Medical Properties Trust Takes Control of Its Real Estate From Steward Health Care
Executed New Lease Agreements with Four Quality Replacement Operators
Completed Safe and Orderly Transitions of Operations at 15 Hospitals
Regarding the settlement, the Company issued the following statement:
“From our initial underwriting of these properties, MPT has strongly believed in the mission critical nature of these hospitals as well as their cash flow potential under the right management.
Throughout Steward’s lengthy restructuring process, our focus has been on supporting efforts to bring quality replacement operators into each of these facilities. That is why we consented to Steward marketing our real estate alongside operations as part of the bankruptcy sales process. And it is why we have worked around the clock for the past several weeks to facilitate a consensual resolution following Steward’s motion to reject our lease.
We have been working tirelessly to identify replacement operators and negotiate new lease terms, and we have been encouraged by the enthusiasm and eagerness of multiple operators to manage these important facilities despite declines in Steward’s operations during its restructuring process. As a result, we were able to rapidly come to terms with several new tenants. We have also collaborated closely with state regulators to put orderly transition plans in place that would avoid hospital closures, protect jobs, and ensure continuity of care for patients.
We believe this global settlement is a positive outcome for all stakeholders. By replacing Steward, we are better positioned to protect the critical function of these facilities for the benefit of their communities and the value of our real estate for the benefit of our shareholders.”
The settlement agreement involves 23 hospitals previously operated by Steward which will remain following the anticipated “Space Coast” transaction described later in this press release. MPT has already reached definitive agreements with four tenants to immediately lease and operate 15 hospitals in
OPERATOR |
REGION(S) |
OPERATOR DESCRIPTION |
HEALTHCARE SYSTEMS
|
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A community-based hospital system based in |
HONOR HEALTH |
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A non-profit, local community healthcare system serving the greater |
QUORUM HEALTH |
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A leading operator of general acute care hospitals and outpatient services with a diversified portfolio in rural and mid-sized markets across |
INSIGHT HEALTH |
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A physician-led provider of community-based, patient-centric care |
Effective September 11, 2024, these replacement operators will be the beneficiaries of operating revenue and have responsibility for the expenses of the hospitals each will manage for Steward on an interim basis until purchase agreements can be finalized with Steward with respect to the operations.
Based on the new lease agreements already in place, MPT expects to receive aggregate annualized cash rental payments of approximately
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
In addition, MPT is in active discussions regarding solutions related to its ongoing
Under the terms of the agreement, MPT has consented to the sale of three “Space Coast”
The Bankruptcy Court has scheduled a hearing for Tuesday, September 17, for consideration and approval of a final order confirming the settlement. The agreement also remains subject to the completion of Steward’s sales to the replacement operators and approval by relevant state and local regulators.
About Medical Properties Trust, Inc.
Medical Properties Trust, Inc. is a self-advised real estate investment trust formed in 2003 to acquire and develop net-leased hospital facilities. From its inception in
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can generally be identified by the use of forward-looking words such as “may”, “will”, “would”, “could”, “expect”, “intend”, “plan”, “estimate”, “target”, “anticipate”, “believe”, “objectives”, “outlook”, “guidance” or other similar words, and include statements regarding our strategies, objectives, asset sales and other liquidity transactions (including the use of proceeds thereof), expected re-tenanting of vacant facilities and any related regulatory approvals, and expected outcomes from Steward’s Chapter 11 restructuring process, including the terms of the agreement described in this press release. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results or future events to differ materially from those expressed in or underlying such forward-looking statements, including, but not limited to: (i) the risk that the outcome and terms of the bankruptcy restructuring of Steward 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, liquidity and cost of capital objectives within a reasonable time period or at all; (v) MPT’s ability to obtain debt financing on attractive terms or at all, as a result of changes in interest rates and other factors, which may adversely impact its ability to pay down, refinance, restructure or extend its indebtedness as it becomes due, or pursue acquisition and development opportunities; (vi) the ability of our tenants, operators and borrowers to satisfy their obligations under their respective contractual arrangements with us; (vii) the ability of our tenants and operators to operate profitably and generate positive cash flow, remain solvent, comply with applicable laws, rules and regulations in the operation of our properties, to deliver high-quality services, to attract and retain qualified personnel and to attract patients; (viii) the risk that we are unable to monetize our investments in certain tenants at full value within a reasonable time period or at all, (ix) our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate and integrate acquisitions and investments; and (x) the risks and uncertainties of litigation or other regulatory proceedings.
The risks described above are not exhaustive and additional factors could adversely affect our business and financial performance, including the risk factors discussed under the section captioned “Risk Factors” in our most recent Annual Report on Form 10-K and our Form 10-Q, and as may be updated in our other filings with the SEC. Forward-looking statements are inherently uncertain and actual performance or outcomes may vary materially from any forward-looking statements and the assumptions on which those statements are based. Readers are cautioned to not place undue reliance on forward-looking statements as predictions of future events. We disclaim any responsibility to update such forward-looking statements, which speak only as of the date on which they were made.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240911823985/en/
Drew Babin, CFA, CMA
Head of Financial Strategy and Investor Relations
Medical Properties Trust, Inc.
(646) 884-9809
dbabin@medicalpropertiestrust.com
Source: Medical Properties Trust, Inc.
