals, which was enacted in Section 507 of the Medicare
  Prescription Drug, Improvement, and Modernization Act of 2003. The Phase II rule
  became effective on July 26, 2004.
  In those cases where physicians invest in us or our facilities, we intend
  to fashion our lease arrangements with healthcare providers to meet the
  applicable indirect compensation exceptions under the Stark Law, however, no
  assurance can be given that our leases will satisfy these Stark Law exception
  requirements. Unlike the Anti-kickback Statute Safe Harbor Regulations, a
  financial arrangement which implicates the Stark Law must meet the requirements
  of an applicable exception to avoid a violation of the Stark Law. This may lead
  to obstacles in permitting local physicians to invest in our facilities or
  restrict the types of lease arrangements we may enter into if we wish to include
  such physicians as investors.
  State Self-Referral Laws.  In addition to the Anti-Kickback Statute and the
  Stark Law, state physician self-referral laws could limit physician investment
  in our company or restrict the types of leases we may enter into if such
  physician investment is permitted.
  Recent Regulatory and Legislative Developments.  On August 1, 2003, CMS
  published the fiscal year 2004 Final Rule for inpatient rehabilitation
  facilities, or IRFs. Under the Final Rule, all IRFs have received an increase in
  their prospective payment system rate for fiscal year 2004 due to an across the
  board 3.2% IRF market basket increase. On July 30, 2004, CMS published the
  fiscal year 2005 Final Rule which updated the prospective payment rates for IRFs
  for fiscal year 2005. In updating the fiscal year 2005 payment rates, CMS
  applied an increase factor to the fiscal year 2004 IRF prospective payment
  system rates that is equal to the IRF market basket. According to CMS, the
  projected fiscal year 2005 IRF market basket increase factor is 3.1%.
  Additionally, the Final Rule calculates the labor-related share for fiscal year
  2005. These increases benefit those tenants of ours who operate IRFs.
  On May 7, 2004, CMS issued a Final Rule to revise the classification
  criterion, commonly known as the "75 percent rule," used to classify a hospital
  or hospital unit as an IRF. The compliance threshold is used to distinguish an
  IRF from an acute care hospital for purposes of payment under the Medicare IRF
  prospective payment system. The Final Rule implements a three-year period to
  analyze claims and patient assessment data to determine whether CMS will
  continue to use a compliance threshold that is lower than 75% or not. For cost
  reporting periods beginning on or after July 1, 2004, and before July 1, 2005,
  the compliance threshold will be 50% of the IRF's total patient population. The
  compliance threshold will increase to 60% of the IRF's total patient population
  for cost reporting periods beginning on or after July 1, 2005 and before July 1,
  2006, to 65% for cost reporting periods beginning on or after July 1, 2006 and
  before July 1, 2007, and to 75% for cost reporting periods after July 1, 2007.
  On December 8, 2003, President Bush signed into law the Medicare
  Prescription Drug and Modernization Act of 2003, or the Act, which contains
  sweeping changes to the federal health insurance program for the elderly and
  disabled. The Act includes provisions affecting program payment for inpatient
  and outpatient hospital services. In total, the Congressional Budget Office
  estimates that hospitals will receive $24.8 billion over ten years in additional
  funding due to the Act.
  Rural hospitals, which may include regional or community hospitals, one of
  our targeted types of facilities, will benefit most from the reimbursement
  changes in the Act. Some examples of these reimbursement changes include (i)
  providing that payment for all hospitals, regardless of geographic
  location, will be based on the same, higher standardized amount which was
  previously available only for hospitals located in large urban areas, (ii)
  reducing the labor share of the standardized amount from 71% to 62% for
  hospitals with an applicable wage index of less than 1.0, (iii) giving hospitals
  the ability to seek a higher wage index based on the number of hospital
  employees who take employment out of the county in which the hospital is located
  with an employer in a neighboring county with a higher wage index, and (iv)
  improving critical access hospital program conditions of participation
  requirements and reimbursement. Medicare disproportionate share hospital, or
  DSH, payment adjustments for hospitals that are not large urban or large rural
  hospitals will be calculated using the DSH formula for large urban hospitals, up
  to a 12% cap in 2004 for all hospitals other than rural referral centers, which
  are not subject to the cap. The Act provides that sole community hospitals, as
  defined in 42 U.S.C. sec. 1395 ww(d)(5)(D)(iii), located in rural areas, rural
  hospitals with 100 or fewer beds, and certain cancer and children's hospitals
  shall receive Transitional Outpatient Payments, or TOPs, such that these
  facilities will be paid as much under the Medicare outpatient prospective
  payment system, or OPPS, as they were paid prior to implementation of OPPS. As
  of January 1, 2004 all TOPs for community mental health centers and all other
  hospitals were otherwise discontinued. The "hold harmless" TOPs provided for
  under the Act will continue for qualifying rural hospitals for services
  furnished through December 31, 2005 and for sole community hospitals for cost
  reporting periods beginning on or after January 1, 2004 and ending on December
  31, 2005. Hold harmless TOPs payments continue permanently for cancer and
  children's hospitals.
  The Act also requires CMS to provide supplemental payments to acute care
  hospitals that are located more than 25 road miles from another acute care
  hospital and have low inpatient volumes, defined to include fewer than 800
  discharges per fiscal year, effective on or after October 1, 2004. Total
  supplemental payments may not exceed 25 percent of the otherwise applicable
  prospective payment rate.
  Finally, the Act assures inpatient hospitals that submit certain quality
  measure data a full inflation update equal to the hospital market basket
  percentage increase for fiscal years 2005 through 2007. The market basket
  percentage increase refers to the anticipated rate of inflation for goods and
  services used by hospitals in providing services to Medicare patients. For
  fiscal year 2005, the market basket percentage increase for hospitals paid under
  the inpatient prospective payment system is 3.3 percent. For those inpatient
  hospitals that do not submit such quality data, the Act provides for an update
  of market basket minus 0.4 percentage points.
  The Act also imposes an 18 month moratorium limiting the availability of
  the "whole hospital exception," or Whole Hospital Exception, under the Stark Law
  for specialty hospitals. The moratorium began upon enactment of the Act and will
  continue until June 8, 2005. Prior to the moratorium's expiration, Congress will
  reevaluate this provision to determine whether it should sunset, be extended or
  be made permanent. On January 12, 2005, as part of its mandated report on
  specialty hospitals, the Medicare Payment Advisory Committee, or MedPAC,
  recommended that Congress extend the 18 month moratorium for an additional
  period until January 1, 2007. Under the Whole Hospital Exception, the Stark Law
  currently permits a physician to refer a Medicare or Medicaid patient to a
  hospital in which the physician has an ownership or investment interest so long
  as the physician maintains staff privileges at the hospital and the physician's
  ownership or investment interest is in the hospital as a whole, rather than a
  subdivision of the facility.
  Specialty hospitals are defined to mean a hospital subject to the inpatient
  prospective payment system that is located outside of Puerto Rico, which was
  neither in operation nor under development as of November 18, 2003, and is
  primarily or exclusively engaged in treating patients with cardiac or orthopedic
  conditions, undergoing surgery or receiving any other specialized category of
  services that the Secretary designates. If a specialty hospital that was in
  operation or under development as of November 18, 2003 increases the number of
  physician investors, adds certain new clinical services, augments its bed
  capacity or violates other requirements to be designated by the Secretary it
  will become subject to the moratorium. The Act also prohibits physicians from
  investing in rural specialty hospitals from invoking the alternative Stark Law
  exception for physician ownership in rural providers.
  Any acquisition or development of specialty hospitals must comply with the
  current application and interpretation of the Stark Law. CMS may clarify or
  modify its definition of specialty hospital, which may result in physicians who
  own interests in our tenants being forced to divest their ownership. Although
  the specialty hospital moratorium limits physician ownership or investment in
  "specialty hospitals" as defined by CMS, it does not limit a physician's ability
  to hold an ownership or investment interest in facilities which may be leased to
  hospital operators or other healthcare providers, assuming the lease arrangement
  conforms to the requirements of an applicable exception under the Stark Law. We
  intend to structure all of our leases, including leases containing percentage
  rent arrangements, to comply with applicable exceptions under the Stark Law and
  to comply with the Anti-kickback Statute. We believe that strong arguments can
  be made that percentage rent arrangements, when structured properly, should be
  permissible under the Stark Law and the Anti-kickback law; however, these laws
  are subject to continued regulatory interpretation and there can be no assurance
  that such arrangements will continue to be permissible. Accordingly, although we
  do not currently have any percentage rent arrangements where physicians own an
  interest in our facilities, we may be prohibited from entering into percentage
  rent arrangements in the future where physicians own an interest in our
  facilities. In the event we enter into such arrangements at some point in the
  future and later find the arrangements no longer comply with the Stark Law or
  Anti-Kickback Statute, we or our tenants may be subject to penalties under the
  statutes.
  The California Department of Health Services recently adopted regulations,
  codified as Sections 70217, 70225 and 70455 of Title 22 of the California Code
  of Regulations, or CCR, which establish minimum, specific, numerical licensed
  nurse-to-patient ratios for specified units of general acute care hospitals.
  These regulations are effective January 1, 2004. The minimum staffing ratios set
  forth in 22 CCR 70217(a) co-exist with existing regulations requiring that
  hospitals have a patient classification system in place. 22 CCR, 70053.2 and
  70217. The licensed nurse-to-patient ratios constitute the minimum number of
  registered nurses, licensed vocational nurses, and, in the case of psychiatric
  units, licensed psychiatric technicians, who shall be assigned to direct patient
  care and represent the maximum number of patients that can be assigned to one
  licensed nurse at any one time. Over the past several years many hospitals have,
  in response to managed care reimbursement contracts, cut costs by reducing their
  licensed nursing staff. The California Legislature responded to this trend by
  requiring a minimum number of licensed nurses at the bedside. Due to this new
  regulatory requirement, any acute care facilities we target for acquisition or
  development in California may be required to increase their licensed nursing
  staff or decrease their admittance rates as a result.
  On May 7, 2004, CMS issued a final rule to update the annual payment rates
  for the Medicare prospective payment system for services provided by long term
  care hospitals. The rule increases the Medicare payment rate for long-term care
  hospitals by 3.1% starting July 1, 2004. Medicare expects aggregate payment to
  these hospitals to increase to $2.96 billion during the 2005 long-term care
  hospital rate year. Long-term care hospitals, one of the types of facilities we
  are targeting, are defined generally as hospitals that have an average Medicare
  inpatient length of stay greater than 25 days. CMS issued a proposed rule on
  February 3, 2005 which contains the proposed annual payment rate updates under
  the prospective payment system for long-term care hospitals. The proposed rule
  contains the 2006 long-term care hospital prospective payment system rate for
  the year July 1, 2005 through June 30, 2006. According to CMS, the proposed
  standard federal rate for the 2006 long-term care hospital prospective payment
  system rate year would increase 3.1% compared to the 2005 long-term care
  hospital prospective payment system rate year standard federal rate due to the
  proposed update to the long-term care hospital prospective payment system
  federal rate. In addition, the proposed rule contains policy changes including
  the adoption of new labor market area definitions for long-term care hospitals
  which are based on the new Core-Based Statistical Areas announced by the OMB
  late in 2000.
  In addition to the extension of the specialty hospital moratorium discussed
  above, at its January 12, 2005 meeting, MedPAC made extensive recommendations to
  Congress and the Secretary of HHS including proposing revisions to DRG payments
  to more fully capture differences in severity of illnesses in an attempt to more
  equally pay for care provided at general acute care hospitals as compared to
  specialty hospitals. Furthermore, MedPAC made significant recommendations
  regarding paying healthcare providers relative to their performance and to the
  outcomes of the care they provided. MedPAC recommendations
  have historically provided strong indications regarding future directions of
  both the regulatory and legislative process.
  our tenants. Our leases with tenants also require the tenants to carry general
  liability, professional liability, all risks, loss of earnings and other
  insurance coverages and to name us as an additional insured under these
  policies. We expect that the policy specifications and insured limits will be
  appropriate given the relative risk of loss, the cost of the coverage and
  industry practice.
  We employ 15 full-time employees and one part-time employee as of the date
  of this prospectus. We anticipate hiring approximately five to 10 additional
  full-time employees during the next 12 months, commensurate with our growth. We
  believe that our relations with our employees are good. None of our employees is
  a member of any union.
  We are not involved in any material litigation nor, to our knowledge, is
  any material litigation pending or threatened against us.
  OUR CURRENT PORTFOLIO
  seven of which are in operation and two of which are under development. The
  Vibra Facilities consist of four rehabilitation hospitals and two long-term
  acute care hospitals. The Desert Valley Facility is a community hospital with an
  integrated medical office building. The facilities under development are the
  West Houston Hospital and the adjacent West Houston MOB that is master-leased by
  the tenant of the hospital. All of the leases for the hospitals currently in
  operation have initial terms of 15 years. The initial lease term for the West
  Houston Hospital began when construction commenced in July 2004 and will end 15
  years after completion of construction. The initial lease term for the West
  Houston MOB began when construction commenced in July 2004 and will end 10 years
  after completion of construction. Construction of the West Houston MOB is
  projected to be completed in August 2005 and construction of the West Houston
  Hospital is projected to be completed in October 2005. The leases for all of the
  facilities in our current portfolio provide for contractual base rent and an
  annual rent escalator. The leases for the Vibra Facilities also provide for
  percentage rent based on an agreed percentage of the tenants' gross revenue. The
  following tables set forth information, as of March 31, 2005, regarding our
  current portfolio of facilities:
  hospital(4)        Stealth, L.P.      105(5)   $        --     $  772,196       $4,749,005
  building(7)        Stealth, L.P.      n/a               --        670,840        2,052,769
  ---      -----------     ----------       ----------
  TOTAL...................         --                      --     105      $        --     $1,443,036       $6,801,774
  ===      ===========     ==========       ==========
  DEVELOPMENT        LEASE
  LOCATION                    COST(3)       EXPIRATION
  --------                  -----------   ---------------
  $43,099,310   October 2020(6)
  20,855,119    August 2015(8)
  TOTAL...................  $63,954,429                --
  VIBRA FACILITIES AND LOANS
  General.  We own or ground lease the six Vibra Facilities located in
  Bowling Green, Kentucky; Marlton, New Jersey; Fresno, California; Kentfield,
  California; Thornton, Colorado; and New Bedford, Massachusetts. We acquired
  these facilities from Care Ventures, Inc., an unaffiliated third party, in July
  and August 2004 for an aggregate purchase price of approximately $127.4 million,
  including acquisition costs. The purchase price was arrived at through
  arms-length negotiations with Care Ventures, Inc., based upon our analysis of
  various factors. These factors included the demographics of the area in which
  the facility is located, the capabilities of the tenant to operate the facility,
  healthcare spending trends in the geographic area, the structural integrity of
  the facility, governmental regulatory trends which may impact the services
  provided by the tenant, and the financial and economic returns which we require
  for making an investment. The Vibra Facilities are leased to subsidiaries of
  Vibra. Our leases of the Vibra Facilities require the tenant to carry customary
  insurance which is adequate to satisfy our underwriting standards.
  Vibra is an affiliate of Senior Real Estate Holdings, LLC, D/B/A The
  Hollinger Group, or The Hollinger Group. Vibra has been recently formed and had
  engaged in no meaningful operations prior to
  entering into the leases for the Vibra Facilities in July and August 2004. The
  principals of The Hollinger Group have extensive experience in developing,
  acquiring, managing and operating specialty healthcare facilities and senior
  care facilities. Mr. Hollinger, the principal owner of Vibra and the founder and
  chief executive officer of The Hollinger Group, has 18 years experience in all
  phases of senior care and healthcare activities. For financial information
  respecting Vibra and its subsidiaries, see the audited financial statements
  included elsewhere in this prospectus.
  Vibra Loans and Fees Receivable.  At the time we acquired the Vibra
  Facilities, MPT Development Services, Inc., our taxable REIT subsidiary, made a
  loan of approximately $41.4 million to Vibra to acquire the operations at these
  locations. We refer to this loans as the acquisition loan. The acquisition loan
  accrues interest at the rate of 10.25% per year and are to be repaid over 15
  years with interest only for the first three years and the principal balance
  amortizing over the remaining 12 year period. The acquisition loan may be
  prepaid at any time without penalty. In connection with the Vibra transactions,
  Vibra agreed to pay us commitment fees of approximately $1.5 million. MPT
  Development Services, Inc. also made secured loans totaling approximately $6.2
  million to Vibra and its subsidiaries for working capital purposes. The
  commitment fees were paid, and the working capital loans were repaid, on
  As security for the acquisition loan, Vibra has pledged to us all of its
  interests in each of the tenants, and Mr. Hollinger has pledged to us his entire
  interest in Vibra. In addition, Mr. Hollinger, The Hollinger Group and Vibra
  Management, LLC, another affiliate of Mr. Hollinger, have guaranteed the
  repayment of the acquisition loan; however, The Hollinger Group and Vibra
  Management, LLC do not have substantial assets and the liability of Mr.
  Hollinger under his guaranty is limited to $5.0 million. See "-- Lease
  Guaranties and Security."
  Vibra has entered into a $14.0 million credit facility with Merrill Lynch,
  and that loan is secured by an interest in Vibra's receivables. There was
  approximately $11.0 million outstanding under the facility on March 31, 2005.
  Our loan to Vibra is subordinate to Merrill Lynch with respect to Vibra's
  receivables. At March 31, 2005, Vibra was not in compliance with a facility rent
  rent coverage covenant from a by facility rent coverage to a consolidated rent
  coverage calculation, such that Vibra was in compliance with the amended
  covenant at March 31, 2005.
  Leases.  Each Vibra lease provides that, so long as the acquisition loan is
  outstanding, after January 1, 2005, and beginning with the calendar month after
  the month in which aggregate gross revenues for the Vibra Facilities exceed a
  revenue threshold, the tenant will pay, in addition to base rent, percentage
  rent in an amount equal to 2% of revenues for the preceding month. Each calendar
  month thereafter during the term of each lease, the percentage rent will be
  decreased pro rata based on the amount of the principal reduction of the
  acquisition loan during the previous calendar month; however, the percentage
  rent will not be decreased below 1% of revenues.
  all of the Vibra Facilities, (iii) that the reduction in the rate of percentage
  rent will be made on a monthly rather than annual basis and (iv) that Vibra will
  escrow insurance premiums and taxes at our request. Prior to execution of this
  amendment, Vibra did not meet the fixed charge coverage ratios required by the
  lease agreements. One covenant required that each Vibra Facility maintain a
  ratio of earnings before interest expense, income tax expense, depreciation
  expense, amortization expense and base rent (EBITDAR) to total debt payments
  plus base rent, measured at the end of each quarter, in excess of 125%. The
  second covenant required that each Vibra Facility maintain a ratio of EBITDAR to
  base rent, measured at the end of each quarter, in excess of 150%. In the event
  that either ratio for any Vibra Facility was below the required level for two
  consecutive fiscal quarters, an event of default would have occurred.
  Capital Improvements.  The tenant under each Vibra lease is responsible for
  all capital expenditures required to keep the facility in compliance with
  applicable laws and regulations. Beginning on July 1, 2005, each tenant will
  make quarterly deposits into a capital improvement reserve account for the
  particular facility in the amount of $1,500 per bed per year, except that the
  first deposit will be pro-rated based on one-half of a year. On each January 1
  thereafter, the payment of $1,500 per bed per year into the capital improvement
  reserve will be increased by 2.5%. All capital expenditures made in each year
  during the term of the lease will be funded first from the capital improvement
  reserve, and the tenant will pay into its respective capital improvement reserve
  such funds as necessary for all replacements and repairs.
  Lease and Loan Guaranties and Security.  We have obtained guaranty
  agreements from Mr. Hollinger, Vibra, Vibra Management, LLC and The Hollinger
  Group that obligate them to make lease and loan payments in the event that Vibra
  or its tenants fail to do so. We believe that these agreements are important
  elements of our underwriting of newly-formed healthcare operating companies
  because they create incentives for their owners and managements to successfully
  operate our tenants. However, we do not believe that these parties have
  sufficient financial resources to satisfy a material portion of the total lease
  or loan obligations. Mr. Hollinger's guaranty is limited to $5.0 million, Vibra
  Management, LLC and The Hollinger Group do not have substantial assets and
  Vibra's assets are substantially comprised of the Vibra Facilities.
  Each Vibra lease is cross-defaulted with the other leases for the Vibra
  Facilities. In addition, Vibra has pledged to us all of its interests in each of
  the tenants, and Mr. Hollinger has pledged to us his interest in Vibra. As
  security for the leases, each of the Vibra tenants has granted us a security
  interest in all personal property, other than receivables, located at the Vibra
  Facilities. The management fees that the Vibra tenants pay to Vibra Management,
  LLC are subordinated to the rents payable to us under the Vibra leases.
  We have included the audited and unaudited consolidated financial
  statements for Vibra Healthcare, LLC as of and for the year ended December 31,
  2004 and as of and for the three months ended March 31, 2005. We believe that
  the financial statements of Vibra Healthcare, LLC are the most meaningful
  financial information respecting the ability of Vibra to make the lease and loan
  payments which it is obligated to make to us. We do not believe that historical
  financial information on the facilities prior to our acquisition of those
  facilities would be meaningful because the facilities had three different owners
  in the year prior to our acquisition. Also during that time, the owners did not
  lease those facilities to lessees but operated the facilities themselves, and
  the facilities were not operated in the same manner as they are currently being
  operated. We also believe that the financial statements of the guarantors
  provide limited financial information due to the limited resources which those
  guarantors possess. We do not believe the financial statements of the Vibra
  guarantors other than Vibra would be helpful to prospective investors.
  Therefore, we have provided the financial statements of Vibra Healthcare, LLC,
  which includes consolidated financial information on the actual lessees of the
  Vibra Facilities and the parent entity, which is one of the guarantors and the
  borrower under the Vibra loans.
  Purchase Option.  At the expiration of each Vibra lease, each tenant will
  have the option to purchase the facility at a purchase price equal to the
  greater of (i) the appraised value of the facility, determined assuming the
  lease is still in place, or (ii) the purchase price we paid for the facility,
  including acquisition costs, increased by 2.5% per annum from the date of
  Depreciation and Real Estate Taxes.  The following table sets forth
  information, as of March 31, 2005, regarding the depreciation and real estate
  taxes for the Vibra Facilities:
  FEDERAL TAX BASIS       --------------------------------------   2005 REAL ESTATE
  ------------------------   ANNUAL                                   -----------------
  LAND       BUILDINGS     RATE       METHOD       LIFE IN YEARS     TAXES     RATE
  ----------   -----------   ------   -------------   -------------   ---------   -----
  Bowling Green, KY......  $3,070,000   $35,141,658    2.5%    Straight-line        40         $ 27,062    0.07%
  Thornton, CO...........   2,130,000     6,361,481    2.5%    Straight-line        40          197,902    2.33%
  Fresno, CA.............   1,550,000    17,131,255    2.5%    Straight-line        40          113,512    0.61%
  Kentfield, CA..........   2,520,000     5,122,332    2.5%    Straight-line        40           92,243    1.21%
  Marlton, NJ............          --    32,267,622    2.5%    Straight-line        40          334,122    1.04%
  New Bedford, NJ........   1,400,000    20,677,847    2.5%    Straight-line        40          284,535    1.29%
  BOWLING GREEN, KENTUCKY
  General.  This facility, licensed for 60 beds, is an approximately 62,500
  gross square foot rehabilitation hospital located in Bowling Green, Kentucky,
  which is approximately 60 miles from Nashville, Tennessee. Construction of the
  facility was completed in 1992. We acquired a fee simple interest in this
  facility on July 1, 2004 for a purchase price of approximately $38.2 million
  including acquisition costs.
  Lease.  This facility is 100% leased to 1300 Campbell Lane Operating
  Company, LLC, a wholly-owned subsidiary of Vibra, pursuant to a 15-year
  net-lease with the tenant responsible for all costs of the facility, including,
  but not limited to, taxes, utilities, insurance and maintenance. The tenant has
  three options to renew for five years each. Beginning on July 1, 2005, the per
  annum base rent will be equal to 12.23% of the purchase price, including
  acquisition costs. On January 1, 2006 and on each January 1 thereafter, the base
  rent will be increased by 2.5%.
  MARLTON, NEW JERSEY
  gross square foot rehabilitation hospital located in Marlton, New Jersey, which
  is approximately 15 miles from Philadelphia, Pennsylvania. Construction of the
  facility was completed in 1994. We acquired a ground lease interest in this
  including acquisition costs. We ground lease the property on which the facility
  is located from Virtua West Jersey Health System, a New Jersey non-profit
  corporation, pursuant to a ground lease dated July 15, 1993. The initial term of
  the ground lease expires in 2030. We have the right to renew the ground lease
  for an additional term of 35 years upon the satisfaction of certain conditions
  as set forth in the ground lease.
  Lease.  This facility is 100% leased to 92 Brick Road Operating Company,
  LLC, a wholly-owned subsidiary of Vibra, pursuant to a 15 year net-lease with
  the tenant responsible for all costs of the facility, including, but not limited
  to, taxes, utilities, insurance and maintenance. The tenant has three options to
  renew for five years each. Beginning on July 1, 2005, the per annum base rent
  will be equal to 12.23% of the purchase price, including acquisition costs. On
  January 1, 2006 and on each January 1 thereafter, the base rent will be
  increased by 2.5%.
  HBA Management, Inc., or HBA, has subleased the entire third floor of the
  hospital facility, approximately 26,896 square feet, for the operation of a
  30-bed pediatric comprehensive rehabilitation unit and related office use,
  together with certain fixtures, furnishings and equipment located in the
  subleased premises. The current term of the sublease expires on August 31, 2013.
  HBA has the option to extend the sublease term for two additional terms of five
  years each. Base annual rent due under the sublease through September 30, 2005
  is approximately $1,112,980 per annum, with adjustments annually thereafter. In
  addition to base annual rent, HBA is required to pay its proportionate share of
  all reimbursable expenses.
  gross square foot rehabilitation hospital located in Fresno, California.
  Construction of the facility was completed in 1990. We acquired a fee simple
  interest in this facility on July 1, 2004 for approximately $18.7 million
  Lease.  This facility is 100% leased to 7173 North Sharon Avenue Operating
  Company, LLC, a wholly-owned subsidiary of Vibra, pursuant to a 15 year
  THORNTON, COLORADO
  General.  This facility, licensed for 117 beds, is an approximately 141,388
  gross square foot rehabilitation hospital located in Thornton, Colorado, which
  is approximately 10 miles from Denver, Colorado. Of the 117 beds, 70 are
  rehabilitation beds, 23 are psychiatric beds and 24 are skilled nursing care
  beds. Construction of the original facility was completed in 1962 with additions
  completed as recently as 1975. We acquired a fee simple interest in this
  facility on August 17, 2004 for a purchase price of approximately $8.5 million
  Lease.  This facility is 100% leased to 8451 Pearl Street Operating
  three options to renew for five years each. Beginning on August 17, 2005, the
  per annum base rent will be equal to 12.23% of the purchase price, including
  gross square foot long-term acute care hospital located in New Bedford,
  Massachusetts, which is approximately 45 miles from Boston, Massachusetts.
  Construction of the original facility was completed in 1942 with additions
  facility on August 17, 2004 for a purchase price of approximately $22.0 million
  Lease.  This facility is 100% leased to 4499 Acushnet Avenue Operating
  KENTFIELD, CALIFORNIA
  gross square foot long-term acute care hospital located in Kentfield,
  California, which is approximately 15 miles from San Francisco, California.
  Construction of the facility was completed in 1963 with the last renovations in
  1988. We acquired a fee simple interest in this facility on July 1, 2004 for a
  purchase price of approximately $7.6 million including acquisition costs.
  Lease.  This facility is 100% leased to 1125 Sir Francis Drake Boulevard
  Operating Company, LLC, a wholly-owned subsidiary of Vibra, pursuant to a 15
  year net-lease with the tenant responsible for all costs of the facility,
  including, but not limited to, taxes, utilities, insurance and maintenance. The
  tenant has three options to renew for five years each. Beginning on July 1,
  2005, the per annum base rent will be
  equal to 12.23% of the purchase price, including acquisition costs. On January
  1, 2006 and on each January 1 thereafter, the base rent will be increased by
  2.5%.
  DESERT VALLEY FACILITY
  General.  On February 28, 2005, we acquired a fee simple interest in the
  Desert Valley Facility located in Victorville, California, which is
  approximately 75 miles from Los Angeles, California. The approximately 122,140
  square foot community hospital facility, built in 1994, is licensed for 83 beds
  and has an integrated medical office building comprising approximately 50,000
  square feet. We acquired the facility from Prime A Investments, LLC, an
  unaffiliated third party, for a purchase price of approximately $28.0 million.
  The purchase price was determined through arms-length negotiations with Prime A
  Investments, LLC based upon our analysis of various factors. These factors
  included the demographics of the area in which the facility is located, the
  capability of the tenant to operate the facility, healthcare spending trends in
  the geographic area, the structural integrity of the facility, governmental
  regulatory trends which may impact the services provided by the tenant, and the
  financial and economic returns which we require for making an investment.
  Lease.  This facility is 100% leased to DVH, an affiliate of Prime A
  Investments, LLC. The principals of DVH have experience in developing,
  acquiring, managing and operating acute care hospital facilities. The lease is a
  15-year net-lease with the tenant responsible for all costs of the facility,
  including, but not limited to, taxes, utilities, insurance and maintenance. DVH
  has three options to renew for five years each. Currently, the annual base rent
  is equal to 10% of the purchase price, or the annual rate of $2.8 million. On
  January 1, 2006, and on each January 1 thereafter, the base rent will be
  increased by an amount equal to the greater of (i) 2% per year of the prior
  year's base rent or (ii) the percentage by which the CPI as published by the
  United States Department of Labor, Bureau of Labor Statistics on January 1 shall
  have increased over the CPI figure in effect on the immediately preceding
  January 1, annualized based on the highest annual rate effective during the
  preceding year if the previous year's base rent is for a partial year. The lease
  requires DVH to carry customary insurance which is adequate to satisfy our
  underwriting standards.
  DVH has subleased approximately 40,110 square feet of space in the medical
  office portion of the facility to its affiliate, Desert Valley Medical Group,
  Inc., or DVMG, for office use. The DVMG lease requires DVMG to pay rent of
  $50,137.50 per month, to be adjusted commencing on January 1, 2006 by the CPI.
  The DVMG sublease expires on December 31, 2011. DVH has also subleased
  approximately 500 square feet of space in the facility to Network
  Pharmaceuticals, Inc. for the operation of a pharmacy. The pharmacy sublease
  requires the tenant to pay rent of $2,000 per month. The pharmacy sublease
  currently expires on May 15, 2007, subject to the pharmacy's option to renew for
  a term of 10 years.
  Lease Guaranties and Security.  The Desert Valley lease is guaranteed by
  Prime A Investments, L.L.C., Desert Valley Health System, Inc. and Desert Valley
  Medical Group, Inc. The guaranty is an absolute and irrevocable guaranty. The
  lease is cross-defaulted with any other leases between us or any of our
  affiliates and DVH, any guarantor and any of their affiliates. In addition, as
  security for the lease, DVH has granted us a security interest in all personal
  property, other than receivables, located at the Desert Valley Facility, subject
  to purchase money liens on equipment. Desert Valley Hospital, Inc. has provided
  to us unaudited financial statements reflecting that, as of March 31, 2005, it
  had tangible assets of approximately $21.6 million, liabilities of approximately
  $17.6 million and stockholders' equity of approximately $4.0 million, and for
  the three months ended March 31, 2005, had net income of approximately $4.0
  Desert Valley Health Systems, the parent of DVH and a guarantor of the
  lease, has provided to us unaudited financial statements showing that, as of
  December 31, 2004, it had consolidated tangible assets of approximately $40.5
  million, consolidated liabilities of approximately $31.4 million, and
  consolidated tangible net worth of approximately $9.1 million and for the year
  ended December 31, 2004, had consolidated net income of approximately $3.9
  Reserve for Extraordinary Repairs.  DVH is responsible for all maintenance
  and repairs and all extraordinary repairs required to keep the facility in
  compliance with all applicable laws and regulations and as required under the
  lease. DVH is required to make quarterly deposits into a reserve account in the
  amount of $2,500 per bed per year. Beginning on January 1, 2006 and on each
  January 1 thereafter, the payment of $2,500 per bed per year into the
  improvement reserve will be increased by 2%. All extraordinary repair
  expenditures made in each year during the term of the lease are to be funded
  first from the reserve, and DVH is to pay into the reserve such funds as
  necessary for all extraordinary repairs.
  Purchase Options.  At any time after February 28, 2007, so long as DVH and
  its affiliates are not in default under any lease with us or any of the leases
  with its subtenants, DVH will have the option, upon 90 days' prior written
  notice, to purchase the facility at a purchase price equal to the sum of (i) the
  purchase price of the facility, and (ii) that amount determined under a formula
  that would provide us an internal rate of return of 10% per year, increased by
  2% of such percentage each year, taking into account all payments of base rent
  received by us. If during the term of the lease we receive from the previous
  owner or any of its affiliates a written offer to purchase the Desert Valley
  Facility and we are willing to accept the offer, so long as DVH and its
  affiliates are not in default under any lease with us or any of the subleases
  with its subtenants, we must first present the offer to DVH and allow DVH the
  right to purchase the facility upon the same price, terms and conditions as set
  forth in the offer; however, if the offer is made after February 28, 2007, in
  lieu of exercising its right of first refusal, DVH may exercise its option to
  purchase as provided above.
  information, as of December 31, 2004, regarding the depreciation and real estate
  taxes for the Desert Valley Facility:
  FEDERAL TAX BASIS              DEPRECIATION                      2004 REAL ESTATE
  ------------------------   ---------------------------     LIFE     -----------------
  LAND       BUILDINGS    ANNUAL RATE      METHOD       IN YEARS     TAXES     RATE
  ----------   -----------   -----------   -------------   --------   ---------   -----
  California...........  $2,000,000   $26,000,000       2.5%      Straight-line      40      $289,905    1.07%
  Facility Expansion.  We have also entered into a letter agreement with DVH
  pursuant to which, subject to certain conditions, we have agreed to fund up to
  $20.0 million for the purpose of expanding our Desert Valley Facility. Subject
  to DVH providing us a development agreement, which it is not obligated to do, we
  have agreed to begin funding and DVH has agreed to begin drawing funds before
  February 28, 2006, in accordance with a disbursement schedule to be provided in
  the development agreement at the time of the first draw. Upon receipt and
  approval of the development agreement, DVH is obligated to pay us a fee in cash
  equal to 0.5% of the maximum amount that can be funded. This fee will be
  adjusted following the full and final funding of the expansion to a sum equal to
  0.5% of the actual amount funded. Except for any adjustments to the fee that may
  result from funding less than the maximum amount, the fee is non-refundable. If
  DVH fails to provide a development agreement to us by February 28, 2006, we will
  have no further liability or obligation to provide the funding. The $20.0
  million expansion amount will be treated as a capital addition under the lease
  and, accordingly, as such expansion costs are funded, the annual rent payable
  under the lease will increase by an amount equal to the then-current lease rate
  multiplied by the amount of expansion cost incurred. Such additional rent will
  continue to be payable for the remaining term of the lease. For purposes of the
  repurchase options contained in the lease, the purchase price will be increased
  by the total cost of the addition. DVH is not obligated to present us with a
  development agreement, and, if it does not, we have no obligation to provide
  funding to DVH for the expansion. We will not generate any revenues from this
  transaction unless and until we and DVH execute a definitive development
  agreement and DVH begins drawing the committed funds.
  WEST HOUSTON FACILITIES
  General.  In June 2004, we entered into agreements with Stealth and GPMV to
  develop the West Houston Hospital and the adjacent West Houston MOB in Houston,
  Texas. We have engaged GPMV to develop the 105 bed, 121,884 gross square foot
  West Houston Hospital. Seventy-one beds will be acute care beds to be operated
  by Stealth and 34 will be long-term acute care beds to be operated by Triumph
  Southwest, L.P., or Triumph, a tenant of Stealth. We have engaged a third-party
  developer to develop the
  adjacent 120,000 gross square foot West Houston MOB on the property. Pursuant to
  the agreements with Stealth and GPMV, we have formed two Delaware limited
  partnerships, MPT West Houston Hospital, L.P., or the hospital limited
  partnership, which will own the West Houston Hospital, and MPT West Houston MOB,
  L.P., or the MOB limited partnership, which will own the adjoining West Houston
  MOB. Stealth will be required to maintain insurance that is adequate to satisfy
  our underwriting standards.
  West Houston GP, L.P., an affiliate of GPMV, holds a 25% general
  partnership interest in Stealth. The limited partners of Stealth, which
  currently hold a 75% interest, consist of 85 physicians. The sole business of
  Stealth is the operation of the West Houston Hospital offering multi-specialty
  services and the West Houston MOB. Because those facilities are still in the
  construction phase, Stealth has had no meaningful operations to date. Our
  operating partnership owns an approximate 93% limited partnership interest in
  the hospital limited partnership and Stealth owns an approximate 6% limited
  partnership interest. MPT West Houston Hospital, LLC, a wholly-owned limited
  liability company of our operating partnership, owns the 1% general partnership
  interest in the hospital limited partnership. Currently, our operating
  partnership owns all of the limited partnership interests in the MOB limited
  partnership and MPT West Houston MOB, LLC, a wholly-owned subsidiary of our
  operating partnership, owns the 1% general partnership interest. We have sold
  limited partnership interests representing approximately 24% of the aggregate
  equity interests in the MOB limited partnership to physicians and others
  associated with our tenant or subtenants of the West Houston MOB.
  The hospital limited partnership and MOB limited partnership each own a fee
  simple interest in the undeveloped land on which the facilities are being
  constructed, as well as adjacent undeveloped land. In addition, Stealth has an
  option throughout the term of the lease to reacquire approximately 14.5 acres of
  land owned by the hospital limited partnership, which land is located adjacent
  to the land on which the facilities are being constructed. The option price for
  this parcel is equal to the original cost to us. Stealth also has a right of
  first offer throughout the term of the lease to purchase this parcel should we
  determine to sell it to a third party.
  In connection with the development of the West Houston Facilities, we are
  entitled to a commitment fee of approximately $932,125. This fee is to be paid
  15 years from the date of completion of the hospital facility, with interest
  thereon at the rate of 10.75% per year, and is unsecured but is cross-defaulted
  with the leases we have with Stealth at the West Houston Facilities. Stealth is
  to commence making monthly interest payments beginning the first month after
  completion of the West Houston Hospital.
  In addition, MPT Development Services, Inc., our taxable REIT subsidiary,
  has agreed to make a working capital loan to Stealth in an amount up to $1.62
  million. To date, no funds have been drawn by Stealth. This loan is to be repaid
  15 years from the date of completion of the West Houston Hospital, with interest
  at the rate of 10.75% per year, and is unsecured but cross-defaulted with the
  leases we have with Stealth at the West Houston Facilities. The loans are not
  guaranteed. The leases contain certain debt coverage ratio and other financial
  covenants, the default of which would constitute a default under the loans.
  Stealth is obligated to commence making monthly interest payments beginning the
  first month after completion of the West Houston Hospital. Either the fee or the
  working capital loan may be prepaid at any time without penalty, except that a
  minimum prepayment of $500,000 is required for the working capital loan.
  If either we or Stealth determine in good faith, after consultation with
  healthcare counsel, that healthcare law prohibitions or restrictions require the
  physician-limited partners to divest their ownership interests in Stealth, we
  have agreed to issue up to $6 million of limited partnership interests in the
  hospital limited partnership to Stealth to be used as part of the consideration
  to completely redeem the physician-limited partners' ownership interests in
  Stealth. We have agreed to lend Stealth the $6 million to purchase the limited
  partnership interests in the hospital limited partnership, which loan would
  accrue interest at the rate of not less than 10.75% per year, and would be paid
  over 10 years. If this transaction is necessary, we do not expect it to occur
  prior to the end of the second quarter of 2005.
  Development Agreements.  The hospital limited partnership has agreed to pay
  GPMV a development fee of approximately $700,000, a construction management fee
  not to exceed $200,000, and a contingent
  funds fee of approximately $450,000. The MOB limited partnership has agreed to
  pay the developer of the West Houston MOB a development fee of approximately
  $550,000, a construction management fee of $300,000, and a contingent funds fee
  of approximately $350,000. Upon the completion of the development of the
  facilities, we will obtain independent as-built appraisals of the facilities.
  Stealth is obligated to pay MPT Development Services, Inc., our taxable
  REIT subsidiary, a project inspection fee for construction coordination services
  of $100,000 in the case of the West Houston Hospital and $50,000 in the case of
  the adjacent West Houston MOB. These fees are to be paid, with interest at the
  rate of 10.75% per year, over a 15 year period beginning on the date that the
  West Houston Hospital is completed. The total development costs for the
  facilities, including acquisition cost, development services fee, commitment
  fee, project management fee, and construction costs, are estimated to be $42.6
  million for the hospital facility and $20.5 million for the medical office
  building. Construction, which commenced in July 2004, is expected to be
  completed in October 2005 for the West Houston Hospital and in August 2005 for
  the adjacent West Houston MOB. During the construction period, we will advance
  funds pursuant to requests made in accordance with the terms of the development
  agreements between us and the developers. We have agreed to fund 100% of the
  total development costs for the West Houston Hospital and the adjacent West
  Houston MOB. Our agreement with Stealth provides that $17,006,803 of this
  funding will be in the form of an equity contribution for the West Houston
  Hospital, with the remaining funding being in the form of debt, and for the
  adjoining West Houston MOB, our agreement with Stealth provides that $5.0
  million of the funding will be in the form of an equity contribution or
  subordinated debt, with the remaining funding being in the form of debt. If we
  obtain third-party construction financing, the debt portion of the development
  costs will be provided by the third-party lender.
  Leases.  We are leasing the facilities to Stealth during the construction
  phase with rent accruing until the completion dates and the accrued rent to be
  paid over the remaining lease term once the facilities are completed. Following
  the completion dates, the lease term will extend for a period of 15 years for
  the West Houston Hospital and 10 years for the West Houston MOB. Stealth will
  have three options to renew each lease for a period of five years each. On
  January 1, 2006 and on each January 1 thereafter, the base rent for the West
  Houston Hospital will increase 2.5% and the base rent for the West Houston MOB
  will increase 2.0%. The leases are net-leases with Stealth responsible for all
  costs and expenses associated with the operation, maintenance and repair of the
  facilities. Triumph has subleased an entire floor of the West Houston Hospital
  in order to operate 34 long-term acute care beds. The sublease is for a term of
  180 months following the completion of the construction of the West Houston
  Hospital. The sublease grants to Triumph options to extend the term of the
  sublease for three additional periods of five years each. The sublease requires
  Triumph to pay rent in an amount equal to 12% of all rent and other charges
  payable by Stealth to us under our lease with Stealth, with certain exclusions.
  The sublease provides that Stealth's obligations under the sublease are
  conditioned upon the execution of a guaranty by Triumph HealthCare of Texas,
  L.L.C. and Triumph HealthCare, L.L.P. The sublease grants Stealth the right to
  relocate Triumph to a new facility to be constructed adjacent to and attached to
  the West Houston Hospital. In order to exercise the relocation right, Stealth
  must give Triumph at least 270 days' notice prior to the date of such
  relocation. Triumph must vacate the subleased premises on or before the
  relocation date specified in the notice from Stealth, which cannot be earlier
  than 270 days after the date of the relocation notice.
  Triumph has subleased 9,726 square feet of net rentable area in the West
  Houston MOB for use as a medical office exclusively for the practice of
  medicine, the operation of a medical office and the provision of related
  administrative services, or medical related use. The sublease is for a term of
  120 months following the earlier of the date of final completion of the
  leasehold improvements, or the date on which Triumph commences business in the
  subleased premises. The sublease grants to Triumph options to extend the term of
  the sublease for four additional periods of five years each. The sublease
  requires Triumph to pay annual base rent for years one through ten calculated at
  $20 per net rentable square foot. Beginning on the first anniversary of the
  lease and on each anniversary date thereafter, base rent is increased to an
  amount equal to 1.02 times or 102% of the base rent payable in the previous
  year. The lease also requires
  Triumph to pay its pro rata share of annual operating expenses, taxes and
  insurance relating to the West Houston MOB. The sublease provides that Stealth's
  obligations under the sublease are conditioned upon the execution of a guaranty
  by Triumph HealthCare of Texas, L.L.C. and Triumph HealthCare, L.L.P. The West
  Houston MOB sublease with Triumph also runs concurrently with Stealth's lease
  with us. In the event our lease with Stealth is terminated, the sublease on the
  hospital with Triumph is also terminated.
  Purchase Option.  After the first full 12 month period after construction
  of each of the West Houston Facilities is completed, as long as Stealth is not
  in default under either of its leases with us or any of the leases with its
  physician subtenants, Stealth has the right to purchase the West Houston MOB and
  the West Houston Hospital at a purchase price equal to the greater of (i) that
  amount determined under a formula that would provide us an internal rate of
  return of at least 18% or (ii) the appraised value based on a 15 year lease in
  place. To arrive at the appraised value, each of the parties chooses an
  appraiser. If the appraisals obtained are not materially different, (meaning a
  10% or more variance), 50% of the sum of each appraised value is used as the
  option price. If the two appraisals are materially different, then the two
  appraisers appoint a third appraiser and the appraiser's valuation which differs
  greatest from the other two appraisers is excluded and 50% of the sum of the two
  remaining determinations is used as the option price. The costs of the appraisal
  process are borne equally by the parties. Upon written notice to us within 90
  days of the expiration of the applicable lease, as long as Stealth is not in
  default under either of its leases with us or any of the leases with its
  physician subtenants, Stealth will have the option to purchase the West Houston
  MOB or the West Houston Hospital at a price equal to the greater of (i) the
  total development costs (including any capital additions funded by us, but
  excluding any capital additions funded by Stealth) increased by 2.5% per year,
  or (ii) the appraised value based on a 15 year lease in place. To arrive at the
  appraised value, each of the parties chooses an appraiser. If the appraisals
  obtained are not materially different, (meaning a 10% or more variance), 50% of
  the sum of each appraised value is used as the option price. If the two
  appraisals are materially different, then the two appraisers appoint a third
  appraiser and the appraiser's valuation which differs greatest from the other
  two appraisers is excluded and 50% of the sum of the two remaining
  determinations is used as the option price. The costs of the appraisal process
  are borne equally by the parties.
  The leases also provide that under certain limited circumstances, the
  tenant will have the right to present us with a choice of one out of three
  proposed exchange facilities to be substituted for the leased facility. The
  tenant will have the right to propose substitute facilities, if not in default,
  at any time prior to the expiration of the term, if (i) in the good faith
  judgment of the tenant the facility becomes uneconomic or unsuitable for its
  primary intended use, (ii) there is an eviction or interference caused by any
  claim of paramount title, or (iii) if for other prudent business reasons, the
  tenant desires to terminate the lease. The tenant will have the obligation to
  substitute facilities if it has discontinued use of the facility for a period in
  excess of one year, and we have not exercised our right to terminate the lease.
  Each proposed substitution facility must: (i) provide us with an annual return
  on our equity in such facility, or yield, substantially equivalent to our yield
  from the original facility (ii) provide us with rent with a substantially
  equivalent yield taking into account any cash adjustment paid or received by us
  and any other relevant factors, and (iii) have a fair market value in an amount
  equal to the fair market value of the original facility, taking into account any
  cash adjustment paid or received by us. If we elect to consummate the exchange,
  the existing lease would terminate and the parties would enter into a new lease
  for the substituted facility. If we elect not to proceed with the exchange, the
  tenant would have the right to terminate the lease and purchase the leased
  facility for appraised value, determined assuming the lease is still in place.
  Right of First Offer to Purchase.  At any time during the term of the
  applicable lease for either of the West Houston Facilities, as long as Stealth
  is not in default under either of its leases with us or any of the leases with
  its physician subtenants, we are required to notify Stealth if we intend to sell
  either facility to a third party. If Stealth wishes to offer to purchase the
  facility, it must notify us in writing within 15 days, setting forth the terms
  and conditions of the proposed purchase. If we accept Stealth's offer, Stealth
  must close the purchase within 45 days of the date of our acceptance.
  Security.  The leases for the West Houston Facilities are cross-defaulted
  and are guaranteed by West Houston G.P., L.P. and West Houston Joint Ventures,
  Inc., affiliates of Stealth. To secure its performance
  of its lease obligations under the West Houston Hospital lease, Stealth has
  obtained a certificate of deposit in the amount of $1,905,234, of which we are
  the beneficiary. The sublease between Stealth and Triumph requires Triumph to
  obtain a certificate of deposit in the amount of $400,000 to secure the
  performance of its obligations under its sublease with Stealth. However, subject
  to execution of definitive agreements, we, Stealth and Triumph have agreed that
  Triumph shall obtain and deliver to us a $400,000 letter of credit, in lieu of
  the certificate of deposit, to be held by us. The sublease has been assigned to
  us as collateral security for Stealth's performance under its lease. Under the
  lease and the sublease, each of Stealth and Triumph, respectively, are required
  to give us a security interest in these certificates of deposit and to enter
  into control agreements with us and the issuing banks which provide that the
  banks will follow our instructions regarding the certificates of deposit. Once
  the West Houston Hospital commences operations, Stealth is required to
  substitute a letter of credit in the amount of $1,905,234 in place of the
  $1,905,234 certificate of deposit; and on May 1, 2005, the sublease requires
  that Triumph substitute a letter of credit in the amount of $1,000,000 in place
  of the $400,000 certificate of deposit. The lease further provides that the
  Stealth letter of credit may be released in two increments of 50% of the total
  amount of the letter of credit over a 2 year period following the date on which
  Stealth generates a total rent (excluding additional charges) coverage from
  EBITDAR of at least 200% for 12 consecutive months.
  Stealth has provided to us unaudited financial statements reflecting that,
  as of March 31, 2005, it had tangible assets of approximately $5.8 million,
  including cash of approximately $4.4 million, liabilities of approximately
  $269,000 and owners' equity of approximately $5.5 million. Neither of the
  guarantors has any substantial assets, other than its interest in Stealth.
  Capital Improvements.  Stealth is responsible for all capital expenditures
  required to keep the West Houston Facilities in compliance with applicable laws
  and regulations. Beginning on January 1, 2005, Stealth will make monthly
  deposits into a capital improvement reserve in the amount of $3,000 per year in
  the case of the West Houston MOB and $2,500 per bed per annum in the case of the
  West Houston Hospital. On each January 1 thereafter, the payment into the
  capital improvement reserve will be increased by 2.0% in the case of the West
  Houston MOB and by 2.25% in the case of the West Houston Hospital. All capital
  expenditures made in each year during the term of the lease will be funded first
  from the capital improvement reserve, and the tenant will pay into its
  respective capital improvement reserve such funds as necessary for all
  replacements and repairs.
  information, as of December 31, 2004, regarding the estimated depreciation and
  real estate taxes for the Houston Facilities:
  ESTIMATED                        DEPRECIATION                    ESTIMATED
  LAND       BUILDINGS     RATE       METHOD       LIFE IN YEARS     TAXES      RATE
  ----------   -----------   ------   -------------   -------------   ----------   ----
  West Houston
  Hospital.............  $8,400,000   $34,200,000    2.5%    Straight-line        40         $1,324,860   3.11%
  West Houston MOB.......   1,800,000    18,700,000    2.5     Straight-line        40            637,550   3.11
  developing our Pending Acquisition and Development Facilities, which we consider
  to be probable acquisitions or developments as of the date of this prospectus,
  under the terms of the contacts or letters of commitment relating to these
  facilities. The leases for each of these facilities will provide for contractual
  base rent and an annual rent escalator. The letters of commitment constitute
  contain information regarding our Pending Acquisition and Development Facilities
  as of the date of this prospectus:
  LOCATION                         TYPE             TENANT          BEDS(1)     BASE RENT       RENT          PRICE      EXPIRATION
  --------                         ----      --------------------  ---------   -----------   -----------   -----------   ----------
  Covington, Louisiana*........  Long-term   Gulf States               58      $1,170,750(2)    2.5%(3)    $11,5 00,000  June 2020(4)
  acute       Long Term Acute Care
  care        of Covington, L.L.C.
