Medical Properties Trust Reaches Global Settlement with Steward Health Care System

Medical Properties Trust, Inc. has announced that it has reached a global settlement agreement with Steward Health Care System, its secured lenders, and the Unsecured Creditors Committee. The agreement restores MPT's control over its real estate, severs its relationship with Steward, and facilitates the immediate transition of operations to quality replacement operators at 15 hospitals across the country. The settlement is a result of MPT's efforts to identify replacement operators and negotiate new lease terms, with multiple operators showing enthusiasm and eagerness to manage the facilities despite declines in Steward's operations during its restructuring process.

Key Takeaways:

• MPT has reached definitive agreements with four tenants to immediately lease and operate 15 hospitals in Arizona, Florida, Louisiana, Ohio, and Texas.
• The replacement operators include Healthcare Systems of America, Honor Health, Quorum Health, and Insight Health, which will manage a total of 15 hospitals.
• The new lease agreements are expected to generate aggregate annualized cash rental payments of approximately $160 million on the portfolio's approximate $2.0 billion lease base upon stabilization in the fourth quarter of 2026.
• Cash rent payments will not be due for the remainder of 2024 and are generally expected to commence in the first quarter of 2025, reach approximately 50% of aggregate fully stabilized rent by the end of 2025, and achieve full stabilization in the fourth quarter of 2026.
• MPT has also consented to the sale of three "Space Coast" Florida hospitals to Orlando Health, with a substantial portion of the proceeds being transferred to Steward.
• The agreement involves 23 hospitals previously operated by Steward, with MPT retaining control over its real estate and severing its relationship with Steward.

Statistics:

• 15 hospitals will be managed by new operators as part of the global settlement between MPT and Steward.
• The new operators will manage hospitals across five states: Arizona, Florida, Louisiana, Ohio, and Texas.
• The aggregate annualized cash rental payments from the new lease agreements are expected to be approximately $160 million.
• The lease base of the hospitals involved in the settlement is approximately $2.0 billion.
• The weighted average initial term of the leases is approximately 18 years.
• Cash rent payments will not be due for the remainder of 2024.

Sources:

• Medical Properties Trust, Inc.

Press Release, dated September 11, 2024.