Tuesday, September 27, 2016
Medical Properties Trust, Inc. announced that it has signed a definitive agreement to acquire the real estate interests of nine acute care hospitals operated by Steward Health Care System LLC (“Steward”). The $1.25 billion total value of the transactions includes a $1.2 billion investment in hospital real estate and a $50 million equity investment in Steward. Per share accretion of approximately 10% is expected, after consideration of previously disclosed dispositions of approximately $800 million, approximately $300 million of previously disclosed and pending acquisitions of German hospitals and permanent financing of the transactions. Steward is owned by its management team and premier private equity firm, Cerberus Capital Management (“Cerberus”), and is the largest for-profit hospital system in the highly innovative Massachusetts market.
MPT’s interests in the hospitals will be subject to a master lease and mortgage loan arrangements with cross default provisions and backed by a corporate guaranty. The master lease represents approximately $600 million and has a 15-year initial term and three five-year extension terms, and a GAAP yield of 10.1%; the cross-defaulted mortgage loans, with a similar aggregate value, have identical rates, including CPI-based escalations, generally within a two to five percent band. MPT is also investing, alongside Cerberus and management, $50 million in Steward, which in addition to attractive investment characteristics, provides certain protective rights concerning Steward’s credit decisions.
A Cerberus affiliate has agreed to invest $150 million in MPW’s common stock in a private placement transaction concurrent with or soon after closing.
In addition to the premiere portfolio of irreplaceable hospital assets announced today, the agreement also includes a right of first refusal for MPT to acquire future Steward hospitals.
“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 times EBITDA,” said Edward K. Aldag, Jr., MPT’s Chairman, President and Chief Executive Officer. “The successful execution of our strategy has made possible this new relationship with Steward, which represents tremendous opportunity for MPT, as Steward similarly positions itself for rapid growth.
“Since Steward’s inception in 2011, they have achieved outstanding results and now rank as the second largest hospital operator in New England, with the largest community-based network of physicians. Dr. Ralph de la Torre, Steward’s Chairman and CEO, is recognized for his thought leadership in the healthcare industry, demonstrated by Steward’s innovative model in delivering healthcare to over 150 communities across Eastern Massachusetts, Rhode Island and Southern New Hampshire. We are very excited about the opportunities this relationship creates for both of us.”
Source : medicalpropertiestrust.com
