MPW Case Study – Macquarie

Author: Viceroy Research Published on: March 10, 2023 Published in: Medical Properties Trust NASDAQ:MPW

March 10, 2023 – On March 16, 2022 MPW completed a partnership with Macquarie Asset Management (MAM). MPW contributed assets worth $1.1b to the joint venture in exchange for an undisclosed cash payment. The joint venture would then raise secured nonrecourse debt with the proceeds going to MPW.

Mortgage records show that the joint venture secured a mortgage of $919m from a consortium of Apollo, Athene, and Aspen, implying MAM’s cash payment was ~$400m. We believe it is this debt transaction, not MAM’s payment, that the portfolio’s $1.78b valuation is based on.
MPW recorded a gross gain on sale of $600m, offset by $125m of uncollected and unbilled straight-line receivables. This transaction also served to move uncollectable straight-line revenue off-balance sheet.
Based on CHIAMass records, the majority of these hospitals show poor financial performance.

The irony of MPW selling hospitals (occupied by Steward) for short-term liquidity is not lost on us. Investors should push MPW to publish the full joint venture agreement between the parties as well as terms of the loan entered into by the JV.

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