The following discussion and analysis of the consolidated financial condition and consolidated results of operations are presented on a combined basis forMedical Properties Trust, Inc. andMPT Operating Partnership, L.P. as there are no material differences between these two entities. Such discussion and analysis should be read together with the condensed consolidated financial statements and notes thereto contained in this Form 10-Q and the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . As the economy continues to recover from the downturn caused by COVID-19 and vaccines continue to roll out, we expect to receive substantially all rent and interest payments in the future, and we are collecting rent, as expected, that we previously deferred in 2020 (less than 2% of our 2020 annual rent), with interest. However, no assurances can be made that if the pandemic continues for an extended period of time that our rent and interest payments will not be delayed into the future until our tenants can recover.
Forward-Looking Statements.
This Quarterly Report on Form 10-Q contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or future performance, achievements or transactions or events to be materially different from those expressed or implied by such forward-looking statements, including, but not limited to, the risks described in our Annual Report on Form 10-K and as updated in our quarterly reports on Form 10-Q for future periods, and current reports on Form 8-K as we file them with theSEC under the Securities Exchange Act of 1934, as amended. Such factors include, among others, the following:
• the political, economic, business, real estate, and other market
conditions in the
the
jurisdictions where we may own healthcare facilities or transact business,
which may have a negative effect on the following, among other things:
o the financial condition of our tenants, our lenders, or institutions
that hold our cash balances or are counterparties to certain
hedge
agreements, which may expose us to increased risks of default
by these
parties;
o our ability to obtain equity or debt financing on attractive terms or
at all, which may adversely impact our ability to pursue
acquisition
and development opportunities, refinance existing debt, and our
future
interest expense; and
o the value of our real estate assets, which may limit our ability to
dispose of assets at attractive prices or obtain or maintain debt financing secured by our real estate assets or on an unsecured basis. • the impact of COVID-19 on our business, our joint ventures, and the
business of our tenants/borrowers and the economy in general, as well as
other factors that may affect our business, our joint ventures or that of
our tenants/borrowers that are beyond our control, including natural
disasters, health crises, or pandemics and subsequent government actions
in reaction to such matters;
• the risk that a condition to closing under the agreements governing any or
all of our pending transactions (including phase two of thePriory Group Transaction disclosed in Note 3 ) that have not closed as of the date hereof may not be satisfied;
• the possibility that the anticipated benefits from any or all of the
transactions we enter into will take longer to realize than expected or
will not be realized at all; • the competitive environment in which we operate; • the execution of our business plan; • financing risks; • acquisition and development risks; • potential environmental contingencies and other liabilities;
• adverse developments affecting the financial health of one or more of our
tenants, including insolvency; • other factors affecting the real estate industry generally or the healthcare real estate industry in particular; • our ability to maintain our status as a REIT for income tax purposes; • our ability to attract and retain qualified personnel; • changes in foreign currency exchange rates; 23
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• changes in federal, state, or local tax laws in the
Australia ,South America , or other jurisdictions in which we may own healthcare facilities or transact business; and • healthcare and other regulatory requirements in theU.S. ,Europe ,Australia ,South America , and other foreign countries.
Key Factors that May Affect Our Operations
Our revenue is derived from rents we earn pursuant to the lease agreements with our tenants, from interest income from loans to our tenants and other facility owners, and from profits or equity interests in certain of our tenants' operations. Our tenants operate in the healthcare industry, generally providing medical, surgical, rehabilitative, and behavioral health 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 is generally positive for efficient operators. However, our tenants' operations are subject to economic, regulatory, market, and other conditions (such as the impact caused by COVID-19) that may affect their profitability, which could impact our results. Accordingly, we monitor certain key performance indicators that we believe provides us with early indications of conditions that could affect the level of risk in our portfolio.
Key factors that we consider in underwriting prospective tenants and in our ongoing monitoring of our tenants' (and guarantors') performance include the following:
• admission levels and surgery/procedure/diagnosis volumes by type;
• the current, historical, and prospective operating profit (measured by
earnings before interest, taxes, depreciation, amortization, and facility
rent) of each tenant or borrower and at each facility; • the ratio of our tenants' or borrowers' operating earnings both to
facility rent and to facility rent plus other fixed costs, including debt
costs; • changes in revenue sources of our tenants' or borrowers' revenue, including the relative mix of public payors (including Medicare,
Medicaid/MediCal, and managed care in the
and
(including commercial insurance and private pay patients);
• trends in tenants' cash collections, including comparison to recorded net
patient service revenues; • tenants' free cash flows;
• the potential impact of healthcare pandemics/epidemics, legislation, and
other regulations (including changes in reimbursement) on our tenants' or
borrowers' profitability and liquidity; and
• the competition and demographics of the local and surrounding areas in
which our tenants or borrowers operate.
