Medical Properties Trust (NYSE: MPW) stock price dropped by almost 2% on Friday as concerns for the company’s future rose. The shares retreated to $3.35, bringing the year-to-date losses to over 30%. This makes it the worst-performing REIT stocks in Wall Street.
Steward is hiring advisorsMedical Properties Trust has been the most embattled REITs in the US as concerns about its wall of maturities and revenues rise. As a result, the company has slashed its dividends while its stock has plummeted by over 70% in the past 12 months.
Steward Healthcare, a key tenant, is one of the top reasons why MPW is in trouble as it has struggled to pay rent in the past few months. In a statement earlier this month, MPW entered into an agreement that saw it extend some financing to Steward.
But now, there are reports that Steward has hired AlixPartners, a well-known restructuring shop to evaluate options. This report was first made by the Wall Street Journal. The options that Alix will consider include a potential sale or re-tenanting of certain hospitals.
The move by Steward is not surprising to REIT experts who have been following the crisis. Some analysts have been warning that Steward would ultimately file for bankruptcy because of its cash flow problems. Just recently, Steward told MPW that it was in a difficult liquidity situation because of vendor issues.
All this leaves Medical Properties Trust in trouble of losing a large tenant and backdated rent. Most importantly, while the company is not facing huge maturities this year, it will need to pay billions starting from next year. It has $1.38 billion of maturities in 2025, $2.99 billion in 2026, and $1.6 billion in the following year.
Therefore, there is a likelihood that the company will cut its dividend once again in a bid to preserve cash. Besides, the company has a forward dividend yield of over 17%, one of the biggest in the REIT industry.
Is Medical Properties Trust a good stock to buy?
Therefore, the question is whether Medical Properties Trust is a good REIT to buy the dip in. I believe that while the stock is clearly cheap, it is still risky to buy it as its problems with Steward and Prospect remain.
Also, the company has a high chance of slashing its dividends once again, which will affect its performance. Keep in mind that REITs are facing major maturities this year and the Fed is not expected to cut rates until June.
As such, in line with this, I suspect that the shares will continue falling as bears target the next key support at $2.50.
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