Medical Properties Trust Faces Risk Of Earnings Dilution Despite New Tenant Leases, Analyst Says

Group 1 - Colliers Securities upgraded Medical Properties Trust, Inc. (MPW) stock to a Buy rating with a price target of $6.5, while Truist Securities analyst Michael Lewis raised its price target from $5 to $6, maintaining a Hold rating [1][2] - Medical Properties Trust disclosed a global settlement with Steward Health Care System, its secured lenders, and the Unsecured Creditors Committee, covering 23 hospitals previously managed by Steward [1][2] - The settlement includes 15 hospitals in Arizona, Florida, Louisiana, Ohio, and Texas that have already been leased to new tenants, with anticipated annual cash rental payments of about $160 million based on a $2 billion lease base, expected to stabilize in Q4 2026 [2] Group 2 - The analyst adjusted the FFO estimates and price target while affirming a Hold rating due to anticipated earnings dilution from refinancing activities over the next few years [3] - Medical Properties Trust agreed to sell three Space Coast hospitals, with a significant portion of the proceeds transferred to Steward, indicating a 75% recovery rate of the $3.2 billion asset value reported in the first quarter supplemental package [4] - The recovery estimate includes $300 million from six closed hospitals, $100 million from two under construction, and $2 billion from 15 transitioned hospitals, although there are risks due to uncertainties about nonoperating asset values and new operators' success rates [5] Group 3 - The analyst revised the 2025 FFO estimate to $1.01 per share from $1.02, still above the $0.92 consensus, indicating a 39.9% year-over-year decline in normalized FFO per share in 2024, followed by 6.0% growth in 2025 [6] - Declining FFO per share is projected in each subsequent year through 2029 due to dilutive debt refinancing [6] - MPW shares increased by 12.4% to $6.295 at the last check on Friday [6]