Steward Healthcare pursued for $50 million in US rental dues amid year of financial, legal woes

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.

                           

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9 Comments
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Mark Sant (Misha)
Mark Sant (Misha)
1 month ago

With Stewart in such a bad financial state, fat chance Malta shall ever recover any of the amount due to it by the company.

Albert Beliard
Albert Beliard
1 month ago

As the Mafia would say, “forget about it” Malta.

The situation is going to get worse after the TRUTH is heard, so they should remember that 911 is for an emergency.

paul pullicino
paul pullicino
1 month ago

Just imagine if Delia and the PN had NOT got the contract annulled and Steward Vitals kicked out finally in 2023 – Robert Abela would be at this very moment pushing another 80 million down their bankrupted throats in 2024.

makjavel
makjavel
1 month ago
Reply to  paul pullicino

may be he is.

Francis Said
Francis Said
1 month ago

Here in Malta we really have a knack of attracting sharks to our shores.

John
John
1 month ago
Reply to  Francis Said

We have enough sharks on our own shores and do not need to look overseas for more sharks. However, the overseas sharks may be more convenient for the local sharks.

Angelo Bugeja
1 month ago

One has to imagine how much they are going to contribute towards their dues to our beloved Malta.

Angelo Bugeja
1 month ago

One can imagine how much our country is going to get back from monies paid to Steward Healthcare and VGH. All concerned for this deal are responsible for retrieving our country’s dues.

saviour mamo
saviour mamo
1 month ago

This is unbelievable. In the US Steward Care had to pay millions in rental dues. In our country, Steward Care were given ownership to three hospitals free and on top of this the government gave them over €400 million. Those who made it possible should be shot.

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