Certain business factors, in addition to those described above that directly affect our tenants and borrowers, 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 of financing their real estate assets through lease structures;
• changes in healthcare regulations that may limit the opportunities for
physicians to participate in the ownership of healthcare providers and healthcare real estate;
• reductions in reimbursements from Medicare, state healthcare programs, and
commercial insurance providers that may reduce our tenants' or borrowers'
profitability and our lease rates; • competition from other financing sources; and
• the ability of our tenants and borrowers to access funds in the credit
markets. CRITICAL ACCOUNTING POLICIES Refer to our 2020 Annual Report on Form 10-K for a discussion of our critical accounting policies, which include investments in real estate, purchase price allocation, loans, credit losses, losses from rent and interest receivables, and our accounting policy on consolidation. During the three months endedMarch 31, 2021 , there were no material changes to these policies. 24
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Overview
We are a self-advised REIT focused on investing in and owning net-leased healthcare facilities across theU.S. and selectively in foreign jurisdictions.Medical Properties Trust, Inc. was incorporated underMaryland law onAugust 27, 2003 , andMPT Operating Partnership, L.P. was formed underDelaware law onSeptember 10, 2003 . We conduct substantially all of our business throughMPT Operating Partnership, L.P. We acquire and develop healthcare facilities and lease the facilities to healthcare operating companies under long-term net leases, which require the tenant to bear most of the costs associated with the property. We also make mortgage loans to healthcare operators collateralized by their real estate assets. In addition, we selectively make loans to certain of our operators through our taxable REIT subsidiaries, the proceeds of which are typically used for acquisitions and working capital. Finally, from time-to-time, we acquire a profits or other equity interest in our tenants that gives us a right to share in such tenant's profits and losses.
At
Our investments in healthcare real estate, including mortgage and other loans, as well as any equity investments in our tenants are considered a single reportable segment. AtMarch 31, 2021 , all of our investments are located in theU.S. ,Europe ,Australia , andSouth America . Our total assets are made up of the following (dollars in thousands): As of As of March 31, % of December 31, % of 2021 Total 2020 Total Real estate assets - at cost$ 15,453,515 82.4 %$ 14,337,929 85.2 % Accumulated real estate depreciation and amortization (903,798 ) -4.8 % (833,529 ) -5.0 % Cash and cash equivalents 746,753 4.0 % 549,884 3.3 % Equity investments 1,080,214 5.8 % 1,123,623 6.7 % Other loans 1,522,666 8.1 % 858,368 5.1 % Other 846,325 4.5 % 792,739 4.7 % Total assets$ 18,745,675 100.0 %$ 16,829,014 100.0 %
Additional Concentration Details
On a pro forma gross asset basis (as defined in the "Reconciliation of Non-GAAP Financial Measures" section of Item 2 of this Quarterly Report on Form 10-Q), our concentration as ofMarch 31, 2021 as compared toDecember 31, 2020 is as follows (dollars in thousands):
Total Pro Forma Gross Assets by Operator
As of March 31, 2021 As of December 31, 2020 Percentage of Percentage of Total Pro Forma Total Pro Forma Total Pro Forma Total Pro Forma Operators Gross Assets Gross Assets Gross Assets Gross Assets Steward Massachusetts market$ 1,487,064 7.1 %$ 1,500,915 7.3 % Utah market 1,261,507 6.1 % 1,260,147 6.2 % Texas/Arkansas/Louisiana market 1,043,913 5.0 % 1,045,982 5.1 % Arizona market 330,734 1.6 % 332,239 1.6 % Florida market 218,123 1.0 % 215,105 1.1 % Ohio/Pennsylvania market 149,122 0.7 % 151,785 0.7 % Circle 2,541,334 12.2 % 2,520,019 12.3 % Prospect 1,606,433 7.7 % 1,597,950 7.8 % Priory 1,582,689 7.6 % 1,566,087 7.7 % Swiss Medical Network 1,252,642 6.0 % 1,177,520 5.8 % Other operators 8,185,843 39.2 % 8,269,093 40.5 % Other assets 1,201,275 5.8 % 792,739 3.9 % Total$ 20,860,679 100.0 %$ 20,429,581 100.0 % 25
