Medical Properties Trust Announces Prospect Recapitalization Transactions
Third-Party Lenders Invest
Proceeds Fully Repay Prospect’s ABL Facility
MPT continues to have strong conviction in the embedded value of the Prospect platform and has structured its master leases and security agreements to provide collateral value in addition to its real estate interests, including interests in the equity of Prospect's managed care business. As of the end of the first quarter of 2023, MPT holds
$513 millioninvestment in six leased Californiahospitals, subject to a master lease scheduled to resume partial rent payments in September and full rent payments at an 8.44% cash yield in March of 2024;
$457 millioninvestment in MPT’s Connecticutreal estate which, as previously announced, Yale New Haven Healthis expected to acquire in a transaction that is expected to close during 2023’s third quarter. MPT’s investment is expected to be fully recovered through cash proceeds of $355 millionat closing and equity interests in Prospect’s managed care business valued at $103 million;
A first lien mortgage loan of
$150 millionand equity interests in the managed care business valued at $100 million, resulting from the transfer to Prospect of Pennsylvaniareal estate with a book value of $250 million;
Loans aggregating approximately
$264 millionand accrued rent and interest of approximately $56 million, along with the previously announced $50 millionconvertible loan to the managed care entities are expected to be recovered through equity interests in the managed care business.
The new loan agreements among Prospect, MPT and third-party lenders have terms of approximately three years. During this period, Prospect intends to further build the value of its managed care business and continue operational and financial improvements of its hospital operating business.
About Prospect Medical
Prospect Medical is a group of health care organizations that have led the transformation of health care for over 25 years. Prospect Medical creates value by accepting the insurance risk from health plans and aligning with providers via unique financial compensation models and by deploying multiple evidence-based medical management services. The result is high-quality, cost-effective care for its membership. The assets and operations are scalable and exportable to new markets. Prospect’s assets include:
Prospect Medical Group: Large family of Independent Physician Associations ("IPAs") with over 6,500 independent physicians' profitably managing approximately 500 thousand lives in the largest 5 Counties in Californiawith new markets in Arizonaand Texas.
- Prospect Health Plan: An insurance company able to accept all of the insurance risk for any type of HMO insurance (Commercial, Medicaid, Medicare, Dual-eligible); and
Prospect Medical Systems: A full-service management services organization ("MSO") with expertise in data-driven medical management and delivering high quality of care to members.
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can generally be identified by the use of forward-looking words such as “may”, “will”, “would”, “could”, “expect”, “intend”, “plan”, “estimate”, “target”, “anticipate”, “believe”, “objectives”, “outlook”, “guidance” or other similar words, and include statements regarding our strategies, objectives, future expansion and development activities, and expected financial performance. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results or future events to differ materially from those expressed in or underlying such forward-looking statements, including, but not limited to: (i) the economic, political and social impact of, and uncertainty relating to, potential impact from health crises (like COVID-19); (ii) the ability of our tenants, operators and borrowers to satisfy their obligations under their respective contractual arrangements with us, especially as a result of the adverse economic impact of the COVID-19 pandemic, and government regulation of hospitals and healthcare providers in connection with same (as further detailed in our Current Report on Form 8-K filed with the
The risks described above are not exhaustive and additional factors could adversely affect our business and financial performance, including the risk factors discussed under the section captioned “Risk Factors” in our Annual Report on Form 10-K for the year ended
Senior Managing Director – Corporate Communications