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Healthcare REIT Inks $93M Stack of Deals

BIRMINGHAM, AL-Medical Properties Trust spends $32.6 million to buy hospitals in West Virginia and Virginia and loans $60 million to the buyer of three SoCal hospitals.

By John McCloud | Updated on July 09, 2008

BIRMINGHAM, AL-Medical Properties Trust Inc. announced $92.6 million of investments in five new hospital facilities. The REIT has entered into a $60-million financing arrangement with affiliates of Prime Healthcare Services Inc. related to three Southern California hospital campuses and completed the $32.6-million acquisition of two in-patient rehabilitation hospitals leased to HealthSouth Corp.

The loan to Prime Healthcare covered the Victorville, CA-based company’s acquisition of three hospital properties from Dallas-based Tenet Healthcare Corp. The SoCal properties are the 151-bed Encino campus of the Encino-Tarzana Medical Center at 16237 Ventura Blvd. in Encino; 167-bed Garden Grove Hospital and Medical Center at 12601 Garden Grove Blvd. in Garden Grove; and 93-bed San Dimas Community Hospital at 1350 W. Covina Blvd. in San Dimas. The financing, which provides for an initial rate of 10.5%, is expected to be converted into a sale-leaseback arrangement within 30 days with an identical initial rate and an initial term of 10 years.

According to MPT chairman, president and CEO Edward K. Aldag Jr., the terms of the Prime Healthcare transactions demonstrate improving acquisition terms, particularly with respect to higher lease rates. “These three properties will further strengthen Prime’s position and accordingly our own investment quality in the southern California market,” he says in a press release. He adds that the acquisitions put Prime’s total concentration in MPT’s portfolio at close to 33%. He says the figure is slightly above the company’s 30% target level, but he believes the elevation is only temporary.

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