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Total Pro Forma Gross Assets by
As of March 31, 2021 As of December 31, 2020 Percentage of Percentage of Total Pro Forma Total Pro Forma Total Pro Forma Total Pro Forma U.S. States and Other Countries Gross Assets Gross Assets Gross Assets Gross Assets Texas$ 1,926,283 9.2 %$ 1,923,440 9.4 % Massachusetts 1,492,464 7.2 % 1,506,315 7.4 % California 1,397,169 6.7 % 1,382,663 6.8 % Utah 1,296,754 6.2 % 1,295,329 6.4 % Pennsylvania 864,709 4.1 % 864,273 4.2 % All other states 3,974,527 19.1 % 3,984,113 19.5 % Other domestic assets 1,065,687 5.1 % 680,678 3.3 % Total U.S.$ 12,017,593 57.6 %$ 11,636,811 57.0 % United Kingdom$ 4,679,097 22.4 %$ 4,636,634 22.7 % Germany 1,306,250 6.3 % 1,361,019 6.6 % Switzerland 1,252,642 6.0 % 1,177,520 5.7 % Australia 985,427 4.7 % 997,878 4.9 % Spain 211,036 1.0 % 221,134 1.1 % All other countries 273,046 1.3 % 286,524 1.4 % Other international assets 135,588 0.7 % 112,061 0.6 % Total international$ 8,843,086 42.4 %$ 8,792,770 43.0 % Grand total$ 20,860,679 100.0 %$ 20,429,581 100.0 %
On an individual property basis, we had no investment in any single property
greater than 3% of our total pro forma gross assets as of
On an adjusted revenue basis (as defined in the "Reconciliation of Non-GAAP Financial Measures" section of Item 2 of this Quarterly Report on Form 10-Q), concentration for the three months endedMarch 31, 2021 as compared to the prior year is as follows (dollars in thousands):
Total Adjusted Revenue by Operator
For the Three Months Ended March 31, 2021 2020 Percentage of Percentage of Total Adjusted Total Adjusted Total Adjusted Total Adjusted Operators Revenue Revenue Revenue Revenue Steward Massachusetts market $ 34,543 8.8 % $ 34,615 10.9 % Utah market 31,705 8.0 % 21,781 6.8 % Texas/Arkansas/Louisiana market 22,671 5.7 % 18,046 5.7 % Arizona market 8,187 2.1 % 8,191 2.6 % Florida market 4,985 1.3 % 3,626 1.1 % Ohio/Pennsylvania market 3,300 0.8 % 5,000 1.6 % Circle 53,192 13.5 % 32,342 10.1 % Prospect 38,066 9.7 % 37,916 11.9 % Prime 30,415 7.7 % 32,162 10.1 % LifePoint Health, Inc. 26,688 6.8 % 26,594 8.3 % Other operators 140,665 35.6 % 98,394 30.9 % Total$ 394,417 100.0 %$ 318,667 100.0 % 26
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Total Adjusted Revenue by
For the Three Months Ended March 31, 2021 2020 Percentage of Percentage of Total Adjusted Total Adjusted Total Adjusted Total Adjusted U.S. States and Other Countries Revenue Revenue Revenue Revenue Texas $ 39,128 9.9 % $ 26,431 8.3 % Massachusetts 34,702 8.8 % 34,773 10.9 % California 34,004 8.6 % 34,946 11.0 % Utah 32,677 8.3 % 22,748 7.1 % Pennsylvania 20,100 5.1 % 21,669 6.8 % All other states 96,549 24.5 % 92,766 29.1 % Total U.S.$ 257,160 65.2 %$ 233,333 73.2 % United Kingdom $ 76,560 19.4 % $ 38,875 12.2 % Germany 26,162 6.6 % 23,804 7.5 % All other countries 34,535 8.8 % 22,655 7.1 % Total international$ 137,257 34.8 % $ 85,334 26.8 % Grand total$ 394,417 100.0 %$ 318,667 100.0 %
Total Adjusted Revenue by Facility Type
For the Three Months Ended March 31, 2021 2020 Percentage of Percentage of Total Adjusted Total Adjusted Total Adjusted Total Adjusted Facility Types Revenue Revenue Revenue Revenue
General acute care hospitals$ 315,434 80.0 %$ 263,742 82.8 % Inpatient rehabilitation hospitals 45,303 11.5 % 40,631 12.7 % Behavioral health facilities 19,754 5.0 % 1,422 0.5 % Long-term acute care hospitals 8,186 2.1 % 8,575 2.7 % Freestanding ER/urgent care facilities 5,740 1.4 % 4,297 1.3 % Total$ 394,417 100.0 %$ 318,667 100.0 % Results of Operations
Three Months Ended
