Apollo is Now “Sole Negotiator” Controlling the Fate of Steward Hospital Properties
Washington, D.C. – U.S. Senators Edward J. Markey (D-Mass.) and Elizabeth Warren (D-Mass.) requested information from private equity firm Apollo Global Management (Apollo) on the company’s role in Steward Health Care’s (Steward’s) bankruptcy, and urged Apollo to work in good faith to facilitate the sale of Steward’s Massachusetts hospitals.
Steward filed for bankruptcy following years of mismanagement and profiteering by its executive team, led by Ralph de la Torre, private equity firm Cerberus Capital Management (Cerberus), and corporate landlords Medical Properties Trust (MPT) and Macquarie Investment Partners (MIP).
“Apollo’s role in the ongoing Steward bankruptcy has thus far received little scrutiny,” wrote the senators. “But in 2022, your firm provided a $920 million loan to MIP and MPT – secured by the hospitals – when those two companies created the joint venture that resulted in MIP’s 50% partnership in the Massachusetts leases.”
These leases saddled Steward’s hospitals with massive financial obligations. Steward’s hospitals entered bankruptcy with billions of dollars of debt resulting from the leases they were forced into as a result of MPT, MIP, and Apollo’s corporate financial engineering.
The bankruptcy court approved a rejection of the Massachusetts Master Lease at a hearing on July 31. As buyers of Steward’s Massachusetts hospitals negotiate new leases or reach deals to buy the properties, these new developments have left Apollo as the “fulcrum” of negotiations.
“Last week, a federal bankruptcy judge approved Steward’s request to close Carney Hospital and Nashoba Valley Medical Center, two of the eight Steward properties in Massachusetts,” continued the senators. “The fate of the remaining six hospitals remains uncertain while bid negotiations continue – in large part because potential buyers had been unwilling to assume the onerous leases held by MPT and MIP.”
And earlier this week, MPT and MIP, “agreed to turn (the lease) over to (Apollo) leaving lease negotiations with prospective buyers in the hands of … Apollo.”
“Given . . . Apollo’s role as the ‘fulcrum’ in these negotiations, we ask that you work in good faith with Steward, Massachusetts officials, and other stakeholders to facilitate the sale of the remaining six Steward hospitals in Massachusetts to operators that will continue serving their communities,” concluded the senators.
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