Medical Properties Trust Secures $2.5B In Debt After Another Major Tenant’s Bankruptcy

Medical Properties Trust has secured approximately $2.5 billion in financing through debt issuance as it struggles to stabilize its tenants.

The company announced a private offering consisting of $1.5 billion in senior secured notes in U.S. dollars and 1 billion euros, with interest rates of 8.5% and 7%, respectively. The deal is expected to close on February 13.

The debt is backed by subsidiaries that own 167 properties, operated by 19 different tenants across the U.S., U.K., and Germany. Interest payments will be made semi-annually, with the notes maturing on February 15, 2032. Originally, MPT aimed to issue $2 billion and €500 million in notes.

This financing strategy will allow MPT to increase its leverage, primarily to repay debt maturing in the coming year. The remaining proceeds, estimated at around $800 million, will be used for general corporate purposes, including operational expenses.

MPT has been facing financial strain due to bankruptcies from two major tenants—Steward Health Care and Prospect Medical Holdings—which have defaulted on millions of dollars in rent. MPT also challenged Prospect’s bankruptcy financing plan in court, according to Bloomberg.

In its third-quarter earnings, MPT reported a net loss of $801 million. Additionally, the REIT has drawn criticism from short-seller Viceroy Research, which accused it of engaging in fraudulent transactions worth billions of dollars. MPT filed a defamation lawsuit against Viceroy, which was settled in December.

The REIT has also been scrutinized by Democratic lawmakers, some of whom have likened its operations to a Ponzi scheme and called for a reduction in hospital rents.

Source: Bisnow