How cash injections from a real estate firm boosted Steward's finances

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When Dallas-based Steward Health Care was controlled by private equity firm Cerberus Capital Management and ran into financial trouble, it received hundreds of millions of dollars from a real estate firm, The Wall Street Journal reported June 21. 

Documents obtained by the Journal found that as losses mounted for Steward, Medical Properties Trust provided financial help to the 34-hospital system through a series of complex deals. 

In one instance the real estate firm provided $200 million to buy Steward's assets, valued at $27 million. It also later refinanced the debts Steward owed Cerberus. 

The financial documents show several instances where Medical Properties Trust stepped in to help boost cash for Steward. In particular, Steward acquired two hospitals in Utah in 2017. Under the deal, Medical Properties Trust gave Steward about $700 million in mortgages for the properties. A few years later, in 2020, Medical Properties Trust agreed to purchase the two Utah hospital properties from Steward, erasing the mortgages and paying Steward an extra $200 million for what the real estate firm said was its relative fair value. The properties were then leased back to Steward in exchange.

In a different deal that involved Steward's international business in Malta, Medical Properties Trust formed a new joint venture with the founder of Steward, Ralph de la Torre, MD, and other executives that is separate from Steward. The real estate firm agreed to lend the joint venture $205 million so it could acquire the international assets from Steward. Financial documents show that the assets that were sold were valued at $27 million.

"All of our sale-leaseback transactions are subject to independent valuation and analysis," Steward told the Journal.

Cerberus last year sold its 90 percent stake in Steward to a group of physicians in exchange for a note from Cerberus. In January, Medical Properties Trust stepped in and gave Steward a new $335 million loan that would extinguish debt Steward owed to Cerberus. 

Steward didn't disclose loan terms, but said the deal allowed it to cut ties with Cerberus.

The close relationship between Steward and Medical Properties Trust was a result of dealmaking by Cerberus. Under Cerberus' control, Steward sold a significant portion of its real estate to Medical Properties Trust, which leased the buildings back to Steward. Medical Properties Trust also has a 10 percent stake in Steward. 

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