Medical Properties Trust Inc stock fell. rose 29% on Friday after the real estate investment trust said one of its tenants, Steward Health Care System, was $50 million behind on rent payments.
Medical Properties Trust MPW shares,
It closed at $3.55, down $1.45, its lowest level 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 will take a non-cash charge for the fourth quarter of about $350 million, including a $225 million write-off of consolidated straight-line rent accruals, in addition to its $25 million share of straight-line rent accruals. Relating to the Massachusetts Unconsolidated Partnership. and combined unpaid rent receivables of approximately $100 million.
“No assurances can be given that further impairment of real estate and non-real estate assets will not take place with the MPT reports for the fourth quarter of 2023,” the REIT said.
Medical Properties Trust is expected to report fourth-quarter results on February 1.
The REIT said it will accelerate its efforts to recover uncollected rents and outstanding loan obligations from Steward, which recently told MPT that its “liquidity was negatively impacted by significant changes in seller payment terms,” the company said.
The move by MPT comes about a month after Steward announced it would close New England Sinai Acute Care and Long-Term Rehabilitation Hospital in Stoughton, Massachusetts.
Steward cited chronic low reimbursement rates for billable services for Medicare and Medicaid patients, according to a statement published by Boston25 News.
“Approximately 75% of Steward Hospital patients are paid by the public sector, which chronically underpays, sometimes at rates below the cost of providing services,” the statement said.
A spokesperson for Steward did not respond to an email from MarketWatch.
MPT has appointed Alvarez & Marsal Securities LLC as its financial advisor to assist with lease recovery options.
MPT said it has agreed to finance a new $60 million bridge loan “secured by all of MPT's existing collateral” as well as new second liens on Steward's managed care business, which are affiliated solely with Steward's asset-based lenders.
Meanwhile, KeyBanc downgraded MPT to sector weight from overweight due to “uncertainty and ongoing risks” to tenant health that “remain a burden.”
“Management is pursuing steps to improve its balance sheet, which we view positively, but pricing and execution remain uncertain,” KeyBanc said.
Visibility of the company's earnings trajectory “remains low and we are moving to the margin until there is better clarity,” KeyBanc said.
In the third quarter, Steward accounted for approximately $70.7 million, or approximately 23%, of MPT's total revenue of $306.58 million.
Before Friday's moves, MPT stock had fallen 59.6% in the past year, compared with a 23% rise in the S&P 500 SPX..
Dallas-based Steward Health Care describes itself as the largest physician-led, minority-owned integrated health care system in the U.S.
Tommy Kilgore contributed.
