ONTARIO, Calif.--(BUSINESS WIRE)--Prime Healthcare Services, Inc. has completed the purchase of real estate of four facilities that comprise Saint Clare’s Health and St. Francis Medical Center from Medical Properties Trust (MPT) for $350 million. The acquisition was funded with $250 million of cash on hand and a $100 million Promissory Note that is carried by MPT. The transaction results in a $215 million reduction in Prime’s debt obligations to MPT related to these assets.
Prime Healthcare is the largest physician-founded and led health system in the nation, recognized for award-winning care and forwarding health equity by transforming hospitals into valued community assets. Prime has invested over $2 billion in capital expenditure to improve and strengthen these hospitals and advance their ability to provide clinically excellent care.
MPT previously owned the real estate of Saint Clare’s and St. Francis since Prime’s acquisition of the respective facility operations in 2015 and 2020.
“Prime’s continued acquisition of the hospital real estate assets is a testament to the significant value that Prime’s unique operating model has generated throughout its national portfolio and indicative of the continued investment Prime has made into the markets it so proudly serves,” said Steve Aleman, Prime’s Chief Financial Officer. “Over the last four years, Prime has re-invested over $872 million back into the company through these acquisitions, and as a result, has further solidified its quality-focused mission while unencumbering the facilities from debt.”
Prime’s purchase of the real estate is noteworthy because the hospital real estate was under fixed lease agreement with MPT that included a lease maturity date of August 2035 and effective lease rates that at end of lease that would have approximated 14.25% and 11.25% for the respective properties. However, due to market conditions, Prime was able to negotiate an early buy-out of the assets for $350 million resulting in a nominal increase over the initial lease base of the assets resulting in material annual cash flow savings.
Additionally, as part of the negotiated transaction with MPT, Prime successfully negotiated purchase options for the remaining real estate still under lease with MPT related to the operations at Lake Huron Medical Center (MI), Saint Michael’s Medical Center (NJ), St. Mary’s Medical Center (MO) and St. Joseph Medical Center (MO). The real estate purchase options for the four remaining facilities can be exercised by Prime at any time per its discretion with no prepayment penalty.
This transaction is a continuation of Prime’s initiative over the last several years to acquire the real estate for all its operations and reduce the level of debt associated with the facilities. Prime Healthcare Services now either owns and/or has a defined purchase option for all the real estate assets related to its 30 hospital locations. Prime Healthcare Foundation owns and operates another 14 not-for-profit facilities in six states.
Together, the health system stands apart from other health systems by its unique ability to transform financially struggling hospitals while delivering award-winning, value-based care for more than 600 communities across the nation. Prime has earned national recognition with hospitals among the nation’s best as 100 Top Hospitals 68 times, more than 200 Healthgrades clinical quality awards and recognition for health equity, social responsibility and clinical excellence from the Lown Institute.
About Prime Healthcare: Prime Healthcare is an award-winning health system operating 44 hospitals and more than 300 outpatient locations in 14 states, providing over 2.6 million patient visits annually. It is one of the nation’s leading health systems with nearly 45,000 employees and physicians dedicated to providing the highest quality healthcare. Fourteen of the Prime Healthcare hospitals are members of the Prime Healthcare Foundation, a not-for-profit public charity. Based in Ontario, California, Prime Healthcare is nationally recognized for award-winning quality care and has been named a Top 10 and Top 15 Health System by IBM Watson Health. To learn more, please visit www.primehealthcare.com.
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