Medical Properties Trust, one of the world's largest hospital real estate owners, has offloaded five Dallas-based Steward Health Care-operated Utah hospitals for around $1.1 billion in total cash proceeds.
The offload comes after Medical Properties Trust recently sold five facilities across California and New Jersey to Ontario, Calif.-based Prime Healthcare for $350 million.
The Utah hospitals were leased to Englewood, Colo.-based Catholic Health Initiatives Colorado, part of Chicago-based CommonSpirit Health, and will be managed by Centennial, Colo.-based Centura Health, according to a Feb. 15 news release.
Around 25% interest was retained by Medical Properties Trust in the sale; the 75% stake was sold to a real estate investment firm for $886 million. The purchase validated Medical Properties Trust's $1.2 billion underwritten lease base.
New nonrecourse secured financing was placed by the joint venture during the sale closure, which gave Medical Properties Trust $190 million in added cash from "its share of the proceeds and further confirming underwritten asset values," the release said.
Approximately $1.1 billion in immediate cash, before costs and reserves, went to Medical Properties Trust from the two transactions. The profits will go toward reducing Medical Properties Trust's debt along with general corporate purposes.
"Our primary focus remains on accelerating our capital allocation strategy, and we are now confident that we will exceed our initial target of $2.0 billion in liquidity transactions in 2024 based on the valuations achieved on recent transactions and the terms we are actively negotiating for additional transactions," Edward Aldag Jr., chair, president and CEO of Medical Properties Trust, said in the release.
Medical Properties Trust's cash basis portfolio of financially troubled Steward is $3.5 billion, according to MPT's recent financial reports shared in February.
Mr. Aldag shared in the February report that the company was "encouraged" at the interest received from other hospital operators for Steward's facilities.
Catholic Health Initiatives Colorado can purchase the leased Utah real estate during the fifth or 10th anniversary of the start date for the 2023 master lease at either fair market value or the lease base for approximately $1.2 billion. Specific preferences were given to CommonSpirit Health by Medical Properties trust based on the potential purchase price.