  Denham Springs, Louisiana*...  Long-term   Gulf States               59         630,000(2)    2.5%(3)      6,000,000   June 2020(4)
  care        of Denham Springs,
  hospital    L.L.C.
  TOTAL........................                                       117      $1,800,750                  $17,500,000          --
  ---------   --------------------    ----      ----------                  -----------   ---------
  NUMBER OF    INCREASE IN   DEVELOPMENT      LEASE
  LOCATION                                         TYPE          TENANT         BEDS(1)        RENT           COST       EXPIRATION
  --------                                         ----      ---------------  -----------   -----------   ------------   ----------
  Bensalem, Pennsylvania**.....................  Women's     Bucks County          30           2.5%(2)     38,000,000     (3)
  Bloomington, Indiana*........................  Community   Monroe                32           2.5%(2)   $ 28,000,000     (3)
  Houston, Texas*..............................  Community   North Cypress         64           2.5%(2)     51,000,000     (3)
  ----                     ------------
  TOTAL........................................         --                --      126                     $117,000,000         --
  ----                     ============
  COVINGTON AND DENHAM SPRINGS, LOUISIANA
  General.  On March 14, 2005, we entered into a letter of commitment with
  Covington Healthcare Properties, L.L.C., or Covington, and Denham Springs
  Healthcare Properties, L.L.C., or Denham Springs, both unaffiliated third
  parties, to purchase two long-term acute care hospital facilities. One facility,
  which we refer to as the Covington Facility, is located in Covington, Louisiana,
  which is approximately 35 miles from New Orleans, Louisiana. The Covington
  Facility contains approximately 43,250 square feet of space and is licensed for
  58 beds. The letter of commitment provides that our purchase price for the
  Covington Facility will be approximately $11,150,000; however, the parties are
  negotiating an increase of the purchase price to $11.5 million. The other
  facility, which we refer to as the Denham Springs Facility, is located in Denham
  Springs, Louisiana, which is approximately 10 miles from Baton Rouge, Louisiana.
  The Denham Springs Facility contains approximately 36,000 square feet of space
  and is licensed for 59 beds. The letter of commitment provides that our purchase
  price for the Denham Springs Facility will be approximately $6.0 million. We
  expect these transactions to close by mid-June 2005 and to use a portion of our
  available cash and cash equivalents to fund the purchase prices for these
  The purchase price for each of the Covington Facility and the Denham
  Springs Facility was arrived at through arms-length negotiations based upon our
  analysis of various factors. These factors included the demographics of the area
  in which the facility is located, the capability of the tenant to operate the
  facility, healthcare spending trends in the geographic area, the structural
  integrity of the facility, governmental regulatory trends which may impact the
  services provided by the tenant, and the financial and economic returns which we
  require for making an investment.
  We intend to form a Delaware limited liability company, MPT of Covington,
  LLC, which will own the Covington Facility, and a Delaware limited liability
  company, MPT of Denham Springs, LLC, which will own the Denham Springs Facility.
  Initially, our operating partnership will own all of the membership interests in
  each of these limited liability companies; however, at some point following
  closing, we have agreed to offer up to 30% of the interests in each of these
  limited liability companies to local physicians.
  Lease.  The letter of commitment provides that at the time we purchase the
  Covington Facility, we will lease 100% of the facility to Gulf States Long Term
  Acute Care of Covington, L.L.C. or its affiliate for a 15-year term, with 3
  options to renew for 5 years each. At the time we purchase the Denham Springs
  Facility, we will lease 100% of the facility to Gulf States Long Term Acute Care
  of Denham Springs, L.L.C. or its affiliate for a 15-year term, with 3 options to
  renew for 5 years each. The letter of commitment provides that each lease will
  be a net-lease with the tenant responsible for all costs of the facility,
  including, but not limited to, taxes, utilities, insurance, maintenance and
  capital improvements. The letter of commitment provides that each lease will
  require the tenant to pay base rent in an amount equal to 10.5% per annum of the
  purchase price plus any costs and charges that may be capitalized. The
  letter of commitment provides that on each January 1, the base rent will be
  increased by an amount equal to the greater of (A) 2.5% per annum of the prior
  year's base rent, or (B) the percentage by which the CPI on January 1 shall have
  increased over the CPI figure in effect on the then just previous January 1;
  provided, however, on January 1, 2006, the adjustment shall be prorated. The
  letter of commitment provides that each lease will also require the tenant to
  carry customary insurance which is adequate to satisfy our underwriting
  Repair and Replacement Reserve.  The letter of commitment provides that
  each lease will require the tenant, commencing on the date we purchase the
  facility, to make annual deposits into a reserve account. We expect that each
  lease will provide that on each January 1 following the date we purchase the
  facility, the payment into the reserve account will be increased, and that all
  extraordinary repair expenditures made in each year during the term of the lease
  will be funded first from the reserve, and the tenant will pay into the reserve
  such funds as necessary for all extraordinary repairs.
  Security.  The letter of commitment provides that, as security for each
  lease, the tenant will grant us a security interest in all personal property,
  other than receivables, located and to be located at the respective facility.
  The letter of commitment provides that each lease will also require the tenant
  to obtain and deliver to us an unconditional and irrevocable letter of credit
  from a bank acceptable to us, naming us beneficiary thereunder, in an amount
  equal to six months' base rent under the lease, and will provide that at such
  time as the operations in the facility have generated EBITDAR coverage of at
  least two times the base rent for eight consecutive fiscal quarters, the letter
  of credit may be reduced to an amount equal to three months of the base rent
  then in effect. If, however, after satisfying the conditions necessary to reduce
  the letter of credit to three months' base rent, EBITDAR coverage subsequently
  drops below two times base rent for two consecutive fiscal quarters, the letter
  of credit will be increased to six months' base rent. The letter of commitment
  provides that the leases will be cross-defaulted with any other lease or
  agreement between the parties. Gulf States Health Services, Inc. has provided to
  us unaudited financial statements reflecting that, as of December 31, 2004, it
  $9.3 million and stockholders' equity of approximately $1.8 million, and for the
  year ended December 31, 2004 had net income of approximately $2.0 million. Team
  Rehab, L.L.C., which is one of the guarantors of the leases, has provided to us
  unaudited financial statements reflecting that, as of December 31, 2004, it had
  tangible assets of approximately $21.3 million, liabilities of approximately
  $9.2 million and owner's equity of approximately $12.1 million, and for the year
  ended December 31, 2004 had net income of approximately $1.7 million.
  The letter of commitment provides that the lease for the Covington Facility
  will require that, as of the commencement date of the lease and at all times
  during the lease term, the tenant and its affiliates, Team Rehab, LLC, Gulf
  States Health Services, Inc. and Jamestown Healthcare Properties, LLC, maintain
  an aggregate tangible net worth in an amount to be mutually agreed upon with us.
  The letter of commitment provides that the lease for the Denham Springs Facility
  during the lease, the tenant and its affiliates, Team Rehab, L.L.C., Gulf States
  Health Services, Inc. and Jamestown Healthcare Properties, LLC, maintain an
  aggregate tangible net worth in an amount to be mutually agreed upon.
  Purchase Options.  The letter of commitment provides that each lease will
  provide that so long as the tenant is not in default, and no event has occurred
  which with the giving of notice or the passage of time or both would constitute
  a default under its (and its affiliates) leases with us or any of our affiliates
  or any of the leases with its subtenants, the tenant will have the option to
  purchase the facility (i) at the expiration of the initial term and each
  extension term of the lease, to be exercised by 90 days' written notice prior to
  the expiration of the initial term and each extension term, and (ii) within 90
  days of written notification from us exercising our right to terminate the
  engagement of the tenant's or its affiliate's management company as the
  management company for the facility as a result of an event of default under the
  lease. The letter of commitment provides that each lease will provide that the
  purchase price shall be equal to the greater of (i) the appraised value of the
  facility, assuming the lease remains in effect for 15 years and not taking into
  account any purchase options contained therein, or (ii) the purchase price
  paid by us for the facility, increased annually by an amount equal to the
  greater of (A) 2.5% per annum from the date of the lease, or (B) the rate of
  increase in the CPI on each January 1.
  Commitment Fee.  We will be entitled to a commitment fee at the closing of
  the purchase of the Covington Facility equal to 1% of the purchase price,
  $16,250 of which has already been paid. The letter of commitment provides that
  we will be entitled to a commitment fee at the closing of the purchase of the
  Denham Springs Facility equal to 1% of the purchase price, $8,750 of which has
  already been paid.
  HAMMOND, LOUISIANA
  General.  On April 1, 2005, we entered into a letter of commitment with
  Hammond Healthcare Properties, LLC, the current owner of the property, or
  Hammond Properties, and Hammond Rehabilitation Hospital, LLC, the current tenant
  of the property, or Hammond Hospital, both unaffiliated third parties, to
  provide a mortgage loan to Hammond Properties and enter into a put-call option
  arrangement relating to our purchase of the facility from Hammond Properties and
  our leaseback of the facility to Hammond Hospital or its affiliates.
  The facility is a long-term acute care hospital located in Hammond,
  Louisiana, which is approximately 45 miles from New Orleans, Louisiana. The
  The letter of commitment provides that, under the mortgage loan
  transaction, we will lend to Hammond Properties the sum of $8.0 million, which
  will bear interest at the rate of 10.5% per year and be payable interest only on
  a monthly basis with a balloon payment due and payable at the expiration of the
  put-call option period described below or, if the put-call option is exercised,
  at closing of our purchase of the facility. The letter of commitment provides
  that the loan will be secured by a first mortgage on the facility and by the
  other collateral and guaranteed as described below.
  The letter of commitment provides that, at the time of the mortgage loan
  closing, we will enter into a put-call option agreement with Hammond Properties
  providing that either party will have the option, exercisable within 90 days
  following the one year anniversary of the loan closing, to cause the purchase
  and sale of the facility, subject to applicable conditions, for a purchase price
  of the greater of (i) $10,285,714 or (ii) the quotient determined by dividing
  the annual rental payments by .105 (but not to exceed $11 million). The purchase
  price was arrived at through arm's-length negotiations based upon our analysis
  of various factors, including the demographics of the area in which the facility
  is located, the capability of the tenant to operate the facility, healthcare
  spending in the geographic area, the structural integrity of the facility,
  governmental regulatory trends which may impact the services provided by the
  facility, and the financial and economic returns which we require for making an
  If the put-call option is exercised, we will form a Delaware limited
  liability company, MPT of Hammond, LLC, which will own the facility. Initially,
  our operating partnership will own all of the membership interests in this
  limited liability company; however, the letter of commitment provides that, at
  some point following closing, we have agreed to offer up to 30% of the interests
  in this limited liability company to local physicians.
  Lease.  The letter of commitment provides that, if the put-call option is
  exercised, we will lease 100% of the facility to Hammond Hospital or its
  affiliate for a 15-year term, with three options to renew for five years each.
  The letter of commitment provides that the lease will be a net-lease with the
  tenant responsible for all costs of the facility, including, but not limited to,
  taxes, utilities, insurance, maintenance and capital improvements. The letter of
  commitment provides that the lease will require the tenant to pay base rent in
  an amount equal to 10.50% per annum of the purchase price plus any costs and
  charges that may be capitalized, which base rent will be payable in monthly
  installments. The letter of commitment provides that, on each January 1
  beginning January 1, 2007, the base rent will be increased by an amount equal to
  the greater of (A) 2.5% per annum of the prior year's base rent, or (B) the
  percentage by which the CPI on January 1 shall have increased over the CPI
  figure in effect on the then just previous January 1. The letter of commitment
  provides that the lease will require the tenant to carry customary insurance
  which is adequate to satisfy our underwriting standards.
  Repair and Replacement Reserve.  The letter of commitment provides that the
  tenant, commencing on the date we purchase the facility, will make annual
  deposits into a reserve account. We expect that the lease will provide that on
  each January 1 following the date we purchase the facility, the payment into the
  reserve account will be increased, and that all extraordinary repair
  from the reserve, and the tenant will pay into the reserve such funds as
  Security.  The letter of commitment provides that, as security for the
  mortgage loan and the lease, Hammond Properties or the tenant, as the case may
  be, will grant us a security interest in all personal property, other than
  receivables, located and to be located at the facility. The letter of commitment
  requires Hammond Properties and the tenant to obtain and deliver to us an
  unconditional and irrevocable letter of credit from a bank acceptable to us,
  naming us beneficiary thereunder, in an amount equal to six months' debt service
  or base rent under the lease, as the case may be, and that at such time as the
  operations in the facility have generated EBITDAR coverage of at least two times
  the base rent for eight consecutive fiscal quarters, the letter of credit may be
  reduced to an amount equal to three months of the base rent then in effect. If,
  however, after satisfying the conditions necessary to reduce the letter of
  credit to three months' base rent, EBITDAR coverage subsequently drops below two
  times base rent for two consecutive fiscal quarters, the letter of credit will
  be increased to six months' base rent. The letter of commitment provides that
  the lease will be cross-defaulted with any other lease or agreement between the
  parties. The letter of commitment provides that the loan and lease will be
  jointly and severally guaranteed by Hammond Properties, certain affiliates of
  Hammond Properties and Gulf States Health Services, Inc. For information about
  the financial condition of Gulf States Health Services, Inc., see the
  description of the Covington and Denham Springs facilities above.
  Purchase Options.  The letter of commitment provides that the lease will
  purchase the facility at the expiration of the initial term and each extension
  term of the lease. The letter of commitment provides that the purchase price
  shall be equal to the greater of (i) the appraised value of the facility,
  assuming the lease remains in effect for 15 years and not taking into account
  any purchase options contained therein, or (ii) the purchase price paid by us
  for the facility, increased annually by an amount equal to the greater of (A)
  2.5% per annum from the date of the lease, or (B) the rate of increase in the
  CPI on each January 1. The parties will agree upon the notice and closing
  periods applicable to these purchase options.
  Net Worth Covenant.  The letter of commitment provides that the loan and
  lease documents will require that, as of the loan closing and throughout the
  loan and lease terms, Hammond Properties, Hammond Hospital and Gulf States
  Health Services, Inc. must maintain an aggregate tangible net worth in an amount
  to be mutually agreed upon with us.
  Commitment Fee.  The letter of commitment provides that we will be entitled
  to a commitment fee at the closing of the loan equal to $80,000, $25,000 of
  which has already been paid. The letter of commitment further provides that we
  will be entitled to a commitment fee at the closing of the sale transaction
  equal to 1% of the purchase price, less the amount of all commitment fees
  previously paid.
  General.  On March 3, 2005, we entered into a purchase and sales agreement
  with Bucks County Oncoplastic Institute, LLC, or BCO, Jerome S. Tannenbaum,
  M.D., M. Stephen Harrison and DSI Facility Development, LLC, or the developer,
  all unaffiliated third parties, to purchase land and develop a women's hospital
  facility with an integrated medical office building in Bucks County,
  Pennsylvania, which is approximately 15 miles from Philadelphia, Pennsylvania.
  The purchase and sale agreement was amended on April 29, 2005 to extend the
  closing date to June 30, 2005, add G. Patrick Maxwell, M.D. as a party and to
  increase the amount of pre-closing development costs we have agreed to advance
  to approximately $2.0 million. BCO has entered into a contract with the owner of
  the land upon which the facility will be constructed for the purchase of the
  land.
  We intend to enter into a development agreement with the developer to
  develop the facility. The total development costs to develop the facility,
  including the cost of the land, are estimated at approximately $38.0 million. We
  will make a construction loan, secured by the improvements, to BCO for the
  amount necessary for construction of the improvements with interest at 10.75%
  per annum for a term ending upon completion of construction. We will ground
  lease the land during the construction period and, subject to certain
  conditions, purchase from and lease to BCO the improvements upon their
  completion. In the event we do not exercise our right to purchase the
  improvements upon completion of construction, we expect that the ground lease
  will continue for a term of 15 years with three five year renewal options and
  that the construction loan will be converted to a 15 year term loan with
  interest at 10.75% per annum, secured by a mortgage on the improvements. If we
  purchase the improvements, the ground lease will terminate and be replaced with
  a lease for both the land and the improvements, which we refer to as the
  facility lease.
  We have agreed to advance up to approximately $2.0 million of development
  costs prior to closing, which advances bear interest at the rate of 10.75% and
  are guaranteed to the extent of $1.3 million by Dr. Tannenbaum, $300,000 by Mr.
  Harrison and $385,000 by Dr. Maxwell.
  Lease.  We have formed a Delaware limited partnership, MPT of Bucks County
  Hospital, L.P., to own the facility. At the time we purchase the land, we intend
  to ground lease back 100% of the land to BCO for the construction period. If we
  purchase the improvements at the end of the construction term, the ground lease
  will terminate and be replaced by the facility lease, which would continue for a
  term of 15 years with three options to renew for five years each. In the case of
  the ground lease or the facility lease, each of which we refer to as the lease,
  the lease is to be a net-lease with BCO responsible for all costs of the
  facility, including, but not limited to, taxes, utilities, insurance and
  maintenance. The lease will require BCO to pay monthly rent in a per annum
  amount equal to 10.75% multiplied by the purchase price of the land in the case
  of the ground lease or by the total amount of the funds disbursed under the
  development agreement in the case of the facility lease. The lease will provide
  that on January 1, 2006, and on each January 1 thereafter, the base rent will be
  year's base rent, or (B) the percentage by which the CPI, has increased over the
  CPI figure in effect on the previous January 1. The lease will also require BCO
  to carry customary insurance which is adequate to satisfy our underwriting
  standards. The lease will require BCO to pay us on the commencement date of the
  lease an amount equal to $7,500 to cover the cost of the physical inspections of
  the facility, which fee will, beginning on January 1, 2006, and continuing on
  each January 1 thereafter, be increased by 2.5% per annum. In addition to the
  inspection fee, the total development costs will also include a fee equal to
  $75,000 to cover our inspection of the facility during the construction period.
  Capital Improvement Reserve.  The lease will require BCO to be responsible
  for all maintenance and repairs and all extraordinary repairs required to keep
  the facility in compliance with all applicable laws and regulations and as
  required under the lease. The lease will also require BCO, beginning on the
  completion of construction of the facility, to make annual deposits into a
  reserve account in the amount of $2,500 per bed per year. The lease will provide
  that beginning on the first January 1 after the completion of construction, the
  payment of $2,500 per bed per year into the improvement reserve will be
  increased by 2.5%. We expect the lease to provide that all extraordinary repair
  from the reserve, and BCO will pay into the reserve such funds as necessary for
  all extraordinary repairs.
  Security.  As security for the lease, BCO will grant us a security interest
  in all personal property, other than receivables, located and to be located at
  the facility, which security interest will be subject to any lien of any
  purchase money lender. The lease will require BCO to obtain and deliver to us an
  naming us beneficiary thereunder, in an amount equal to one year's base rent
  under the lease. As a condition to closing and as a continuing covenant under
  the lease, BCO will be required to maintain a tangible net worth of $5 million
  or access to a working capital line of at least $5 million guaranteed by Dr.
  Tannenbaum, Dr. Maxwell and
  other approved guarantors. The lease will be cross-defaulted to any other lease
  or agreement between the parties. BCO is newly formed and has had no significant
  operations to date.
  Purchase Options.  The lease will provide that so long as BCO is not in
  default under any lease with us or any of the leases with its subtenants, at the
  expiration of the lease BCO will have the option, upon 60 days prior written
  notice, to purchase the facility at a purchase price equal to the greater of (i)
  the appraised value of the facility, which assumes the lease remains in effect
  for 15 years, or (ii) the total development costs, including any capital
  additions funded by us, as increased by an amount equal to the greater of (A)
  CPI on each January 1.
  Commitment Fee.  We are to receive at closing a commitment fee equal to 1%
  of the commitment amount, $15,000 of which has already been paid.
  General.  On February 28, 2005, we entered into a letter of commitment with
  Monroe Hospital Operating Company, or Monroe Hospital, to develop a community
  hospital in Bloomington, Indiana, which is approximately 50 miles from
  Indianapolis, Indiana. The letter of commitment provides that we will enter into
  a contract with Monroe Hospital to, among other things, purchase the land. We
  intend to enter into a development agreement with an affiliate of Monroe
  Hospital to develop the facility. The total development costs to develop the
  facility, including the cost of the land, will be approximately $28.0 million.
  Alternatively, and subject to the approval of Monroe Hospital, we may make a
  construction loan, secured by the improvements, to Monroe Hospital for the
  lease the land during the construction period. Subject to certain conditions, we
  will purchase from and lease to Monroe Hospital the improvements upon their
  Lease.  We have formed a Delaware limited liability company, MPT of
  Bloomington, LLC, which will own the facility. The letter of commitment provides
  that, at the time we purchase the land, we will ground lease 100% of the land
  and all improvements to be constructed thereon to Monroe Hospital for the
  construction period. If we purchase the improvements at the end of the
  construction term, the ground lease will terminate and be replaced by the
  facility lease which would continue for a term of 15 years with three options to
  renew for five years each. In the case of the ground lease or the facility
  lease, each of which we refer to as the lease, the letter of commitment provides
  that the lease will be a net-lease with the tenant responsible for all costs of
  the facility, including, but not limited to, taxes, utilities, insurance,
  maintenance and capital improvements. The letter of commitment provides that the
  lease will require the tenant to pay monthly rent in a per annum amount equal to
  10.50% multiplied by the purchase price of the land in the case of the ground
  lease or by the total amount of the funds disbursed under the development
  agreement in the case of the facility lease. The letter of commitment also
  provides that on January 1, 2006, and on each January 1 thereafter, the base
  rent will be increased by an amount equal to the greater of (A) 2.5% per annum
  of the prior year's base rent, or (B) the percentage by which the CPI on January
  1 shall have increased over the CPI figure in effect on the then just previous
  January 1. The letter of commitment provides that the lease will also require
  the tenant to carry customary insurance which is adequate to satisfy our
  underwriting standards, and require the tenant to pay us on the commencement
  date of the lease an amount equal to $5,000 to cover the cost of the physical
  inspections of the facility, which fee will, beginning on January 1, 2006, and
  continuing on each January 1 thereafter, be increased by 2.5% per annum. The
  letter of commitment provides that the lease will be cross-defaulted with any
  other lease between us and the tenant or its affiliates.
  lease will require the tenant, beginning on the completion of construction of
  the facility, to make annual deposits into a reserve account in the amount of
  $2,500 per bed per year. The letter of commitment also provides that the lease
  will require that beginning on the first January 1 after the completion of
  construction, the payment of $2,500 per bed per year into the improvement
  reserve will be increased by 2.5%. We expect the lease to require that all
  other than receivables, located and to be located at the facility. The letter of
  commitment requires the tenant to obtain and deliver to us an unconditional and
  irrevocable letter of credit from a bank acceptable to us, naming us beneficiary
  thereunder, in an amount equal to one year's base rent under the lease, and
  provide that at such time as the operations in the facility generated EBITDAR
  coverage of at least two times the base rent for two consecutive fiscal years,
  the letter of credit may be reduced to an amount equal to six months of the base
  rent then in effect. The letter of commitment provides that the lease will be
  cross-defaulted to any other lease or agreement between the parties.
  Monroe Hospital is newly formed and has had no significant operations date.
  The development transaction is conditioned upon Monroe Hospital receiving equity
  contributions of at least $6.0 million and maintaining sufficient tangible net
  worth to absorb reasonable costs and expenses, including our lease payments,
  during the start-up period. Monroe Hospital has executed a contract with an
  experienced hospital management company to manage the day-to-day operations of
  the hospital, including staffing, scheduling, billing and collections,
  governmental compliance and relations, and other functions. The management
  company intends to make a substantial equity investment in Monroe Hospital. The
  letter of commitment provides that we will have the right to require Monroe
  Hospital to replace the management company under certain conditions.
  provide that so long as Monroe Hospital is not in default under any lease with
  us or any of the leases with its subtenants, at the expiration of the lease
  Monroe Hospital will have the option, upon 60 days prior written notice, to
  purchase the facility at a purchase price equal to the greater of (i) the
  appraised value of the facility, which assumes the lease remains in effect for
  15 years, or (ii) the total development costs, including any capital additions
  funded by us, as increased by an amount equal to the greater of (A) 2.5% per
  annum from the date of the lease, or (B) the rate of increase in the CPI on each
  January 1.
  Commitment Fee.  The letter of commitment provides that we are entitled to
  a commitment fee at closing equal to 0.5% of $28.0 million if closing occurs
  before June 1, 2005, less the sum of $100,000 which we have already received as
  a commitment fee. We may increase the commitment fee if closing occurs after May
  31, 2005. We will also be entitled to receive at closing the sum of $50,000 as a
  construction fee.
  North Cypress Medical Center Operating Company, Ltd., or North Cypress, an
  unaffiliated third party, to develop a community hospital in Houston, Texas. We
  expect to enter into a ground lease with the current owner of the land, with an
  option for us to purchase the land and then sublease the land to North Cypress.
  We intend to enter into a development agreement with an affiliate of North
  Cypress to develop the facility. The letter of commitment provides that the
  total development costs to develop the facility are estimated to be
  approximately $51.0 million. Alternatively, and subject to the approval of North
  Cypress, we will make a construction loan, secured by the improvements, to North
  Cypress for the amount necessary for construction of the improvements with
  interest at 10.50% per annum for a term ending upon completion of construction.
  We will ground sublease the land during the construction period and, subject to
  certain conditions, purchase from and lease to North Cypress the improvements
  upon their completion. In the
  event we do not exercise our right to purchase the improvements upon completion
  of construction, we expect that the ground sublease will continue for a term of
  15 years with three five year renewal options and that the construction loan
  will be converted to a 15 year term loan with interest at 10.50% per annum,
  secured by a mortgage on the improvements. If we purchase the improvements, the
  ground sublease will terminate and be replaced with a lease for both the land
  and the improvements which we refer to as the facility lease. We have ordered an
  independent appraisal in connection with the lease of the land and the
  development of the facility and expect that the appraised value will not be less
  than the total development costs.
  Commitment Fee.  The letter of commitment provides that, in connection with
  the acquisition of the leasehold and development of the facility, North Cypress
  has agreed to pay us a commitment fee equal to 1% of the total development
  costs, which shall be due and paid to us at the time the lease is signed;
  provided, however, $100,000 of the total 1% commitment fee was paid to us at the
  time the letter of commitment was executed.
  Sublease.  We intend to form a Delaware limited partnership, MPT of North
  Cypress, LP, which will enter into the ground lease with the current owner. The
  letter of commitment provides that, at the time we enter into the ground lease,
  we will ground sublease 100% of the land to North Cypress for the construction
  period. If we purchase the improvements at the end of the construction term, the
  ground sublease will terminate and be replaced by the facility lease which would
  continue for a term of 15 years with three options to renew for five years each.
  The ground sublease or the facility lease will be a net-lease with the tenant
  responsible for all costs of the facility, including, but not limited to, all
  rent and other costs and expenses due and payable under the ground lease, taxes,
  utilities, insurance, maintenance and capital improvements. The facility lease
  will require the tenant to pay monthly rent in a per annum amount equal to
  10.50% multiplied by the total amount of the funds disbursed under the
  development agreement plus the sum of all rents paid pursuant to the ground
  lease. The letter of commitment also provides that on January 1, 2006, and on
  each January 1 thereafter, the base rent will be increased by an amount equal to
  the greater of (A) 2.5% per year of the prior year's base rent, or (B) the
  provides that the facility lease will require the tenant to carry customary
  insurance which is adequate to satisfy our underwriting standards. The letter of
  commitment provides that the facility lease will require the tenant to pay us,
  commencing on January 1, 2006, an amount equal to $7,500 to cover the cost of
  the physical inspections of the facility, which fee will, on each January 1, be
  increased by 2.5% per annum. In addition to the inspection fee, the total
  development costs will include $75,000 to cover our inspection of the facility
  during the construction period.
  Capital Improvement Reserve.  The letter of commitment provides that the
  sublease will require the tenant, beginning on the date that construction of the
  facility has been completed, to make annual deposits into a reserve account in
  the amount of $2,500 per bed per year. The letter of commitment also provides
  that on each January 1 thereafter, the payment of $2,500 per bed per year into
  the improvement reserve will be increased by 2.5%. We expect the lease to
  require that all extraordinary repair expenditures made in each year during the
  term of the sublease will be funded first from the reserve, and the tenant will
  pay into the reserve such funds as necessary for all extraordinary repairs.
  Capital Contributions and Net Worth Covenant.  The letter of commitment
  provides that the sublease will require that, as of the commencement date of the
  sublease, tenant shall have received from its equity owners at least $15.0
  million in cash equity which we expect to be used for operating expenses and not
  be distributed to its equity owners. Those contributions will include the letter
  of credit as described below. We expect the lease to provide that upon our
  request tenant will provide to us evidence that such cash equity is in place and
  has not been distributed to tenant's equity owners. The letter of commitment
  provides that the sublease will require that North Cypress maintain at all times
  during the sublease a tangible net worth, the amount of which shall be
  negotiated prior to closing and execution of the sublease.
  Security.  The letter of commitment provides that as security for the
  sublease, the tenant will grant us a security interest in all personal property,
  other than receivables, located and to be located at the
  facility. The letter of commitment provides that the sublease will be
  cross-defaulted with any other sublease between North Cypress, or its
  affiliates, and us, or our affiliates. The letter of commitment provides that
  the sublease will also require the tenant to obtain and deliver to us an
  under the sublease, and that at such time as the operations in the facility have
  for two consecutive fiscal years generated EBITDAR coverage of at least two
  times the base rent, the letter of credit may be reduced to an amount equal to
  six months of the base rent then in effect.
  North Cypress is newly formed and has had no significant operations date.
  The development transaction is conditioned upon North Cypress receiving equity
  contributions of at least $15.0 million and maintaining sufficient tangible net
  during the start-up period. North Cypress has executed a contract with an
  company intends to make a substantial equity investment in North Cypress. The
  letter of commitment provides that we will have the right to require North
  Cypress to replace the management company under certain conditions.
  Purchase Options.  The letter of commitment provides that so long as we
  have the corresponding rights under the ground lease, the sublease will provide
  that so long as the tenant is not in default, and no event has occurred which
  with the giving of notice or the passage of time or both would constitute a
  default under its, and its affiliates, leases and subleases with us or any of
  our affiliates or any of the leases and subleases with its subtenants, at the
  expiration of the sublease, and at the expiration of each extension term, the
  tenant will have the option to purchase the facility at a purchase price equal
  to the greater of (i) the appraised value of the facility, or (ii) the total
  development costs, including any capital additions funded by us, as increased by
  an amount equal to the greater of (A) 2.5% per annum from the date of the
  sublease, or (B) the rate of increase in the CPI on each January 1.
  Sale Proceeds Distributions or Syndication.  The letter of commitment
  provides that at the time we enter into the lease with the tenant, we will also
  enter into an agreement with the tenant granting the tenant the right to choose
  between two options relating to the facility. The first option is based on a
  sale of the facility and, after we receive from the sales proceeds an amount
  equal to the total development costs plus an internal rate of return equal to
  15% any proceeds above that amount will be distributed to the tenant and us on
  an equal basis. Under the other option, subject to applicable healthcare
  regulatory requirements, if requested by tenant, we will offer the tenant or its
  physician partners opportunities to purchase up to 49% of the limited
  partnership equity interest in the limited partnership entity that will hold the
  title to the facility. The valuation of the limited partnership's equity
  interest will be based on the historical cost of the limited partnership's
  assets. To the extent that we elect to place debt on the facility, such debt
  will be non-recourse to the limited partners. Such offering will occur six to
  nine months following the occupancy of the facility. If tenant chooses this
  option, tenant and/or its physician partners will invest on an equal basis with
  We cannot assure you that we will acquire or develop any of the Pending
  Acquisition and Development Facilities on the terms described in this prospectus
  or at all, because each of these transactions is subject to a variety of
  conditions, including, in the case of the Pending Acquisition and Development
  Facility under contract, our satisfactory completion of due diligence, receipt
  of appraisals and other third party reports, obtaining of government and third
  party approvals and consents, our proposed tenant's acquisition of the property
  on which facilities are to be built, as well as other customary closing
  conditions and, in the case of the transactions under letters of commitment,
  negotiation and execution of mutually-acceptable definitive agreements, our
  satisfactory completion of due diligence, receipt of appraisals that support the
  purchase price set forth in the commitment letter and other third party reports,
  obtaining of government and third party approvals and consents, approval by our
  board of directors, and in certain cases the acquisition of the property on
  which the facility is to be constructed from the current owner, as well as
  satisfaction of customary closing conditions.
  We have also entered into the following arrangements which, because of the
  various contingencies that must be satisfied before these transactions can be
  completed, we do not consider to be probable acquisitions or developments as of
  the date of this prospectus.
  DIVERSIFIED SPECIALTY INSTITUTES, INC. ACQUISITION AND DEVELOPMENT FUNDING
  General.  On March 3, 2005, we entered into a letter agreement with
  Diversified Specialty Institutes, Inc., or DSI. An affiliate of DSI is the
  proposed tenant of the women's hospital and medical office building in Bensalem,
  Pennsylvania that we have contracted with to develop and leaseback. The letter
  agreement provides that, subject to DSI identifying facilities for acquisition
  or development, which it is not required to do, and subject to certain other
  conditions set forth in the letter agreement, we have agreed to make available
  to DSI or its affiliates acquisition and development funding in the total amount
  of $50.0 million to be used to finance the potential future acquisition or
  development of healthcare facilities, in each case subject to our due diligence
  and approval. The arrangement will remain outstanding until March 2, 2006, and
  be available to finance any acquisition facility or development facility that is
  subject to definitive agreements as of March 2, 2006, notwithstanding that the
  closing or completion of the acquisition facility or development facility may
  not have occurred as of March 2, 2006. We agreed that the definitive documents
  relating to the arrangement must close by April 30, 2005, unless a 30-day
  extension is requested by DSI or us. We have extended the closing date to June
  30, 2005.
  DSI is not required to identify facilities for acquisition or development
  and, if it does not, we have no obligation to provide funding to DSI. If funds
  are drawn from the arrangement to fund an acquisition or development facility,
  as applicable, we expect to enter into definitive documents with DSI. With
  respect to any development facility, we expect to enter into a development
  agreement with a developer, which may be an affiliate of DSI, to develop the
  development facility.
  Commitment Fee.  The letter agreement provides that we are entitled to a
  fee equal to 1% of the aggregate purchase price or development costs of any
  facilities we acquire pursuant to this arrangement, $100,000 of which was paid
  when the letter agreement was signed. The remainder of the fee will be due and
  payable at the closing of future projects, with the fee on each project being
  equal to 1% of that project's purchase price. We have agreed to give DSI a
  credit on future payments of fees for the $100,000 paid at the execution of the
  letter agreement.
  Lease.  We expect to form a Delaware limited liability company or a limited
  partnership to own each facility acquired or developed pursuant to the
  commitment. The letter of commitment provides that, at the time of our purchase
  of any acquisition or development facility, we intend to lease back to the
  applicable tenant 100% of the land and all improvements, including improvements
  to be constructed in the case of a development facility, for a 15-year term,
  with three options to renew for five years each, so long as the options are
  exercised at least six months prior to the expiration of the lease or the
  applicable extended term. The letter of commitment provides that each lease will
  including, but not limited to, taxes, utilities, insurance and maintenance.
  For each development facility, the letter agreement provides that the
  tenant will pay monthly rent during the construction period in a per year amount
  equal to 10.75% multiplied by the total amount of the funds disbursed under the
  development agreement. The letter agreement also provides that the lease
  relating to a development facility to require the tenant to pay, following the
  completion of construction of the facility, base rent in an amount equal to
  10.75% per year of the total development costs, payable in monthly installments.
  For an acquisition facility, we expect the lease to require the tenant to pay us
  base rent equal to 10.75% of the purchase price of the facility. The letter
  agreement provides that each lease will provide that commencing on the first
  January 1 following the commencement of the lease with respect to an acquisition
  facility, and on the first January 1 following the construction completion date
  with respect to a development facility, and on each January 1 thereafter, the
  base rent will be increased by an amount equal to the greater of (A) 2.5% per
  year of the prior year's base rent, or (B) the percentage by which the CPI on
  January 1 has increased over the CPI figure in effect on the then just previous
  January 1. The letter of commitment also provides that each lease for an
  acquisition facility and a development facility
  will require the tenant to carry customary insurance which is adequate to
  satisfy our underwriting standards.
  The letter agreement provides that each lease will require the tenant to
  pay us on the commencement date of the lease an amount equal to $7,500 to cover
  the cost of the physical inspections of the facility. The letter agreement also
  provides that this inspection fee will increase at the rate of 2.5% per year
  starting on the first January 1 following the commencement date of the lease, in
  the case of an acquisition facility, or the completion date, in the case of a
  development facility. In addition to the inspection fee, we also expect the
  tenant to pay us a fee equal to $75,000 per development facility to cover our
  inspection of the development facility during the construction period.
  Capital Improvement Reserve.  The letter agreement provides that each lease
  will require, commencing on the date that construction has been completed with
  respect to a development facility, or on the date of commencement of the lease
  with respect to an acquisition facility, the tenant to make annual deposits into
  a reserve account in the amount of $2,500 per bed per year. The letter agreement
  also provides that each lease is expected to provide that on each January 1
  thereafter, the payment of $2,500 per bed per year into the improvement reserve
  will be increased by 2.5%. We expect that the lease will require all
  Security.  The letter agreement provides that, as security for each lease,
  the tenant will grant us a security interest in all personal property, other
  than receivables, located and to be located at the facility. The letter
  agreement provides that each lease will be cross-defaulted with any other leases
  between the tenant, or its affiliates, and us, or our affiliates. The letter
  agreement provides that each lease will require the tenant to obtain and deliver
  to us an unconditional and irrevocable letter of credit from a bank acceptable
  to us, naming us beneficiary thereunder, in an amount equal to one year's base
  rent under the lease.
  The letter agreement provides that each lease will require that, as of the
  commencement date of the lease, the tenant to have a tangible net worth of no
  less than $5 million in cash equity or shall have access to a working capital
  line of no less than $5 million that is personally guaranteed by Dr. Tannenbaum
  and such other persons as may be approved by us.
  Purchase Options.  The letter agreement provides that each lease will
  provide that so long as tenant is not in default, and no event has occurred
  a default under its, and its affiliates, leases with us or any of our affiliates
  or any of the leases with its subtenants, at the expiration of the initial term
  of the lease, and at the expiration of each extended term thereafter, upon at
  least 60 days' prior written notice, tenant will have the option to purchase the
  facility at a purchase price equal to the greater of (i) the appraised value of
  the facility, or, in the case of a development facility (ii) the total
  development costs (including any capital additions funded by us), as increased
  by an amount equal to the greater of (A) 2.5% per year from the date of the
  lease, or (B) the rate of increase in the CPI on each January 1, or, in the case
  of an acquisition facility, (ii) the amount of (A) the purchase price paid for
  the facility, including costs of third party reports, legal fees and all other
  acquisition costs.
  OTHER ARRANGEMENTS
  On May 9, 2005, we entered into an arrangement with Vibra to purchase a
  hospital facility in California for a purchase price of $20.8 million, subject
  to adjustment. The transaction is subject to Vibra's acquisition of the facility
  and the operations of the facility from the current owner and a number of other
  conditions. Vibra has entered into a non-binding letter of intent to acquire the
  facility and operations at that facility, but we cannot assure you that it will
  be able to acquire the facility. If we purchase the facility, we will lease it
  back to an affiliate of Vibra for a term of 15 years with three renewal options
  of five years each. The lease will require the tenant to pay base rent in an
  amount equal to 10.5% of the purchase price which rent shall increase each year
  by the greater of 2.5% or the increase in CPI from the prior year. We have been
  paid a fee of $     as consideration for entering into this arrangement. The
  will be cross-defaulted with all other leases and other agreements between us or
  our affiliates, on the one hand, and the tenant or its affiliates, on the other
  On May 3, 2005 we entered into an arrangement with Prime Healthcare
  Systems, LLC or Prime Healthcare, an affiliate of DVH, to purchase a hospital
  facility in California for a purchase price of $25.0 million, subject to
  adjustment based on an appraisal that we intend to obtain. The transaction is
  subject to Prime Healthcare's acquisition of the facility from the current owner
  and a number of other conditions. Prime Healthcare has not yet entered into an
  agreement or letter of intent to purchase the facility from the current owner
  and we cannot assure you that it will be able to acquire the facility. If we
  purchase the facility from Prime Healthcare, we will lease it back to an
  affiliate of Prime Healthcare for a term of 15 years with three renewal options
  amount equal to 10% of the purchase price, which rent shall increase each year
  lease will be cross-defaulted with all other leases and other agreements between
  us or our affiliates, on the one hand, and the tenant or its affiliates, on the
  other hand.
  We cannot assure you that we will acquire or develop any of the facilities
  in our acquisition and development pipeline on the terms described in this
  prospectus or at all, because each of these transactions is subject to a variety
  of conditions, including negotiation and execution of mutually-acceptable
  definitive agreements, our satisfactory completion of due diligence, receipt of
  appraisals that support the purchase price set forth in the letter agreements
  and other third party reports, obtaining of government and third party approvals
  and consents, approval by our board of directors, and in certain cases our
  proposed tenant's acquisition of the facility from the current owner, as well as
  OUR DIRECTORS AND EXECUTIVE OFFICERS
  Our business and affairs are managed under the direction of our board of
  directors, which consists of eight members, three of whom are members of our
  senior management team and five of whom our board of directors has determined to
  be independent in accordance with the listing standards established by the New
  York Stock Exchange, or NYSE. Each director is elected to serve until the next
  annual meeting of stockholders and until his successor is elected and qualified.
  The terms of our present directors will expire at our 2005 annual meeting of
  stockholders. The following table sets forth certain information regarding our
  executive officers and directors:
  NAME                                        AGE                    POSITION
  ----                                        ---                    --------
  Edward K. Aldag, Jr. .....................  41    Chairman of the Board, President and Chief
  R. Steven Hamner..........................  48    Director, Executive Vice President and
  William G. McKenzie.......................  46    Vice Chairman of the Board
  Emmett E. McLean..........................  50    Executive Vice President, Chief Operating
  Officer, Treasurer and Assistant Secretary
  Michael G. Stewart........................  50    Executive Vice President, General Counsel
  and Secretary
  Virginia A. Clarke........................  46    Director
  G. Steven Dawson..........................  47    Director
  Bryan L. Goolsby..........................  54    Director
  Robert E. Holmes, Ph.D. ..................  63    Director*
  L. Glenn Orr, Jr. ........................  65    Director
  *    Mr. Holmes has been designated as our lead independent director.
  The following is a summary of certain biographical information concerning
  our directors and executive officers:
  Edward K. Aldag, Jr. is one of our founders and has served as our president
  and chief executive officer since August 2003, and as chairman of the board
  since March 2004. Mr. Aldag served as our vice chairman of the board from August
  2003 until March 2004 and as our secretary from August 2003 until March 2005.
  Prior to that, Mr. Aldag served as an executive officer and director with our
  predecessor from its inception in August 2002 until August 2003. From 1986 to
  2001, Mr. Aldag managed two private real estate companies, Guilford Capital
  Corporation and Guilford Medical Properties, Inc., that had aggregate assets
  valued at more than $500 million. Mr. Aldag played an integral role in the
  formation of investor groups, structuring the financing, and closing the
  transactions. Guilford Medical Properties, Inc. owned numerous rehabilitation
  hospitals across the country and net-leased them to four different national
  healthcare providers. Mr. Aldag served as president and a member of the board of
  directors of Guilford Medical Properties, Inc. from its inception until selling
  his interest in the company in 2001. Mr. Aldag was the president and a member of
  the board of directors of Guilford Capital Corporation from 1998 to 2001 and
  from 1990 to 1998 served as executive vice president, chief operating officer
  and a member of the board of directors. Mr. Aldag received his B.S. in Commerce
  & Business from the University of Alabama with a major in corporate finance.
  R. Steven Hamner is one of our founders and has served as our executive
  vice president and chief financial officer since September 2003 and as a
  director since February 2005. In August and September 2003, Mr. Hamner served as
  our executive vice president and chief accounting officer. From October 2001
  through March 2004, he was the managing director of Transaction Analysis LLC, a
  company that provided interim and project-oriented accounting and consulting
  services to commercial real estate owners
  and their advisors. From June 1998 to September 2001, he was vice president and
  chief financial officer of United Investors Realty Trust, a publicly-traded
  REIT. For the 10 years prior to becoming an officer of United Investors Realty
  Trust, he was employed by the accounting and consulting firm of Ernst & Young
  LLP and its predecessors. Mr. Hamner received a B.S. in Accounting from
  Louisiana State University. Mr. Hamner is a certified public accountant.
  William G. McKenzie is one of our founders and has served as the vice
  chairman of our board of directors since September 2003. Mr. McKenzie has served
  as a director since our formation and served as the executive chairman of our
  board of directors in August and September 2003. From May 2003 to August 2003,
  he was an executive officer and director of our predecessor. From 1998 to the
  present, Mr. McKenzie has served as president, chief executive officer and a
  board member of Gilliard Health Services, Inc., a privately-held owner and
  operator of acute care hospitals. From 1996 to 1998, he was executive vice
  president and chief operating officer of the Mississippi Hospital
  Association/Diversified Services, Inc. and the Health Insurance Exchange, a
  mutual company and HMO. From 1994 to 1996, Mr. McKenzie was senior vice
  president of Managed Care and executive vice president of Physician Solutions,
  Inc., a subsidiary of Vaughan HealthCare, a private healthcare company in
  Alabama. From 1981 to 1994, Mr. McKenzie was hospital administrator and chief
  financial officer and held other management positions with several private acute
  care organizations. Mr. McKenzie received a Masters of Science in Health
  Administration from the University of Colorado and a B.S. in Business
  Administration from Troy State University. He has served in numerous capacities
  with the Alabama Hospital Association.
  Emmett E. McLean is one of our founders and has served as our executive
  vice president, chief operating officer and treasurer since September 2003. Mr.
  McLean has served as assistant secretary since April 2004. In August and
  September 2003, Mr. McLean also served as our chief financial officer. Mr.
  McLean was one of our directors from September 2003 until April 2004. From June
  to September, 2003, Mr. McLean served as executive vice president, chief
  financial officer, and treasurer and board member of our predecessor. From 2000
  to 2003, Mr. McLean was a private investor and, for part of that period, served
  as a consultant to a privately held company. From 1995 to 2000, Mr. McLean
  served as senior vice president -- development, secretary, treasurer and a board
  member of PsychPartners, L.L.C., a healthcare services and practice management
  company. From 1992 to 1994, he was senior vice president, chief financial
  officer and secretary of Diagnostic Health Corporation, a healthcare services
  company. From 1984 to 1992, he worked for Dean Witter Reynolds, Inc., now Morgan
  Stanley, and Smith Barney, now Citigroup, in the corporate finance departments
  of their respective investment banking businesses. From 1977 to 1982, Mr. McLean
  worked as a commercial banker for SunTrust Banks, Inc. Mr. McLean received an
  MBA from the University of Virginia and a B.A. in Economics from The University
  of North Carolina.
  Michael G. Stewart has served as our general counsel since October 2004 and
  as our executive vice president and secretary since March 2005. Prior to October
  2004, Mr. Stewart worked as a private investor, healthcare consultant and
  novelist. He advised physician and surgery groups on emerging healthcare issues
  for four years before publishing three novels. From 1993 until 1995, he served
  as vice president and general counsel of Complete Health Services, Inc., a
  managed care company, and its successor corporation, United Healthcare of the
  South, a division of United Healthcare, Inc. (NYSE: UNH). Mr. Stewart was
  engaged in the private practice of law between 1988 and 1993. Mr. Stewart holds
  a J.D. degree from Cumberland School of Law of Samford University and a B.S. in
  Business Administration from Auburn University.
  Virginia A. Clarke has served as a member of our board of directors since
  February 2005. Ms. Clarke has been a search consultant in the global executive
  search firm of Spencer Stuart & Associates since 1997. Ms. Clarke was with DHR
  International, an executive search firm, during 1996. Prior to that, Ms. Clarke
  spent 10 years in the real estate investment management business with La Salle
  Partners and Prudential Real Estate Investors, where her activities included
  asset management, portfolio management, capital raising and client service, and
  two years with First National Bank of Chicago. Ms. Clarke is a member of the
  Pension Real Estate Association. Ms. Clarke graduated from the University of
  California at
  Davis and received a master's degree in management from the J.L. Kellogg
  Graduate School of Management at Northwestern University.
  G. Steven Dawson has served as a member of our board of directors since
  April 2004. He is currently a private investor and serves on the boards of five
  other real estate investment trusts in addition to his service for us, as
  follows: American Campus Communities (NYSE: ACC), AmREIT, Inc. (AMEX: AMY),
  Desert Capital REIT (a non-listed public mortgage company), Sunset Financial
  Resource, Inc. (NYSE: SFO), and Trustreet Properties, Inc. (NYSE: TSY). Mr.
  Dawson is chairman of the audit committees for each of these companies except
  Sunset Financial Resource, Inc. and Trustreet Properties, Inc. From July 1990 to
  September 2003, he was chief financial officer and senior vice president-finance
  of Camden Property Trust (NYSE: CPT) and its predecessors, a REIT engaged in the
  development, ownership, management, financing and sale of multi-family
  properties throughout the southern United States. Mr. Dawson is involved in
  various charitable, non-profit and educational organizations, including serving
  on the board of His Grace Foundation, a charity providing services to the
  families of children in the Bone Marrow Transplant Unit of Texas Children's
  Hospital, and as a member of the Real Estate Roundtable at the Mays Graduate
  School of Business at Texas A&M University. Mr. Dawson received a degree in
  business from Texas A&M University.
  Bryan L. Goolsby has served as a member of our board of directors since
  February 2005. Mr. Goolsby is the managing partner of the law firm Locke Liddell
  & Sapp LLP. Mr. Goolsby is an associate board member of the Board of Governors
  of the National Association of Real Estate Investment Trusts. He is also a
  member of the National Multi-Family Housing Association and the Pension Real
  Estate Association, and an associate board member of the Edwin L. Cox School of
  Business at Southern Methodist University. He serves as a director of Desert
  Capital REIT, Inc. and AmREIT, Inc. Mr. Goolsby received a J.D. degree from the
  University of Texas, and is a Certified Public Accountant.
