MedEquities Realty Trust Secures Option To Purchase An Inpatient Rehabilitation Hospital From Cobalt Rehabilitation Hospitals With $5.4 Million Construction Loan

NASHVILLE, Tenn., Feb. 1, 2018 /PRNewswire/ -- MedEquities Realty Trust, Inc. (NYSE: MRT) announced that it provided a construction mezzanine loan of $5.4 million to Hicks Ventures to partially fund the construction of a 42-bed, 57,275-square-foot inpatient rehabilitation facility in the Louisville, Kentucky suburb of Clarksville, Indiana. The three-year loan was fully funded at closing and has an annual interest rate of 9.5%, which has a claw-back feature that would equate to a 15.0% rate from the inception of the loan should MedEquities elect not to exercise its purchase option.

The loan is subordinate to a $15.8 million construction loan provided by a large commercial bank and provides MedEquities the exclusive option to purchase the new facility upon completion for approximately $26.0 million pursuant to a 20-year triple-net master lease guaranteed by Cobalt Medical Partners and Cobalt Rehabilitation Hospitals at an initial lease rate of 9.0%.

Cobalt Rehabilitation Hospitals currently operates four inpatient rehabilitation hospitals in Arizona, Kansas, Louisiana and Texas and has two additional hospitals under construction in North Dakota and Texas. Cobalt's business model is to enhance the traditional rehabilitation hospital with a special focus on a broader range of neurological conditions, including traumatic brain injuries (TBI) and concussions.  Cobalt creates centers of excellence by staffing with special clinical expertise and equipping its facilities to meet the unique treatment needs of affected individuals such as war veterans, athletes, accident victims and first responders. Cobalt's development partner, Hicks Ventures, has developed over $1.6 billion in commercial real estate projects and owns and manages a current portfolio totaling one million square feet.

John McRoberts, Chief Executive Officer and Chairman of MedEquities, noted, "Cobalt's success in high bed need markets and its relationships with the U.S. Armed Services, professional athletes and national foundations and alliances engaged in TBI treatment and awareness, as well as Hicks Ventures' long track record, make this a very compelling investment opportunity for us. The creative nature of this financing and establishment of new relationships help us expand our presence in inpatient rehabilitation hospitals in a very disciplined fashion while positioning us to work with Cobalt to meet their current and future growth needs."

About MedEquities Realty Trust

MedEquities Realty Trust (NYSE: MRT) is a self-managed and self-administered real estate investment trust that invests in a diversified mix of healthcare properties and healthcare-related real estate debt investments. The Company's management team has extensive industry experience in acquiring, owning, developing, financing, operating, leasing and monetizing many types of healthcare properties and portfolios. MedEquities' strategy is to become an integral capital partner with high-quality and growth-oriented facility-based providers of healthcare services on a nationwide basis, primarily through net-leased real estate investment. For more information, please visit www.medequities.com.

Forward-Looking Statements

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SOURCE MedEquities Realty Trust, Inc.