Medical Properties Trust downgraded on execution risk and rent-collection challenges

By Steve Gelsi

Collier Securities cuts rating on real-estate investment trust to neutral from buy as stock falls

Medical Properties Trust Inc.'s stock fell 6% Wednesday after Colliers Securities downgraded the real-estate investment trust on execution risk and "continued problems with rent collection."

Colliers analyst Barry Oxford cut his rating on Medical Properties Trust (MPW) to neutral from buy and slashed his price target for the stock to $4.25 a share from $10.

Risks include a pending bridge loan from Medical Properties Trust to its largest tenant, Steward Health Care System.

"There can be no assurances that the bridge loan will close or Steward will meet the requirements," Oxford said.

While Medical Properties Trust has now closed its $350 million sale of five hospitals to Prime Healthcare, the deal included a $100 million seller-financed mortgage note that ate into the deal's proceeds, he said.

Medical Properties Trust may also need to raise additional capital even after closing the sale.

"While the company's divestiture did increase liquidity, there is still near-term debt maturities that need to be addressed," Oxford said.

Medical Properties Trust faces a $5 billion wall of debt maturities over the next five years, amounting to about 50% of its total debt. The maturities include $3 billion in 2026.

"This is a tremendous amount of debt to refinance and dispositions will be paramount to retiring some of this debt," said Oxford, who plans to watch for an update from the company on potential sales activity.

Short sellers have been wading into the stock and creating additional downward force on its share price, he said.

"We believe the short sellers will continue to keep that stock under pressure, which could limit upside potential," he said.

The downgrade from Colliers Securities comes after Medical Properties Trust's stock fell to a 14-year low in late January after the REIT said tenant Steward Health Care System was $50 million behind in rent payments.

The spreads on their bonds against Treasury notes have also been under pressure, along with its stock price.

Also read: Medical Properties Trust's stock drops to 14-year low as tenant falls $50 million behind on rent

-Steve Gelsi

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04-10-24 1140ET

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