The Real Estate Investment Trust (REIT) Medical Properties Trust (NYSE:MPW) is expediting its initiatives to recoup overdue rents and outstanding loans from the Steward Health Care System, a healthcare network in the United States.
Simultaneously, it is implementing measures to reduce its dependency on Steward, given that a substantial portion of its total revenue is tied to Steward.
Update on Rent Collection
According to MPW, Steward failed to pay a portion of its rent due in September and October. Further, the company noted that Steward obtained additional working capital financing and sold its non-core laboratory business in the fourth quarter of 2023. Steward’s unpaid rent to MPW is around $50 million as of December 31, 2023, which is equivalent to over 16% of its Q3 total revenue.
However, it recently informed MPW that its liquidity has been negatively impacted by significant changes to vendors’ payment terms. The company expects the resumption of partial cash rent payments in February, amounting to approximately $9 million in the first quarter and roughly $44 million in the second quarter of 2024.
Despite these expectations, the REIT is uncertain about Steward’s ability to fulfill all scheduled lease payments over the remaining 22-year term of its master lease. Consequently, MPW foresees recording a non-cash charge of approximately $225 million in Q4 2023 to account for the write-off of consolidated straight-line rent receivables.
It is important to highlight that Medical Properties Trust has appointed financial and legal experts to expedite recovery.
Is Medical Properties Trust a Buy, Sell, or Hold?
Medical Properties Trust stock has lost over 53% of its value in one year. Despite this significant correction in its share price, analysts remain sidelined.
MPW stock has one Buy, four Hold, and two Sell recommendations for a Hold consensus rating. Further, analysts’ average price target of $5.71 implies 14.2% upside potential from current levels.
