MPW – Infra(ud)core

Author: Viceroy Research Published on: September 26, 2023 Published in: Medical Properties Trust NASDAQ:MPW

September 26, 2023 – Among many of MPW’s off-balance sheet investment vehicles sits the Swiss entity, Infracore. MPW owns 70% of the economic interests in Infracore, who’s almost-sole tenant is Swiss Medical Network: MPW’s 4th largest tenant on a “adjusted gross asset basis”.

By our calculations: MPW & Infracore have thrown CHF 764m (~$850m) of cash at SMN and its ultimate beneficial owner, Aevis Victoria, since 2019. Despite this, Infracore has round tripped substantially all of the rent it receives from SMN back to Aevis Victoria since 2021.

94% of the rent paid by Swiss Medical Network since 2021 has round tripped back to its ultimate beneficial owner, Aevis Victoria, through Infracore loans and cash pooling arrangements.
Aevis Victoria is in no place repay its debts and appears distressed. Despite this, Aevis Victoria paid CHF 84m in dividends to its shareholders in 2022. It is 75% owned by its founder.
Infracore appears to unjustly inflate asset values against long-dated contract extensions, and then borrows against this to loan its tenant money, thus subsidizing rent.

We believe MPW is a donut, and that since our first report on January 26, 2023, the interest of shareholders (and the general public) would have been better served by a competent and clean management team with skin in the game. The market agrees.

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