The parent company of Holy Family Hospital, Haverhill and Methuen, is selling and leasing back properties to pay off debt, make capital improvements and expand its business.
In a $1.25 billion real estate sale-leaseback transaction announced Monday, Steward Health Care System, Boston will, among other things, give investor Medical Properties Trust, Birmingham, Ala., a $50 million “limited equity stake” in Steward, allowing the privately owned health care company “to expand nationally.” The remaining $1.2 billion represents an “investment in hospital real estate,” including more than $100 million for capital improvements at existing Steward facilities. Steward will continue to manage all hospital properties and other facilities, including Holy Family campuses at the former Merrimack Valley Hospital, Haverhill and in Methuen. The deal also “returns an initial investment” in Steward nearly six years ago by Cerberus Capital Management, New York City.
“This investment, along with Cerberus’ continued commitment sets the stage for Steward’s future,” said Steward founder, Chairman and CEO Ralph de la Torre. “The Medical Properties Trust investment will provide Steward a second source of capital funding. This ensures Steward will continue to provide high quality health care at an affordable cost in New England, and enables us to grow our proven quality model nationally,” he added. “We believe this investment is a strong validation of our business model and an endorsement of our ability to scale nationally.”
The deal “unlocks the value of Steward’s real estate assets, pays off corporate debt, strengthens the company financially, broadens its ownership base and will provide fresh capital to fund expansion into regions of the country comfortable with the integrated Accountable Care Organization model honed by Steward,” a statement added.
Founded in November 2010 with investment from Cerberus, Steward “built an integrated portfolio of inpatient and outpatient services in the communities it serves.” Steward is one of the largest employers in Massachusetts with more than 17,000 employees and estimated $2.3 billion in revenue in 2016.