Medical Properties Trust to Acquire 21 Healthcare Facilities from HCP for $371M

Medical Properties Trust Inc. said today it plans to buy 21 healthcare facilities from HCP Inc., for approximately $371 million, significantly boosting its portfolio and expanding its geographic reach across the United States.The Birmingham, Ala.,-based healthcare REIT said it would pay for the acquisition with a combination of common stock and debt securities, proceeds of the sale of three facilities announced earlier this week to Vibra Healthcare L.L.C., and borrowings from its existing credit facilities.The acquisition is expected to occur in stages beginning March 28 and lasting throughout the second quarter. The HCP portfolio is comprised of seven acute care hospitals in five states; five inpatient rehabilitation hospitals in five states; three long-term acute care hospitals in three states and six wellness centers in three states. Locations were not made public today.Based on December, 2007 figures, the properties generated approximately $33.4 million in rent last year, according to a release today from MPT. There are currently 14 leases in place at the various properties expiring between 2009 and 2027, plus renewal options. Tenants in more than half of the properties have purchase rights or options, but are not expected to use them to block the sale to MPT.“This portfolio is a transformative event for MPT,” Edward Aldag, Jr., chairman, president and CEO of MPT, said in the release. “The portfolio will increase the number of properties by 75 percent, substantially increase our tenant diversification with eight new, well-known operators whom we believe to be of high quality, as well as significantly improve our geographic footprint.”To fund the acquisition, Medical Properties Trust announced today it planned to make a public offering of approximately 11 million shares of its common stock. It said it expected to offer underwriters the option to buy up to approximately 1.65 million additional shares to cover over-allotments. UBS Investment Bank will be the sole bookrunner for the offering. Co-lead managers will be KeyBanc Capital Markets and RBC Capital Markets. Deutsche Bank Securities, JPMorgan and Raymond James Bank will act as co-managers. The stock, which trades as MPW on the New York Stock Exchange, closed Thursday at $12.08. Shortly before 12:30 p.m. today, shares were trading at $11.36, down 72 cents, or 5.96 percent.Yesterday, CPN reported that MPT was selling three inpatient rehabilitation faculties in Marlton, N.J.; Fresno, Calif.; and Bowling Green, Ky., to Vibra Healthcare L.LC., which had been managing the properties for $90 million. That definitive agreement calls for Vibra to pay a one-time termination fee of $7 million and make a $10 million early principal payment on the balance of an existing loan for a total transaction worth $107 million to MPT.Medical Properties Trust also has commitments from lenders for a senior secured interim loan facility expected to provide up to $300 million for the balance of the HCP purchase. MPT’s year-end reported dated Jan. 31 noted the REIT had entered into a new $220 million credit facility in the fourth quarter that could be expanded and was expected to help the firm fund its “aggressive growth targets for 2008.”The REIT, which acquires and develops net-leased medical facilities, made about $316 million in acquisitions last year. If the HCP acquisition goes through as planned, Medical Properties Trust would have already exceeded its stated goal of acquiring at least $200 million in assets for 2008. The HCP properties nearly double MPT’s portfolio. As of Dec. 31, 2007, MPT’s portfolio consisted of 28 properties, according to its year-end financial report. It stated that 25 facilities owned by MPT are leased to eight tenants. At the end of last year, HCP’s portfolio, excluding assets held for sale, consisted of 753 properties, including 41 hospital and 63 skilled nursing facilities. As of Sept. 30, 2007, HCP said it had 34 percent of its assets in California; 14 percent in Texas; 8 percent in Florida; 4 percent in Virginia; 3 percent in Colorado and 37 percent in other states.