The pubicly traded REIT Medical Properties Trust, Inc. (NYSE: MPW) is significantly expanding its property portfolio. Medical Properties Trust is buying 18 behavioral health hospitals from Welsh, Carson, Anderson & Stowe for $760 million and an interest in the operations of Springstone, LLC, a leading provider of behavioral health services in the United States for $190 million.
Springstone provides a full continuum of behavioral care including inpatient, partial hospitalization, and intensive outpatient programs and has targeted diversified geographies with positive demographic trends and a commercial-heavy payor mix.
The hospitals, along with additional facilities that Springstone expects to develop and acquire, are expected to be master leased pursuant to terms that are anticipated to provide a GAAP-basis yield exceeding 9.0% and lease payment coverage of approximately 1.75x in the near term. The lease is expected to include an initial 20-year term with CPI-based annual rent escalators subject to a 2% floor.
“The Springstone investments give [Medical Properties Trust] a major presence in the rapidly expanding United States behavioral health care market, which has been underserved in our society despite importance on the same level as acute and post-acute care hospitals,” said Edward K. Aldag, Jr., Medical Properties Trust’s Chairman, President, and CEO.
Barclays and Guggenheim Securities, LLC acted as financial advisors to Medical Properties Trust.
