Is MEDICAL REALTY TRUST stock worth buying?

Therapeutic Realty Trust, Inc. (NYSE: MPW)The stock seems to keep falling. After dropping 53% in 2022, it's done even worse in 2023, dropping 56%. 2024 so far, it's down about 18% - and it would have fallen even more if not for the recent rebound.

Investors are right to be bearish on the company. Maternity Realty Trust has not been in the best of financial shape. The company cut its dividend last year, it has had problems with its tenants, and the rise in interest rates in recent years has not made real estate investment trusts (REITs) a popular investment.

But with the stock's losses easing recently, and with the REIT seemingly shaking off a lot of bad news, is it finally time to take a chance on this severely beaten-down stock?

Why MEDICAL REAL ESTATE can turn the tide!

Over the past few years, healthcare REITs have been facing challenges; not only has COVID hurt healthcare organizations and hospitals, but rising interest rates have also made borrowing more expensive. In addition, rising interest rates give investors a reason to abandon stocks for safer investment options such as bonds, which become more attractive as interest rates rise.

The REIT's share price hasn't been this low since 2009. Investors are not optimistic that this healthcare stock can turn around. But it's good to see that management is trying to clean up its balance sheet. The company is looking to sell assets to increase liquidity and put itself in a better position for the future.

One of the most promising updates in the company's recently released financial results is that the issues related to Steward may be close to being resolved.

In a press release, Edward K. Aldag Jr., Chief Executive Officer, said, "With respect to Steward, we are encouraged by the interest shown to date by other hospital operators in these critical facilities, and we anticipate that over time, this real estate portfolio will either return to profitability or become an additional source of liquidity," he added. We expect this real estate investment group to return to profitability over time or become an additional source of liquidity.

Either way, there's hope that Steward's problems and concerns will stop dragging down its stock price, whether through acquisitions or operational improvements. The REIT also expects to receive $2 billion in additional liquidity from asset sales this year.

There are still many risks ahead

Ultimately, much will depend on how the sale of the assets progresses and at what price they can be sold. There's also the question of how much the size of the carpet may shrink after all these deals are done, and what kind of growth prospects investors can expect from the company.

While Koon's quarterly dividend of $0.15 per share is much smaller than last year's ($0.29), it could still prove to be too high if the company doesn't generate enough working capital (FFO) to pay the dividend once all the dust settles and the deal is finalized.

Last year, the company reported a net loss of $556.5 million, but impairment charges and write-offs severely impacted its earnings, especially in the fourth quarter. With asset sales expected this year, investors should be cautious about these latest business results, as Maternity Property Trust's financial picture could look very different in a year or two.

But it's also a big unknown: how much revenue will Maternity Realty Trust generate, how much financial and fiscal freedom will it have, and will its rent collection issues be resolved? Until these issues are clarified, this will remain a high-risk stock.

Is Maternity Property Trust worth the risk?

This stock is not suitable for risk-averse investors. Although its share price has fallen sharply in the last few years, the mass of mass could get worse. Investors should not assume that the price has bottomed out.

However, if you are willing to take the risk, the Maternity Realty Trust could be an investment for the Barbarian. It does have a diverse portfolio of assets across many countries. If interest rates fall, REITs will certainly become a more attractive option for investors.

But unless you can afford all the risk and uncertainty surrounding Maternity Realty Trust stock, it's best to avoid it. Although the company cut its dividend last year, investors should not assume that the current payout is safe.

Should you invest $1,000 in a therapeutic REIT now?

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David Jagielski does not own any of the shares listed above.The Motley Fool does not own any of the shares listed above.The Motley Fool has a disclosure policy.

Is MEDICAL REALTY TRUST Stock Worth Buying? This post was originally published by The Motley Fool.