Medical Properties Trust Inc (NYSE:MPW) has announced the adoption of an updated capital allocation strategy, with the aim of bolstering its balance sheet, reducing its cost of capital, and positioning the company for long-term value creation for its shareholders.
The revised strategy places a priority on expediting debt reduction while also maintaining a focus on returning significant cash to shareholders.
“With this refreshed capital allocation framework, we believe MPT will be even better positioned to deliver long-term value through our profitable investments in hospital real estate,” said Edward K. Aldag, Jr., chairman, president, and CEO.
“As we made clear during our recent quarterly earnings update, our focus is squarely on reducing leverage and improving our long-term cost of debt and equity capital. Our Board is confident these decisive steps will facilitate achievement of our target leverage ratios and create significant strategic and financial flexibility.”
Over the past eighteen months, MPT has undertaken a series of transactions that have impacted adjusted funds from operations (AFFO), including partnering with Macquarie Asset Management for eight Massachusetts hospitals, repurchasing 14 facilities from Prime Healthcare, and selling seven Australian hospitals.
The company has also announced additional transactions slated to close in the latter half of 2023. These transactions include the sale of its Connecticut hospitals to Yale New Haven Health for approximately $355 million and the remaining Australian portfolio for about $300M.
While these transactions have been profitable, they have led to a reduction in MPT's leased assets by approximately $2.5 billion.
Moreover, MPT has announced today it will declare a quarterly cash dividend of $0.15 per diluted share. This dividend will be paid on October 12 to shareholders of record as of September 14. The initial payout aims to be less than 60% of the projected near-term AFFO.
The company will also pursue carefully chosen additional transactions that strengthen underwritten asset values. This includes exploring refinancing, sales, and joint-venture opportunities that facilitate debt repayment.
Finally, the company said it plans to scale back discretionary operating expenses and other costs to align more closely with the reduction of its asset base and near-term acquisition activities.
MPW shares fell 3.5% in pre-open Monday.