Press Release

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

Company Release - 2/1/2018 4:15 PM ET

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.

MedEquities Realty Trust Logo (PRNewsfoto/MedEquities Realty Trust, Inc.)

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

This press release contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements provide our current expectations or forecasts of future events and are not statements of historical fact. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "will" and variations of these words and other similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and/or could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.  Forward-looking statements involve inherent uncertainty and may ultimately prove to be incorrect or false. For a description of factors that may cause the Company's actual results or performance to differ from its forward-looking statements, see the sections entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, which was filed with the Securities and Exchange Commission (the "SEC") on February 27, 2017, and other documents filed by the Company with the SEC. You are cautioned to not place undue reliance on forward-looking statements. Except as otherwise may be required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or actual operating results.

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SOURCE MedEquities Realty Trust, Inc.