Medical Properties Trust closes £631m 10-year loan secured by UK hospital portfolio

  • 24th May 2024

Medical Properties Trust has this week announced the completion of a deal to refinance debt secured against dozens of UK hospitals.

The £631m deal will be among the biggest transactions in the UK healthcare property sector in recent months.

And it will encompass 27 hospitals across the UK, all of which are operated by Circle Health on long-term leases.

The lending group behind the deal comprises a consortium of global institutional, insurance, and pension investors led by Song Capital, a European real estate investment firm.

Edward K Aldag Jr, chairman, president, and chief executive of Medical Properties Trust, said: “In the first five months of the year, we have raised $2.4bn of liquidity, comfortably exceeding our initial full-year liquidity target of $2.0bn, as sophisticated third-party investors continue to recognise the value embedded in our leading portfolio of hospital real estate assets.

“The terms of this most-recent financing prove our ability to borrow at long-term fixed costs well inside market-implied rates on our outstanding debt and significantly extend the overall duration of our debt maturities.”

The transaction includes 27 of the 36 facilities MPT leases to Circle Health in the UK and is being executed at a conservatively-underwritten loan-to-value ratio in the low-40% range – implying an approximate 20% increase in value since MPT acquired the majority of the underlying properties approximately four years ago, even during a period of cap rate expansion and rising interest rates.

The loan carries a fixed cash pay rate of 6.9% over the 10-year term excluding debt issuance costs.

The company intends to use the proceeds to repay outstanding debt, including the company’s £105m secured term loan maturing in December 2024, borrowings under its revolving credit facility, and a portion of its GBP term loan maturing in early 2025, as well as for other general corporate purposes.

Goodwin Procter (UK) LLP acted as legal adviser for MPT and Slaughter and May, CBRE, and Rothschild & Co advised Song Capital.


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