Real Estate to be Acquired from and Leased to Steward Health Care
System LLC, an Affiliate of Cerberus Capital Management; Immediately
Accretive Transaction Increases Company’s Asset Base to Approximately $7
Billion
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Sep. 26, 2016--
Medical Properties Trust, Inc. (the “Company” or “MPT”) (NYSE: MPW)
today 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.”
Benefits of the Transaction
-
Achieves Immediate Accretion.
-
Expands Acquisition Pipeline. The transaction aligns MPT with
an industry-leading acute care provider and provides the Company with
right of first refusal to purchase real estate resulting from
Steward’s future growth.
-
Reduces Tenant Concentration. Subsequent to the Steward and
MEDIAN transactions, MPT’s exposure to its largest tenant improves to
17.8% from 20.8% and its two largest tenants combined improve to 33.9%
from 40.2%.
-
Improves Diversification. The transaction improves geographical
diversification with MPT now being represented in 30 states at the
close of the transaction. Acute care facilities as a percentage of
MPT’s U.S. portfolio increases to 80%, up from 75% as of June 30, 2016.
-
Increases Critical Mass. The transaction, combined with MEDIAN
transactions, increases MPT’s total gross assets 29% to approximately
$7 billion on a pro forma basis. Further, it adds nine hospital
properties and approximately 1,800 beds to MPT’s portfolio increasing
the total number to 248 and approximately 27,000, respectively.
-
Establishes New Operator Relationship. The transaction adds
Steward to MPT’s industry-leading group of 30 hospital operators.
Steward provides the largest fully integrated community-based
healthcare delivery system in New England.
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. 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.
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 Steward and MEDIAN acquisition and
related transactions; the Company’s financing of the transactions
described herein; Steward’s and MEDIAN’s expected rent coverage; the
capacity of Steward, MEDIAN, 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 or equity 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;
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, 2015 and “Item 1.A Risk Factor” in our quarterly report Form 10-Q
for the quarter ended June 30, 2016. 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/20160926006394/en/
Source: Medical Properties Trust, Inc.
Medical Properties Trust, Inc.
Tim Berryman, 205-969-3755
Director
– Investor Relations
tberryman@medicalpropertiestrust.com