For numerous valid reasons, Medical Properties Trust (MPW 5.34%) has generally been an unpopular stock this year. You wouldn’t know that from the real estate investment trust’s (REIT) performance on Thursday, though, as its price rose by more than 5% on news of a big divestment. That performance easily topped that of the S&P 500, which increased by 1.6% on the day.
A sizable asset sale
Just after market hours on Wednesday, Medical Properties Trust announced that it had finalized the sale of 11 of its properties. These are located in Colorado and have been purchased by University of Colorado Health for $86 million.
For its money, University of Colorado Health is receiving 11 freestanding-healthcare properties in the western state. These include primary and urgent care facilities, among other structures. The properties’ development was funded by Medical Properties Trust between 2015 and 2017 for Adeptus Health. Following that company’s Chapter 11 bankruptcy filing, University of Colorado Health began leasing the facilities.
The REIT said the total initial cost of the 11 properties was $64 million, so it did well in the sale.
It added that it will use the proceeds of the deal to retire debt and for “general corporate purposes.” It did not get more specific.
Improving the finances
Medical Properties Trust was a company in need of a good piece of news to deliver to shareholders. That’s because earlier this month, it touched the third rail of REITs by cutting its dividend. Although this wasn’t exactly a shock given the significant challenges the company is facing, since it’s a REIT, many shareholders are invested in it solely because of the dividend. Hopefully for them, the Colorado asset sale will be one of several moves helping to greatly improve the finances.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