Net income for the three months endedMarch 31, 2021 , was$163.8 million compared to$81.0 million for the three months endedMarch 31, 2020 . This 102% increase in net income is primarily due to incremental revenue from new investments made in 2020 and in early 2021, partially offset by higher interest expense (from additional debt to partially finance these new investments), depreciation expense, general and administrative costs and income taxes due to the growth of the company. In addition, our return on our equity investments were greater in the 2021 first quarter compared to the prior year, and we incurred approximately$19 million of real estate impairment charges in 2020. Normalized funds from operations ("FFO"), after adjusting for certain items (as more fully described in the "Reconciliation of Non-GAAP Financial Measures"), was$243.9 million for the 2021 first quarter, or$0.42 per diluted share, as compared to$191.2 million , or$0.37 per diluted share, for the 2020 first quarter. Similar to net income, this 28% increase in Normalized FFO is primarily due to incremental revenue from new investments in 2020 and early 2021.
A comparison of revenues for the three month periods ended
Year over % of % of Year 2021 Total 2020 Total Change Rent billed$ 213,344 58.9 %$ 171,767 58.4 % 24.2 % Straight-line rent 54,873 15.1 % 31,421 10.7 % 74.6 % Income from financing leases 50,894 14.0 % 52,436 17.8 % (2.9) % Interest and other income 43,654 12.0 % 38,508 13.1 % 13.4 % Total revenues$ 362,765 100.0 %$ 294,132 100.0 % 23.3 % 27
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Our total revenue for the 2021 first quarter is up
• Operating lease revenue (includes rent billed and straight-line rent) - up
incremental revenue from acquisitions made in 2020 (including
million from the Circle transactions and
Steward properties in
mortgage loan conversions in the third quarter),
reclassification of properties from deferred financing leases to operating
leases due to certain lease modifications in the fourth quarter of 2020,$3.5 million is from the commencement of rent on three development properties,$1.7 million is from capital additions in 2021, and approximately$5.6 million is from favorable foreign currency fluctuations. This increase is partially offset by$2.1 million of lower revenue from disposals in 2020.
• Income from financing leases - down
the reclassification of properties from deferred financing leases to
operating leases due to certain lease modifications in the fourth quarter
of 2020, partially offset by revenue from new financing leases in the 2020
fourth quarter as part of the conversion of
simple asset ownership.
• Interest and other income - up
following:
- Interest from loans - up
million of incremental revenue earned on loan investments in
2020 and
early 2021, including$15.9 million earned on the two loans
made to
Priory in 2021 and$6.9 million from the loans made to the international joint venture and for the threeColombia
properties in
2020, along with$0.5 million of favorable foreign currency fluctuations. This increase is partially offset by$14.7
million of
lower interest revenue related to Steward mortgage loans
converted to
fee simple assets in the third quarter of 2020,$3.0 million of lower interest revenue related toErnest mortgage loans converted to fee simple assets in the fourth quarter of 2020, and$9.2 million related to the repayment of Prime loans in the fourth quarter of 2020. - Other income - up$1.7 million from the prior year with the addition of new properties, whereby we received more direct
reimbursements from
our tenants for ground lease, property taxes, and insurance. Also, other income is higher in 2021 due to an approximate$1 million write-off of straight-line rent related to ground leases on certain Adeptus facilities in the 2020 first quarter. Interest expense for the quarters endedMarch 31, 2021 and 2020, totaled$87.0 million and$80.9 million , respectively. This increase is primarily related to new debt issuances in 2020 and 2021. Our weighted-average interest rate was 3.4% for the three months endedMarch 31, 2021 , as compared to 4.0% in the same period in 2020.
