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Entry into a Material Definitive Agreement |
On August 6, 2024, Medical Properties Trust, Inc., a Maryland corporation (the “Company”), and MPT Operating Partnership, L.P., a Delaware limited partnership and the Company’s operating partnership (the “Operating Partnership” or the “Borrower”) and certain subsidiaries of the Operating Partnership as guarantors, entered into an amendment (the “Amendment”) to the Second Amended and Restated Revolving Credit and Term Loan Agreement, dated as of June 29, 2022, by and among the Company, the Operating Partnership, the several lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement” and, as amended through and including the Amendment, the “Amended Credit Agreement”).
The Amendment modifies certain financial covenants, effective June 30, 2024 through and including September 30, 2025 (the “Modified Covenant Period”), unless the Company elects to terminate the period on an earlier date, as follows:
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maximum total leverage ratio is increased from 60% to 65%; |
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maximum unsecured leverage ratio is increased from 65% to 70% and the 10% cap on unencumbered asset value attributable to tenants subject to a bankruptcy event for purposes of determining compliance with the unsecured leverage ratio is waived; |
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minimum unsecured interest coverage ratio is decreased from 1.75:1.00 to 1.45:1.00; |
The Amended Credit Agreement limits the payment of cash dividends to $0.08 per share in any fiscal quarter during the Modified Covenant Period. In addition, the Amendment increases borrowing spreads to 300 basis points during the Modified Covenant Period and then to 225 basis points after the Modified Covenant Period. The Amendment further provides that the Borrower’s minimum permitted consolidated tangible net worth for all periods will be reduced permanently from approximately $6.7 billion to $5 billion (plus, in each case, the sum of certain equity proceeds).
Upon expiration or earlier termination of the Modified Covenant Period, the Amendment provides that the total leverage ratio, unsecured leverage ratio and minimum interest coverage ratio will automatically reset to their prior levels, without any further restrictions on cash dividends except as set forth in the Credit Agreement prior to giving effect to the Amendment.
As of August 6, 2024, approximately $590 million of borrowings were outstanding under the revolving credit facility and $200 million of term loans were outstanding under the Amended Credit Agreement. Effective upon the execution of the Amendment, the Borrower reduced the revolving commitments under the Amended Credit Agreement from $1,400,000,000 to $1,280,000,000. The Amended Credit Agreement also requires that certain proceeds of asset sales and debt transactions be applied to repay certain outstanding obligations of the Borrower, including revolving loans under the Amended Credit Agreement (which revolving loans may be reborrowed) and the Borrower’s sterling denominated term loans due January 2025.
The foregoing description of the Amendment and the Amended Credit Agreement is qualified in its entirety by the full terms and conditions of the Amendment which will be filed as an exhibit to the Company and Operating Partnership’s combined Quarterly Report on Form
10-Q
for the quarter ended September 30, 2024.
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Results of Operations and Financial Condition. |
On August 8, 2024, the Company issued a press release announcing its financial results for the three and six months ended June 30, 2024. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form
8-K
and is incorporated herein by reference. The information in this Current Report on Form
8-K,
including the information set forth in Exhibit 99.1 and Exhibit 99.2 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. In addition, this information shall not be deemed incorporated by reference in any filing of the Company with the Securities and Exchange Commission, except as expressly set forth by specific reference in any such filing.
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Creation Of A Direct Financial Obligation Or An Obligation Under An Off-Balance Sheet Arrangement Of A Registrant. |
The information set forth under Item 1.01 of this Current Report hereby incorporated by reference into this Item 2.03.
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Financial Statements and Exhibits. |
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