US-based hospital operator Steward Health Care has secured court approval for a settlement with its landlord, Medical Properties Trust (MPT), amid its ongoing bankruptcy proceedings.

US Bankruptcy Judge Christopher Lopez sanctioned the agreement, which allows Steward to proceed with the sale of its hospital operations.

It follows the recent approval of Steward's sale of three Florida hospitals for $439m.

The settlement resolves a contentious dispute between Steward and MPT over the division of future sale proceeds.

Steward had previously sued MPT, but under the new agreement, both parties will drop potential claims.

MPT will waive substantial lease obligations, allowing Steward to transition its hospital operations to new operators and avoid further operating expenses and litigation.

According to Steward's company lawyer Ray Schrock, transferring the hospitals to new operators will prevent Steward from facing extra operating costs and avoid the risk of potentially expensive legal disputes.

Schrock confirmed that the company would continue to finalise the settlement with stakeholders.

Lopez is now expected to decide on granting final approval for the deal later this month.

The deal involves 23 hospitals that will remain operational after the sale, with MPT arranging leases with four tenants to operate 15 hospitals across several states.

These new operators took over on 11 September, with MPT expecting to receive around $160m in annualised cash rental payments upon stabilisation by the fourth quarter of 2026.

To facilitate a smooth transition, MPT has agreed that cash rent payments for the 15 properties will be deferred until the end of this year.

Payments are expected to start early next year, reaching about half of the fully stabilised rent by the end of next year and full stabilisation by the fourth quarter of 2026.

Last month, Steward received approval from Lopez for the sale of its physician network, Stewardship Health, to Rural Healthcare Group for $245m.