Overlooked news

Medical Properties Trust (MPW) is issuing a Euro denominated senior note for 500mm Euros with a 3.325% coupon.  This is fixed rate and matures in 2025.  The market price did not move on the news, but its fundamentals did.

This is a remarkably cheap cost of capital which not only makes MPW less sensitive to interest rates, but it will be wildly accretive with an asset purchase.  Most of MPW’s acquisitions are in the 8% to 10% range, providing a massive spread.  Once proceeds are invested, FFO/share should increase.

Retail data came out showing strong sales in February.  This should benefit CBL and WPG, but the stock prices continue to languish.  With tax refunds about to hit consumers’ pockets, March should be a strong month as well.  As the gap between fundamental valuation and market valuation widens, all we can do is hang on and wait for it to close.  Both WPG and CBL declared their dividends recently and continue to support shareholders with sizable dividends.

Commentary may contain forward looking statements which are by definition uncertain.  We retain no obligation to update or correct forward looking statements should the available information change.  Actual results may differ materially from our forecasts or estimations.

 

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