Medical Properties Trust reported a sharp swing to third-quarter profit, while funds from operations declined from a year earlier. The hospital landlord also completed a $2.4 billion secured-note offering and asset sales that generated about $680 million, steps it says have extended debt maturities and created room to reduce debt.
A key operating concern remains HSA, a tenant facing revenue-collection difficulties that did not pay September rent. MPT said the missed rent reduced quarterly normalized funds from operations by two cents per share.
Key details
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Quarterly results: Net income was $202 million, or $0.34 per share, compared with a $78 million loss, or $0.13 per share, a year earlier. Normalized funds from operations (NFFO) fell to $64 million, or $0.11 per share, from $77 million, or $0.13 per share.
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Debt refinancing: MPT completed a private offering of about $2.4 billion in secured notes. It used the proceeds to repay existing debt, including its 2026 notes and about half of its 2027 notes. The transactions extended debt maturities and produced a $70 million gain during the quarter.
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Asset sales: Sales of certain properties generated about $680 million in cash proceeds and a combined gain of $158 million. The transactions included the sale of MPT’s remaining interest in five Utah hospitals for about $174 million and the sale of real estate at two Idaho hospitals to affiliates of Intermountain Health for about $371 million. Other sales accounted for the balance of proceeds.
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Use of sale proceeds: MPT said the proceeds are available for debt repayment and other balance-sheet improvements. The company said the sale prices for the Utah and Idaho properties exceeded its original investments.
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HSA operations: HSA’s revenue-cycle challenges prevented payment of September rent and reduced MPT’s NFFO by $0.02 per share for the quarter. HSA has engaged Ovation Healthcare to oversee operations across its portfolio and work on improving billing and collections. MPT also provided HSA with additional working-capital support during the quarter.
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Rent outlook: MPT continues to expect portfolio cash rents to exceed $1.0 billion in 2027, even after accounting for the properties sold in the third quarter. That estimate includes conservative assumptions for cash-basis tenants, including HSA.
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Dividend: MPT paid its regular quarterly dividend of $0.09 per share in October.
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Portfolio: At September 30, MPT had about $14.4 billion in total assets and owned or financed 365 properties with approximately 37,000 licensed beds. The facilities were leased to or mortgaged by 52 hospital operators across the U.S. and eight other countries.
Plain-English implications
The refinancing and property sales brought in substantial cash and pushed out some debt maturities, while reducing the company’s exposure to the refinanced obligations. At the same time, the lower NFFO reflects pressure from HSA’s missed rent, despite the quarter’s reported net profit.