Why Medical Real Estate Trust Stocks Are Plunging Today

what happened

shares of Medical Property Trust (MPW -1.76%) It was down more than 10% by 11:30 a.m. ET on Friday.weigh Healthcare REIT It was a report at wall street journal About the top 2 tenants.

so what

of wall street journal Hospital system Steward Healthcare and Prospect Medical Holdings reported today that they have hired financial advisors to help them refinance their lines of credit. These rank as his two largest tenants of the Medical Properties Trust. Stewards supplied more than 27% of the REIT’s rental income, while prospects accounted for about 10%.

The stewards hired Guggenheim Securities to refinance an asset-based loan maturing at the end of the year, according to the report. The company’s lender granted a one-year extension to the hospital owner late last year.Meanwhile, Prospect Medical Houlihan Lokey This is to help you refinance your debt. These investment banks specialize in helping financially troubled companies find solutions.

Medical Properties is providing financial support to both tenants. The company funded a $150 million loan to the stewards, $100 million of which the stewards recently repaid after selling a property in Utah. Meanwhile, the REIT provided the prospect with a $50 million loan in the first quarter. Prospect is also not paying rent on the Pennsylvania property he currently leases from the Medical Property Trust.

REITs are providing this additional assistance while these tenants strive to strengthen their financial profile.


The Medical Properties Trust has been plagued by tenant problems for the past year. The company is working with major tenants to help them get through this difficult time. The REIT is also working to reduce its exposure to both tenants. Steward’s Utah sale cuts Medical Properties’ exposure to hospital operators to 20% of rent. Meanwhile, the REIT is in a deal to sell Prospect’s Connecticut property, which is about to expire. It also plans to eventually collect the rent its tenants are paying and sell the Pennsylvania property.

The company hopes these moves will strengthen its portfolio over the long term. However, there are many uncertainties in the short term as tenants seek to strengthen their financial base. This could continue to weigh on REIT stock prices. Additionally, the risk remains that the company may eventually cut its high-yielding dividend.

With this in mind, income-seeking investors may want to sit on the sidelines and wait and see how this situation unfolds before buying REITs for dividend income. yeah.

Matthew DiLallo holds a position with the Medical Properties Trust and has the following options: In September 2023 he shorts $8 and puts on the Medical Properties Trust. The Motley Fool has a position in and recommends Houlihan Lokey. The Motley Fool has a disclosure policy.

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