Is it Wise to Retain Medical Properties Stock in Your Portfolio Now?

Medical Properties Trust MPW — also known as MPT —  is engaged in acquiring and developing net-leased healthcare facilities. Its properties consist of general acute care hospitals, behavioral health facilities, post-acute care facilities, freestanding ER/urgent care facilities and other assets.

Rising healthcare spending and an aging population will drive demand for Medical Properties. Long-term leases and capital-recycling initiatives bode well. Operator concentration risks, potential tenant bankruptcies and lower dividend payouts are key concerns for the company.

What’s Aiding MPW?

The senior citizens’ population is expected to rise in the years ahead. As a result, the national healthcare expenditure by senior citizens, who constitute a major customer base of healthcare services and incur higher healthcare expenditures than the average population, will likely increase in the upcoming period.

Medical Properties leases facilities to healthcare operating companies. These facilities generally have initial fixed lease terms of at least 15 years, with most including five-year renewal options. More than 99% of its leases provide annual rent escalations based on increases in the Consumer Price Index.

Medical Properties follows a disciplined capital-recycling strategy, through which it disposes of non-core assets and redeploys the proceeds in premium asset acquisitions and accretive development projects. Such efforts also help the company improve its financial position and address the concerns surrounding the tenant base.

During the first six months of 2025, Medical Properties sold three facilities and an ancillary facility for around $48 million, resulting in a gain on real estate of $13.3 million. In the second quarter of 2025, the company invested around CHF 50 million in the Swiss Medical Network real estate joint venture, part of which was used to acquire a general acute care facility. In the first quarter of 2025, it completed construction and commenced recording rental income on a $10.5 million capital addition project at an Arizona facility leased to Lifepoint Behavioral Health.

Medical Properties has been making efforts to enhance its liquidity position and financial strength. As of Aug. 5, 2025, the company had approximately $1.2 billion of liquidity. After the February 2025 refinancing transactions, it has no debt maturities coming due in the next twelve months. MPW’s access to diverse capital sources through capital recycling and internal cash flow provides ample financial flexibility and is likely to support its growth endeavors.

What’s Hurting MPW?

The company faces operator concentration risk. Properties leased to Circle Health, Priory Group and Lifepoint Behavioral Health accounted for 22.4%, 11% and 8.5% of MPT’s total revenues, respectively, in the second quarter of 2025. In case of no lease renewal, change in lease agreements, or any adverse development concerning these operators, the company’s financial health and performance could be adversely impacted.

Moreover, potential tenant bankruptcies of some of MPT’s tenants, like Steward Health Care System and Prospect Medical Group, could adversely impact its operating results and financial condition.

Solid dividend payouts remain the biggest attraction for REIT investors. However, MPT has increased its dividend only two times in the last five years, and its five-year annualized dividend growth rate is negative 25.81%.

In the past three months, shares of this Zacks Rank #3 (Hold) company have declined 5.2% against the industry's growth of 2.8%.

Stocks to Consider

Some better-ranked stocks from the broader REIT sector are Host Hotels & Resorts HST and Welltower WELL, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for HST’s 2025 FFO per share has moved 4 cents northward to $1.95 over the past month.

The Zacks Consensus Estimate for WELL’s 2025 FFO per share has moved 4 cents upward to $5.06 over the past month.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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