Stock Plunge Amid Tenant Woes

Medical Properties Trust Inc MPW shares are plummeting, down around 15% following its disclosure to minimize exposure to tenant Steward Health Care System.

As per the company’s third quarter 2023 Form 10-Q filing, Steward has delayed a portion of its September and October rent payment to MPT.

Tenant’s Liquidity Woes

Steward has cited significant changes in vendor payment terms that have adversely affected its liquidity, despite seeking additional working capital financing and attempting to sell its non-core laboratory business in Q4 2023.

Protective Measures and Loan Arrangement

To safeguard its assets and hospital operations, MPW has approved funding for a new $60 million bridge loan, secured by all existing collateral and new second liens on Steward’s managed care business.

A portion of MPW’s existing loans to Steward will now be secured by these second liens on the managed care platform.

Deferred Rent and Rental Restart

MPW has consented to deferring unpaid rent under the consolidated master lease as of December 31, 2023, with limited and tapering deferral of about $55 million of 2024 rents until June 30, 2024, or the completion of expected asset sales.

The company anticipates partial cash rent payments to resume from February onwards, including approximately $9 million in Q1 and around $44 million in Q2 2024.

Anticipated Non-Cash Charge and Stock Performance

With no guarantee of Steward’s successful execution of its plans or MPW’s full recovery of rents and loans, the company projects a non-cash charge in Q4 2023 amounting to approximately $225 million.

MPW shares are down 20.8% at $3.96 premarket on the last check Friday.