  Robert E. Holmes, Ph.D., has served as a member of our board of directors
  since April 2004. Mr. Holmes, our lead independent director, is the Dean and
  Professor of Management of the School of Business at the University of Alabama
  at Birmingham, positions he has held since 1999. From 1995 to 1999, he was Dean
  of the Olin Graduate School of Business at Babson College in Wellesley,
  Massachusetts. Prior to that, he was Dean of the James Madison University
  College of Business in Harrisonburg, Virginia for 12 years. He is the author of
  more than 20 scholarly publications, is past president of the Southern Business
  Administration Association, and is actively involved in the International
  Association for Management Education. Mr. Holmes received a bachelor's degree
  from the University of Texas at Austin, an MBA from University of North Texas,
  and received his Ph.D. from the University of Arkansas with an emphasis on
  management strategy.
  L. Glenn Orr, Jr. has served as a member of our board of directors since
  February 2005. Mr. Orr has been president and chief executive officer of The Orr
  Group, which provides investment banking and consulting services for
  middle-market companies, since 1995. Prior to that, he was chairman of the board
  of directors, president and chief executive officer of Southern National
  Corporation from 1990 until its merger with Branch Banking & Trust in 1995. Mr.
  Orr is member of the board of directors, chairman of the governance/compensation
  committee and a member of the executive committee of Highwoods Properties, Inc.
  (NYSE: HIW). He is also a member of the boards of directors of General Parts,
  Inc., Village Tavern, Inc. and Broyhill Management Fund, Inc. Mr. Orr previously
  served as president and chief executive officer of Forsyth Bank and Trust Co.,
  president of Community Bank in Greenville, South Carolina and president of the
  North Carolina Bankers Association. He is a trustee of Wake Forest University.
  CORPORATE GOVERNANCE -- BOARD OF DIRECTORS AND COMMITTEES
  Our board of directors has adopted a code of ethics and business conduct
  relating to the conduct of our business by our employees, officers and
  directors, and has also adopted corporate governance guidelines to assist the
  board of directors in the administration of its duties. Our corporate governance
  guidelines and the listing standards of the NYSE require that a majority of the
  members of our board of directors be
  independent. Board members are recommended for nomination by our ethics,
  nominating and corporate governance committee. Nominations must satisfy the
  standards established by that committee for membership on our board of
  directors.
  Our directors generally meet quarterly or more frequently if necessary. The
  directors are regularly kept informed about our business at meetings of the
  board of directors and its committees and through supplemental reports and
  communications. Our independent directors meet regularly in executive sessions
  without the presence of any corporate officers. Mr. Holmes has been selected by
  the board of directors to serve as lead independent director and in that
  capacity presides at meetings of the non-management directors, coordinates the
  preparation for meetings of the board of directors with our chief executive
  officer, and serves as the liaison between the board of directors and our chief
  executive officer.
  Our board of directors has established audit, compensation, ethics,
  nominating and corporate governance and investment committees, the principal
  functions and membership of which are briefly described below. The charters of
  the audit, compensation and ethics, nominating and corporate governance
  committees, along with our code of ethics and business conduct and our corporate
  governance guidelines, will be available on our website upon completion of this
  In February 2005, we expanded the size of our board of directors from seven
  to 11 directors and elected four new directors, Messrs. Goolsby, Hamner and Orr
  and Ms. Clarke. In connection with the election of these new directors, our
  board reconstituted our audit, compensation and ethics, nominating and corporate
  governance committees and established the investment committee of our board. On
  April 6, 2005, three of our independent directors who had become members of our
  board in April 2004 resigned as directors.
  Our board of directors has established an audit committee, which is
  comprised of three independent directors, Messrs. Dawson and Orr and Ms. Clarke.
  Mr. Dawson serves as the chairperson of the audit committee and also serves on
  the audit committees of three other public companies. Our board of directors has
  determined that Mr. Dawson's service on the audit committees of other public
  companies does not impair his ability to serve on our audit committee. The audit
  committee oversees (i) our accounting and financial reporting processes; (ii)
  the integrity and audits of our financial statements; (iii) our compliance with
  legal and regulatory requirements; (iv) the qualifications and independence of
  our independent auditors; and (v) the performance of our internal and
  independent auditors. The audit committee also:
  - has sole authority to appoint or replace our independent auditors;
  - has sole authority to approve in advance all audit and non-audit services
  by our independent auditors;
  - monitors compliance of our employees with our standards of business
  conduct and conflict of interest policies; and
  - meets at least quarterly with our senior executive officers, internal
  audit staff and our independent auditors in separate executive sessions.
  The specific functions and responsibilities of the audit committee are set
  forth in the audit committee's charter. Our board of directors has determined
  that each of the members of the audit committee is financially literate, as such
  term is interpreted by our board of directors. In addition, our board of
  directors has determined that Mr. Dawson qualifies as an "audit committee
  financial expert" under the current SEC regulations. Our management has primary
  responsibility for the financial statements and internal control over financial
  reporting. The audit committee engages an independent registered public
  accounting firm to conduct an annual audit of the Company's financial statements
  in accordance with the standards of the Public Company Accounting Oversight
  Our board of directors has established a compensation committee, which is
  comprised of three independent directors, Messrs. Dawson, Goolsby and Orr. Mr.
  Orr serves as the chairperson of the compensation committee. The principal
  functions of the compensation committee are to:
  - evaluate the performance of our executive officers;
  - review and approve the compensation for our executive officers;
  - review and make recommendation to the board with respect to our incentive
  compensation plans and equity-based plans; and
  - administer our equity incentive plan.
  The compensation committee also reviews and approves corporate goals and
  objectives relevant to the chief executive officer's compensation, evaluates the
  chief executive officer's performance in light of those goals and objectives,
  and establishes the chief executive officer's compensation levels based on its
  evaluation. The compensation committee has the authority to retain and terminate
  any compensation consultant to be used to assist in the evaluation of the
  compensation of the chief executive officer or any other executive officer or
  director. In 2004, the compensation committee engaged a compensation consultant
  to perform a comprehensive review and provide recommendations to the
  compensation committee regarding the compensation of our officers and directors.
  The specific functions and responsibilities of the compensation committee are
  set forth in more detail in the compensation committee's charter.
  ETHICS, NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
  Our board of directors has established an ethics, nominating and corporate
  governance committee. Membership of the committee is comprised of three
  independent directors, Messrs. Dawson, Goolsby and Holmes. Mr. Holmes serves as
  the chairperson of this committee. The ethics, nominating and corporate
  governance committee is responsible for, among other things, recommending the
  nomination of qualified individuals to become directors, recommending the
  composition of committees of our board, periodically reviewing the board's
  performance and effectiveness as a body, recommending proposed changes to the
  board of directors, and periodically reviewing our corporate governance
  guidelines and policies. The specific functions and duties of the ethics,
  nominating and corporate governance committee are set forth in the committee's
  charter.
  Our board of directors has established an investment committee. Membership
  of the committee is comprised of all of our current directors. Mr. Aldag serves
  as the chairperson of this committee. The investment committee is responsible
  for, among other things, considering and taking action with respect to all
  acquisitions, developments and leasing of healthcare facilities in which our
  aggregate investment will exceed $10 million.
  VACANCIES ON OUR BOARD OF DIRECTORS
  Any director may resign at any time and may be removed with or without
  cause by the stockholders upon the affirmative vote of the holders of at least
  two-thirds of all of our common stock outstanding and entitled to vote generally
  for the election of directors. Unless filled by a vote of the stockholders in
  the event a director is removed as permitted by Maryland law, a vacancy created
  by death, resignation, removal, adjudicated incompetence or other incapacity of
  a director may be filled by a vote of a majority of the remaining directors
  although less than a quorum. Vacancies created by an increase in the number of
  directors must be filled by a vote of majority of the entire board.
  LIMITED LIABILITY AND INDEMNIFICATION
  The MGCL permits a Maryland corporation to include in its charter a
  provision limiting the liability of its directors and officers to the
  corporation and its stockholder for money damages except for liability resulting
  from actual receipt of an improper benefit or profit in money, property or
  services or active and deliberate dishonesty established by a final judgment as
  being material to the cause of action. Our charter limits the personal liability
  of our directors and officers for money damages to the fullest extent permitted
  under Maryland law.
  The MGCL requires a corporation, unless its charter provides otherwise,
  which our charter does not, to indemnify a director or officer who has been
  successful on the merits or otherwise, in the defense of any proceeding to which
  he or she is made a party by reason of his or her service in that capacity. See
  "Certain Provisions of Maryland Law and of Our Charter and
  Bylaws -- Indemnification and Limitation of Directors' and Officers' Liability."
  We maintain a directors and officers liability insurance policy. We have
  also entered into indemnification agreements with each of our directors and
  executive officers, which we refer to in this context as indemnitees. The
  indemnification agreements provide that we will, to the fullest extent permitted
  by Maryland law, indemnify and defend each indemnitee against all losses and
  expenses incurred as a result of his current or past service as our director or
  officer, or incurred by reason of the fact that, while he was our director or
  officer, he was serving at our request as a director, officer, partners,
  trustee, employee or agent of a corporation, partnership, joint venture, trust,
  other enterprise or employee benefit plan. We have agreed to pay expenses
  incurred by an indemnitee before the final disposition of a claim provided that
  he provides us with a written affirmation that he has met the standard of
  conduct required for indemnification and a written undertaking to repay the
  amount we pay or reimburse if it is ultimately determined that he has not met
  the standard of conduct required for indemnification. We are to pay expenses
  within 20 days of receiving the indemnitee's written request for such an
  advance. Indemnitees are entitled to select counsel to defend against
  indemnifiable claims.
  The general effect to investors of any arrangement under which any person
  who controls us or any of our directors, officers or agents is insured or
  indemnified against liability is a potential reduction in distributions to our
  stockholders resulting from our payment of premiums associated with liability
  insurance and payment of indemnifiable expenses and losses.
  The SEC takes the position that indemnification against liabilities arising
  under the Securities Act is against public policy and unenforceable. As a
  result, indemnification of our directors and officers may not be allowed for
  liabilities arising from or out of a violation of state or federal securities
  laws.
  As compensation for serving on our board of directors, each of our
  independent directors receives an annual fee of $20,000 and an additional $1,000
  for each board of directors meeting attended. In addition, each independent
  director is paid $1,000 for attendance at each meeting of a committee on which
  he serves. Committee chairmen receive an additional $5,000 per year except that
  the audit committee chairman receives an additional $10,000 per year. In
  addition, we reimburse our directors for their reasonable out-of-pocket expenses
  incurred in attending board of directors and committee meetings. Directors who
  are also officers or employees of our company receive no additional compensation
  for their service as directors. At the time of each annual meeting of our
  stockholders following his or her election to the board of directors, each
  independent director will receive 2,000 shares of our common stock, restricted
  as to transfer for three years, or a comparable number of deferred stock units.
  Our compensation committee may change the compensation of our independent
  directors in its discretion.
  Upon joining our board of directors, each independent director received a
  non-qualified option to purchase 20,000 shares of our common stock with an
  exercise price of $10.00 per share. One-third of these options vested upon
  grant. One-half of the remaining options will vest on each of the first and
  second anniversaries of the date of grant. In addition to this option to
  purchase stock, each of our independent
  directors has been awarded 2,500 deferred stock units, which represent the right
  to receive 2,500 shares of common stock at no cost in October 2007 for Messrs.
  Dawson and Holmes and 2,500 shares of common stock at no cost in March 2008 for
  Ms. Clarke and Messrs. Goolsby and Orr.
  The following table sets forth the compensation paid or earned by our chief
  executive officer and our other executive officers for 2003 and 2004:
  RESTRICTED STOCK   OTHER ANNUAL    ALL OTHER
  NAME AND POSITION                   YEAR    SALARY       BONUS        AWARDS(1)       COMPENSATION   COMPENSATION
  -----------------                   ----   --------     --------   ----------------   ------------   ------------
  Edward K. Aldag, Jr. .............  2004   $350,000     $350,000         43,500         $50,462(2)     $30,769(3)
  Chairman, Chief Executive         2003    145,833(4)   145,833                         10,492(5)       9,249(6)
  Officer and President
  Emmett E. McLean..................  2004   $250,000     $250,000         20,500         $24,385(7)     $15,385(3)
  Executive Vice President,         2003    104,167(4)   104,167                             --         10,896(8)
  Chief Operating Officer,
  Treasurer and Assistant
  R. Steven Hamner..................  2004   $250,000     $250,000         27,000         $24,385(7)     $15,385(3)
  Executive Vice President          2003    104,167(4)   104,167                             --          5,918(9)
  and Chief Financial Officer
  William G. McKenzie...............  2004   $175,000     $175,000         15,000         $    --        $    --
  Vice Chairman of the Board        2003     72,917(4)    72,917                             --             --
  Michael G. Stewart................  2004   $ 43,527(10) $ 42,188             --         $    --        $    --
  Executive Vice President,         2003         --           --             --              --             --
  Secretary and General Counsel
  (1) To be awarded upon completion of this offering under our equity incentive
  plan. These restricted stock awards will vest at a rate of 8.33% per
  quarter beginning on the last day of the first calendar quarter after
  completion of this offering so long as each named executive officer remains
  an employee of ours. Dividends will be paid on the shares of restricted
  (2) Represents a $12,000 automobile allowance and $25,000 payable to Mr. Aldag
  to reimburse him for the cost of tax preparation and financial planning
  services and $13,462 to reimburse Mr. Aldag for his tax liabilities
  associated with such payment.
  (3) Represents reimbursement for life insurance premiums of $20,000 for Mr.
  Aldag and $10,000 for each of Messrs. McLean and Hamner and reimbursement
  of $10,769 for Mr. Aldag and $5,385 for each of Messrs. McLean and Hamner
  for tax liabilities associated with such premium reimbursements, but does
  not include any matching contributions under the 401(k) plan that we expect
  to adopt in 2004.
  (4) For the partial year period from our inception in August 2003 until
  (5) Represents a $7,000 automobile allowance and $3,492 payable to Mr. Aldag to
  reimburse him for the cost of tax preparation and financial planning
  (6) Represents reimbursement for life insurance premiums of $9,249.
  (7) Represents a $9,000 automobile allowance and $10,000 for the named
  executive officers to reimburse them for the cost of tax preparation
  services and $5,385 for the named executive officers to reimburse them for
  their tax liabilities associated with such tax preparation cost
  reimbursement.
  (8) Represents reimbursement for life insurance premiums of $10,896.
  (10) For the partial year period from October 25, 2004, Mr. Stewart's date of
  hire, to December 31, 2004. Had Mr. Stewart been employed for the full year
  2004, he would have been entitled to a base salary of $225,000 during 2004.
  Mr. Stewart's employment agreement was amended effective April 28, 2005.
  The amended employment agreement provides for an annual base salary of
  EMPLOYMENT AGREEMENTS
  We have employment agreements with each of the named executive officers.
  These employment agreements provide the following annual base salaries: Edward
  K. Aldag, Jr., $350,000; Emmett E. McLean, $250,000; R. Steven Hamner, $250,000;
  Michael G. Stewart, $250,000; and William G. McKenzie, $175,000. The base
  salaries for Messrs. Aldag, McLean and Hamner were increased by 5% effective
  January 1, 2005. On each January 1 hereafter, each of the executive officers is
  to receive a minimum increase in his base salary equal to the increase in the
  Consumer Price Index. These agreements provide that the executive officers,
  other than Mr. McKenzie, agree to devote substantially all of their business
  time to our operation. The employment agreement for each of the named executive
  officers is for a three year term which is automatically extended at the end of
  each year within such term for an additional one year period, unless either
  party gives notice of non-renewal as provided in the agreement.
  These employment agreements permit us to terminate each executive's employment
  with appropriate notice for or without "cause." "Cause" is generally defined to
  - conviction of, or the entry of a plea of guilty or nolo contendere to, a
  felony (excluding any felony relating to the negligent operation of a
  motor vehicle or a conviction or plea of guilty or nolo contendere
  arising under a statutory provision imposing per se criminal liability
  due to the position held by the executive with us, provided the act or
  omission of the executive or officer with respect to such matter was not
  taken or omitted to be taken in contravention of any applicable policy or
  directive of the board of directors);
  - a willful breach of the executive's duty of loyalty which is materially
  detrimental to us;
  - a willful failure to perform or adhere to explicitly stated duties that
  are consistent with the executive's employment agreement, or the
  reasonable and customary guidelines of employment or reasonable and
  customary corporate governance guidelines or policies, including, without
  limitation, the business code of ethics adopted by the board of
  directors, or the failure to follow the lawful directives of the board of
  directors provided such directives are consistent with the terms of the
  executive's employment agreement, which continues for a period of 30 days
  after written notice to the executive; and
  - gross negligence or willful misconduct in the performance of the
  executive's duties.
  Each of the named executive officers has the right under his employment
  agreement to resign for "good reason." The following constitute good reason
  under the employment agreements: (i) the employment agreement is not
  automatically renewed by the company; (ii) the termination of certain incentive
  compensation programs; (iii) the termination or diminution of certain employee
  benefit plans, programs or material fringe benefits (other than for Mr.
  McKenzie); (iv) the relocation of our principal office outside of a 100 mile
  radius of Birmingham, Alabama (in the case of Mr. Aldag); or (v) our breach of
  the employment agreement which continues uncured for 30 days. In addition, in
  the case of Mr. Aldag, the following constitute good reason: (i) his removal
  from the board of directors without cause or his failure to be nominated or
  elected to the board of directors; or (ii) any material reduction in duties,
  responsibilities or reporting requirements, or the assignment of any duties,
  responsibilities or reporting requirements that are inconsistent with his
  positions with us.
  The executive employment agreements provide a monthly car allowance of
  $1,000 for Mr. Aldag and $750 for each of Messrs. McLean, Hamner and Stewart.
  Messrs. Aldag, McLean, Hamner and Stewart are also reimbursed for the cost of
  tax preparation and financial planning services, up to $25,000 annually for Mr.
  Aldag and $10,000 annually for each of Messrs. McLean, Hamner and Stewart. We
  also reimburse each executive for the income tax he incurs on the receipt of
  these tax preparation and financial planning services. In addition, the
  employment agreements provide for annual paid vacation of six weeks for Mr.
  Aldag and three weeks for Messrs. McLean, Hamner and Stewart and various other
  customary benefits. The employment agreements also provide that Mr. Aldag will
  receive up to $20,000 per year in reimbursement for life insurance premiums,
  which amount is to increase annually based on the increase in the Consumer Price
  Index for such year, and that Messrs. McLean, Hamner and Stewart will receive up
  to $10,000 per year in reimbursement for life insurance premiums which amount is
  to increase annually based on the increase in the Consumer Price Index for such
  year. We also reimburse each executive for the income tax he incurs on the
  receipt of these premium reimbursements.
  We have the right to obtain a key man life insurance policy for the benefit
  of the company on the life of each of our executives with a death benefit equal
  to the death benefit of such executive's whole life policy.
  The employment agreements referred to above provide that the executive
  officers are eligible to receive the same benefits, including medical insurance
  coverage and retirement plan benefits in a 401(k) plan to the same extent as
  other similarly situated employees, and such other benefits as are commensurate
  with their position. Participation in employee benefit plans is subject to the
  terms of said benefit plans as in effect from time to time.
  If the named executive officer's employment ends for any reason, we will
  pay accrued salary, bonuses and incentive payments already determined, and other
  existing obligations. In addition, if we terminate the named executive officer's
  employment without cause or if any of them terminates his employment for good
  reason, we will be obligated to pay (i) a lump sum payment of severance equal to
  the sum of (x) the product of three and the sum of the salary in effect at the
  time of termination plus the average cash bonus (or the highest cash bonus, in
  the case of Mr. Aldag) paid to such executive during the preceding three years,
  grossed up for taxes in the case of Mr. Aldag, and (y) the incentive bonus
  prorated for the year in which the termination occurred, (ii) other than for Mr.
  McKenzie, the cost of the executive's continued participation in the company's
  benefit and welfare plans (other than the 401(k) plan) for a three year period
  (or for a five year period in the case of Mr. Aldag), and (iii) certain other
  benefits as provided for in the employment agreement. Additionally, in the event
  of a termination by us for any reason other than cause or by the executive for
  good reason, all of the options and restricted stock granted to the executive
  will become fully vested, and the executive will have whatever period remains
  under the options in which to exercise all vested options.
  In the event of a termination of the employment of our executives as a
  result of death, then in addition to the accrued salary, bonus and incentive
  payments due to them, they shall become fully vested in their options and
  restricted stock, and their respective beneficiaries will have whatever period
  remains under the options to exercise such options. In addition, the executives
  would be entitled to their prorated incentive bonuses.
  In the event the employment of our executives ends as a result of a
  termination by us for cause or by the executives without good reason, then in
  addition to the accrued salary, bonuses and incentive payments due to them, the
  executives would be entitled to exercise their vested stock options pursuant to
  the terms of the grant, but all other unvested options and restricted stock
  would be forfeited.
  Upon a change of control, the named executive officers will become fully
  vested in their options and restricted stock and will have whatever period
  remains under the option in which to exercise their options. In addition, if any
  executive's employment is terminated by us for cause or by the executive without
  good reason in connection with a change of control, the executive will be
  entitled to receive an amount equal to the largest cash compensation paid to the
  executive for any twelve month period during his tenure multiplied by three. In
  general terms, a change of control occurs:
  - if a person, entity or affiliated group (with certain exceptions)
  acquires more than 50% of our then-outstanding voting securities;
  - if we merge into or complete a share exchange, consolidation or other
  business combination transaction with another entity unless the holders
  of our voting stock immediately prior to the merger have at least 50% of
  the combined voting power of the securities in the merged entity or its
  parent; or
  - upon the liquidation, dissolution, sale or disposition of all or
  substantially all of our assets such that after that transaction the
  holders of our voting stock immediately prior to the transaction own less
  than 50% of the voting securities of the acquiror or its parent.
  If payments become due as a result of a change in control and the excise
  tax imposed by Code Section 4999 applies, the terms of the employment agreements
  require us to gross up the amount payable to the executive by the amount of this
  excise tax plus the amount of income and other taxes due as a result of the
  gross up payment.
  For an 18 month period after termination of an executive's employment for
  any reason other than (i) termination by us without cause or (ii) termination by
  the executive for good reason, each of the executives under these employment
  agreements has agreed not to compete with us by working with or investing in,
  subject to certain limited exceptions, any enterprise engaged in a business
  substantially similar to our business as it was conducted during the period of
  the executive's employment with us.
  The employment agreements provide that these named executive officers are
  eligible to participate in our equity incentive plan, as described in the
  section below titled "Equity Incentive Plan." The employment agreements also
  provide that the named executive officers are eligible to receive annual bonuses
  under our bonus policy. See "Annual Incentive Bonus Policy."
  BENEFIT PLANS
  ANNUAL INCENTIVE BONUS POLICY
  We expect our compensation committee to adopt an annual cash incentive
  bonus policy. This policy will be subject to those provisions in our executive
  officers' employment agreements that provide that the executives will receive
  not less than 40% nor more than 100% of their base salaries under the policy.
  Our compensation committee will reevaluate the annual incentive bonus policy for
  our executive officers on an annual basis, subject to the maximum and minimum
  limitations previously described. In addition, the compensation committee may
  approve any additional bonus awards to any executive officer.
  Our board of directors has approved the adoption of a Section 401(k) plan
  covering our eligible employees. The plan will be a safe harbor plan providing
  that each participant must complete one year of service before becoming eligible
  for profit sharing contributions, we will match each dollar, dollar for dollar
  for the first 3%, then 50% for each dollar of the next 2%, of each participant's
  salary and participants' elective contributions and safe harbor contributions
  will be fully vested when made and profit sharing contributions will vest over
  three years.
  EQUITY INCENTIVE PLAN
  We have adopted the Amended and Restated Medical Properties Trust, Inc.
  2004 Equity Incentive Plan, or equity incentive plan, for the purpose of
  attracting and retaining directors, executive officers and other key employees
  and consultants, including officers and employees of our operating partnership.
  The equity incentive plan provides that the aggregate number of shares of common
  stock as to which awards can be made pursuant to the equity incentive plan is
  791,180. On April 25, 2005, our compensation committee awarded 82,000 shares of
  restricted stock to Mr. Stewart and certain non-management employees. These
  shares will vest 20% per year over five years beginning on April 25, 2006. There
  remain 490,680 shares available for awards under the equity incentive plan. We
  intend to seek stockholder approval of an amendment to the equity incentive plan
  at our 2005 annual meeting in order to increase the shares of common stock
  available under the plan.
  Awards.  The equity incentive plan authorizes the issuance of options to
  purchase shares of common stock, restricted stock awards, restricted stock
  units, deferred stock units, stock appreciation rights and performance units.
  The equity incentive plan contains an award limit on the maximum number of
  shares of common stock that may be awarded to an individual in any fiscal year
  of 300,000 shares.
  Vesting.  Our compensation committee will determine the vesting of options
  and restricted stock and restricted stock units granted under the equity
  incentive plan, subject to any different vesting provisions agreed upon in a
  participant's employment agreement. In addition, our compensation committee will
  establish a standard vesting schedule for options, restricted stock and
  restricted stock units subject to any different vesting schedule which is agreed
  upon in a participant's employment or award agreement.
  Options.  Each option granted pursuant to the equity incentive plan is
  designated at the time of grant as either an option intended to qualify as an
  incentive stock option under Section 422 of the Code, referred to as a qualified
  incentive option, or as an option that is not intended to so qualify, referred
  to as a non-qualified option. The equity incentive plan authorizes our
  compensation committee to grant incentive stock options for common stock in an
  amount and at an exercise price to be determined by it, provided that the price
  cannot be less than 100% of the fair market value of the common stock on the
  date on which the option is granted. If an incentive stock option is granted to
  a 10% stockholder, additional requirements will
  apply to the option. The exercise price of non-qualified options will be equal
  to 100% of the fair market value of common stock on the date the option is
  granted unless otherwise determined by our compensation committee. The exercise
  price for any option is generally payable in cash or, in certain circumstances,
  by the surrender, at the fair market value on the date on which the option is
  exercised, of shares of our common stock having a value equal to the exercise
  price. The equity incentive plan provides that exercise may be delayed or
  prohibited if it would adversely affect our status as a REIT. In addition, the
  equity incentive plan permits optionholders to exercise their options prior to
  the date on which the options will vest, subject to Committee action. In such
  case, the optionholder will, upon payment for the shares, receive restricted
  stock having vesting terms on transferability that are identical to the vesting
  terms under the original option and subject to repurchase by us while the
  restrictions on vesting are in effect.
  In connection with certain extraordinary events, the compensation committee
  may make adjustments in the aggregate number and kind of shares of capital stock
  reserved for issuance, the number and kind of shares of capital stock covered by
  outstanding awards and the exercise prices specified therein as may be
  determined to be appropriate.
  Restricted Stock.  The equity incentive plan also provides for the grant of
  restricted stock awards. A restricted stock award is an award of shares of
  common stock that is subject to restrictions on transferability and other
  restrictions, if any, as our compensation committee may impose at the date of
  grant. Shares of restricted common stock are subject to vesting as our
  compensation committee may approve or as may otherwise be agreed upon in a
  participant's employment or other award agreement. The restrictions may lapse
  separately or in combination at the times and under the circumstances, including
  without limitation, a specified period of employment or the satisfaction of
  pre-established criteria, in installments or otherwise, as our compensation
  committee may determine. Except to the extent restricted under the award
  agreement, a participant granted shares of restricted stock will have all of the
  rights of a stockholder, including, without limitation, the right to vote and
  the right to receive dividends on the restricted stock.
  Restricted Stock Units and Deferred Stock Units.  Under the equity
  incentive plan, the compensation committee may award restricted stock units and
  deferred stock units, each for the duration that it determines in its
  discretion. Each restricted stock unit and each deferred stock unit is
  equivalent in value to one share of common stock and entitles the participant
  receiving the award to receive one share of common stock for each restricted
  stock unit at the end of the vesting period applicable to such restricted stock
  unit and for each deferred stock unit at the end of the deferral period.
  Participants are not required to pay any additional consideration in connection
  with the settlement of restricted stock units or deferred stock units. A holder
  of restricted stock units or deferred stock units has no voting rights, right to
  receive cash distributions or other rights as a stockholder until shares of
  common stock are issued to the holder in settlement of the stock units. However,
  participants holding restricted stock units or deferred stock units will be
  entitled to receive dividend equivalents with respect to any payment of cash
  dividends on an equivalent number of shares of common stock. Such dividend
  equivalents will be credited in the form of additional stock units.
  Performance Units.  The equity incentive plan also provides for the grant
  of performance shares and performance units. Holders of performance units will
  be entitled to receive payment in cash or shares of our common stock (or in some
  combination of cash and shares) if the performance goals established by the
  compensation committee are achieved or the awards otherwise vest. Each
  performance unit will have an initial value established by the compensation
  committee. The compensation committee will set performance objectives, and such
  performance objectives may be based upon the achievement of company-wide,
  divisional or individual goals.
  Stock Appreciation Rights.  The equity incentive plan also authorizes our
  compensation committee to grant stock appreciation rights. Stock appreciation
  rights are awards that give the recipient the right to receive an amount equal
  to (1) the number of shares exercised under the right, multiplied by (2) the
  amount by which our stock price exceeds the exercise price. Payment may be in
  cash, in shares of our common stock with equivalent value, or in some
  combination, as determined by the administrator. The
  compensation committee will determine the exercise price, vesting schedule and
  other terms and conditions of stock appreciation rights; however, stock
  appreciation rights expire under the same rules that apply to stock options.
  Administration of the Plan.  The equity incentive plan is administered by
  our compensation committee. Mr. Aldag is to make recommendations to the
  compensation committee as to which consultants, employees, and executive
  officers, other than himself, will be eligible to participate, subject to
  compensation committee review and approval. The compensation committee, in its
  absolute discretion, will determine the effect of an employee's termination on
  unvested options, restricted common stock and restricted stock units, unless
  otherwise provided in the equity incentive plan or the participant's employment
  or award agreement.
  COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
  There are no compensation committee interlocks and none of our employees
  participates on the compensation committee.
  INSTITUTIONAL TRADING OF OUR COMMON STOCK
  The last sale of our common stock on the Portal(SM) Market occurred on May
  25, 2005 at a price of $10.05 per share. The following table shows the high and
  low sales prices for our common stock for each quarterly period since our common
  stock became eligible for trading in the Portal(SM) Market:
  HIGH SALES     LOW SALES
  PRICE         PRICE
  -----------   -----------
  April 6, 2004 to June 30, 2004..............................    $10.50        $10.00
  July 1, 2004 to September 30, 2004..........................     10.00         10.00
  October 1, 2004 to December 31, 2004........................     10.25         10.00
  January 1, 2005 to March 31, 2005...........................     10.25         10.00
  April 1, 2005 to May 25, 2005...............................     10.25         10.00
  PRINCIPAL STOCKHOLDERS
  The following table sets forth the beneficial ownership of our common stock
  as of June 2, 2005 by (i) each of our directors, (ii) each of our executive
  officers, (iii) all of our directors and executive officers as a group and (iv)
  each person known to us who is the beneficial owner of more than 5% of our
  common stock, as adjusted to give effect to the issuance of shares of restricted
  common stock issuable upon completion of this offering. The SEC has defined
  "beneficial" ownership of a security to mean the possession, directly or
  indirectly, of voting power or investment power. A stockholder is also deemed to
  be, as of any date, the beneficial owner of all securities that such stockholder
  has the right to acquire within 60 days after that date through (a) the exercise
  of any option, warrant or right, (b) the conversion of a security, (c) the power
  to revoke a trust, discretionary account or similar arrangement, or (d) the
  automatic termination of a trust, discretionary account or similar arrangement.
  Each beneficial owner named in the table has the sole voting and investment
  power with respect to all of the shares of our common stock shown as
  beneficially owned by such person, except as otherwise set forth in the notes to
  the table. Unless otherwise indicated, the address of each named beneficial
  owner is Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501,
  Birmingham, Alabama, 35242.
  ALL COMMON       PERCENTAGE OF ALL
  NUMBER OF SHARES         SHARES           COMMON SHARES
  NAME OF BENEFICIAL OWNER                BENEFICIALLY OWNED   (PRE-OFFERING)(1)   (POST-OFFERING)(1)
  ------------------------                ------------------   -----------------   ------------------
  Edward K. Aldag, Jr...................        282,217(2)            1.08%
  R. Steven Hamner......................         73,804(3)               *
  William G. McKenzie...................         97,680(4)               *
  Emmett E. McLean......................        105,207(5)               *
  Michael G. Stewart....................         30,000(6)               *
  Virginia A. Clarke....................          6,666(7)               *
  G. Steven Dawson......................         33,333(8)               *
  Bryan L. Goolsby......................          6,666(7)               *
  Robert E. Holmes, Ph.D. ..............         14,333(8)               *
  L. Glenn Orr, Jr. ....................          6,666(7)               *
  All executive officers and directors
  as a group (10 persons)..........        655,672(9)            2.50%
  Friedman, Billings, Ramsey Group,
  Inc.................................      2,843,023(10)          10.90%
  1001 Nineteenth St. North
  * Represents less than 1% of the number of shares of common stock outstanding.
  (1) Pre-offering calculations assume 26,164,862 shares of common stock
  outstanding as of June 2, 2005. Post-offering calculations assume
  shares of common stock outstanding. Shares of common stock that are deemed
  to be beneficially owned by a stockholder within 60 days after June 2, 2005
  are deemed outstanding for purposes of computing such stockholder's
  percentage ownership but are not deemed outstanding for the purpose of
  computing the percentage ownership of any other stockholder.
  (2) Excludes 43,500 shares of restricted common stock to be awarded upon
  completion of this offering.
  (6) These restricted shares of common stock will vest over five years, at a
  rate of 20% per year, beginning on April 25, 2006.
  (7) Includes 6,666 shares of common stock issuable upon exercise of a vested
  stock option.
  (8) Includes 13,333 shares of common stock issuable upon exercise of a vested
  (9) See notes (1)-(8) above.
  (10) Includes 1,795,571 shares of common stock owned directly by Friedman,
  Billings, Ramsey Group, Inc., the parent company of Friedman, Billings,
  Ramsey & Co., Inc., 52,452 shares owned directly by Friedman, Billings,
  Ramsey & Co., Inc. and 995,000 shares held by various investment funds over
  which Friedman, Billings, Ramsey Group, Inc., through a wholly-owned
  indirect subsidiary, exercises shared investment and voting power.
  We and our founders have agreed that the 521,908 shares of our common stock
  held by them that were issued in connection with our formation, which excludes
  the 36,000 shares in the aggregate that they
  purchased in our April 2004 private placement, will vest upon the effective date
  of the registration statement of which this prospectus is a part. In addition, a
  founder's unvested shares will become 100% vested if the founder's employment is
  terminated by that founder with good reason or by us without cause, upon the
  founder's death or disability or upon a change of control of the company prior
  to completion of this offering. A founder's unvested shares will be forfeited if
  the founder's employment with us is terminated by us for good cause or by the
  founder without good reason prior to completion of this offering.
  The following table sets forth the beneficial ownership of shares of common
  stock by the selling stockholders as of          , 2005, the maximum number of
  shares of common stock being offered by the selling stockholders under this
  prospectus and the beneficial ownership of shares of common stock by the selling
  stockholders on           , 2005 as adjusted to give effect to the sale of
  shares of common stock offered by this prospectus. The SEC has defined
  Shares of common stock may also be sold by donees, pledges or other transferees
  or successors in interest of the selling stockholder.
  Pursuant to a registration rights agreement between us and our existing
  stockholders, these stockholders have the right to sell in this offering all or
  a portion of their shares of common stock. In accordance with notices that we
  received pursuant to these registration rights, we are including
  shares of common stock in this offering.
  PERCENTAGE OF     BENEFICIAL OWNERSHIP
  NUMBER OF       MAXIMUM       ALL SHARES      AFTER RESALE OF SHARES
  SHARES       NUMBER OF     BENEFICIALLY    -------------------------
  BENEFICIALLY   SHARES BEING   OWNED BEFORE    NUMBER OF
  SELLING STOCKHOLDER                   OWNED         OFFERED        RESALE(1)      SHARES     PERCENTAGE(2)
  -------------------                ------------   ------------   -------------   ---------   -------------
  *  Represents less than 1%.
  (1) Assumes    shares of common stock outstanding as of        , 2005.
  (2) Assumes         shares of common stock outstanding as of         , 2005,
  including         shares of common stock issued in this offering.
  The purchasers of our common stock in our April 2004 private placement are
  entitled to the benefits of a registration rights agreement among the purchasers
  of our stock in that offering, Friedman, Billings, Ramsey & Co., Inc. and us. In
  accordance with the registration rights agreement, we have agreed to include
  shares held by     of these purchasers in this offering. At the request of us or
  the underwriters, the holders of our outstanding common stock not being sold in
  this offering will be prohibited from selling, contracting to sell or otherwise
  disposing of or hedging their common stock for specified periods of time
  following the date of this prospectus. These registration rights and lock-up
  agreements are described in detail below. The summary of the registration rights
  agreement is subject to and qualified in its entirety by reference to the
  registration rights agreement, a copy of which is filed as an exhibit to the
  registration statement of which this prospectus is a part. See "Where You Can
  Find More Information."
  Inclusion of Common Stock in this Offering.  On or about November 12, 2004,
  we sent to all of our stockholders notice that we have filed a registration
  statement with the SEC for this offering. We sent this notice pursuant to the
  registration rights agreement among our stockholders, Friedman, Billings, Ramsey
  & Co., Inc. and us, under which the persons who purchased our common stock in
  our private placement in April 2004 and their transferees have the right to sell
  in this offering all or a portion of their common stock, subject to various
  rights of the underwriters and other conditions referred to below.
  Because this offering is underwritten, the registration rights agreement:
  - requires the selling stockholders to enter into the underwriting
  agreement for this offering;
  - permits the underwriters, based on marketing factors, to limit the number
  of shares a selling stockholder may sell in this offering; and
  - conditions the selling stockholders' participation in this offering on
  compliance with applicable provisions of the registration rights
  agreement.
  Resale Registration Statement.  Pursuant to the registration rights
  agreement, we also agreed for the benefit of the holders of shares of common
  stock sold in our April 2004 private placement or issued to Friedman, Billings,
  Ramsey & Co., Inc. in connection with our April 2004 private placement, that we
  would, at our expense, file with the SEC, no later than nine months following
  the closing of the offering, or January 6, 2005, a resale registration statement
  permitting the public offering and sale of the registrable securities. The
  resale registration statement was filed on January 6, 2005. Pursuant to a
  registration rights agreement between us, Friedman, Billings, Ramsey & Co., Inc.
  and certain holders of our common stock, we are required to pay most expenses in
  connection with the registration of the shares of common stock purchased in the
  April 2004 private placement. In addition, we will reimburse selling
  stockholders in an aggregate amount of up to $50,000, for the fees and expenses
  of one counsel and one accounting firm, as selected by Friedman, Billings,
  Ramsey & Co., Inc. for the selling stockholders to review any registration
  statement. Each selling stockholder participating in this offering will bear a
  proportionate share based on the total number of shares of common stock sold in
  this offering of all discounts and commissions payable to the underwriters, all
  transfer taxes and transfer fees and any other expense of the selling
  stockholders not allocated to us in the registration rights agreement.
  In addition, we agreed to use our reasonable best efforts to cause the
  resale registration statement to become effective under the Securities Act as
  promptly as practicable after the filing and to maintain the resale registration
  statement continuously effective under the Securities Act until the first to
  occur of (1) such time as all of the shares of common stock covered by the
  resale registration statement have been sold pursuant to the registration
  statement or pursuant to Rule 144 (or any successor or analogous rule) under the
  Securities Act, (2) such time as all of the common stock not held by affiliates
  of us, and covered by the resale registration statement, are eligible for sale
  pursuant to Rule 144(k) (or any successor or analogous rule) under the
  Securities Act, (3) such time as the shares of common stock have been otherwise
  transferred, new certificates for them not bearing a legend restricting further
  transfer have been delivered by us and subsequent public distribution of such
  shares does not require registration, or (4) the second annual anniversary of
  the initial effective date of the resale registration statement.
  Notwithstanding the foregoing, we will be permitted, under limited
  circumstances, to suspend the use, from time to time, of the prospectus that is
  part of the resale registration statement, and therefore suspend sales under the
  registration statement, for certain periods, referred to as "blackout periods,"
  if a majority of the independent directors of our board, in good faith,
  determines that we are in compliance with the terms of the registration rights
  agreement, that it is in our best interest to suspend the use of the
  registration statement, and:
  - that the offer or sale of any registrable shares would materially impede,
  delay or interfere with any material proposed acquisition, merger, tender
  offer, business combination, corporate reorganization, consolidation or
  similar material transaction;
  - after the advice of counsel, sale of the registrable shares would require
  disclosure of non-public material information not otherwise required to
  be disclosed under applicable law; and
  - disclosure would have a material adverse effect on us or on our ability
  to close the applicable transaction.
  In addition, we may effect a blackout if a majority of independent
  directors of our board, in good faith, determines that we are in compliance with
  the terms of the registration rights agreement, that it is in our best interest
  to suspend the use of the registration statement, and, after advice of counsel,
  that it is required by law, rule or regulation to supplement the registration
  statement or file a post-effective amendment for the purposes of:
  - including in the registration statement any prospectus required under
  Section 10(a)(3) of the Securities Act;
  - reflecting any facts or events arising after the effective date of the
  registration statement that represents a fundamental change in
  information set forth therein; or
  - including any material information with respect to the plan of
  distribution or change to the plan of distribution not set forth therein.
  The cumulative blackout periods in any 12 month period commencing on the
  closing of the offering may not exceed an aggregate of 90 days and furthermore
  may not exceed 60 days in any 90 day period. We may not institute a blackout
  period more than three times in any 12 month period. Upon the occurrence of any
  blackout period, we are to use our reasonable best efforts to take all action
  necessary to promptly permit resumed use of the registration statement.
  If, among other matters, we fail to file a resale registration statement
  within nine months of the closing of the April 2004 private placement or fail to
  maintain its effectiveness, or, if our board of directors suspends the
  effectiveness of the resale registration statement in excess of the permitted
  blackout periods described above, the holders of registrable shares (other than
  our affiliates) will be entitled to receive liquidated damages from us for the
  period during which such failures or excess suspensions are continuing. The
  liquidated damages will accrue daily during the first 90 days of any such period
  at a rate of $0.25 per registrable share per year and will escalate by $0.25 per
  registrable share per year at the end of each 90 day period within any such
  period up to a maximum rate of $1.00 per registrable share per year. The
  liquidated damages will be payable quarterly, in arrears within ten days after
  the end of each applicable quarter.
  In connection with the registration of the shares sold in the April 2004
  private placement, we agreed to use our reasonable best efforts to list our
  common stock on the NYSE or the Nasdaq National Market and thereafter to
  maintain the listing.
  LOCK-UP AGREEMENTS
  of our stockholders other than our executive officers and directors agree not to
  sell or otherwise dispose of any of the shares of our common stock or securities
  released from the restrictions under the registration rights agreement.
  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  We were formed as a Maryland corporation on August 27, 2003 to succeed to
  the business of Medical Properties Trust, LLC, a Delaware limited liability
  company, which was formed by certain of our founders in December 2002. In
  connection with our formation, we issued our founders 1,630,435 shares of our
  common stock in exchange for nominal cash consideration and the membership
  interests of Medical Properties Trust, LLC. Upon completion of our private
  placement in April 2004, 1,108,527 shares of the 1,630,435 shares of common
  stock held by our founders were redeemed for nominal value and they now
  collectively hold 557,908 shares of our common stock, including shares purchased
  in our April 2004 private placement.
  James P. Bennett was formerly an owner, officer, director and consultant of
  the company's predecessor, Medical Properties Trust, LLC, but has not been
  affiliated with us since August 2003. Our predecessor had a consulting agreement
  with Mr. Bennett pursuant to which he was to be paid a monthly consulting fee,
  certain fringe benefits and, under certain circumstances, a fee based upon the
  completion of specified acquisition transactions. We believe we owe Mr. Bennett
  $411,238. Mr. Bennett disputes this amount and has notified us that he believes
  he is entitled to be paid consulting fees of approximately $1.6 million. We
  intend to vigorously defend against this claim.
  From time to time, we may acquire or develop facilities in transactions
  involving prospective tenants in which our directors or executive officers have
  an interest. In accordance with our written conflicts of interest policy, we do
  not intend to engage in these transactions without the approval of a majority of
  our disinterested directors.
  Conflicts of interest could arise in the future as a result of the
  relationships between us and our affiliates, on the one hand, and our operating
  partnership or any limited partner thereof, on the other. Our directors and
  officers have duties to our company and our stockholders under applicable
  Maryland law in connection with their management of our company. At the same
  time, we, through our wholly owned subsidiary, have fiduciary duties, as a
  general partner, to our operating partnership and to the limited partners under
  Delaware law in connection with the management of our operating partnership. Our
  duties, through our wholly owned subsidiary, as a general partner to our
  operating partnership and its partners may come into conflict with the duties of
  our directors and officers to our company and our stockholders. The partnership
  agreement of our operating partnership requires us to resolve such conflicts in
  favor of our stockholders.
  Pursuant to Maryland law, a contract or other transaction between us and a
  director or between us and any other corporation or other entity in which any of
  our directors is a director or has a material financial interest is not void or
  voidable solely on the grounds of such common directorship or interest, the
  presence of such director at the meeting at which the contract or transaction is
  authorized, approved or ratified or the counting of the director's vote in favor
  thereof. However, such transaction will not be void or voidable only if:
  - the material facts relating to the common directorship or interest and as
  to the transaction are disclosed to our board of directors or a committee
  of our board, and our board or committee authorizes, approves or ratifies
  the transaction or contract by the affirmative vote of a majority of
  disinterested directors, even if the disinterested directors constitute
  less than a quorum;
  to the transaction are disclosed to our stockholders entitled to vote
  thereon, and the transaction is authorized, approved or ratified by a
  majority of the votes cast by the stockholders entitled to vote (other
  than the votes of shares owned of record or beneficially by the
  interested director); or
  - the transaction or contract is fair and reasonable to us at the time it
  is authorized, ratified or approved.
  Furthermore, under Delaware law, where our operating partnership is formed,
  we, acting through the general partner, have a fiduciary duty to our operating
  partnership and, consequently, such transactions are also subject to the duties
  of care and loyalty that we, as a general partner, owe to limited partners in
  our operating partnership (to the extent such duties have not been eliminated
  pursuant to the terms of the partnership agreement). Where appropriate, in the
  judgment of the disinterested directors, our board of directors may obtain a
  fairness opinion, or engage independent counsel to represent the interests of
  non-affiliated security holders, although our board of directors will have no
  obligation to do so.
  RELATIONSHIP WITH ONE OF OUR UNDERWRITERS
  On November 13, 2003, we entered into an engagement letter agreement with
  Friedman, Billings, Ramsey & Co., Inc., one of the underwriters of this
  offering. The engagement letter gives Friedman, Billings, Ramsey & Co., Inc. the
  right to serve in the following capacities until April 2006:
  On March 31, 2004, we entered into a Purchase/Placement Agreement with
  Friedman, Billings, Ramsey & Co., Inc., pursuant to which Friedman, Billings,
  Ramsey & Co., Inc. acted as initial purchaser and sole placement agent for our
  April 2004 private placement and received aggregate initial purchaser discounts
  and placement fees of $17.7 million. In addition, we issued 260,954 shares of
  our common stock to Friedman, Billings, Ramsey & Co., Inc. as payment for
  financial advisory services. As of June 2, 2005, Friedman, Billing, Ramsey
  Group, Inc., an affiliate of Friedman, Billings, Ramsey & Co., Inc.,
  beneficially owned, directly or indirectly through affiliates, 2,843,023 shares
  of our common stock or approximately 10.90% of our outstanding common stock. We
  have an account with Friedman, Billings, Ramsey & Co., Inc. through which we
  manage approximately $69.7 million of our cash and cash equivalents.
  INVESTMENT POLICIES AND POLICIES
  WITH RESPECT TO CERTAIN ACTIVITIES
  The following is a discussion of our investment policies and our policies
  with respect to certain other activities, including financing matters and
  conflicts of interest. These policies may be amended or revised from time to
  time at the discretion of our board of directors, without a vote of our
  stockholders. Any change to any of these policies by our board of directors,
  however, would be made only after a thorough review and analysis of that change,
  in light of then-existing business and other circumstances, and then only if, in
  the exercise of its business judgment, our board of directors believes that it
  is advisable to do so in our and our stockholders' best interests. We cannot
  assure you that our investment objectives will be attained.
  INVESTMENTS IN REAL ESTATE OR INTERESTS IN REAL ESTATE
  We conduct our investment activities through our operating partnership and
  other subsidiaries. Our policy is to acquire or develop assets primarily for
  current income generation. In general, our investment strategy consists of the
  following elements:
  - Integral Healthcare Real Estate:  We acquire and develop net-leased
  healthcare facilities providing state-of-the-art healthcare services. In
  our experience, healthcare service providers, including physicians and
  hospital operating companies, choose to remain in an established location
  for relatively long periods since changing the location of their physical
  facilities does not assure that other critical components of the
  healthcare delivery system, such as laboratory support, access to
  specialized equipment, patient referral sources, nursing and other
  professional support, and patient convenience, will continue to be
  available at the same level of quality and efficiency. Consequently, we
  believe market conditions will remain favorable for long-term net-leased
  healthcare facilities, and we do not presently expect high levels of
  tenant turnover. Moreover, we believe that our partnering approach will
  afford us the opportunity to play an integral role in the strategic
  planning process for the financing of replacement facilities and the
  development of alternative uses for existing facilities.
  - Net-lease Strategy:  Our healthcare facilities are leased to healthcare
  operators pursuant to long-term net-lease agreements under which our
  tenants are responsible for virtually all costs of occupancy, including
  property taxes, utilities, insurance and maintenance. We believe an
  important investment consideration is that our leases to healthcare
  operators provide a means for us to participate in the anticipated growth
  of the healthcare sector of the United States economy. Our leases
  generally provide for either contractual annual rent increases ranging
  from 1.0% to 3.0% and, where feasible and in compliance with applicable
  healthcare laws and regulations, percentage rent. We expect that such
  rental rate adjustments will provide us with significant internal growth.
  - Diversified Investment Strategy:  Our facilities and the Pending
  Acquisition and Development Facilities are diversified geographically, by
  service type within the healthcare industry and by types of operator. We
  have invested and intend to invest in a portfolio of net-leased
  healthcare facilities providing state-of-the-art healthcare services. Our
  facilities and Pending Acquisition and Development Facilities include new
  and established facilities, both small and large facilities, including
  surgical centers, regional and community hospitals, medical office
  buildings and specialized single-discipline facilities. Our facilities
  are and we expect will continue to be located across the country. In
  addition, our tenants and prospective tenants are diversified across many
  healthcare service areas. Because of the expected diversity of our
  facilities in terms of facility type, geographic location and tenant, we
  believe that our financial performance is less likely to be materially
  affected by changes in reimbursement or payment rates by private or
  public insurers or by changes in local or regional economies.
  - Financing Strategy:  We intend to employ leverage in our capital
  structure in amounts determined from time to time by our board of
  directors. At present, we intend to limit our debt to
  approximately 60% of the aggregate costs of our facilities, although we
  may temporarily exceed that level from time to time. We expect our
  borrowings to be a combination of long-term, fixed-rate, non-recourse
  mortgage loans, variable-rate secured term and revolving credit
  facilities, and other fixed and variable-rate short to medium-term loans.
