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Medical Properties: "Different by Design"

06/29/2016 8:00 am EST


Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

Our latest recommendation is a $3.6 billion real estate investment trust that owns and finances hospitals, acute care facilities, rehab centers and medical offices, notes Mark Skousen, editor of High-Income Alert.

Healthcare, of course, is one of the largest and fastest-growing segments of the US economy and Medical Properties Trust (MPW) trust -- based in Birmingham, Alabama -- is different by design.

In addition to having more than 100 properties in the United States and Europe, MPW provides capital to acute care facilities of all kinds through long-term, triple-net leases.

Under these agreements, tenants pay real estate taxes, maintenance and insurance. And MPW will provide up to 100% financing to reduce an organization’s cost of capital.

By allowing healthcare operators to tap the value of their real estate and put it to work in facility improvements, technology upgrades, new staff and even construction, MPW allows healthcare centers to operate more effectively and cost efficiently.

As the only healthcare real estate investment trust focused exclusively on hospitals, MPW is low risk. According to a MedPac report to Congress, fewer than 1% of hospitals close each year.

In the most recent quarter, earnings per share jumped 61% on a 35% increase in revenue. The trust enjoys a whopping 63% operating margin. And the yield is an attractive 6.2%.

MPW has beaten analysts’ estimates in each of the last eight quarters. I expect this trend to continue. MPW should earn $1.34 a share this year and nearly $1.50 in 2017.

In short, this is a low-risk, high-yielding trust with excellent upside potential. Expect good news when it announces quarterly results again in a few weeks.

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By Mark Skousen, Editor of High-Income Alert

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