I See No ‘Wow Factor’ With Medical Properties Trust

 In Free Articles

Summary

  • MPW has carved a unique niche in the largest and fastest-growing segment of the U.S. economy.
  • MPW cut its dividend in 2009 and it took 4 years for the company to begin to grow the dividend.
  • Many of MPW’s sources of revenue includes the Medicare and Medicaid programs, private insurance carriers, and health maintenance organizations.

I am maintaining a HOLD on MPW.

When it comes to investing, I often look for companies that provide a clear cut competitive advantage. Generally, I like to see that the company’s business model is easily identified such that I can describe the economic moat is just a few words.

For example, Realty Income (O) is “the low-cost leader in net lease” or Ventas, Inc. (VTR) “partners with best-in-class operators to generate stable and growing dividends.”

Several readers have asked me to take a closer look at Medical Office Properties Trust (MPW) in an effort to evaluate the business model and size of its moat. I opened up the company’s Q4-17 supplemental to identify the key elements of the platform:

A screenshot of a cell phone Description generated with high confidence

It’s been over a year since I produced a research report on MPW, the last one I wrote was in March 2017 when I explained,

“I am maintaining a HOLD on MPW. Until I see more clarity with ADPT, I am sitting on the sidelines. I am encouraged by the improvements to the balance sheet, but the ADPT difficulties has created another “black eye,” and as the events unfold, MPW will be subject to distraction risks.”

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MPW shares are up ~4.7% since my last article, while shares in Ventas, Inc. has declined by over 17%.

A close up of a map Description generated with very high confidence

Keep in mind, MPW is the only “pure play” hospital REIT, or as the company states on its website, “it is a different kind of REIT – by design. MPW has carved a unique niche in the largest and fastest-growing segment of the U.S. economy…the company focuses exclusively on providing capital to acute care facilities of all kinds through long-term net leases.”

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An Overview

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