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MPW – Under-Waterland

Author: Published on: Published in: Medical Properties Trust NASDAQ:MPW

October 22, 2024 – In Q2 2023, MPW engaged in significant uncommercial round-trip transactions with its European tenants, Median and Priory Group, via sale-leaseback transactions. Both tenants are owned by Waterland Private Equity.

MPW’s assertions about the solvency of its tenants are fairytales told to shareholders and analysts. MPW’s rent roll is almost exclusively distressed, and management continues to portray these tenants as not only a going concern, but a sound investment.

  • Priory Group has been operationally loss-making for years and relies on the proceeds of sale-leaseback transactions to remain solvent. Priory is MPW’s third largest tenant by asset exposure, and largest unencumbered credit.
    • Priory Group operational losses widened to £73m in 2023.
    • Priory’s rent is recorded as “finance costs”. This is not included as operational expenses or in Priory’s non-GAAP operational measurements (EBITDA).
  • Median scraped by with an operational margin of 2% in 2023 and posted €100m of losses over the last 2 years due to a commercially unsustainable capital structure.
    • The company is severely cash-flow deficient and recorded €111m of Free Cash Flow losses across 2022 and 2023, relying on sale-leasebacks to survive.
    • In 2023, MPW engaged in a sale-leaseback transaction with Median in which it purchased €16.1m worth of real estate for €70m (representing a 335% mark-up), resulting in a €53.9m gain on sale to Median.

       

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