Macquarie Infrastructure Partners V (MIP V) and Medical Properties Trust (MPT) have entered into a partnership for eight Massachusetts hospitals valued at $1.78 billion.
Medical Properties Trust said Thursday that Macquarie Infrastructure Partners V controlled subsidiary will acquire a 50% interest in a portfolio of eight Massachusetts-based general acute care hospitals currently owned by MPT and operated by Steward Health Care System.
”The transaction values the portfolio at approximately $1.78 billion” said the company in a press release.
MIP V is an Americas-focused $6.9 billion unlisted infrastructure fund managed by Macquarie Asset Management.
“We are very pleased to have found in Macquarie Asset Management a partner that recognizes the pivotal role hospitals play in U.S. infrastructure,” said Edward K. Aldag, Jr., MPT’s Chairman, President, and CEO.
“This first of its kind partnership with one of the largest infrastructure investors globally confirms the quality of this hospital portfolio and demonstrates the strength of MPT’s overall investment strategy and our ability to deliver value for our shareholders. This transaction’s portfolio valuation is a 48% increase over our original investment in these hospitals made in 2016, and the compelling value creation reflects the strength of MPT’s underwriting process, which allows our team to identify operators and strategies that are likely to result in long-term and sustained improvement in operating results. This partnership also strongly validates the financial and operational strength of Steward, which has significantly improved the performance of these assets over the last five years and has continued to deliver first class patient care to the Boston area throughout the pandemic while growing its overall national footprint,” he added.
“We are pleased to enter into this partnership with MPT,” said Karl Kuchel, Chief Executive Officer of Macquarie Infrastructure Partners. “The eight hospitals that we are investing in are essential to their local communities and Steward, as operator, has clearly demonstrated the ability to transform the performance of these acute care hospitals over the last five years, so that they are now world class, well-operated healthcare infrastructure facilities. MPT is a leading global hospital owner, and our 50/50 partnership with MPT, combined with the 20-year triple net master lease with Steward, ensures that there is strong alignment across all parties with respect to the long-term performance of this portfolio.”
MIP V has agreed to acquire its interest in the partnership for cash based on a 5.6% 2021 cash cap rate. Subject to market conditions, the partnership expects to raise nonrecourse secured debt of up to 55% of asset value.
Total anticipated proceeds to MPT, including proceeds from the expected secured debt, will be approximately $1.3 billion.
The cash proceeds anticipated to be generated through this transaction will be used to repay debt and fund MPT’s previously announced $950 million Springstone inpatient behavioral health facility transactions, which are expected to close in the second half of 2021.
Based on year-to-date transactions, along with an assumed capital structure pro forma for completion of the partnership with Macquarie Asset Management and no additional debt or equity transactions (resulting in a net debt-to-EBITDA ratio of approximately 6.0x), MPT expects an annual run-rate of $1.16 to $1.20 per diluted share for net income and $1.81 to $1.85 per diluted share for normalized fnds from operations.
