Medical Properties Trust selling spree continues, Utah deal closes

Dive Brief:

  • Medical Properties Trust has sold the majority of its interests in five Utah hospitals for $886 million, the hospital landlord said Friday. The hospitals included in the deal are currently leased to a subsidiary of CommonSpirit Health.

  • The buyer is an unspecified investment firm’s newly formed joint venture. The JV also granted MPT a $190 million non-recourse secured loan — meaning if MPT defaults, the lender cannot collect MPT’s other assets or income. In total, MPT expects the two transactions to generate $1.1 billion in immediate cash, according to the announcement.

  • The sale comes just three days after the landlord sold five hospitals to Prime Healthcare for $350 million.

Dive Insight:

MPT is on a selling spree in order to free up liquidity.

The Birmingham, Alabama-based real estate investment trust has said it’s been heavily exposed during the Dallas-based Steward Health Care’s financial meltdown.

Steward accounted for 19.2% of MPT’s assets as of Dec. 31 and was the largest tenant in its portfolio, according to MPT’s 2023 annual report. The for-profit physician owned network began delaying rent payments to MPT in September, and only paid $16 million of its required $70 million of rent during the fourth quarter. At the same time, MPT was funding multiple rounds of asset-backed loans to Steward, according to the filing.

MPT reported a net loss of $556 million for fiscal year 2023, citing the Steward shortfall as a significant contributor to the results.

The loss of Steward’s rent cushion — coupled with increasing interest rates and $1.3 billion of debt coming due within the next year — motivated the company to pursue several sales early this year, MPT said.

During its fourth quarter earnings call, investors asked whether Steward’s financial instability could play out in the their dividend checks moving forward.

“The dividend is not dependent on Steward’s rent. It’s more dependent on our ability to close some of these liquidity transactions,” MPT CEO Edward K. Aldag Jr. said. MPT announced its quarterly dividend of $0.15 per share alongside the Utah deal.

Aldag said the company hoped to sell enough property to shore up at least $2 billion in liquidity. With the Utah deal closed, the CEO said in a release that he is now “confident” MPT will exceed that threshold.

MPT’s stock price was up 20.8% when the markets opened Monday morning, trading at $4.80 per share.

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