Press Release 03 November 2008 @ 05:02 pm EST
Medical Properties Trust, Inc. (NYSE: MPW) announced today that it has entered into a new long-term lease agreement for its Shasta Regional Medical Center in Redding, California. The terms of the new lease contain participation features, including an ownership interest in the new operator, an affiliate of Prime Healthcare Services, Inc., that should generate substantial incremental income for the Company. In addition, the new operator has agreed to a $3 million increase in the value of the real estate from $60 million to $63 million.
“The new lease arrangement for Shasta Regional Medical Center is the result of sound underwriting procedures and creative transaction structuring,“ said Edward K. Aldag, Jr., Chairman, President and CEO of Medical Properties Trust. “With this agreement, we identified and have capitalized on an outstanding opportunity to participate in the future value of our tenant‘s hospital operations.“
Mr. Aldag noted that participation features in the new agreement are expected to generate additional rental and other income to the Company of up to $20 million based on the future profitability of the hospital‘s operations, in addition to the increased base rent on and future repurchase price of the $3 million increase in the lease value. Aldag also commented on the Company‘s related investment in the former River Oaks hospital in Houston, “We are continuing to pursue various possibilities regarding the sale or releasing of the Houston campuses. Because the value that we have created through the Shasta structure should substantially exceed our original investment thereby mitigating any impact the River Oaks properties might otherwise cause, we remain confident that we will recover our entire investment value in the former HPA facilities.“
