The future of Crozer Health is as murky as ever as the Delaware County health system’s landlord, a massive real estate investment firm based in Alabama, undertakes complicated financial maneuvers to mitigate a troubled investment.
The landlord, Medical Properties Trust Inc., known as MPT, acquired the health system’s real estate in 2019required Crozer and other hospitals to rent their facilities from MPT. But since last year, Prospect has not been being paying rent. In February, MPT conceded that the real estate occupied by Crozer’s four Delaware County hospital buildings wasIn an update last week, MPT told Wall Street analysts that it plans to convert its lease on Crozer’s buildings into a first-lien mortgage. Two experts said the change is highly unusual.
Bankruptcy rules also treat a mortgage differently than a lease. During bankruptcy, a mortgage can be renegotiated for a lower interest rate or a lower principal amount. That’s not true of a lease. It can only be accepted or rejected in bankruptcy.Crozer and its parent company, Los-Angeles-based Prospect Medical Holdings Inc.
Since early last year, Prospect, which started in California and owns seven hospitals there, has been trying to sell its East Coast operations. It owns hospitals in Connecticut and Rhode Island, in addition to those in Pennsylvania.
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