Medical Properties Strikes Hospital Sale Leaseback Deal for $700M
CEO Edward K. Aldag, Jr., said that the REIT’s pipeline is robust and more deals may be in the offing.
BIRMINGHAM, AL—Medical Properties Trust has struck a deal with one of the largest acute care operators in the US to acquire 10 of its hospitals for $700 million, which the operator, LifePoint Health, will lease back.
LifePoint is a portfolio company managed by Apollo Global Management. This deal expands on an existing relationship between the REIT and LifePoint and Apollo.
The transaction also illustrates investor appetite for such assets, according to Medical Properties CEO Edward K. Aldag, Jr. “This immediately and strongly accretive acquisition of well-run facilities from sophisticated operators and owners demonstrates the expanding market for hospital real estate,” Aldag said in prepared remarks.
The properties, which are located in six US states, will be leased under a master lease agreement with an initial term of 20 years with two five-year extension options.
The transaction is expected to produce investment spreads of between 3% and 4%, Medical Properties said. The transaction is expected to close in the fourth quarter of 2019 or the first quarter of 2020, subject to customary closing conditions.
Aldag noted that this deal improves its overall diversification by reducing the concentration of its largest operator relationship to 28% and its largest single facility to 2.7%, while increasing the number of US states in its portfolio to 34.
He also said that the REIT is continuing to negotiate additional transactions in the US and globally. “Our pipeline remains robust and while there is no certainty that we will announce additional agreements during 2019, we remain confident that our near term growth will continue,” he said.
Upon closing, Medical Properties’ portfolio will include 40,000 beds in 34 US states and in Germany, the United Kingdom, Switzerland, Italy, Spain and Australia.