Medical Properties to pay £800M for UK behavioral health facility portfolio

Healthcare real estate investment trust Medical Properties Trust Inc. agreed to acquire a portfolio of behavioral health facilities across the U.K. for about £800 million.

The facilities are owned and operated by U.K. behavioral health provider Priory Group, whose operations will be acquired by affiliates of Waterland Private Equity from Acadia Healthcare Co. Inc.

Following Waterland's acquisition of Priory, the properties to be bought by the REIT will be subject to long-term sale-leaseback agreements with Priory. The leases will carry an initial fixed term of 25 years, two 10-year extension options and annual rent escalators linked to U.K. inflation and subject to a 2% floor.

The REIT expects the sale-leaseback deals to close during the first half of 2021.

Medical Properties will pre-fund the £800 million real estate purchase price by way of a secured interim acquisition loan to Waterland in the same amount, which will be financed at the closing of Waterland's acquisition of Priory, expected in the first quarter.

At the time of closing of Waterland's purchase of Priory, the REIT will offer a separate £250 million short-term bridge loan to the buyer and acquire a 9.9% stake in the equity of the operator for a nominal amount.

Medical Properties expects the transaction to lead to immediate accretion to its most recently communicated annual run-rate expectations for per-share normalized funds from operations of $1.68 to $1.71.

The REIT noted that in the 2020 fourth quarter, it invested $470 million in five separate transactions.