MPW – (Dis)Reputable Operators

Author: Viceroy Research Published on: September 18, 2024 Published in: Medical Properties Trust NASDAQ:MPW

September 18, 2024 – The Steward bankruptcy court has rubber-stamped a deal to allow MPW to appoint interim operators, most of which are as mismanaged, insolvent, and/or fraudulent as Steward. In its releases MPW stated it would provide aggregate loans of up to $80m to the interim operators, some of which are empty shells, and expects cash rent payments (which crippled Steward) by Q4 2026.

We note that MPW faces its own liquidity challenges, and is unlikely to live to see any rent collections.

This is a disastrous deal for MPW stakeholders, designed for the purpose of falsely preserving inflated real estate values as MPW faces a liquidity crunch.

MPW cannot raise capital or issue debt. It is actively selling assets during covenant waivers and already junk-rated. Any further revaluations of MPW’s book will give cause for MPW’s lenders to call their debt.
- MPW lacks the liquidity to cover its Q1 2025 maturities without massively diluting equity holders.
MPW will record new straight-line rent against new 18-year lease terms, despite not receiving any rent for 2 years. This fabrication will ensure management meets FFO requirements for their compensation targets.
The vast majority of MPW’s tenants are financially distressed/bankrupt. MPW has round-tripped revenues to itself in the form of disguised financing for years. The majority of the Steward replacement operators appear to fall into the same category.

Viceroy have compiled a rap-sheet for each of MPW’s newly appointed interim operators in the report available below.

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