MPT in $900M Deal for Capella Healthcare RE

BIRMINGHAM, AL—Medical Properties Trust has signed a definitive agreement to acquire Capella Holdings Inc. from private equity firm GTCR for $900 million. The deal values Capella's seven hospitals at $600 million and its operating entities at $300 million.

As part of the agreement, MPT and the senior management of Franklin, TN-based Capella will enter a joint venture to own Capella's operating entities. The deal is expected to close by year's end, subject to regulatory approvals.

“The acquisition of Capella, which in a single stroke accretively increases our portfolio of high quality hospital real estate by almost 20%, is simply the next step along our track record of creating strong double-digit growth,” says Edward K. Aldag Jr., MPT's chairman, president and CEO.  It's expected to boost MPT's funds from operations by $0.04 per share in the first year after permanent financing is put in place.

The Capella portfolio includes facilities in Arkansas, Oklahoma, South Carolina, Tennessee and Washington state. It will add three states to the 27 in which MPT already operates, as well as an aggregate 1,169 beds and over two million square feet of healthcare space to the REIT's portfolio.

MPT's interest in the hospitals will be subject to sale-leaseback and mortgage loan arrangements that will have cross default provisions and a blended GAAP yield of 9.1%. The initial lease term will be 15 years with four five-year renewal options.

Chicago-based GTCR formed Capella in partnership with founder Dan Slipkovich in 2005 to acquire acute-care hospitals serving rural and suburban markets. “We worked in close partnership with Capella's management team to create a unique, high-quality platform in the hospital space,” says Deah Mihas, GTCR managing director. “We believe MPT is an excellent partner for Capella that will allow the business to continue to thrive and grow.”