Image source: https://medicalpropertiestrust.com
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When it comes to REITs, one thing that one will want to research is what kind of REIT do you want to invest in? Retail, office space, apartments, residential, senior living, college dorms, warehouses or medical properties, to name a few?
For today’s post, I want to discuss Medical Properties Trust Inc. (NYSE: MPW). It’s important to note that I currently do NOT own a position in MPW.
So, what is Medical Properties Trust? According to their summary:
Medical Properties Trust, Inc. is a real estate investment trust (REIT). The Company focuses on investing in and owning net-leased healthcare facilities across the United States and selectively in foreign jurisdictions. The Company’s segment is its investments in healthcare real estate, including mortgage and other loans, as well as any equity investments in its tenants. The Company conducts its operations through MPT Operating Partnership, L.P. The Company acquires and develops healthcare facilities, and leases the facilities to healthcare operating companies under long-term net leases. The Company makes mortgage loans to healthcare operators collateralized by their real estate assets. The Company owns hospitals with approximately 390 facilities and approximately 42,000 licensed beds in eight countries and across three continents.
The REIT is known as the world’s leading source of capital for hospitals, experienced in unlocking the value of hospital real estate for growth and are preferred by top operators around the globe.
The REIT is currently sold at $20.86 (as of July 27th), has a market cap of $12.3 billion and an enterprise value of $21.5 billion and has 588.2 million shares outstanding and the shares are held by institutions at 82%.
As you can look at the chart, the REIT was sold at around $9.76 when it started back in 2005 and suffered in the real estate market crash of 2008 and dropped to under $4.00 in 2009.
But the stock would eventually rise over $10 by 2010 and during the Pandemic, by February 2020, the REIT was doing phenomenally well hitting $24 but then the Pandemic hit and two months later it would drop to $14. But the REIT is now made its march back up to over $20.
The REIT has over 424 facilities in nine countries (the United States represents 57.6%, 22.4% for the UK, 6.3%for Germany, 6.0% for Switzerland, 4.7% for Australia, 1.0% in Spain and about 2% in other), 44,000+ licensed beds in its portfolio with 72.7% dedicated to its general acute hospitals, 10.2% towards inpatient rehabilitation hospitals, 8.3% towards behavioral health facilities, 1.6% towards long-term acute care hospitals, 1.4% freestanding ER/urgent care facilities and 5.8% towards other.
Charles Schwab’s Equity Ranking is D for Underperforming and that the REIT has a price volatility outlook of low. Schwab gave the growth, quality and valuation grade at neutral but gave its sentiment and stability grade at negative.
Ned Davis Research gave MPW a neutral with its NDR Equity Focus Rank of 17.15, which falls between the required minimum buy rating rank of 90 and maximum sell rating rank of 10. Its NDR Sentiment Rating is set at Pessimistic.
CFRA’s Quantitative Stock Report has a recommendation of HOLD, with a valuation, Growth and Street Sentiment at Neutral, Quality at Positive and Price Momentum as Negative.
As for dividends, Medical Properties Trust Inc. (NYSE: MPW) is known purely for dividends. For a $20 REIT with some growth, its dividend growth has increased every year since 2013. While the dividend increase could be $.02-.04 each year, they have not cut their dividend.
Currently the quarterly dividend is $.28 ($1.12 annual) with an earnings per share of $.93 and price/earnings $22.32 and forward P/E at $16.74.
Now, its positive to see MPW grow back to over $20 but one will need to keep an eye on the REITs debt of over 9,009 million, while its total revenue was about 1,270 million for 2020. With the increased total assets, the increased debt is a concern because one wonders if the REIT will need to decrease dividend earnings if the company needs to increase its leverage.
While I find hospital REITs to be attractive for investing, especially if a REIT has been consistent, it’s great for a dividend investor, not so much for a dividend growth investor.
But it all depends on your investment style.
As always, perform your due diligence and do a lot of research before investing. Talk to a financial advisor and find out if Medical Properties Trust Inc. (NYSE: MPW) would be a perfect investment for you.