  There are no limitations on the amount or percentage of our total assets
  that may be invested in any one facility. Additionally, no limits have been set
  on the concentration of investments in any one location or facility type or with
  any one tenant. Our current policy requires the approval of our board of
  directors for acquisitions or developments of facilities which exceed $10
  We believe that adherence to the investment strategy outlined above will
  allow us to achieve the following objectives:
  - increase in our stock value through increases in the cash flows and
  values of our facilities;
  - achievement of long-term capital appreciation, and preservation and
  protection of the value of our interest in our facilities; and
  - providing regular cash distributions to our stockholders, a portion of
  which may constitute a nontaxable return of capital because it will
  exceed our current and accumulated earnings and profits, as well as
  providing growth in distributions over time.
  INVESTMENTS IN SECURITIES OF OR INTERESTS IN PERSONS PRIMARILY ENGAGED IN REAL
  ESTATE ACTIVITIES AND OTHER ISSUERS
  Generally speaking, we do not expect to engage in any significant
  investment activities with other entities, although we may consider joint
  venture investments with other investors or with healthcare service providers.
  We may also invest in the securities of other issuers in connection with
  acquisitions of indirect interests in facilities (normally general or limited
  partnership interests in special purpose partnerships owning facilities). We may
  in the future acquire some, all or substantially all of the securities or assets
  of other REITs or similar entities where that investment would be consistent
  with our investment policies and the REIT qualification requirements. There are
  no limitations on the amount or percentage of our total assets that may be
  invested in any one issuer, other than those imposed by the gross income and
  asset tests that we must satisfy to qualify as a REIT. However, we do not
  anticipate investing in other issuers of securities for the purpose of
  exercising control or acquiring any investments primarily for sale in the
  ordinary course of business or holding any investments with a view to making
  short-term profits from their sale. In any event, we do not intend that our
  investments in securities will require us to register as an "investment company"
  under the Investment Company Act, and we intend to divest securities before any
  registration would be required.
  We do not intend to engage in trading, underwriting, agency distribution or
  sales of securities of other issuers.
  Although we have no current plans to dispose of any of our facilities, we
  will consider doing so, subject to REIT qualification rules and prohibited
  transaction tax, if our management determines that a sale of a facility would be
  in our best interests based on the price being offered for the facility, the
  operating performance of the facility, the tax consequences of the sale and
  other factors and circumstances surrounding the proposed sale. In addition, our
  tenants have, and we expect that some or all of our prospective tenants will
  have, the option to acquire the facilities at the end of or, in some cases,
  during the lease term.
  FINANCING POLICIES
  We intend to employ leverage in our capital structure in amounts we
  determine from time to time. At present, we intend to limit our debt to
  approximately 60% of the aggregate costs of our facilities, although
  we may temporarily exceed that level from time to time. We expect our borrowings
  to be a combination of long-term, fixed-rate, non-recourse mortgage loans,
  variable-rate short to medium-term loans. Our board of directors considers a
  number of factors when evaluating our level of indebtedness and when making
  decisions regarding the incurrence of indebtedness, including the purchase price
  of facilities to be acquired, the estimated market value of our facilities and
  the ability of particular facilities, and our company as a whole, to generate
  cash flow to cover expected debt service.
  Any of this indebtedness may be unsecured or may be secured by mortgages or
  other interests in our facilities, and may be recourse, non-recourse or
  cross-collateralized and, if recourse, that recourse may include our general
  assets and, if non-recourse, may be limited to the particular facility to which
  the indebtedness relates. In addition, we may invest in facilities subject to
  existing loans secured by mortgages or similar liens on the facilities, or may
  refinance facilities acquired on a leveraged basis. We may use the proceeds from
  any borrowings for working capital, to purchase additional interests in
  partnerships or joint ventures in which we participate, to refinance existing
  indebtedness or to finance acquisitions, expansion, redevelopment of existing
  facilities or development of new facilities. We may also incur indebtedness for
  other purposes when, in the opinion of our board of directors, it is advisable
  to do so. In addition, we may need to borrow to meet the taxable income
  distribution requirements under the Code if we do not have sufficient cash
  available to meet those distribution requirements.
  LENDING POLICIES
  We do not have a policy limiting our ability to make loans to persons other
  than our executive officers. We may consider offering purchase money financing
  in connection with the sale of facilities where the provision of that financing
  will increase the value to be received by us for the facility sold. We may make
  loans to joint ventures in which we may participate in the future. Although we
  do not intend to engage in significant lending activities in the future, we have
  and may in the future make acquisition and working capital loans to prospective
  tenants as well as mortgage loans to other facility owners. See
  "Summary -- Loans and Fees Receivable."
  EQUITY CAPITAL POLICIES
  Subject to applicable law, our board of directors has the authority,
  without further stockholder approval, to issue additional shares of authorized
  common stock and preferred stock or otherwise raise capital, including through
  the issuance of senior securities, in any manner and on the terms and for the
  consideration it deems appropriate, including in exchange for property. Existing
  stockholders will have no preemptive right to additional shares issued in any
  offering, and any offering might cause a dilution of investment. We may in the
  future issue common stock in connection with acquisitions. We also may issue
  limited partnership units in our operating partnership or equity interests in
  other subsidiaries in connection with acquisitions of facilities or otherwise.
  Our board of directors may authorize the issuance of preferred stock with
  terms and conditions that could have the effect of delaying, deterring or
  preventing a transaction or a change in control in us that might involve a
  premium price for holders of our common stock or otherwise might be in their
  best interests. Additionally, any shares of preferred stock could have dividend,
  voting, liquidation and other rights and preferences that are senior to those of
  our common stock.
  We may, under certain circumstances, purchase our common stock in the open
  market or in private transactions with our stockholders, if those purchases are
  approved by our board of directors. Our board of directors has no present
  intention of causing us to repurchase any shares, and any action would only be
  taken in conformity with applicable federal and state laws and the applicable
  requirements for qualifying as a REIT.
  In the future we may institute a dividend reinvestment plan, which would
  allow our stockholders to acquire additional common stock by automatically
  reinvesting their cash dividends. Shares would be acquired pursuant to the plan
  at a price equal to the then prevailing market price, without payment of
  brokerage commissions or service charges. Stockholders who do not participate in
  the plan will continue to receive cash dividends as declared and paid.
  CODE OF ETHICS AND CONFLICT OF INTEREST POLICY
  We have adopted written policies that are intended to minimize actual or
  potential conflicts of interest. However, we cannot assure you that these
  policies will be successful in eliminating the influence of these conflicts. Our
  code of ethics and business conduct, or code of ethics, requires our directors,
  officers and employees to conduct themselves in a manner that avoids even the
  appearance of a conflict of interest, and to discuss any transaction or
  relationship that reasonably could be expected to give rise to a conflict of
  interest with our code of ethics contact person. Our code of ethics also
  addresses insider trading, company funds and property, corporate opportunities
  and fair dealing.
  In addition, we have adopted a policy that requires that all contracts and
  transactions between us, our operating partnership or any of our subsidiaries,
  on the one hand, and any of our directors or executive officers or any entity in
  which such director or executive officer is a director or has a material
  financial interest, on the other hand, must be approved by the affirmative vote
  of a majority of our disinterested directors.
  The following summary of the material provisions of our capital stock is
  subject to and qualified in its entirety by reference to the Maryland general
  corporation law, or MGCL, and our charter and bylaws. Copies of our charter and
  bylaws are filed as exhibits to the registration statement of which this
  prospectus is a part. We recommend that you review these documents. See "Where
  You Can Find More Information."
  AUTHORIZED STOCK
  Our charter authorizes us to issue up to 100,000,000 shares of common
  stock, par value $.001 per share, and 10,000,000 shares of preferred stock, par
  value $.001 per share. Upon completion of this offering, there will be
  shares of common stock issued and outstanding and no shares of
  preferred stock issued and outstanding. Our charter authorizes our board of
  directors to increase the aggregate number of authorized shares or the number of
  shares of any class or series without stockholder approval. Under Maryland law,
  stockholders generally are not liable for the corporation's debts or
  obligations.
  All shares of our common stock offered hereby will be duly authorized,
  fully paid and nonassessable. Subject to the preferential rights of any other
  class or series of stock and to the provisions of our charter regarding the
  restrictions on transfer of stock, holders of shares of our common stock are
  entitled to receive dividends on such stock when, as and if authorized by our
  board of directors out of funds legally available therefor and declared by us
  and to share ratably in the assets of our company legally available for
  distribution to our stockholders in the event of our liquidation, dissolution or
  winding up after payment of or adequate provision for all known debts and
  liabilities of our company, including the preferential rights on dissolution of
  any class or classes of preferred stock.
  Subject to the provisions of our charter regarding the restrictions on
  transfer of stock, each outstanding share of our common stock entitles the
  holder to one vote on all matters submitted to a vote of stockholders, including
  the election of directors and, except as provided with respect to any other
  class or series of stock, the holders of such shares will possess the exclusive
  voting power. There is no cumulative voting in the election of our board of
  directors. Our directors are elected by a plurality of the votes cast at a
  meeting of stockholders at which a quorum is present.
  Holders of shares of our common stock have no preference, conversion,
  exchange, sinking fund, redemption or appraisal rights and have no preemptive
  rights to subscribe for any securities of our company. Subject to the provisions
  of our charter regarding the restrictions on transfer of stock, shares of our
  common stock will have equal dividend, liquidation and other rights.
  Under the MGCL, a Maryland corporation generally cannot dissolve, amend its
  charter, merge, consolidate, sell all or substantially all of its assets, engage
  in a share exchange or engage in similar transactions outside the ordinary
  course of business unless approved by the corporation's board of directors and
  by the affirmative vote of stockholders holding at least two-thirds of the
  shares entitled to vote on the matter unless a lesser percentage (but not less
  than a majority of all of the votes entitled to be cast on the matter) is set
  forth in the corporation's charter. Our charter does not provide for a lesser
  percentage for these matters. However, Maryland law permits a corporation to
  transfer all or substantially all of its assets without the approval of the
  stockholders of the corporation to one or more persons if all of the equity
  interests of the person or persons are owned, directly or indirectly, by the
  corporation. Because operating assets may be held by a corporation's
  subsidiaries, as in our situation, this may mean that a subsidiary of a
  corporation can transfer all of its assets without a vote of the corporation's
  Our charter authorizes our board of directors to reclassify any unissued
  shares of our common stock into other classes or series of classes of stock and
  to establish the number of shares in each class or series and to set the
  preferences, conversion and other rights, voting powers, restrictions,
  limitations as to dividends or other distributions, qualifications or terms or
  conditions of redemption for each such class or series.
  Our charter authorizes our board of directors to classify any unissued
  shares of preferred stock and to reclassify any previously classified but
  unissued shares of any series. Prior to issuance of shares of each series, our
  board of directors is required by the MGCL and our charter to set the terms,
  preferences, conversion or other rights, voting powers, restrictions,
  limitations as to dividends or other distributions, qualifications and terms and
  conditions of redemption for each such series. Thus, our board of directors
  could authorize the issuance of shares of preferred stock with terms and
  conditions which could have the effect of delaying, deferring or preventing a
  change of control transaction that might involve a premium price for holders of
  our common stock or which holders might believe to otherwise be in their best
  interest. As of the date hereof, no shares of preferred stock are outstanding,
  and we have no current plans to issue any preferred stock.
  On April 7, 2004, we granted an unregistered warrant for 35,000 shares of
  common stock, with an exercise price of $9.30 per share, to an unaffiliated
  third party. The warrant is fully vested, and may be exercised at any time until
  the first to occur of a sale of all or substantially all of our assets or a
  similar transaction, the closing of our initial public offering or April 7,
  2009. We are required to give the warrantholder notice at least 10 days prior to
  the closing of this offering.
  POWER TO INCREASE AUTHORIZED STOCK AND ISSUE ADDITIONAL SHARES OF OUR COMMON
  STOCK AND PREFERRED STOCK
  We believe that the power of our board of directors, without stockholder
  approval, to increase the number of authorized shares of stock, issue additional
  authorized but unissued shares of our common stock or preferred stock and to
  classify or reclassify unissued shares of our common stock or preferred stock
  and thereafter to cause us to issue such classified or reclassified shares of
  stock will provide us with flexibility in structuring possible future financings
  and acquisitions and in meeting other needs which might arise. The additional
  classes or series, as well as the common stock, will be available for issuance
  without further action by our stockholders, unless stockholder consent is
  required by applicable law or the rules of any national securities exchange or
  automated quotation system on which our securities may be listed or traded.
  In order for us to qualify as a REIT under the Code, not more than 50% of
  the value of the outstanding shares of our stock may be owned, actually or
  constructively, by five or fewer individuals (as defined in the Code to include
  certain entities) during the last half of a taxable year (other than the first
  year for which an election to be a REIT has been made by us). In addition, if
  we, or one or more owners (actually or constructively) of 10% or more of our
  stock, actually or constructively owns 10% or more of a tenant of ours (or a
  tenant of any partnership in which we are a partner), the rent received by us
  (either directly or through any such partnership) from such tenant will not be
  qualifying income for purposes of the REIT gross income tests of the Code. Our
  stock must also be beneficially owned by 100 or more persons during at least 335
  days of a taxable year of 12 months or during a proportionate part of a shorter
  taxable year (other than the first year for which an election to be a REIT has
  been made by us).
  Our charter contains restrictions on the ownership and transfer of our
  capital stock that are intended to assist us in complying with these
  requirements and continuing to qualify as a REIT. The relevant sections of our
  charter provide that, effective upon completion of this offering and subject to
  the exceptions described below, no person or persons acting as a group may own,
  or be deemed to own by virtue of the attribution provisions of the Code, more
  than (i) 9.8% of the number or value, whichever is more restrictive, of the
  outstanding shares of our common stock or (ii) 9.8% of the number or value,
  whichever is more restrictive, of the issued and outstanding preferred or other
  shares of any class or series of our stock. We refer to this restriction as the
  "ownership limit." The ownership limitation in our charter is more restrictive
  than the restrictions on ownership of our common stock imposed by the Code.
  The ownership attribution rules under the Code are complex and may cause
  stock owned actually or constructively by a group of related individuals or
  entities to be owned constructively by one individual or entity. As a result,
  the acquisition of less than 9.8% of our common stock (or the acquisition of an
  interest in an entity that owns, actually or constructively, our common stock)
  by an individual or entity could nevertheless cause that individual or entity,
  or another individual or entity, to own constructively in excess of 9.8% of our
  outstanding common stock and thereby subject the common stock to the ownership
  limit.
  Our board of directors may, in its sole discretion, waive the ownership
  limit with respect to one or more stockholders if it determines that such
  ownership will not jeopardize our status as a REIT (for example, by causing any
  tenant of ours to be considered a "related party tenant" for purposes of the
  REIT qualification rules).
  As a condition of our waiver, our board of directors may require an opinion
  of counsel or IRS ruling satisfactory to our board of directors and
  representations or undertakings from the applicant with respect to preserving
  our REIT status.
  In connection with the waiver of the ownership limit or at any other time,
  our board of directors may decrease the ownership limit for all other persons
  and entities; provided, however, that the decreased ownership limit will not be
  effective for any person or entity whose percentage ownership in our capital
  stock is in excess of such decreased ownership limit until such time as such
  person or entity's percentage of our capital stock equals or falls below the
  decreased ownership limit, but any further acquisition of our capital stock in
  excess of such percentage ownership of our capital stock will be in violation of
  the ownership limit. Additionally, the new ownership limit may not allow five or
  fewer "individuals" (as defined for purposes of the REIT ownership restrictions
  under the Code) to beneficially own more than 49.5% of the value of our
  outstanding capital stock.
  Our charter generally prohibits:
  - any person from actually or constructively owning shares of our capital
  stock that would result in us being "closely held" under Section 856(h)
  of the Code; and
  - any person from transferring shares of our capital stock if such transfer
  would result in shares of our stock being beneficially owned by fewer
  than 100 persons (determined without reference to any rules of
  attribution).
  Any person who acquires or attempts or intends to acquire beneficial or
  constructive ownership of shares of our common stock that will or may violate
  any of the foregoing restrictions on transferability and ownership will be
  required to give notice immediately to us and provide us with such other
  information as we may request in order to determine the effect of such transfer
  on our status as a REIT. The foregoing provisions on transferability and
  ownership will not apply if our board of directors determines that it is no
  longer in our best interests to attempt to qualify, or to continue to qualify,
  as a REIT.
  Pursuant to our charter, if any purported transfer of our capital stock or
  any other event would otherwise result in any person violating the ownership
  limits or the other restrictions in our charter, then any such purported
  transfer will be void and of no force or effect with respect to the purported
  transferee or owner (collectively referred to hereinafter as the "purported
  owner") as to that number of shares in excess of the ownership limit (rounded up
  to the nearest whole share). The number of shares in excess of the ownership
  limit will be automatically transferred to, and held by, a trust for the
  exclusive benefit of one or more charitable organizations selected by us. The
  trustee of the trust will be designated by us and must be unaffiliated with us
  and with any purported owner. The automatic transfer will be effective as of the
  close of business on the business day prior to the date of the violative
  transfer or other event that results in a transfer to the trust. Any dividend or
  other distribution paid to the purported owner, prior to our discovery that the
  shares had been automatically transferred to a trust as described above, must be
  repaid to the trustee upon demand for distribution to the beneficiary of the
  trust and all dividends and other distributions paid by us with respect to such
  "excess" shares prior to the sale by the trustee of such shares shall be paid to
  the trustee for the beneficiary. If the transfer to the trust as described above
  is not automatically effective, for any reason, to prevent violation of the
  applicable ownership limit, then our
  charter provides that the transfer of the excess shares will be void. Subject to
  Maryland law, effective as of the date that such excess shares have been
  transferred to the trust, the trustee shall have the authority (at the trustee's
  sole discretion and subject to applicable law) (i) to rescind as void any vote
  cast by a purported owner prior to our discovery that such shares have been
  transferred to the trust and (ii) to recast such vote in accordance with the
  desires of the trustee acting for the benefit of the beneficiary of the trust,
  provided that if we have already taken irreversible action, then the trustee
  shall not have the authority to rescind and recast such vote.
  Shares of our capital stock transferred to the trustee are deemed offered
  for sale to us, or our designee, at a price per share equal to the lesser of (i)
  the price paid by the purported owner for the shares (or, if the event which
  resulted in the transfer to the trust did not involve a purchase of such shares
  of our capital stock at market price, the market price on the day of the event
  which resulted in the transfer of such shares of our capital stock to the trust)
  and (ii) the market price on the date we, or our designee, accepts such offer.
  We have the right to accept such offer until the trustee has sold the shares of
  our capital stock held in the trust pursuant to the provisions discussed below.
  Upon a sale to us, the interest of the charitable beneficiary in the shares sold
  terminates and the trustee must distribute the net proceeds of the sale to the
  purported owner and any dividends or other distributions held by the trustee
  with respect to such capital stock will be paid to the charitable beneficiary.
  If we do not buy the shares, the trustee must, within 20 days of receiving
  notice from us of the transfer of shares to the trust, sell the shares to a
  person or entity designated by the trustee who could own the shares without
  violating the ownership limits. After that, the trustee must distribute to the
  purported owner an amount equal to the lesser of (i) the net price paid by the
  purported owner for the shares (or, if the event which resulted in the transfer
  to the trust did not involve a purchase of such shares at market price, the
  market price on the day of the event which resulted in the transfer of such
  shares of our capital stock to the trust) and (ii) the net sales proceeds
  received by the trust for the shares. Any proceeds in excess of the amount
  distributable to the purported owner will be distributed to the beneficiary.
  All persons who own, directly or by virtue of the attribution provisions of
  the Code, more than 5% (or such other percentage as provided in the regulations
  promulgated under the Code) of the lesser of the number or value of the shares
  of our outstanding capital stock must give written notice to us within 30 days
  after the end of each calendar year. In addition, each stockholder will, upon
  demand, be required to disclose to us in writing such information with respect
  to the direct, indirect and constructive ownership of shares of our stock as our
  board of directors deems reasonably necessary to comply with the provisions of
  the Code applicable to a REIT, to comply with the requirements or any taxing
  authority or governmental agency or to determine any such compliance.
  All certificates representing shares of our capital stock will bear a
  legend referring to the restrictions described above.
  These ownership limits could delay, defer or prevent a transaction or a
  change of control of our company that might involve a premium price over the
  then prevailing market price for the holders of some, or a majority, of our
  outstanding shares of common stock or which such holders might believe to be
  otherwise in their best interest.
  TRANSFER AGENT AND REGISTRAR
  The transfer agent and registrar for our common stock is American Stock
  Transfer and Trust Co.
  OUR CHARTER AND BYLAWS
  The following is a summary of certain provisions of Maryland law and of our
  charter and bylaws. For a complete description, we refer you to the applicable
  Maryland laws and to our charter and bylaws, copies of which are exhibits to the
  Our charter and bylaws provide that the number of our directors is to be
  established by our board of directors but may not be fewer than one nor more
  than 15. Currently, our board is comprised of seven directors. Any vacancy,
  other than one resulting from an increase in the number of directors, may be
  filled, at any regular meeting or at any special meeting called for that
  purpose, by a majority of the remaining directors, though less than a quorum.
  Any vacancy resulting from an increase in the number of our directors must be
  filled by a majority of the entire board of directors. A director elected to
  fill a vacancy shall be elected to serve until the next election of directors
  and until his successor shall be elected and qualified.
  Pursuant to our charter, each member of our board of directors is elected
  until the next annual meeting of stockholders and until his successor is
  elected, with the current members' terms expiring at the annual meeting of
  stockholders to be held in 2005. Holders of shares of our common stock have no
  right to cumulative voting in the election of directors. Consequently, at each
  annual meeting of stockholders, all of the members of our board of directors
  will stand for election and our directors will be elected by a plurality of
  votes cast. Directors may be removed with or without cause by the affirmative
  vote of two-thirds of the votes entitled to be cast in the election of
  BUSINESS COMBINATIONS
  Maryland law prohibits "business combinations" between a Maryland
  corporation and an interested stockholder or an affiliate of an interested
  stockholder for five years after the most recent date on which the interested
  stockholder becomes an interested stockholder. These business combinations
  include a merger, consolidation, share exchange, or, in circumstances specified
  in the statute, certain transfers of assets, certain stock issuances and
  reclassifications. Maryland law defines an interested stockholder as:
  - any person who beneficially owns 10% or more of the voting power of the
  corporation's voting stock; or
  - an affiliate or associate of the corporation who, at any time within the
  two-year period prior to the date in question, was the beneficial owner
  of 10% or more of the voting power of the then-outstanding voting stock
  of the corporation.
  A person is not an interested stockholder if the board of directors
  approves in advance the transaction by which the person otherwise would have
  become an interested stockholder. However, in approving the transaction, the
  board of directors may provide that its approval is subject to compliance, at or
  after the time of approval, with any terms and conditions determined by the
  board of directors.
  After the five year prohibition, any business combination between a
  corporation and an interested stockholder generally must be recommended by the
  board of directors and approved by the affirmative vote of at least:
  - 80% of the votes entitled to be cast by holders of the then outstanding
  shares of voting stock; and
  - two-thirds of the votes entitled to be cast by holders of the voting
  stock other than shares held by the interested stockholder with whom or
  with whose affiliate the business combination is to be effected or shares
  held by an affiliate or associate of the interested stockholder.
  These super-majority vote requirements do not apply if stockholders receive
  a minimum price, as defined under Maryland law, for their shares in the form of
  cash or other consideration in the same form as previously paid by the
  interested stockholder for its shares.
  The statute permits various exemptions from its provisions, including
  business combinations that are approved by the board of directors before the
  time that the interested stockholder becomes an interested stockholder.
  As permitted by Maryland law, our charter includes a provision excluding
  our company from these provisions of the MGCL and, consequently, the five-year
  prohibition and the super-majority vote requirements will not apply to business
  combinations between us and any interested stockholder of ours unless we later
  amend our charter, with stockholder approval, to modify or eliminate this
  exclusion provision. We believe that our ownership restrictions will
  substantially reduce the risk that a stockholder would become an "interested
  stockholder" within the meaning of the Maryland business combination statute.
  There can be no assurance, however, that we will not opt into the business
  combination provisions of the MGCL at a future date.
  CONTROL SHARE ACQUISITIONS
  The MGCL provides that "control shares" of a Maryland corporation acquired
  in a "control share acquisition" have no voting rights except to the extent
  approved at a special meeting by the affirmative vote of two-thirds of the votes
  entitled to be cast on the matter. Shares owned by the acquiror or by officers
  or directors who are our employees are excluded from shares entitled to vote on
  the matter. "Control shares" are voting shares which, if aggregated with all
  other shares previously acquired by the acquirer or in respect of which the
  acquirer is able to exercise or direct the exercise of voting power except
  solely by virtue of a revocable proxy, would entitle the acquirer to exercise
  voting power in electing directors within one of the following ranges of voting
  power: (i) one-tenth or more but less than one-third, (ii) one-third or more but
  less than a majority, or (iii) a majority or more of all voting power. Control
  shares do not include shares the acquiring person is then entitled to vote as a
  result of having previously obtained stockholder approval. A "control share
  acquisition" means the acquisition of control shares, subject to certain
  A person who has made or proposes to make a control share acquisition, upon
  satisfaction of certain conditions, including an undertaking to pay expenses,
  may compel a corporation's board of directors to call a special meeting of
  stockholders to be held within 50 days of demand to consider the voting rights
  of the shares. If no request for a meeting is made, the corporation may itself
  present the question at any stockholders meeting.
  If voting rights are not approved at the meeting or if the acquiring person
  does not deliver an acquiring person statement as required by Maryland law,
  then, subject to certain conditions and limitations, the corporation may redeem
  any or all of the control shares, except those for which voting rights have
  previously been approved, for fair value determined, without regard to the
  absence of voting rights for the control shares, as of the date of the last
  control share acquisition by the acquirer or of any meeting of stockholders at
  which the voting rights of such shares are considered and not approved. If
  voting rights for control shares are approved at a stockholders meeting and the
  acquirer becomes entitled to vote a majority of the shares entitled to vote,
  then all other stockholders are entitled to demand and receive fair value for
  their stock, or provided for in the "dissenters" rights provisions of the MGCL
  may exercise appraisal rights. The fair value of the shares as determined for
  purposes of such appraisal rights may not be less than the highest price per
  share paid by the acquirer in the control share acquisition.
  The control share acquisition statute does not apply (i) to shares acquired
  in a merger, consolidation or share exchange if the corporation is a party to
  the transaction or (ii) to acquisitions approved or exempted by the charter or
  bylaws of the corporation.
  Our charter contains a provision exempting from the control share
  acquisition statute any and all acquisitions by any person of our stock. There
  can be no assurance that we will not opt into the control share acquisition
  provisions of the MGCL in the future.
  MARYLAND UNSOLICITED TAKEOVERS ACT
  Maryland law also permits Maryland corporations that are subject to the
  Exchange Act and have at least three outside directors to elect by resolution of
  the board of directors or by provision in its charter or bylaws to be subject to
  some corporate governance provisions that may be inconsistent with the
  corporation's charter and bylaws. Under the applicable statute, a board of
  directors may classify itself without the vote of stockholders. A board of
  directors classified in that manner cannot be altered by amendment to the
  charter of the corporation. Further, the board of directors may, by electing
  into applicable statutory provisions and notwithstanding the charter or bylaws:
  - provide that a special meeting of the stockholders will be called only at
  the request of stockholders entitled to cast at least a majority of the
  votes entitled to be cast at the meeting;
  - reserve for itself the right to fix the number of directors;
  - provide that a director may be removed only by the vote of the holders of
  two-thirds of the stock entitled to vote;
  - retain for itself sole authority to fill vacancies created by the death,
  removal or resignation of a director; and
  - provide that all vacancies on the board of directors may be filled only
  by the affirmative vote of a majority of the remaining directors, in
  office, even if the remaining directors do not constitute a quorum for
  the remainder of the full term of the class of directors in which the
  vacancy occurred.
  A board of directors may implement all or any of these provisions without
  amending the charter or bylaws and without stockholder approval. A corporation
  may be prohibited by its charter or by resolution of its board of directors from
  electing any of the provisions of the statute. We are not prohibited from
  implementing any or all of these provisions. While certain of these provisions
  are already addressed by our charter and bylaws, the law would permit our board
  of directors to override further changes to the charter or bylaws. If
  implemented, these provisions could discourage offers to acquire our stock and
  could increase the difficulty of completing an offer.
  AMENDMENT TO OUR CHARTER
  Our charter may be amended only if declared advisable by the board of
  directors and approved by the affirmative vote of the holders of at least
  two-thirds of all of the votes entitled to be cast on the matter except that
  after June 1, 2005, our board of directors will be able, without stockholder
  approval to amend our charter to change our corporate name or the name or
  designation or par value of any class or series of stock.
  DISSOLUTION OF OUR COMPANY
  A voluntary dissolution of our company must be declared advisable by a
  majority of the entire board of directors and approved by the affirmative vote
  of the holders of at least two-thirds of all of the votes entitled to be cast on
  the matter.
  ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS
  Our bylaws provide that:
  - with respect to an annual meeting of stockholders, the only business to
  be considered and the only proposals to be acted upon will be those
  properly brought before the annual meeting:
  - pursuant to our notice of the meeting;
  - by, or at the direction of, a majority of our board of directors; or
  - by a stockholder who is entitled to vote at the meeting and has complied
  with the advance notice procedures set forth in our bylaws;
  - with respect to special meetings of stockholders, only the business
  specified in our company's notice of meeting may be brought before the
  meeting of stockholders unless otherwise provided by law; and
  - nominations of persons for election to our board of directors at any
  annual or special meeting of stockholders may be made only:
  - by, or at the direction of, our board of directors; or
  with the advance notice provisions set forth in our bylaws.
  Generally, under our bylaws, a stockholder seeking to nominate a director
  or bring other business before our annual meeting of stockholders must deliver a
  notice to our secretary not later than the close of business on the 90th day nor
  earlier than the close of business on the 120th day prior to the first
  anniversary of the date of mailing of the notice to stockholders for the prior
  year's annual meeting. For a stockholder seeking to nominate a candidate for our
  board of directors, the notice must describe various matters regarding the
  nominee, including name, address, occupation and number of shares of common
  stock held, and other specified matters. For a stockholder seeking to propose
  other business, the notice must include a description of the proposed business,
  the reasons for the proposal and other specified matters.
  INDEMNIFICATION AND LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY
  corporation and its stockholders for money damages except for liability
  resulting from actual receipt of an improper benefit or profit in money,
  property or services or active and deliberate dishonesty established by a final
  judgment as being material to the cause of action. Our charter limits the
  personal liability of our directors and officers for monetary damages to the
  fullest extent permitted under current Maryland law, and our charter and bylaws
  provide that a director or officer shall be indemnified to the fullest extent
  required or permitted by Maryland law from and against any claim or liability to
  which such director or officer may become subject by reason of his or her status
  as a director or officer of our company. Maryland law allows directors and
  officers to be indemnified against judgments, penalties, fines, settlements, and
  expenses actually incurred in connection with any proceeding to which they may
  be made a party by reason of their service on those or other capacities unless
  the following can be established:
  - the act or omission of the director or officer was material to the cause
  of action adjudicated in the proceeding and was committed in bad faith or
  was the result of active and deliberate dishonesty;
  - the director or officer actually received an improper personal benefit in
  money, property or services; or
  - with respect to any criminal proceeding, the director or officer had
  reasonable cause to believe his or her act or omission was unlawful.
  The MGCL requires a corporation (unless its charter provides otherwise,
  which our charter does not) to indemnify a director or officer who has been
  successful on the merits or otherwise, in the defense of any claim to which he
  or she is made a party by reason of his or her service in that capacity.
  However, under the MGCL, a Maryland corporation may not indemnify for an
  adverse judgment in a suit by or in the right of the corporation or for a
  judgment of liability on the basis that personal benefit was improperly
  received, unless in either case a court orders indemnification and then only for
  expenses. In
  addition, the MGCL permits a corporation to advance reasonable expenses to a
  director or officer upon the corporation's receipt of:
  - a written affirmation by the director or officer of his or her good faith
  belief that he or she has met the standard of conduct necessary for
  indemnification by the corporation; and
  - a written undertaking by the director or on the director's behalf to
  repay the amount paid or reimbursed by the corporation if it is
  ultimately determined that the director did not meet the standard of
  conduct.
  Our charter authorizes us to obligate ourselves to indemnify and our bylaws
  do obligate us, to the fullest extent permitted by Maryland law in effect from
  time to time, to indemnify and, without requiring a preliminary determination of
  the ultimate entitlement to indemnification, pay or reimburse reasonable
  expenses in advance of final disposition of a proceeding to:
  - any present or former director or officer who is made a party to the
  proceeding by reason of his or her service in that capacity; or
  - any individual who, while a director or officer of our company and at our
  request, serves or has served another corporation, real estate investment
  trust, partnership, joint venture, trust, employee benefit plan or any
  other enterprise as a director, officer, partner or trustee of such
  corporation, real estate investment trust, partnership, joint venture,
  trust, employee benefit plan or other enterprise and who is made a party
  to the proceeding by reason of his or her service in that capacity.
  Our charter and bylaws also permit us to indemnify and advance expenses to
  any person who served a predecessor of ours in any of the capacities described
  Our stockholders have no personal liability for indemnification payments or
  other obligations under any indemnification agreements or arrangements. However,
  indemnification could reduce the legal remedies available to us and our
  stockholders against the indemnified individuals.
  This provision for indemnification of our directors and officers does not
  limit a stockholder's ability to obtain injunctive relief or other equitable
  remedies for a violation of a director's or an officer's duties to us or to our
  stockholders, although these equitable remedies may not be effective in some
  In addition to any indemnification to which our directors and officers are
  entitled pursuant to our charter and bylaws and the MGCL, our charter and bylaws
  provide that, with the approval of our board of directors, we may indemnify
  other employees and agents to the fullest extent permitted under Maryland law,
  whether they are serving us or, at our request, any other entity.
  We have entered into indemnification agreements with each of our directors
  and executive officers, and we maintain a directors and officers liability
  insurance policy. See "Management -- Limited Liability and Indemnification."
  Insofar as the foregoing provisions permit indemnification of directors,
  officers or persons controlling us for liability arising under the Securities
  Act, we have been informed that, in the opinion of the SEC, this indemnification
  is against public policy as expressed in the Securities Act and is therefore
  unenforceable.
  The following is a summary of the material terms of the first amended and
  restated agreement of limited partnership of our operating partnership. This
  summary is subject to and qualified in its entirety by reference to the first
  amended and restated agreement of limited partnership of our operating
  partnership, a copy of which is an exhibit to the registration statement of
  which this prospectus is a part. See "Where You Can Find More Information."
  MANAGEMENT OF OUR OPERATING PARTNERSHIP
  MPT Operating Partnership, L.P., our operating partnership, was organized
  as a Delaware limited partnership on September 10, 2003. The initial partnership
  agreement was entered into on that date and amended and restated on March 1,
  2004. Pursuant to the partnership agreement, as the owner of the sole general
  partner of the operating partnership, Medical Properties Trust, LLC, we have,
  subject to certain protective rights of limited partners described below, full,
  exclusive and complete responsibility and discretion in the management and
  control of the operating partnership. We have the power to cause the operating
  partnership to enter into certain major transactions, including acquisitions,
  dispositions, refinancings and selection of tenants, and to cause changes in the
  operating partnership's line of business and distribution policies. However, any
  amendment to the partnership agreement that would affect the redemption rights
  of the limited partners or otherwise adversely affect the rights of the limited
  partners requires the consent of limited partners, other than us, holding more
  than 50% of the units of our operating partnership held by such partners.
  TRANSFERABILITY OF INTERESTS
  We may not voluntarily withdraw from the operating partnership or transfer
  or assign our interest in the operating partnership or engage in any merger,
  consolidation or other combination, or sale of substantially all of our assets,
  in a transaction which results in a change of control of our company unless:
  - we receive the consent of limited partners holding more than 50% of the
  partnership interests of the limited partners, other than those held by
  our company or its subsidiaries;
  - as a result of such transaction, all limited partners will have the right
  to receive for each partnership unit an amount of cash, securities or
  other property equal in value to the greatest amount of cash, securities
  or other property paid in the transaction to a holder of one share of our
  common stock, provided that if, in connection with the transaction, a
  purchase, tender or exchange offer shall have been made to and accepted
  by the holders of more than 50% of the outstanding shares of our common
  stock, each holder of partnership units shall be given the option to
  exchange its partnership units for the greatest amount of cash,
  securities or other property that a limited partner would have received
  had it (i) exercised its redemption right (described below) and (ii)
  sold, tendered or exchanged pursuant to the offer shares of our common
  stock received upon exercise of the redemption right immediately prior to
  the expiration of the offer; or
  - we are the surviving entity in the transaction and either (i) our
  stockholders do not receive cash, securities or other property in the
  transaction or (ii) all limited partners receive for each partnership
  unit an amount of cash, securities or other property having a value that
  is no less than the greatest amount of cash, securities or other property
  received in the transaction by our stockholders.
  We also may merge with or into or consolidate with another entity if
  immediately after such merger or consolidation (i) substantially all of the
  assets of the successor or surviving entity, other than partnership units held
  by us, are contributed, directly or indirectly, to the partnership as a capital
  contribution in exchange for partnership units with a fair market value equal to
  the value of the assets so contributed as determined by the survivor in good
  faith and (ii) the survivor expressly agrees to assume all of our obligations
  under the partnership agreement and the partnership agreement shall be amended
  after any such merger or consolidation so as to arrive at a new method of
  calculating the amounts payable upon
  exercise of the redemption right that approximates the existing method for such
  calculation as closely as reasonably possible.
  We also may (i) transfer all or any portion of our general partnership
  interest to (A) a wholly-owned subsidiary or (B) a parent company, and following
  such transfer may withdraw as general partner and (ii) engage in a transaction
  required by law or by the rules of any national securities exchange or automated
  quotation system on which our securities may be listed or traded.
  We contributed to our operating partnership substantially all the net
  proceeds of our April 2004 private placement as a capital contribution in
  exchange for units of the operating partnership. The partnership agreement
  provides that if the operating partnership requires additional funds at any time
  in excess of funds available to the operating partnership from borrowing or
  capital contributions, we may borrow such funds from a financial institution or
  other lender and lend such funds to the operating partnership on the same terms
  and conditions as are applicable to our borrowing of such funds. Under the
  partnership agreement, we are obligated to contribute the proceeds of any
  offering of shares of our company's stock as additional capital to the operating
  partnership. We are authorized to cause the operating partnership to issue
  partnership interests for less than fair market value if we have concluded in
  good faith that such issuance is in both the operating partnership's and our
  best interests. If we contribute additional capital to the operating
  partnership, we will receive additional partnership units and our percentage
  interest will be increased on a proportionate basis based upon the amount of
  such additional capital contributions and the value of the operating partnership
  at the time of such contributions. Conversely, the percentage interests of the
  limited partners will be decreased on a proportionate basis in the event of
  additional capital contributions by us. In addition, if we contribute additional
  capital to the operating partnership, we will revalue the property of the
  operating partnership to its fair market value, as determined by us, and the
  capital accounts of the partners will be adjusted to reflect the manner in which
  the unrealized gain or loss inherent in such property, that has not been
  reflected in the capital accounts previously, would be allocated among the
  partners under the terms of the partnership agreement if there were a taxable
  disposition of such property for its fair market value, as determined by us, on
  the date of the revaluation. The operating partnership may issue preferred
  partnership interests, in connection with acquisitions of property or otherwise,
  which could have priority over common partnership interests with respect to
  distributions from the operating partnership, including the partnership
  interests that our wholly-owned subsidiary owns as general partner.
  REDEMPTION RIGHTS
  Pursuant to Section 8.04 of the partnership agreement, the limited
  partners, other than us, will receive redemption rights, which will enable them
  to cause the operating partnership to redeem their limited partnership units in
  exchange for cash or, at our option, shares of our common stock on a one-for-one
  basis, subject to adjustment for stock splits, dividends, recapitalization and
  similar events. Currently, we own 100% of the issued limited partnership units
  of our operating partnership. Under Section 8.04 of our partnership agreement,
  holders of limited partnership units will be prohibited from exercising their
  redemption rights for 12 months after they are issued, unless this waiting
  period is waived or shortened by our board of directors. Notwithstanding the
  foregoing, a limited partner will not be entitled to exercise its redemption
  rights if the delivery of common stock to the redeeming limited partner would:
  - result in any person owning, directly or indirectly, common stock in
  excess of the stock ownership limit in our charter;
  - result in our shares of stock being owned by fewer than 100 persons
  (determined without reference to any rules of attribution);
  - result in our being "closely held" within the meaning of Section 856(h)
  of the Code;
  - cause us to own, actually or constructively, 10% or more of the ownership
  interests in a tenant of our or the partnership's real property, within
  the meaning of Section 856(d)(2)(B) of the Code; or
  - cause the acquisition of common stock by such redeeming limited partner
  to be "integrated" with any other distribution of common stock for
  purposes of complying with the registration provisions of the Securities
  We may, in our sole and absolute discretion, waive any of these
  With respect to the partnership units issuable in connection with the
  acquisition or development of our facilities, the redemption rights may be
  exercised by the limited partners at any time after the first anniversary of our
  acquisition of these facilities; provided, however, unless we otherwise agree:
  - a limited partner may not exercise the redemption right for fewer than
  1,000 partnership units or, if such limited partner holds fewer than
  1,000 partnership units, the limited partner must redeem all of the
  partnership units held by such limited partner;
  - a limited partner may not exercise the redemption right for more than the
  number of partnership units that would, upon redemption, result in such
  limited partner or any other person owning, directly or indirectly,
  common stock in excess of the ownership limitation in our charter; and
  - a limited partner may not exercise the redemption right more than two
  times annually.
  We currently hold all the outstanding interests in our operating
  partnership and, accordingly, there are currently no units of our operating
  partnership subject to being redeemed in exchange for shares of our common
  stock. The number of shares of common stock issuable upon exercise of the
  redemption rights will be adjusted to account for stock splits, mergers,
  consolidations or similar pro rata stock transactions.
  The partnership agreement requires that the operating partnership be
  operated in a manner that enables us to satisfy the requirements for being
  classified as a REIT, to avoid any federal income or excise tax liability
  imposed by the Code (other than any federal income tax liability associated with
  our retained capital gains) and to ensure that the partnership will not be
  classified as a "publicly traded partnership" taxable as a corporation under
  Section 7704 of the Code.
  In addition to the administrative and operating costs and expenses incurred
  by the operating partnership, the operating partnership generally will pay all
  of our administrative costs and expenses, including:
  - all expenses relating to our continuity of existence;
  - all expenses relating to offerings and registration of securities;
  - all expenses associated with the preparation and filing of any of our
  periodic reports under federal, state or local laws or regulations;
  - all expenses associated with our compliance with laws, rules and
  regulations promulgated by any regulatory body; and
  - all of our other operating or administrative costs incurred in the
  ordinary course of business on behalf of the operating partnership.
  The partnership agreement provides that the operating partnership will
  distribute cash from operations, including net sale or refinancing proceeds, but
  excluding net proceeds from the sale of the operating partnership's property in
  connection with the liquidation of the operating partnership, at such time and
  in such amounts as determined by us in our sole discretion, to us and the
  limited partners in accordance with their respective percentage interests in the
  Upon liquidation of the operating partnership, after payment of, or
  adequate provision for, debts and obligations of the partnership, including any
  partner loans, any remaining assets of the partnership will be
  distributed to us and the limited partners with positive capital accounts in
  accordance with their respective positive capital account balances.
  Profits and losses of the partnership, including depreciation and
  amortization deductions, for each fiscal year generally are allocated to us and
  the limited partners in accordance with the respective percentage interests in
  the partnership. All of the foregoing allocations are subject to compliance with
  the provisions of Sections 704(b) and 704(c) of the Code and Treasury
  regulations promulgated thereunder. The operating partnership expects to use the
  "traditional method" under Section 704(c) of the Code for allocating items with
  respect to contributed property acquired in connection with the offering for
  which the fair market value differs from the adjusted tax basis at the time of
  contribution.
  The operating partnership will have perpetual existence, or until sooner
  dissolved upon:
  - our bankruptcy, dissolution, removal or withdrawal, unless the limited
  partners elect to continue the partnership;
  - the passage of 90 days after the sale or other disposition of all or
  substantially all the assets of the partnership; or
  - an election by us in our capacity as the owner of the sole general
  partner of the operating partnership.
  Pursuant to the partnership agreement, the general partner is the tax
  matters partner of the operating partnership. Accordingly, through our ownership
  of the general partner of the operating partnership, we have authority to handle
  tax audits and to make tax elections under the Code on behalf of the operating
  UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
  This section summarizes the current material federal income tax
  consequences to our company and to our stockholders generally resulting from the
  treatment of our company as a REIT. Because this section is a general summary,
  it does not address all of the potential tax issues that may be relevant to you
  in light of your particular circumstances. Baker, Donelson, Bearman, Caldwell &
  Berkowitz, P.C., or Baker Donelson, has acted as our counsel, has reviewed this
  summary, and is of the opinion that the discussion contained herein fairly
  summarizes the federal income tax consequences that are material to a holder of
  shares of our common stock. The discussion does not address all aspects of
  taxation that may be relevant to particular stockholders in light of their
  personal investment or tax circumstances, or to certain types of stockholders
  that are subject to special treatment under the federal income tax laws, such as
  insurance companies, tax-exempt organizations (except to the limited extent
  discussed in "-- Taxation of Tax-Exempt Stockholders"), financial institutions
  or broker-dealers, and non-United States individuals and foreign corporations
  (except to the limited extent discussed in "-- Taxation of Non-United States
  Stockholders").
  The statements in this section and the opinion of Baker Donelson, referred
  to as the Tax Opinion, are based on the current federal income tax laws
  governing qualification as a REIT. We cannot assure you that new laws,
  interpretations of law or court decisions, any of which may take effect
  retroactively, will not cause any statement in this section to be inaccurate.
  You should be aware that opinions of counsel are not binding on the IRS, and no
  assurance can be given that the IRS will not challenge the conclusions set forth
  in those opinions.
  This section is not a substitute for careful tax planning. We urge you to
  consult your own tax advisors regarding the specific federal state, local,
  foreign and other tax consequences to you, in light of your own particular
  circumstances, of the purchase, ownership and disposition of shares of our
  common stock, our election to be taxed as a REIT and the effect of potential
  changes in applicable tax laws.
  TAXATION OF OUR COMPANY
  We were previously taxed as a subchapter S corporation. We revoked our
  subchapter S election on April 6, 2004 and we will elect to be taxed as a REIT
  under Sections 856 through 860 of the Code, commencing with our taxable year
  that began on April 6, 2004 and ended on December 31, 2004. Our counsel has
  opined that, for federal income tax purposes, we are and have been organized in
  conformity with the requirements for qualification to be taxed as a REIT under
  the Code commencing with our initial short taxable year ended December 31, 2004,
  and that our current and proposed method of operations as described in this
  prospectus and as represented to our counsel by us satisfies currently, and will
  enable us to continue to satisfy in the future, the requirements for such
  qualification and taxation as a REIT under the Code for future taxable years.
  This opinion, however, is based upon factual assumptions and representations
  made by us.
  We believe that our proposed future method of operation will enable us to
  qualify as a REIT. However, no assurances can be given that our beliefs or
  expectations will be fulfilled, as such qualification and taxation as a REIT
  depend upon our ability to meet, for each taxable year, various tests imposed
  under the Code as discussed below. Those qualification tests involve the
  percentage of income that we earn from specified sources, the percentage of our
  assets that falls within specified categories, the diversity of our stock
  ownership, and the percentage of our earnings that we distribute. Baker Donelson
  will not review our compliance with those tests on a continuing basis.
  Accordingly, with respect to our current and future taxable years, no assurance
  can be given that the actual results of our operation will satisfy such
  requirements. For a discussion of the tax consequences of our failure to qualify
  as a REIT. See "-- Failure to Qualify."
  The sections of the Code relating to qualification and operation as a REIT,
  and the federal income taxation of a REIT and its stockholders, are highly
  technical and complex. The following discussion sets forth only the material
  aspects of those sections. This summary is qualified in its entirety by the
  applicable Code provisions and the related rules and regulations.
  If we qualify as a REIT, we generally will not be subject to federal income
  tax on the taxable income that we distribute to our stockholders. The benefit of
  that tax treatment is that it avoids the "double taxation," or taxation at both
  the corporate and stockholder levels, that generally results from owning stock
  in a corporation. However, we will be subject to federal tax in the following
  circumstances:
  - We are subject to the corporate federal income tax on taxable income,
  including net capital gain, that we do not distribute to stockholders
  during, or within a specified time period after, the calendar year in
  which the income is earned.
  - We are subject to the corporate "alternative minimum tax" on any items of
  tax preference that we do not distribute or allocate to stockholders.
  - We are subject to tax, at the highest corporate rate, on:
  - net income from the sale or other disposition of property acquired
  through foreclosure ("foreclosure property") that we hold primarily
  for sale to customers in the ordinary course of business, and
  - other non-qualifying income from foreclosure property.
  - We are subject to a 100% tax on net income from sales or other
  dispositions of property, other than foreclosure property, that we hold
  primarily for sale to customers in the ordinary course of business.
  - If we fail to satisfy the 75% gross income test or the 95% gross income
  test, as described below under "-- Requirements for
  Qualification -- Gross Income Tests," but nonetheless continue to qualify
  as a REIT because we meet other requirements, we will be subject to a
  100% tax on:
  - the greater of (i) the amount by which we fail the 75% test, or (ii)
  the excess of 90% (95% for taxable years beginning on and after
  January 1, 2005) of our gross income over the amount of gross income
  attributable to sources that qualify under the 95% test, multiplied by
  - a fraction intended to reflect our profitability.
  - If we fail to distribute during a calendar year at least the sum of: (i)
  85% of our REIT ordinary income for the year, (ii) 95% of our REIT
  capital gain net income for the year, and (iii) any undistributed taxable
  income from earlier periods, then we will be subject to a 4% excise tax
  on the excess of the required distribution over the amount we actually
  distributed.
  - If we fail to satisfy one or more requirements for REIT qualification
  during a taxable year beginning on or after January 1, 2005, other than a
  gross income test or an asset test, we will be required to pay a penalty
  of $50,000 for each such failure.
  - We may elect to retain and pay income tax on our net long-term capital
  gain. In that case, a United States stockholder would be taxed on its
  proportionate share of our undistributed long-term capital gain (to the
  extent that we make a timely designation of such gain to the stockholder)
  and would receive a credit or refund for its proportionate share of the
  tax we paid.
  - We may be subject to a 100% excise tax on certain transactions with a
  taxable REIT subsidiary that are not conducted at arm's-length.
  - If we acquire any asset from a "C corporation" (that is, a corporation
  generally subject to the full corporate-level tax) in a transaction in
  which the basis of the asset in our hands is determined by reference to
  the basis of the asset in the hands of the C corporation, and we
  recognize gain on the disposition of the asset during the 10 year period
  beginning on the date that we acquired the asset, then the asset's
  "built-in" gain will be subject to tax at the highest regular corporate
  To qualify as a REIT, we must elect to be treated as a REIT, and we must
  meet various (i) organizational requirements, (ii) gross income tests, (iii)
  asset tests, and (iv) annual distribution requirements.
