Why Medical Properties Trust Stock Crushed the Market Today

For many good reasons, Medical Property Trust (MPW 5.34%) has generally been an unpopular stock this year. You wouldn’t know it from the real estate investment trust’s (REIT) performance on Thursday, however, as its price jumped more than 5% on news of a big divestment. That performance easily surpassed that of S&P 500which increased by 1.6% on the day.

A sale of considerable assets

Just after market hours on Wednesday, Medical Properties Trust announced that it has completed the sale of 11 of its properties. They are located in Colorado and were purchased by the University of Colorado Health for $86 million.

For its money, University of Colorado Health is getting 11 freestanding healthcare properties in the western state. These include primary and emergency care facilities, among other facilities. Development of the properties was funded by Medical Properties Trust between 2015 and 2017 for Adeptus Health. Following the company’s Chapter 11 bankruptcy filing, University of Colorado Health began leasing the facilities.

The REIT said the total original cost of the 11 properties was $64 million, so it did well in the sale.

It added that it would use the proceeds from the deal to retire debt and for “general corporate purposes.” It didn’t get more specific.

Improving finances

Medical Properties Trust was a company that needed some good news to deliver to shareholders. That’s because earlier this month, it hit the third rail of REITs by cutting dividends. While this wasn’t exactly a shock given the significant challenges the company faces because it’s a REIT, many shareholders are invested in it just because of the dividend. Hopefully, for them, the sale of Colorado assets will be one of several moves that will help significantly improve their finances.