Medical Properties Trust Faces Challenges with Largest Tenant

Shares of Medical Properties Trust (MPT) took a sharp downturn as the real estate investment trust announced its intensified efforts to recover uncollected rent and outstanding loans from its largest tenant.

MPT's stock plunged 31% to $3.46 during Friday's trading, representing a staggering 72% decrease over the past 12 months.

In a news release on Thursday, MPT disclosed that its tenant, Steward Health Care System, currently owes approximately $50 million in rent as of December 31st. Despite making partial monthly rent payments, Steward's liquidity has been significantly impacted by alterations to payment terms with vendors.

Operating across multiple states including Arizona, Arkansas, Florida, Louisiana, Massachusetts, Ohio, Pennsylvania, Texas, and Utah, Steward Health Care System boasts a network of over 30 hospitals, according to their website.

To address the situation, Steward is exploring various strategic options. These include the potential sale or re-tenanting of certain hospital operations. Additionally, they are actively seeking a third-party capital partner for their managed care business. Unfortunately, Steward was not available for immediate comment.

To support Steward through these challenging times, MPT has agreed to defer a portion of their rent for 2024. They have also committed to providing a $60 million bridge loan. Additionally, MPT has enlisted the help of financial and legal advisors to aid in rent collection.

The current uncertainty surrounding Steward's financial standing has prompted one Wall Street firm to exercise caution. KeyBanc analysts downgraded their rating of MPT from "Overweight" to "Sector Weight" on Thursday. The analysts emphasized the need for greater clarity regarding unresolved tenant challenges and the overall health of MPT's balance sheet before reassessing their position.