Sharon Regional's parent company owes $50M in unpaid rent

Jan. 9—Steward Health Care System, the parent company of Sharon Regional Medical Center's, owes $50 million in unpaid rent to a company that owns most of its buildings.

Medical Properties Trust Inc. reported that figure Tuesday in a news release as the amount it says it's owed by Dallas-based Steward for back rent as of Dec. 31.

MPT is a real estate investment trust based in Birmingham, Ala., that describes itself as investing in healthcare facilities. Steward leases buildings from MPT.

Steward delayed a portion of its September and October rent, MPT said in the release.

"Despite its obtaining additional working capital financing and selling its non-core laboratory business in the fourth quarter of 2023, Steward recently informed MPT that its liquidity has been negatively impacted by significant changers to vendors' payment terms," MPT said.

As a result, MPT said it plans to "accelerate its efforts to recover uncollected rents and outstanding loan obligations" from Steward, the company said in the release.

Sharon City Manager Bob Fiscus said the hospital — the city's largest employer — is current on all city taxes and fees. Fiscus called Sharon Regional a local asset that is not directly associated with the issue.

"Our understanding is that this is not going to impact Sharon Regional locally," Fiscus said of Steward Health's situation. "We value having the hospital in our city and appreciate having a vibrant healthcare system and employer for our residents and surrounding community."

The city will continue in strengthening its ties and collaborative efforts with the healthcare provider, he added.

Sharon Regional officials referred questions on the matter to Steward's headquarters. A message left with the parent office Tuesday afternoon wasn't immediately returned.

MPT added it had hired a financial adviser and separate law firm to recover the uncollected debt and outstanding loans.

But the company also said it's working with Steward to work out a payment deal.

Steward, MPT said, is looking for ways to raise funds "including the potential sale or re-tenanting of certain hospital operations" along with other activities. Re-tenanting generally refers to a new renter taking over an existing or new lease.

For its part, MPT said it has agreed to defer funds owed by Steward under a lease agreement, of around $55 million in 2024 rents, until the earlier of June 30 or "completion of anticipated asset sales."

Steward touts itself as the largest physician-owned, private, for-profit health care network in the U.S. MPT is publicly traded on the New York Stock Exchange under the symbol: MPW.

Rod Wilt finds himself in an unusual position. Wilt is executive director of Penn-Northwest Development Corp., Mercer County's lead economic development agency. He also sits on Sharon Regional's community board. The board serves as an advisory group.

"If they're not making payment that's not a good thing," Wilt said.

Sharon Regional plays a crucial role in the area, he said.

"They are a huge employer and a huge part of the healthcare delivery network," Wilt said. "They are absolutely vital to the Shenango Valley and Mercer County."

For decades, Sharon Regional was Mercer County's top employer. The hospital system now ranks sixth among the county's top 50 employers, according to the state Department of Labor and Industry's second quarter 2023 report, the most recent available.

The report does not give employment numbers but Sharon Regional in the past had more than 1,000 employees.

Wabtech's Grove City locomotive engine plant, formerly owned by GE Transportation, is the county's top employer, followed by state government, Walmart, Hermitage-based Joy Cone Co. and the UPMC Horizon hospital system.

Steward also owns Trumbull Regional Medical Center and Hillside Rehabilitation Hospital in Trumbull County, Ohio.