Medical Properties Trust
Medical Properties Trust (MPW) is a real estate investment trust focused on healthcare facilities. MPW’s holdings include nearly 60 properties, including acute care hospitals, rehabilitation hospitals and medical office buildings.
As a REIT, Medical Properties Trust earns special corporate tax advantages, but in return is required to pay out at least 90% of its annual earnings to investors. That results in a big current dividend yield of 6.6%.
Like other REITs, MPW has slumped since July as treasury yields have spiked — it’s down 30% from its high in May. But the tide might be turning.
Last week’s lower-than-expected job growth report gave REITs a bump — MDT hopped up 3% on Friday — but the big opportunity for here is the growth opportunity that Obamacare presents for healthcare REITs in general, and MPW in particular. Although potential cuts in Medicare reimbursements could pose headwinds for hospitals, a broader base of insured patients would reduce bad debt write-offs.
Last month, MPW announced a $283 million deal to acquire three hospitals affiliated with IASIS Healthcare LLC. MPW will spend $2 million improving the properties, then lease them back to IASIS — a win-win for MPW and the hospital group. MPW should thrive over the next few years in an environment where hospitals are seeking out new ways to improve their facilities and free up cash.
MPW currently trades at less than 11 times forward earnings.