Item 1.01. Entry into a Material Definitive Agreement.
On December 4, 2020, MPT Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”) and the operating partnership of Medical Properties Trust, Inc., a Maryland corporation (the “Company”), and MPT Finance Corporation, a Delaware corporation and wholly owned subsidiary of the Operating Partnership (together with the Operating Partnership, the “Issuers”), completed a public offering of $1.3 billion aggregate principal amount of their 3.500% Senior Notes due 2031 (the “Notes”) at a public offering price of 100.0% of the principal amount thereof. The Notes are governed by the terms of an Indenture, dated as of October 10, 2013 (the “Base Indenture”), among the Company, the Issuers, certain subsidiaries of the Operating Partnership and Wilmington Trust, National Association, as trustee (the “Trustee”), as supplemented by a Sixteenth Supplemental Indenture, dated as of December 4, 2020 (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”) among the Issuers, the Company and the Trustee.
Interest on the Notes is payable semi-annually on March 15 and September 15 of each year, commencing on March 15, 2021. The Notes pay interest in cash at a rate of 3.500% per year. The Notes will mature on March 15, 2031. The Issuers may redeem some or all of the Notes at any time prior to March 15, 2026 at a “make-whole” redemption price. On or after March 15, 2026, the Issuers may redeem some or all of the Notes at a premium that will decrease over time. In addition, at any time and from time to time prior to March 15, 2024, the Issuers may redeem up to 40% of the Notes at a redemption price equal to 103.5% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon to, but excluding the redemption date, using the proceeds from one or more equity offerings.
In the event of a Change of Control Triggering Event (as defined in the Indenture), each holder of the Notes may require the Issuers to repurchase some or all of its Notes at a repurchase price equal to 101% of the aggregate principal amount of the Notes plus accrued and unpaid interest to the date of purchase.
The Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Company. The Notes and the Company’s guarantee are the Issuers’ and the Company’s respective general senior unsecured obligations and rank equal in right of payment with all such entities’ existing and future senior indebtedness, including borrowings under the Operating Partnership’s senior credit facilities, and senior in right of payment to all of such entities’ future subordinated indebtedness, if any. The Notes and the Company’s guarantee are effectively subordinated to all of the Issuers’ and the Company’s secured indebtedness, if any, to the extent of the value of the collateral securing such indebtedness and are also structurally subordinated to all existing and future indebtedness and other liabilities of the Issuers’ and the Company’s respective subsidiaries, including MPT Australia Realty Trust’s borrowings under the Australian Credit Agreement (as defined in the Indenture) and certain subsidiaries’ borrowings under the U.K. Credit Agreement (as defined in the Indenture), with respect to the assets of such subsidiaries.
The Indenture contains restrictive covenants that, among other things, restrict the ability of the Issuers and their restricted subsidiaries to: (i) incur debt; (ii) pay dividends and make distributions on, or redeem or repurchase, their capital stock; (iii) make certain investments or other restricted payments; (iv) sell assets; (v) create liens; (vi) enter into transactions with affiliates; and (vii) merge, consolidate or transfer all or substantially all of their assets. The Issuers and their restricted subsidiaries are also required to maintain total unencumbered assets of at least 150% of their collective unsecured debt. All of these covenants are subject to a number of important limitations and exceptions under the Indenture.
The Indenture also provides for customary events of default, including, but not limited to, the failure to make payments of interest or premium, if any, on, or principal of, the Notes, the failure to comply with certain covenants and agreements specified in the Indenture for a period of time after notice has been provided, the acceleration of other indebtedness resulting from the failure to pay principal on such other indebtedness prior to its maturity, and certain events of insolvency. If an Event of Default (as defined in the Indenture) occurs and is continuing, the Trustee or the holders of at least 25% in aggregate principal amount of the outstanding Notes may declare the Notes immediately due and payable, except that an Event of Default resulting from certain events of insolvency with respect to an Issuer will automatically cause the Notes to become immediately due and payable without any declaration or other act on the part of the Trustee or any holders of Notes.
