With a low price-earnings ratio of 5 and now trading at just 69% of book value, some might view it as a possible value stock but with a less-than-special price-to-free cash flow of 2 and more long-term debt than equity, that’s unlikely. Wall Street analysts are forecasting a 36% drop in earnings next year.

Investors now will be asking whether Medical Properties’ 11% dividend at its current price is sustainable. With the Federal Reserve taking interest rates higher and with mortgage yields going straight up, REITs like this one may be discovering declines in the underlying value of buildings and land, not to mention the increased costs of financing and refinancing.

Take a look at the daily price chart for Medical Properties Trust Inc.:

Oct. 21 shows a lower low than the earlier October low and on substantial volume. 

Here’s the daily chart of the benchmark for REITs, the Real Estate Select Sector SPDR Fund:

The fund that represents a large group of REITs closed up by 0.7% on Oct. 21. 

It’s clear that Medical Properties is underperforming other REITs.

Here’s the weekly price chart for the company:

This REIT is down for the week ending Oct. 21 by 5.89%

To compare, here’s the REIT benchmark fund’s weekly chart:

The Real Estate Select Sector SPDR fund closed the week ending Oct. 21 up by 2.67%.

That’s quite a difference.

It probably doesn’t help that Medical Properties Trust has been downgraded by four leading investment firms this year, beginning in March. That’s when Bank of America Securities lowered its rating on the REIT from buy to neutral with a price target of $21. In April, Jefferies Group reduced its rating on the company from buy to hold with a price target reduction from $25 to $21. 

In June, JP Morgan Chase & Co. downgraded Medical Properties Trust from overweight to neutral. It lowered its price target from $24 to $18. In July, Credit Suisse Group AG took its rating on the REIT from outperform to neutral with a price target reduction from $23 to $17.

In retrospect, these analysts seem to have done their homework.

See More On Real Estate From Benzinga:

Not investment advice. For educational purposes only. 

Charts: Courtesy of StockCharts