Medical Properties Trust Sells 11 Hospitals in Australia for $800M
The pricing on the hospitals is “significantly better” than anticipated, Green Street says.
Medical Properties Trust has reached an agreement to sell its Australian real estate investments operated by Healthscope to affiliates of HMC Capital.
The Healthscope portfolio includes 11 Australian hospitals and was sold for approximately $800 million. Total consideration for the Healthscope portfolio is based in part on a lease capitalization rate approximating 5.7%.
In a report on the transaction, Green Street said while the forward NOI cap rate is in line with its initial estimates, the pricing on the hospitals is “significantly better” than anticipated. “Further analysis of the deal is needed, but a 50 bps reduction in MPW’s average nominal cap rate, from the high-7% down to low-7% range, would not be unreasonable,” said report authors John Pawlowski, Michael Stroyeck and Emily Meckler.
HMC Capital is likely ascribing value to future redevelopment of facilities and underutilized adjacent land, which “muddies the readthrough to cap rates”, the authors noted.
MPW intends to use disposition proceeds to pay down its Australian denominated term loan facility. Roughly $815 million remained outstanding on the term loan at year end.
Pawlowski, Stroyeck and Meckler expressed concern over MPW’s balance sheet and tenant credit risk profile but said market pricing appears to be holding up much better than anticipated. “HMC’s bid for the Healthscope portfolio does not provide a direct readthrough to the rest of MPW’s portfolio for a variety of reasons. However, the price tag is high enough to suggest MPW may continue to find private market buyers willing to pay a premium for safety or perceived safety of cash flow, relative to other real estate asset classes,” they wrote. MPW is one of the world’s largest owners of hospital real estate with 444 facilities and approximately 44,000 licensed beds in ten countries.
HMC Capital is an Australian alternative asset manager focused on real estate strategies.
The transaction is expected to be completed in the second half of 2023, subject to regulatory approval.