What happened
Specialty real estate investment trust (REIT) Medical Properties Trust (MPW 2.65%) wasn't all that special for investors on Thursday. On the back of a recommendation downgrade from an analyst at an influential bank, shares of the company lost nearly 2% of their value. By contrast, the S&P 500 index rose by roughly the same percentage rate.
So what
The downgrading analyst was Bank of America Securities' Joshua Dennerlein. He now has Medical Properties Trust pegged at neutral, one rung down from his previous buy. In addition to changing his recommendation, Dennerlein also cut his price target on the REIT, to $10 per share from the preceding $13.
The downgrade doesn't come at a particularly opportune time for Medical Properties Trust.
REITs typically depend on banks to provide them with various forms of financing, as their core assets -- properties -- are ferociously expensive to acquire. The recent tumult in the banking sector following the meltdown of SVB Financial Group's Silicon Valley Bank and regional lender First Republic Bank is having unpleasant knock-on effects on certain REITs.
The recent rise in interest rates is also a concern, as this makes funding more expensive for businesses like REITs that rely on bank loans.
Now what
Medical Properties Trust, meanwhile, has had to cope with its own set of struggles. This includes one of its tenants filing for bankruptcy last year and another that is several months behind in fully paying its rent.
That said, the U.S. population is getting older and will thus need more medical care and stays at facilities like the ones the REIT operates. So perhaps its stock is a good, discounted play on long-term trends for investors willing to weather the current storms.
