Medical Properties Trust plans to enter into a sale leaseback transaction as part of Dallas-based Steward Health Care's deal to buy five hospitals currently owned by Dallas-based Tenet Healthcare, the real estate investment firm said June 23.
Six things to know:
1. The five Florida hospitals involved in the sale are Coral Gables Hospital, Florida Medical Center in Lauderdale Lakes, Hialeah Hospital, North Shore Medical Center in Miami and Palmetto General Hospital in Hialeah.
2. Earlier this month, Tenet announced plans to divest the hospitals to Steward for $1.1 billion. Once the transaction is complete, Medical Properties Trust will acquire the associated real estate for $900 million and enter a sale leaseback transaction with Steward.
3. Medical Properties Trust entered a master lease agreement with Steward, and the health system is expected to extend the lease until 2041.
4. Medical Properties Trust will fund the deal using cash on hand, binding property sales, proceeds from loan repayments and other recycling transactions.
5. This is not the first sale-leaseback transaction Medical Properties Trust has entered into with Steward. In particular, Steward acquired two hospitals in Utah in 2017. Under the deal, Medical Properties Trust gave Steward about $700 million in mortgages for the properties. A few years later, in 2020, Medical Properties Trust agreed to purchase the two Utah hospital properties from Steward, erasing the mortgages and paying Steward an extra $200 million for what the real estate firm said was its relative fair value. The properties were then leased back to Steward in exchange. Read more about the deals here.
6. "We are excited to own these essential community hospitals in areas with positive demographic trends at a very attractive yield," said Edward Aldag Jr., Medical Properties Trust chair, president and CEO. "Furthermore, we have a great deal of confidence in [Steward founder] Dr. Ralph de la Torre and the Steward team and believe that their physician-led operating model will further enhance the level of care each facility has long been providing to its local population."
Editor's Note: This article was updated at 5:31 p.m. June 24.