What happened
Shares of healthcare real estate investment trust (REIT) Medical Properties Trust (MPW 2.27%) are under heavy pressure today. The healthcare REIT's stock was down by 8.3% as of 12:02 p.m. ET Thursday afternoon.
What's weighing on the company's shares today? Ahead of the opening bell, Medical Properties Trust released its 2022 fourth-quarter and full-year results. Although the company's top- and bottom-line results were largely in line with analysts' expectations, Medical Properties Trust reported a $171 million impairment charge related to four properties leased to Prospect Medical Holdings in Pennsylvania. In addition, Medical Properties Trust included a $112 million write-off on unbilled Prospect rent in its latest financial report.
So what
Medical Properties Trust stock lost over half of its value last year in response to concerns emanating from a tenant's (Pipeline Health) bankruptcy filing. Investors are clearly concerned that the unfavorable dynamic of hot inflation and rising interest rates will make it tough for hospitals to pay rent in a timely manner.
Unfortunately, this latest impairment charge and rent write-off won't help to change this narrative in the short term. Complicating matters further is the fact that experts have no clear consensus on where the global economy is headed over the next 12 months.
Now what
Is Medical Properties Trust stock a screaming buy on this hefty pullback? With the company's shares trading at under 9 times 2023 estimated earnings following this dip, this bearish narrative may be overdone at this point. Hospitals have historically been reliable tenants after all. So, while there is a risk that more tenants will fall behind on rent as the economy softens, Medical Properties Trust stock appears to have baked in most of this downside risk at this point.
