REIT Medical Properties' Largest Tenant Hires Restructuring Specialist, Looks To Unload Hospitals

The beleaguered Steward Health Care, the largest tenant of healthcare facility owner Medical Properties Trust, has hired turnaround consulting firm AlixPartners to help it deal with its deep financial problems, The Wall Street Journal reports, citing anonymous sources familiar with the matter.

The for-profit Steward, which operates 33 hospitals nationwide, has struggled to pay its bills for years and was losing money even before the pandemic. Once Covid-19 hit, the company suffered further as lucrative elective surgeries were postponed and labor costs ballooned.

Steward lost $800M between 2017 and 2020, the most recent period for which data is available, the WSJ reported. Steward accounts for roughly a fifth of MPT's assets, or an estimated $3.8B.

MPT has recorded $350M of write-downs associated with Steward, according to documents filed with the Securities and Exchange Commission earlier in January. The REIT also loaned Steward $60M and is deferring some of the hospital operator's rent for this year.

Closing hospitals may be part of the restructuring. Last year, Steward closed the 325-bed Texas Vista Medical Center in San Antonio.

The entire Massachusetts congressional delegation, in a letter sent to Steward Tuesday, demanded to know what the company plans to do to avoid closing any or all of its nine facilities in the commonwealth.

“The abrupt closure of Steward’s Massachusetts hospitals would significantly limit access to inpatient critical care and inpatient behavioral health care, as well as maternal and newborn health services in eastern Massachusetts,” the lawmakers said in the letter.

Aside from any challenges posed by the ailing Steward, MPT is also facing its own wall of debt maturities, with nearly $1.4B of debt maturing in 2025 and nearly $3B the next year.

MPT stock dropped about 3% on Friday morning. It is down roughly 73% since this time in 2023.

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