BIRMINGHAM, AL—Locally based Medical Properties Trust is investing in a healthcare services company based in Los Angeles through a $1.55 billion sale leaseback. The company, Prospect Medical Holdings, is leasing back its real estate assets in California, Connecticut and Pennsylvania, but is leaving out its properties in Rhode Island, New Jersey, and Texas. The portfolio includes 14 acute care hospitals and 2 behavioral health hospital facilities.
Prospect will continue to own and operate all its hospitals and ancillary operations in California, Connecticut, Pennsylvania, Texas and New Jersey as well as its Rhode Island joint venture. The transaction is expected to close in the second half of 2019, subject to customary closing conditions. Prospect will use the funds to retire the company's existing term-loan debt.
The company expects to be able to tap MPT's for long term growth as well, according to CEO Samuel S. Lee, noting that it is “a significant and experienced potential source of funding for improvements to our existing facilities as well as for future acquisitions and other growth opportunities. We will intensify our focus and resources in our existing markets – where we can expand and drive more growth – to provide quality, cost-effective, coordinated care through our comprehensive network of hospitals, medical groups, and ancillary facilities.”
MPT also expects the relationship to expand, according to prepared remarks MPT CEO Edward K Aldag.
Separately, the REIT announced that all together it has entered into definitive agreements with two new operators and completed a transaction with a third new operator involving 24 hospital facilities for a total investment of approximately $1.75 billion. With these transactions, MPT has surpassed its 2019 acquisition guidance of $2.5 billion, with a total investment of $3 billion.
Besides the sales leaseback with Prospect, the REIT has also invested in seven community hospitals operated by Saint Luke's Health System for $145 million and one acute care hospital operated by Halsen Healthcare for $55 million.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
