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Everyone Wondered How a Private Equity Firm Would Make Money in a Leveraged Buyout of a Struggling Non-Profit Hospital Chain - Now We Know

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  • Eileen Appelbaum

Abstract

On Monday, September 26, private equity firm Cerberus Capital Management announced that Medical Properties Trust Inc. (MPT) would buy all of Steward Health Care’s hospital properties. The real estate investment firm agreed to pay $1.2 billion for the properties and a further $50 million for a 5 percent equity stake in the health care system. Still struggling financially after six years of private equity ownership, Steward will lease back the properties for its hospitals and other facilities, paying rent to MPT. The deal will pay back Cerberus’ initial investment in Steward and more, although the total amount the PE firm and its investors will receive has not been revealed. The deal will also pay down all of the company’s more than $400 million debt and provide a payoff for top executives. Steward will receive an undisclosed amount to try once again to revive its failed strategy to acquire additional hospitals outside of Massachusetts and grow into a national powerhouse.

Suggested Citation

  • Eileen Appelbaum, 2016. "Everyone Wondered How a Private Equity Firm Would Make Money in a Leveraged Buyout of a Struggling Non-Profit Hospital Chain - Now We Know," CEPR Reports and Issue Briefs 2016-18, Center for Economic and Policy Research (CEPR).
    • Handle: RePEc:epo:papers:2016-18
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    JEL classification:

    • G - Financial Economics
    • G2 - Financial Economics - - Financial Institutions and Services
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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