Medical Properties: Independent investigation found no evidence of wrongdoing

The independent members of the Board of Directors of Medical Properties Trust last night released a letter to shareholders regarding the findings of an independent, forensic investigation into short-seller allegations, including with respect to transactions between the company and Steward Healthcare. The Board’s Audit Committee engaged Wachtell, Lipton, Rosen & Katz to conduct this investigation, which was completed in February 2023. The letter said in part: “Over much of the past two years, Medical Properties Trust has been the target of considerable scrutiny from short-selling hedge funds as well as certain media outlets. As fiduciaries for our shareholders, the Board treats these matters with the utmost seriousness. In response to certain claims asserted by Viceroy Research, the Board’s Audit Committee engaged Wachtell Lipton in early 2023 to conduct an independent investigation into the short-seller allegations, including with respect to MPT transactions involving Steward Healthcare beginning in 2016. Wachtell Lipton in turn retained a leading global consulting firm to assist with financial forensics as part of this investigation. No limitations or restrictions were placed on the scope of the investigation and management cooperation with the investigation was exemplary. The key findings from the investigation are as follows: The investigation identified no evidence that MPT gratuitously overpays its operator-tenants for real estate. The investigation identified no evidence of improper round-tripping. The investigation found no evidence of improper recognition of ‘uncollectable’ rent through GAAP-mandated straight linerevenue recognition. The investigation also found no evidence to substantiate the allegation that MPT was required to consolidate Steward’s financial results. The investigation concluded that neither Manolete Health nor MPT has an ownership interest in any Malta property or hospital. The investigation yielded no evidence that management manipulated acquisitions or other metrics to meet compensation targets. The investigation yielded no evidence of concerns regarding management integrity. Our Board continues to stand firmly behind our management team.”