MPW Q4 Report Analysis: Excellent News! Medical Properties Trust Stock Earnings Analysis (NYSE: MPW)

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Despite all the issues, the Medical Properties Trust (MPT, NYSE: MPW) is still very profitable, making over half a billion per year in cash, without including non-cash rent and revenues. For a $2.3 billion market cap, this is quite a bit.

And again, you can find $10 or even $15 billion companies that make the same or even less.

Anyway, that’s enough for MPW’S current 15% dividend, which requires around $345 million. But if they really need it, I would rather see another cut than having to refinance that money.

They had a bunch of write-offs related to Steward as they announced earlier, but this is just accounting, it’s not something new.

They also agreed to sell almost half a billion worth of assets in the first two months, and I believe they are taking the right steps.

Something very important that I really wanted to see is this comment from the CEO. He said that they expect about $2 billion in liquidity coming this year from transactions, which is a very significant chunk of the debt they have to pay in the next 2 to 3 years. If they do that for another year, adding the AFFO and discounting the dividend, that’s almost everything they need to pay, basically solving the whole issue that was behind the worries that made them crash. I said it before, but this plus cutting the dividend were the best options for the company, because otherwise they have to refinance at very high rates. Doing that would’ve created a very serious long-term issue.

But, also keep in mind that selling assets means making less money and paying a smaller dividend in the long-term.

Anyway, it’s better than having to pay more debt every year, and it offers a lot more financial flexibility in the future.

But, on the other hand, rate cuts will be a massive catalyst not only for MPW directly because they will probably have to refinance too, but also for the tenants.

Rate cuts should allow the tenants to maybe stabilize, which would be great for MPW and could represent the catalyst behind a recovery in the industry. So, their timing is going to be very important – the sooner the better.

To get an idea, if they have to refinance for example $2 billion at an extra rate of 4%, that’s $80 million per year on top of what they already have to pay. $3 billion at 6% more is already $180 million, and that’s a lot of money that could’ve been used for dividends, buybacks or investing. So you can see why every single % cut they can get matters. Imagine if they use that money for buybacks instead for example. $180 million can push the stock price up like 50% in a single year.

Another very important comment was what you can see on the screen. Basically, if Steward doesn’t recover, there is already interest for some of these facilities from other companies.

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0:00 Medical Properties Trust (NYSE: MPW) Stock Review
0:20 MPW Financial Analysis, Steward Update, Earnings Report Review + More

#stocks #investing #personalfinance #valueinvesting

Hey, welcome back! After a 25% recovery in the past month, MPW is still very far from the price from a few years ago. There are… several reasons behind the crash, all of which together put MPW in a very tough spot.

But, as you are about to see, they seem to be taking very rapid steps in the right direction and there are a couple of very important developments I want to mention. Despite all the issues, the company is still very profitable, making over half a billion

Per year in cash, without including non-cash rent and revenues. For a $2.3 billion market cap, this is quite a bit. And again, you can find $10 or even $15 billion companies that make the same or even less. Anyway, that’s enough for the current 15% dividend, which requires around $345 million.

But if they really need it, I would rather see another cut than having to refinance that money. They had a bunch of write-offs related to Steward as they announced earlier, but this is just accounting, it’s not something new.

They also agreed to sell almost half a billion worth of assets in the first two months, and I believe they are taking the right steps. Something very important that I really wanted to see is this comment from the CEO.

He said that they expect about $2 billion in liquidity coming this year from transactions, which is a very significant chunk of the debt they have to pay in the next 2 to 3 years. If they do that for another year, adding the AFFO and discounting the dividend, that’s

Almost everything they need to pay, basically solving the whole issue that was behind the worries that made them crash. I said it before, but this plus cutting the dividend were the best options for the company, because otherwise they have to refinance at very high rates.

Doing that would’ve created a very serious long-term issue. But, also keep in mind that selling assets means making less money and paying a smaller dividend in the long-term. Anyway, it’s better than having to pay more debt every year, and it offers a lot more financial flexibility in the future.

But, on the other hand, rate cuts will be a massive catalyst not only for MPW directly because they will probably have to refinance too, but also for the tenants. Rate cuts should allow the tenants to maybe stabilize, which would be great for MPW and

Could represent the catalyst behind a recovery in the industry. So, their timing is going to be very important – the sooner the better. To get an idea, if they have to refinance for example $2 billion at an extra rate of

4%, that’s $80 million per year on top of what they already have to pay. $3 billion at 6% more is already $180 million, and that’s a lot of money that could’ve been used for dividends, buybacks or investing. So you can see why every single % cut they can get matters.

Imagine if they use that money for buybacks instead for example. $180 million can push the stock price up like 50% in a single year. Another very important comment was what you can see on the screen. Basically, if Steward doesn’t recover, there is already interest for some of these facilities from other companies.

And this is a very important aspect. Steward is ultimately just a tenant. MPW owns the hospitals, so if Steward is gone, they MAYBE lose the direct investments and loans and so on in the company – which goes for any other tenant.

But, you know, at the end of the day, if a tenant goes bankrupt, they just have to find a new one. The bigger issue is the rent that they miss during that time, and if it happens in a time

Like today when they really need every penny they can get, it’s not that great. They also split the assets so that the market can see even more clearly what Steward operates. I mean, it was public even before – I showed it to you in the past – but now you don’t

Even have to dig for it. And, you know, this plus a couple more tenants having issues were basically behind MPW losing about $10 billion in market cap. Again, they are tenants, and MPW wouldn’t lose the hospitals in case these companies go bankrupt.

I looked into what would happen in the realistically impossible scenario where every tenant from every continent goes bankrupt in this video. Make sure to check it out if you are interested. And I want to mention again the possibility of a short squeeze.

Today, with almost half of the float being shorted, a recovery for MPW would be boosted a lot more thanks to shorts having to cover. And this makes the risk of shorting even higher, especially since the price is so low.

I get doing it at $20, $15 or even $10, but at $3, if it doesn’t go bankrupt, you can lose like 3, 4, 5 times or even more what you can make. But, keep in mind that there is still risk, even with all the positive developments.

Bad timing of a potential bankruptcy plus a lot of vacancies as a result and them having to refinance a lot of money at a high interest rate – if they manage to – can be very bad for MPW.

Anyway, for me, MPW offers a very good potential return for the risk it comes with. The company is still very profitable despite all the issues and, again, they are doing exactly what I want to see right now.

I think that if they keep doing what they did since the beginning of the year, they can get over the debt repayments, after which they would be almost debt free, making like a billion per year. For a $2.3 billion market cap, I don’t have to tell you how undervalued that is.

As always, what I cover in my videos shouldn’t be enough for you to make any investment decision, so please do your own research before investing in anything. If you want to see more videos like this one, please leave a like and even a comment to help me out, and make sure to subscribe.

Thank you for watching and I’ll see you next time.