Apr 27, 2021 at 7:34AM Follow @jimhalley
Medical Properties Trust (NYSE:MPW) gets a lot of upside out of being a real estate investment trust (REIT), not least because it is investing in a market that nearly everyone expects to grow: healthcare spending. The company buys hospitals and leases them back with long-term, triple-net leases.
In 1970, healthcare costs were responsible for 6.9% of the gross domestic product in the U.S. By 2019, that percentage had risen to 17.7%. Of those numbers, hospital and physician services represented half of the spending. According to data from the Centers for Medicare and Medicaid Services, the compound annual growth rate (CAGR) for healthcare spending is expected to be 5.4% through 2028, reaching $6.2 trillion by then, with healthcare expenditures taking up 19.7% of the GDP in 2028.
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1. Medical Properties Trust
Medical Properties Trust is a real estate investment trust (REIT), which means that it s obligated to pay out at least 90% of its annual profits in dividends to shareholders. As long as a REIT is collecting rents and not having problems with tenants, it can make for a solid income investment. And while investing in apartment REITs or ones that may be dependent on collecting cash from out-of-work individuals may be risky, a REIT like Medical Properties Trust, which focuses on the healthcare industry, is much safer. Nearly 85% of the REIT s portfolio is made up of general acute care hospitals and inpatient rehabilitation hospitals. It also offers geographical diversification its 431 facilities are spread across nine countries.
A City s Only Hospital Cut Services. How Locals Fought Back. © Cayla Nimmo for the Wall Street Journal
When the only hospital in a small central Wyoming city stopped delivering babies and cut back on surgeries, local residents sought to start their own. The fight that ensued now stretches to Washington, and is shining an uncomfortable light on one of the country’s biggest hospital chains and its private-equity owner.
LifePoint Health Inc., backed by Apollo Global Management Inc., controls the only hospital in working-class Riverton, Wyo. After LifePoint merged Riverton’s hospital with another facility it owns in the city of Lander, 30 miles away, it began consolidating the hospitals’ services.
Better Buy: Medical Properties Trust vs. Healthpeak Properties Millionacres 2 hrs ago © Provided by The Motley Fool Better Buy: Medical Properties Trust vs. Healthpeak Properties
Healthcare real estate is one of the most resilient and recession-resistant types of commercial real estate you can invest in. Not only are most healthcare properties leased to their tenants on a long-term, triple-net basis, but there are few types of businesses more essential than healthcare.
Two excellent healthcare real estate investment trusts, or healthcare REITs, are
Medical Properties Trust (NYSE: MPW) and
Healthpeak Properties (NYSE: PEAK). However, these two REITs have somewhat different investment styles, so let s take a closer look and see which could be the better buy now.
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