Medical Properties Trust has locked in approximately $2.5B in financing through debt issuance as the hospital landlord tries to stop the bleeding from its flailing tenants.
:no_upscale():quality(75))
The private offering of $1.5B and 1 billion euros in senior secured notes, with interest of 8.5% and 7%, respectively, is expected to close Feb. 13, according to an announcement by the company.
Subsidiaries that own 167 properties run by 19 different operators in the U.S., UK and Germany were posted as collateral for the debt.
Under the deal, interest payments will be made twice a year and a maturity date is set for Feb. 15, 2032. Originally, MPT sought to issue $2B and €500M in notes.
The plan allows MPT to increase its leverage. It will be primarily used to pay off debt coming due this year and next. The remaining net proceeds, estimated to be about $800M, will be used for general corporate purposes, which includes capital to cover day-to-day operational expenses.
MPT has been hemorrhaging money while it's been hit by the bankruptcies of Steward Health Care and Prospect Medical Holdings, two large tenants in the REIT’s portfolio that have failed to pay millions of dollars in rent. MPT challenged the financing plan for Prospect in bankruptcy court, Bloomberg reported.
In the third quarter, MPT reported a net loss of $801M.
MPT has also been targeted by short seller Viceroy Research, which alleged that the REIT had “engaged in billions of dollars of uncommercial transactions” and accused it of fraud. MPT sued the group in 2023 for defamation. The lawsuit was settled in December.
The REIT has also faced scrutiny from Democrats in Congress, who have compared it to a Ponzi scheme and called for it to lower hospital rents.
