Illustrative archive: TheFrog001 / CC0, 2020, cropped
Medical Properties Trust returned to a quarterly profit after hospital-property sales and a debt refinancing, but a measure it uses to track underlying performance fell as a tenant missed rent, according to the company’s results released Thursday.
The hospital landlord reported third-quarter net income of $202 million, or 34 cents a share, compared with a $78 million loss, or 13 cents a share, a year earlier.
MPT said normalized funds from operations fell to $64 million, or 11 cents a share, from $77 million, or 13 cents a share. That adjusted measure, often used to assess property companies, is not the same as profit under standard accounting rules or cash available to spend.
Asset sales helped the bottom line
The company said completed asset sales brought in about $680 million during the quarter and generated an aggregate $158 million gain. Those transactions had previously been announced, so Thursday’s report confirms their completion rather than announcing new hospital sales.
MPT said it sold its remaining interest in five Utah hospitals for about $174 million and its real-estate interest in two Idaho hospitals to Intermountain Health affiliates for about $371 million.
The company also completed a roughly $2.4 billion secured-note offering, using the proceeds to repay debt, including its 2026 notes and about half its 2027 notes. MPT reported a $70 million gain from the refinancing.
These gains help explain why reported profit improved even while normalized funds from operations declined. Selling a property can produce a one-time gain, but it also removes the rent that property would otherwise generate.
A missed rent payment remains a warning
MPT said tenant HSA did not pay September rent because of continuing billing and collections problems. The company said that reduced normalized funds from operations by two cents a share during the quarter.
According to MPT, HSA recently hired Ovation Healthcare to oversee operations across its portfolio and improve billing and collections. MPT also said it provided HSA with additional working-capital support during the quarter.
Those are the landlord’s disclosures. They do not establish that a particular hospital is closing or that patient services have changed.
MPT said it continues to expect more than $1 billion in portfolio cash rent in 2027, even after accounting for the third-quarter property sales. That is a forecast, not rent already collected, and the company said it includes conservative assumptions for tenants whose rent is recognized on a cash basis, including HSA.
A landlord’s results, not hospital operating profit
At September 30, MPT said its portfolio included 365 properties and about 37,000 licensed beds, leased to or mortgaged by 52 hospital operators across nine countries. It reported total assets of about $14.4 billion.
For readers following hospital finances, the distinction matters: MPT finances and owns hospital real estate, while its tenants run the hospitals. The report measures the landlord’s finances, not the overall financial health of every hospital in its portfolio.
MPT said it paid a regular quarterly dividend of nine cents a share in October.
JBizNews Desk | Birmingham
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