  Organizational Requirements.  A REIT is a corporation, trust or association
  that meets each of the following requirements:
  (1) it is managed by one or more trustees or directors;
  (2) its beneficial ownership is evidenced by transferable stock, or by
  transferable certificates of beneficial interest;
  (3) it would be taxable as a domestic corporation, but for its
  election to be taxed as a REIT under Sections 856 through 860 of the Code;
  (4) it is neither a financial institution nor an insurance company
  subject to special provisions of the federal income tax laws;
  (5) at least 100 persons are beneficial owners of its stock or
  ownership certificates (determined without reference to any rules of
  attribution);
  (6) not more than 50% in value of its outstanding stock or ownership
  certificates is owned, directly or indirectly, by five or fewer
  individuals, which the federal income tax laws define to include certain
  entities, during the last half of any taxable year; and
  (7) it elects to be a REIT, or has made such election for a previous
  taxable year, and satisfies all relevant filing and other administrative
  requirements established by the IRS that must be met to elect and maintain
  REIT status.
  We must meet requirements one through four during our entire taxable year
  and must meet requirement five during at least 335 days of a taxable year of 12
  months, or during a proportionate part of a taxable year of less than 12 months.
  If we comply with all the requirements for ascertaining information concerning
  the ownership of our outstanding stock in a taxable year and have no reason to
  know that we violated requirement six, we will be deemed to have satisfied
  requirement six for that taxable year. We do not have to satisfy requirements
  five and six for our taxable year ending December 31, 2004. After the issuance
  of common stock pursuant to our April 2004 private placement we had issued
  common stock with enough diversity of ownership to satisfy requirements five and
  six as set forth above. Our charter provides for restrictions regarding the
  ownership and transfer of our shares of common stock so that we should continue
  to satisfy these requirements. The provisions of our charter restricting the
  ownership and transfer of our shares of common stock are described in
  For purposes of determining stock ownership under requirement six, an
  "individual" generally includes a supplemental unemployment compensation
  benefits plan, a private foundation, or a portion of a trust permanently set
  aside or used exclusively for charitable purposes. An "individual," however,
  generally does not include a trust that is a qualified employee pension or
  profit sharing trust under the federal income tax laws, and beneficiaries of
  such a trust will be treated as holding our shares in proportion to their
  actuarial interests in the trust for purposes of requirement six.
  A corporation that is a "qualified REIT subsidiary," or QRS, is not treated
  as a corporation separate from its parent REIT. All assets, liabilities, and
  items of income, deduction and credit of a QRS are treated as assets,
  liabilities, and items of income, deduction and credit of the REIT. A QRS is a
  corporation, all of the capital stock of which is owned by the REIT. Thus, in
  applying the requirements described herein, any QRS that we own will be ignored,
  and all assets, liabilities, and items of income, deduction and credit of such
  subsidiary will be treated as our assets, liabilities, and items of income,
  deduction and credit.
  An unincorporated domestic entity, such as a partnership, that has a single
  owner, generally is not treated as an entity separate from its parent for
  federal income tax purposes. An unincorporated domestic entity with two or more
  owners is generally treated as a partnership for federal income tax purposes. In
  the case of a REIT that is a partner in a partnership that has other partners,
  the REIT is treated as owning its proportionate share of the assets of the
  partnership and as earning its allocable share of the gross income of the
  partnership for purposes of the applicable REIT qualification tests. Thus, our
  proportionate share of the assets, liabilities and items of income of our
  operating partnership and any other partnership, joint venture, or limited
  liability company that is treated as a partnership for federal income tax
  purposes in which we acquire an interest, directly or indirectly, is treated as
  our assets and gross income for purposes of applying the various REIT
  qualification requirements.
  A REIT is permitted to own up to 100% of the stock of one or more "taxable
  REIT subsidiaries." A taxable REIT subsidiary is a fully taxable corporation
  that may earn income that would not be qualifying income if earned directly by
  the parent REIT. The subsidiary and the REIT must jointly file an election with
  the IRS to treat the subsidiary as a taxable REIT subsidiary. A taxable REIT
  subsidiary will pay income tax at regular corporate rates on any income that it
  earns. In addition, the taxable REIT subsidiary rules limit the deductibility of
  interest paid or accrued by a taxable REIT subsidiary to its parent REIT to
  assure that the taxable REIT subsidiary is subject to an appropriate level of
  corporate taxation. Further, the rules impose a 100% excise tax on certain types
  of transactions between a taxable REIT subsidiary and its parent REIT or the
  REIT's tenants that are not conducted on an arm's-length basis. We may engage in
  activities indirectly through a taxable REIT subsidiary as necessary or
  convenient to avoid obtaining the benefit of income or services that would
  jeopardize our REIT status if we engaged in the activities directly. In
  particular, we would likely engage in activities through a taxable REIT
  subsidiary if we wished to provide services to unrelated parties which might
  produce income that does not qualify under the gross income tests described
  below. We might also dispose of an unwanted asset through a taxable REIT
  subsidiary as necessary or convenient to avoid the 100% tax on income from
  prohibited transactions. See description below under "Prohibited Transactions."
  A taxable REIT subsidiary may not operate or manage a healthcare facility. For
  purposes of this definition a "healthcare facility" means a hospital, nursing
  facility, assisted living facility, congregate care facility, qualified
  continuing care facility, or other licensed facility which extends medical or
  nursing or ancillary services to patients and which is operated by a service
  provider which is eligible for participation in the Medicare program under Title
  XVIII of the Social Security Act with respect to such facility. We have formed
  and made a taxable REIT subsidiary election with respect to MPT Development
  Services, Inc., a Delaware corporation formed in January 2004. We may form or
  acquire one or more additional taxable REIT subsidiaries in the future. See
  "Federal Income Tax Considerations -- Income Taxation of the Partnerships and
  the Partners -- Taxable REIT Subsidiaries."
  Gross Income Tests.  We must satisfy two gross income tests annually to
  maintain our qualification as a REIT. First, at least 75% of our gross income
  for each taxable year must consist of defined types of income that we derive,
  directly or indirectly, from investments relating to real property or mortgages
  on real property or qualified temporary investment income. Qualifying income for
  purposes of that 75% gross income test generally includes:
  - rents from real property;
  - interest on debt secured by mortgages on real property, or on interests
  in real property;
  - dividends or other distributions on, and gain from the sale of, shares in
  other REITs;
  - gain from the sale of real estate assets;
  - income derived from the temporary investment of new capital that is
  attributable to the issuance of our shares of common stock or a public
  offering of our debt with a maturity date of at least five years and that
  we receive during the one year period beginning on the date on which we
  received such new capital; and
  - gross income from foreclosure property.
  Second, in general, at least 95% of our gross income for each taxable year
  must consist of income that is qualifying income for purposes of the 75% gross
  income test, other types of interest and dividends, gain from the sale or
  disposition of stock or securities, income from certain hedging instruments or
  any combination of these. Gross income from our sale of property that we hold
  primarily for sale to customers in the ordinary course of business is excluded
  from both the numerator and the denominator in both income tests. In addition,
  for taxable years beginning on and after January 1, 2005, income and gain from
  "hedging transactions" that we enter into to hedge indebtedness incurred or to
  be incurred to acquire or carry real estate assets and that are clearly and
  timely identified as such also will be excluded from both the numerator and the
  denominator for purposes of the 95% gross income test (but not the 75% gross
  income test). The following paragraphs discuss the specific application of the
  gross income tests to us.
  Rents from Real Property.  Rent that we receive from our real property will
  qualify as "rents from real property," which is qualifying income for purposes
  of the 75% and 95% gross income tests, only if the following conditions are met.
  First, the rent must not be based in whole or in part on the income or
  profits of any person. Participating rent, however, will qualify as "rents from
  real property" if it is based on percentages of receipts or sales and the
  percentages:
  - are fixed at the time the leases are entered into;
  - are not renegotiated during the term of the leases in a manner that has
  the effect of basing rent on income or profits; and
  - conform with normal business practice.
  More generally, the rent will not qualify as "rents from real property" if,
  considering the relevant lease and all the surrounding circumstances, the
  arrangement does not conform with normal business practice, but is in reality
  used as a means of basing the rent on income or profits. We have represented to
  Baker Donelson that we intend to set and accept rents which are fixed dollar
  amounts or a fixed percentage of gross revenue, and not determined to any extent
  by reference to any person's income or profits, in compliance with the rules
  Second, we must not own, actually or constructively, 10% or more of the
  stock or the assets or net profits of any tenant, referred to as a related party
  tenant, other than a taxable REIT subsidiary. Failure to adhere to this
  limitation would cause the rental income from the related party tenant to not be
  treated as qualifying income for purposes of the REIT gross income tests. The
  constructive ownership rules generally provide that, if 10% or more in value of
  our stock is owned, directly or indirectly, by or for any person, we are
  considered as owning the stock owned, directly or indirectly, by or for such
  person. We do not own any stock or any assets or net profits of any tenant
  directly. In addition, our charter prohibits transfers of our shares that would
  cause us to own, actually or constructively, 10% or more of the ownership
  interests in a tenant. We should not own, actually or constructively, 10% or
  more of any tenant other than a taxable REIT subsidiary. We have represented to
  counsel that we will not rent any facility to a related-party tenant. However,
  because the constructive ownership rules are broad and it is not possible to
  monitor continually direct and indirect transfers of our shares, no absolute
  assurance can be given that such transfers or other events of which we have no
  knowledge will not cause us to own constructively 10% or more of a tenant other
  than a taxable REIT subsidiary at some future date. MPT Development Services,
  Inc., our taxable REIT subsidiary, has made loans to Vibra Healthcare, LLC, the
  parent entity of our tenants, in an aggregate amount of approximately $41.4
  million to acquire the operations at certain facilities. MPT Development
  Services, Inc. also made a loan of approximately $6.2 million to Vibra and its
  subsidiaries for working capital purposes which was repaid in February 2005. We
  believe that the loans to Vibra will be treated as debt rather than equity
  interests in Vibra, and that our rental income from Vibra will be treated as
  qualifying income for purposes of the REIT gross income tests. However, there
  can be no assurance that the IRS will not take a contrary position. If the IRS
  were to successfully treat the loans to Vibra as equity interests in Vibra,
  Vibra would be a related party tenant with respect to our company, the rent that
  we receive from Vibra would not be qualifying income for purposes of the REIT
  income tests, and we could lose our REIT status. However, as stated above, we
  interests in Vibra.
  As described above, we currently own 100% of the stock of MPT Development
  Services, Inc., a taxable REIT subsidiary, and may in the future own up to 100%
  of the stock of one or more additional taxable REIT subsidiaries. Under an
  exception to the related-party tenant rule described in the preceding paragraph,
  rent that we receive from a taxable REIT subsidiary will qualify as "rents from
  real property" as long as (i) the taxable REIT subsidiary is a qualifying
  taxable REIT subsidiary (among other things, it does not operate or manage a
  healthcare facility), (ii) at least 90% of the leased space in the facility is
  leased to persons other than taxable REIT subsidiaries and related party
  tenants, and (iii) the amount paid by the taxable REIT subsidiary to rent space
  at the facility is substantially comparable to rents paid by other tenants of
  the facility for comparable space. If in the future we receive rent from a
  taxable REIT subsidiary, we will seek to comply with this exception.
  Third, the rent attributable to the personal property leased in connection
  with a lease of real property must not be greater than 15% of the total rent
  received under the lease. The rent attributable to personal property under a
  lease is the amount that bears the same ratio to total rent under the lease for
  the taxable year as the average of the fair market values of the leased personal
  property at the beginning and at the end of the taxable year bears to the
  average of the aggregate fair market values of both the real and personal
  property covered by the lease at the beginning and at the end of such taxable
  year (the "personal property ratio"). With respect to each of our leases, we
  believe that the personal property ratio generally will be less than 15%. Where
  that is not, or may in the future not be, the case, we believe that any income
  attributable to personal property will not jeopardize our ability to qualify as
  a REIT. There can be no assurance, however, that the IRS would not challenge our
  calculation of a personal property ratio, or that a court would not uphold such
  assertion. If such a challenge were successfully asserted, we could fail to
  satisfy the 75% or 95% gross income test and thus lose our REIT status.
  Fourth, we cannot furnish or render noncustomary services to the tenants of
  our facilities, or manage or operate our facilities, other than through an
  independent contractor who is adequately compensated and from whom we do not
  derive or receive any income. However, we need not provide services through an
  "independent contractor," but instead may provide services directly to our
  tenants, if the services are "usually or customarily rendered" in connection
  with the rental of space for occupancy only and are not considered to be
  provided for the tenants' convenience. In addition, we may provide a minimal
  amount of "noncustomary" services to the tenants of a facility, other than
  through an independent contractor, as long as our income from the services does
  not exceed 1% of our income from the related facility. Finally, we may own up to
  100% of the stock of one or more taxable REIT subsidiaries, which may provide
  noncustomary services to our tenants without tainting our rents from the related
  facilities. We do not intend to perform any services other than customary ones
  for our tenants, other than services provided through independent contractors or
  taxable REIT subsidiaries. We have represented to Baker Donelson that we will
  not perform noncustomary services which would jeopardize our REIT status.
  Finally, in order for the rent payable under the leases of our properties
  to constitute "rents from real property," the leases must be respected as true
  leases for federal income tax purposes and not treated as service contracts,
  joint ventures, financing arrangements, or another type of arrangement. We
  generally treat our leases with respect to our properties as true leases for
  federal income tax purposes. We believe that our lease of the Desert Valley
  Facility is a true lease; however, because of the nature of the lessee's
  purchase option thereunder, there can be no assurance that the IRS would not
  consider this lease a financing arrangement instead of a true lease for federal
  income tax purposes. In that case, our income from the lease of the Desert
  Valley Facility would be interest income rather than rent and would be
  qualifying income for purposes of the 75% gross income test to the extent that
  our "loan" does not exceed the fair market value of the real estate assets
  associated with the Desert Valley Facility. All of the interest income from our
  loan would be qualifying income for purposes of the 95% gross income test. We
  believe that the characterization of the Desert Valley Facility lease as a
  financing arrangement would not adversely affect our ability to qualify as a
  If a portion of the rent we receive from a facility does not qualify as
  "rents from real property" because the rent attributable to personal property
  exceeds 15% of the total rent for a taxable year, the portion of the rent
  attributable to personal property will not be qualifying income for purposes of
  either the 75% or 95% gross income test. If rent attributable to personal
  property, plus any other income that is nonqualifying income for purposes of the
  95% gross income test, during a taxable year exceeds 5% of our gross income
  during the year, we would lose our REIT status. By contrast, in the following
  circumstances, none of the rent from a lease of a facility would qualify as
  "rents from real property": (i) the rent is considered based on the income or
  profits of the tenant; (ii) the tenant is a related party tenant or fails to
  qualify for the exception to the related-party tenant rule for qualifying
  taxable REIT subsidiaries; or (iii) we furnish more than a de minimis amount of
  noncustomary services to the tenants of the facility, or manage or operate the
  facility, other than through a qualifying independent contractor or a taxable
  REIT subsidiary. In any of these circumstances, we could lose our REIT status
  because we would be unable to satisfy either the 75% or 95% gross income test.
  Tenants may be required to pay, besides base rent, reimbursements for
  certain amounts we are obligated to pay to third parties (such as a tenant's
  proportionate share of a facility's operational or capital expenses), penalties
  for nonpayment or late payment of rent or additions to rent. These and other
  similar payments should qualify as "rents from real property."
  Interest.  The term "interest" generally does not include any amount
  received or accrued, directly or indirectly, if the determination of the amount
  depends in whole or in part on the income or profits of any person. However, an
  amount received or accrued generally will not be excluded from the term
  "interest" solely because it is based on a fixed percentage or percentages of
  receipts or sales. Furthermore, to the extent that interest from a loan that is
  based upon the residual cash proceeds from the sale of the property securing the
  loan constitutes a "shared appreciation provision," income attributable to such
  participation feature will be treated as gain from the sale of the secured
  Fee Income.  We may receive various fees in connection with our operations.
  The fees will be qualifying income for purposes of both the 75% and 95% gross
  income tests if they are received in consideration for entering into an
  agreement to make a loan secured by real property and the fees are not
  determined by income and profits. Other fees are not qualifying income for
  purposes of either gross income test. Any fees earned by MPT Development
  Services, Inc., our taxable REIT subsidiary, will not be included for proposes
  of the gross income tests. We anticipate that MPT Development Services, Inc.
  will receive most of the management fees, inspection fees, and construction fees
  in connection with our operations.
  Prohibited Transactions.  A REIT will incur a 100% tax on the net income
  derived from any sale or other disposition of property, other than foreclosure
  property, that the REIT holds primarily for sale to customers in the ordinary
  course of a trade or business. We believe that none of our assets will be held
  primarily for sale to customers and that a sale of any of our assets will not be
  in the ordinary course of our business. Whether a REIT holds an asset "primarily
  for sale to customers in the ordinary course of a trade or business" depends,
  however, on the facts and circumstances in effect from time to time, including
  those related to a particular asset. Nevertheless, we will attempt to comply
  with the terms of safe-harbor provisions in the federal income tax laws
  prescribing when an asset sale will not be characterized as a prohibited
  transaction. We cannot assure you, however, that we can comply with the
  safe-harbor provisions or that we will avoid owning property that may be
  characterized as property that we hold "primarily for sale to customers in the
  ordinary course of a trade or business." We may form or acquire a taxable REIT
  subsidiary to hold and dispose of those facilities we conclude may not fall
  within the safe-harbor provisions.
  Foreclosure Property.  We will be subject to tax at the maximum corporate
  rate on any income from foreclosure property, other than income that otherwise
  would be qualifying income for purposes of the 75% gross income test, less
  expenses directly connected with the production of that income. However, gross
  income from foreclosure property will qualify under the 75% and 95% gross income
  tests. Foreclosure property is any real property, including interests in real
  property, and any personal property incident to
  such real property acquired by a REIT as the result of the REIT's having bid on
  the property at foreclosure, or having otherwise reduced such property to
  ownership or possession by agreement or process of law after actual or imminent
  default on a lease of the property or on indebtedness secured by the property,
  or a "Repossession Action." Property acquired by a Repossession Action will not
  be considered "foreclosure property" if (i) the REIT held or acquired the
  property subject to a lease or securing indebtedness for sale to customers in
  the ordinary course of business or (ii) the lease or loan was acquired or
  entered into with intent to take Repossession Action or in circumstances where
  the REIT had reason to know a default would occur. The determination of such
  intent or reason to know must be based on all relevant facts and circumstances.
  In no case will property be considered "foreclosure property" unless the REIT
  makes a proper election to treat the property as foreclosure property.
  Foreclosure property includes any qualified healthcare property acquired by
  a REIT as a result of a termination of a lease of such property (other than a
  termination by reason of a default, or the imminence of a default, on the
  lease). A "qualified healthcare property" means any real property, including
  interests in real property, and any personal property incident to such real
  property which is a healthcare facility or is necessary or incidental to the use
  of a healthcare facility. For this purpose, a healthcare facility means a
  hospital, nursing facility, assisted living facility, congregate care facility,
  qualified continuing care facility, or other licensed facility which extends
  medical or nursing or ancillary services to patients and which, immediately
  before the termination, expiration, default, or breach of the lease secured by
  such facility, was operated by a provider of such services which was eligible
  for participation in the Medicare program under Title XVIII of the Social
  Security Act with respect to such facility.
  However, a REIT will not be considered to have foreclosed on a property
  where the REIT takes control of the property as a mortgagee-in-possession and
  cannot receive any profit or sustain any loss except as a creditor of the
  mortgagor. Property generally ceases to be foreclosure property at the end of
  the third taxable year following the taxable year in which the REIT acquired the
  property (or, in the case of a qualified healthcare property which becomes
  foreclosure property because it is acquired by a REIT as a result of the
  termination of a lease of such property, at the end of the second taxable year
  following the taxable year in which the REIT acquired such property) or longer
  if an extension is granted by the Secretary of the Treasury. This period (as
  extended, if applicable) terminates, and foreclosure property ceases to be
  foreclosure property on the first day:
  - on which a lease is entered into for the property that, by its terms,
  will give rise to income that does not qualify for purposes of the 75%
  gross income test, or any amount is received or accrued, directly or
  indirectly, pursuant to a lease entered into on or after such day that
  gross income test;
  - on which any construction takes place on the property, other than
  completion of a building or any other improvement, where more than 10% of
  the construction was completed before default became imminent; or
  - which is more than 90 days after the day on which the REIT acquired the
  property and the property is used in a trade or business which is
  conducted by the REIT, other than through an independent contractor from
  whom the REIT itself does not derive or receive any income. For this
  purpose, in the case of a qualified healthcare property, income derived
  or received from an independent contractor will be disregarded to the
  extent such income is attributable to (i) a lease of property in effect
  on the date the REIT acquired the qualified healthcare property (without
  regard to its renewal after such date so long as such renewal is pursuant
  to the terms of such lease as in effect on such date) or (ii) any lease
  of property entered into after such date if, on such date, a lease of
  such property from the REIT was in effect and, under the terms of the new
  lease, the REIT receives a substantially similar or lesser benefit in
  comparison to the prior lease.
  Hedging Transactions.  From time to time, we may enter into hedging
  transactions with respect to one or more of our assets or liabilities. Our
  hedging activities may include entering into interest rate swaps, caps, and
  floors, options to purchase such items, and futures and forward contracts. For
  taxable years beginning prior to January 1, 2005, any periodic income or gain
  from the disposition of any financial
  instrument for these or similar transactions to hedge indebtedness we incur to
  acquire or carry "real estate assets" should be qualifying income for purposes
  of the 95% gross income test, but not the 75% gross income test. For taxable
  years beginning on and after January 1, 2005, income and gain from "hedging
  transactions" will be excluded from gross income for purposes of the 95% gross
  income test (but not the 75% gross income test). For those taxable years, a
  "hedging transaction" will mean any transaction entered into in the normal
  course of our trade or business primarily to manage the risk of interest rate or
  price changes, or currency fluctuations with respect to borrowings made or to be
  made, or ordinary obligations incurred or to be incurred, to acquire or carry
  real estate assets. We will be required to clearly identify any such hedging
  transaction before the close of the day on which it was acquired, originated, or
  entered into. Since the financial markets continually introduce new and
  innovative instruments related to risk-sharing or trading, it is not entirely
  clear which such instruments will generate income which will be considered
  qualifying income for purposes of the gross income tests. We intend to structure
  any hedging or similar transactions so as not to jeopardize our status as a
  Failure to Satisfy Gross Income Tests.  If we fail to satisfy one or both
  of the gross income tests for our 2004 taxable year, we nevertheless may qualify
  as a REIT for that year if we qualify for relief under certain provisions of the
  federal income tax laws. Those relief provisions generally will be available if:
  - our failure to meet these tests is due to reasonable cause and not to
  willful neglect;
  - we attach a schedule of the sources of our income to our tax return; and
  - any incorrect information on the schedule is not due to fraud with intent
  to evade tax.
  For taxable years beginning on and after January 1, 2005, those relief
  provisions will be available if:
  - our failure to meet those tests is due to reasonable cause and not to
  willful neglect, and
  - following our identification of such failure for any taxable year, a
  schedule of the sources of our income is filed in accordance with
  regulations prescribed by the Secretary of the Treasury.
  We cannot with certainty predict whether any failure to meet these tests
  will qualify for the relief provisions. As discussed above in "-- Taxation of
  Our Company," even if the relief provisions apply, we would incur a 100% tax on
  the gross income attributable to the greater of the amounts by which we fail the
  75% and 95% gross income tests, multiplied by a fraction intended to reflect our
  profitability.
  Asset Tests.  To maintain our qualification as a REIT, we also must satisfy
  the following asset tests at the end of each quarter of each taxable year.
  First, at least 75% of the value of our total assets must consist of:
  - cash or cash items, including certain receivables;
  - government securities;
  - real estate assets, which includes interest in real property, leaseholds,
  options to acquire real property or leaseholds, interests in mortgages on
  real property and shares (or transferable certificates of beneficial
  interest) in other REITs;
  - stock in other REITs; and
  - investments in stock or debt instruments attributable to the temporary
  investment (i.e., for a period not exceeding 12 months) of new capital
  that we raise through equity offerings or offerings of debt with at least
  a five year term.
  With respect to investments not included in the 75% asset class, we may not hold
  securities of any one issuer (other than a taxable REIT subsidiary) that exceed
  5% of the value of our total assets; nor may we hold securities of any one
  issuer (other than a taxable REIT subsidiary) that represent more than 10% of
  the voting power of all outstanding voting securities of such issuer, or more
  than 10% of the value of all outstanding securities of such issuer.
  In addition, we may not hold securities of one or more taxable REIT
  subsidiaries that represent in the aggregate more than 20% of the value of our
  total assets, irrespective of whether such securities may also be included in
  the 75% asset class (e.g., a mortgage loan issued to a taxable REIT subsidiary).
  Furthermore, no more than 25% of our total assets may be represented by
  securities that are not included in the 75% asset class, but this requirement
  will necessarily be satisfied if the 75% asset class requirement is satisfied.
  For purposes of the 5% and 10% asset tests, the term "securities" does not
  include stock in another REIT, equity or debt securities of a qualified REIT
  subsidiary or taxable REIT subsidiary, mortgage loans that constitute real
  estate assets, or equity interests in a partnership. The term "securities,"
  however, generally includes debt securities issued by a partnership or another
  REIT, except that for purposes of the 10% value test, the term "securities" does
  not include:
  - "Straight debt," defined as a written unconditional promise to pay on
  demand or on a specified date a sum certain in money if (i) the debt is
  not convertible, directly or indirectly, into stock, and (ii) the
  interest rate and interest payment dates are not contingent on profits,
  the borrower's discretion, or similar factors. "Straight debt" securities
  do not include any securities issued by a partnership or a corporation in
  which we or any controlled TRS (i.e., a TRS in which we own directly or
  indirectly more than 50% of the voting power or value of the stock) holds
  non-"straight debt" securities that have an aggregate value of more than
  1% of the issuer's outstanding securities. However, "straight debt"
  securities include debt subject to the following contingencies:
  - a contingency relating to the time of payment of interest or principal,
  as long as either (i) there is no change to the effective yield of the
  debt obligation, other than a change to the annual yield that does not
  exceed the greater of 0.25% or 5% of the annual yield, or (ii) neither
  the aggregate issue price nor the aggregate face amount of the issuer's
  debt obligations held by us exceeds $1 million and no more than 12
  months of unaccrued interest on the debt obligations can be required to
  be prepaid; and
  - a contingency relating to the time or amount of payment upon a default
  or prepayment of a debt obligation, as long as the contingency is
  consistent with customary commercial practice;
  - Any loan to an individual or an estate;
  - Any "section 467 rental agreement," other than an agreement with a
  related party tenant;
  - Any obligation to pay "rents from real property";
  - Any security issued by a state or any political subdivision thereof, the
  District of Columbia, a foreign government of any political subdivision
  thereof, or the Commonwealth of Puerto Rico, but only if the
  determination of any payment thereunder does not depend in whole or in
  part on the profits of any entity not described in this paragraph or
  payments on any obligation issued by an entity not described in this
  paragraph;
  - Any security issued by a REIT;
  - Any debt instrument of an entity treated as a partnership for federal
  income tax purposes to the extent of our interest as a partner in the
  income tax purposes not described in the preceding bullet points if at
  least 75% of the partnership's gross income, excluding income from
  prohibited transactions, is qualifying income for purposes of the 75%
  gross income test described above in "-- Requirements for
  Qualification -- Income Tests."
  For purposes of the 10% value test, our proportionate share of the assets of a
  partnership is our proportionate interest in any securities issued by the
  partnership, without regard to securities described in the last two bullet
  points above.
  In connection with the acquisition of the facilities in our current
  portfolio, MPT Development Services, Inc., our taxable REIT subsidiary, has made
  loans to Vibra Healthcare, LLC, the parent entity of our tenants, in an
  aggregate amount of approximately $41.4 million to acquire the operations at
  those facilities. MPT Development Services, Inc. also made a loan of
  approximately $6.2 million to Vibra and its subsidiaries for working capital
  purposes which was repaid in February 2005. Those loans bear interest at an
  annual rate of 10.25%. Our operating partnership loaned the funds to MPT
  Development Services, Inc. to make these loans. The loans from our operating
  partnership to MPT Development Services, Inc. bear interest at an annual rate of
  9.25%.
  Baker Donelson is of the opinion that the loans to Vibra will be treated as
  debt rather than equity interests in Vibra, and that our rental income from
  Vibra will be treated as qualifying income for purposes of the REIT gross income
  tests. However, there can be no assurance that the IRS will not take a contrary
  position. If the IRS were to successfully treat the loans to Vibra as equity
  interests in Vibra, Vibra would be a "related party tenant" with respect to our
  company and the rent that we receive from Vibra would not be qualifying income
  for purposes of the REIT gross income tests. As a result, we could lose our REIT
  status. In addition, if the IRS were to successfully treat the loans to Vibra as
  interests held by our operating partnership rather than by MPT Development
  Services, Inc. and to treat the loans as other than straight debt, we would fail
  the 10% asset test with respect to such interests and, as a result, could lose
  our REIT status. Baker Donelson is of the opinion that the loans to Vibra will
  be treated as straight debt for federal income tax purposes.
  We will monitor the status of our assets for purposes of the various asset
  tests and will manage our portfolio in order to comply at all times with such
  tests. If we fail to satisfy the asset tests at the end of a calendar quarter,
  we will not lose our REIT status if:
  - we satisfied the asset tests at the end of the preceding calendar
  quarter; and
  - the discrepancy between the value of our assets and the asset test
  requirements arose from changes in the market values of our assets and
  was not wholly or partly caused by the acquisition of one or more
  non-qualifying assets.
  If we did not satisfy the condition described in the second item, above, we
  still could avoid disqualification by eliminating any discrepancy within 30 days
  after the close of the calendar quarter in which it arose.
  In the event that, at the end of any calendar quarter in a taxable year
  beginning on or after January 1, 2005, we violate the 5% or 10% test described
  above, we will not lose our REIT status if (1) the failure is de minimis (up to
  the lesser of 1% of our assets or $10 million) and (2) we dispose of assets or
  otherwise comply with the asset tests within six months after the last day of
  the quarter in which we identified the failure of the asset test. In the event
  of a more than de minimis failure of the 5% or 10% tests, or a failure of the
  other assets test, at the end of any calendar quarter in a taxable year
  beginning on or after January 1, 2005, as long as the failure was due to
  reasonable cause and not to willful neglect, we will not lose our REIT status if
  we (1) dispose of assets or otherwise comply with the asset tests within six
  months after the last day of the quarter in which we identified the failure of
  the asset test and (2) pay a tax equal to the greater of $50,000 or 35% of the
  net income from the nonqualifying assets during the period in which we failed to
  satisfy the asset tests.
  Distribution Requirements.  Each taxable year, we must distribute
  dividends, other than capital gain dividends and deemed distributions of
  retained capital gain, to our stockholders in an aggregate amount not less than:
  - the sum of:
  -  90% of our "REIT taxable income," computed without regard to the
  dividends-paid deduction or our net capital gain or loss, and
  -  90% of our after-tax net income, if any, from foreclosure property,
  -  the sum of certain items of non-cash income.
  We must pay such distributions in the taxable year to which they relate, or
  in the following taxable year if we declare the distribution before we timely
  file our federal income tax return for the year and pay the distribution on or
  before the first regular dividend payment date after such declaration.
  We will pay federal income tax on taxable income, including net capital
  gain, that we do not distribute to stockholders. In addition, we will incur a 4%
  nondeductible excise tax on the excess of a specified required distribution over
  amounts we actually distribute if we distribute an amount less than the required
  distribution during a calendar year, or by the end of January following the
  calendar year in the case of distributions with declaration and record dates
  falling in the last three months of the calendar year. The required distribution
  must not be less than the sum of:
  - 85% of our REIT ordinary income for the year;
  - 95% of our REIT capital gain income for the year; and
  - any undistributed taxable income from prior periods.
  We may elect to retain and pay income tax on the net long-term capital gain
  we receive in a taxable year. See " -- Taxation of Taxable United States
  Stockholders." If we so elect, we will be treated as having distributed any such
  retained amount for purposes of the 4% excise tax described above. We intend to
  make timely distributions sufficient to satisfy the annual distribution
  requirements and to avoid corporate income tax and the 4% excise tax.
  It is possible that, from time to time, we may experience timing
  differences between the actual receipt of income and actual payment of
  deductible expenses and the inclusion of that income and deduction of such
  expenses in arriving at our REIT taxable income. For example, we may not deduct
  recognized capital losses from our "REIT taxable income." Further, it is
  possible that, from time to time, we may be allocated a share of net capital
  gain attributable to the sale of depreciated property that exceeds our allocable
  share of cash attributable to that sale. As a result of the foregoing, we may
  have less cash than is necessary to distribute all of our taxable income and
  thereby avoid corporate income tax and the excise tax imposed on certain
  undistributed income. In such a situation, we may need to borrow funds or issue
  additional shares of common or preferred stock.
  Under certain circumstances, we may be able to correct a failure to meet
  the distribution requirement for a year by paying "deficiency dividends" to our
  stockholders in a later year. We may include such deficiency dividends in our
  deduction for dividends paid for the earlier year. Although we may be able to
  avoid income tax on amounts distributed as deficiency dividends, we will be
  required to pay interest based upon the amount of any deduction we take for
  deficiency dividends.
  Recordkeeping Requirements.  We must maintain certain records in order to
  qualify as a REIT. In addition, to avoid paying a penalty, we must request on an
  annual basis information from our stockholders designed to disclose the actual
  ownership of our shares of outstanding capital stock. We intend to comply with
  these requirements.
  Failure to Qualify.  If we failed to qualify as a REIT in any taxable year
  and no relief provision applied, we would have the following consequences. We
  would be subject to federal income tax and any applicable alternative minimum
  tax at rates applicable to regular C corporations on our taxable income,
  determined without reduction for amounts distributed to stockholders. We would
  not be required to make any distributions to stockholders, and any distributions
  to stockholders would be taxable as ordinary income to the extent of our current
  and accumulated earnings and profits. Corporate stockholders could be eligible
  for a dividends-received deduction if certain conditions are satisfied. Unless
  we qualified for relief under specific statutory provisions, we would not be
  permitted to elect taxation as a REIT for the four taxable years following the
  year during which we ceased to qualify as a REIT.
  For taxable years beginning on and after January 1, 2005, if we fail to
  satisfy one or more requirements for REIT qualification, other than the gross
  income tests and the asset tests, we could avoid disqualification if the failure
  is due to reasonable cause and not to willful neglect and we pay a penalty of
  $50,000 for each such failure. In addition, there are relief provisions for a
  failure of the gross income tests and asset tests, as described above in
  "-- Income Tests" and "-- Asset Tests."
  Taxation of Taxable United States Stockholders.  As long as we qualify as a
  REIT, a taxable "United States stockholder" will be required to take into
  account as ordinary income distributions made out of our current or accumulated
  earnings and profits that we do not designate as capital gain dividends or
  retained long-term capital gain. A United States stockholder will not qualify
  for the dividends-received deduction generally available to corporations. The
  term "United States stockholder" means a holder of shares of common stock that,
  for United States federal income tax purposes, is:
  - a citizen or resident of the United States;
  - a corporation or partnership (including an entity treated as a
  corporation or partnership for United States federal income tax purposes)
  created or organized under the laws of the United States or of a
  political subdivision of the United States;
  - an estate whose income is subject to United States federal income
  taxation regardless of its source; or
  - any trust if (i) a United States court is able to exercise primary
  supervision over the administration of such trust and one or more United
  States persons have the authority to control all substantial decisions of
  the trust or (ii) it has a valid election in place to be treated as a
  United States person.
  Distributions paid to a United States stockholder generally will not
  qualify for the new 15% tax rate for "qualified dividend income." The Jobs and
  Growth Tax Relief Reconciliation Act of 2003 reduced the maximum tax rate for
  qualified dividend income from 38.6% to 15% for tax years through 2008. Without
  future congressional action, the maximum tax rate on qualified dividend income
  will move to 35% in 2009 and 39.6% in 2011. Qualified dividend income generally
  includes dividends paid by domestic C corporations and certain qualified foreign
  corporations to most United States noncorporate stockholders. Because we are not
  generally subject to federal income tax on the portion of our REIT taxable
  income distributed to our stockholders, our dividends generally will not be
  eligible for the new 15% rate on qualified dividend income. As a result, our
  ordinary REIT dividends will continue to be taxed at the higher tax rate
  applicable to ordinary income. Currently, the highest marginal individual income
  tax rate on ordinary income is 35%. However, the 15% tax rate for qualified
  dividend income will apply to our ordinary REIT dividends, if any, that are (i)
  attributable to dividends received by us from non-REIT corporations, such as our
  taxable REIT subsidiary, and (ii) attributable to income upon which we have paid
  corporate income tax (e.g., to the extent that we distribute less than 100% of
  our taxable income). In general, to qualify for the reduced tax rate on
  qualified dividend income, a stockholder must hold our common stock for more
  than 60 days during the 120-day period beginning on the date that is 60 days
  before the date on which our common stock becomes ex-dividend.
  Distributions to a United States stockholder which we designate as capital
  gain dividends will generally be treated as long-term capital gain, without
  regard to the period for which the United States stockholder has held its common
  stock. We generally will designate our capital gain dividends as either 15%, 20%
  or 25% rate distributions. A corporate United States stockholder, however, may
  be required to treat up to 20% of certain capital gain dividends as ordinary
  that we receive in a taxable year. In that case, a United States stockholder
  would be taxed on its proportionate share of our undistributed long-term capital
  gain. The United States stockholder would receive a credit or refund for its
  proportionate share of the tax we paid. The United States stockholder would
  increase the basis in its shares of common stock by the amount of its
  proportionate share of our undistributed long-term capital gain, minus its share
  of the tax we paid.
  A United States stockholder will not incur tax on a distribution in excess
  of our current and accumulated earnings and profits if the distribution does not
  exceed the adjusted basis of the United States stockholder's shares. Instead,
  the distribution will reduce the adjusted basis of the shares, and any amount in
  excess of both our current and accumulated earnings and profits and the adjusted
  basis will be treated as capital gain, long-term if the shares have been held
  for more than one year, provided the shares are a capital asset in the hands of
  the United States stockholder. In addition, any distribution we declare in
  October, November, or December of any year that is payable to a United States
  stockholder of record on a specified date in any of those months will be treated
  as paid by us and received by the United States stockholder on December 31 of
  the year, provided we actually pay the distribution during January of the
  following calendar year.
  Stockholders may not include in their individual income tax returns any of
  our net operating losses or capital losses. Instead, these losses are generally
  carried over by us for potential offset against our future income. Taxable
  distributions from us and gain from the disposition of shares of common stock
  will not be treated as passive activity income; stockholders generally will not
  be able to apply any "passive activity losses," such as losses from certain
  types of limited partnerships in which the stockholder is a limited partner,
  against such income. In addition, taxable distributions from us and gain from
  the disposition of common stock generally will be treated as investment income
  for purposes of the investment interest limitations. We will notify stockholders
  after the close of our taxable year as to the portions of the distributions
  attributable to that year that constitute ordinary income, return of capital,
  and capital gain.
  Taxation of United States Stockholders on the Disposition of Shares of
  Common Stock.  In general, a United States stockholder who is not a dealer in
  securities must treat any gain or loss realized upon a taxable disposition of
  our shares of common stock as long-term capital gain or loss if the United
  States stockholder has held the stocks for more than one year, and otherwise as
  short-term capital gain or loss. However, a United States stockholder must treat
  any loss upon a sale or exchange of common stock held for six months or less as
  a long-term capital loss to the extent of capital gain dividends and any other
  actual or deemed distributions from us which the United States stockholder
  treats as long-term capital gain. All or a portion of any loss that a United
  States stockholder realizes upon a taxable disposition of common stock may be
  disallowed if the United States stockholder purchases other shares of our common
  stock within 30 days before or after the disposition.
  Capital Gains and Losses.  The tax-rate differential between capital gain
  and ordinary income for non-corporate taxpayers may be significant. A taxpayer
  generally must hold a capital asset for more than one year for gain or loss
  derived from its sale or exchange to be treated as long-term capital gain or
  loss. The highest marginal individual income tax rate is currently 35%. The
  maximum tax rate on long-term capital gain applicable to individuals is 15% for
  sales and exchanges of assets held for more than one year and occurring on or
  after May 6, 2003 through December 31, 2008. The maximum tax rate on long-term
  capital gain from the sale or exchange of "section 1250 property" (i.e.,
  generally, depreciable real property) is 25% to the extent the gain would have
  been treated as ordinary income if the property were "section 1245 property"
  (i.e., generally, depreciable personal property). We generally may designate
  whether a distribution we designate as capital gain dividends (and any retained
  capital gain that we are deemed to distribute) is taxable to non-corporate
  stockholders at a 15% or 25% rate.
  The characterization of income as capital gain or ordinary income may
  affect the deductibility of capital losses. A non-corporate taxpayer may deduct
  capital losses not offset by capital gains against its ordinary income only up
  to a maximum of $3,000 annually. A non-corporate taxpayer may carry unused
  capital losses forward indefinitely. A corporate taxpayer must pay tax on its
  net capital gain at corporate ordinary-income rates. A corporate taxpayer may
  deduct capital losses only to the extent of capital gains, with unused losses
  carried back three years and forward five years.
  Information Reporting Requirements and Backup Withholding.  We will report
  to our stockholders and to the IRS the amount of distributions we pay during
  each calendar year and the amount of tax we
  withhold, if any. A stockholder may be subject to backup withholding at a rate
  of up to 28% with respect to distributions unless the holder:
  - is a corporation or comes within certain other exempt categories and when
  required, demonstrates this fact; or
  - provides a taxpayer identification number, certifies as to no loss of
  exemption from backup withholding, and otherwise complies with the
  applicable requirements of the backup withholding rules.
  A stockholder who does not provide us with its correct taxpayer
  identification number also may be subject to penalties imposed by the IRS. Any
  amount paid as backup withholding will be creditable against the stockholder's
  income tax liability. In addition, we may be required to withhold a portion of
  capital gain distributions to any stockholders who fail to certify their
  non-foreign status to us. For a discussion of the backup withholding rules as
  applied to non-United States stockholders, see "Taxation of Non-United States
  Stockholders."
  Taxation of Tax-Exempt Stockholders.  Tax-exempt entities, including
  qualified employee pension and profit sharing trusts and individual retirement
  accounts, referred to as pension trusts, generally are exempt from federal
  income taxation. However, they are subject to taxation on their "unrelated
  business taxable income." While many investments in real estate generate
  unrelated business taxable income, the IRS has issued a ruling that dividend
  distributions from a REIT to an exempt employee pension trust do not constitute
  unrelated business taxable income so long as the exempt employee pension trust
  does not otherwise use the shares of the REIT in an unrelated trade or business
  of the pension trust. Based on that ruling, amounts we distribute to tax-exempt
  stockholders generally should not constitute unrelated business taxable income.
  However, if a tax-exempt stockholder were to finance its acquisition of common
  stock with debt, a portion of the income it received from us would constitute
  unrelated business taxable income pursuant to the "debt-financed property"
  rules. Furthermore, social clubs, voluntary employee benefit associations,
  supplemental unemployment benefit trusts and qualified group legal services
  plans that are exempt from taxation under special provisions of the federal
  income tax laws are subject to different unrelated business taxable income
  rules, which generally will require them to characterize distributions they
  receive from us as unrelated business taxable income. Finally, in certain
  circumstances, a qualified employee pension or profit-sharing trust that owns
  more than 10% of our shares of common stock must treat a percentage of the
  dividends it receives from us as unrelated business taxable income. The
  percentage is equal to the gross income we derive from an unrelated trade or
  business, determined as if we were a pension trust, divided by our total gross
  income for the year in which we pay the dividends. This rule applies to a
  pension trust holding more than 10% of our shares only if:
  - the percentage of our dividends which the tax-exempt trust must treat as
  unrelated business taxable income is at least 5%;
  - we qualify as a REIT by reason of the modification of the rule requiring
  that no more than 50% of our shares of common stock be owned by five or
  fewer individuals, which modification allows the beneficiaries of the
  pension trust to be treated as holding shares in proportion to their
  actual interests in the pension trust; and
  - either of the following applies:
  - one pension trust owns more than 25% of the value of our shares of
  common stock; or
  - a group of pension trusts individually holding more than 10% of the
  value of our shares of common stock collectively owns more than 50% of
  the value of our shares of common stock.
  Taxation of Non-United States Stockholders.  The rules governing United
  States federal income taxation of nonresident alien individuals, foreign
  corporations, foreign partnerships, and other foreign stockholders are complex.
  This section is only a summary of such rules. We urge non-United States
  stockholders to consult their own tax advisors to determine the impact of
  federal, state, and local income tax laws on ownership of shares of common
  stock, including any reporting requirements.
  A non-United States stockholder that receives a distribution which (i) is
  not attributable to gain from our sale or exchange of "United States real
  property interests" (defined below) and (ii) we do not designate a capital gain
  dividend (or retained capital gain) will recognize ordinary income to the extent
  of our current or accumulated earnings and profits. A withholding tax equal to
  30% of the gross amount of the distribution ordinarily will apply unless an
  applicable tax treaty reduces or eliminates the tax. However, a non-United
  States stockholder generally will be subject to federal income tax at graduated
  rates on any distribution treated as effectively connected with the non-United
  States stockholder's conduct of a United States trade or business, in the same
  manner as United States stockholders are taxed on distributions. A corporate
  non-United States stockholder may, in addition, be subject to the 30% branch
  profits tax. We plan to withhold United States income tax at the rate of 30% on
  the gross amount of any distribution paid to a non-United States stockholder
  unless:
  - a lower treaty rate applies and the non-United States stockholder files
  an IRS Form W-8BEN evidencing eligibility for that reduced rate with us;
  - the non-United States stockholder files an IRS Form W-8ECI with us
  claiming that the distribution is effectively connected income.
  A non-United States stockholder will not incur tax on a distribution in
  excess of our current and accumulated earnings and profits if the excess portion
  of the distribution does not exceed the adjusted basis of the stockholder's
  shares of common stock. Instead, the excess portion of the distribution will
  reduce the adjusted basis of the shares. A non-United States stockholder will be
  subject to tax on a distribution that exceeds both our current and accumulated
  earnings and profits and the adjusted basis of its shares, if the non-United
  States stockholder otherwise would be subject to tax on gain from the sale or
  disposition of shares of common stock, as described below. Because we generally
  cannot determine at the time we make a distribution whether or not the
  distribution will exceed our current and accumulated earnings and profits, we
  normally will withhold tax on the entire amount of any distribution at the same
  rate as we would withhold on a dividend. However, a non-United States
  stockholder may obtain a refund of amounts we withhold if we later determine
  that a distribution in fact exceeded our current and accumulated earnings and
  We must withhold 10% of any distribution that exceeds our current and
  accumulated earnings and profits. We will, therefore, withhold at a rate of 10%
  on any portion of a distribution not subject to withholding at a rate of 30%.
  For any year in which we qualify as a REIT, a non-United States stockholder
  will incur tax on distributions attributable to gain from our sale or exchange
  of "United States real property interests" under the "FIRPTA" provisions of the
  Code. The term "United States real property interests" includes interests in
  real property and stocks in corporations at least 50% of whose assets consist of
  interests in real property. Under the FIRPTA rules, a non-United States
  stockholder is taxed on distributions attributable to gain from sales of United
  States real property interests as if the gain were effectively connected with
  the conduct of a United States business of the non-United States stockholder. A
  non-United States stockholder thus would be taxed on such a distribution at the
  normal capital gain rates applicable to United States stockholders, subject to
  applicable alternative minimum tax and a special alternative minimum tax in the
  case of a nonresident alien individual. A non-United States corporate
  stockholder not entitled to treaty relief or exemption also may be subject to
  the 30% branch profits tax on such a distribution. We must withhold 35% of any
  distribution that we could designate as a capital gain dividend. A non-United
  States stockholder may receive a credit against our tax liability for the amount
  we withhold.
  For taxable years beginning on and after January 1, 2005, for non-U.S.
  stockholders of our publicly-traded shares, capital gain distributions that are
  attributable to our sale of real property will not be subject to FIRPTA and
  therefore will be treated as ordinary dividends rather than as gain from the
  sale of a United States real property interest, as long as the non-U.S.
  stockholder did not own more than 5% of the class of our stock on which the
  distributions are made during the taxable year. As a result, non-U.S.
  stockholders generally would be subject to withholding tax on such capital gain
  distributions in the same manner as they are subject to withholding tax on
  ordinary dividends.
  A non-United States stockholder generally will not incur tax under FIRPTA
  with respect to gain on a sale of shares of common stock as long as, at all
  times, non-United States persons hold, directly or indirectly, less than 50% in
  value of the outstanding common stock. We cannot assure you that this test will
  be met. In addition, a non-United States stockholder that owned, actually or
  constructively, 5% or less of the outstanding common stock at all times during a
  specified testing period will not incur tax under FIRPTA on gain from a sale of
  common stock if the stock is "regularly traded" on an established securities
  market. Any gain subject to tax under FIRPTA will be treated in the same manner
  as it would be in the hands of United States stockholders subject to alternative
  minimum tax, but under a special alternative minimum tax in the case of
  nonresident alien individuals.
  A non-United States stockholder generally will incur tax on gain from the
  sale of common stock not subject to FIRPTA if:
  - the gain is effectively connected with the conduct of the non-United
  States stockholder's United States trade or business, in which case the
  non-United States stockholder will be subject to the same treatment as
  United States stockholders with respect to the gain; or
  - the non-United States stockholder is a nonresident alien individual who
  was present in the United States for 183 days or more during the taxable
  year and has a "tax home" in the United States, in which case the
  non-United States stockholder will incur a 30% tax on capital gains.
  OTHER TAX CONSEQUENCES
  Tax Aspects of Our Investments in the Operating Partnership.  The following
  discussion summarizes certain federal income tax considerations applicable to
  our direct or indirect investment in our operating partnership and any
  subsidiary partnerships or limited liability companies we form or acquire, each
  individually referred to as a Partnership and, collectively, as Partnerships.
  The following discussion does not cover state or local tax laws or any federal
  tax laws other than income tax laws.
  Classification as Partnerships.  We are entitled to include in our income
  our distributive share of each Partnership's income and to deduct our
  distributive share of each Partnership's losses only if such Partnership is
  classified for federal income tax purposes as a partnership (or an entity that
  is disregarded for federal income tax purposes if the entity has only one owner
  or member), rather than as a corporation or an association taxable as a
  corporation. An organization with at least two owners or members will be
  classified as a partnership, rather than as a corporation, for federal income
  tax purposes if it:
  - is treated as a partnership under the Treasury regulations relating to
  entity classification (the "check-the-box regulations"); and
  - is not a "publicly traded" partnership.
  Under the check-the-box regulations, an unincorporated entity with at least
  two owners or members may elect to be classified either as an association
  taxable as a corporation or as a partnership. If such an entity does not make an
  election, it generally will be treated as a partnership for federal income tax
  purposes. We intend that each Partnership will be classified as a partnership
  for federal income tax purposes (or else a disregarded entity where there are
  not at least two separate beneficial owners).
  A publicly traded partnership is a partnership whose interests are traded
  on an established securities market or are readily tradable on a secondary
  market (or a substantial equivalent). A publicly traded partnership is generally
  treated as a corporation for federal income tax purposes, but will not be so
  treated for any taxable year for which at least 90% of the partnership's gross
  income consists of specified passive income, including real property rents,
  gains from the sale or other disposition of real property, interest, and
  dividends (the "90% passive income exception").
