Dallas-based Steward Health Care's landlord, Medical Properties Trust, one of the world's largest hospital real estate owners, saw a $321 million net loss for the second quarter of 2024, ended June 30, a significant increase from the $42 million loss during the same period in 2023.
Steward sought Chapter 11 protection May 6 and has been working to offload its hospitals and physician group, Stewardship Health.
Most recently, the for-profit health system received bankruptcy court approval to close two of its eight Massachusetts hospitals, which MPT owns a 50% interest through "a partnership that has a separate master lease agreement with Steward," according to an Aug. 8 news release.
The court also approved Steward's request to reject "Master Lease II" agreements for its Massachusetts hospitals, allowing buyers to negotiate new leases with each facility's landlord.
"[MPT] expects to relinquish its ownership of those properties to the non-recourse secured lender," the release said. "As a result, MPT has fully impaired its equity investment in the partnership."
MPT CEO Edward Aldag, Jr. said during an Aug. 8 earnings call that Steward's Massachusetts market has received the most publicity, which has caused the sale process in the state and other important markets to slow down. Mr. Aldag said that quality operators, along with some of the largest U.S. private health systems, had shown interest in submitting bids for the hospitals, but backed out after "considerable volume of inaccurate, negative commentary" that scared them away or discouraged them from participating in the bidding process.
"We are obviously disappointed with the outcome in Massachusetts, but subject to court approval, we expect positive results in Steward's remaining markets based on the real estate agreements we have negotiated with new operators, as well as others that are close to being finalized," he said.
Here are seven findings from MPT's second-quarter report:
1. Medical Properties Trust saw $400 million in real estate gains in the second quarter of 2024, which was offset by around $700 million in negative fair value adjustments and impairments. It also has a net debt of $9.37 billion.
2. Steward paid around $19 million in May and June cash rent. It also made July scheduled payments for its leased facilities. Los Angeles-based Prospect Medical Holdings paid MPT $18 million in case rent and $4 million in cash interest in the second quarter of 2024, which fully satisfied its past due payments.
3. MPT closed the $350 million sale in April of five formerly leased hospitals to Ontario, Calif.-based Prime Healthcare.
4. In April, MPT also wrapped up the sale of 75% interest in five Utah hospitals leased to Chicago-based CommonSpirit for $1.1 billion in total proceeds to a new joint venture with an institutional investor.
5. MPT closed a $160 million sale of a hospital and seven freestanding emergency department facilities to San Francisco-based Dignity Health, part of Chicago-based CommonSpirit Health.
6. Around $1.5 billion in debt was repaid by MPT in the second quarter of 2024.
7. The company comprises around $16.2 billion in total assets, along with $10 billion in general acute facilities, $2.4 billion in behavioral health facilities and $1.7 billion in post-acute facilities. MPT has 435 properties and around 42,000 licensed beds either mortgaged by or leased to 50 hospital operating companies in the U.S., U.K., Colombia, Finland, Germany, Switzerland, Italy and Portugal as of June 30.