Community
Massachusetts legislators ask for briefing over concerns of hospital closures in Fall River, Taunton, Brockton, other communities
BIRMINGHAM, Ala.- Medical Properties Trust, Inc. has announced plans to accelerate its efforts to recover uncollected rents and outstanding loan obligations from Steward Health Care System and related processes designed to significantly reduce its exposure to Steward.
According to WCVB, Steward operates Carney Hospital in Dorchester, Good Samaritan Medical Center in Brockton, Holy Family Hospital in Haverhill and Methuen, Morton Hospital in Taunton, Nashoba Valley Medical Center, New England Sinai Hospital, Norwood Hospital, Saint Anne’s Hospital in Fall River and St. Elizabeth’s Medical Center in Brighton.
As disclosed in the Company’s third quarter 2023 Form 10-Q, Steward delayed paying a portion of its September and October rent to MPT. Despite its obtaining additional working capital financing and selling its non-core laboratory business in the fourth quarter of 2023, Steward recently informed MPT that its liquidity has been negatively impacted by significant changes to vendors’ payment terms. As a result, Steward has continued to make partial monthly rent payments, and total unpaid rent under its consolidated master lease with MPT is approximately $50 million as of December 31, 2023 (exclusive of approximately $50 million that was previously deferred and not currently payable related to the Norwood Hospital, which is under reconstruction).
MPT has engaged Alvarez & Marsal Securities, LLC as its financial advisor and KTBS Law, LLP and Baker, Donelson, Bearman, Caldwell & Berkowitz, PC as legal advisors to advise the Company on its options to enable the recovery of uncollected rent and outstanding loans. MPT’s management team and advisors have worked closely with Steward and its own advisors to develop an action plan which, if successful, is designed to strengthen Steward’s liquidity and restore its balance sheet, optimize MPT’s ability to recover unpaid rent, and ultimately reduce MPT’s exposure to Steward.
As part of this plan, Steward is pursuing several strategic transactions, including the potential sale or re-tenanting of certain hospital operations as well as the divestiture of non-core operations. Further, Steward has committed to seeking a third-party capital partner for its managed care business, net proceeds from which will be used in part to repay all outstanding obligations to MPT. Steward has also intensified measures to improve collections and overall governance, including establishment of a transformation committee comprised of newly appointed independent directors and submission of periodic cash activity and asset sale progress reports to MPT and its ABL lenders.
To protect the value of MPT’s assets and hospital operations while Steward executes on its strategic plan, MPT has agreed to fund a new $60 million bridge loan secured by all MPT’s existing collateral plus new second liens on Steward’s managed care business, subordinate only to Steward’s ABL lenders. A portion of MPT’s existing approximately $215 million of transaction-specific and working capital loans to Steward will now also be secured by these same second liens on the managed care platform. The Company has also consented to the deferral of unpaid rent under the consolidated master lease as of December 31, 2023, as well as a 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. Partial cash rent payments are expected to recommence in February, including approximately $9 million in the first quarter and approximately $44 million in the second quarter of 2024.
According to Medical Properties Trust, Inc., there can be no assurance that Steward will successfully execute its plans or that the Company will recover all of its deferred rent and loans outstanding to Steward. As a result, MPT cannot be assured that Steward will make all scheduled lease payments throughout the remaining approximate 22-year fully extended term of its master lease. Accordingly, pursuant to generally accepted accounting principles, the Company expects to record a non-cash charge in the fourth quarter of 2023 to write off consolidated straight-line rent receivables of approximately $225 million, its approximately $25 million share of straight-line rent receivables related to the unconsolidated Massachusetts partnership and consolidated unpaid rent receivables of approximately $100 million (which includes the previously referenced $50 million related to the Norwood development). Furthermore, MPT routinely evaluates for indications of impairments to its real estate and other investments, including those related to Steward. Such evaluations are ongoing as of December 31, 2023, and no assurances can be provided that further impairment of real estate and non-real estate assets will not be taken with MPT’s fourth quarter 2023 reporting.
The money owed in rent by the medical facilities has caused the Massachusetts Congressional delegation to ask for a briefing from Steward Health Care.
Ken Masson
January 24, 2024 at 9:20 am
I remember when all hospitals were not for profit and sustainable. Now look at the mess this for-profit companies is in. And you wonder why a health care costs have skyrocketed?
South Coast hospitals are still non-profit.
RedPilled
January 24, 2024 at 9:21 am
The cost of providing care for illegals is staggering. Massachusetts a sanctuary state which reimburses pennies on the dollar for their care. Hospitals are losing millions because of this. The impact of hospital closures would trickle down to many companies and force layoffs. Most folks don’t realize the true cost of sanctuary status. You may know soon enough.
Antifa doesn't hate like MAGAt's do.
January 24, 2024 at 11:24 am
These problems were around way before the influx of migrants seeking asylum from poverty and violence. They ain’t the problem. Our whole health care system is broken way before now. We have the highest cost and are only number 11 in results. The problem is corporations running health care for profit. The other problem is a shitty insurance system. I bet you didn’t realize a lot of people can’t afford their co-pays and the hospitals never collect them. Now can you imagine a single payer system where the hospitals get fully reimbursed for every patient and non-profit to contain cost? It’s immoral to profit from healthcare. And that system would be cheaper and more effective. The only reason why we don’t have a better system in this country is the ridiculous fear of anything socialist and lobbyists for profit insurance companies and health care systems. Socialism was never the problem it’s authoritarianism that hurts countries and authoritarianism is a problem at the extremes of both the left and the right.
It’s funny how there’s a bipartisan legislation addressing the border crisis ready to be signed but the morons of the freedom caucus won’t vote for it because they know this migrant crisis makes Biden look bad. Well I hope Biden pulls out his megaphone to point out who’s really at fault. A congress that does not want what’s best for this nation only for their political careers in there MAGAt districts. No wonder this is the least productive Congress in history. It’s a freaking clown show!
Oh and PS, walls are proving to be totally ineffective. Biden wants money for technology and boots on the ground but morons insist on what don’t work and is a total waste of money. This only proves there’s no more conservatism in the Republican party. It’s just a populous party now of Christian fascist, white supremacist and white nationalist. A total hate filled s***show.
AntifaHatesMaga
January 25, 2024 at 6:13 pm
Antifa hates MAGA. Antifa are Nazi Proxies.
MAGAt Nazis are fascist but two stupid to know.
January 26, 2024 at 2:13 pm
Have you always been this insanely confused? Flunked middle school history?
Antifa, antifascist. Why is it right wing ignoramuses like you always try to flip it around? Why won’t you admit you’re a racist fascist MAGAt cult member that’s drank the Kool-Aid.
AntifaHatesMaga
January 27, 2024 at 8:15 pm
More hateful Antifa fascism on display. Antifa are Proxies for the liberal white nationalist movement. Antifashistas are known to gather in liberal sanctuary cities where they dine at 7 Eleven on rancid hotdogs and burnt discount coffee. During moments of extreme rage due to absent daddy complex. Ants as they prefer to be identified, enjoy attacking innocent conservative, christian, Patriots due to severe inferiority complex. Most times during an attack, Antifa Tardites receive severe ass whoopings and have their philosophical misgivings instantly corrected. Beware though, Antifashistas smell of cat urine due to sharing basement dwellings with family as well as stray cats. An Ant will many times be wrapped in several layers of feline hair. Antifa are avowed communists and resist any common sense arguments that easily dispel their overwhelming confusion of reality. Beware Antifa is coming to a liberal progressive shit hole near you, because they can’t afford the rents in upscale areas, like the ones where their leadership reside.