Capella Healthcare, the privately held, Franklin, Tenn.-based chain, will be sold to a real estate investment trust in a $900 million deal.
Rumors surfaced two years ago that Capella's private equity owner GTCR had hired an investment bank to explore a sale. But the company's CEO, Michael Wiechart, denied at the time that takeover plans were in the works.
Under the current deal, which is expected to be completed in the second half of the year, Medical Properties Trust will purchase Capella's real estate assets while operations of the 11 hospitals will be jointly managed by both the REIT and Capella's senior management.
The deal marks the second transaction this year in which a REIT purchased a hospital operating company and separated its real estate from its operations. In April, Ventas entered into a $1.75 billion deal to acquire Ardent Medical Services from its private equity owner Welsh, Carson, Anderson & Stowe.
As more care moves to the outpatient setting, hospitals are hoping to find value in their bloated real estate portfolios. For REITs, the unused space presents an opportunity to expand into lower-acuity services such as rehabilitation and assisted living.
Capella's current leadership team, including Wiechart, will remain in place following the transaction. The deal came out of a year-long evaluation of different opportunities, according to a press release.
GTCR has owned Capella since its founding in 2005.
For 2014, Capella reported a net loss of $25.1 million on $713.4 million in revenue compared with its 2013 net loss of $31.8 million on $668.1 million in revenue.
Capella last week said that it plans to sell its majority stake in four Tennessee hospitals to Ascension subsidiary St. Thomas Health, its joint venture partner in the state since 2012. The chain has been selling assets in Tennessee and Missouri but recently agreed to buy two hospitals in the Pacific Northwest.