  Treasury regulations, referred to as PTP regulations, provide limited safe
  harbors from treatment as a publicly traded partnership. Pursuant to one of
  those safe harbors, or private placement exclusion, interests in a partnership
  will not be treated as readily tradable on a secondary market or the substantial
  equivalent thereof if (i) all interests in the partnership were issued in a
  transaction or transactions that were not required to be registered under the
  Securities Act, and (ii) the partnership does not have more than 100
  partners at any time during the partnership's taxable year. For the
  determination of the number of partners in a partnership, a person owning an
  interest in a partnership, grantor trust, or S corporation that owns an interest
  in the partnership is treated as a partner in the partnership only if (i)
  substantially all of the value of the owner's interest in the entity is
  attributable to the entity's direct or indirect interest in the partnership and
  (ii) a principal purpose of the use of the entity is to permit the partnership
  to satisfy the 100-partner limitation. Each Partnership should qualify for the
  private placement exclusion.
  We have not requested, and do not intend to request, a ruling from the
  Internal Revenue Service that the Partnerships will be classified as
  partnerships for federal income tax purposes. If for any reason a Partnership
  were taxable as a corporation, rather than as a partnership, for federal income
  tax purposes, we likely would not be able to qualify as a REIT. See
  "-- Requirements for Qualification -- Income Tests" and " -- Requirements for
  Qualification -- Asset Tests." In addition, any change in a Partnership's status
  for tax purposes might be treated as a taxable event, in which case we might
  incur tax liability without any related cash distribution. See "-- Requirements
  for Qualification -- Distribution Requirements." Further, items of income and
  deduction of such Partnership would not pass through to its partners, and its
  partners would be treated as stockholders for tax purposes. Consequently, such
  Partnership would be required to pay income tax at corporate rates on its net
  income, and distributions to its partners would constitute dividends that would
  not be deductible in computing such Partnership's taxable income.
  INCOME TAXATION OF THE PARTNERSHIPS AND THEIR PARTNERS
  Partners, Not the Partnerships, Subject to Tax.  A partnership is not a
  taxable entity for federal income tax purposes. We will therefore take into
  account our allocable share of each Partnership's income, gains, losses,
  deductions, and credits for each taxable year of the Partnership ending with or
  within our taxable year, even if we receive no distribution from the Partnership
  for that year or a distribution less than our share of taxable income.
  Similarly, even if we receive a distribution, it may not be taxable if the
  distribution does not exceed our adjusted tax basis in our interest in the
  Partnership Allocations.  Although a partnership agreement generally will
  determine the allocation of income and losses among partners, allocations will
  be disregarded for tax purposes if they do not comply with the provisions of the
  federal income tax laws governing partnership allocations. If an allocation is
  not recognized for federal income tax purposes, the item subject to the
  allocation will be reallocated in accordance with the partners' interests in the
  partnership, which will be determined by taking into account all of the facts
  and circumstances relating to the economic arrangement of the partners with
  respect to such item. Each Partnership's allocations of taxable income, gain,
  and loss are intended to comply with the requirements of the federal income tax
  laws governing partnership allocations.
  Tax Allocations With Respect to Contributed Properties.  Income, gain,
  loss, and deduction attributable to appreciated or depreciated property that is
  contributed to a partnership in exchange for an interest in the partnership must
  be allocated in a manner such that the contributing partner is charged with, or
  benefits from, respectively, the unrealized gain or unrealized loss associated
  with the property at the time of the contribution. Similar rules apply with
  respect to property revalued on the books of a partnership. The amount of such
  unrealized gain or unrealized loss, referred to as built-in gain or built-in
  loss, is generally equal to the difference between the fair market value of the
  contributed or revalued property at the time of contribution or revaluation and
  the adjusted tax basis of such property at that time, referred to as a book-tax
  difference. Such allocations are solely for federal income tax purposes and do
  not affect the book capital accounts or other economic or legal arrangements
  among the partners. The United States Treasury Department has issued regulations
  requiring partnerships to use a "reasonable method" for allocating items with
  respect to which there is a book-tax difference and outlining several reasonable
  allocation methods. Our operating partnership generally intends to use the
  traditional method for allocating items with respect to which there is a
  book-tax difference.
  Basis in Partnership Interest.  Our adjusted tax basis in any partnership
  interest we own generally will be:
  - the amount of cash and the basis of any other property we contribute to
  the partnership;
  - increased by our allocable share of the partnership's income (including
  tax-exempt income) and our allocable share of indebtedness of the
  partnership; and
  - reduced, but not below zero, by our allocable share of the partnership's
  loss, the amount of cash and the basis of property distributed to us, and
  constructive distributions resulting from a reduction in our share of
  indebtedness of the partnership.
  Loss allocated to us in excess of our basis in a partnership interest will
  not be taken into account until we again have basis sufficient to absorb the
  loss. A reduction of our share of partnership indebtedness will be treated as a
  constructive cash distribution to us, and will reduce our adjusted tax basis.
  Distributions, including constructive distributions, in excess of the basis of
  our partnership interest will constitute taxable income to us. Such
  distributions and constructive distributions normally will be characterized as
  long-term capital gain.
  Depreciation Deductions Available to Partnerships.  The initial tax basis
  of property is the amount of cash and the basis of property given as
  consideration for the property. A partnership in which we are a partner
  generally will depreciate property for federal income tax purposes under the
  modified accelerated cost recovery system of depreciation, referred to as MACRS.
  Under MACRS, the partnership generally will depreciate furnishings and equipment
  over a seven year recovery period using a 200% declining balance method and a
  half-year convention. If, however, the partnership places more than 40% of its
  furnishings and equipment in service during the last three months of a taxable
  year, a mid-quarter depreciation convention must be used for the furnishings and
  equipment placed in service during that year. Under MACRS, the partnership
  generally will depreciate buildings and improvements over a 39 year recovery
  period using a straight line method and a mid-month convention. The operating
  partnership's initial basis in properties acquired in exchange for units of the
  operating partnership should be the same as the transferor's basis in such
  properties on the date of acquisition by the partnership. Although the law is
  not entirely clear, the partnership generally will depreciate such property for
  federal income tax purposes over the same remaining useful lives and under the
  same methods used by the transferors. The partnership's tax depreciation
  deductions will be allocated among the partners in accordance with their
  respective interests in the partnership, except to the extent that the
  partnership is required under the federal income tax laws governing partnership
  allocations to use a method for allocating tax depreciation deductions
  attributable to contributed or revalued properties that results in our receiving
  a disproportionate share of such deductions.
  Under recently enacted legislation, a first-year bonus depreciation of 50%
  may be available for certain tenant improvements. In addition, certain qualified
  leasehold improvement property placed in service before January 1, 2006 will be
  depreciated over a 15-year recovery period using a straight method and a
  half-year convention.
  Sale of a Partnership's Property.  Generally, any gain realized by a
  Partnership on the sale of property held for more than one year will be
  long-term capital gain, except for any portion of the gain treated as
  depreciation or cost recovery recapture. Any gain or loss recognized by a
  Partnership on the disposition of contributed or revalued properties will be
  allocated first to the partners who contributed the properties or who were
  partners at the time of revaluation, to the extent of their built-in gain or
  loss on those properties for federal income tax purposes. The partners' built-in
  gain or loss on contributed or revalued properties is the difference between the
  partners' proportionate share of the book value of those properties and the
  partners' tax basis allocable to those properties at the time of the
  contribution or revaluation. Any remaining gain or loss recognized by the
  Partnership on the disposition of contributed or revalued properties, and any
  gain or loss recognized by the Partnership on the disposition of other
  properties, will be allocated among the partners in accordance with their
  percentage interests in the Partnership.
  Our share of any Partnership gain from the sale of inventory or other
  property held primarily for sale to customers in the ordinary course of the
  Partnership's trade or business will be treated as income from a prohibited
  transaction subject to a 100% tax. Income from a prohibited transaction may have
  an adverse effect on our ability to satisfy the gross income tests for REIT
  status. See "-- Requirements for
  Qualification -- Income Tests." We do not presently intend to acquire or hold,
  or to allow any Partnership to acquire or hold, any property that is likely to
  be treated as inventory or property held primarily for sale to customers in the
  ordinary course of our, or the Partnership's, trade or business.
  Taxable REIT Subsidiaries.  As described above, we have formed and have
  made a timely election to treat MPT Development Services, Inc. as a taxable REIT
  subsidiary and may form or acquire additional taxable REIT subsidiaries in the
  future. A taxable REIT subsidiary may provide services to our tenants and engage
  in activities unrelated to our tenants, such as third-party management,
  development, and other independent business activities.
  We and any corporate subsidiary in which we own stock must make an election
  for the subsidiary to be treated as a taxable REIT subsidiary. If a taxable REIT
  subsidiary directly or indirectly owns shares of a corporation with more than
  35% of the value or voting power of all outstanding shares of the corporation,
  the corporation will automatically also be treated as a taxable REIT subsidiary.
  of one or more taxable REIT subsidiaries, irrespective of whether such
  securities may also qualify under the 75% assets test, and no more than 25% of
  the value of our assets may consist of the securities that are not qualifying
  assets under the 75% test, including, among other things, certain securities of
  a taxable REIT subsidiary, such as stock or non-mortgage debt.
  Rent we receive from our taxable REIT subsidiaries will qualify as "rents
  from real property" as long as at least 90% of the leased space in the property
  is leased to persons other than taxable REIT subsidiaries and related party
  tenants, and the amount paid by the taxable REIT subsidiary to rent space at the
  property is substantially comparable to rents paid by other tenants of the
  property for comparable space. The taxable REIT subsidiary rules limit the
  deductibility of interest paid or accrued by a taxable REIT subsidiary to us to
  of transactions between a taxable REIT subsidiary and us or our tenants that are
  not conducted on an arm's-length basis.
  A taxable REIT subsidiary may not directly or indirectly operate or manage
  a healthcare facility. For purposes of this definition a "healthcare facility"
  means a hospital, nursing facility, assisted living facility, congregate care
  facility, qualified continuing care facility, or other licensed facility which
  extends medical or nursing or ancillary services to patients and which is
  operated by a service provider which is eligible for participation in the
  Medicare program under Title XVIII of the Social Security Act with respect to
  such facility.
  State and Local Taxes.  We and our stockholders may be subject to taxation
  by various states and localities, including those in which we or a stockholder
  transacts business, owns property or resides. The state and local tax treatment
  may differ from the federal income tax treatment described above. Consequently,
  stockholders should consult their own tax advisors regarding the effect of state
  and local tax laws upon an investment in our common stock.
  Friedman, Billings, Ramsey & Co., Inc. is acting as representative of the
  underwriters of this offering. Subject to the terms and conditions in the
  underwriting agreement entered into in connection with the sale of our common
  stock described in this prospectus, the underwriters named below have severally
  agreed to purchase the number of shares of common stock set forth opposite their
  respective names.
  UNDERWRITER                                                    OF COMMON STOCK
  -----------                                                    ----------------
  Friedman, Billings, Ramsey & Co., Inc. .....................
  J.P. Morgan Securities Inc. ................................
  TOTAL:......................................................
  The underwriting agreement provides that the obligations of the
  underwriters to purchase and accept delivery of the shares of common stock
  offered by this prospectus are subject to approval by their counsel of legal
  matters and to other conditions contained in the underwriting agreement
  including, among other items, the receipt of legal opinions from counsel, the
  receipt of comfort letters from our current auditors, the absence of any
  material adverse changes affecting us or our business and the absence of any
  objections from the National Association of Securities Dealers, Inc., or NASD,
  with respect to the fairness and reasonableness of the underwriting terms. The
  underwriters are obligated to purchase and accept delivery of all of the shares
  of common stock offered by this prospectus, other than those covered by the
  over-allotment option described below, if any shares are taken. If an
  underwriter defaults, the underwriting agreement provides that the purchase
  commitments of the non-defaulting underwriters may be increased or, in the event
  that the purchase commitments of the defaulting underwriters represent more than
  10% of the total number shares of common stock offered by this prospectus, the
  underwriting agreement may be terminated.
  The underwriters propose to offer the shares of common stock directly to
  the public at the public offering price indicated on the cover page of this
  prospectus and to various dealers at that price less a concession not to exceed
  $     per share, of which $     may be reallowed to other dealers. After this
  offering, the public offering price, concession and reallowance to dealers may
  be reduced by the underwriters. No reduction shall change the amount of proceeds
  to be received by us as indicated on the cover page of this prospectus. The
  common stock is offered by the underwriters as stated in this prospectus,
  subject to receipt and acceptance by them and subject to their right to reject
  any order in whole or in part.
  We have granted to the underwriters an option, exercisable within 30 days
  after the date of this prospectus, to purchase from time to time up to an
  aggregate of 1,704,750 additional shares of our common stock to cover
  over-allotments, if any, at the public offering price less the underwriting
  discount. If the underwriters exercise their over-allotment option to purchase
  any of the additional 1,704,750 shares of common stock, each underwriter,
  subject to certain conditions, will become obligated to purchase these
  additional shares based on the underwriters' percentage purchase commitment in
  the offering as indicated in the table above. If purchased, these additional
  shares will be sold by the underwriters on the same terms as those on which the
  shares offered by this prospectus are being sold. The underwriters may exercise
  the over-allotment option to cover over-allotments made in connection with the
  sale of the shares of common stock offered in this offering.
  The following table summarizes the underwriting compensation to be paid to
  the underwriters by us and the selling stockholders. These amounts assume both
  no exercise and full exercise of the underwriters' over-allotment option to
  purchase additional shares.
  WITHOUT            WITH
  OVER-ALLOTMENT   OVER-ALLOTMENT
  --------------   --------------
  By us:
  Per share:..............................................
  Total:..................................................
  By the selling stockholders:
  We have agreed to reimburse Friedman, Billings, Ramsey & Co., Inc. for
  certain of its reasonable out-of-pocket expenses in connection with this
  offering, including any fees or disbursements of its counsel, not to exceed
  Pursuant to a registration rights agreement between us, Friedman, Billings,
  Ramsey & Co., Inc. and certain holders of our common stock, we are required to
  pay substantially all of the expenses in connection with the registration of the
  shares of common stock purchased in the April 2004 private placement. In
  addition, we will reimburse selling stockholders in an aggregate amount of up to
  $50,000, for the fees and expenses of one counsel and one accounting firm, as
  selected by Friedman, Billings, Ramsey & Co., Inc. for the selling stockholders,
  to review any registration statement. Each selling stockholder participating in
  this offering will bear a proportionate share of the underwriting discounts
  payable to the underwriters, all transfer taxes and transfer fees and any other
  expense of the selling stockholders not allocated to us in the registration
  rights agreement.
  We estimate that the total expenses payable by us in connection with this
  offering will be approximately $1.25 million.
  Pursuant to an engagement letter dated November 13, 2003, we appointed
  Friedman, Billings, Ramsey & Co., Inc. to act until April 7, 2006 as lead
  underwriter or placement agent in connection with any public or private
  offerings of our equity securities and to act as our financial advisor in
  connection with any purchase or sale of stock, merger, corporate acquisition,
  business combination or other strategic combination in which we may engage.
  Other than with respect to this offering, the underwriters are not providing us
  with any financial advisory services. Subject to the terms of that engagement
  letter, the underwriters and their affiliates may from time to time engage in
  future transactions with us and our affiliates and provide services to us and
  our affiliates in the ordinary course of their business.
  Friedman, Billings, Ramsey Group, Inc., an affiliate of Friedman, Billings,
  Ramsey & Co., Inc. currently beneficially owns approximately 10.95% of our
  outstanding common stock. Under the Conduct Rules of the NASD, when underwriters
  or their affiliates beneficially own 10% or more of the common equity of a
  company, they may be deemed to have a "conflict of interest" under Rule
  2720(b)(7) of the rules and regulations of the NASD. When a NASD member with a
  conflict of interest participates as an underwriter in a public offering, that
  rule requires that the initial public offering price be no higher than that
  recommended by a "qualified independent underwriter," as defined by the NASD,
  which qualified independent underwriter shall also participate in the
  preparation of the registration statement and the prospectus and exercise the
  usual standards of "due diligence" in its participation. Although this rule does
  not apply to REITs and therefore to this offering, J.P. Morgan Securities Inc.
  has been engaged to act as a qualified independent underwriter. In this role,
  J.P. Morgan Securities Inc. has performed a due diligence investigation of us
  and participated in the preparation of this prospectus and the registration
  statement. The initial public offering price of the shares of common stock will
  be no higher than the price recommended by J.P. Morgan Securities Inc. We and
  the selling stockholders have agreed to indemnify J.P. Morgan Securities Inc.
  against liabilities incurred in connection with acting as a qualified
  independent underwriter, including liabilities under the Securities Act.
  We and the selling stockholders have also agreed to indemnify the
  underwriters against various liabilities, including liabilities under the
  Securities Act of 1933, or to contribute to payments the underwriters may be
  required to make because of any of those liabilities.
  We have applied to list our common stock on the New York Stock Exchange
  upon the completion of this offering under the symbol "MPW." In connection with
  the listing of our common stock on the New York Stock Exchange, the underwriters
  will undertake to sell round lots of 100 shares or more to a minimum of 2,000
  beneficial owners.
  Prior to this offering, there has been no public market for our common
  stock, other than limited trading on the Portal Market. The initial public
  offering price has been determined through negotiations between the underwriters
  and us. Among the factors considered in such determination were:
  - prevailing market conditions;
  - dividend yields and financial characteristics of publicly traded REITs
  that we and the underwriters believe to be comparable to us;
  - the present state of our financial and business operations;
  - our management;
  - estimates of our business and earnings potential; and
  - the prospects for the industry in which we operate.
  Each of our executive officers and directors has agreed, subject to
  specified exceptions, not to:
  - offer, sell, agree to offer or sell, solicit offers to purchase, grant
  any call option or purchase any put option with respect to, pledge,
  borrow or otherwise dispose of any shares of common stock, any of our or
  our subsidiaries' other equity securities or any securities convertible
  into or exercisable or exchangeable for shares of our common stock or any
  such equity securities; or
  - establish or increase any "put equivalent position" or liquidate or
  decrease any "call equivalent position" or otherwise enter into any swap,
  derivative or other transaction or arrangement that transfers to another,
  in whole or in part, any of the economic consequences associated with the
  ownership of any shares of our common stock or of our or our
  subsidiaries' other equity securities (regardless of whether any of these
  transactions are to be settled by the delivery of common stock, other
  securities, cash or otherwise) for a period of 180 days after the date of
  this prospectus without the prior written consent of Friedman, Billings,
  Ramsey & Co., Inc. This restriction terminates after the close of trading
  of the common stock on and including the 180th day after the date of this
  prospectus. However, Friedman, Billings, Ramsey & Co., Inc. may, in its
  sole discretion and at any time or from time to time before the
  termination of the 180-day period, without notice, release all or any
  portion of the securities subject to lock-up agreements. There are no
  other existing agreements between the underwriters and any officer or
  director who has executed a lock-up agreement providing consent to the
  sale of shares prior to the expiration of the lock-up period.
  In addition, we have agreed that, for 180 days after the date of this
  prospectus, we will not, without the prior written consent of Friedman,
  Billings, Ramsey & Co., Inc., issue, sell, contract to sell, or otherwise
  dispose of, any shares of common stock, any options or warrants to purchase any
  shares of common stock or any securities convertible into, exercisable for or
  exchangeable for shares of common stock other than our sale of shares in this
  offering, the issuance of options or shares of common stock upon the exercise of
  outstanding options or warrants, the issuance of options or shares of common
  stock under existing stock option and incentive plans, or the issuance of common
  stock or other securities convertible into common stock issued in connection
  with the acquisition of properties. We also have agreed that we will not consent
  to the disposition of any shares held by officers or directors subject to
  lock-up agreements prior to the expiration of their respective lock-up periods
  unless pursuant to an exception to those agreements or with the consent of
  Friedman, Billings, Ramsey & Co., Inc. The lockup provisions do not
  prohibit us from filing a resale registration statement to register the shares
  issued in our April 2004 private placement.
  Our stockholders other than our executive officers and directors may not
  date of this prospectus, subject to limited exceptions.
  In connection with this offering, the underwriters may engage in activities
  that stabilize, maintain or otherwise affect the price of our common stock,
  - short sales;
  - syndicate covering transactions;
  - imposition of penalty bids; and
  - purchases to cover positions created by short sales.
  Stabilizing transactions consist of bids or purchases made for the purpose
  of preventing or retarding a decline in the market price of our common stock
  while this offering is in progress. Stabilizing transactions may include making
  short sales of our common stock, which involves the sale by the underwriters of
  a greater number of shares of common stock than they are required to purchase in
  this offering, and purchasing common stock from us or in the open market to
  cover positions created by short sales. Short sales may be "covered" shorts,
  which are short positions in an amount not greater than the underwriters'
  over-allotment option referred to above, or may be "naked" shorts, which are
  short positions in excess of that amount.
  The underwriters may close out any covered short position either by
  exercising their over-allotment option, in whole or in part, or by purchasing
  shares in the open market. In making this determination, the underwriters will
  consider, among other things, the price of shares available for purchase in the
  open market compared to the price at which the underwriters may purchase shares
  pursuant to the over-allotment option.
  A naked short position is more likely to be created if the underwriters are
  concerned that there may be downward pressure on the price of the common stock
  in the open market that could adversely affect investors who purchased in this
  offering. To the extent that the underwriters create a naked short position,
  they will purchase shares in the open market to cover the position.
  The representative also may impose a penalty bid on underwriters and
  selling group members. This means that if the representative purchases shares in
  the open market in stabilizing transactions or to cover short sales, the
  representative can require the underwriters or selling group members that sold
  those shares as part of this offering to repay underwriting discount or the
  selling concession received by them.
  As a result of these activities, the price of our common stock may be
  higher than the price that otherwise might exist in the open market. If the
  underwriters commence these activities, they may discontinue them at any time.
  The underwriters may carry out these transactions on the New York Stock
  Exchange, in the over-the-counter market or otherwise.
  The underwriters do not expect sales to accounts over which they exercise
  discretionary authority to exceed 5% of the total number of shares of common
  stock offered by this prospectus.
  At our request, the underwriters have reserved up to   % of the common
  stock being offered by this prospectus for sale to our directors, employees,
  business associates and related persons at the public offering price. The sales
  will be made by Friedman, Billings, Ramsey & Co., Inc. through a directed share
  program. We do not know if these persons will choose to purchase all or any
  portion of these reserved shares, but any purchases they do make will reduce the
  number of shares available to the general public. These persons must commit to
  purchase no later than the close of business on the day following the date of
  this prospectus. Any directors, employees or other persons purchasing such
  reserved shares will be prohibited from disposing of or hedging such shares for
  a period of at least 180 days after the date of this
  prospectus. The common stock issued in connection with the directed share
  program will be issued as part of the underwritten public offering.
  The validity of the common stock and certain tax matters, including REIT
  qualification and debt characterization, will be passed upon for us by Baker,
  Donelson, Bearman, Caldwell & Berkowitz, P.C. The summary of legal matters
  contained in the section of this prospectus under the heading "United States
  Federal Income Tax Considerations" is based on the opinion of Baker Donelson.
  Certain legal matters in connection with this offering will be passed upon for
  the underwriters by Hunton & Williams LLP.
  Our consolidated financial statements and the accompanying financial
  statement schedule as of December 31, 2004, and 2003, and for the year ended
  December 31, 2004 and for the period from inception (August 27, 2003) through
  December 31, 2003, included herein, have been audited by KPMG LLP, independent
  registered public accounting firm, as stated in their report included herein.
  The consolidated financial statements of Vibra as of December 31, 2004 and
  for the period from inception (May 14, 2004) through December 31, 2004 included
  herein have been audited by Parente Randolph, LLC, independent registered public
  accounting firm, as stated in their report included herein.
  The independent registered public accounting firms have not examined,
  compiled or otherwise applied procedures to any financial forecast, projection
  or anticipated results presented herein and, accordingly, do not express an
  opinion or any other form of assurance on such.
  WHERE YOU CAN FIND MORE INFORMATION
  We have filed with the Securities and Exchange Commission a registration
  statement on Form S-11, including exhibits, schedules and amendments filed with,
  or incorporated by reference in, this registration statement, under the
  Securities Act with respect to the shares of our common stock to be sold in this
  offering. This prospectus does not contain all of the information set forth in
  the registration statement and exhibits and schedules to the registration
  statement. For further information with respect to our company and the shares of
  our common stock to be sold in this offering, reference is made to the
  registration statement, including the exhibits to the registration statement.
  Statements contained in this prospectus as to the contents of any contract or
  other document referred to in, or incorporated by reference in, this prospectus
  are not necessarily complete and, where that contract is an exhibit to the
  registration statement, each statement is qualified in all respects by the
  exhibit to which the reference relates. Copies of the registration statement,
  including the exhibits and schedules to the registration statement, may be
  examined without charge at the public reference room of the Securities and
  Exchange Commission, 450 Fifth Street, N.W. Room 1024, Washington, DC 20549.
  Information about the operation of the public reference room may be obtained by
  calling the Securities and Exchange Commission at 1-800-SEC-0300. Copies of all
  or a portion of the registration statement can be obtained from the public
  reference room of the Securities and Exchange Commission upon payment of
  prescribed fees. Our Securities and Exchange Commission filings, including our
  registration statement, are also available to you on the Securities and Exchange
  Commission's website, www.sec.gov.
  As a result of this offering, we will become subject to the information and
  reporting requirements of the Securities Exchange Act, and will file periodic
  reports, proxy statements and will make available to our stockholders annual
  reports containing audited financial information for each year, and quarterly
  reports for the first three quarters of each fiscal year containing unaudited
  interim financial information.
  INDEX TO FINANCIAL STATEMENTS
  UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
  Medical Properties Trust, Inc. and Subsidiaries
  Unaudited Pro Forma Consolidated Balance Sheet as of March
  31, 2005...............................................   F-3
  Unaudited Pro Forma Consolidated Statement of Operations
  for the Three Months Ended March 31, 2005..............   F-4
  for the Year Ended December 31, 2004...................   F-5
  Notes to Unaudited Pro Forma Consolidated Financial
  Statements.............................................   F-6
  HISTORICAL FINANCIAL INFORMATION
  Consolidated Balance Sheets as of March 31, 2005 and
  December 31, 2004......................................  F-12
  Consolidated Statements of Operations for the Three Months
  Ended March 31, 2005 and March 31, 2004................  F-13
  Consolidated Statements of Cash Flows for the Three Months
  Notes to Consolidated Financial Statements................  F-15
  Report of Independent Registered Public Accounting Firm...  F-18
  Consolidated Balance Sheets as of December 31, 2004 and
  Consolidated Statements of Operations for the Year Ended
  December 31, 2004 and for the Period from Inception
  (August 27, 2003) through December 31, 2003............  F-20
  Consolidated Statements of Cash Flows for the Year Ended
  Consolidated Statements of Stockholders' Equity (Deficit)
  for the Year Ended December 31, 2004 and for the Period
  from Inception (August 27, 2003) through December 31,
  2003...................................................  F-22
  Schedule III -- Real Estate and Accumulated Depreciation....  F-34
  Vibra Healthcare, LLC (formerly Highmark Healthcare, LLC)
  Consolidated Balance Sheet as of March 31, 2005 and
  Consolidated Statements of Operations and Changes in
  Partners' Deficit for the Three Months Ended March 31,
  Consolidated Statement of Cash Flows for the Three Months
  Ended March 31, 2005...................................  F-37
  Consolidated Balance Sheet as of December 31, 2004........  F-48
  Consolidated Statement of Operations and Changes in
  Partner's Capital for the Period from Inception (May
  14, 2004) through December 31, 2004....................  F-49
  Consolidated Statement of Cash Flows for the Period from
  Inception (May 14, 2004) through December 31, 2004.....  F-50
  The following unaudited pro forma consolidated financial information sets
  forth:
  - the historical financial information derived from our audited
  consolidated financial statements for the year ended December 31, 2004
  and the three months ended March 31, 2005 as adjusted to:
  - give effect to acquisition of our facilities acquired and leased to
  Vibra and Desert Valley as if we owned them from the inception of each
  period presented;
  - give effect to our loans made to Vibra;
  - give effect to our probable acquisitions;
  - give effect to this offering; and
  - our pro forma, as adjusted unaudited consolidated balance sheet as of
  March 31, 2005, and the pro forma, as adjusted, unaudited consolidated
  statement of operations for the year ended December 31, 2004, to give
  effect to our initial portfolio, our probable acquisitions and this
  This section contains forward-looking statements, which are projections of
  future performance and the assumptions upon which the forward-looking statements
  are based. Our actual results could differ materially from those expressed in
  our forward-looking statements as a result of various risks, including those set
  forth in "Risk Factors" and elsewhere in this prospectus. You should read the
  information below along with all other financial information and analysis
  presented in this prospectus, including the sections captioned "Management's
  Discussion and Analysis of Financial Condition and Results of Operations" and
  our historical financial statements and related notes.
  The unaudited pro forma consolidated financial information is presented for
  informational purposes only. We do not expect that this information will reflect
  our future results of operations or financial position. The unaudited pro forma
  adjustments and eliminations are based on available information and upon
  assumptions that we believe are reasonable. The unaudited pro forma financial
  information assumes that the above described transactions were completed as of
  December 31, 2004, for purposes of the unaudited pro forma consolidated balance
  sheets and as of the first day of the period presented for purposes of the
  unaudited pro forma consolidated statements of operations.
  Unaudited Pro Forma Consolidated Balance Sheet
  PRO FORMA                                  TRANSACTIONS
  EFFECT OF              EFFECT              ------------
  DIVIDENDS        COMPLETED             OF THIS              GULF STATES
  HISTORICAL     DECLARED       TRANSACTIONS            OFFERING                HEALTH
  ------------   -----------     -------------         ------------           ------------
  Real estate assets
  Land............................  $ 12,670,000   $        --     $ 12,670,000          $         --           $  1,984,643(3)
  Buildings and improvements......   136,381,785            --      136,381,785                    --             24,726,479(3)
  Construction in progress........    36,757,429                     36,757,429                                           --
  Intangible lease assets.........     6,320,410            --        6,320,410                    --              1,073,878(3)
  ------------   -----------     ------------          ------------           ------------
  Gross investment in real
  estate assets...............   192,129,624            --      192,129,624                    --             27,785,000
  Accumulated depreciation and
  amortization..................    (2,320,877)           --       (2,320,877)                   --                     --
  Net investment in real estate
  assets......................   189,808,747            --      189,808,747                    --             27,785,000
  Cash and cash equivalents.........    82,053,255    (7,055,493)(1)   74,997,762           115,013,800(4)         (27,785,000)(3)
  Interest and rent receivable......       748,677            --          748,677                    --                     --
  Unbilled rent receivable..........     5,177,925            --        5,177,925                    --                     --
  Loans.............................    42,498,111            --       42,498,111                    --
  Other assets......................     6,017,364            --        6,017,364                    --                     --
  TOTAL ASSETS..................  $326,304,079   $(7,055,493)    $319,248,586          $115,013,800           $         --
  ============   ===========     ============          ============           ============
  LIABILITIES AND STOCKHOLDERS'
  Long-term debt..................  $ 74,141,667   $        --     $ 74,141,667          $         --           $         --
  Accounts payable and accrued
  expenses......................    10,072,197    (2,869,115)(1)    7,203,082                    --                     --
  Deferred revenue................     4,518,896            --        4,518,896                    --                     --
  Lease deposits..................     3,314,556            --        3,314,556                    --                     --
  Total liabilities.............    92,047,316    (2,869,115)      89,178,201                    --                     --
  Minority interest.................     1,762,500            --        1,762,500                    --                     --
  Preferred stock,................            --            --               --                    --                     --
  Common stock,...................        26,083            --           26,083                11,553(2)(4)               --
  Additional paid in capital......   233,701,690            --      233,701,690           117,070,247(2)(4)               --
  Accumulated deficit.............    (1,233,510)   (4,186,378)      (5,419,888)           (2,068,000)(2)(4)              --
  Total stockholders' equity....   232,494,263    (4,186,378)     228,307,885           115,013,800                     --
  TOTAL LIABILITIES AND
  STOCKHOLDERS' EQUITY........  $326,304,079   $(7,055,493)    $323,248,586          $115,013,800           $         --
  Land............................  $ 14,654,643
  Buildings and improvements......   161,108,264
  Construction in progress........    36,757,429
  Intangible lease assets.........     7,394,288
  estate assets...............   219,914,624
  amortization..................    (2,320,877)
  assets......................   217,593,747
  Cash and cash equivalents.........   162,226,562
  Interest and rent receivable......       748,677
  Unbilled rent receivable..........     5,177,925
  Loans.............................    42,498,111
  Other assets......................     6,017,364
  TOTAL ASSETS..................  $434,262,386
  Long-term debt..................  $ 74,141,667
  expenses......................     7,203,082
  Deferred revenue................     4,518,896
  Lease deposits..................     3,314,556
  Total liabilities.............    89,178,201
  Minority interest.................     1,762,500
  Preferred stock,................            --
  Common stock,...................        37,636
  Additional paid in capital......   350,771,937
  Accumulated deficit.............    (7,487,888)
  Total stockholders' equity....   343,321,685
  STOCKHOLDERS' EQUITY........  $434,262,386
  See accompanying notes to Unaudited Pro Forma Consolidated Financial Statements.
  For the Three Months Ended March 31, 2005
  COMPLETED                      PROBABLE
  ACQUISITION                   ACQUISITION
  TRANSACTIONS                  TRANSACTIONS
  ------------    PRO FORMA     ------------
  DESERT       EFFECT OF         GULF
  VALLEY --      COMPLETED        STATES        COMPANY
  HISTORICAL    VICTORVILLE    TRANSACTIONS      HEALTH       PRO FORMA
  -----------   ------------   ------------   ------------   -----------
  Rent income...................  $ 5,268,490     $529,449(5)  $ 5,797,939      $871,917(6)  $ 6,669,856
  Interest income from loans....    1,212,038           --       1,212,038            --       1,212,038
  -----------     --------     -----------      --------     -----------
  Total revenues.............    6,480,528      529,449       7,009,977       871,917       7,881,894
  Depreciation and
  amortization...............      842,407      115,316(5)      957,723       172,439(6)    1,130,162
  Property expenses.............       29,466           --          29,466            --          29,466
  General and administrative....    1,698,249           --       1,698,249            --       1,698,249
  Costs of terminated
  acquisitions...............       23,095           --          23,095            --          23,095
  Total operating expenses...    2,593,217      115,316       2,708,533       172,439       2,880,972
  Operating income......    3,887,311      414,133       4,301,444       699,478       5,000,922
  Interest income...............      383,772           --         383,772            --         383,772
  Interest expense..............     (711,149)          --        (711,149)           --        (711,149)
  Net other expense..........     (327,377)          --        (327,377)           --        (327,377)
  NET INCOME...............  $ 3,559,934     $414,133     $ 3,974,067      $699,478     $ 4,673,545
  ===========     ========     ===========      ========     ===========
  NET INCOME PER SHARE --
  BASIC.................  $      0.14                                                $      0.12
  DILUTED...............  $      0.14                                                $      0.12
  OUTSTANDING -- BASIC...   26,099,195                                                 37,652,195(7)
  OUTSTANDING -- DILUTED...   26,103,259                                                 37,656,259(7)
  For the Year Ended December 31, 2004
  COMPLETED ACQUISITION                       ACQUISITION
  TRANSACTIONS              PRO FORMA     TRANSACTIONS
  -----------------------------     EFFECT OF     ------------
  VIBRA       DESERT VALLEY-     COMPLETED     GULF STATES       COMPANY
  HISTORICAL    FACILITIES      VICTORVILLE      TRANSACTIONS      HEALTH        PRO FORMA
  -----------   -----------    --------------    ------------   ------------    -----------
  Rent income...................  $ 8,611,344   $ 9,774,139(8)   $3,228,104(9)   $21,613,587     $3,487,670(10) $25,101,257
  Interest income from loans....    2,282,115     2,754,934(8)           --        5,037,049             --       5,037,049
  -----------   -----------      ----------      -----------     ----------     -----------
  Total revenues..............   10,893,459    12,529,073       3,228,104       26,650,636      3,487,670      30,138,306
  amortization................    1,478,470     1,660,526(8)      691,894(9)     3,830,890        689,755(10)   4,520,645
  Property expenses.............       93,502        93,502(8)           --          187,004             --         187,004
  General and administrative....    5,057,284            --              --        5,057,284             --       5,057,284
  acquisitions................      585,345            --              --          585,345             --         585,345
  Total operating expense.....    7,214,601     1,754,028         691,894        9,660,523        689,755      10,350,278
  Operating income..........    3,678,858    10,775,045       2,536,210       16,990,113      2,797,915      19,788,028
  Interest income...............      930,260            --              --          930,260             --         930,260
  Interest expense..............      (32,769)           --              --          (32,769)            --         (32,769)
  Net other income............      897,491            --              --          897,491             --         897,491
  NET INCOME................  $ 4,576,349   $10,775,045      $2,536,210      $17,887,604     $2,797,915     $20,685,519
  ===========   ===========      ==========      ===========     ==========     ===========
  NET INCOME PER
  SHARE -- BASIC.........  $      0.24                                                                   $       .67
  SHARE -- DILUTED.......  $      0.24                                                                   $       .67
  OUTSTANDING -- BASIC...   19,310,833                                                                    30,863,833(11)
  OUTSTANDING -- DILUTED...   19,312,634                                                                    30,865,634(11)
  NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
  ADJUSTMENTS FOR UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF MARCH 31,
  (1) Record the $.11 per share distribution declared and accrued in March,
  2005, and paid in April, 2005, and the $.16 per share distribution declared in
  May, 2005, payable in July, 2005.
  Shares of common stock outstanding at March 31,
  2005..........................................   26,082,862    26,082,862
  Restricted shares issued to employees on April
  25, 2005......................................           --        82,000
  Total shares....................................   26,082,862    26,164,862
  Cash distribution per share.....................  $      0.11   $      0.16
  Total cash distribution.........................  $ 2,869,115   $ 4,186,378   $ 7,055,493
  ===========   ===========   ===========
  (2) Records the issuance of 11,365,000 common shares at a public offering
  price of $11.00 per share less underwriting commission and other expenses,
  calculated as follows:
  Number of Shares Offered....................................    11,365,000
  Price per Share.............................................  $      11.00
  Gross Proceeds..............................................  $125,015,000
  Less: Underwriting discounts, commissions and other
  transaction costs.........................................   (10,001,200)
  Net proceeds from offering..................................  $115,013,800
  Common stock at par value...................................  $     11,365
  Additional paid in capital..................................   115,002,435
  Pro forma adjustment to cash................................  $115,013,800
  (3) Probable Acquisition: Records the acquisition of the three Gulf States
  Health facilities as though we acquired them on March 31, 2005. The Company has
  not closed on the acquisition of this facilities, but the Company believes that
  the acquisitions are probable.
  TOTAL FOR GULF STATES
  HEALTH PROBABLE
  COVINGTON    DENHAM SPRINGS     HAMMOND         ACQUISITIONS
  -----------   --------------   -----------   ---------------------
  Land.......................  $   821,429     $  428,571     $   734,643        $ 1,984,643
  Building...................   10,234,101      5,339,532       9,152,846         24,726,479
  Intangible lease assets....      444,470        231,897         397,511          1,073,878
  -----------     ----------     -----------        -----------
  Total cost.................  $11,500,000     $6,000,000     $10,285,000        $27,785,000
  ===========     ==========     ===========        ===========
  (4) Records compensation expense related to restricted stock awards made to
  senior management upon completion of this offering, calculated by multiplying
  the number of shares awarded times the price per share of common stock in this
  Shares of common stock awarded..............................     188,000
  Price per share of common stock in this offering............  $    11.00
  Total value of shares awarded...............................  $2,068,000
  Common stock at par value...................................  $      188
  Additional paid in capital..................................   2,067,812
  Pro forma adjustment to accumulated deficit.................  $2,068,000
  No adjustment for this is shown in the accompanying pro forma statement of
  operations since the impact is non-recurring as defined in Regulation S-X
  210.11-02(b)(5).
  ADJUSTMENTS FOR UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
  THREE MONTHS ENDED MARCH 31, 2005:
  (5) Completed Acquisition: Records three months of rent income for the
  Desert Valley -- Victorville facility as though we owned it from January 1,
  2005, to March 31, 2005. This facility was acquired on February 28, 2005. Rent
  income is based on the straight-line rent (as required by SFAS No. 13) in the
  lease agreements between the Company and the lessee. Pro forma rent income for
  the Desert Valley -- Victorville for the three months ended March 31, 2005
  consists of the following:
  Rent income for three months of the first year..............  $807,026
  Historical rent for the period February 28 - March 31,
  2005......................................................   277,577
  Pro forma rent income.......................................  $529,449
  Depreciation of buildings (straight line using a 40 year life) and
  amortization of intangible lease assets (straight line using a fifteen year
  life) for the three months ended March 31, 2005 as though the properties were
  occupied on January 1, 2005.
  ANNUAL        DEPRECIATION AND   AMORTIZATION FOR      PRO FORMA
  DEPRECIATION AND   AMORTIZATION FOR    FEBRUARY 28 -     DEPRECIATION AND
  COST         AMORTIZATION       THREE MONTHS      MARCH 31, 2005      AMORTIZATION
  -----------   ----------------   ----------------   ----------------   ----------------
  Land.................  $ 2,000,000       $     --           $     --           $    --            $     --
  Buildings............   24,994,553        624,864            156,216            52,072             104,144
  Intangible lease
  assets.............    1,005,447         67,030             16,758             5,586              11,172
  -----------       --------           --------           -------            --------
  $28,000,000       $691,894           $172,974           $57,658            $115,316
  ===========       ========           ========           =======            ========
  (6) Probable Acquisition: Records three months of rent income for the three
  Gulf States Health facilities as though we owned them from January 1, 2005, to
  March 31, 2005. Rent income is based on the straight-line rent (as required by
  SFAS No. 13) in the lease agreements between the Company and the lessee. Pro
  forma rent income for the Gulf States Health facilities for the three months
  ended March 31, 2005 consists of the following:
  ANNUAL RENT   THREE MONTHS RENT
  -----------   -----------------
  Gulf States -- Covington................................  $1,443,520        $360,880
  Gulf States -- Denham Springs...........................     753,141         188,285
  Gulf States -- Hammond..................................   1,291,009         322,752
  ----------        --------
  $3,487,670        $871,917
  ==========        ========
  amortization of intangibles (straight-line using a 15 year life) for the three
  months ended March 31, 2005 as though the properties were occupied on January 1,
  COST                           ANNUAL        DEPRECIATION AND
  COST         -- DENHAM        COST       DEPRECIATION AND   AMORTIZATION FOR
  -- COVINGTON      SPRINGS      -- HAMMOND      AMORTIZATION       THREE MONTHS
  --------------   -----------   ------------   ----------------   ----------------
  Land..................   $   821,429     $  428,571    $   734,643        $     --           $     --
  Buildings.............    10,234,101      5,339,532      9,152,846         618,163            154,541
  assets..............       444,470        231,897        397,511          71,592             17,898
  -----------     ----------    -----------        --------           --------
  $11,500,000     $6,000,000    $10,285,000        $689,755           $172,439
  ===========     ==========    ===========        ========           ========
  (7) Pro forma weighted average shares outstanding, basic and diluted, are
  BASIC       DILUTED
  ----------   ----------
  Historical..................................................  26,099,195   26,103,259
  Effect of this offering.....................................  11,365,000   11,365,000
  Restricted shares awarded to management and employees.......     188,000      188,000
  Pro forma weighted average shares...........................  37,652,195   37,656,259
  ==========   ==========
  The shares issued in this offering and the restricted shares awarded to
  management and employees are shown as though they were issued on January 1,
  YEAR ENDED DECEMBER 31, 2004:
  (8) Completed Acquisition: Records year of rent income for the six Vibra
  initial property purchases as though we owned them from January 1, 2004, to
  December 31, 2004. Rent income is based on the monthly straight-line rent (as
  required by SFAS No. 13) for each property. Rent income from the Vibra
  properties is as follows:
  ANNUAL RENT
  Bowling Green...............................................   $ 5,471,964
  Fresno......................................................     2,675,182
  Kentfield...................................................     1,094,393
  Marlton.....................................................     4,752,598
  New Bedford.................................................     3,171,528
  Denver......................................................     1,219,818
  TOTAL.....................................................    18,385,483
  Historical rent income for July 1 - December 31, 2004.......     8,611,344
  Pro forma rent income.......................................   $ 9,774,139
  Records interest income from loans to Vibra entities as though the loans
  were made on January 1, 2004 and interest income was earned for the year ended
  December 31, 2004, at the stated rate of 10.25%.
  LOANS          INCOME
  -----------   ---------------
  Bowling Green............................................   $11,771,389     $1,206,567
  Fresno...................................................     6,561,308        672,534
  Kentfield................................................     5,422,387        555,795
  Marlton..................................................    11,203,366      1,148,345
  New Bedford..............................................     8,361,930        857,098
  Denver...................................................     5,821,564        596,710
  -----------     ----------
  TOTAL..................................................   $49,141,944      5,037,049
  Historical interest income for July 1 - December 31,
  2004...................................................                    2,282,115
  Pro forma interest income................................                   $2,754,934
  life) for the year ended December 31, 2004 as though the properties were
  acquired on January 1, 2004.
  ANNUAL         ANNUAL      DEPRECIATION AND
  DEPRECIATION   AMORTIZATION     AMORTIZATION
  ------------   ------------   ----------------
  Bowling Green................................    $  839,268      $104,736        $  944,004
  Fresno.......................................       409,080        51,204           460,284
  Kentfield....................................       119,124        23,808           142,932
  Marlton......................................       772,572        90,972           863,544
  New Bedford..................................       494,304        60,384           554,688
  Denver.......................................       150,324        23,220           173,544
  ----------      --------        ----------
  TOTAL......................................     2,784,672       354,324         3,138,996
  Historical depreciation and amortization for
  July 1 - December 31, 2004.................     1,311,757       166,713         1,478,470
  Pro forma depreciation and amortization......    $1,472,915      $187,611        $1,660,526
  ==========      ========        ==========
  Property expenses consist primarily of payments for the ground lease at
  Marlton for the year ended December 31, 2004.
  (9) Completed Acquisition: Records one year of rent income for the Desert
  Valley -- Victorville facility as though we owned it from January 1, 2004, to
  December 31, 2004. Rent income is based on the straight-line rent (as required
  by SFAS No. 13) in the lease agreements between the Company and the lessee. Pro
  forma rent income for the Desert Valley -- Victorville for the year ended
  December 31, 2004 consists of the following:
  Desert Valley -- Victorville................................   $3,228,104
  COST         AMORTIZATION
  -----------   ----------------
  Land.....................................................  $ 2,000,000       $     --
  Buildings................................................   24,994,553        624,864
  Intangible lease assets..................................    1,005,447         67,030
  -----------       --------
  $28,000,000       $691,894
  ===========       ========
  (10) Probable Acquisition: Records one year of rent income for the three
  by SFAS No. 13) in the lease agreement between the Company and the lessee. Pro
  forma rent income for the Gulf States Health facilities for the year ended
  Gulf States -- Covington....................................  $1,443,520
  Gulf States -- Denham Springs...............................     753,141
  Gulf States -- Hammond......................................   1,291,009
  Depreciation of buildings (straight-line using a 40 year life) for the year
  ended December 31, 2004 as though the properties were occupied on January 1,
  COST --        COST --         COST --      DEPRECIATION AND
  COVINGTON    DENHAM SPRINGS     HAMMOND        AMORTIZATION
  -----------   --------------   ------------   ----------------
  Land.........................  $   821,429     $  428,571     $   734,643        $     --
  Buildings....................   10,234,101      5,339,532       9,152,846         618,163
  Intangible lease assets......      444,470        231,897         397,511          71,592
  -----------     ----------     -----------        --------
  $11,500,000     $6,000,000     $10,285,000        $689,755
  ===========     ==========     ===========        ========
  (11) Pro forma weighted average shares outstanding, basic and diluted, are
  March 31, 2005 and December 31, 2004
  MARCH 31, 2005   DECEMBER 31, 2004
  --------------   -----------------
  (UNAUDITED)         (AUDITED)
  Land......................................................   $ 12,670,000      $ 10,670,000
  Buildings and improvements................................    136,381,785       111,387,232
  Construction in progress..................................     36,757,429        24,318,098
  Intangible lease assets...................................      6,320,410         5,314,963
  ------------      ------------
  Gross investment in real estate assets.................    192,129,624       151,690,293
  Accumulated depreciation..................................     (2,059,997)       (1,311,757)
  Accumulated amortization..................................       (260,880)         (166,713)
  Net investment in real estate assets...................    189,808,747       150,211,823
  Cash and cash equivalents...................................     82,053,255        97,543,677
  Interest and rent receivable................................        748,677           419,776
  Unbilled rent receivable....................................      5,177,925         3,206,853
  Loans.......................................................     42,498,111        50,224,069
  Other assets................................................      6,017,364         4,899,865
  TOTAL ASSETS................................................   $326,304,079      $306,506,063
  ============      ============
  Long-term debt............................................   $ 74,141,667      $ 56,000,000
  Accounts payable and accrued expenses.....................     10,072,197        10,903,025
  Deferred revenue..........................................      4,518,896         3,578,229
  Lease deposits............................................      3,314,556         3,296,365
  Total liabilities......................................     92,047,316        73,777,619
  Minority interest...........................................      1,762,500         1,000,000
  Stockholders' equity (deficit)
  Preferred stock, $0.001 par value. Authorized 10,000,000
  shares; no shares outstanding..........................             --                --
  Common stock, $0.001 par value. Authorized 100,000,000
  shares; issued and outstanding -- 26,082,862 shares at
  March 31, 2005 and December 31, 2004...................         26,083            26,083
  Additional paid in capital................................    233,701,690       233,626,690
  Accumulated deficit.......................................     (1,233,510)       (1,924,329)
  Total stockholders' equity.............................    232,494,263       231,728,444
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..................   $326,304,079      $306,506,063
  See accompanying notes to consolidated financial statements.
