Medical Properties Trust Inc. (NYSE: MPW) announced a settlement agreement with the bankrupt Steward Health Care System, along with its secured lenders (“the Lenders”) and the Unsecured Creditors Committee, that will cut its relationship with Steward and restore the company’s control over its real estate while transitioning operations for 15 Steward hospitals in Arizona, Florida, Louisiana, Ohio and Texas.
“From our initial underwriting of these properties, MPT has strongly believed in the mission critical nature of these hospitals as well as their cash flow potential under the right management,” said Medical Properties Trust in an unattributed press statement. “Throughout Steward’s lengthy restructuring process, our focus has been on supporting efforts to bring quality replacement operators into each of these facilities. That is why we consented to Steward marketing our real estate alongside operations as part of the bankruptcy sales process. And it is why we have worked around the clock for the past several weeks to facilitate a consensual resolution following Steward’s motion to reject our lease.”
“We have been working tirelessly to identify replacement operators and negotiate new lease terms, and we have been encouraged by the enthusiasm and eagerness of multiple operators to manage these important facilities despite declines in Steward’s operations during its restructuring process,” the company added. “As a result, we were able to rapidly come to terms with several new tenants. We have also collaborated closely with state regulators to put orderly transition plans in place that would avoid hospital closures, protect jobs, and ensure continuity of care for patients. We believe this global settlement is a positive outcome for all stakeholders. By replacing Steward, we are better positioned to protect the critical function of these facilities for the benefit of their communities and the value of our real estate for the benefit of our shareholders.”
Medical Properties Trust stated it was also in active discussions related to a pair of construction projects in Massachusetts and Texas along with four hospitals closed before Steward’s bankruptcy filing and two that recently closed or otherwise became subject to uncertainty during the restructuring process. These six facilities have an aggregate lease base of approximately $300 million.
Medical Properties Trust acquired Steward for $1.25 billion in 2016. The hospital operator filed for bankruptcy in May, hobbled by $50 million in rent it was unable to cover, which resulted in putting dozens of its hospitals at risk of closing.
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