Medical Properties Trust (NYSE:MPT) said it has launched a two-step refinancing plan intended to address its 2026 and 2027 debt maturities, while reporting second-quarter normalized funds from operations of $0.15 per share and describing stable performance across much of its hospital portfolio.
Chairman, President and Chief Executive Officer Edward K. Aldag Jr. said the company announced a comprehensive refinancing transaction that would extend $2.4 billion of debt maturities to 2032. The plan is designed to reduce near-term maturities and support what Aldag called a more balanced capital-allocation strategy.
Refinancing Plan Targets 2026 and 2027 Obligations
Executive Vice President and Chief Financial Officer Steven Hamner said the refinancing consists of two steps intended to fully satisfy about $2.7 billion of 2026 and 2027 debt maturities, along with addressing approximately $1.2 billion of longer-dated unsecured notes.
The first step, expected to close later on the day of the call, involves issuing $2.4 billion of secured notes with a 9.25% coupon and a five-and-a-half-year term. The notes become prepayable after two years, Hamner said.
Proceeds are expected to redeem the company’s upcoming €500 million unsecured note maturity and repay or exchange approximately $738 million, or about 53%, of unsecured notes due in 2027. The company also plans to exchange, at a discount, about $1.2 billion of longer-dated unsecured notes, reducing gross debt by about $123 million.
The second step is expected to be completed in the coming weeks and includes repayment of the remaining 2027 unsecured notes, a new multiyear bank revolver and repayment of a $200 million term loan due in June 2027. Hamner said Medical Properties Trust expects to have no maturities in 2026 or 2027 once the process is completed. Its only maturity over the following three years would be roughly $600 million of notes due in June 2028.
Hamner said the company expects $1.1 billion of liquidity based on recent and anticipated asset sales. He also said the refinancing could increase the company’s unencumbered-assets-to-unsecured-debt covenant cushion to nearly 300%, depending on how liquidity is deployed, from a required minimum of 150%.
Asset Sales and Deleveraging Efforts
The company highlighted recent and potential asset transactions as part of its effort to reduce leverage. Hamner said the public listing of Swiss joint venture Infracore generated about $140 million in proceeds for Medical Properties Trust. He said the market valuation established through the transaction exceeded the carrying value of the related assets.
Hamner also said an unidentified transaction expected to close imminently would provide approximately $172 million of after-debt cash proceeds. He said the sale represented a gain of more than 60% over the company’s original investment and an internal rate of return of approximately 34%.
Additionally, Medical Properties Trust said it was negotiating sales of several other assets that could potentially generate another $200 million to $400 million of proceeds over the next few weeks, though Hamner said there was no assurance the transactions would be completed.
During the question-and-answer session, Hamner said asset-sale proceeds and debt repayment would create additional capacity under the company’s secured-debt ratio. He said the first-stage secured issuance would move the ratio from approximately 25% closer to a 40% limit.
Portfolio Trends and Tenant Updates
Aldag said total portfolio EBITDARM coverage remained steady, with post-acute operators producing the strongest growth. He said post-acute EBITDARM rose by more than $70 million year over year, led by a 24% increase at MEDIAN and a 13% increase at Ernest Health.
Rosa Williams, senior vice president of operations and secretary, said general acute operators reported aggregate EBITDARM coverage of 2.8 times during the quarter. Post-acute coverage was 2.4 times, while behavioral health coverage declined slightly to 1.4 times amid pressures in the U.K. and U.S. markets.
Williams said U.K. behavioral-health operator Priory is implementing tighter cost controls and optimizing services as National Health Service budget constraints and changing referral patterns affect operations. Aldag said he remained encouraged by activity at U.K. facilities and sees long-term opportunity in behavioral health despite current funding pressures.
In the U.S., Williams said Noor began paying 50% of contractual rent in June and produced higher year-over-year admissions, emergency department visits and surgeries. Noor’s rent is scheduled to rise to 100% of contractual rent in mid-December.
Hospital Systems of America, or HSA, experienced operational disruption during a MEDITECH electronic medical record conversion and after outsourcing revenue-cycle management, Williams said. Delayed supplemental funding in Florida also pressured liquidity. HSA has since brought revenue-cycle management back in-house and received significant Florida supplemental funding in August, allowing it to begin repaying working-capital advances from Medical Properties Trust.
Aldag said HSA’s cash collections remained in the 80% range and need to improve, although he noted that the operator is generating roughly two times EBITDARM-to-cash-rent coverage. He said HSA had received about half of its expected Florida supplemental funding and planned to use the remaining payment to repay an additional $20 million of advances, with a remaining $10 million expected to be repaid in the next quarter.
Second-Quarter Financial Results
Senior Vice President, Controller and Chief Accounting Officer Kevin Hanna said normalized FFO was $0.15 per share in the second quarter, compared with $0.14 per share in the prior quarter. He said the result was in line with management’s expectations as rent payments from HSA and Noor increased under their lease agreements.
Hanna said HSA was paying 75% of contractual rent and is scheduled to move to 100% in mid-September. The company also consolidated LifePoint, LifePoint Behavioral Health and all but one Scion post-acute property into a single master lease, with cash rent expected to remain essentially unchanged.
General and administrative expense increased year over year due primarily to stock-compensation expense and depreciation associated with the company’s corporate headquarters building. Medical Properties Trust also recorded about $17 million of impairments on working-capital loans, primarily related to two Steward replacement tenants in the Midwest.
About Medical Properties Trust (NYSE:MPT)
Medical Properties Trust, Inc (NYSE: MPT) is a real estate investment trust (REIT) that acquires, owns and finances hospitals and other healthcare facilities. Founded in 2003 by Edward K. Aldag Jr., the company’s business model centers on providing real estate capital to healthcare operators through long-term leases, sale-leaseback transactions, build-to-suit developments and mortgage financing. By specializing in healthcare real estate, MPT aims to deliver steady rental income and asset-based returns while enabling operators to access capital for clinical operations and growth.
The company’s portfolio primarily comprises acute care hospitals, inpatient rehabilitation hospitals, long-term acute care facilities, behavioral health centers and other specialty hospitals.
