Shares of Medical Properties Trust (MPW -0.80%) soared 18.8% on Monday after the healthcare facilities-focused real estate investment trust (REIT) announced a major asset sale.
Medical Properties Trust announces a huge Utah deal
Late Friday, the company said it had sold its interests in five Utah hospitals to a newly formed joint venture with an investment fund for $886 million. Medical Properties Trust has retained a roughly 25% interest in the joint venture, while the fund purchased a 75% stake. The joint venture also placed new non-recourse secured financing simultaneous with the closing of the sale, giving Medical Properties Trust $190 million of additional cash. Altogether, the deal generates roughly $1.1 billion of total cash proceeds to Medical Properties Trust.
What's next for Medical Properties Trust investors?
Medical Properties Trust said the proceeds will be primarily used to reduce outstanding debt, including payment in full of its $300 million Australian term loan due this year and repayment of borrowings under its revolving credit facility.
The news came only a few days after Medical Properties Trust announced the sale of five facilities in California and New Jersey to Prime Healthcare for $350 million. Less than three weeks ago, Medical Properties Trust also rallied after its single largest tenant, beleaguered hospital operator Steward Health Care, announced a separate deal to divest its nationwide physician network to a subsidiary of UnitedHealth. Steward Health owed Medical Properties Trust a total of $50 million in unpaid rent as of the end of 2023.
In the end, investors are rightly celebrating as Medical Properties Trust works to selectively divest assets and clean up its balance sheet. Considering this beaten-down stock's dividend payout currently yields around 12.7% annually, it might well prove to be a solid value for those investors willing to bet it will be able to restore the business to a more steady state in the coming quarters.
