Medical Properties Trust Narrows Loss as Cash Rents Climb
The hospital landlord posted a $3 million net loss, down from $98 million a year earlier, as billed rent rose 14%.
Medical Properties Trust (MPT), the hospital-focused real estate investment trust, reported a sharply narrower second-quarter net loss of $3 million, or $0.01 a share, compared with a loss of $98 million, or $0.16 a share, in the year-ago period. The improvement reflected both higher cash collections from tenants transitioning to stabilized leases and a dramatic reduction in non-cash fair-value write-downs.
Total revenue rose 8% to $259.3 million in the quarter ended June 30, driven by a 14% jump in billed rent to $203.4 million as transition tenants ramped toward full contractual rates. Straight-line rent, a non-cash accounting adjustment, declined 16% to $33.3 million, signaling that a greater share of the company's income is now being collected in cash rather than booked as a receivable.
Normalized funds from operations, the key profitability gauge for REITs, climbed 14% to $92 million, or $0.15 a share, from $81 million, or $0.14 a share, a year earlier. FFO itself swung to positive $78.1 million from negative $40.2 million in the prior-year quarter, largely because non-cash fair-value losses narrowed to $1.9 million from $124.4 million. On a sequential basis, NFFO per share was flat at $0.15.
The company continued to shrink its portfolio, ending the quarter with 373 properties and roughly 38,000 licensed beds, down from 384 properties and approximately 39,000 beds at the start of the year. The number of hospital operating-company tenants fell to 51 from 52 over the same span. Medical Properties Trust also consolidated its exposure to Scion Healthcare to a single facility after combining Lifepoint and Lifepoint Behavioral leases into one amended master lease and exchanging three Scion properties for one Lifepoint property, generating a gain of roughly $7 million.
HSA, a key tenant, received an additional $50 million in working-capital advances during the quarter, of which $20 million was repaid and another $20 million is expected to be repaid in August. That contrasted with the first quarter, when HSA was fully current and its monthly rent had increased to 75% of fully stabilized rent.
On the balance sheet, total assets declined to $14.75 billion from $15.00 billion at year-end 2023, while cash and equivalents fell 27% to $396.6 million. Interest expense edged up 4% to $135.3 million, and general and administrative costs rose 33% to $34.8 million, partly reflecting higher staffing. Real estate impairment charges increased to $16.8 million from $1.4 million a year earlier, and earnings from equity interests dropped 55% to $11.4 million.
The company announced a private offering of approximately $2.4 billion in secured notes to refinance existing debt, including 2026 maturities and about half of its 2027 notes, capturing roughly $123 million of original-issue discount and significantly extending its debt profile. Separately, Medical Properties Trust agreed to sell certain assets expected to generate about $172 million of cash proceeds in the third quarter and received approximately $100 million in cash from the Infracore SA initial public offering, with an additional $35 million expected later in the quarter.
The board raised the quarterly dividend to $0.09 a share from $0.08 a year ago.