Medical Properties Trust (NYSE:MPW) stock slumped 7.7% in Friday morning trading after the Wall Street Journal reported that a California regulator put on hold a deal to save one of its largest tenants.
In May, Medical Properties (MPW) said its tenant, Prospect Medical, had closed on $375M in new financings from third-party lenders in a deal that would benefit both MPW and Prospect. As part of that deal MPW would get a stake in Prospect. Earlier this month, the hospital REIT said its Q2 2023 earnings benefited from the receipt of equity in Prospect Medical Holdings in lieu of cash for 2023 owed rent and interest.
However, on July 20, a California state regulator ordered that the transaction be put on hold, according to the order that was sent to Prospect, the WSJ said. Medical Properties Trust (MPW), though, did not disclose the order in its Q2 earnings report or in its 10-Q filing.
Before the refinancing deal, Prospect had stopped paying rent to MPW and had closed two hospitals near Philadelphia.
Prospect told the WSJ that it isn’t in a position to answer questions about the California regulator’s July 20 order. Meanwhile, a Medical Properties (MPW) spokesman told the newspaper that the transaction is going through “a normal regulatory review process that was expected and is not controversial.” He said he expects the deal to gain approval, the WSJ reported.
Medical Properties Trust stock sinks after report that Prospect deal on hold (NYSE:MPW)
