Properties Medical Properties Trust Buy
With the help of the Unsecured Creditors Committee (“UCC”), its secured lenders (“the Lenders”), and Steward Health Care System (“Steward”), Medical Properties Trust, Inc. (the “Company” or “MPT”) announced today that it had reached a global settlement agreement. This agreement allows MPT to regain control over its real estate, sever its relationship with Steward, and expedite the transfer of operations to quality replacement operators at 15 hospitals across the nation.
- MPT has been a strong believer in the mission-critical nature of these hospitals and their potential for cash flow under appropriate management since we first underwrote these facilities.
- Our priority has been to support the efforts of Steward in finding qualified replacement operators for each of these facilities during the protracted restructuring process.
- For this reason, we gave Steward permission to offer our property in conjunction with operations as a component of the bankruptcy sale procedure.
- And that is the reason we have been working nonstop for the last few weeks to help reach a mutually agreeable solution in response to Steward’s move to reject our lease.
- Despite decreases in Steward’s operations during its reorganization process, we have been heartened by the excitement and desire of several operators to handle these vital facilities.
- We have been working relentlessly to locate alternative operators and negotiate new lease terms.
- We were therefore able to quickly reach agreements with a number of additional renters.
- In order to create orderly transition plans that would prevent hospital closures, safeguard jobs, and guarantee patient care continuity, we have also worked closely with state authorities.
- We think that all parties involved will benefit from this global settlement.
- We are in a better position to safeguard these facilities’ vital role for the good of their communities and our real estate’s worth for the benefit of our shareholders now that Steward has been replaced.”
- The settlement deal covers 23 hospitals that Steward once ran and will continue to operate after the planned “Space Coast” transaction, which is detailed later in this press release.
- As shown in the accompanying table, MPT has already finalized agreements with four tenants to lease and run fifteen hospitals in Arizona, Florida, Louisiana, Ohio, and Texas as soon as possible.
- With effect from September 11, 2024, these substitute operators will get operating revenue and will bear interim liability for the hospitals they oversee for Steward until acquisition agreements pertaining to the operations can be finalized with Steward.
- After stabilizing in the fourth quarter of 2026, MPT anticipates receiving aggregate annualized cash rental payments of approximately $160 million on the approximate $2.0 billion lease base of this portfolio, taking into account the impact of each lease’s contractual minimum annual escalator.
- This expectation is based on the new lease agreements already in place. Based on minimum rent escalators, this amounts to almost 95% of the cash rent that Steward would have contractually due for the same assets in the fourth quarter of 2026.
- The initial terms of the leases have a weighted average duration of about 18 years.
- To expedite the re-tenanting process and minimize any disruption to patient care as new operators are ramping up, cash rent payments will not be due for the remainder of 2024 for all 15 properties.
- Cash rent payments are generally expected to commence in the first quarter of 2025, reach approximately 50% of aggregate fully stabilized rent by the end of 2025 and achieve full stabilization in the fourth quarter of 2026.
- Furthermore, MPT is currently engaged in discussions concerning potential solutions for its ongoing construction projects in Norwood, Massachusetts, and Texarkana, Texas.
- Two hospitals have recently closed or have become uncertain due to the restructuring process, and four hospitals closed well in advance of Steward’s bankruptcy.
The total lease base for these six facilities is close to $300 million.
MPT has approved the sale of three “Space Coast” Florida hospitals to Orlando Health in accordance with the terms of the arrangement, with a sizeable share of the sale going to Steward.
As a result, as of September 11, 2024, Steward and its other stakeholders have forfeited any rights to any additional value allocation from transactions pertaining to any other hospital that may still be in the portfolio.
In addition, the parties have decided to exchange wide general releases, including MPT’s loans and deferred rent, and to mutually discharge claims against one another following the conclusion of the hospitals’ transition process.
On Tuesday, September 17, the Bankruptcy Court has set a hearing to review and approve a final order confirming the settlement.
The arrangement is still contingent upon the completion of Steward’s sales to the substitute operators and the clearance of pertinent federal, state, and local regulatory bodies.
Concerning Medical Properties Trust, Inc.
In order to buy and develop net-leased hospital assets, Medical Properties Trust, Inc. is a self-advised real estate investment trust that was established in 2003.
As of June 30, 2024, the company, which had its start in Birmingham, Alabama, had 435 institutions and almost 42,000 licensed beds spread throughout nine nations and three continents, making it one of the largest owners of hospital real estate worldwide.
The financing approach offered by MPT makes acquisitions and recapitalizations easier, and it enables hospital operators to access the value of their real estate holdings to finance operational expenditures such as facility upgrades and technological advancements.
To obtain additional details, kindly navigate to the Company’s website at
Statements Regarding the Future
Within the terms of Sections 21E of the Securities Exchange Act of 1934 and 27A of the Securities Act of 1933, as amended, there are forward-looking statements in this press release.
The words “may,” “will,” “would,” “could,” “expect,” “intend,” “plan,” “estimate,” “target,” “believe,” “objectives,” “outlook,” “guidance,” and other words of a similar nature are typically used to identify forward-looking statements.
These statements also include statements about our strategies, objectives, asset sales and other liquidity transactions (including the use of proceeds thereof), anticipated re-tenanting of vacant facilities and any related regulatory approvals, and anticipated outcomes from Steward’s Chapter 11 restructuring process, as well as the terms of the agreement outlined in this press release.
The following are just a few examples of the known and unknown risks and uncertainties that could cause our actual results or future events to differ materially from those expressed in or underlying such forward-looking statements: (i) the risk that the terms and outcome of Steward’s bankruptcy restructuring will not be consistent with those anticipated by the company; (ii) the risk that the company is unable to successfully re-tenant the Steward portfolio hospitals, on the terms described herein or at all; (iii) the risk that previously announced or contemplated property sales, loan repayments, and other capital recycling transactions do not occur as anticipated or at all; (iv) the risk that MPT is not able to attain its leverage,
The ability of MPT to obtain debt financing on favorable terms or at all, due to fluctuations in interest rates and other factors, could potentially negatively affect the company’s capacity to pay down, refinance, restructure, or extend its debt as it becomes due, or pursue acquisition and development opportunities.
Additionally, the ability of our tenants, operators, and borrowers to fulfill their contractual obligations with us, as well as their ability to operate profitably and generate positive cash flow, are all factors that need to be considered.
maintain our financial stability, abide by all applicable laws, rules, and regulations when operating our properties, provide top-notch services, draw in and keep qualified staff, and draw in patients; (viii) the risk that we won’t be able to recoup our investments in some tenants at full value or at all; (ix) the success of our business plan implementation and our capacity to find, evaluate, finance, close, and integrate investments and acquisitions; and (x) the risks and uncertainties of litigation or other regulatory proceedings.
The risks listed above are not all-inclusive, and other factors—such as those covered in the “Risk Factors” section of our most recent Annual Report on Form 10-K and Form 10-Q, as well as any updates from our other SEC filings—could have a negative impact on our business and financial performance.
Due to the inherent uncertainty of forward-looking statements, actual performance or results could differ significantly from both the statements’ and their underlying assumptions’ projections.
It is advised that readers should not rely unduly on forward-looking statements as forecasts of what may happen in the future.
Since these are simply predictions as of the day they were made, we disclaim any obligation to update them.
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