Medical Properties Trust Sells Hospitals for $360M
Prime Healthcare re-acquires nine hospitals, two MOBs that were part of sale-leaseback deal.
Medical Properties Trust (MPT) has sold nine general acute hospitals and two related MOB properties to Prime Healthcare for $360M, the Birmingham, Al-based REIT announced on Thursday.
The properties are located in California, Indiana, Nevada and Pennsylvania.
Prime Healthcare, the largest physician-founded and led healthcare system, repurchased the facilities, which it had been operating under sale-leaseback deals dating back to 2012.
“Over the last 10 years, Prime has invested physical and human capital into these facilities, resulting in significant improvements in their financial performance, operations and sustainability as community assets,” said Steve Alerman, Prime’s CFO, in a statement.
Prime funded the deal with a combination of cash on hand, ABL credit draw and related entity financing. The company said the re-acquisition materially reduces its overall effective interest rate and annual debt service with net neutral leverage.
As part of the transaction, the Pajaro Valley Health Care District Corp. repaid MPT more than $30M in financing it provided to allow the Watsonville Community Hospital in Watsonville, CA to remain open. Parajo Valley acquired the Watsonville Hospital in a bankruptcy proceeding.
In addition to proceeds from these transactions, Medical Properties Trust said it expects to receive another $200M of loan repayments as a result of a pending transaction with LifePoint Health.
Including the pending deal, MPT said it will leverage about $600M in near-term liquidity that it will use to reduce leverage and execute other acquisitions.
Last month, Brentwood, TN-based LifePoint agreed to acquire a majority interest in Springstone Health Opco for $250M.
MPT currently has a minority stake in Louisville-based Springstone, a mental health system that operates behavioral hospitals, that it acquired for $190M in October 2021. The minority stake was part of $760M acquisition by MPT of 18 of Springstone’s behavioral hospitals.
When LifePoint closes the deal for a majority stake in Springstone, MPT will be repaid $200M for its original investment and retain minority interest plus ownership and leasing rights of Springstone’s hospitals.
LifePoint also will be required to extend the maturity of its current master lease of eight general acute hospitals by five years to complete the deal.
Since it was formed in 2003 as a self-advised real estate investment trust focused on developing net-leased hospital facilities, MPT has grown into one of the world’s largest owners of hospital real estate with roughly 435 facilities and 44,000 beds in ten countries.
Prime Healthcare is the fifth-largest for-profit health system in the US, operating 45 hospitals in 14 states with more than 300 outpatient locations.