Total Investment of $900 Million Allocated $600 Million to Real
Estate Interests and $300 Million to Ownership of Operations with
Capella Management Team
Transaction Immediately Accretive to Normalized FFO per Share by
$0.04 in First Year
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Jul. 27, 2015--
Medical Properties Trust, Inc. (the “Company” or “MPT”) (NYSE: MPW)
today announced that it has signed a definitive agreement to acquire
Capella Holdings, Inc. (“Capella”), a privately-owned hospital company
headquartered in Franklin, Tennessee. Capella is one of the ten largest
for-profit acute care hospital operators in the U.S. based on revenue.
The $900 million total value of the transactions will be comprised of a
$600 million investment in Capella’s real estate and an approximate $300
million investment in Capella’s operating entities, which is expected to
be owned jointly by MPT and Capella management. The transaction will be
immediately accretive to MPT’s Normalized FFO (“FFO”) per share by $0.04
in the first year after closing.
With this acquisition, MPT will be adding to its acute care portfolio
seven hospitals located in five states, with an aggregate 1,169 beds and
over two million square feet. MPT’s interest in the hospitals, valued at
an aggregate $600 million, will be subject to sale leaseback and
mortgage loan arrangements that will have cross default provisions and a
blended GAAP yield of 9.1% giving consideration to annual CPI-based rent
escalators subject to a 2% floor and 4% ceiling. The initial lease term
will be 15 years with four 5-year renewal options. The EBITDAR coverage
ratio for the real estate is expected to exceed 2.3x in the first year.
MPT and Capella’s senior management have agreed subject to execution of
definitive documentation, to form a joint venture (“JV”) that will
become the acquirer of Capella’s operating entities for a total
consideration of approximately $300 million, including a loan or other
investment by MPT of approximately $290 million that will earn a fixed
coupon in line with our initial lease rate. In addition, the JV
agreement will provide for distributions to MPT that are expected to
result in additional returns under certain conditions. No such
anticipated additional returns are included in the estimated initial
year accretion of $0.04 per share.
“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,” said Edward K. Aldag, Jr., Chairman, President and
CEO of Medical Properties Trust. “In our very first transaction as a
company in 2004, and long before the RIDEA legislation paved a way for
other REITs to own interests in their healthcare tenants, our
specialized knowledge in and total focus on hospital operations resulted
in a unique and creative transaction with Vibra Health that provided
real estate and operating capital that no other REIT could provide. The
Capella acquisition demonstrates that more than 10 years later MPT
remains the undisputed go to source when hospital operators are
considering the most efficient means to access low cost capital while
retaining operating control to execute their growth strategies.”
Benefits of the Transaction
-
Immediately Accretive to FFO per Share. This transaction is
expected to be immediately accretive to MPT’s FFO per share by $0.04
in the first year after permanent financing is put in place. MPT’s
economic participation in the operating company is expected to further
contribute to FFO. Additionally, MPT expects to have the opportunity
to participate in other accretive real estate transactions as Capella
further executes its growth strategy.
-
Increases MPT’s Critical Mass and Diversification. The
transaction increases MPT’s total gross assets by 19% to $5.6 billion
on a pro forma basis. It also will add seven hospital properties,
three states and 1,169 beds to MPT’s portfolio. MPT will have 183
properties and be represented in 30 states at the close of the
transaction. Acute care facilities as a percentage of MPT’s portfolio
will increase to 62% globally (74% in the U.S.). Tenant concentration
will be positively affected as Capella will add a completely new
operator representing 16% of total gross assets and MPT’s exposure to
its largest tenant will improve to 19%.
-
Establishes New Operator Relationship and Expands Acquisition
Pipeline. The transaction provides MPT with a new operator
relationship in Capella. Capella has a proven management team and
strategy that has resulted in market leadership positions. Capella’s
growth strategy of expanding into non-primary markets complements the
strategies of other operators in MPT’s portfolio. MPT is acquiring a
high quality in-place hospital portfolio and has the potential to
participate in Capella’s currently identified and future acquisition
opportunities.
Timing
The transaction is subject to customary closing conditions including the
Hart-Scott-Rodino Premerger Notification Program and is expected to
close during the second half of 2015. MPT has commitments for a new $1.0
billion senior unsecured bridge loan and intends to refinance the
Capella acquisition as market conditions warrant with a combination of
new unsecured debt and equity.
