Medical Properties Trust (MPT) has signed definitive agreements to acquire 18 behavioural health hospital facilities of Springstone for a total consideration of $760m.
In addition, the agreements cover the purchase of interests in Springstone operations from Welsh, Carson, Anderson & Stowe for $190m.
Founded in 2010, Springstone delivers behavioural health services at its inpatient hospital facilities across the US. The company focuses on the continuum of care for mental illness and addiction patients.
According to the terms of the agreements, the intended hospitals, as well as other facilities that Springstone will develop and acquire, are anticipated to be master leased.
In the near term, the deal is estimated to offer a GAAP-basis yield of more than 9% and lease payment coverage of about 1.75x. The lease is set to involve an initial 20-year term.
Medical Properties Trust chairman, president and CEO Edward Aldag said: “MPT’s acquisition of the 18 purpose-built inpatient facilities, much like our recent investment in the Priory portfolio in the UK, appropriately targets the highest level of acuity within the behavioural care continuum, and we believe that our investment in the operating company will result in additional attractive real estate opportunities.”
Springstone is expected to continue operations under the same senior management team that developed its existing portfolio of inpatient and outpatient behavioural health facilities.
The company’s executive chairman Bill Wilcox, CEO Philip Spencer and CFO Greg Miller will also invest in the operating company and manage its operations, MPT noted.
Spencer said: “We look forward to working with MPT to expand our behavioral healthcare model to serve even more communities.”
Apart from cash on hand, MPT will initially fund the total cash consideration with borrowings under its revolving credit facility and other financing arrangements.
Subject to customary closing conditions, including regulatory approvals, the acquisition is set to be completed in the second half of this year.