Steward Health Care System is being actively pursued for millions of dollars of unpaid rent by the US-based Medical Properties Trust Inc, with the beleaguered company being given six months to sort out its finances.

As of the end of 2023, Steward accumulated $50 million in rental dues and has been given a bridge loan of $60 million and a deferral of rent until asset liquidation or mid-year 2024.

Steward “delayed” paying the company a portion of its September and October rent.

According to reports in international media, Steward’s financial woes are marked by liquidity issues and continue despite the selling of its laboratory business and the procurement of capital financing.

Steward told its landlord that its financial issues were due to “significant changes to vendors payment terms”.

Steward also said it had intensified measures to improve “overall governance”, including establishing a transformation committee comprised of newly appointed independent directors and submitting periodic cash activity and asset sale progress reports to its creditors, according to a statement from the Trust.

This comes on top of $225 million in written-off straight-line rent receivables, $25 million in rent receivables from another agreement in Massachusetts, and $100 million in unpaid rent receivables – almost $400 million.

Medical Properties Trust is a real estate investment Trust that specialises in providing hospital properties. Steward is its biggest tenant, holding around a quarter of its assets.

It has told Steward that partial rent payments must restart in February 2024, with $9 million payable in Q1 and $44 million in Q2.

The news led to the Trust’s shares falling by 32% on 5 January, the most significant drop in its history.

Steward Health Care has 22 years remaining on its master lease agreement with the Trust, which has been called into question due to the current level of debt.

It is also reported that Steward is trying to save itself by potentially selling or re-tenanting certain hospital operations. But the reality is that Steward has not been meeting its obligations for quite some time.

In April 2023, multiple media reported on the”embattled finances” of various Steward Health Care properties. It was accused of owing millions to a dialysis company called Fresenius, blaming the delay in paying for “labour shortages, broken supply chains, increased costs of goods and labour, resource deficiencies and rapid inflation.”

In May, the Trust was “downgraded” due to its exposure to Steward and had to bring on financial advisers to help refinance credit lines.

A month later, the Trust sold $105 million of its interest in Steward’s syndicated asset-backed credit facility to a leading global assets manager.

Then, in July, Steward was sued by PalAmerican, a security company, for some $11 million it owed after going back on a deal made to catch up on its already overdue bills.

It was then sued by the US federal government for violating the False Claims Act over claims for medicare payments concerning a doctor who pocketed $5 million in incentives. It settled the case for $4.7 million.

In August, The American Prospect reported that, in Texas alone, Steward was sued by a linens provider, two staffing agencies, an HVAC contractor, a supplier of bodybags, and drug detox services, totalling over $13 million.

In December, it announced it would close a hospital in Massachusetts due to financial difficulties.

Steward Health Care purchased a concession to run three public hospitals in Malta in a deal that was later found to be wracked with fraud and corruption involving disgraced former prime minister Joseph Muscat and his former minister Konrad Mizzi, as well as former OPM chief of staff Keith Schembri.

Steward pointed fingers at the government, while Vitals Global Healthcare’s former director, Sri Ram Tumuluri, filed for whistleblower status in the US. He claimed he was coerced into handing over the concession to Steward for €1 under the threat of death and out of fear for the safety of his family.

A magisterial inquiry on the deal is awaiting conclusion.