Global hospital property real estate investment trust (REIT) Medical Properties Trust (NYSE: MPW)
stock survived the pandemic
and emerge as the nation’s most stable healthcare
and hospital facilities owner. Shares are still trading below their pre-pandemic highs of 2020. The REIT owns over 430 hospital and healthcare facilities in the U.S., U.K., and various other countries. It derives most of its revenues from the U.S. with California and Massachusetts contributing the largest portion of its revenues. The rollout of COVID vaccines
has enabled retail re-openings
and resumption of outpatient services and inpatient procedures. This has enabled its clients to resume billings and stabilize cash flow, which is always a concern for landlords. Incidentally, the pandemic had little impact as 98% of rents were collected in 2020 with the remaining 2% scheduled for repayment with interest. The Company was also able to acquire properties during the pandemic for discounted prices to further bolster its portfolio. Prudent investors seeking a healthy 5% dividend yield with stable cash flow and growth can monitor shares for opportunistic pullback opportunities.
Q4 Fiscal 2020 Earnings Release
On Feb. 4, 2021, Medical Properties released its fourth-quarter 2020 results for the quarter ending December 2020. The Company reported normalized funds-from-operations (NFFO) of $0.41 per-share which met consensus analyst estimates. Revenues rose 30.2% year-over-year (YoY) to $333.8 million beating analyst estimates for $332.44 million. The Company had net income of $0.81 and NFFO of $1.57 for full-year 2020. The Company closed on one inpatient rehabilitation facility (IRF) development agreement and six general acute and IRF acquisitions in the U.S., U.K, Switzerland, and Colombia totaling nearly $670 million. In mid-January 2021, the Company closed on a U.K. real estate investment in behavioral health properties operated by the Priory Group. The Company issued $1.3 million in 3.5% senior unsecured notes due in 2021. Medical Properties raised its full-year 2021 guidance for NFFO to range between $1.72 to $1.76 versus consensus analyst estimates for $1.71.
Conference Call Takeaways
Medical Properties CEO, Edward K. Aldag Jr., set the tone, “We outperformed our peer in almost every measurable financial metric… We were able to close on almost $3.6 billion in transaction throughout 2020. We began 2020 with the announcement of our approximate $2 billion acquisition of BMI in the U.K. We entered South Africa for the first time with our Columbia transactions. We expanded our ownership of Infracore, the real estate owner of the Swiss Medical Network, the second-largest private operator in Switzerland.” CEO Aldag continued to detail the acquisitions which included hospital assets with partners Prime Healthcare, Circle and MEDIAN and expanded relationships with the NHS in the UK and Curahealth in the U.S. He noted that the $706 million in CARES act grants enabled an 18.4% YoY increased in EBITDARM for same-store portfolio growth. Same-store acute care EBITDARM coverage was 3.51X, representing 20% YoY growth. Even without the CARES Act grants, CEO Aldag concluded, “…without any grants, comparing third quarter 2020 to the third quarter 2019, all of our operations are very close to or better than they were in 2019. Excluding any grants or advances, the total same-store portfolio EBITDARM coverage was off just 6% from 2019 levels for the third quarter.”
Scalable Growth Model
Medical Properties offers a strong value proposition for hospital operators enabling them to better use their capital, rather than tie it up in real estate (owning the hospital property). The REIT has boundless opportunity with the thousands of community hospitals that are fragmented throughout the country. The Company estimates just over 5,000 local community hospitals in the U.S. and over 20,000 globally are the pool of potential acquisition targets. Approximately 75% of this pool are owned non-profit operators (NPOs) in which Medical Properties makes a compelling case for win-win arrangements for acquisitions. Prudent investors seeking income, stability and growth can monitor shares for opportunistic pullback levels.
MPW Opportunistic Pullback Levels
Using the rifle charts on the monthly and weekly time frames provide a broader view of the price action playing field for MPW stock. The monthly rifle chart has an uptrend with a rising 5-period moving average (MA) support at $21.56 as it attempts to stabilize above the 21.92 Fibonacci (fib) level. The monthly stochastic triggered a mini pup in late 2020 on the breakout heading into 2021. The monthly upper Bollinger Bands (BBs) sit at $24.25. The weekly rifle chart peaked at the $22.65 fib and has been chopping above the market structure high (MSH) sell trigger at $20.09. The weekly market structure low (MSL) buy triggered on the breakout through $18.62. The weekly stochastic made a healthy oscillation down which is stalling just below the 60-band attempting to cross back up again to trigger a breakout. Prudent investors can monitor for opportunistic pullback levels at the $21.21 fib, $21.08 fib, $19.28 fib, $18.62 fib, and the $17.28 fib. The upside trajectories range from the $24.47 fib to the $29.24 fib.
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