Medical Properties Trust, Inc. (NYSE:MPW) Files An 8-K Results of Operations and Financial Condition
Item2.02.
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Results of Operations and Financial Condition. |
On April 25, 2017, Medical Properties Trust, Inc. (the Company)
commenced a public offering of shares of its common stock (the
Offering). The preliminary prospectus, dated April 25, 2017, by
which the common stock is being offered includes preliminary
results for the quarter ended March 31, 2017, a copy of which is
attached as Exhibit 99.1 to this Current Report on Form 8-K and
is incorporated herein by reference. The information contained in
this Item 2.02, including Exhibit 99.1, is being furnished and
shall not be deemed filed for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the Exchange Act) or
otherwise subject to the liability of that section or Sections 11
and 12(a)(2) of the Securities Act of 1933, as amended (the
Securities Act). The information in this Item 2.02, including
Exhibit 99.1, shall not be incorporated by reference into any
registration statement or other document to the Securities Act or
into any filing or other document to the Exchange Act, except as
otherwise expressly stated in any such filing.
| Item7.01. | Regulation FD Disclosure |
On April25, 2017, the Company commenced the Offering. The
preliminary prospectus, dated April25, 2017, by which the common
stock is being offered includes the following information under
the heading Recent Developments:
Acquisition of Steward Expansion
Portfolio
In February 2017, our current tenant Steward Health Care System
LLC (Steward), the largest fully integrated health care services
organization and community hospital network in New England,
agreed to purchase eight hospitals affiliated with Community
Health Systems, Inc. (CHS) in Florida, Ohio and Pennsylvania.
Also in February 2017, we entered into agreements with Steward to
acquire the real estate of these eight hospitals (Steward
Expansion Portfolio) for an aggregate purchase price of $301.3
million and lease them to Steward. We expect to complete this
transaction in the second quarter of 2017. This transaction is
subject to regulatory approval and customary closing conditions,
and no assurance can be provided that it will be completed on the
terms described, or at all.
The table below sets forth pertinent details with respect to the
hospitals in the Steward Expansion Portfolio:
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Hospital |
Property Type | Location | Licensed Beds | |||||||||
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Wuesthoff Medical Center |
AcuteCare | Melbourne,FL | ||||||||||
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Wuesthoff Medical Center |
Acute Care | Rockledge, FL | ||||||||||
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Sebastian River Medical Center |
AcuteCare | Sebastian, FL | ||||||||||
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Northside Medical Center |
Acute Care | Youngstown,OH | ||||||||||
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Trumbull Memorial Hospital |
Acute Care | Warren, OH | ||||||||||
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Hillside Rehabilitation Hospital |
InpatientRehabilitation | Warren, OH | ||||||||||
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Sharon Regional Health System |
Acute Care | Sharon, PA | ||||||||||
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Easton Hospital |
Acute Care | Easton, PA | ||||||||||
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Total Licensed Beds |
1,768 | |||||||||||
The Steward Expansion Portfolio will be leased to Steward under
our current master lease agreement with Steward that has an
initial term of 15 years with three 5-year extension options,
plus annual inflation protected escalators. We expect that the
initial GAAP yield of the Steward Expansion Portfolio under the
master lease will be approximately 10.1%.
In this prospectus supplement, we refer to the transactions
described above with respect to the Steward Expansion Portfolio
as the Steward Transactions.
Other U.S. Acquisition Activity and
Divestiture
In January 2017, Alecto Healthcare Services LLC (Alecto) entered
into a definitive agreement to purchase the operations of the
Ohio Valley Medical Center, a 218-bed acute care hospital located
in Wheeling, West Virginia, and the East Ohio Regional Hospital,
a 139-bed acute care hospital in Martins Ferry, Ohio, from Ohio
Valley Health Services, a not-for-profit entity in West Virginia.
In March 2017, we agreed to purchase the real estate of these two
acute care hospitals for an aggregate purchase price of $40.0
million and lease them to Alecto, which is the current operator
of three facilities in our portfolio. We also agreed to provide
up to $20.0 million in capital improvement funding on these two
facilities. The lease on these facilities is expected to have a
15-year initial term with 2% annual minimum increases and three
5-year extension options. We expect that the initial GAAP yield
under this lease will be approximately 10.8%. The facilities will
be cross-defaulted and cross collateralized with our other
hospitals currently operated by Alecto. With these acquisitions,
we will also obtain a 20% interest in the operator of these
facilities. We expect to consummate this transaction in the
second quarter of 2017.
