Medical Properties Trust (MPT) has sold its interests in five Utah, US hospitals to a joint venture (JV) with an investment fund affiliated with an institutional asset manager, with expertise in real estate investments.
As part of the transaction, MPT said it has retained nearly 25% interest in the JV, while the investment fund acquired the remaining 75% interest at a cost of $886m.
This transaction completely validates MPT's underwritten lease base of around $1.2bn.
Simultaneously, the JV has now placed new non-recourse secured financing, contributing another $190m in cash to MPT based on the proceeds share.
This further confirms the underwritten values of the asset.
The combined transactions have provided MPT with immediate cash proceeds of approximately $1.1bn, before including the costs and reserves.
MPT plans to utilise the proceeds from these transactions for reducing its current outstanding debt, which comprises the full repayment of a $300m Australian term loan due in this year as well as the repayment of borrowings under its revolving credit facility.
The funds will also be used for supporting MPT’s general corporate purposes.
With this deal, MPT's total liquidity transactions for the year have reached $1.6bn, which is 80% of its initial fiscal year 2024 target.
The latest deal builds upon MPT's earlier announcement regarding the Utah lessee, which is an affiliate of CommonSpirit Health.
MPT previously said that the Utah lessee may purchase the leased real estate at 'a price equal to the greater of fair market value or the $1.2bn lease base' at fifth/tenth anniversary of beginning of 2023 master lease.
MPT has also granted the investment fund certain limited and conditional preferences on the basis of potential exercise value of lessee's purchase option.
Eastdil Secured served as the exclusive financial adviser for the transaction, while Goodwin Procter and Baker Donelson provided legal counsel to MPT.
MPT chairman, president and CEO Edward Aldag Jr said: “Our primary focus remains on accelerating our capital allocation strategy, and we are now confident that we will exceed our initial target of $2.0bn in liquidity transactions in 2024 based on valuations achieved on recent transactions and the terms we are actively negotiating for additional transactions.”
