A real estate firm has objected to a proposed $439 million deal that would lead to the health system Orlando Health buying three hospitals in Brevard and Indian River counties as part of the bankruptcy of hospital operator Steward Health Care.
Medical Properties Trust, which owns the hospital properties and leases them to Steward, argued in a court document Monday that Steward had not properly followed bidding procedures because it did not distinguish between the values of hospital operations and the real estate.
“There is no basis at all for a scheme under which a non-debtor real estate owner can be compelled not just to sell its property, but to accept whatever (capped) price that the buyer dictates,” MPT’s attorneys wrote.
But Steward’s attorneys Monday filed a complaint that said Steward and its affiliates, “consistent with their rights under the bidding procedures, allowed bidders to submit bids that contemplate a single purchase price for the relevant hospital’s or hospitals’ operations and real estate combined.”
The complaint, which accused MPT of interfering in the bidding and sales process, seeks a judgment “allocating the amount of value attributable to hospital operations and other estate assets, on one hand, and hospital real estate, on the other.”
A proposed agreement filed last week said Orlando Health would pay $439 million in cash for Melbourne Regional Medical Center, Rockledge Regional Medical Center and Sebastian River Medical Center, though the amount could be adjusted based on a series of factors.
Orlando Health is designated as what is known in bankruptcy cases as a “stalking horse bidder,” which sets an initial bid.
An emergency hearing has been scheduled for Thursday on entry of stalking horse bid protections.
Other potential buyers of the three hospitals face a Monday deadline for submitting bids, according to a document filed in U.S. Bankruptcy Court in the Southern District of Texas.
Dallas-based Steward Health Care filed for Chapter 11 bankruptcy in May. In addition to Florida, it has operated hospitals in Arizona, Arkansas, Louisiana, Massachusetts, Ohio, Pennsylvania and Texas.
Melbourne Regional Medical Center and Rockledge Regional Medical Center are in Brevard County, while Sebastian River Medical Center is in Indian River County.
In addition to those hospitals, Steward owns Coral Gables Hospital, Hialeah Hospital, North Shore Medical Center and Palmetto General Hospital in Miami-Dade County and Florida Medical Center in Broward County.
Steward in 2021 acquired the Miami-Dade and Broward hospitals from Tenet Healthcare Corp.
