Medical Properties Trust Inc MPW shares are spiraling down today, plummeting by approximately 15% following its plans to lessen its exposure to tenant Steward Health Care System.
Steward Health Care System has fallen behind on paying a portion of its September and October rent to MPT, disclosed in the company’s third quarter 2023 Form 10-Q.
Steward recently notified MPW that significant changes in vendor payment terms have adversely affected its liquidity efforts, despite attempting to secure additional working capital financing and sell its non-core laboratory business in Q4 2023.
As of December 31, 2023, Steward’s total unpaid rent under its consolidated master lease with MPW is approximately $50 million (not including $50 million previously deferred and not currently payable related to the Norwood Hospital, which is under reconstruction).
To safeguard the value of its assets and hospital operations, MPW has consented to fund a new $60 million bridge loan secured by all existing collateral, in addition to new second liens on Steward’s managed care business, subordinate only to Steward’s ABL lenders.
A portion of MPW’s existing transaction-specific and working capital loans of about $215 million to Steward will now be secured by these same second liens on the managed care platform.
MPW has also consented to deferring unpaid rent under the consolidated master lease (as of December 31, 2023) and limited and tapering deferral of approximately $55 million of 2024 rents until the earlier of June 30, 2024, or the completion of anticipated asset sales.
The company anticipates partial cash rent payments to recommence in February, including around $9 million in Q1 and roughly $44 million in Q2 2024.
As there is no assurance that Steward will successfully execute its plans or MPW will recover all rents and loans, the company expects to record a non-cash charge in Q4 2023 to write off consolidated straight-line rent receivables of approximately $225 million, and approximately $25 million share of straight-line rent receivables related to the unconsolidated Massachusetts partnership and consolidated unpaid rent receivables of about $100 million.
Price Action: MPW shares are down 20.8% at $3.96 premarket on the last check Friday.
