Medical Properties Trust Announces New Lease Agreement for Northern California Hospital Asset
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."
Shasta Regional Medical Center is a 246-bed regional acute care hospital serving Northern California. The healthcare facility offers a range of services including emergency medicine, critical care, general/specialty surgery, oncology, diagnostic cardiac, neurosciences and orthopedic care.
Redding is the center of trade and commerce for the upstate region of northern California. The city is experiencing a shift in its economic base toward service sectors including medical, retail and tourism.
About Medical Properties Trust, Inc.
Medical Properties Trust, Inc. is a Birmingham, Alabama based self-advised real estate investment trust (REIT) formed to capitalize on the changing trends in healthcare delivery by acquiring and developing net-leased healthcare facilities. These facilities include inpatient rehabilitation hospitals, long-term acute care hospitals, regional acute care hospitals, ambulatory surgery centers and other single-discipline healthcare facilities, such as heart hospitals and orthopedic hospitals.
The statements in this press release that are forward looking are based on current expectations and actual results or future events may differ materially. Words such as "expects," "believes," "anticipates," "intends," "will," "should" and variations of such words and similar expressions are intended to identify such forward-looking statements, which include statements including, but not limited to, any incremental income and future profitability related to the operations of Shasta Regional Medical Center, and the value of the River Oaks hospital. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results of the Company or future events to differ materially from those expressed in or underlying such forward-looking statements, including without limitation: national and economic, business, real estate and other market conditions; the competitive environment in which the Company operates; the execution of the Company's business plan; financing risks; the Company's ability to attain and maintain its status as a REIT for federal income tax purposes; acquisition and development risks; potential environmental and other liabilities; and other factors affecting the real estate industry generally or healthcare real estate in particular. For further discussion of the facts that could affect outcomes, please refer to the "Risk Factors" section of the Company's Form 10-K for the year ended December 31, 2007 and Form 10-Q for the quarterly period ended June 30, 2008. Except as otherwise required by the federal securities laws, the Company undertakes no obligation to update the information in this press release.
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