MPT Expects $430M Impairment Charge Tied To Steward Deal
After reaching a settlement deal with bankrupt Steward Health Care, landlord Medical Properties Trust is feeling the effects of the hospital operator's demise.
The hospital REIT expects to record $430M in impairment charges this quarter related to Steward, according to a Securities and Exchange Commission filing. The charges include a working capital loan and other secured loans the REIT advanced to Steward last year.
The REIT's expected impairment charges also include between $100M and $200M tied to its Space Coast facilities, three Steward hospitals that were up for sale in Florida. Orlando Health was approved on Sept. 10 to acquire the three hospitals — Sebastian River Medical Center, Melbourne Regional Medical Center and Rockledge Regional Medical Center — for $439M.
MPT's filing says it also expects an amortization expense of $120M to pay down costs associated with the master lease it terminated effective Sept. 11.
The REIT had already recorded more than $1.5B in impairments related to Steward, according to its filing: $714M last year, $470M in the first quarter and $490M in the second quarter. Those charges have been partially offset by gains from selling properties, but its net losses through the first half of the year totaled more than $1B.
On Sept. 12, the judge overseeing Steward's bankruptcy approved its deal with MPT to keep nearly two dozen hospitals open by handing operations to other managers. The new managers will be responsible for Steward's $2B in lease obligations.
Steward has faced the most heat in Massachusetts, where it closed two hospitals and landlords MPT and Macquarie Infrastructure Partners handed over the keys to eight hospitals to lender Apollo Global Management.
Steward and MPT have also faced congressional pressure, including from Sen. Elizabeth Warren, who called for the IRS at the beginning of the month to increase its scrutiny of healthcare and hospital REITs that she said have pushed the boundaries of their tax laws, specifically calling out MPT.
