Medical Properties Trust (MPW) is our "top pick" for the month; the company is a US-based REIT that invests in hospitals around the world, notes Richard Croft, associate publisher of The Income Investor.
It claims to be the only company with that specific mandate. It is the second-largest owner of hospital beds in the US, with 46,000. Its US portfolio is worth $13.3 billion and its global portfolio $8.8 billion. A total of 60% of the portfolio is in the US, with 20% in the UK. The trust also has assets in Germany, Switzerland, Australia, and Spain.
The REIT was established in 2003 and went public in 2005. It expanded internationally 10 years ago, and since then, its compound annual growth rate has been 29%. This investment offers exposure to a sector of the real estate market that is not available elsewhere. Plus, it has an attractive yield of 4.9%, and a history of increasing the distribution every year since 2018.
Third-quarter results were very good. The trust reported revenue of almost $391 million, up from $329 million in the same period last year. For the first nine months of the fiscal year, revenue was $1.1 billion, compared with $915 million in 2020.
Third-quarter net income attributable to shareholders was $171.1 million ($0.29 per share), up from $131.1 million ($0.25 a share) in the same quarter of 2020. For the nine months, net income was $449.5 million ($0.76 per share), compared with $321.6 million ($0.61 per share) in the prior year.
Adjusted funds from operations (AFFO) were $0.34 for the quarter compared with $0.31 the year before. For the nine months, AFFO per share was $1.01, up from $0.90 in 2020. The company grows by acquisition, leasing, and joint ventures.
In early September it announced a partnership agreement with Macquarie Infrastructure Partners V to own a portfolio of eight Massachusetts-based general acute-care hospitals. In mid-September it reached an agreement to lease five Utah general acute-care hospitals to HCA Healthcare (HCA).
The trust makes quarterly distributions in March, June, September, and December. Distributions are usually in the form of dividends or capital gains.
This security is best suited for investors seeking reliable US dollar income. This is a unique REIT, in terms of the types of property it owns. The distribution appears to be safe, and the trust has a history of annual increases. Buy at the current level.
