Medical Properties Trust Inc. has entered into definitive agreements under which the company will acquire 11 Australian hospitals from affiliates of Healthscope Ltd. for an aggregate purchase price of approximately $859 million, and lease the acquired real estate back to Healthscope.
In a related transaction, Brookfield Business Partners L.P. together with its institutional partners have agreed to acquire up to 100% of Healthscope’s outstanding shares. The MPT acquisitions are conditioned upon the successful completion of the Brookfield transactions.
“We are very excited to enter 2019 with the opportunity to establish a new long-term relationship with Brookfield and Healthscope, Australia’s second largest private hospital operator,” said Edward K. Aldag, Jr., MPT’s Chairman, President and CEO. “Not only will long-term inflation-protected rents from these highly sought assets be strongly accretive to FFO per share, the transaction will further improve MPT’s tenant and geographic diversification measures.”
The 11 separate hospitals are concentrated in large metropolitan areas in Australia, and will be leased pursuant to master leases that have an average initial term of 20 years with annual fixed escalations and multiple extension options. The master lease agreements also include provisions for MPT to invest up to an additional $350 million for expansion and redevelopment projects in 2019 and future years.
MPT expects to fund the transactions with a combination of existing cash balances, including approximately $200 million in net proceeds from recent issuance of common shares, and an undrawn $1.3 billion revolver under the Company’s credit facility. The transactions are expected to close in the second quarter of 2019, subject to Healthscope shareholder approval, certain governmental consents and other customary closing conditions.