Question: Where are people going?
While I thought hotels and hospitality REITs like RHP and APLE were good investments, the Coronavirus has upended that segment in more drastic ways that might be more long-lasting and even catastrophic for the foreseeable future. That is why I sold my shares of RHP and APLE – especially when they both suspended their dividends.
Another REIT stock we own is Medical Properties Trust (MPW). The main ingredient in this REIT is hospital properties. This includes general acute care hospitals, inpatient rehabilitation hospitals and long-term acute care hospitals. These facilities are in the USA, the UK, Germany, Australia, Switzerland and Spain. They also own Women’s and Children’s Hospitals, Regional and Community Hospitals, Medical Office Buildings and Single-Discipline Facilities like cardiovascular hospitals and cancer centers.
Here is why I like MPW: 1) Sadly, the hospital business is picking up; 2) Unfortunately, most of us will continue to need hospitals sometimes for joyous occasions like births and sometimes for extremely difficult times; 3) They are geographically diverse; 4) They have a conservative investment approach and 5) They have diversification in the types of properties they buy.
We own 2,600 shares of MPW and Cindie’s mom has 200 shares in her brokerage account. I bought more shares last week.
This Seeking Alpha contributor talks about this investment in more detail. LINK.
Reminder: While there are no totally safe investments, unless you count how you invest your time for eternity, there are some investments that make more sense than others.
Know Your Flocks & Herds 
Wayne,I love hospitals, but question whether they are a good investment especially at this time. I would watch them closely as I know YOU will. Expenses are going to be far more than reimbursement. Routine care and procedures have been cancelled and these are the money makers. Two hospitals in WV (owned by the same company) have closed during the last few months although I am not sure of the real reasons for their demise. The margin of profit to provide medical care is slim. I have had to determine the cost to doing specific procedures and often the reimbursement was less than the cost of doing the procedure from some providers. Increase volume especially for expensive equipment was key. Short outpatient surgeries made more money. I am sure the cost of caring for patients with the extra precautions has soared as prices for gowns, masks, ventilators, testing, have been inflated. Supply and demand. I have not sold or purchased any investments during this time, although if I was younger and had extra cash there have been some good opportunities to jump in. I pray for you and your family everyday. Thank you for your ministry and may God continue to use your knowledge and wisdom to help others to use God’s gifts wisely. Love you, Aunt Carolyn
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Hi Aunt Carolyn, You are correct and it is wise to be cautious. Not all hospitals or hospital or medical care investments would be a good investment. However, MPW owns the property and buildings, not the business. The hospitals lease the facilities back from MPW. So if the hospital goes bankrupt, that would be a problem for MPW. I think geography also plays a role. I noticed that MPW does not have any properties in Illinois. I’m not surprised by that, because Illinois is notorious for high taxes and irrational governance. I certainly would not buy stock in a company that owned a couple of hospitals, as the risk would be great. In the end, I continue to diversify, and MPW is just one piece of the puzzle. I think hospital and urgent care is a great addition to an investor who wants exposure to real estate. Thanks for sharing your insights! Wayne
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