Healthcare real estate investment trust (REIT) Medical Properties Trust (NYSE: MPW) has been expanding at a healthy pace over the last decade, increasing its assets at a 30% compound annual growth rate. That growth has paid big dividends for investors as the hospital owner has grown its normalized FFO per share at an 8% compound annual rate, enabling it to increase its dividend in each of the last seven years.
The company has hit the accelerator this year thanks to a surge in acquisitions, which helped drive a 24% year-over-year increase in normalized FFO during the third quarter, the fastest growth rate in the REIT sector for a company of its size. That upward trend appears poised to continue given its current deal pipeline.
Another busy quarter
While hospitals have been ground zero for the COVID-19 outbreak, it hasn't had any negative impact on Medical Properties. The company collected nearly 100% of the current rent and interest due during the quarter "as operating conditions continue to approach and, in some instances, exceed pre-COVID levels," according to CEO Edward Aldag in the earnings press release.
Meanwhile, the REIT continues to purchase hospital properties. During the quarter, it bought an inpatient rehab facility in Germany and a hospital in the U.K. and invested $300 million into a medical center in California. These deals brought the company's year-to-date acquisition total to nearly $2.9 billion.
The company has a few other deals on track to close during the fourth quarter, including a $135 million investment in three hospitals in Colombia. On top of that, it expects to complete two U.S. post-acute care development projects and several other small expansion and renovation projects during the quarter. That should bring its 2020 investment total to more than $3 billion. These deals will help drive additional normalized FFO growth in 2021, which should set the stage for another dividend increase.
2021 looks to be shaping up to be another big year
Medical Properties Trust anticipates that its acquisition spree will continue next year. Aldag stated: