Medical Properties

Medical Properties Trust to settle lease claims with bankrupt Steward Health Care (msn.com)

--The agreement creates a security blanket partially funded by the $395 million sale of Space Coast Hospital in Florida and a $10 million escrow account that will be held by Medical Properties Trust (MPT -Steward’s land leasor) for payroll and operating costs.

--Union representatives from Trumbull and Hillside voiced concerns that the agreement is not clear on a successor clause for their bargaining agreements and asked that a line clarifying that be added to make sure that any new owner or management team would honor those bargaining agreements.

--Equipment and housekeeping vendors voiced concerns about the agreement saying it was vague in how they would be notified or able to retrieve their property if a hospital ultimately closed because of a failed deal. They wanted more clarity on how their assets would be protected

Hearing details deal to keep local Steward hospitals open in Warren, Ohio and Sharon, Pennsylvnaia (wkbn.com)

Fab B #1077

„all of MPT’s claims against the Debtors’ estates (up to approximately $7.5 billion in the aggregate, consisting of approximately $83.4 million in MPT DIP Claims, $448.1 million in MPT Prepetition Secured Claims, $403.4 million in MPT HoldCo Claims, and $6.6 billion in future lease obligations), will be waived;

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Jetzt wird ein Schuh daraus.

Die Krankenhäuser gehen nicht in MPT über, sondern nur der weitere Betrieb.

Stewarts eigene Krankenhäuser sind weiter Insolvenzmasse.

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. 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.”

The settlement agreement involves 23 hospitals previously operated by Steward which will remain following the anticipated “Space Coast” transaction described later in this press release. MPT has already reached definitive agreements with four tenants to immediately lease and operate 15 hospitals in Arizona, Florida, Louisiana, Ohio and Texas, as summarized in the following table:

OPERATOR
REGION(S)
OPERATOR DESCRIPTION

HEALTHCARE SYSTEMS
OF AMERICA
Southeast Florida (5),
East Texas (2),
Louisiana (1)
A community-based hospital system based in Los Angeles, CA affiliated with American Hospital Systems, which currently operates four acute care hospitals

HONOR HEALTH
Arizona (3)
A non-profit, local community healthcare system serving the greater Phoenix area with a network encompassing acute-care hospitals, an extensive medical group, outpatient surgery centers, a cancer care network, clinical research, and more

QUORUM HEALTH
West Texas (2)
A leading operator of general acute care hospitals and outpatient services with a diversified portfolio in rural and mid-sized markets across the United States

INSIGHT HEALTH
Ohio (2)
A physician-led provider of community-based, patient-centric care
Effective September 11, 2024, these replacement operators will be the beneficiaries of operating revenue and have responsibility for the expenses of the hospitals each will manage for Steward on an interim basis until purchase agreements can be finalized with Steward with respect to the operations.

Based on the new lease agreements already in place, MPT expects to receive aggregate annualized cash rental payments of approximately $160 million on this portfolio’s approximate $2.0 billion lease base upon stabilization in the fourth quarter of 2026, including the impact of each lease’s contractual minimum annual escalator. This represents approximately 95% of the cash rent Steward would have contractually owed for the same assets in the fourth quarter of 2026, based on minimum rent escalators. The weighted average initial term of the leases is approximately 18 years.

To expedite the re-tenanting process and minimize any disruption to patient care as new operators are ramping up, cash rent payments will not be due for the remainder of 2024 for all 15 properties. Cash rent payments are generally expected to commence in the first quarter of 2025, reach approximately 50% of aggregate fully stabilized rent by the end of 2025 and achieve full stabilization in the fourth quarter of 2026.

In addition, MPT is in active discussions regarding solutions related to its ongoing Norwood, Massachusetts and Texarkana, Texas construction projects, as well as, separately, four hospitals closed well before Steward’s bankruptcy 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.

Under the terms of the agreement, MPT has consented to the sale of three “Space Coast” Florida hospitals to Orlando Health, with a substantial portion of the proceeds being transferred to Steward. In turn, Steward and its other stakeholders have relinquished all rights to any further allocation of value from transactions related to any other hospital remaining in the portfolio as of September 11, 2024. Further, upon completion of the transition process for the hospitals, the parties have agreed to mutually dismiss claims against each other and exchange broad general releases including for MPT’s loans and deferred rent.

The Bankruptcy Court has scheduled a hearing for Tuesday, September 17, for consideration and approval of a final order confirming the settlement. The agreement also remains subject to the completion of Steward’s sales to the replacement operators and approval by relevant state and local regulators.

www.medicalpropertiestrust.com/...rol-its-real-estate-steward