2024-04-09 21:45:32 ET
Summary
- Medical Properties Trust's focus on hospitals funded by private equity bankers introduces unique risks that are different from those of a typical operator.
- Efforts to reduce debt and stabilize earnings face obstacles, including rising interest, affecting refinancing efforts.
- Aggressive accounting and asset sales to manage debt may not be sufficient to address MPW's underlying issues, impacting its valuation.
Investment Thesis
At first glance, Medical Properties Trust ( MPW ) seems like an undervalued dividend pick. It owns and leases 420 hospitals/clinics under "triple-net" contracts that pass all property-related costs (and responsibilities) to its 54 tenants, allowing it to run an impressive $18.3 billion portfolio with only 131 employees. As a REIT, it distributes most of its income to shareholders, making it a rent conduit that links "economy-proof" hospitals to income-oriented investors.
But when I last covered MPW in 2022, I was waving red flags about the CEO's excessive salary, the three corporate jets bought on the shareholder's dime, Social and Governance shortcomings, and conflicts of interests in a debt-fueled growth strategy that screamed trouble. I ended up saying investors might be better off parking their money elsewhere....
Read the full article on Seeking Alpha
For further details see:
Medical Properties Entangled With Private Equity Playbook