Additional Information
The Company has posted additional information pertaining to the
acquisition of Capella on the Investor Relations page of its website,
which can be found at www.medicalpropertiestrust.com.
About Medical Properties Trust, Inc.
Medical Properties Trust, Inc. is a Birmingham, Alabama based
self-advised real estate investment trust formed to capitalize on the
changing trends in healthcare delivery by acquiring and developing
net-leased healthcare facilities and. MPT’s financing model allows
hospitals and other healthcare facilities to unlock the value of their
underlying real estate in order to fund facility improvements,
technology upgrades, staff additions and new construction. Facilities
include acute care hospitals, inpatient rehabilitation hospitals,
long-term acute care hospitals, and other medical and surgical
facilities. For more information, please visit the Company’s website at www.medicalpropertiestrust.com.
About Capella Healthcare, Inc.
Capella Healthcare partners with communities to build strong local
healthcare systems that are known for quality patient care. Based in
Franklin, Tennessee, Capella owns acute care and specialty hospital
facilities in six states. The company was recognized in 2012 and 2013 by Modern
Healthcare as one of the nation’s fastest growing healthcare
companies.
MPT Second Quarter 2015 Financial Results Conference Call and Webcast
MPT will host a conference call and webcast on Tuesday, August 4, 2015
at 11:00 a.m. Eastern Time to discuss the company’s second quarter 2015
financial results. A press release with second quarter 2015 financial
results will be issued before the market opens on August 4, 2015.
The dial-in numbers for the conference call are 800-510-9691 (U.S.) and
617-614-3453 (international); both numbers require passcode 61786001.
The conference call will also be webcast live on the Investor Relations
section of the Company’s website, www.medicalpropertiestrust.com.
A telephone and webcast replay of the call will be available beginning
shortly after the call’s completion through August 18, 2015. Dial-in
numbers for the replay are 888-286-8010 and 617-801-6888 for U.S. and
International callers, respectively. The replay passcode for both U.S.
and international callers is 54067149.
This press release includes “forward-looking statements” within the
meaning of securities laws of applicable jurisdictions. Forward-looking
statements can generally be identified by the use of forward-looking
words such as “may,” “will,” “would,” “could,” “expect,” “intend,”
“plan,” “aim,” “estimate,” “target,” “anticipate,” “believe,”
“continue,” “objectives,” “outlook,” “guidance” or other similar words,
and include statements regarding MPT’s plans, strategies, objectives,
targets, future expansion and development activities and expected
financial performance. Forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the actual
results of the Company or future events to differ materially from those
expressed in or underlying such forward-looking statements, including
without limitation: the satisfaction of all conditions to, and the
timely closing (if at all) of the Capella acquisition and the final
execution of the appropriate agreements including the lease, loans,
joint venture and management agreements; the Company’s financing of the
transactions described herein; Capella’s expected rent coverage; the
capacity of Capella and the Company’s other tenants to meet the terms of
their agreements; Normalized FFO per share; expected payout ratio, the
amount of acquisitions of healthcare real estate, if any; capital
markets conditions, the repayment of debt arrangements; statements
concerning the additional income to the Company as a result of ownership
interests in certain hospital operations and the timing of such income;
the payment of future dividends, if any; completion of additional debt
arrangement, and additional investments; national and international
economic, business, real estate and other market conditions; the
competitive environment in which the Company operates; the execution of
the Company's business plan; financing risks; the Company's ability to
maintain its status as a REIT for federal income tax purposes;
acquisition and development risks; potential environmental and other
liabilities; and other factors affecting the real estate industry
generally or healthcare real estate in particular; and the value of our
real estate assets, which may limit our ability to dispose of assets at
attractive prices or obtain or maintain equity or debt financing secured
by our properties or on an unsecured basis, and the factors referenced
under the section captioned “Item 1.A Risk Factors” in our annual report
on Form 10-K for the year ended December 31, 2014. Actual results,
performance or achievements may vary materially from any projections and
forward looking statements and the assumptions on which those statements
are based. Readers are cautioned not to place undue reliance on
forward-looking statements, and MPT disclaims any responsibility to
update such information.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150727006273/en/
Source: Medical Properties Trust, Inc.
Medical Properties Trust, Inc.
Tim Berryman, 205-969-3755
Director
– Investor Relations
tberryman@medicalpropertiestrust.com