Medical Properties Trust, Inc. (the “Company” or “MPT”) (NYSE: MPW)
today announced that it has entered into a definitive agreement with
leading German rehabilitation hospital operator RHM Klinik- und
Altenheimbetriebe GmbH & Co. KG (“RHM”) to acquire 11 facilities in
Germany in a sale / leaseback transaction valued at €184.0 million
(including €9.0 million of transfer tax paid by MPT), or approximately
$244.7 million based on a EUR/USD exchange rate of 1.33.
Under the terms of the transaction, MPT will acquire the real estate
assets of 11 facilities located throughout Germany and lease them back
to the operator, RHM, in a 27-year master lease structure. The RHM
portfolio consists of nearly 1,800 beds with average occupancy rates
significantly above the average rates for German rehabilitation clinics.
RHM is based in Deidesheim, Germany and owned by Waterland Private
Equity Investments, a leading European private equity firm, which will
maintain its operational ownership.
“This acquisition is fully aligned with our long-stated strategy to
diversify our portfolio while remaining focused on hospital
investments,” said Edward K. Aldag, Jr., Chairman, President and CEO of
Medical Properties Trust. “This investment will allow MPT and its
shareholders to benefit from the stable German economy, favorable
demographic trends and the operational expertise of RHM, all of which we
expect will help drive FFO growth.
“As the only U.S. healthcare REIT focused exclusively on funding
hospitals and other facilities where patients must be admitted by
doctors, MPT is continuing to leverage its unparalleled expertise in
healthcare real estate, healthcare finance and healthcare operations in
its investment strategy,” continued Mr. Aldag. “While the U.S. remains
our core market for investments, we believe that increasing our exposure
to positive global trends will add a dynamic new layer of diversity to
our portfolio and significantly increase our acquisition pipeline
opportunities. We are excited to expand into Western Europe with RHM,
who we expect will become a valuable contributor to the performance of
our portfolio.”
Benefits of the Transaction
Further diversifies MPT’s asset portfolio and adds significant scale.
With this acquisition, which is consistent with the Company’s successful
investment strategy, MPT is entering a new, stable market with dynamics
that the Company believes are highly complementary and similar to the
U.S. market. MPT expects to leverage its extensive U.S. hospital
expertise as it expands to new geographies. On a pro forma basis, MPT
will reduce its exposure to its largest operator from more than 24% to
22% based on gross assets, assuming completion of all development
projects. RHM will represent approximately 8% of the pro forma portfolio
and the remaining 92% of MPT’s pro forma portfolio will be located in 25
states in the U.S. In addition, on a pro forma basis, no single property
will account for more than 3.5% of the aggregate portfolio.
Expands acquisition pipeline opportunities. This transaction not
only provides MPT with a “built-in” pipeline for additional investments,
but also creates a platform to pursue highly selective additional
European opportunities that will be complementary to the Company’s U.S.
acquisition strategy. RHM has robust growth opportunities and there are
significant consolidation opportunities in the highly fragmented German
market for well-capitalized operators.
Increases exposure to favorable market trends and demographics.
The acquisition provides compelling opportunities for MPT in Germany,
which has a strong, stable economy, low unemployment rates and universal
healthcare coverage and payment policies. Similar to the U.S., German
culture values stable business practices and monetary policy while
focusing on its citizens’ welfare, making this market highly attractive.
Absolute net lease structure will allow MPT to further leverage
operating infrastructure. The absolute net lease structure of this
transaction is fully aligned with the Company’s stated strategy to
pursue new investment opportunities that can be seamlessly integrated
and managed within MPT’s existing corporate infrastructure.
Positive German Market Dynamics
As a percentage of gross domestic product, Germany has the fourth
largest global healthcare system, and guarantees its citizens access to,
and coverage under, a comprehensive health insurance program. German
citizens can seek coverage under the government-regulated public health
insurance system, private coverage from an insurance company, or a
combination of both options. Individuals receive coverage for a vast
array of services, including preventive services, inpatient and
outpatient hospital care, and rehabilitation. Both the private and
public sectors have invested considerably in this industry, a trend
which MPT expects to continue.
Mr. Aldag continued, “With the acquisition of 11 stable inpatient
rehabilitation hospitals in this economically strong region, MPT is
establishing an international presence in a significant growth market.
In a single transaction we are adding a host of assets to our portfolio
that have demonstrated long-term financial stability, have substantial
lease coverage at 1.75 times EBITDAR and a track record of operational
excellence. We believe that these assets will add meaningfully to our
portfolio.”
Strength of RHM Operations and Assets
RHM is an experienced operator in preventive and rehabilitative
healthcare in Germany. The leased 11 facilities, which will be governed
by a 27-year master lease, are strategically equipped to address the
needs of patients at various stages of rehabilitation. The facilities
are well-known providers of consistent service and certain facilities
utilize an integrated post-acute healthcare delivery model within the
same campus as the traditional rehabilitation center.
Approvals and Financing
The transaction is expected to close in the fourth quarter of 2013,
subject to customary closing conditions and regulatory approvals. MPT
intends to finance the transaction with all-debt financing, arrangements
which may include borrowings under the Company’s revolving credit
facility or other senior debt facilities, or the issuance of unsecured
debt securities, or a combination thereof. MPT estimates that on a pro
forma basis for any debt financing, MPT will have a net debt-to-EBITDA
ratio of approximately 5.2 times. In addition, the Company estimates
that on a pro forma basis it will have a net debt-to-gross asset ratio
of approximately 44%. Subject to the final terms of the financing, the
Company expects the transaction to be immediately accretive to Funds
from Operations (“FFO”) per diluted share.
About Medical Properties Trust, Inc.
Medical Properties Trust, Inc. is a Birmingham, Alabama based
self-advised real estate investment trust formed to capitalize on the
changing trends in healthcare delivery by acquiring and developing
net-leased healthcare facilities. These facilities include inpatient
rehabilitation hospitals, long-term acute care hospitals, regional acute
care hospitals, ambulatory surgery centers and other single-discipline
healthcare facilities. For more information, please visit the Company’s
website at www.medicalpropertiestrust.com.
The statements in this press release that are forward looking are
based on current expectations and actual results or future events may
differ materially. Words such as “expects,” “believes,” “anticipates,”
“intends,” “will,” “should” and variations of such
words and similar expressions are intended to identify such
forward-looking statements. Forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the actual
results of the Company or future events to differ materially from those
expressed in or underlying such forward-looking statements, including
without limitation: the Company’s ability to secure debt financing for
the acquisition transaction described above or satisfactory terms or at
all, or otherwise to successfully consummate the acquisition
transaction. For further discussion of the factors that could affect
outcomes, please refer to the “Risk factors” section of the
Company’s Annual Report on Form 10-K for the year ended December 31,
2012, and as updated by the Company’s subsequently filed Quarterly
Reports on Form 10-Q and other SEC filings. Except as otherwise required
by the federal securities laws, the Company undertakes no obligation to
update the information in this press release.
Copyright Business Wire 2013