Medical Properties Trust (NYSE:MPW) to acquire the real estate of 30 acute care hospital facilities located throughout the United Kingdom for an aggregate purchase price of ~£1.5B, or ~$2B.
The facilities are leased under long-term inflation protected net leases to affiliates of BMI Healthcare, which will be later acquired by affiliates of Circle Health.
The hospitals will be leased under a master lease structure guaranteed by Circle with an initial fixed term of 30 years, two 5-year extension options, and annual rent escalators linked to UK consumer price inflation.
The lease arrangement is expected to provide a GAAP-basis yield of 8.9%.
The company expects to fund the acquisition with cash on hand, including proceeds from recent U.S. dollar equity and sterling-denominated bond offerings and borrowings under an unsecured sterling-denominated term loan facility.
The transaction is expected to close in 1Q20.
Based on YTD transactions in 2019, along with an assumed capital structure that results in a net debt to EBITDA ratio of ~5.5 times, MPT expects an annual run rate of $1.24 to $1.27/diluted share for net income and $1.65 to $1.68/diluted share for Normalized FFO.
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