Medical Properties Trust (MPT) has signed definitive agreements for the acquisition of a portfolio of select behavioral hospitals in the UK in a deal worth about £800m ($1.089bn).
Priory Group currently owns and operates these behavioral hospitals.
In a related transaction, Waterland Private Equity Investments’ affiliates will acquire Priory’s operations from Acadia Healthcare after a competitive process.
Once Waterland’s acquisition concludes in the first quarter of this year, the properties to be acquired by MPT will be subject to long-term sale-leaseback agreements with Priory.
Waterland, which is the parent of MPT’s German post-acute tenant MEDIAN Kliniken, proposes to create a comprehensive medical and behavioral rehabilitation services provider in Europe by combining both the platforms.
The portfolio substantially consists of Priory’s most acute behavioral hospitals and will be subject to a cross-defaulted, master lease structure.
Subject to customary closing conditions, the sale-leaseback transactions are expected to close during the first half of this year.
MPT plans to pre-fund the purchase amount through a secured interim acquisition loan to Waterland in the same amount that will bear interest at a market rate and will be funded at the closing of Waterland’s acquisition of Priory.
The company will use cash on hand, borrowings under its revolving credit facility and/or funds from additional financing arrangements to fund the total cash consideration payable.
MPT chairman, president and CEO Edward Aldag said: “We are elated to rapidly expand both our presence in the UK and our exposure to the increasingly critical behavioral health hospital segment at what we believe to be a very strong return to MPT.”
The company owns hospitals with about 430 facilities and roughly 43,000 licensed beds in nine countries and across four continents on a pro forma basis.