Who is Going to the Hospital?

Where to invest in real estate?

Although we don’t like to admit it, we are all very fragile. Covid certainly made that even more clear to a new generation. Solomon says we started as dust, and we will return to dust. We even say that nothing is certain except death and taxes. But before most of us turn back into dust, we will be a patient in a hospital.

Wayne’s Hospital Visits

You might guess that in 71 years I may have been to the hospital multiple times. Most of these were expensive visits, with the exception of one. I was in a hospital when I was born. I did not return, based on my memory until 1976, when I spent several weeks in a VA hospital in the Milwaukee area for a ruptured appendix. I went to the hospital as an observer at least three times: for the birth of our son, for my wife’s gall bladder surgery, and for the birth of our daughter. I returned another time for a hernia repair operation and have been to the hospital multiple times for lovely colon cancer screenings. I’ve been to the hospital for lab work, dermatology problems, and even for the birth of some of our grandchildren.

Real Estate without Headaches

Although I have yet to find an ETF or mutual fund that is focused on real estate in a way that makes sense to me, I have created our own “REIT ETF” by strategic buys of different REITS in different sectors. Therefore, we have real estate that is focused on consumer retail, warehousing, entertainment, hospitality, and medical properties. This is far better, and far easier than buying apartment buildings or duplexes. My tenants never call me, and I don’t need to think about any capital improvements or plumbing repairs. Someone else pays the real estate taxes, the insurance premiums, the utility bills, and the other surprises that face real estate owners. One of our investments is called Medical Properties Trust.

What I like about MPW

MPW is a value investment. Therefore, I am not expecting huge investment growth. In fact, at the present time our holdings are worth slightly less than our total cost basis. I am OK with this, because YTD income from our MPW shares is $2,982. By yearend total income will be over $4,000. That income covers all of our Medicare Part B supplemental insurance, our Medicare Part D insurance, all of our dental costs, eye care costs and all of our out-of-pocket drug costs.

Furthermore, MPW is an international REIT, but it is focused primarily in the USA. There is good geographic distribution of the assets, and multiple asset types. Management has shown the ability to increase the dividend over the last ten years nine times. Although the increases don’t cover true inflation, the dividend yield is certainly satisfactory.

Options Trades

I bought VLO and MPW this week.

Most of the time I don’t trade options on REIT investments. However, because the price of MPW shares is depressed at the present time, due to interest rate concerns, this week was a good time to buy 500 shares of MPW. After I bought the additional shares, I sold a covered call option contract on all 500 shares. This gave me instant income of $171.59. If the shares are not called away, I will receive another quarterly dividend from the additional shares sometime in September.

Company Profile: Medical Properties Trust, Inc.

Medical Properties Trust, Inc. is a self-advised real estate investment trust formed in 2003 to acquire and develop net-leased hospital facilities. From its inception in Birmingham, Alabama, the Company has grown to become one of the world’s largest owners of hospitals with 431 facilities and roughly 43,000 licensed beds in nine countries and across four continents on a pro forma basis. MPT’s financing model facilitates acquisitions and recapitalizations and allows operators of hospitals to unlock the value of their real estate assets to fund facility improvements, technology upgrades and other investments in operations.

Full Disclosure

Cindie and I own 4,100 shares of MPW as a long-term investment. Although it is not a top-ten investment, the total shares make up more than 2% of our total investments at Fidelity. In addition, I have purchased shares of MPW for our six grandchildren for income that can be invested during opportune times.