As previously disclosed, in September 2016, we entered into a
definitive agreement with RCCH HealthCare Partners (RCCH) to
purchase the real estate of St. Joseph Regional Medical Center, a
145-bed acute care hospital in Lewiston, Idaho, and Lourdes
Health, a 35-bed acute care hospital in Pasco, Washington for an
aggregate purchase price of approximately $105 million. We expect
to consummate the acquisition of St. Joseph Regional Medical
Center in the second quarter of 2017 and of Lourdes Health no
later than the fourth quarter of 2017, pending regulatory
approval.
In this prospectus supplement, we refer to the Alecto and RCCH
acquisitions as the Other U.S. Acquisitions.
On March31, 2017, we completed the sale of the real estate of
EASTAR Health System, a 320-bed acute care hospital in Muskogee,
Oklahoma, for $64.3 million. We expect to report a gain on sale
of approximately $7.4 million in the first quarter of 2017 as a
result of this divestiture, partially offset by a $0.6 million
non-cash charge to write-off related straight-line rent
receivables on this property.
European Acquisition Activity
In July and September 2016, we entered into agreements to acquire
the real estate assets of 26 non-acute hospitals in Germany,
which will be leased to affiliates of Median Kliniken S.a.r.l.
(MEDIAN), one of our current tenants. The acquisitions are
subject to certain closing conditions and regulatory approvals.
We expect the acquisition of the real estate (along with the
additional investment in the equity of MEDIAN to maintain our
current 5.1% interest) to approximate 270million (exclusive of
any acquisition costs such as real estate transfer taxes). The
properties are expected to be joined to the existing master lease
or a new master lease agreement with MEDIAN that will have terms
similar to the existing master lease. The existing master lease
has an initial term of 27 years with annual escalators at the
greater of one percent or 70% of the German consumer price index.
As of the date of this prospectus supplement, we have closed on
the acquisitions of 13 of these facilities for a total of
approximately 94million, and we expect the remaining transactions
to close in the second quarter of 2017. In this prospectus
supplement, we refer to these transactions as the New MEDIAN
Transactions.
In April 2017, we completed the acquisition of the long leasehold
interest of a development site in Birmingham, England from the
Circle Health Group (the tenant of our existing site in Bath,
England) for a purchase price of approximately 2.72million (GBP).
Simultaneously with the acquisition we entered into contracts
with the property freeholder and the Circle Health Group
committing us to construct an acute care hospital on the site.
Our total development costs are anticipated to be approximately
30million (GBP). Circle Health Group is contracted to enter into
a lease of the hospital following completion of construction for
an initial 15 year term with rent to be calculated based on our
total development costs.
Restructuring of Adeptus Leases
On April4, 2017, we announced that we had agreed in principle
with Deerfield Management Company, L.P. (Deerfield), a
healthcare-only investment firm, to the restructuring in
bankruptcy (the Restructuring) of Adeptus Health, Inc., a current
tenant and operator of facilities representing approximately 6%
of our total gross assets after giving effect to the transactions
in this Recent Development section. In furtherance of the
Restructuring, Adeptus and certain of its subsidiaries filed
voluntary petitions for relief under chapter 11 of the United
States Bankruptcy Code on April19, 2017. Funds advised by
Deerfield acquired Adeptus outstanding bank debt and Deerfield
has agreed to provide additional financing, along with
operational and managerial support, to Adeptus as part of the
Restructuring.
The Restructuring and terms of our agreement with Deerfield
provide for the payment to us of 50% of the rent payable during
the Restructuring, and the assumption by Deerfield of
approximately 80% of the master leased facilities at current
rental rates. We have agreed to provide a one-time rental credit
of approximately $3.1 million during the 12 months commencing
upon Adeptus emergence from bankruptcy.
On April4, 2017, we also announced that our Louisiana
freestanding emergency facilities currently operated by Adeptus
(with a total budgeted investment of up to approximately $24.5
million) have been re-leased to Ochsner Clinic Foundation (the
Ochsner Leases), a health care system in the New Orleans area.
The Ochsner Leases provide for 15-year initial terms with a 9.2%
average minimum lease rate based on our total development and
construction cost. Under these leases, Ochsner also has the right
to purchase the freestanding emergency facilities (i)at our cost
within two years of rent commencement or (ii)for the greater of
fair market value or our cost after such two-year period. With
this transaction, we expect to incur a non-cash charge of $0.5
million to write-off the straight-line rent receivables
associated with the previous Adeptus lease on these properties.
