Transaction Expected to Generate Approximately $550 Million for
Debt Repayment
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Mar. 22, 2016--
Medical Properties Trust, Inc. (the “Company” or “MPT”) (NYSE:MPW) today
announced that the Company and its affiliates have entered into
definitive agreements with RegionalCare Hospital Partners, Inc.
(“RegionalCare”), an affiliate of certain funds (the “Apollo Funds”)
managed by affiliates of Apollo Global Management, LLC (NYSE:APO)
(together with its consolidated subsidiaries, “Apollo”), under which
MPT’s investment in the operations of Capella Healthcare, Inc.
(“Capella”) will be merged with RegionalCare to create one of the
largest healthcare operating companies in the United States. Completion
of the merger is subject to customary closing conditions.
Under the terms of the definitive agreements, MPT will receive
approximately $390 million for its equity investment and loans made as
part of MPT’s August 2015 transactions with Capella. In addition, MPT
will also receive $210 million in prepayment of two mortgage loans for
hospitals in Russellville, Arkansas, and Lawton, Oklahoma, that were
also part of the August 2015 transactions. The Company will retain an
approximate $100 million loan for a hospital property in Olympia,
Washington, that is expected to be converted to a sale and leaseback
arrangement upon regulatory approval. Additionally, the Company and an
Apollo affiliate will each invest up to $50 million in unsecured notes
to be issued by RegionalCare.
Net proceeds from the transaction of approximately $550 million are
expected to be used to reduce MPT’s debt, after which the Company’s net
debt is expected to be approximately 5.6 times pro forma annualized
EBITDA and 49% of total gross assets. MPT is affirming its previously
announced full year 2016 guidance of Normalized FFO in the range of
$1.29 to $1.33 per share.
“We are extremely pleased to have entered into this transaction, which
demonstrates the significant value of our assets as well as the power
and integrity of our underwriting process,” said Edward K. Aldag, Jr.,
Chairman, President and CEO of Medical Properties Trust. “This
transaction brings added focus to our outstanding real estate properties
by resulting in our Capella real estate being leased to
RegionalCare/Capella, a larger, stronger healthcare business, with
substantial equity capitalization provided by RegionalCare and Apollo
Funds. At the same time, we are continuing to execute on our objective
to further strengthen our balance sheet.”
Aldag added, “We remain committed to our strategy of maintaining a
best-in-class hospital real estate portfolio and being among the leaders
in the healthcare REIT sector. As we execute our strategy, we will
continue to make equity investments in strong operators like Capella.
The Capella transaction remains very important to MPT. We are pleased
that MPT will continue to have Capella as one of its tenants and we wish
CEO Mike Wiechart and his team the greatest success as a part of the
RegionalCare/Capella operating team.”
In addition to the Company’s improved debt profile, MPT’s shareholders
will benefit from:
-
Capella becoming fully owned by RegionalCare with strong equity
support from Apollo Funds;
-
The Company maintaining its ownership of five Capella hospitals in Hot
Springs, Arkansas; Camden, South Carolina; Hartsville, South Carolina;
Muskogee, Oklahoma; and McMinnville, Oregon;
-
MPT retaining the right to purchase an acute care hospital in Olympia,
Washington, upon receiving regulatory approval;
-
The six hospitals previously acquired and leased back by MPT,
including the pending Olympia, Washington, sale leaseback, will be
leased to Apollo’s strongly capitalized RegionalCare/Capella
affiliates that have announced aggressive growth plans; and,
-
A strategic agreement between MPT and the newly combined
RegionalCare/Capella operating entity under which MPT is expected to
provide future sale leaseback funding for acquisitions of additional
hospitals.
The Company’s aforementioned Normalized FFO per share estimates for 2016
and projected leverage metrics post this transaction do not include the
effects, if any, of real estate operating costs, litigation costs, debt
refinancing costs, acquisition costs, currency exchange rate movements,
interest rate hedging activities, write-offs of straight-line rent or
other non-recurring or unplanned transactions. These estimates may
change when the Company acquires or sells assets, market interest rates
change, debt is refinanced, new shares are issued, additional debt is
incurred, other operating expenses vary, income from investment in
tenant operations vary from expectations or existing leases do not
perform in accordance with their terms.
About Medical Properties Trust, Inc.
Medical Properties Trust, Inc. is a self-advised real estate investment
trust formed to capitalize on the changing trends in healthcare delivery
by acquiring and developing net-leased healthcare facilities. 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.
The statements in this press release that are forward looking are
based on current expectations and actual results or future events may
differ materially. Words such as "expects," "believes," "anticipates,"
"intends," "will," "should” and variations of such words and similar
expressions are intended to identify such forward-looking statements.
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 pending transactions; Normalized FFO per share;
projected leverage metrics; the amount of net proceeds available for
debt repayment; the amount of acquisitions of healthcare real estate, if
any; results from the potential sales, if any, of assets; 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
arrangements, 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. For further
discussion of the factors that could affect outcomes, please refer to
the "Risk factors" section of the Company's Annual Report on Form 10-K
for the year ended December 31, 2015. Except as otherwise required by
the federal securities laws, the Company undertakes no obligation to
update the information in this press release.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160322005906/en/
Source: Medical Properties Trust, Inc.
Medical Properties Trust, Inc.
Tim Berryman, 205-969-3755
Director
– Investor Relations
tberryman@medicalpropertiestrust.com