Real estate depreciation and amortization during the first quarter of 2021
increased to
Property-related expenses totaled$5.5 million for the quarter endedMarch 31, 2021 , which is consistent with the prior year. Of the$5.5 million of property expenses in the first three months of 2021, approximately$3.5 million represents costs that were reimbursed by our tenants and included in "Interest and other income" line on our condensed consolidated statements of net income. As a percentage of revenue, general and administrative expenses represent 9.9% for the 2021 first quarter compared to 11.4% in the prior year. On a dollar basis, general and administrative expenses totaled$36.1 million for the 2021 first quarter, which is a$2.7 million increase from the prior year first quarter and reflective of the growth of the company, in particular our continued international expansion. During the three months endedMarch 31, 2021 , we sold one facility and an ancillary property resulting in a net gain of$1.0 million . In the first quarter of 2020, we sold four ancillary properties resulting in a net gain of$1.3 million . In addition, we made a$19.0 million adjustment to lower the carrying value of the real estate on certain assets previously leased to Adeptus and Alecto in the 2020 first quarter (see Note 3 to Item 1 of this Form 10-Q for further details). Earnings from equity interests was$7.1 million for the first three months of 2021, up$3.0 million from the same period in 2020, primarily due to more income generated on our investment in Infracore, which we increased our share in during the 2020 fourth quarter. Debt refinancing and unutilized financing costs were$2.3 million in the 2021 first quarter as a result of the early termination of our$900 million interim credit facility and the amendment to our Credit Facility (see Note 4 to the condensed consolidated financial statements for more detail). In the first quarter of 2020, we incurred$0.6 million of accelerated commitment fee amortization expense associated with our GBP term loan facility.
In the first quarter of 2021, we recorded a favorable non-cash fair value
adjustment of more than
28
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This adjustment (reflected in the "Other" line of our condensed consolidated
statements of net income) was a loss of more than
Income tax expense includesU.S. federal and state income taxes on our domestic TRS entities, as well as non-U.S. income based or withholding taxes on certain investments located in jurisdictions outside theU.S. The$8.4 million income tax expense for the three months endedMarch 31, 2021 is from the income generated by our investments in theUnited Kingdom ,Colombia , andAustralia , as well as income from lending activities of our domestic TRS entities. In comparison, we incurred a$4.0 million income tax expense in the first quarter of 2020. This increase in income tax expense is primarily related to higher foreign taxable income generated from investments made in 2020 and early 2021. We utilize the asset and liability method of accounting for income taxes. Deferred tax assets are recorded to the extent we believe these assets will more likely than not be realized. In making such determination, all available positive and negative evidence is considered, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Based upon our review of all positive and negative evidence, including our three-year cumulative pre-tax book loss position in certain entities, we concluded that a valuation allowance of approximately$38 million should be reflected against certain of our international and domestic net deferred tax assets atMarch 31, 2021 . In the future, if we determine that it is more likely than not that we will realize our net deferred tax assets, we will reverse the applicable portion of the valuation allowance, recognize an income tax benefit in the period in which such determination is made, and incur higher income taxes in future periods as income is earned.
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. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets, which assumes that the value of real estate diminishes predictably over time. We compute FFO in accordance with the definition provided by theNational Association of Real Estate Investment Trusts , or Nareit, which represents net income (loss) (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairment charges on real estate assets, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. In addition to presenting FFO in accordance with the Nareit definition, we also disclose normalized FFO, which adjusts FFO for items that relate to unanticipated or non-core events or activities or accounting changes that, if not noted, would make comparison to prior period results and market expectations less meaningful to investors and analysts. We believe that the use of FFO, combined with the required GAAP presentations, improves the understanding of our operating results among investors and the use of normalized FFO makes comparisons of our operating results with prior periods and other companies more meaningful. While FFO and normalized FFO are relevant and widely used supplemental measures of operating and financial performance of REITs, they should not be viewed as a substitute measure of our operating performance since the measures do not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which can be significant economic costs that could materially impact our results of operations. FFO and normalized FFO should not be considered an alternative to net income (loss) (computed in accordance with GAAP) as indicators of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity. 29
