MTP Infuses $1.2B into Hospital Portfolio
- Sep 28, 2016
Birmingham, Ala.—The real estate interests of nine acute care hospitals that are part of the Steward Health Care System were acquired in a deal worth more than $1.2 billion. Medical Properties Trust Inc. completed the purchase that also included a $50 million equity investment in Steward, an entity owned by its management team and Cerberus Capital Management.
Currently the largest for-profit hospital system in the state of Massachusetts, Steward will be granted protective rights concerning its credit decisions as part of the deal. According to the statement, per share accretion of roughly 10 percent is anticipated, following the consideration of previously disclosed dispositions of about $800 million, as well as $300 million in previously disclosed and pending acquisitions of German hospitals and permanent financing of those deals.
The interests in the hospitals are subject to a master lease of roughly $600 million and has a 15-year initial term and three five-year extension terms, as well as a GAAP yield of 10.1 percent. Interests will also be subject to mortgage loan arrangements that have similar aggregate value, have identical rates, including CPI-based escalations, generally within a two to five percent band. The acquisition agreement has a clause that gives MPT right of first refusal to acquire other Steward hospitals going forward.
The nine medical properties add 1,800 beds to the company’s current portfolio, bringing MPT’s holdings to 248 facilities and roughly 27,000 beds. The nine Steward-operated facilities also help with the geographic diversification of the trust’s holdings, offering MPT a presence in 30 states. Roughly 80 percent of the portfolio consists of acute care facilities.
“As a result of our strategic asset sales earlier this year, along with the opportunistic utilization of our ATM program and refinancing of long term debt, MPT has reduced our leverage to among the best in the industry at 5.0 time EBITDA,” MPT Chairman, President & CEO Edward Aldag said in prepared remarks. Following the transaction, the portfolio includes assets operated by 30 different entities.
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