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Medical Properties Trust Inc.’s stock plummeted 29% on Friday following the news that one of its tenants, Steward Health Care System, is $50 million behind in rent payments. Medical Properties Trust’s stock closed at $3.55, down $1.45, marking its lowest point since 2009. The stock also received at least one downgrade from an analyst on Friday.
The real-estate investment trust said late Thursday that it’s taking fourth-quarter noncash charges of about $350 million, including $225 million to write off consolidated straight-line rent receivables. With no assurances that further impairment of real estate will not be taken, Medical Properties Trust is expected to report their fourth-quarter results on Feb. 1.
The real-estate investment trust said they will accelerate recovery efforts to receive uncollected rents and outstanding loan obligations from Steward. This comes after Steward recently announced that it will be closing down New England Sinai Acute Long-Term Care and Rehabilitation Hospital in Massachusetts. The move by Steward was cited due to chronic low reimbursement rates for services paid to Medicare and Medicaid patients.
MPT has hired Alvarez & Marsal Securities LLC as their financial adviser to help with their options in recovering the rent. The real estate company also agreed to fund a new $60 million bridge loan that is “secured by all MPT’s existing collateral” plus new second liens on Steward’s managed-care business, subordinate only to Steward’s asset-based lenders.
KeyBanc downgraded MPT to sector weight from overweight due to “uncertainty and ongoing risks” to its tenant health. Visibility into the company’s earnings trajectory “remains low and we are moving to the sidelines until there is better clarity,” KeyBanc said.
Steward accounted for about $70.7 million of MPT’s total revenue of $306.58 million in the third quarter. Prior to Friday’s moves, MPT’s stock had already fallen 59.6% in the past year, compared with a 23% rise by the S&P 500.
Dallas-based Steward Health Care describes itself as the largest physician-led, minority-owned integrated healthcare system in the U.S. Overall, Friday’s events may signify a difficult period for Medical Properties Trust and its tenant, Steward Health Care.