In addition, we expect to re-lease or sell certain Texas
facilities that are not being assumed as part of the
Restructuring representing approximately 15% of the current
Adeptus master-leased portfolio. These lease or sale transactions
are expected to be completed by the end of 2018, and Adeptus is
obligated to pay contractual rent to us under the master lease
until the earlier of (a)transition to a new operator is complete,
or (b)one year following Adeptus emergence from bankruptcy (for
approximately 60 percent of the Texas facilities) or 90 days
following Adeptus emergence from bankruptcy (for the remainder of
the Texas facilities).
Financing Transactions
On February1, 2017, we entered into a new revolving credit and
term loan facility (the Senior Credit Facilities), comprised of a
$1.3 billion unsecured revolving credit facility, a $200 million
unsecured term loan facility (the USD term loan facility), and a
200million unsecured term loan (the EUR term loan facility). The
Senior Credit Facilities replaced our then existing $1.3 billion
senior unsecured revolving credit facility and $250 million
unsecured term loan facility. The new unsecured revolving credit
facility matures February1, 2021 and can be extended for an
additional 12 months at our option. The USD term loan facility
matures on February1, 2022. The EUR term loan facility matures on
January31, 2020, and can be extended for an additional 12 months
at our option. The term loan and the revolving loan commitments
under the Senior Credit Facilities may be increased in an
aggregate amount not to exceed $500 million.
On March4, 2017, we redeemed in full 200million aggregate
principal amount of our 5.750% Senior Notes due 2020 using the
proceeds from the EUR term loan facility, together with cash on
hand.
On March24, 2017, we issued 500million of 3.325% Senior Notes due
2025 to finance the remaining New MEDIAN transactions, including
the related costs, expenses and real estate transfer taxes and to
pay off the EUR term loan facility.
With the Senior Credit Facilities and the redemption of the
5.750% Senior Notes due 2020, we expect to incur a one-time debt
refinancing charge of approximately $14 million in the first
quarter of 2017 (of which $9 million relates to a redemption
premium paid with respect to the 5.750% Senior Notes due 2020).
In addition, on April25, 2017, the Company issued a press release
announcing that it had commenced the Offering, a copy of which is
furnished as Exhibit 99.2 hereto and incorporated herein
by reference.
The information contained in this Item 7.01, including Exhibit
99.2, is being furnished and shall not be deemed filed for
purposes of Section18 of the Exchange Act or otherwise subject to
the liability of that section or Sections 11 and 12(a)(2) of the
Securities Act. The information in this Item 7.01, including
Exhibit 99.2, shall not be incorporated by reference into any
registration statement or other document to the Securities Act or
into any filing or other document to the Exchange Act, except as
otherwise expressly stated in any such filing.
This Current Report on Form 8-K does not constitute an offer to
sell, or a solicitation of an offer to buy, any of the Companys
securities, including, without limitation, those securities
proposed to be offered and sold to the preliminary prospectus and
registration statement described above.
| Item9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
|
Exhibit No. |
Description |
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| 99.1 | Preliminary Results for the Quarter Ended March 31, 2017 | |
| 99.2 | Press Release dated April25, 2017 |
About Medical Properties Trust, Inc. (NYSE:MPW)
Medical Properties Trust, Inc. is a self-advised real estate investment trust (REIT) focused on investing in and owning net-leased healthcare facilities. It conducts all of its business through MPT Operating Partnership, L.P. It acquires and develops healthcare facilities and leases the facilities to healthcare operating companies under long-term net leases. It also makes mortgage loans to healthcare operators collateralized by their real estate assets. The Company’s portfolio consists of 202 properties, which includes 179 facilities that the Company owns and 14 properties controlled in the form of mortgage loans. The properties are leased/mortgaged to 29 tenants located in 28 states, and Germany, United Kingdom, Italy, and Spain. Of the total portfolio, 9 facilities are under development. Its facilities consist of 64 general acute care hospitals, 69 inpatient rehabilitation hospitals, 23 long-term acute care hospitals, 43 free standing emergency rooms, and 3 medical office buildings. Medical Properties Trust, Inc. (NYSE:MPW) Recent Trading Information
Medical Properties Trust, Inc. (NYSE:MPW) closed its last trading session up +0.03 at 13.84 with 2,784,811 shares trading hands.