Shares of hospital real estate master limited partnership Medical Properties Trust (MPW 14.05%) rallied 13% on Thursday as of 1:48 PM EDT, even as the broader markets were largely down on fears over tariffs.

Medical Properties reported earnings this morning. After enduring a difficult couple years, investors seemed encouraged that the company's problems with key tenants may now be behind it.

Medical Properties beats on revenue and normalized funds from operations

In the fourth quarter, Medical Properties reported revenue of $231.8 million and normalized funds from operations (NFFO) of $0.18. While the NFFO number was down 50% from the year-ago quarter, both metrics actually beat expectations.

Medical Properties is a landlord to hospitals, and just in January, Prospect officially declared Chapter 11 bankruptcy, as expected. MPW acquired Prospect Health's hospitals in a sales-and-leaseback transaction back in 2019. It also made a loan to Prospect in 2023. However, many of Prospect's facilities were not able to meet the high rent payments over time and defaulted on rent payments to MPW in June 2024.

In response to Prospect's bankruptcy and the prior bankruptcy of key tenant Steward Health, Medical Properties Trust had to sell some properties to de-lever while also going through protracted legal processes. Still, over the past year, MPW has lowered its debt by about 12%.

Additionally, CEO Edward Aldag Jr. noted improving trends across the rest of Medical Properties' portfolio, such as increasing admissions and surgical volumes. Finally, Aldag also noted that MPW had signed a term sheet that would allow Prospect to sell its hospitals, presumably the ones backed by MPW's loans.

A relief rally after a trying few years

While Medical Properties is essentially a lender and should be able to benefit from either selling properties or collecting rents from new tenants, the two bankruptcies have caused a lot of disruption.

But with these two large tenants' bankruptcies now behind it, investors may be looking forward to better times. After all, even with a current quarterly dividend payout of $0.08 -- 72% lower than MPW's peak dividend of $0.29, last paid in June 2023 -- the stock still yields a hefty 6.7%.

Still, for those betting on a turnaround, one should probably research MPW's largest existing tenants to try to get a sense of their financial health, in case other surprises are lurking.