Medical Properties Trust enters new lease deal for six California facilities

Medical Properties Trust (MPW) announced a lease agreement with NOR Healthcare Systems in conjunction with NOR’s bid for Prospect Medical Group’s California operations. The transactions are expected to close in 2025, subject to approval by applicable regulatory agencies. The six facilities will be subject to a master lease with initial annualized rent of $45M, virtually identical to Prospect’s once-scheduled 2025 rent, and CPI-based annual rent escalators beginning in 2026. All rent will be deferred for a period of six months, and 50% of rent will be deferred for an additional period of six months, after which the aggregate deferred rent will be paid over the remaining lease term. MPT has committed to fund up to $60M in seismic improvements as may be required by California regulators over the next four years, which will increase the lease base and result in additional rent at the prevailing lease yield.