The most recent example of this can be seen by looking at the decision of one of its tenants, Pipeline Health, to file for Chapter 11 bankruptcy protection on Monday of this past week. But one thing that those who are bearish about the company will point to as a reason to not be happy is the company's exposure to some assets that are questionable in nature. And the lease involved $104 million in rent being paid to it.Īll of these things combined should result in roughly $1 billion worth of liquidity accruing to the company as the deals closed. The sale of the hospitals is being done at a price of $457 million, more or less matching the price the company paid for them in August of 2019. In short, Medical Properties Trust decided to sell three Connecticut hospitals to its current lessee and the hospital operations from Prospect to a separate party. But of course, the largest transaction came on October 6th. The company also, on that day, announced that it had sold 11 assets, nine of them being general acute hospitals, and the other two being medical office buildings, to a firm called Prime Healthcare in a deal worth $360 million on a net basis. That deal involves a scenario where the company has been able to re-lease its Watsonville Community Hospital to Pajaro Valley Health Care District Corporation in a move that brings Medical Properties Trust an immediate capital injection of $30 million As repayment for financing that it provided to allow that hospital to remain open during bankruptcy proceedings of its prior tenant. as part of the arrangement, Medical Properties Trust still gets to keep its minority equity interest in that enterprise, giving investors the opportunity to generate further upside from those assets moving forward.Īnother deal was announced by the company on September 7th. This particular deal, which is slated to close next year, will allow Medical Properties Trust to be paid $200 million as compensation for the $190 million investment that the company made in Springstone in October of 2021, most of which was made in the form of a loan. For instance, on August 29th, management announced that it had reached an agreement with LifePoint Health ( LPNT) whereby that company had decided to acquire a majority interest in Springstone Health Opco from the current management group based on an enterprise value of $250 million. Of course, this is not to say that we haven't had some developments. But the fact of the matter is that no further quarterly data has been released. You would think that the company had come out with some awful fundamental data since the publication of that article. But since then, shares have taken a beating, generating a loss for investors of 36.6% at a time when the broader market was down 13.5%. At the end of the day, I ended up keeping my ‘strong buy’ rating on the company, reflecting my belief that it should do incredibly well moving forward. At the same time, however, I felt that shares were cheap enough to warrant material upside from that point on. In that article, I talked about how the market seemed to be reacting in response to management failing to keep up with the expectations that analysts had set for the firm. The last time I wrote an article about Medical Properties Trust was back in the middle of August of this year. All things considered, I cannot help but keep my ‘strong buy’ rating on the enterprise for now, reflecting my belief that it's likely to significantly outperform the market for the foreseeable future. But when you factor in the company's stability, as well as other signals, then the picture is not as bad as many fear - there is little to conclude other than that the market is behaving in an insane fashion when it comes to this particular firm. At this point, some investors may have thrown in the towel. Despite strong fundamental performance achieved by management, concerns about the financial health of those operating the company's properties, combined with a general malaise concerning the market, has resulted in shares falling precipitously. Although my portfolio is still outperforming the market over the past year by nearly 10%, a big source of discomfort has been Medical Properties Trust ( NYSE: MPW ). If there's one thing that the past few months have taught me, it's that the market can be irrational for an extended period of time.
0 kommentar(er)
