Medical Properties Trust pours $1 billion into new properties
Approximately 28 percent of MPT’s portfolio, or a total of 55 facilities, will be located in Western Europe
Medical Properties Trust has signed a deal to acquire and lease back substantially all of the real estate assets of privately-held MEDIAN Kliniken Group, the largest private provider of post-acute and acute rehabilitation services in Germany. The aggregate purchase price for the assets is expected to be approximately $900 million.
“This transaction further demonstrates MPT’s success in leveraging its deep understanding of the healthcare markets and continues its track record of completing highly accretive investments across diverse geographies,” said Edward K. Aldag, Jr., chairman, president and CEO of Medical Properties Trust in a statement. “This is an important transaction because it significantly increases our asset base to approximately $4.5 billion, and builds on our recent entry into the attractive Western European market. The acquisition of the MEDIAN real estate is a very compelling and unique opportunity for MPT and is fully aligned with our strategy to diversify our market-leading hospital portfolio across geography, operator and facility type.”
Under the terms of the sale/leaseback agreement, MPT will acquire from and leaseback to MEDIAN the real estate assets of 38 rehabilitation and 2 acute care hospitals throughout Germany pursuant to a 27 year master lease that provides an initial lease rate well within MPT’s 8.0 percent to 11.0 percent target range, with annual escalators at the greater of one percent or 70 percent of German CPI. Aggregate earnings before interest, taxes, depreciation, amortization and rent for the 40 hospitals are also expected to approximate MPT’s historical underwriting targets for post-acute hospitals.
[See also: Medical Properties Trust acquiring Texas, Missouri hospitals.]
In addition to the MEDIAN acquisitions, MPT also announced approximately $155 million in recent, previously undisclosed commitments and investments. These hospital assets include three acute facilities in the United States (located in Alabama, Texas and West Virginia) with an aggregate value of approximately $74 million and three additional German rehabilitation hospitals with an aggregate value of approximately $81 million (based on agreed pricing of €64 million) to be leased to RHM Kliniken, a current tenant of the Company’s assets in Germany, and owned by affiliates of Waterland Private Equity, the expected future majority owner of MEDIAN.
With these transactions, MPT has committed to investments totaling approximately $1.4 billion year-to-date, the highest amount of investments the company has made in a single year in its history.
The new U.S. hospital facilities, as well as those included in the new commitment with RHM Kliniken, will be leased back to the operators under long-term net leases with a weighted average initial cash lease rate of approximately 9.3 percent and consumer price index-based escalators.
The new transactions will significantly expand MPT’s asset base by approximately 30 percent to $4.5 billion, grow the total number of properties in its portfolio by approximately 39 percent to 165 and increase its number of beds by approximately 98 percent to nearly 20,000.
MPT's leadership believes Germany remains a dynamic market in which to invest. The public and private sectors are making considerable investments in the healthcare industry in Germany, and the firm expects to realize significant value and long-term stability through its increased exposure in the region. On a pro forma basis, approximately 28 percent of MPT’s portfolio, or a total of 55 facilities, will be located in Western Europe.