  For the Three Months Ended March 31, 2005 and March 31, 2004
  THREE MONTHS ENDED   THREE MONTHS ENDED
  MARCH 31, 2005       MARCH 31, 2004
  ------------------   ------------------
  Rent billed............................................      $3,923,049           $      --
  Unbilled rent..........................................       1,345,441                  --
  Interest income from loans.............................       1,212,038                  --
  ----------           ---------
  Total revenues......................................       6,480,528                  --
  Real estate depreciation...............................         748,240                  --
  Amortization of intangible lease assets................          94,167                  --
  Other property expenses................................          29,466                  --
  General and administrative.............................       1,698,249             485,504
  Costs of terminated acquisitions.......................          23,095                  --
  Total operating expenses............................       2,593,217             485,504
  Operating income (loss)...........................       3,887,311            (485,504)
  Interest income........................................         383,772                  --
  Interest expense.......................................        (711,149)             (8,222)
  Net other expense...................................        (327,377)             (8,222)
  NET INCOME (LOSS).................................      $3,559,934           $(493,726)
  ==========           =========
  NET INCOME (LOSS) PER SHARE, BASIC................      $     0.14           $   (0.30)
  WEIGHTED AVERAGE SHARES OUTSTANDING -- BASIC......      26,099,195           1,630,435
  NET INCOME (LOSS) PER SHARE, DILUTED..............      $     0.14           $   (0.30)
  WEIGHTED AVERAGE SHARES OUTSTANDING -- DILUTED....      26,103,259           1,630,435
  Net income (loss).........................................     $  3,559,934          $(493,726)
  provided by operating activities
  Depreciation and amortization.........................          874,730                 --
  Amortization of deferred financing costs..............          143,172                 --
  Unbilled rent revenue.................................       (1,345,441)                --
  Deferred fee revenue..................................          (34,964)                --
  Deferred stock units issued to directors..............           75,000                 --
  Increase in:
  Interest and rent receivable..........................         (328,901)                --
  Other assets..........................................         (837,057)           (25,173)
  Accounts payable and accrued expenses.................         (830,828)           375,964
  Deferred revenue......................................          350,000                 --
  Lease deposits........................................           18,191                 --
  ------------          ---------
  Net cash provided by (used for) operating activities......        1,643,836           (142,935)
  Real estate acquired....................................      (28,000,000)                --
  Loans receivable........................................        7,725,958                 --
  Construction in progress................................      (12,439,331)            (4,143)
  Equipment acquired......................................          (15,698)            (4,972)
  Net cash used for investing activities....................      (32,729,071)            (9,115)
  Addition to long-term debt..............................       19,000,000                 --
  Proceeds from loan payable..............................               --            100,000
  Payments of long-term debt..............................         (858,333)                --
  Deferred financing costs................................         (440,239)                --
  Distributions paid......................................       (2,869,115)                --
  Sale of partnership units...............................          762,500                 --
  Net cash provided by financing activities.................       15,594,813            100,000
  Increase in cash and cash equivalents for period..........      (15,490,422)           (52,050)
  Cash and cash equivalent at beginning of period.........       97,543,677            100,000
  CASH AND CASH EQUIVALENTS AT END OF PERIOD..................     $ 82,053,255          $  47,950
  ============          =========
  Supplemental schedule of non-cash investing activities:
  Additions to unbilled rent receivable recorded as deferred
  revenue.................................................     $    625,631          $      --
  Supplemental schedule of non-cash financing activities:
  Distributions declared, not paid..........................        2,869,115                 --
  Additional paid in capital from deferred stock units
  issued to directors.....................................           75,000                 --
  Interest paid, net of capitalized interest of $395,401 in
  2005......................................................          567,977              8,222
  FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
  1.  ORGANIZATION
  Medical Properties Trust, Inc., a Maryland corporation (the Company), was
  formed on August 27, 2003 under the General Corporation Law of Maryland for the
  purpose of engaging in the business of investing in and owning commercial real
  estate. The Company's operating partnership subsidiary, MPT Operating
  Partnership, L.P. (the Operating Partnership), was formed in September 2003.
  Through another wholly owned subsidiary, Medical Properties Trust, LLC, the
  Company is the sole general partner of the Operating Partnership. The Company
  presently owns directly all of the limited partnership interests in the
  The Company succeeded to the business of Medical Properties Trust, LLC, a
  Delaware limited liability company, which was formed in December 2002. On the
  day of formation, the Company issued 1,630,435 shares of common stock, and the
  membership interests of Medical Properties Trust, LLC were transferred to the
  Company. Medical Properties Trust, LLC had no assets, but had incurred
  liabilities for costs and expenses related to acquisition due diligence, a
  planned offering of common stock, consulting fees and office overhead in an
  aggregate amount of approximately $423,000, which was assumed by the Operating
  Partnership and has been included in the accompanying consolidated statement of
  The Company's primary business strategy is to acquire and develop real
  estate and improvements, primarily for long term lease to providers of
  healthcare services such as operators of inpatient physical rehabilitation
  hospitals, long-term acute care hospitals, surgery centers, centers for
  treatment of specific conditions such as cardiac, pulmonary, cancer, and
  neurological hospitals, and other healthcare-oriented facilities. The Company
  considers this to be a single business segment as defined in Statement of
  Financial Accounting Standard (SFAS) No. 131, Disclosures about Segments of an
  Enterprise and Related Information.
  On April 6, 2004, the Company completed the sale of 25.6 million shares of
  common stock in a private placement to qualified institutional buyers and
  accredited investors. The Company received $233.5 million after deducting
  offering costs. The proceeds are being used to purchase properties, to pay debt
  and accrued expenses and for working capital and general corporate purposes.
  The Company has filed with the Securities and Exchange Commission (SEC) a
  Form S-11 registration statement for an Initial Public Offering (IPO) of common
  stock. The Company has not determined the number of shares nor price per share
  to be offered in the IPO. The size of the offering will be determined based on
  the volume of purchase commitments which the Company has entered into at the
  time the registration statement becomes effective with the SEC.
  2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Use of Estimates:  The preparation of financial statements in conformity
  with accounting principles generally accepted in the United States of America
  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. Actual results could differ
  from those estimates.
  Principles of Consolidation:  Property holding entities and other
  subsidiaries of which the Company owns 100% of the equity or has 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 the Company owns less than 100% of the equity interest, the
  Company consolidates the property if it has the direct or indirect ability to
  make decisions about the entities' activities based upon the terms of the
  respective entities' ownership agreements. For entities in which the Company
  owns less than 100% and
  FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004 -- (CONTINUED)
  does not have the direct or indirect ability to make decisions but does exert
  significant influence over the entities' activities, the Company records its
  ownership in the entity using the equity method of accounting.
  The Company periodically evaluates all of its transactions and investments
  to determine if they represent variable interests in a variable interest entity
  as defined by FASB Interpretation No. 46 (revised December 2003) (FIN 46-R),
  Consolidation of Variable Interest Entities, an interpretation of Accounting
  Research Bulletin No. 51, Consolidated Financial Statements. If the Company
  determines that it has a variable interest in a variable interest entity, the
  Company determines if it is the primary beneficiary of the variable interest
  entity. The Company consolidates each variable interest entity in which the
  Company, by virtue of its transactions with or investments in the entity, is
  considered to be the primary beneficiary. The Company re-evaluates its status as
  primary beneficiary when a variable interest entity or potential variable
  interest entity has a material change in its variable interests.
  Unaudited Interim Consolidated Financial Statements:  The accompanying
  unaudited interim consolidated financial statements have been prepared in
  accordance with accounting principles generally accepted in the United States
  for interim financial information. Accordingly, they do not include all the
  information and footnotes required by generally accepted accounting principles
  for complete financial statements. In the opinion of management, all adjustments
  (consisting of normal recurring accruals) considered necessary for a fair
  presentation have been included. Operating results for the three-month period
  ended March 31, 2005, are not necessarily indicative of the results that may be
  expected for the year ending December 31, 2005.
  3.  REAL ESTATE AND LENDING ACTIVITIES
  On February 9, 2005, Vibra paid $7.8 million of principal and interest on
  various loans from the Company. The payments left a $41.4 million loan payable
  to the Company by Vibra. The Company has no commitments to make additional loans
  to Vibra.
  In February, 2005, the Company purchased a general acute care hospital for
  $28 million. The purchase price was paid from loan proceeds and from the
  proceeds of the Company's private placement. Upon closing the purchase of the
  hospital, the Company and the seller entered into a fifteen year lease of the
  hospital back to the seller, with renewal options for three additional five year
  terms. The Company has recorded the following assets from this transaction:
  Land........................................................  $ 2,000,000
  Building....................................................   24,994,553
  Intangible lease assets.....................................    1,005,447
  The Company has amended its leases with Vibra effective March 31, 2005. The
  amendment revises the financial covenants to cover a full twelve months period
  of operations, revises the percentage rents calculations to clarify the effects
  of Vibra reducing its loan balances with the Company, and allows the Company to
  require Vibra to escrow future insurance and property tax payments on the leased
  As of March 31, 2005, the Company has sold $762,500 of limited partnership
  units to qualified individual investors in a private offering of the Company's
  general acute care hospital and medical office building limited partnerships in
  Texas. The period of the offering will extend through April 30, 2005.
  4.  LONG-TERM DEBT
  In December 2004, the Company received $56 million as part of a $75
  million, three year term loan. In February 2005, the Company received the
  remaining $19 million on this loan. All other terms and conditions of the loan
  remain unchanged.
  Maturities of long-term debt at March 31, 2005, for each successive twelve
  month period are as follows:
  2006........................................................  $ 3,750,000
  2007........................................................    3,750,000
  2008........................................................   66,641,667
  5.  STOCK AWARDS
  In February, 2005, the Company awarded 7,500 deferred stock units valued at
  $10 per share to three new independent directors elected to the Company's board.
  The total value of $75,000 has been recorded as additional paid-in-capital in
  the consolidated balance sheet at March 31, 2005, and an expense in the
  consolidated income statement for the three months ended March 31, 2005.
  6.  EARNINGS PER SHARE
  The following is a reconciliation of the weighted average shares used in
  net income per common share to the weighted average shares used in net income
  per common share -- assuming dilution for the three months ended March 31, 2005
  and 2004, respectively:
  2005        2004
  ----------   ---------
  Weighted average number of shares issued and outstanding....  26,082,862   1,630,435
  Vested deferred stock units.................................      16,333          --
  Weighted average shares -- basic............................  26,099,195   1,630,435
  Common stock warrants and options...........................       4,425          --
  Weighted average shares -- diluted..........................  26,103,620   1,630,435
  ==========   =========
  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  The Board of Directors and Stockholders
  Medical Properties Trust, Inc.:
  We have audited the accompanying consolidated balance sheets of Medical
  Properties Trust, Inc. and subsidiaries as of December 31, 2004 and 2003, and
  the related consolidated statements of operations, stockholders' equity
  (deficit), and cash flows for the year ended December 31, 2004 and for the
  period from inception (August 27, 2003) to December 31, 2003. In connection with
  our audits of the consolidated financial statements, we have also audited the
  accompanying financial statement Schedule III. These consolidated financial
  statements and schedule are the responsibility of the Company's management. Our
  responsibility is to express an opinion on these consolidated financial
  statements and schedule based on our audits.
  We conducted our audits in accordance with the standards of the Public
  Company Accounting Oversight Board (United States). Those standards require that
  we plan and perform the audits to obtain reasonable assurance about whether the
  financial statements are free of material misstatement. An audit includes
  examining, on a test basis, evidence supporting the amounts and disclosures in
  the financial statements. An audit also includes assessing the accounting
  principles used and significant estimates made by management, as well as
  evaluating the overall financial statement presentation. We believe that our
  audits provide a reasonable basis for our opinion.
  In our opinion, the consolidated financial statements referred to above
  present fairly, in all material respects, the financial position of Medical
  the results of their operations and their cash flows for the year ended December
  31, 2004 and for the period from inception (August 27, 2003) to December 31,
  2003 in conformity with U.S. generally accepted accounting principles. Also in
  our opinion, the related financial statement schedule, when considered in
  relation to the basic consolidated financial statements taken as a whole,
  presents fairly in all material respects the information set forth therein.
  /s/ KPMG LLP
  December 31, 2004 and December 31, 2003
  DECEMBER 31, 2004   DECEMBER 31, 2003
  -----------------   -----------------
  Land......................................................    $ 10,670,000         $        --
  Buildings and improvements................................     111,387,232                  --
  Construction in progress..................................      24,318,098             166,301
  Intangible lease assets...................................       5,314,963                  --
  ------------         -----------
  Gross investment in real estate assets.................     151,690,293             166,301
  Accumulated depreciation..................................      (1,311,757)                 --
  Accumulated amortization..................................        (166,713)                 --
  Net investment in real estate assets...................     150,211,823             166,301
  Cash and cash equivalents...................................      97,543,677             100,000
  Interest receivable.........................................         419,776                  --
  Unbilled rent receivable....................................       3,206,853                  --
  Loans receivable............................................      50,224,069                  --
  Other assets................................................       4,899,865             201,832
  TOTAL ASSETS................................................    $306,506,063         $   468,133
  ============         ===========
  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
  Long-term debt............................................    $ 56,000,000         $        --
  Accounts payable and accrued expenses.....................      10,903,025           1,389,779
  Deferred revenue..........................................       3,578,229                  --
  Lease deposit.............................................       3,296,365                  --
  Loan payable..............................................              --             100,000
  Total liabilities......................................      73,777,619           1,489,779
  Minority interest...........................................       1,000,000                  --
  shares; no shares outstanding..........................              --                  --
  shares; issued and outstanding  -- 26,082,862 shares at
  December 31, 2004 and 1,630,435 shares at December 31,
  2003...................................................          26,083               1,630
  Additional paid in capital................................     233,626,690                  --
  Accumulated deficit.......................................      (1,924,329)         (1,023,276)
  Total stockholders' equity (deficit)...................     231,728,444          (1,021,646)
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)........    $306,506,063         $   468,133
  For The Year Ended December 31, 2004 and
  Period from Inception (August 27, 2003) through December 31, 2003
  YEAR ENDED      PERIOD FROM INCEPTION
  DECEMBER 31,       (AUGUST 27, 2003)
  2004       THROUGH DECEMBER 31, 2003
  ------------   -------------------------
  Rent billed.............................................  $ 6,162,278           $        --
  Unbilled rent...........................................    2,449,066                    --
  Interest income from loans..............................    2,282,115                    --
  -----------           -----------
  Total revenues.......................................   10,893,459                    --
  Real estate depreciation................................    1,311,757                    --
  Amortization of intangible lease assets.................      166,713                    --
  Other property expenses.................................       93,502                    --
  General and administrative..............................    5,057,284               992,418
  Costs of terminated acquisitions........................      585,345                30,858
  Total operating expenses.............................    7,214,601             1,023,276
  Operating income (loss)............................    3,678,858            (1,023,276)
  Interest income.........................................      930,260                    --
  Interest expense........................................      (32,769)                   --
  Net other income.....................................      897,491                    --
  NET INCOME (LOSS)..................................  $ 4,576,349           $(1,023,276)
  ===========           ===========
  NET INCOME (LOSS) PER SHARE, BASIC.................  $      0.24           $     (0.63)
  WEIGHTED AVERAGE SHARES OUTSTANDING -- BASIC.......   19,310,833             1,630,435
  NET INCOME (LOSS) PER SHARE, DILUTED...............  $      0.24           $     (0.63)
  WEIGHTED AVERAGE SHARES OUTSTANDING -- DILUTED.....   19,312,634             1,630,435
  PERIOD FROM INCEPTION
  YEAR ENDED       (AUGUST 27, 2003) THROUGH
  DECEMBER 31, 2004       DECEMBER 31, 2003
  -----------------   --------------------------
  Net income (loss).........................................    $   4,576,349            $(1,023,276)
  Depreciation and amortization.........................        1,517,530                     --
  Unbilled rent revenue.................................       (2,449,066)                    --
  Warrant issued to lender..............................           24,500                     --
  Deferred stock units issued to directors..............          125,000                     --
  Interest receivable...................................         (419,776)                    --
  Other assets..........................................         (309,769)                    --
  Accounts payable and accrued expenses.................        6,644,130              1,391,409
  Deferred revenue......................................          210,000                     --
  -------------            -----------
  Net cash provided by operating activities.................        9,918,898                368,133
  Real estate acquired....................................     (127,372,195)                    --
  Loans receivable........................................      (44,317,263)                    --
  Construction in progress................................      (23,151,797)              (166,301)
  Equipment acquired......................................         (759,387)                    --
  Net cash used for investing activities....................     (195,600,642)              (166,301)
  Addition to long-term debt..............................       56,000,000                     --
  Proceeds from loan payable..............................          200,000                100,000
  Payment of loan payable.................................         (300,000)                    --
  Deferred financing costs................................       (3,869,767)              (201,832)
  Distributions paid......................................       (2,608,286)                    --
  Sale of common stock, net of offering costs.............      233,703,474                     --
  Net cash provided by (used for) financing activities......      283,125,421               (101,832)
  Increase in cash and cash equivalents for period..........       97,443,677                100,000
  Cash at beginning of period.............................          100,000                     --
  CASH AND CASH EQUIVALENTS AT END OF PERIOD..................    $  97,543,677            $   100,000
  =============            ===========
  Additions to unbilled rent receivables recorded as
  deferred revenue........................................    $     757,787            $        --
  Additions to loans receivable recorded as lease deposits
  and deferred revenue....................................        5,906,807                     --
  Minority interest granted for contribution of land to
  development project...................................        1,000,000                     --
  Distributions declared, not paid........................        2,869,116                     --
  Deferred offering costs charged to proceeds from sale of
  common stock..........................................          201,832                     --
  issued to directors...................................          125,000                     --
  Conversion of accounts payable and accrued expenses to
  common stock..........................................               --                  1,630
  Interest expense paid.......................................           32,769                     --
  and Period from Inception (August 27, 2003) through December 31, 2003
  PREFERRED                COMMON                                               TOTAL
  ------------------   ----------------------   ADDITIONAL PAID   ACCUMULATED   STOCKHOLDERS'
  SHARES   PAR VALUE     SHARES     PAR VALUE     IN CAPITAL        DEFICIT        EQUITY
  ------   ---------   ----------   ---------   ---------------   -----------   -------------
  BALANCE AT INCEPTION
  (AUGUST 27, 2003).......     --      $  --             --    $    --     $         --     $        --   $         --
  Issuance of common
  stock.................     --         --      1,630,435      1,630               --              --          1,630
  Net loss................     --         --             --         --               --      (1,023,276)    (1,023,276)
  ----      -----     ----------    -------     ------------     -----------   ------------
  BALANCE AT DECEMBER 31,
  2003....................     --         --      1,630,435      1,630               --      (1,023,276)    (1,021,646)
  Redemption of founders'
  shares................     --         --     (1,108,527)    (1,108)           1,108              --             --
  Issuance of common stock
  in private placement
  (net of offering
  costs)................     --         --     25,560,954     25,561      233,476,082              --    233,501,643
  Value of warrants
  issued................     --         --             --         --           24,500              --         24,500
  Deferred stock units
  issued to directors...     --         --             --         --          125,000              --        125,000
  Distributions declared
  ($.21 per common
  share)................     --         --             --         --               --      (5,477,402)    (5,477,402)
  Net income..............     --         --             --         --               --       4,576,349      4,576,349
  2004....................     --      $  --     26,082,862    $26,083     $233,626,690     $(1,924,329)  $231,728,444
  ====      =====     ==========    =======     ============     ===========   ============
  to be offered in the IPO.
  owns less than 100% and does not have the direct or indirect ability to make
  decisions but does exert significant influence over the entities' activities,
  the Company records its ownership in the entity using the equity method of
  PERIOD FROM INCEPTION (AUGUST 27, 2003) THROUGH DECEMBER 31, 2003 -- (CONTINUED)
  Cash and Cash Equivalents:  Certificates of deposit and short-term
  investments with remaining maturities of three months or less when acquired and
  money-market mutual funds are considered cash equivalents.
  Deferred Costs:  Costs incurred prior to the completion of offerings of
  stock or other capital instruments that directly relate to the offering are
  deferred and netted against proceeds received from the offering. Costs incurred
  in connection with anticipated financings and refinancing of debt are
  capitalized as deferred financing costs in other assets and amortized over the
  lives of the related loans as an addition to interest expense to produce a
  constant effective yield on the loan (interest method). Costs that are
  specifically identifiable with, and incurred prior to the completion of,
  probable acquisitions are deferred and capitalized upon closing. The Company
  begins deferring costs when the Company and the seller have executed a letter of
  intent (LOI), commitment letter or similar document for the purchase of the
  property by the Company. Deferred acquisition costs are expensed when management
  determines that the acquisition is no longer probable. Leasing commissions and
  other leasing costs directly attributable to tenant leases 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 lessees
  are recognized as a reduction in interest income over the life of the loan by
  the interest method.
  Revenue Recognition:  The Company receives income from operating leases
  based on the fixed, minimum required rents (base rent) and from additional rent
  based on a percentage of tenant revenues once the tenant's revenue has exceeded
  an annual threshold (percentage rent). Rent revenue is recorded on the
  straight-line method over the terms of the related lease agreements for new
  leases and the remaining terms of existing leases for acquired properties. The
  straight-line method records the periodic average amount of rent earned over the
  term of a lease, taking into account contractual rent increases over the lease
  term. The straight-line method has the effect of recording more rent revenue
  from a lease than a tenant is required to pay during the first half of the lease
  term. During the last half 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 the consolidated statement of operations is shown as
  two amounts. Billed rent revenue is the amount of rent actually billed to the
  customer each period as required by the lease. Unbilled rent revenue is the
  difference between rent revenue earned based on the straight-line method and the
  amount recorded as billed rent revenue. These differences between rental
  revenues earned and amounts due per the respective lease agreements are charged,
  as applicable, to unbilled rent receivable. Percentage rents are recognized in
  the period in which revenue thresholds are met. Rental payments received prior
  to their recognition as income are classified as rent received in advance.
  Fees received from development and leasing services for lessees are
  initially recorded as deferred revenue and recognized as income over the initial
  term of an operating lease to produce a constant effective yield on the lease
  (interest method). Fees from lending services are recorded as deferred revenue
  and recognized as income over the life of the loan using the interest method.
  Acquired Real Estate Purchase Price Allocation:  The Company allocates the
  purchase price of acquired properties to net tangible and identified intangible
  assets acquired based on their fair values in accordance with the provisions of
  SFAS No. 141, Business Combinations. In making estimates of fair values for
  purposes of allocating purchase prices, the Company utilizes a number of
  sources, including independent appraisals that may be obtained in connection
  with the acquisition or financing of the respective property and other market
  data. The Company also considers information obtained about each property as a
  result of its pre-acquisition due diligence, marketing and leasing activities in
  estimating the fair value of the tangible and intangible assets acquired.
  The Company records above-market and below-market in-place lease values, if
  any, for its facilities which are based on the present value (using an interest
  rate which reflects the risks associated with the leases acquired) 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. The Company amortizes any resulting
  capitalized above-market lease values as a reduction of rental income over the
  remaining non-cancelable terms of the respective leases. The Company amortizes
  any resulting capitalized below-market lease values as an increase to rental
  income over the initial term and any fixed-rate renewal periods in the
  respective leases. Because the Company's strategy largely involves the
  origination of long term lease arrangements at market rates, management does not
  expect the above-market and below-market in-place lease values to be significant
  for many anticipated transactions.
  The Company measures the aggregate value of other intangible assets to be
  acquired based on the difference between (i) the property valued with existing
  in-place leases adjusted to market rental rates and (ii) the property valued as
  if vacant. Management's estimates of value are expected to be made using methods
  current market conditions, and costs to execute similar leases. Management also
  considers information obtained about each targeted facility as a result of
  expected lease-up periods, which are expected to range primarily from three to
  eighteen months, depending on specific local market conditions. Management also
  estimates costs to execute similar leases including leasing commissions, legal
  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.
  The Company amortizes the value of in-place leases, if any, to expense over
  the initial term of the respective leases, which range primarily from 10 to 15
  years. The value of customer relationship intangibles is amortized to expense
  over the initial term and any renewal periods in the respective leases, but in
  no event will the amortization period for intangible assets exceed the remaining
  depreciable life of the
  building. Should a tenant terminate its lease, the unamortized portion of the
  in-place lease value and customer relationship intangibles would be charged to
  expense.
  Real Estate and Depreciation:  Depreciation is calculated on the
  straight-line method over the estimated useful lives of the related assets, as
  Buildings and improvements.......................   40 years
  Tenant origination costs.........................   Remaining terms of the related leases
  Tenant improvements..............................   Term of related leases
  Furniture and equipment..........................   3-7 years
  Real estate is carried at depreciated cost. Expenditures for ordinary
  maintenance and repairs 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. In
  accordance with SFAS No. 144, Accounting for the Impairment of Long-Lived Assets
  and for Long-Lived Assets to Be Disposed Of the Company records impairment
  losses on long-lived assets used in operations when events and circumstances
  indicate that the assets might be impaired and the undiscounted cash flows
  estimated to be generated by those assets, including an estimated liquidation
  amount, during the expected holding periods are less than the carrying amounts
  of those assets. Impairment losses are measured as the difference between
  carrying value and fair value of assets. For assets held for sale, impairment is
  measured as the difference between carrying value and fair value, less cost of
  disposal. Fair value is based on estimated cash flows discounted at a
  risk-adjusted rate of interest.
  Construction in progress includes the cost of land, the cost of
  construction of buildings, improvements and 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.
  Loans Receivable:  Real estate related loans consist of working capital
  loans and long-term loans. Interest income on loans is recognized as earned
  based upon the principal amount outstanding. The working capital and long-term
  loans are generally secured by interests in receivables and corporate and
  individual guaranties.
  Losses from Rent Receivables and Loans Receivable:  A provision for losses
  on rent receivables and loans receivable is recorded when it becomes probable
  that the loan will not be collected in full. The provision is an amount which
  reduces the rent or loan to its estimated net realizable value based on a
  determination of the eventual amounts to be collected either from the debtor or
  from the collateral, if any. At that time, the Company discontinues recording
  interest income on the loan or rent receivable from the tenant.
  Net Income (Loss) Per Share:  The Company reports earnings per share
  pursuant to SFAS No. 128, Earnings Per Share. Basic net income (loss) per share
  is computed by dividing the net income (loss) to common stockholders by the
  weighted average number of common shares and potential common stock outstanding
  during the period. Diluted net income (loss) per share is computed by dividing
  the net income (loss) available to common shareholders by the weighted average
  number of common shares outstanding during the period, adjusted for the assumed
  conversion of all potentially dilutive outstanding share options.
  Income Taxes:  For the period from January 1, 2004 through April 5, 2004,
  the Company has elected Sub-chapter S status for income tax purposes, at which
  time the Company filed its final tax returns as a Sub-chapter S company. Since
  April 6, 2004, the Company has conducted its business as a real estate
  investment trust (REIT) under Sections 856 through 860 of the Internal Revenue
  Code of 1986, as
  amended (the Code). The Company will file its initial tax return as a REIT for
  the period from April 6, 2004, through December 31, 2004, at which time it must
  formally make an election to be taxed as a REIT. To qualify as a REIT, the
  Company must meet certain organizational and operational requirements, including
  a requirement to currently distribute to shareholders at least 90% of its
  ordinary taxable income. As a REIT, the Company generally will not be subject to
  federal income tax on taxable income that it distributes to its shareholders. If
  the Company fails to qualify as a REIT in any taxable year, it will then be
  subject to federal income taxes on its taxable income at regular corporate rates
  and will not be permitted to qualify for treatment as a REIT for federal income
  tax purposes for four years following the year during which qualification is
  lost, unless the Internal Revenue Service grants the Company relief under
  certain statutory provisions. Such an event could materially adversely affect
  the Company's net income and net cash available for distribution to
  shareholders. However, the Company believes that it will be organized and
  operate in such a manner as to qualify for treatment as a REIT and intends to
  operate in the foreseeable future in such a manner so that the Company will
  remain qualified as a REIT for federal income tax purposes.
  The Company's financial statements include the operations of a taxable REIT
  subsidiary, MPT Development Services, Inc. (MDS) that is not entitled to a
  dividends paid deduction and is subject to federal, state and local income
  taxes. MDS is authorized to provide property development, leasing and management
  services for third-party owned properties and makes loans to lessees and
  Stock-Based Compensation:  The Company currently sponsors a stock option
  and restricted stock award plan that was established in 2004. The Company
  accounts for its stock option plan under the recognition and measurement
  provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock
  Issued to Employees (APB No. 25) and related interpretations. Under APB No. 25,
  no expense is recorded for options which are exercisable at the price of the
  Company's stock at the date the options are granted. Deferred compensation on
  restricted stock relates to the issuance of restricted stock to employees and
  directors of the Company. Deferred compensation is amortized to compensation
  expense based on the passage of time and certain performance criteria.
  Fair Value of Financial Instruments:  The Company has various assets and
  liabilities that are considered financial instruments. The Company estimates
  that the carrying value of cash and cash equivalents, interest receivable and
  accounts payable and accrued expenses approximates their fair values. The fair
  value of unbilled rent receivable has been estimated based on expected payment
  dates and discounted at a rate which the Company considers appropriate for such
  assets considering their credit quality and maturity. The fair value of loans
  receivable is estimated based on the present value of future payments,
  discounted at a rate which the Company considers appropriate for such assets
  considering their credit quality and maturity. The Company estimates that the
  carrying value of the Company's long term debt should approximate fair value
  because the debt is variable rate and adjusts daily with changes in the
  underlying interest rate index.
  Reclassifications:  Certain reclassifications have been made to the 2003
  consolidated financial statements to conform to the 2004 consolidated financial
  statement presentation. These reclassifications have no impact on shareholders'
  equity or net income.
  New Accounting Pronouncements:  The following is a summary of recently
  issued accounting pronouncements which have been issued but not yet adopted by
  the Company and which could have a material effect on the Company's financial
  position and results of operations.
  In December 2004, the Financial Accounting Standards Board (FASB) issued
  SFAS No. 123(R), Share-Based Payment, which is a revision of SFAS No. 123(R),
  Accounting for Stock Based
  Compensation. SFAS No. 123(R) establishes standards for the accounting for
  transactions in which an entity exchanges its equity instruments for goods or
  services. This Statement focuses primarily on accounting for transactions in
  which an entity obtains employee services in share-based payment transactions.
  SFAS No. 123(R) requires that the fair value of such equity instruments be
  recognized as expense in the historical financial statements as services are
  performed. Prior to SFAS No. 123(R), only certain pro-forma disclosures of fair
  value were required. SFAS No. 123(R) becomes effective for public companies with
  their first annual reporting period that begins after June 15, 2005. For
  non-public companies, the standard becomes effective for their first fiscal year
  beginning after December 15, 2005. The Company does not expect SFAS No. 123(R)
  to have a material effect on its financial position or the results of its
  3.  PROPERTY ACQUISITIONS AND LOANS
  On July 1, 2004, the Company purchased four rehabilitation facilities at a
  price of $96.8 million, which were then leased to a new operator of the
  facilities, Vibra Healthcare, LLC and its operating subsidiaries (collectively,
  Vibra). The Company also made loans of $33.3 million to Vibra. On August 18,
  2004, the Company purchased two additional rehabilitation facilities for $30.6
  million, which were then leased to Vibra, and made additional loans to Vibra of
  $13.8 million. The Company made an additional $2 million loan to Vibra on
  October 1, 2004. Loans totaling $42.9 million accrue interest at the rate of
  10.25% per year and are to be paid over 15 years with interest only for the
  first three years and the principal balance amortizing over the remaining 12
  year period. Loans totaling $6.2 million accrue interest at the rate of 10.25%
  per year. Vibra will pay fees of $1.5 million to the Company for transacting the
  leases and loans. The Company has determined that Vibra is a variable interest
  entity as defined by FIN 46-R. The Company has also determined that it is not
  the primary beneficiary of Vibra and, therefore, has not consolidated Vibra in
  the Company's consolidated financial statements. For the year ended December 31,
  2004, Vibra has been the only tenant which is required to make payments under
  operating leases and loans from the Company.
  The Company recorded intangible lease assets of $5,314,963 representing the
  estimated value of the Vibra leases which were entered into at the date the
  Company acquired the facilities. The Company recorded amortization expense of
  $166,713 and expects to recognize amortization expense of $354,324 in each of
  the next five years.
  As security for the loans, each of the Vibra tenants and Vibra have granted
  the Company a security interest in their respective rights to receive payments,
  directly or indirectly, for any goods or services provided to any persons or
  entities; any records or data related to those rights; and all cash and non-cash
  proceeds resulting from those rights. As additional security, Vibra has pledged
  to the Company all of its interests in each of the tenants. One individual is
  the majority owner of Vibra, The Hollinger Group and Vibra Management, LLC. The
  owner of Vibra has pledged his interest in Vibra to secure the loans. In
  addition, The Hollinger Group and Vibra Management have guaranteed the loans.
  The owner of Vibra has also provided a $5 million personal guarantee.
  4.  LONG-TERM DEBT AND LOAN PAYABLE
  In 2003, the Company entered into a loan agreement which provided for
  maximum borrowings of $300,000 if certain conditions were met by the Company.
  Borrowings under the agreement ($100,000 at December 31, 2003) accrued interest
  at 20% per annum and were due upon the earlier of (i) the third business day
  following the funding of the Company's private placement or (ii) March 29, 2004.
  During the first three months of 2004, the Company increased its borrowings on
  the loan to $300,000, which was paid
  in full in April 2004. Contemporaneous with the private placement, the Company
  issued to the lender a warrant to purchase up to 35,000 shares of the Company's
  common stock at a price per share equal to 93% of the price at which the
  Company's shares were offered to investors in the private placement. The warrant
  has been recorded in the consolidated balance sheet using the intrinsic value
  method as an addition to Additional Paid-in Capital and as additional interest
  expense at a value of $.70 per warrant ($10.00 per share private placement price
  less $9.30 exercise price per warrant) or a total of $24,500. The Company
  considers any differences which would result between the intrinsic method and
  another fair value method to not be material to the Company's financial
  position, results of its operations or changes in its cash flows.
  remaining $19 million of this loan. The loan requires monthly payments based on
  a 20 year amortization schedule and interest at the one month London Interbank
  Offered Rate (LIBOR) plus 300 basis points, which results in an interest rate of
  5.42% at December 31, 2004. The loan is secured by the six Vibra facilities,
  which have a book value of $125.9 million, and requires the Company to meet
  financial coverage, ratio and total debt covenants typical of such loans.
  In December 2004, the Company closed a $43 million loan with a bank to
  finance the construction of the Company's medical office building and community
  hospital development project in Houston, Texas. The loan carries a construction
  period term of eighteen months, with the option to convert the loan into a
  thirty month term loan thereafter with a twenty-five year amortization. The loan
  requires interest payments only during the initial eighteen month term, and
  principal and interest payments during the optional thirty month term. The loan
  is secured by mortgages on the development property. The loan bears interest at
  a rate of one month LIBOR plus 225 basis points (4.67% at December 31, 2004)
  during the construction period and one month LIBOR plus 250 basis points (4.92%
  at December 31, 2004) during the thirty month optional period. The Company has
  paid a commitment fee of one per-cent for the construction loan with an
  additional .25% per-cent fee due if the Company exercises the term loan option.
  Proceeds may be drawn down by periodically presenting to the lender
  documentation of construction and development costs incurred. The Company has
  not drawn down any proceeds from this loan as of December 31, 2004.
  Maturities of long-term debt at December 31, 2004, are as follows:
  2005........................................................   $ 2,566,663
  2006........................................................     2,799,996
  2007........................................................    50,633,341
  5.  COMMITMENTS AND CONTINGENCIES
  In June 2004, the Company began construction of a hospital and medical
  office building with an expected total cost of $63.4 million. The Company plans
  to fund this project with a combination of its own and borrowed funds. At
  December 31, 2004, the Company has funded $24.2 million of the cost which has
  been financed with funds from the April 6, 2004 private placement. The remaining
  commitment for construction and development contracts at December 31, 2004,
  totals $32.1 million.
  Fixed minimum payments due under operating leases with non-cancellable
  terms of more than one year at December 31, 2004 are as follows:
  2005........................................................   $  275,106
  2006........................................................      339,570
  Thereafter..................................................    2,133,005
  A former consultant to the Company has made a claim for 2003 and 2004
  consulting compensation under the terms of a now terminated consulting agreement
  with the Company. The Company disputes this claim and has made an offer of
  settlement based on the terms of the consulting agreement. The Company has made
  provision for the amount (which the Company has determined is not material to
  the consolidated financial statements) that it estimates is owed to the former
  consultant.
  6.  EQUITY INCENTIVE PLAN AND OTHER STOCK AWARDS
  The Company has adopted the Medical Properties Trust, Inc. 2004 Amended and
  Restated Equity Incentive Plan (the Equity Incentive Plan) which authorizes the
  issuance of options to purchase shares of common stock, restricted stock awards,
  restricted stock units, deferred stock units, stock appreciation rights and
  performance units. The Company has reserved 791,180 shares of common stock for
  awards under the Equity Incentive Plan. The Equity Incentive Plan contains a
  limit of 300,000 shares as the maximum number of shares of common stock that may
  be awarded to an individual in any fiscal year.
  Upon their election to the board in April, 2004, each of our original
  independent directors was awarded options to acquire 20,000 shares of our common
  stock. These options have an exercise price of $10 per option, vested one-third
  upon grant and the remainder will vest one-half on each of the first and second
  anniversaries of the date of grant, and expire ten years from the date of grant.
  The Company has determined that the exercise price of these options is equal to
  the fair value of the common stock because the options were granted immediately
  following the private placement of its common stock in April, 2004. Accordingly,
  the options have no intrinsic value as that term is used in SFAS No. 123,
  Accounting for Stock-Based Compensation. No other options have been granted.
  SHARES    EXERCISE PRICE
  --------   --------------
  Outstanding at January 1, 2004..............................        --           --
  Granted.....................................................   100,000       $10.00
  Exercised...................................................        --           --
  Forfeited...................................................        --           --
  --------       ------
  Outstanding at December 31, 2004............................   100,000       $10.00
  ========       ======
  Options exercisable at December 31, 2004....................    33,333       $10.00
  Weighted-average grant-date fair value of options granted...  $   1.21
  Options exercisable at December 31, 2004, are as follows:
  OPTIONS       OPTIONS        AVERAGE REMAINING
  EXERCISE PRICE   OUTSTANDING   EXERCISABLE   CONTRACTUAL LIFE (YEARS)
  --------------   -----------   -----------   ------------------------
  $10.00         100,000       33,333                9.6
  The Company follows APB No. 25 and related Interpretations in accounting
  for the Plan. In accordance with APB 25, no compensation expense has been
  recognized for stock options. Had compensation expense for the Company's stock
  option plans been determined based on the fair value at the grant dates for
  awards under those plans consistent with the methods prescribed in SFAS No. 123,
  the Company's net income and income per share for the year ended December 31,
  2004, would have been decreased by $67,000 and would have had no per share
  effect, respectively.
  In addition to these options to purchase common stock, each independent
  director was awarded 2,500 deferred stock units in October, 2004, valued by the
  Company at $10 per unit, which represent the right to receive 2,500 shares of
  common stock in October, 2007. Beginning in 2005, each independent director will
  receive 2,000 shares of restricted common stock annually, which will be
  restricted as to transfer for three years. The Company has recognized expense in
  the amount of $125,000 for the deferred stock units awarded to its' independent
  directors in 2004. The Company has also allocated 114,500 shares of restricted
  stock to be awarded to employees upon completion of its IPO.
  The Company uses the Black-Scholes pricing model to calculate the fair
  values of the options awarded, which are included in the pro forma amounts
  above. The following assumptions were used to derive the fair values: an option
  term of four to six years; no estimated volatility; a weighted average risk-
  free rate of return of 3.63%; and a dividend yield of 1.00% for 2004.
  7.  LEASING OPERATIONS
  For the properties purchased in July and August, 2004 (see Note 3), minimum
  rental payments due in future periods under operating leases which have
  non-cancelable terms extending beyond one year at December 31, 2004, are as
  2005........................................................   $ 14,343,635
  2006........................................................     16,082,461
  Thereafter..................................................    188,238,038
  The leases are with tenants engaged in medical operations in California
  (two facilities), Colorado, Kentucky, Massachusetts, and New Jersey. Each of the
  six lease agreements are for an initial term of 15 years with options for the
  tenant to renew for three periods of five years each. Lease payments are
  calculated based on the total acquisition cost (aggregating approximately
  $127,000,000) and an initial lease rate of 10.25%; the rate increases to 12.23%
  on the first anniversary of lease commencement and upon each January 1
  thereafter escalates at a rate of 2.5%. At such time that the tenants' aggregate
  net revenue exceeds a certain level, the leases further provide that the tenants
  will pay additional rent of between 1% and 2% of total net revenue. All of the
  leases are cross-defaulted.
  In addition, the Company is funding the acquisition and development costs
  for a community hospital and adjacent medical office building in Houston, Texas
  on land that is leased to the operator/tenant. During the development and
  construction period, the tenant is charged rent (construction period rent) based
  on the lease rates (which average 10.4%) and the amount funded, which aggregated
  $16,225,907 at December 31, 2004. The Company has recorded $757,787 of
  construction period rent as unbilled rent receivable and as deferred revenue as
  of December 31, 2004. Upon completion of development and occupancy by the
  tenant, the fixed lease term (15 and 10 years for the hospital and medical
  office building, respectively) will commence and any accrued construction period
  rent will be paid, with interest calculated at the lease rate, over the term of
  the respective lease. Upon occupancy, the Company will begin recognizing as rent
  revenue, using the straight-line method, all construction period rent recorded
  during the construction period. The Company expects to complete the construction
  of the hospital and the medical office building in October 2005 and August 2005,
  8.  FAIR VALUE OF FINANCIAL INSTRUMENTS
  DECEMBER 31, 2004          DECEMBER 31, 2003
  -------------------------   -----------------------
  BOOK VALUE    FAIR VALUE    BOOK VALUE   FAIR VALUE
  -----------   -----------   ----------   ----------
  Cash and cash equivalents..........  $97,543,677   $97,543,677   $  100,000   $  100,000
  Interest receivable................      419,776       419,776           --           --
  Unbilled rent receivable...........    3,206,853     1,679,450           --           --
  Loans..............................   50,224,069    50,646,695      100,000      100,000
  Long-term debt.....................   56,000,000    56,000,000           --           --
  expenses.........................   10,903,025    10,903,025    1,389,779    1,389,779
  9.  INCOME TAXES
  The following table reconciles the Company's net income as reported in its
  consolidated statement of operations prepared in accordance with generally
  accepted accounting principles with its taxable income under the REIT income tax
  regulations for the year ended December 31, 2004:
  Net income as reported......................................   $ 4,576,349
  Less: Net income of the taxable REIT subsidiary.............       (63,905)
  Net income from REIT operations.............................     4,512,444
  Unbilled rent receivable....................................    (2,449,066)
  GAAP depreciation and amortization in excess of tax
  depreciation..............................................       198,266
  Expenses deductible in future tax periods...................     2,434,535
  Other.......................................................       289,759
  Taxable income subject to REIT distribution requirements....   $ 4,985,938
  The Company paid distributions of $2,608,286 ($.10 per share) on October
  10, 2004, and $2,869,115 ($.11 per share) on January 11, 2005. All of the
  October distribution and $755,546 of the January 2005, distribution will be
  subject to federal incomes taxes by the Company's stockholders in 2004. The
  remainder of the January, 2005, distribution will be subject to federal income
  taxes by the Company's stockholders in 2005. All of the distributions are
  taxable to the Company's shareholders at ordinary income federal tax rates.
  10.  SUBSEQUENT EVENTS
  On February 9, 2005, Vibra made a $7.8 million payment of principal and
  interest on its transaction fee and working capital loans from the Company. The
  payments left a $41.4 million loan payable to the Company by Vibra. The Company
  has no commitments to make additional loans to Vibra.
  In February, 2005, the Company purchased a community hospital for $28
  million. The purchase price was paid from loan proceeds and from the proceeds of
  the Company's private placement. Upon closing the purchase of the hospital, the
  Company and the seller entered into a fifteen year lease of the hospital back to
  the seller, with renewal options for three additional five year terms.
  11.  EARNINGS PER SHARE
  net income (loss) per common share to the weighted average shares used in net
  income (loss) per common share -- assuming dilution for the year ended December
  31, 2004, and for the period from Inception (August 27, 2003) through December
  31, 2003, respectively:
  Vested deferred stock units.................................       2,322          --
  Common stock warrants.......................................       1,801          --
  12.  RELATED PARTIES
  The Company's lead underwriter for its IPO and private placement is the
  largest stockholder, including shares owned directly and indirectly through
  funds it manages. In connection with services provided for its managing and
  underwriting of the private placement, the underwriter received approximately
  261,000 shares of the Company's common stock. The Company also manages its cash
  and cash equivalents (approximately $96.1 million at December 31, 2004) through
  the underwriter.
  SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
  ADDITIONS SUBSEQUENT TO
  INITIAL COSTS                    ACQUISITION
  ---------------------------    ------------------------------
  LOCATION                            TYPE OF PROPERTY           LAND         BUILDINGS      IMPROVEMENTS    CARRYING COSTS
  --------                         -----------------------    -----------    ------------    ------------    --------------
  Bowling Green, KY..............  Rehabilitation hospital    $ 3,070,000    $ 33,570,541       $  --            $  --
  Thornton, CO...................  Rehabilitation hospital      2,130,000       6,013,142          --               --
  Fresno, CA.....................  Rehabilitation hospital      1,550,000      16,363,153          --               --
  Kentfield, CA..................  Long term acute care         2,520,000       4,765,176          --               --
  Marlton, NJ....................  Rehabilitation hospital             --      30,903,051          --               --
  New Bedford, NJ................  Long term acute care         1,400,000      19,772,169          --               --
  -----------    ------------       -----
  TOTAL                      $10,670,000    $111,387,232       $  --            $  --
  ===========    ============       =====
  COST AT DECEMBER 31, 2004
  ------------------------------------------   ACCUMULATED         DATE OF            DATE
  LOCATION                  LAND       BUILDINGS(1)       TOTAL       DEPRECIATION     CONSTRUCTION        ACQUIRED
  --------               -----------   -------------   ------------   ------------   -----------------  ---------------
  Bowling Green, KY.................  $ 3,070,000   $ 33,570,541    $ 36,640,541    $  419,634          1992            July 1, 2004
  Thornton, CO......................    2,130,000      6,013,142       8,143,142        56,371       1962, 1975      August 17, 2004
  Fresno, CA........................    1,550,000     16,363,153      17,913,153       204,540          1990            July 1, 2004
  Kentfield, CA.....................    2,520,000      4,765,176       7,285,176        59,562          1963            July 1, 2004
  Marlton, NJ.......................           --     30,903,051      30,903,051       386,286          1994            July 1, 2004
  New Bedford, NJ...................    1,400,000     19,772,169      21,172,169       185,364    1962, 1975, 1992   August 17, 2004
  -----------   ------------    ------------    ----------
  TOTAL                               $10,670,000   $111,387,232    $122,057,232    $1,311,757
  ===========   ============    ============    ==========
  DEPRECIABLE
  LOCATION               LIFE (YEARS)
  --------               ------------
  Bowling Green, KY.................       40
  Thornton, CO......................       40
  Fresno, CA........................       40
  Kentfield, CA.....................       40
  Marlton, NJ.......................       40
  New Bedford, NJ...................       40
  Balance at beginning of period..........    $         --          $     --
  Additions during the period
  Acquisitions........................     122,057,232                --
  ------------          --------
  Balance at end of period................    $122,057,232          $     --
  ============          ========
  DECEMBER 31, 2004    DECEMBER 31, 2003
  ------------------   -----------------
  ACCUMULATED DEPRECIATION
  Balance at beginning of period..........      $         --          $     --
  Depreciation........................         1,311,757                --
  Balance at end of period................      $  1,311,757          $     --
  (1) The gross cost for Federal income tax purposes is $116,702,195.
  VIBRA HEALTHCARE, LLC AND SUBSIDIARIES
  March 31, 2005 (Unaudited) and December 31, 2004 (Audited)
  Cash and cash equivalents.................................   $ 2,707,976        $ 2,280,772
  Patient accounts receivable, net of allowance for doubtful
  collections of $435,816 at March 31, 2005 and $302,988
  at December 31, 2004...................................    19,911,175         17,319,154
  Third party settlements receivable........................        59,457            346,141
  Prepaid insurance.........................................       553,683            719,480
  Deposit for workers' compensation claims..................            --          1,375,000
  Other current assets......................................       562,437            518,650
  -----------        -----------
  Total current assets...................................    23,794,728         22,559,197
  Restricted investment.......................................       100,000                 --
  Property and equipment, net.................................     2,673,223          2,662,546
  Goodwill....................................................    24,650,800         24,510,296
  Intangible assets...........................................     4,260,000          4,260,000
  Deposits....................................................     3,485,387          3,485,387
  Deferred financing and lease costs..........................     1,667,390          1,543,424
  Total assets...........................................   $60,631,528        $59,020,850
  ===========        ===========
  LIABILITIES AND PARTNERS' DEFICIT
  Accounts payable..........................................   $ 3,248,677        $ 5,142,345
  Accounts payable -- related parties.......................       200,871            262,144
  Accrued liabilities.......................................     3,899,378          4,387,292
  Accrued insurance claims..................................     1,738,985          1,441,516
  Total current liabilities..............................     9,087,911         11,233,297
  Deferred rent...............................................     3,769,231          2,460,308
  Long-term debt..............................................    52,482,304         49,141,945
  Total liabilities...........................................    65,339,446         62,835,550
  Partners' deficit...........................................    (4,707,918)        (3,814,700)
  Total liabilities and partners' deficit................   $60,631,528        $59,020,850
  The accompanying notes are an integral part of these consolidated financial
  Consolidated Statement of Operations and Changes in Partners' Deficit
  For the Three Months Ended March 31, 2005 (Unaudited)
  Net patient service revenue...............................   $29,328,088
  Cost of services..........................................    20,067,059
  General and administrative................................     3,354,649
  Rent expense..............................................     5,121,583
  Interest expense..........................................     1,263,356
  Management fee -- Vibra Management, LLC...................       586,593
  Depreciation and amortization.............................       194,293
  Bad debt expense..........................................       167,233
  Total expenses.........................................    30,754,766
  Loss from operations.................................    (1,426,678)
  Non-operating revenue.....................................       533,460
  Net loss.............................................      (893,218)
  Partners' deficit -- beginning..............................    (3,814,700)
  Partners' deficit -- ending.................................   $(4,707,918)
  For Three Months Ended March 31, 2005 (Unaudited)
  Net loss..................................................   $   (893,218)
  Adjustments to reconcile net loss to net cash used in
  Depreciation and amortization........................        194,293
  Provision for bad debts..............................        167,233
  Changes in operating assets and liabilities, net of effects
  from acquisition of business:
  Accounts receivable including third party
  settlements.........................................     (2,613,072)
  Prepaids and other current assets....................        122,010
  Deposits.............................................      1,375,000
  Accounts payable.....................................     (1,893,668)
  Accounts payable -- related party....................        (61,273)
  Accrued liabilities..................................       (190,445)
  Deferred rent........................................      1,308,923
  Net cash used in operating activities.......................     (2,484,217)
  Purchase of restricted investment....................       (100,000)
  Purchases of property and equipment..................       (163,463)
  Net cash used in investing activities.......................       (263,463)
  Borrowings under revolving credit facility...........     24,098,291
  Repayments of revolving credit facility..............    (13,189,000)
  Repayment of notes payable...........................     (7,725,957)
  Payment of deferred financing costs..................         (8,450)
  Net cash provided by financing activities...................      3,174,884
  Net increase in cash and cash equivalents...................        427,204
  Cash and cash equivalents -- beginning......................      2,280,772
  Cash and cash equivalents -- ending.........................   $  2,707,976
  Supplemental cash flow information:
  Cash paid for interest...............................   $  1,263,356
  Non-cash transactions:
  Deferred financing costs funded by revolving credit
  facility............................................   $    157,025
  Business acquisition adjustment of goodwill..........   $    140,504
  1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Organization:  Vibra Healthcare, LLC ("Vibra" and the "Company") was formed
  May 14, 2004, and commenced operations with the acquisition of its subsidiaries
  consisting of four independent rehabilitation hospitals ("IRF") and two
  long-term acute care hospitals ("LTACH") located throughout the United States on
  July 1, 2004 and August 17, 2004, respectively. Vibra, a Delaware limited
  liability company ("LLC"), has an infinite life. The members' liability is
  limited to the capital contribution. Vibra was previously named Highmark
  Healthcare LLC until a name change in December 2004. Vibra's wholly-owned
  subsidiaries consist of:
  SUBSIDIARIES                                                       LOCATION
  ------------                                                   -----------------
  92 Brick Road Operating Company LLC.........................   Marlton, NJ
  4499 Acushnet Avenue Operating Company LLC..................   New Bedford, MA
  1300 Campbell Lane Operating Company LLC....................   Bowling Green, KY
  8451 Pearl Street Operating Company LLC.....................   Denver, CO
  7173 North Sharon Avenue Operating Company LLC..............   Fresno, CA
  1125 Sir Francis Drake Boulevard Operating Company LLC......   Kentfield, CA
  The Company provides long-term acute care hospital services and inpatient
  acute rehabilitative hospital care at its hospitals. Patients in the Company's
  LTACHs typically suffer from serious and often complex medical conditions that
  require a high degree of care. Patients in the Company's IRFs typically suffer
  from debilitating injuries including traumatic brain and spinal cord injuries,
  and require rehabilitation care in the form of physical, psychological, social
  and vocational rehabilitation services. The Company also operates ten outpatient
  clinics affiliated with five of its six hospitals.
