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Medical Estate Trust (New York Stock Exchange:MPW) fell 5.3% on Friday amid a repeated short call from Hedgeye, as the firm sees the healthcare REIT as worth no more than $3 a share and believes the dividend the payment is “at risk”.
“The stock is still trading at an implied net effective cash capitalization rate of ~6.3%,” Hedgeye analyst Rob Simone wrote in a note on Friday. “This calculation includes the impact of cash G&A and capex, but is also generous in that it gives MPW credit for a ~7% return on that incremental capital investment. We believe that MPW should reasonably trade several hundred basis points outside of that number, reflecting the inherent risk of its underlying tenant credit.”
Hedgeye’s note comes after Medical Properties (MPW) posted fourth-quarter results online on Thursday, though the company’s 2023 FFO guidance was below consensus. company shares fell 8.7% and the MPW announced that its chief operating officer would resign effective September 1.
Hedgeye’s Simone wrote that she cares less about the “wreck” that was the fourth quarter results and more about the company’s pending 10-K filing.
“We continue to view the dividend payment as very risky,” Simone added. “He The current annual payment of $1.16 per share is completely unsustainable and must be reduced immediately to preserve cash flow and deleverage the entity.”
Hedgeye first initiated a brief call to Medical Properties Trust (MPW) in April, saying at the time that the company’s core business was “deteriorating and grossly overvalued in a base case scenario”. MPW shares are down ~48% since the Hedgeye call in mid-April.
Medical Properties Trust (MPW) did not immediately respond to an email request for comment from Seeking Alpha that was sent after business hours on Sunday.
The short interest of Medical Properties Trust (MPW) is 17.5%.
Medical Properties Trust (MPW) said earlier this month that it will lease its $1.2 billion Utah hospital portfolio to CommonSpirit Health, following its acquisition of the business currently operated by Steward Health Care System.
Also see Sunday’s article by SA Contributor On the Pulse titled “Medical Properties: I’m Buying This 10.4% Yield Despite Panic.”
