Five Utah hospital properties are getting new ownership

For the second time in a week, Medical Properties Trust, Inc. has offloaded some of its healthcare properties.

The real estate investment trust announced in a news release that it has sold 75% of its interest in five hospitals in Utah to a newly formed joint venture, which was not identified. The joint venture is affiliated with “a leading multi-strategy, multi-billion dollar institutional asset manager with a proven track record in real estate investments," Medical Properties Trust said.

With the deal, the joint venture also is giving a $190 million “non-recourse secured” loan to Medical Properties Trust. Under such loans, the borrower can’t go after other assets.

Medical Properties Trust says the deal, which was announced April 12, provides about $1.1 billion in immediate cash proceeds. Medical Properties Trust retains a 25% interest in the venture.

CommonSpirit Health, through a subsidiary, is leasing the Utah properties. CommonSpirit acquired five Utah hospitals from Steward Health Care in a deal last year, but Medical Properties Trust owned the real estate, making CommonSpirit a tenant of the company.

At the close of Monday, Medical Properties Trust’s stock price rose nearly 19%, to $4.74 per share, its highest level since early January. As Medical Properties Trust announced the deal, the trust also announced a dividend of 15 cents per share would be paid to shareholders on May 1.

Edward K. Aldag, Jr., chairman, president and CEO of Medical Properties Trust, said he’s “confident” the company will surpass its target of $2 billion in liquidity transactions in 2024.

The complex deal comes just three days after Medical Properties Trust completed the sale of five hospital properties in California and New Jersey to Prime Healthcare. Medical Properties Trust received a total of $350 million in that sale.

For Medical Properties Trust, both deals provide more cash as the real estate investment trust continues to grapple with the consequences of Steward Health Care’s financial woes. Medical Properties Trust reported a loss of $556 million in 2023, and attributed much of its losses to Steward Health Care. It noted its losses in the fourth quarter of 2023 were primarily related to Steward.

Medical Properties Trust said in January that as of Dec. 31, Steward owed $50 million in unpaid rent.

Steward Health Care has been under heavy scrutiny from elected officials in Massachusetts as the health system struggles financially. Massachusetts Gov. Maura Healey has pushed Steward to relinquish control of its hospitals to the state. Lawmakers representing Massachusetts in Congress have been pressing Steward about its finances and its plans to ensure high-quality care and patient safety.

Aldag said in February that Steward is seeing suitors for its hospitals.

“With regard to Steward, we are encouraged by the amount of interest received to date from other hospital operators for these mission-critical facilities, and we expect this real estate portfolio will either resume its contributions to earnings or become additional sources of liquidity as the year progresses,” Aldag said in a statement.

Massachusetts lawmakers have also pointed out that some of Steward’s financial difficulties stem from having to make lease payments to Medical Properties Trust.

Based in Birmingham, Alabama, Medical Properties Trust is one of the largest owners of hospital real estate in the world, with 439 properties in nine countries as of the end of 2023.

More hospital deals have been taking place in recent months. There were 20 announced hospital mergers and acquisitions in the first quarter of 2024, the highest number in a first quarter since 2020, according to Kaufman Hall.