  Principles of Consolidation:  The consolidated financial statements include
  the accounts of the Company and its wholly-owned subsidiaries controlled through
  majority membership interests in limited liability companies. All significant
  intercompany balances and transactions are eliminated in consolidation.
  liabilities at the date of the financial statements and reported amounts of
  Cash and Cash Equivalents:  The Company considers all highly liquid
  investments with a maturity of three months or less when purchased to be cash
  equivalents. Cash equivalents are stated at cost which approximates market.
  Patient Accounts Receivable:  Patient accounts receivable are reported at
  net realizable value. Accounts are written off when they are determined to be
  uncollectible based upon management's assessment of individual accounts. The
  allowance for doubtful collections is estimated based upon a periodic review of
  the accounts receivable aging, payor classifications and application of
  historical write-off percentages.
  Inventories:  Inventories of pharmaceuticals and pharmaceutical supplies
  are stated at the lower of cost or market value. Cost is determined on a
  first-in, first-out basis. These inventories totaled $429,654 at March 31, 2005,
  and are included in other current assets in the accompanying consolidated
  balance sheet.
  Restricted Investment:  The restricted investment consists of a five year
  certificate of deposit with a local bank pledged as collateral for a letter of
  credit benefiting the California Department of Health Services ("CDHS"). CDHS
  can draw on the letter of credit to reimburse any medicaid overpayments.
  Property and Equipment:  Property and equipment are stated at cost net of
  accumulated depreciation. Depreciation and amortization are computed using the
  straight-line method over the estimated useful lives of the assets or the term
  of the lease, as appropriate. The general range of useful lives is as follows:
  Leasehold improvements......................................   15 years
  Furniture and equipment.....................................   2-7 years
  In accordance with Statement of Financial Accounting Standards No. 144,
  "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS No 144),
  the Company reviews the realizability of long-lived assets whenever events or
  circumstances occur which indicate recorded costs may not be recoverable.
  Intangible Assets:  The Company adopted Statement of Financial Accounting
  Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets". Under SFAS No.
  142, goodwill and other intangible assets with indefinite lives are no longer
  subject to periodic amortization but are instead reviewed annually or more
  frequently if impairment indicators arise. These reviews require the Company to
  estimate the fair value of its identified reporting units and compare those
  estimates against the related carrying values. Identifiable assets and
  liabilities acquired in connection with business combinations accounted for
  under the purchase method are recorded at their respective fair values. For each
  of the reporting units, the estimated net realizable value is determined using
  current transaction information and the present value of future cash flows of
  the units.
  Management has allocated the intangible assets between identifiable
  intangibles and goodwill. Intangible assets, other than goodwill, consist of
  values assigned to certificates of need ("CONs") and licenses. The useful life
  of each class of intangible assets is as follows:
  Goodwill....................................................   Indefinite
  Certificates of Need/Licenses...............................   Indefinite
  Deferred Financing and Lease Costs:  Costs and fees incurred in connection
  with the MPT acquisition note and leases and the Merrill Lynch revolving credit
  facility have been deferred and are being amortized over the term of the loans
  and leases using the straight-line method, which approximates the effective
  interest method. Amortization expense was $41,510 for the three months ended
  Insurance Risk Programs:  Under the Company's insurance programs, the
  Company is liable for a portion of its losses. The Company estimates its
  liability for losses based on historical trends that will be incurred in a
  respective accounting period and accrues that estimated liability. These
  programs are monitored quarterly and estimates are revised as necessary to take
  into account additional information. The Company has accrued $1,738,985 related
  to these programs at March 31, 2005. A deposit for workers' compensation claims
  of $1,375,000 at December 31, 2004, consisted of cash provided to Vibra's
  insurance carrier to fund workers' compensation claims. In February 2005, Vibra
  used $1,375,000 of its borrowing base on the Merrill Lynch loan to collateralize
  a letter of credit for the claims and the cash deposit was refunded.
  Deferred Rent:  The excess of straight line rent expense over rent paid is
  credited to deferred rent on a monthly basis. At March 31, 2005, rent expense
  exceeded rent paid by $3,769,231.
  Revenue Recognition:  Net patient service revenue consists primarily of
  charges to patients and are recognized as services are rendered. Net patient
  service revenue is reported net of provisions for contractual allowances from
  third-party payors and patients. The Company has agreements with third-party
  payors that provide for payments to the Company at amounts different from its
  established rates. The differences between the estimated program reimbursement
  rates and the standard billing rates are
  accounted for as contractual adjustments, which are deducted from gross revenues
  to arrive at net patient service revenues. Payment arrangements include
  prospectively determined rates per discharge, reimbursed costs, discounted
  charges and per diem payments. Retroactive adjustments are accrued on an
  estimated basis in the period the related services are rendered and adjusted in
  future periods as final settlements are determined. Patient accounts receivable
  resulting from such payment arrangements are recorded net of contractual
  allowances.
  A significant portion of the Company's net patient service revenues are
  generated directly from the Medicare and Medicaid programs. Net patient service
  revenues generated directly from the Medicare and Medicaid programs represented
  approximately 65% and 14%, respectively, of the Company's consolidated net
  patient service revenue for the three month period ended March 31, 2005.
  Approximately 46% and 22% of the Company's gross patient accounts receivable at
  March 31, 2005, are from Medicare and Medicaid, respectively. As a provider of
  services to these programs, the Company is subject to extensive regulations. The
  inability of a hospital to comply with regulations can result in changes in that
  hospital's net patient service revenues generated from these programs.
  Concentration of Credit Risk:  Financial instruments that potentially
  subject the Company to concentration of credit risk consist primarily of cash
  balances and patient accounts receivables. The Company deposits its cash with
  large banks. The Company grants unsecured credit to its patients, most of whom
  reside in the service area of the Company's facilities and are insured under
  third-party payor agreements. Because of the geographic diversity of the
  Company's facilities and non-governmental third-party payors, Medicare and
  Medicaid represent the Company's primary concentration of credit risk.
  that the carrying value of its current assets, current liabilities and long-term
  debt approximates their fair value.
  Income Taxes:  Vibra and its subsidiaries have elected to be a LLC for
  federal and state income tax purposes. In lieu of corporate income taxes, the
  member of a LLC is taxed on their proportionate share of the Company's taxable
  income or loss. Therefore, no provision or liability for federal or state income
  taxes has been provided for in the consolidated balance sheet or consolidated
  statement of operations.
  accordance with accounting principles generally accepted in the United States of
  America for interim financial information. In the opinion of management, all
  adjustments (consisting of normal recurring accruals) considered necessary for a
  fair presentation have been included. Operating results for the three month
  period ended March 31, 2005, are not necessarily indicative of the results that
  may be expected for the year ending December 31, 2005.
  2.  ACQUISITIONS
  In July and August 2004, Vibra entered into agreements with Medical
  Properties Trust, Inc. (MPT) to acquire the operations of six specialty
  hospitals. MPT, a healthcare real estate investment trust based in Birmingham,
  Alabama, acquired the real estate for approximately $127.4 million and assigned
  to Vibra its rights to acquire the operations of the hospitals from Care One
  Realty of Hackensack, New Jersey for approximately $38.1 million net of cash
  acquired and $7.5 million of liabilities assumed which was financed by MPT. The
  assignment of the LLC interests to Vibra transferred the operations, assets and
  liabilities of each LLC. The purchase price of the operations may be adjusted
  either upward or downward pursuant to a post-closing working capital adjustment
  with the seller. The purchase price of the operations has been allocated to net
  assets acquired, and liabilities assumed based on valuation studies subject to
  purchase price adjustments. The excess of the amount of purchase price over the
  net asset value, including
  identifiable intangible assets, was allocated to goodwill. The purchase price
  was negotiated based on management's evaluation of future operational
  performance of the hospitals as a group under Vibra. The results of operations
  of the hospitals acquired have been included in the Company's consolidated
  financial statements since the date of acquisition. The following table
  summarizes the acquisition date and other relevant information regarding each
  hospital:
  LOCATION                                             TYPE    BEDS   ACQUISITION DATE
  --------                                             -----   ----   ----------------
  Marlton, NJ........................................   IRF     46(1) July 1, 2004
  Bowling Green, KY..................................   IRF     60    July 1, 2004
  Fresno, CA.........................................   IRF     62    July 1, 2004
  Kentfield, CA......................................  LTACH    60    July 1, 2004
  New Bedford, MA....................................  LTACH    90    August 17, 2004
  Thornton, CO.......................................   IRF    117(2) August 17, 2004
  (1) Vibra subleases a floor of the Marlton building to an unaffiliated provider
  which operates 30 pediatric rehabilitation beds which are in addition to the
  46 beds operated by Vibra.
  (2) Includes beds licensed as skilled nursing and beds licensed as psychiatric.
  Information with respect to the businesses acquired in purchase
  transactions is as follows:
  Notes issued, net of cash acquired..........................   $ 38,093,842
  Liabilities assumed.........................................      7,477,988
  Fair value of assets acquired:
  Accounts receivable.......................................    (13,640,825)
  Property and equipment....................................     (2,749,840)
  CONs/Licenses.............................................     (4,260,000)
  Other.....................................................       (410,869)
  Cost in excess of fair value of net assets acquired
  (goodwill) at December 31, 2004...........................   $ 24,510,296
  Based on an analysis of pre-acquisition accounts receivable at March 31,
  2005, the Company estimated the fair value of the acquired accounts receivable
  required a downward adjustment of $140,504. This adjustment increased the
  goodwill recorded at March 31, 2005 to $24,650,800.
  3.  PROPERTY AND EQUIPMENT
  Property and equipment consists of the following:
  Leasehold improvements......................................     $   93,530
  Furniture and equipment.....................................      2,987,673
  Less: accumulated depreciation and amortization.............        407,980
  Total.......................................................     $2,673,223
  Depreciation expense was $152,783 for the three months ended March 31,
  4.  DEPOSITS
  The facility lease agreements with MPT require deposits equal to three
  months rent. The funds are on deposit with MPT in non-interest bearing accounts.
  Deposits consist of the following:
  MPT lease deposits..........................................     $3,296,365
  Other deposits..............................................        189,022
  5.  INTANGIBLE ASSETS
  The Company adopted SFAS No. 142. Under SFAS No. 142, goodwill and other
  intangible assets with indefinite lives are not subject to periodic amortization
  but are instead reviewed annually as of June 30, or more frequently if
  impairment indicators arise. These reviews require the Company to estimate the
  fair value of its identified reporting units and compare those estimates against
  the related carrying values. For each of the reporting units, the estimated net
  realizable value is determined using current transaction information and the
  present value of future cash flows of the units. The following table summarizes
  Goodwill....................................................    $24,650,800
  CONs/Licenses...............................................    $ 4,260,000
  The CONs/Licenses have not been amortized as they have indefinite lives.
  The components of long-term debt are shown in the following table:
  MPT 10.25% hospital acquisition note........................    $41,415,988
  Merrill Lynch $14 million revolving credit facility.........     11,066,316
  As of December 31, 2004, MPT had advanced $49,141,945 to Vibra under four
  notes for the hospital acquisition and working capital. Three notes for working
  capital and transaction fees totaling $7,725,957 were interest only, with a
  balloon payment due on March 31, 2005. Vibra may prepay the notes at any time
  without penalty.
  The hospital acquisition note is interest only through June 2007, and then
  amortized over the next 12 years with a final maturity in 2019. Substantially
  all of the assets of Vibra and its subsidiaries, as well as Vibra's membership
  interests in its subsidiaries, secure the MPT note. In addition the majority
  member of Vibra, an affiliated company owned by the majority member and Vibra
  Management, LLC have jointly and severally guaranteed the notes payable to MPT,
  although the obligation of the majority member is limited to $5 million and his
  membership interest in Vibra. A default in any of the MPT lease terms will also
  constitute a default under the notes.
  The revolving credit facility has a balloon maturity on February 8, 2008.
  Interest is payable monthly at the rate of 30 day LIBOR plus 3% (5.85% as of
  March 31, 2005). The loan is secured by a first
  position in the Company's accounts receivable through an intercreditor agreement
  with MPT. Up to $14 million can be borrowed based on a formula of qualifying
  accounts receivable. A portion of the proceeds were used to pay off $7,725,957
  in working capital and transaction fee notes to MPT which had a maturity of
  March 31, 2005. The Company is subject to various financial and non-financial
  covenants under the credit facility. A default in any of the MPT note and lease
  terms will also constitute a default under the credit facility. At March 31,
  2005, Vibra was not in compliance with a facility rent coverage covenant. The
  Merrill Lynch credit facility documents were subsequently amended to
  retroactively change the rent coverage covenant from a by facility rent coverage
  to a consolidated rent coverage calculation. At March 31, 2005, the Company met
  the amended covenant (Note 11).
  Maturities of long-term debt for the next five years are as follows:
  MARCH 31                                                      (IN THOUSANDS)
  --------                                                      --------------
  2006........................................................     $    --
  2007........................................................          --
  2008........................................................      12,436
  2009........................................................       1,999
  Thereafter..................................................      35,833
  7.  RELATED PARTY TRANSACTIONS
  The Company has entered into agreements with Vibra Management, LLC (a
  company affiliated through common ownership) to provide management services to
  each hospital. The services include information system support, legal counsel,
  accounting/tax, human resources, program development, quality management and
  marketing oversight. The agreements call for a management fee equal to 2% of net
  patient service revenue, and are for an initial term of five years with
  automatic one-year renewals. Management fee expense amounted to $586,593 for the
  three months ended March 31, 2005. At March 31, 2005, $200,871 was payable to
  Vibra Management, LLC and is included accounts payable -- related party in the
  accompanying consolidated balance sheet.
  The spouse of the majority member of the Company provided legal consulting
  services to the Company on the hospital acquisition and on various operational
  licensing and financing matters. During the period from inception through
  December 31, 2004, legal consulting services from this person totaled $176,187,
  of which $98,137 was payable at December 31, 2004. The balance was paid during
  the three months ended March 31, 2005, and no additional services were provided.
  Vibra entered into triple-net long-term real estate operating leases with
  MPT at each hospital. Each lease is for an initial term of 15 years and contains
  renewal options at Vibra's option for three additional five-year terms. Vibra
  has the option to purchase the leased property at the end of the lease term,
  including any extension periods, for the greater of the fair market value of the
  leased property, or the purchase price increased by 2.5% per annum from the
  commencement date.
  The base rate at commencement is calculated at 10.25% of MPT's adjusted
  purchase price of the real estate ("APP"). The base rate increases to 12.23% of
  APP effective July 1, 2005. Beginning January 1,
  2006, and each January 1, thereafter, the base rate increases by an inflator of
  2.5% (i.e. base rate becomes 12.54% of APP on January 1, 2006).
  Each lease also contains a percentage rent provision ("Percentage Rent").
  Beginning January 1, 2005, if the aggregate monthly net patient service revenues
  of the six hospitals exceed an annualized net patient service revenue run rate
  of $110,000,000, additional rent equal to 2% of monthly net patient service
  revenue is triggered. The percentage rent is payable within ten days after the
  end of the applicable quarter. The percentage rent declines from 2% to 1% on a
  pro rata basis as Vibra repays the $41.416 million in notes to MPT. For the
  three months ended March 31, 2005, percentage rents totaling $405,582 have been
  accrued and are included in accrued liabilities in the accompanying consolidated
  Commencing on July 1, 2005, Vibra must make quarterly deposits to a capital
  improvement reserve at the rate of $375 per quarter per bed or $652,500 on an
  annual basis for all hospitals leased from MPT. The reserve may be used to fund
  capital improvements and repairs as agreed to by the parties.
  Beginning with the quarter ending September 30, 2006, the MPT leases will
  be subject to various financial covenants including limitations on total debt to
  100% of the total capitalization of the guarantors (as defined) or 4.5 times the
  12 month total EBITDAR (as defined) of the guarantors whichever is greater,
  coverage ratios of 125% of debt service and 150% of rent (as defined), and
  maintenance of average daily patient census. A default in any of the loan terms
  will also constitute a default under the leases. All of the MPT leases are cross
  defaulted.
  Vibra has entered into operating leases for six outpatient clinics which
  expire on various dates through 2008.
  Minimum future lease obligations on the leases are as follows (in
  thousands):
  MPT RENT    OUTPATIENT
  MARCH 31                                               OBLIGATION    CLINICS      TOTAL
  --------                                               ----------   ----------   --------
  2006.................................................   $ 15,077       $173      $ 15,250
  2007.................................................     16,183        112        16,295
  2008.................................................     16,588         55        16,643
  2009.................................................     17,002         --        17,002
  Thereafter...........................................    184,027         --       184,027
  --------       ----      --------
  $266,304       $340      $266,644
  ========       ====      ========
  Substantially, all of the assets of Vibra and its subsidiaries, as well as
  Vibra's membership interests in its subsidiaries, secure the MPT leases. In
  addition the majority member of Vibra, an affiliated Company owned by the
  majority member, and Vibra Management, LLC have jointly and severally guaranteed
  the leases to MPT, although the obligation of the majority member is limited to
  $5 million and his membership interest in Vibra.
  The Company has sublet a floor of its Marlton, NJ hospital to an
  independent pediatric rehabilitation provider. Three other hospitals have
  entered into numerous sublease arrangements. These subleases generated rental
  income of $433,883 for the three months ended March 31, 2005, which is included
  non-operating revenue in the accompanying consolidated statement of operations.
  The following table summarizes amounts due under sub leases (in thousands):
  2006........................................................   $ 1,126
  2007........................................................     1,151
  Thereafter..................................................     4,524
  The Company is subject to legal proceedings and claims that have arisen in
  the ordinary course of its business and have not been finally adjudicated
  (including claims against the hospitals under prior ownership). In the opinion
  of management, the outcome of these actions will not have a material effect on
  consolidated financial position or results of operations of the Company.
  CALIFORNIA MEDICAID
  The Company is in the process of fulfilling change of ownership
  requirements imposed by Medi-Cal, the California Medicaid administrator that
  date back to the prior owners' acquisition of the California hospitals. Accounts
  receivable at March 31, 2005, include $1,399,464 due from Medi-Cal, including
  $657,000 prior to the acquisition. In March 2005 the California Department of
  Health Services approved the Company as a provider and agreed to enter into
  contracts that would allow the Company to retro-bill Medi-Cal for services
  provided after August 1, 2003. The Company expects to submit bills for these
  services in May and June 2005.
  CALIFORNIA SEISMIC UPGRADE
  For earthquake protection California requires hospitals to receive an
  approved Structural Performance Category 2 (SPC-2) by January 1, 2008, to
  maintain its license. Hospitals may request a five year implementation
  extension. The Fresno, CA hospital is expected to meet the SPC-2 standard by
  January 1, 2008, with capital outlays that are not material to the consolidated
  financial statements. The Kentfield, CA hospital has applied for a three year
  extension to meet the requirement. Management is in preliminary consultations
  with consulting architects and engineers to develop a plan for Kentfield to meet
  the requirements. The capital outlay required to meet the standards at Kentfield
  cannot be determined at this time.
  9.  RETIREMENT SAVINGS PLAN
  In November 2004, the Company began sponsorship of a defined contribution
  retirement savings plan for substantially all of its employees. Employees may
  elect to defer up to 15% of their salary. The Company matches 25% of the first
  3% of compensation employees contribute to the plan. The employees vest in the
  employer contributions over a five-year period beginning on the employee's hire
  date. The expense incurred by the Company related to this plan was $29,870 for
  the three months ended March 31, 2005.
  10.  SEGMENT INFORMATION
  SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
  Information", establishes standards for reporting information about operating
  segments and related disclosures about products and services, geographic areas
  and major customers.
  The Company's segments consist of (i) IRFs and (ii) LTACHs. The accounting
  policies of the segments are the same as those described in the summary of
  significant accounting policies. The Company evaluates performance of the
  segments based on loss from operations.
  The following table summarizes selected financial data for the Company's
  reportable segments:
  IRF          LTACH       OTHER        TOTAL
  -----------   -----------   --------   -----------
  Net patient service revenue........  $13,822,924   $15,505,164   $     --   $29,328,088
  Net loss from operations...........   (1,153,003)     (189,409)   (84,266)   (1,426,678)
  Interest expense...................      744,998       518,358         --     1,263,356
  Depreciation and amortization......       95,348        82,435     16,510       194,293
  Deferred rent......................    2,749,822     1,019,409         --     3,769,231
  Total assets.......................   31,853,471    28,175,098    602,959    60,631,528
  Purchases of property and
  equipment........................       73,182        86,220      4,061       163,463
  Goodwill...........................   16,409,877     8,240,923         --    24,650,800
  11.  SUBSEQUENT EVENT
  On April 16, 2005, Vibra entered into a letter of intent to acquire a
  California specialty hospital. In connection with this transaction, Vibra
  entered into a financing commitment with MPT. Vibra paid non-refundable deposits
  totaling $228,000 related to this transaction. The acquisition is subject to
  final negotiation of definitive documents, due diligence and licensing.
  On June 1, 2005, Merrill Lynch and Vibra amended their credit facility
  documents for no consideration. The amendment changed a rent coverage covenant
  from a by facility rent coverage to a consolidated rent covenant calculation.
  The Member
  Vibra Healthcare, LLC
  We have audited the accompanying consolidated balance sheet of Vibra
  Healthcare, LLC and subsidiaries (the "Company") as of December 31, 2004, and
  the related consolidated statements of operations, changes in partner's capital,
  and cash flows for the period from inception (May 14, 2004) through December 31,
  2004. These financial statements are the responsibility of the Company's
  management. Our responsibility is to express an opinion on these financial
  statements based on our audit.
  We conducted our audit in accordance with the standards of the Public
  we plan and perform the audit to obtain reasonable assurance about whether the
  audit provides reasonable basis for our opinion.
  present fairly, in all material respects, the financial position of Vibra
  Healthcare, LLC and subsidiaries as of December 31, 2004, and the results of
  their operations and their cash flows for the period from inception (May 14,
  2004) through December 31, 2004 in conformity with accounting principles
  generally accepted in the United States of America.
  /s/ Parente Randolph, LLC
  Harrisburg, Pennsylvania
  March 8, 2005, except Note 11,
  as to which the date is March 31, 2005
  Cash and cash equivalents.................................   $ 2,280,772
  collections of $302,988................................    17,319,154
  Third party settlements receivable........................       346,141
  Prepaid insurance.........................................       719,480
  Deposit for workers' compensation claims..................     1,375,000
  Other current assets......................................       518,650
  Total current assets...................................    22,559,197
  Property and equipment, net.................................     2,662,546
  Goodwill....................................................    24,510,296
  Intangible assets...........................................     4,260,000
  Deposits....................................................     3,485,387
  Deferred financing and lease costs..........................     1,543,424
  Total assets...........................................   $59,020,850
  LIABILITIES AND PARTNER'S CAPITAL
  Accounts payable..........................................   $ 5,142,345
  Accounts payable -- related parties.......................       262,144
  Accrued liabilities.......................................     4,387,292
  Accrued insurance claims..................................     1,441,516
  Total current liabilities..............................    11,233,297
  Deferred rent...............................................     2,460,308
  Long-term debt, net of current maturities...................    49,141,945
  Total liabilities...........................................    62,835,550
  Partner's capital...........................................    (3,814,700)
  Total liabilities and partner's capital................   $59,020,850
  Consolidated Statement of Operations and Changes in Partner's Capital
  For the Period from Inception (May 14, 2004) through December 31, 2004
  Non-operating revenue.....................................     1,293,711
  Net loss.............................................    (3,814,700)
  Partner's capital -- beginning............................            --
  Partner's capital -- ending...............................   ($3,814,700)
  VIBRA HEALTHCARE LLC AND SUBSIDIARIES
  Net loss..................................................   $(3,814,700)
  Depreciation and amortization........................       302,194
  Provision for bad debts..............................       776,780
  settlements.........................................    (4,801,250)
  Prepaids and other current assets....................    (2,257,611)
  Deposits.............................................      (133,671)
  Accounts payable.....................................     1,884,531
  Accounts payable -- related party....................       262,144
  Accrued liabilities..................................     1,608,634
  Deferred rent........................................     2,460,308
  Net cash used in operating activities.......................    (3,712,641)
  Purchases of property and equipment..................      (167,900)
  Cash acquired in business acquisition................       201,280
  Net cash provided by investing activities...................        33,380
  Proceeds of notes payable............................     6,050,458
  Payment of deferred financing costs..................       (90,425)
  Net cash provided by financing activities...................     5,960,033
  Net increase in cash and cash equivalents...................     2,280,772
  Cash and cash equivalents -- beginning......................            --
  Cash and cash equivalents -- ending.........................   $ 2,280,772
  Cash paid for interest...............................   $ 2,293,402
  Notes issued relating to acquisition.................   $38,093,842
  Lease deposits funded by notes payable...............   $ 3,296,365
  Deferred financing costs funded by notes payable.....   $ 1,500,000
  PERIOD FROM INCEPTION (MAY 14, 2004) THROUGH DECEMBER 31, 2004
  Organization:  Vibra Healthcare LLC ("Vibra" and the "Company") was formed
  July 1, 2004, and August 17, 2004. Vibra, a Delaware limited liability company
  ("LLC"), is a single member LLC with an infinite life. The members liability is
  the accounts of the Company and its wholly owned subsidiaries controlled through
  sole membership interests in limited liability companies. All significant
  first-in, first-out basis. These inventories totaled $363,720 at December 31,
  2004, and are included in other current assets in the accompanying consolidated
  with the MPT loans and leases have been deferred and are being amortized over
  the 15 year term of the loans and leases using the straight-line method, which
  approximates the effective interest method. Amortization expense was $47,000 for
  the period from inception through December 31, 2004.
  into account additional information. At December 31, 2004, the Company has
  accrued $1,441,516 related to these programs. Deposits for workers' compensation
  claims consist of cash provided to Vibra's insurance carrier to fund workers'
  compensation claims. In February 2005, Vibra used $1,375,000 of its borrowing
  base on the Merrill Lynch loan (see Note 11) to collateralize a letter of credit
  for the claims and the cash deposit was refunded.
  Deferred Rent:  The excess of straight line rent expense over each rent
  paid is credited to deferred rent on a monthly basis. For the period from
  inception through December 31, 2004, rent expense exceeded the rent paid in cash
  by $2,460,308.
  patient service revenues for the period from inception through December 31,
  2004. Approximately 46% and 21% of the Company's gross patient accounts
  receivable at December 31, 2004, are from Medicare and Medicaid, respectively.
  As a provider of services to these programs, the Company is subject to extensive
  regulations. The inability of a hospital to comply with regulations can result
  in changes in that hospital's net patient service revenues generated from these
  programs.
  net asset value, including identifiable intangible assets, was allocated to
  goodwill. The purchase price was negotiated based on management's evaluation of
  future operational performance of the hospitals as a group under Vibra. The
  results of operations of the hospitals acquired have been included in the
  Company's consolidated financial
  statements since the date of acquisition. The following table summarizes the
  acquisition date and other relevant information regarding each hospital:
  (goodwill)................................................   $ 24,510,296
  Property and equipment at December 31, 2004, consists of the following:
  Leasehold improvements......................................   $   48,055
  Furniture and equipment.....................................    2,869,685
  Less: accumulated depreciation and amortization.............      255,194
  Total.......................................................   $2,662,546
  Depreciation expense was $255,194 for the period from inception through
  Deposits at December 31, 2004, consist of the following:
  MPT lease deposits..........................................   $3,296,365
  Other deposits..............................................      189,022
  but are instead reviewed annually as of April 30, or more frequently if
  present value of future cash flows of the units.
  Goodwill in the amount of $24,510,296 and CONs/Licenses of $4,260,000 have
  been recorded in connection with the acquisition of the six hospitals, and have
  not been amortized as both have indefinite lives.
  6.  NOTES PAYABLE
  notes for the hospital acquisition and working capital. The notes bear interest
  at 10.25%. Three notes totaling $7,725,958 are interest only, with a balloon
  payment due on March 31, 2005. The remaining note for $41,415,988 is payable
  interest only for the first 36 months and then amortized over the next 12 years
  with a final maturity in 2019. Vibra may prepay the notes at any time without
  penalty. Maturities for the next five years are:
  December 31, 2005...........................................      $    --
  2006........................................................           --
  2007........................................................          902
  2008........................................................        9,675
  Thereafter..................................................       36,407
  Substantially all of the assets of Vibra and its subsidiaries, as well as
  Vibra's membership interests in its subsidiaries, secure the loans. In addition
  the sole member of Vibra, an affiliated company owned by the sole member and
  Vibra Management, LLC have jointly and severally guaranteed the notes payable to
  MPT, although the obligation of the sole member is limited to $5 million and his
  As discussed in Note 11, Vibra used a portion of the proceeds of a
  long-term revolving credit facility from Merrill Lynch Capital to repay the MPT
  notes due March 31, 2005. As a result of this refinancing,
  the notes due MPT have been classified as long-term at December 31, 2004 in the
  period from inception through December 31, 2004. At December 31, 2004, $164,007
  was payable to Vibra Management, LLC and is included accounts payable -- related
  party in the accompanying consolidated balance sheet.
  The spouse of the sole member of the Company provided legal consulting
  of which $98,137 was payable at December 31, 2004.
  APP effective July 1, 2005. Beginning January 1, 2006, and each January 1,
  thereafter, the base rate increases by an inflator of 2.5% (i.e. base rate
  becomes 12.54% of APP on January 1, 2006).
  pro rata basis as Vibra repays the $49.142 million in notes to MPT.
  The MPT leases are subject to various financial covenants including
  limitations on total debt to 100% of the total capitalization of the guarantors
  (as defined) or 4.5 times the 12 month total EBITDAR of the guarantors,
  whichever is greater, coverage ratios of 125% of debt service and 150% of rent
  (as defined), and maintenance of average daily patient census. As of December
  31, 2004, Vibra was not in compliance with the debt service and rent coverage
  covenants. The MPT lease agreements were subsequently amended to delay the
  initial measurement date with respect to these financial covenants (Note 11). A
  default in
  any of the loan terms will also constitute a default under the leases. All of
  the MPT leases are cross defaulted.
  OBLIGATION    CLINICS      TOTAL
  ----------   ----------   --------
  December 31, 2005....................................   $ 14,344       $205      $ 14,549
  addition the sole member of Vibra, an affiliated Company owned by the sole
  member, and Vibra Management LLC have joint and severally guaranteed the leases
  to MPT, although the obligation of the sole member is limited to $5 million and
  his membership interest in Vibra.
  The Company has sublet a floor of its Marlton, NJ, hospital to an
  income of $884,913 for the period from inception through December 31, 2004 and
  is included in non-operating revenue in the accompanying consolidated statement
  of operations. The following table summarizes amounts due under sub leases (in
  December 31, 2005...........................................  $ 1,119
  2006........................................................    1,144
  Thereafter..................................................    4,614
  the financial position or results of operations of the Company.
  date back to the prior owners' acquisition of the California
  hospitals. Amounts receivable at December 31, 2004, include $1,015,959 due from
  Medi-Cal, including $657,000 prior to the acquisition. Management is continuing
  to negotiate with Medi-Cal. The amount that will ultimately be received cannot
  be determined at this time.
  extension. The Fresno, CA, hospital is expected to meet the SPC-2 standard by
  financial statements. The Kentfield, CA, hospital has applied for a three year
  FOR THE PERIOD FROM INCEPTION (MAY 14, 2004) THROUGH
  IRF           LTACH         OTHER        TOTAL
  ------------   ------------   ---------   ------------
  Net patient service revenue........  $24,741,573    $23,524,446    $     --    $48,266,019
  Net operating loss.................   (3,649,867)    (1,395,339)    (63,205)    (5,108,411)
  Interest expense...................    1,493,279        800,123          --      2,293,402
  Depreciation and amortization......      185,746        116,448          --        302,194
  Deferred rent......................    1,833,216        627,092          --      2,460,308
  Total assets.......................   32,175,207     26,702,535     143,108     59,020,850
  equipment........................       75,582         92,318          --        167,900
  Goodwill...........................   16,664,491      7,845,805          --     24,510,296
  On February 9, 2005, Vibra closed on a revolving credit facility (the
  "Revolver") with Merrill Lynch Capital secured by a first position in the
  Company's accounts receivable through an intercreditor agreement with MPT. Up to
  $14 million can be borrowed based on a formula of qualifying accounts
  receivable. The terms of the Revolver are interest only for three years at 30
  day LIBOR plus 3% with a balloon maturity on February 8, 2008. The proceeds were
  used to repay $7,725,958 of notes payable to MPT and for general corporate
  On March 31, 2005, MPT and Vibra amended the hospital leases for no
  consideration. The amendments included delaying the initial measurement date
  with respect to limitations on total debt and coverage ratios until the quarter
  ending September 30, 2006, aggregating the six hospitals financial results in
  calculating the financial covenants, establishing an escrow for property taxes
  and insurance, and certain other terms.
  NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
  OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
  AND IF GIVEN OR MADE SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON
  AS HAVING BEEN AUTHORIZED BY US OR THE UNDERWRITERS. THE STATEMENTS IN THIS
  PROSPECTUS ARE MADE AS OF THE DATE HEREOF, UNLESS ANOTHER DATE IS SPECIFIED, AND
  NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
  ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
  FACTS SET FORTH HEREIN SINCE THE DATE HEREOF. THIS PROSPECTUS IS NOT AN OFFER TO
  SELL OR SOLICITATION OF AN OFFER TO BUY THESE SHARES OF COMMON STOCK IN ANY
  CIRCUMSTANCES UNDER WHICH THE OFFER OR SOLICITATION IS UNLAWFUL.
  Summary...............................    1
  Risk Factors..........................   16
  A Warning About Forward Looking
  Statements..........................   39
  Use of Proceeds.......................   40
  Capitalization........................   41
  Dilution..............................   42
  Distribution Policy...................   44
  Selected Financial Information........   45
  Management's Discussion and Analysis
  of Financial Condition and Results
  of Operations.......................   47
  Our Business..........................   56
  Our Portfolio.........................   71
  Management............................   96
  Compensation Committee Interlocks and
  Insider Participation...............  107
  Institutional Trading of Our Common
  Stock...............................  107
  Principal Stockholders................  108
  Selling Stockholders..................  109
  Registration Rights and Lock-up
  Agreements..........................  109
  Transactions........................  112
  Investment Policies and Policies with
  Respect to Certain Activities.......  114
  Description of Capital Stock..........  118
  Material Provisions of Maryland Law
  and of our Charter and Bylaws.......  122
  Partnership Agreement.................  127
  Considerations......................  131
  Underwriting..........................  151
  Legal Matters.........................  155
  Experts...............................  155
  Where You Can Find More Information...  155
  Index to Financial Statements and
  Financial Statement Schedules.......  F-1
  UNTIL           , 2005, ALL DEALERS EFFECTING TRANSACTIONS IN THE
  REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
  REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF
  DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
  THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
  11,365,000 SHARES
  FRIEDMAN BILLINGS RAMSEY
  INFORMATION NOT REQUIRED IN PROSPECTUS
  ITEM 31.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
  The following table sets forth the costs and expenses payable by the
  Registrant in connection with the issuance and distribution of common stock
  being registered. All amounts except the SEC registration fee and NASD fee are
  estimates.
  AMOUNT TO BE PAID
  SEC registration fee........................................        31,675
  NASD Fee....................................................        25,500
  NYSE Listing Fees...........................................             *
  Transfer agent and registrar fees...........................             *
  Legal fees and expenses.....................................             *
  Accounting fees and expenses................................             *
  Printing and mailing fees...................................             *
  Miscellaneous...............................................             *
  Total.......................................................             *
  * To be filed by amendment.
  ITEM 32.  SALES TO SPECIAL PARTIES.
  ITEM 33.  RECENT SALES OF UNREGISTERED SECURITIES.
  On April 6, 2004 and April 7, 2004, we sold in a private placement
  21,857,329 shares of common stock to Friedman, Billings, Ramsey & Co., Inc., as
  initial purchaser, pursuant to the exemptions from registration provided in
  Section 4(2) of the Securities Act of 1933, as amended , or the Securities Act,
  and Rule 506 of Regulation D thereunder. Friedman, Billings, Ramsey & Co., Inc.
  promptly resold 20,244,426 of these shares to qualified institutional buyers in
  accordance the resale exemption provided in Rule 144A under the Securities Act
  and to non-U.S. persons in accordance with the exemption provided in Regulation
  S under the Securities Act. Friedman, Billings, Ramsey & Co., Inc. paid us a
  purchase price of $9.30 per share for the shares it purchased and resold the
  shares that it resold for a price of $10.00 per share.
  Also on April 7, 2004, the Company sold in a concurrent private placement
  3,442,671 shares of common stock directly to institutional and individual
  accredited investors pursuant to the exemptions from registration provided in
  Section 4(2) of the Securities Act and Rule 506 of Regulation D thereunder.
  These shares were sold for $10.00 per share; however, Friedman, Billings, Ramsey
  & Co., Inc., which acted as placement agent, received a placement agent fee of
  $0.70 per share. In addition, we issued 260,954 shares of our common stock on
  April 7, 2004, to Friedman, Billings, Ramsey & Co., Inc. in a private placement
  under Section 4(2) of the Securities Act and Rule 506 of Regulation D thereunder
  as payment for financial advisory services.
  Each of the private placements that we made in reliance on the exemptions
  from registration provided under Section 4(2) of the Securities Act and Rule 506
  of Regulation D thereunder, as described in the two proceeding paragraphs, did
  not involve any public offering of the common stock. In addition, each purchaser
  of privately placed shares provided us with written representations that it was
  an accredited investor within the meaning of Rule 501(e) of Regulation D, that
  it was a sophisticated investor and that it had the knowledge and experience
  necessary to evaluate the risks and merits of the investment in our
  II-1
  common stock. In addition, each purchaser of our common stock in the private
  placements and resales that occurred on April 6 and April 7, 2004 was solicited
  on a private and confidential basis in a manner not involving any general
  solicitation or advertising in compliance with Regulation D.
  Pursuant to our 2004 Equity Incentive Plan, we have granted options to
  purchase a total of 160,000 shares of common stock, and awarded 20,000 deferred
  stock units, to our current or former independent directors. In addition, on
  April 25, 2005, we awarded 82,000 shares of restricted common stock to certain
  of our employees. In granting these options to purchase common stock and
  deferred stock units and in making these restricted stock awards, we relied upon
  exemptions from registration set forth in Section 4(2) of the Securities Act and
  Rule 701 under the Securities Act.
  In August and September 2003, Mr. Aldag, Mr. McLean, Mr. McKenzie and Mr.
  Hamner, or our founders, were collectively issued 1,630,435 shares of our common
  stock in exchange for nominal cash consideration. Upon completion of our private
  placement in April 2004, 1,108,527 shares of common stock held by our senior
  management were redeemed for nominal value and they now collectively hold
  557,908 shares of our common stock, including shares purchased in our April 2004
  private placement. We relied upon Section 4(2) of the Securities Act in issuing
  these shares of common stock to our founders.
  ITEM 34.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.
  We maintain a directors and officers liability insurance policy. Our
  charter limits the personal liability of our directors and officers for monetary
  damages to the fullest extent permitted under current Maryland law, and our
  charter and bylaws provide that a director or officer shall be indemnified to
  the fullest extent required or permitted by Maryland law from and against any
  claim or liability to which such director or officer may become subject by
  reason of his or her status as a director or officer of our company. Maryland
  law allows directors and officers to be indemnified against judgments,
  penalties, fines, settlements, and expenses actually incurred in a proceeding
  unless the following can be established:
  provide that we may indemnify other employees and agents to the fullest extent
  permitted under Maryland law, whether they are serving us or, at our request,
  any other entity.
  and executive officers, which we refer to in this context as indemnitees. The
  he provides us with a written affirmation that he has met the standard
  of conduct required for indemnification and a written undertaking to repay the
  ITEM 35.  TREATMENT OF PROCEEDS FROM STOCK BEING REGISTERED.
  None of the proceeds will be credited to an account other than the
  appropriate capital share account.
  ITEM 36.  FINANCIAL STATEMENTS AND EXHIBITS.
  (a) Financial Statements.  See page F-1 for an index of the financial
  statements included in the Registration Statement.
  (b) Exhibits.  The following exhibits are filed as part of this
  registration statement on Form S-11.
  NUMBER                           EXHIBIT TITLE
  -------                          -------------
  1.1*     Form of Underwriting Agreement
  3.1**    Registrant's Second Articles of Amendment and Restatement
  3.2      Registrant's Amended and Restated Bylaws
  4.1*     Form of Common Stock Certificate
  5.1*     Opinion of Baker, Donelson, Bearman, Caldwell & Berkowitz,
  P.C. with respect to the legality of the shares being
  P.C. with respect to certain tax matters
  10.1*     First Amended and Restated Agreement of Limited Partnership
  of MPT Operating Partnership, L.P.
  10.2*     Amended and Restated 2004 Equity Incentive Plan
  10.3**    Employment Agreement between the Registrant and Edward K.
  Aldag, Jr., dated September 10, 2003
  10.4**    First Amendment to Employment Agreement between the
  Registrant and Edward K. Aldag, Jr., dated March 8, 2004
  10.5**    Employment Agreement between the Registrant and Emmett E.
  McLean, dated September 10, 2003
  10.6**    Employment Agreement between the Registrant and R. Steven
  Hamner, dated September 10, 2003
  10.7**    Amended and Restated Employment Agreement between the
  Registrant and William G. McKenzie, dated September 10, 2003
  10.8**    Lease Agreement between MPT West Houston MOB, L.P. and
  Stealth L.P., dated June 17, 2004.
  10.9**    Lease Agreement between MPT West Houston Hospital, L.P. and
  10.10**   Third Amended and Restated Lease Agreement between 1300
  Campbell Lane, LLC and 1300 Campbell Lane Operating Company,
  LLC, dated December 20, 2004.
  10.11**   First Amendment to Third Amended and Restated Lease
  Agreement between 1300 Campbell Lane, LLC and 1300 Campbell
  Lane Operating Company, LLC, dated December 31, 2004.
  10.12**   Second Amended and Restated Lease Agreement between 92 Brick
  Road, LLC and 92 Brick Road, Operating Company, LLC, dated
  10.13**   First Amendment to Second Amended and Restated Lease
  Agreement between 92 Brick Road, LLC and 92 Brick Road,
  Operating Company, LLC, dated December 31, 2004.
  10.14**   Third Amended and Restated Lease Agreement between San
  Joaquin Health Care Associates Limited Partnership and 7173
  North Sharon Avenue Operating Company, LLC, dated December
  Agreement between San Joaquin Health Care Associates Limited
  Partnership and 7173 North Sharon Avenue Operating Company,
  10.16**   Second Amended and Restated Lease Agreement between 8451
  Pearl Street, LLC and 8451 Pearl Street Operating Company,
  10.17**   First Amendment Second Amended and Restated Lease Agreement
  between 8451 Pearl Street, LLC and 8451 Pearl Street
  Acushnet Avenue, LLC and 4499 Acushnet Avenue Operating
  Company, LLC, dated December 20, 2004.
  Agreement between 4499 Acushnet Avenue, LLC and 4499
  Acushnet Avenue Operating Company, LLC, dated December 31,
  10.20**   Third Amended and Restated Lease Agreement between Kentfield
  THCI Holding Company, LLC and 1125 Sir Francis Drake
  Boulevard Operating Company, LLC, dated December 20, 2004.
  Agreement between Kentfield THCI Holding Company, LLC and
  1125 Sir Francis Drake Boulevard Operating Company, LLC,
  dated December 31, 2004.
  10.22**   Loan Agreement between Colonial Bank, N.A., and MPT West
  Houston MOB, L.P., dated December 17, 2004.
  Houston Hospital, L.P., dated December 17, 2004.
  10.24**   Loan Agreement between Merrill Lynch Capital and 4499
  Acushnet Avenue, LLC, 8451 Pearl Street, LLC, 92 Brick Road,
  LLC, 1300 Campbell Lane, LLC, Kentfield THCI Holding
  Company, LLC and San Joaquin Health Care Associates, LP,
  10.25**   Payment Guaranty made by the Registrant and MPT Operating
  Partnership, L.P. in favor of Merrill Lynch Capital, dated
  10.26**   Purchase Agreement among THCI Company, LLC, THCI of
  California, LLC, THCI of Massachusetts, LLC, THCI Mortgage
  Holding Company, LLC and MPT Operating Partnership, L.P.,
  dated May 20, 2004.
  10.27**   Purchase and Sale Agreement among MPT Operating Partnership,
  L.P., MPT of Victorville, LLC, Prime A Investments, L.L.C.,
  Desert Valley Health System, Inc., Desert Valley Hospital,
  Inc. and Desert Valley Medical Group, Inc., dated February
  10.28**   Lease Agreement between MPT of Victorville, LLC and Desert
  Valley Hospital, Inc., dated February 28, 2005.
  L.P., MPT of Bucks County Hospital, L.P., Bucks County
  Oncoplastic Institute, LLC, Jerome S. Tannenbaum, M.D., M.
  Stephen Harrison and DSI Facility Development, LLC, dated
  10.30**   Employment Agreement between the Registrant and Michael G.
  Stewart, dated April 28, 2005.
  10.31**   Letter of Commitment between MPT Operating Partnership, L.P.
  and Monroe Hospital Operating Hospital, dated February 28,
  10.32**   Letter of Commitment between MPT Operating Partnership,
  L.P., Covington Healthcare Properties, LLC and Denham
  Springs Healthcare Properties, LLC, dated March 14, 2005.
  and North Cypress Medical Center Operating Partnership,
  Ltd., dated March 16, 2005.
  L.P., Hammond Healthcare Properties, LLC and Hammond
  Rehabilitation Hospital, LLC, dated April 1, 2005.
  and Diversified Specialty Institutes, Inc., dated March 3,
  10.36**   Amendment to Letter of Commitment between MPT Operating
  Partnership, L.P. and Diversified Specialty Institutes,
  Inc., dated March 31, 2005.
  L.P., MPT of Victorville, LLC and Desert Valley Hospital,
  Inc. dated February 28, 2005.
  10.38**   Amendment to Purchase and Sale Agreement among MPT Operating
  Partnership, L.P., MPT of Bucks County Hospital, L.P., Bucks
  County Oncoplastic Institute, LLC, DSI Facility Development,
  LLC, Jerome S. Tannenbaum, M.D., M. Stephen Harrison and G.
  Patrick Maxwell, M.D., dated April 29, 2005.
  21.1*     Subsidiaries of the Registrant
  23.1      Consent of KPMG LLP
  23.2      Consent of Parente Randolph, LLC
  23.3*     Consent of Baker, Donelson, Bearman, Caldwell & Berkowitz,
  P.C. (included in Exhibits 5.1 and 8.1)
  24.1**    Power of Attorney, included on signature page of the
  Registrant's Form S-11 filed with the Commission on October
  24.2**    Power of Attorney, included on signature page of Amendment
  No. 3 to the Registrant's Form S-11 filed with the
  Commission on May 13, 2005.
  ** Previously filed.
  ITEM 37.  UNDERTAKINGS.
  (a) The undersigned registrant hereby undertakes to provide to the
  underwriters at the closing specified in the underwriting agreement certificates
  in such denominations and registered in such names as required by the
  underwriters to permit prompt delivery to each purchaser.
  (b) Insofar as indemnification for liabilities arising under the Securities
  Act of 1933, as amended, may be permitted to directors, officers or controlling
  persons of the registrant pursuant to the foregoing provisions, or otherwise,
  the registrant has been advised that in the opinion of the Securities and
  Exchange Commission such indemnification is against public policy as expressed
  in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In
  the event that a claim for indemnification against such liabilities (other than
  the payment by the registrant of expenses incurred or paid by a director,
  officer or controlling person of the registrant in the successful defense of any
  action, suit or proceeding) is asserted by such director, officer or controlling
  person in connection with the securities being registered, the registrant will,
  unless in the opinion of its counsel the matter has been settled by controlling
  precedent, submit to a court of appropriate jurisdiction the question whether
  such indemnification by it is against public policy as expressed in the
  Securities Act of 1933, as amended, and will be governed by the final
  adjudication of such issue.
  (c) The undersigned Registrant hereby further undertakes that:
  (1) For purposes of determining any liability under the Securities Act
  of 1933, as amended, the information omitted from the form of prospectus
  filed as part of this registration statement in reliance under Rule 430A
  and contained in a form of prospectus filed by the Registrant pursuant to
  Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed
  to part of this registration statement as of the time it was declared
  effective.
  (2) For the purpose of determining any liability under the Securities
  Act of 1933, as amended, each post-effective amendment that contains a form
  of prospectus shall be deemed to be a new registration statement relating
  to the securities offered herein, and the offering of such securities at
  that time shall be deemed to be the initial bona fide offering thereof.
  Pursuant to the requirements of the Securities Act of 1933, as amended, the
  registrant certifies that it has reasonable grounds to believe that it meets all
  of the requirements for filing on Form S-11 and has duly caused this
  registration statement to be signed on its behalf by the undersigned, thereunto
  duly authorized, in Birmingham, Alabama on June 3, 2005.
  By:     /s/ R. STEVEN HAMNER
  R. Steven Hamner
  Executive Vice President,
  Chief Financial Officer and Director
  Pursuant to the requirements of the Securities Act of 1933, as amended,
  this registration statement has been signed by the following persons in the
  capacities and on the dates listed.
  SIGNATURE                                 TITLE                       DATE
  ---------                                 -----                       ----
  *                      Chairman of the Board, President and   June 3, 2005
  --------------------------------------         Chief Executive Officer
  /s/ R. STEVEN HAMNER              Executive Vice President, Chief      June 3, 2005
  --------------------------------------      Financial Officer and Director
  *                                                             June 3, 2005
  --------------------------------------                 Director
  Virginia A. Clarke
  G. Steven Dawson
  Bryan L. Goolsby
  Robert E. Holmes, Ph.D.
  --------------------------------------        Vice Chairman of the Board
  William G. McKenzie
  L. Glenn Orr, Jr.
  *By:        /s/ R. STEVEN HAMNER                                               June 3, 2005
  Attorney-in-Fact
  Agreement between 8451 Pearl Street, LLC and 8451 Pearl
  Street Operating Company, LLC, dated December 31, 2004.
  24.2**    Power of Attorney included on signature page of Amendment
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