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The following table presents a reconciliation of net income attributable to MPT
common stockholders to FFO and Normalized FFO for the three months ended
For the Three Months Ended March 31, 2021 March 31, 2020 FFO information: Net income attributable to MPT common stockholders$ 163,783 $ 80,992 Participating securities' share in earnings (370 ) (464 )
Net income, less participating securities' share in earnings
$ 163,413 $ 80,528 Depreciation and amortization 88,536 70,502 Gain on sale of real estate (989 ) (1,325 ) Real estate impairment charges - 19,006 Funds from operations$ 250,960 $ 168,711 Write-off (recovery) of straight-line rent and other (5,238 ) 6,740 Non-cash fair value adjustments (4,065 ) 14,195 Tax rate change - 977 Debt refinancing and unutilized financing costs 2,269 611 Normalized funds from operations$ 243,926 $ 191,234 Per diluted share data: Net income, less participating securities' share in earnings $ 0.28 $ 0.15 Depreciation and amortization 0.15 0.13 Gain on sale of real estate - - Real estate impairment charges - 0.04 Funds from operations $ 0.43 $ 0.32 Write-off (recovery) of straight-line rent and other (0.01 ) 0.02 Non-cash fair value adjustments - 0.03 Tax rate change - - Debt refinancing and unutilized financing costs - - Normalized funds from operations $ 0.42 $ 0.37 Total Pro Forma Gross Assets Pro forma gross assets is total assets before accumulated depreciation/amortization (adjusted for our unconsolidated joint ventures) and assumes all real estate commitments on new investments and unfunded amounts on development deals and commenced capital improvement projects as of the applicable reporting periods are fully funded, and assumes cash on hand is used in these transactions. We believe total pro forma gross assets is useful to investors as it provides a more current view of our portfolio and allows for a better understanding of our concentration levels as our commitments close and our other commitments are fully funded. The following table presents a reconciliation of total assets to total pro forma gross assets (in thousands): As of As of March 31, 2021 December 31, 2020 Total assets$ 18,745,675 $ 16,829,014 Add: Real estate commitments on new investments(1) 157,630
1,901,087
Unfunded amounts on development deals and commenced capital
improvement projects(2) 114,129 166,258 Accumulated depreciation and amortization 903,798 833,529 Incremental gross assets of our joint ventures(3) 1,211,206
1,287,077
Proceeds from new debt and equity subsequent to period-end -
1,479,961
Less:
Cash used for funding the transactions above(4) (271,759 ) (2,067,345 ) Total pro forma gross assets$ 20,860,679 $ 20,429,581
(1) The 2021 column reflects our investment in
2021. The 2020 column reflects investments made in early 2021, including the
Priory transaction that was funded onJanuary 19, 2021 . 30
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(2) Includes
development projects and
on capital improvement projects and development projects that have commenced
rent, as of
(3) Adjustment to reflect our share of our joint ventures' gross assets.
(4) Includes cash available on-hand plus cash generated from activities
subsequent to period-end including proceeds from new debt, equity, or loan
repayments, if any. Adjusted revenue Adjusted revenues are total revenues adjusted for our pro rata portion of similar revenues in our real estate joint venture arrangements. We believe adjusted revenue is useful to investors as it provides a more complete view of revenue across all of our investments and allows for better understanding of our revenue concentration. The following table presents a reconciliation of total revenues to total adjusted revenues (in thousands): For the Three Months Ended March 31, 2021 2020 Total revenues $ 362,765 $ 294,132 Revenue from real estate properties owned through joint venture arrangements 31,652 24,535 Total adjusted revenue $ 394,417 $ 318,667
LIQUIDITY AND CAPITAL RESOURCES
2021 Cash Flow Activity
During the 2021 first quarter, we generated approximately$188.7 million of cash flows from operating activities, primarily consisting of rent and interest from mortgage and other loans. We used these operating cash flows, along with$11 million received from Steward as a return of capital distribution, to fund our dividends of$147.7 million and certain investment activities. In addition, we invested approximately$1.8 billion in real estate and other assets, including the £1.1 billion Priory Group Transaction inJanuary 2021 (as more fully described in Note 3 to Item 1 of this Form 10-Q), using a combination of cash on-hand generated from the$779.2 million of net proceeds from the sales of stock during the quarter, £500 million of proceeds from an interim credit facility, and proceeds from our revolving facility. In lateMarch 2021 , we issued £850 million of senior unsecured notes and used such proceeds to pay off our interim credit facility in full and reduce our revolving credit facility balance to less than$200 million outstanding. Subsequent to quarter-end, we sold an additional 4.9 million shares under our at-the-market equity program, resulting in net proceeds of approximately$105.5 million , and received approximately$75 million from loan principal prepayments.
