Medical Properties Trust Invests $950M in Health Platform
The firm has agreed to acquire 18 inpatient behavioral hospital facilities, as well as interest in the operations of Springstone LLC.
LOUISVILLE, KY – Medical Properties Trust Inc. has entered into definitive agreements to invest $950 million into the Louisville, KY-based, behavioral health platform, Springstone LLC.
The firm’s investment includes the acquisition and leaseback of 18 inpatient behavioral hospital facilities, valued at $760 million, and the $190 million acquisition of interests in the operating company, Springstone LLC.
Medical Properties Trust is acquiring the properties and interest from Welsh, Carson, Anderson & Stowe, for a total consideration of $950 million.
The transactions are expected to close during the second half of 2021, subject to customary closing conditions.
As a provider of behavioral health services in the US, Springstone delivers care across the full behavioral care acuity spectrum from its purpose-built, inpatient facilities.
“The Springstone investments give MPT a major presence in the rapidly expanding US behavioral health care market, which has been underserved in our society despite importance on the same level as acute and post-acute care hospitals,” states Edward K. Aldag Jr., chairman, president and CEO of Medical Properties Trust. “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 behavioral care continuum, and we believe that our investment in the operating company will result in additional attractive real estate opportunities.”
The acquired hospitals, along with Springstone’s future additional facilities, are expected to be master-leased pursuant to terms that are anticipated to provide a GAAP-basis yield exceeding 9% and lease payment coverage of 1.75x in the near-term. The lease is expected to include an initial 20-year term with CPI-based annual rent escalators subject to a 2% floor.
Medical Properties Trust Inc. plans to initially fund the total cash consideration using cash on hand and borrowings under its revolving credit facility and additional financing arrangements.
Medical Properties Trust expects Springstone will continue to be operated by the same senior management team that created the portfolio. The team, led by executive chairman Bill Wilcox, CEO Phil Spencer and CFO Greg Miller, will likely continue to handle the day-to-day operations of Springstone.
“We’re so appreciative of the job the management team did to build this business,” says Brian T. Regan, head of healthcare and partner at Welsh, Carson, Anderson & Stowe. “We started this company from scratch 10 years ago and are incredibly proud to have built over 50 facilities, created more than 4,000 jobs, and treated tens of thousands of patients with the highest quality care. It was important to us that the management team has the opportunity to be part of Springstone’s ownership and to continue leading the company and its employees to the next phases of growth.”
“Over the past decade, Springstone has helped tens of thousands who struggle with mental health and addiction challenges, thanks to the support of Welsh, Carson, Anderson & Stowe and the dedication of our team of compassionate professionals,” states Philip Spencer, CEO of Springstone. “We look forward to working with MPT to expand our behavioral healthcare model to serve even more communities.”