Shares from Medical Property Fund (NYSE: MPW) Technology stocks were up 16.8% in Thursday trading as of 12:45 p.m. ET.
Medical property Real Estate Investment Trust (REIT) Shares of Steward Healthcare have fallen sharply as high interest rates and problems with its largest tenant, Steward Healthcare, forced the company to cut its dividend by about half over the summer — the second 50% cut in a year.
But as the stock fell, news of a final legal settlement with Steward sent the stock higher today.
New operators take over as Steward
The most significant part of the settlement agreement for shareholders was that MPT reached new lease agreements with four hospital operators that will take over management of 15 of Steward’s 23 troubled sites.
MPT will not collect rent from the new operators this year, but will begin receiving rent payments in the first quarter of 2025, then increase to a fully stabilized rent of $160 million per year by the fourth quarter of 2026. Notably, MPT said this would be 95% of what it would have received from Steward in 2026 based on the original lease deal with the escalators.
The administration also noted that it was in active discussions with other parties regarding two hospitals under construction and six others that are closed or inactive. MPT has agreed to sell three of the troubled hospitals in Florida, with most of the proceeds going to Steward. But after that, Steward will waive all rights to claims for any value from the other facilities. Steward sued MPT in August, accusing it of blocking Steward’s attempts to sell the hospitals. It’s worth noting that MPT actually owns the land for most of those facilities, while Steward owns the facilities themselves.
Relief march
These new operators are expected to outperform Steward, which ran into trouble after its previous owner Private Investments saddled it with debt and high rental obligations.
At its current discounted dividend, Medical Properties shares The return is about 5.8%. After the market rally today. But with the company moving past the Steward Health disaster and new operators set to pay their rents next year, hopefully there won’t be any further cuts in payments.
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Billy Duberstein and/or its clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has Disclosure Policy.
Why Medical Properties Trust Shares Are Up Today Originally posted by The Motley Fool
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