Shares of Medical Properties Trust (MPW -0.80%) soared 18.6% on Wednesday after the largest tenant of the healthcare facilities-focused real estate investment trust (REIT) announced a deal to sell its doctor network to UnitedHealth (UNH -0.23%) subsidiary Optum.
Medical Properties' largest tenant may finally be able to pay its bills
In a story first reported by the Boston Globe late yesterday, beleaguered hospital operator Steward Health Care has struck a deal to divest its nationwide physician network to UnitedHealth's Optum segment. The exact terms of the deal weren't disclosed. But considering Steward Health Care hasn't been paying its rent to Medical Properties Trust as it has grappled with financial hardship in recent quarters -- and coupled with the fact Steward previously represented as much as 20% of Medical Properties Trust's total revenue -- Medical Properties Trust shares are understandably rallying given the prospect that Steward could catch up on its past-due obligations.
Medical Properties Trust previously reduced its dividend in August by nearly 50% to $0.15 per share due to Steward Health Care's inability to pay its rent. In a January update, Medical Properties Trust revealed Steward owed a total of $50 million in unpaid rent to the REIT at the end of 2023.
What's next for Medical Properties Trust investors?
Steward Health Care's agreement isn't a done deal just yet; the deal is widely expected to receive pushback from antitrust regulators who worry that Optum's recent acquisitive streak could threaten competition across the country.
But if this deal passes regulatory muster, it could represent a massive boon for Medical Properties Trust investors who've watched helplessly as their company's single largest tenant missed its significant rent payments.