2020 Cash Flow Activity
During the 2020 first quarter, we generated$106.9 million of cash flows from operating activities, primarily consisting of rent and interest from mortgage and other loans. Operating cash flows for the 2020 first quarter did not include approximately$35 million of revenue earned on the new Circle/BMI transaction, as such rent was prepaid before the closing of the acquisition. We used our operating cash flows in the 2020 first quarter, along with approximately$63 million of distributions from our HM Hospitales joint venture investment in the form of a return of capital, to fund our dividends of$138.1 million and certain investing activities including the additional funding of our development activities. In addition, we funded the £1.5 billion Circle acquisition of 30 properties inJanuary 2020 with a combination of cash on-hand and proceeds from the £700 million British pound sterling term loan.
Short-term Liquidity Requirements:
As ofMay 3, 2021 , we have no debt principal payments due in the next twelve months - see debt maturity schedule below. InJanuary 2021 , we extended the maturity of our revolving credit facility toFebruary 2024 . AtMay 3, 2021 , availability under our revolving credit facility plus cash on-hand approximated$1.8 billion . We believe this liquidity along with our current monthly cash receipts from rent and loan interest, regular distributions from our joint venture arrangements, approximately$400 million of availability under our at-the-market equity program, and approximately £250 million expected to be repaid by Waterland pursuant to the Priory acquisition loan is sufficient to fund our operations, dividends in order to comply with REIT requirements, and our current firm commitments and debt service obligations for the next twelve months. 31
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Long-term Liquidity Requirements:
As ofMay 3, 2021 , our liquidity approximates$1.8 billion and we believe our liquidity, along with our current monthly cash receipts from rent and loan interest, regular distributions from our joint venture arrangements, and approximately$400 million of availability under our at-the-market equity program, is sufficient to fund our operations, debt and interest obligations, our firm commitments, and dividends in order to comply with REIT requirements for the foreseeable future. However, in order to fund additional investments, to fund debt maturities coming due starting in 2022 and beyond, or to strategically refinance any existing debt in order to reduce interest rates, we may need to access one or a combination of the following sources of capital:
• sale of equity securities;
• issuance of new USD, EUR, or GBP denominated debt securities, including
senior unsecured notes; • entering into new bank term loans;
• placing new secured loans on real estate located outside the
• proceeds from strategic property sales or joint ventures.
However, there is no assurance that conditions will be favorable for such possible transactions (particularly in light of the ongoing COVID-19 pandemic) or that our plans will be successful.
Principal payments due on our debt (which exclude the effects of any discounts, premiums, or debt issue costs recorded) as ofMay 3, 2021 are as follows (in thousands): 2021 $ - 2022 603,200 2023 556,440 2024 1,112,403 2025 1,576,970 Thereafter 6,317,095 Total$ 10,166,108 Contractual Commitments We presented our contractual commitments in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2020 . Except for changes to our debt, there have been no other significant changes during the three months endedMarch 31, 2021 .
The following table updates our contractual commitments schedule for these
updates as of
2021(1) 2022 2023 2024 2025 Thereafter Total 2.500% Senior Unsecured Notes due 2026 $ -$ 17,389 $ 17,389 $
17,389
- 17,828 16,432
16,432 16,432 569,047 636,171
(1) This column represents obligations post
Distribution Policy
The table below is a summary of our distributions declared during the two year
period ended
Declaration Date Record Date Date of Distribution Distribution per Share February 18, 2021 March 18, 2021 April 8, 2021 $ 0.28 November 12, 2020 December 10, 2020 January 7, 2021 $ 0.27 August 13, 2020 September 10, 2020 October 8, 2020 $ 0.27 May 21, 2020 June 18, 2020 July 16, 2020 $ 0.27 February 14, 2020 March 12, 2020 April 9, 2020 $ 0.27 November 21, 2019 December 12, 2019 January 9, 2020 $ 0.26 August 15, 2019 September 12, 2019 October 10, 2019 $ 0.26 May 23, 2019 June 13, 2019 July 11, 2019 $ 0.25 32
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We intend to pay to our stockholders, within the time periods prescribed by the Internal Revenue Code of 1986, as amended ("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 taxes on undistributed income. However, our Credit Facility limits the amount of dividends we can pay - see Note 4 in Item 1 to this Form 10-Q for further information.
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