Why Medical Properties Trust Stock Rallied Nearly 12% in July

Shares of Medical Properties Trust (NYSE: MPW) jumped 11.6% in July, according to data provided by S&P Global Market Intelligence . The main driver was the real estate investment trust's (REIT) continued progress on its plans to bolster its liquidity. The hospital landlord sold eight more facilities last month, pushing it further past its liquidity target.

More progress

Medical Properties Trust has battled several notable headwinds in recent years. Its two largest tenants have struggled financially, impacting their ability to pay rent. That issue and much higher interest rates have made it more challenging for the healthcare REIT to refinance maturing debt. As a result, the REIT has had to take steps to shore up its liquidity.

The company took another step forward on its plan to bolster its liquidity last month. It agreed to sell a 50-bed hospital in Arizona and seven freestanding emergency departments for $160 million. That sale price was above the $92 million the REIT initially invested to build the facilities for their original operator between 2015 and 2017. That operator subsequently went bankrupt in 2017. Medical Properties Trust later released the properties to Dignity Health at the same rental rate. That company is now buying them from the REIT.

That sale pushed the REIT further past its liquidity goal for the year. Medical Properties Trust initially sought to raise $2 billion by the end of this year. However, it has now raised over $2.5 billion. In addition to selling several properties, the REIT formed a joint venture around its Utah properties that brought in $1.1 billion and secured a 10-year, $800 million loan backed by properties in the U.K. These moves have enabled it to repay its 2024 debt maturities and pay down its credit facility.

The positive progress in its liquidity situation helped offset some bad news about its top tenant, Steward Health Care . The bankrupt hospital operator is struggling to sell its hospital operations. It must sell those operations to repay creditors, including Medical Properties Trust. The REIT hopes the new operators will either resume paying rent on those facilities or buy the properties.

Even more progress is needed

Medical Properties Trust continued to make progress in shoring up its balance sheet last month. That's giving it more financial flexibility to deal with its troubled tenants and its debt maturities. However, the REIT still has a long road ahead, given Steward's troubles in selling off its hospital operations. While those sales are a potential major upside catalyst for the REIT, its stock will likely remain volatile until there's more clarity on that situation.

Matt DiLallo has positions in Medical Properties Trust. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .