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Omega Healthcare Vs. Medical Properties Trust, Which Is The Superior Healthcare REIT?

Aug. 04, 2021 9:00 AM ETMedical Properties Trust, Inc. (MPW), OHI138 Comments
Steven Fiorillo profile picture
Steven Fiorillo


  • I'm putting Omega Healthcare Investors and Medical Properties Trust head to head to answer the question which is the better investment today?
  • My findings and conclusions may surprise you as I wouldn't have predicted how the analysis unfolded if you gave me multiple tries.
  • I am basing my analysis across their income statements, balance sheets, and dividend metrics to determine the outcome.

REIT. Real estate investment trust. Financial Market. Hand pressing button on screen
Funtap/iStock via Getty Images

REITs are a fantastic way for investors such as myself to gain exposure to real estate since I have no intention of becoming a landlord. There are three types of REITs, including equity, mortgage, and hybrid REITs, then many sectors, including office, retail, industrial, lodging, residential, healthcare, self-storage, infrastructure, data

This article was written by

Steven Fiorillo profile picture
I am focused on growth and dividend income. My personal strategy revolves around setting myself up for an easy retirement by creating a portfolio which focuses on compounding dividend income and growth. Dividends are an intricate part of my strategy as I have structured my portfolio to have monthly dividend income which grows through dividend reinvestment and yearly increases. Feel free to reach out to me on Seeking Alpha or https://dividendincomestreams.substack.com/

Analyst’s Disclosure: I/we have a beneficial long position in the shares of OHI, MPW, AAPL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: I am not an investment advisor or professional. This article is my own personal opinion and is not meant to be a recommendation of the purchase or sale of stock. Investors should conduct their own research before investing to see if the companies discussed in this article fit into their portfolio parameters.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (138)

OHI has trouble with rent collections sold out @$33.00
Good call. MPW has greatly outperformed OHI this past week.
good article.
I read your article thanks, very good.

Here is another thing Steve. I was looking at buying OHI because of there assisted living properties. Peak is selling theres. Look at BKD, the largest skilled nursing company, is losing money. GENN sells for a quarter a share.

The nursing home market looks like its in taters. I am wondering how OHI keeps profitable?

But in the long term skilled nursing facilities is a great market. I know a guy whose parents where in nursing homes. They paid 25,000 a month for both of them to stay.

Steve, which company stands to benefit the most when nursing homes make a comeback?Because that is where I want to be. I am just not that fond of what MPW does.
theheckwithtech profile picture
I concur with this article and have been accumulating MPW.
Alduin profile picture
Thanks for this concise comparison. Good work.
No mention of debt, tenant credit quality, tenant concentration or if MPW's income came from acquisitions. I would much rather hold BDCs than either of these names.
@user1416 “MPW's income came from acquisitions”

REITs grow mainly by acquiring properties.
@arnold.bird Yes, and acquisitions come with debt- which also wasn't mentioned. And apples-to-apples comparisons usually include some mention of organic growth and recurring revenue. Fluff article.
@user1416 "I would much rather hold BDCs than either of these names." I have MPW and recently sold OHI. MPW has no share price growth and OHI is declining. Last year I bought MPW and WPC which have produced very small gains compared to BDCs bought during the same time frame. I constantly have to force myself to keep the REITs thinking I need some real estate exposure but total return over the last year is definitely weighted to BDCs.
@Steven Fiorillo

Thanks for the article. But trying to understand why have you not compared debts and it's impact on future until debt is paid off ?

Total Liabilities 5year 2016-2020

As of 31-Dec 2016 2017 2018 2019 2020
OHI -> 5,091 5,218 5,146 5,661 5,656
MPW-> 3,170 5,200 4,297 7,439 9,490

For MPW debt has tripple. Almost flat for OHI.

Please share your views on the debt. Does MPW debt sound concerning ? No, why ? Yes, why ?

@Steven Fiorillo any thoughts on the debt ?
Although they are both healthcare REITs they are very different from one another. Perhaps MPW would be more comparable to something like DOC, which would compare hospitals to doctors offices, or OHI to LTC which are both senior living/nursing home centered. In any case I found your comparison of these two insightful.
And no mention of DEBT in the entire article. Jeez.
Great analysis. Thanks.
There is a math error in the depreciation example. Twenty years of depreciation at $200,000 per year does not total to $5,000,000.Thanks for the article, but as others have commented, per share metrics should have been provided. A discussion of risk factors, especially the financial condition of their tenants would have been helpful. In that regard, I believe that while both OHI and MPW have significant risk, MPW has more risk.
Own MPW..thanks for this article and analysis.
theheckwithtech profile picture
I never buy OHI over $30, which has served me well over the years. Just began accumulating MPW this year.
Adream profile picture
Don't get why comparison is not done more in a /share basis though. Am I wrong or you compare income in absolute term? But then it's just bigger = better ? But for REITs that are usually quite dilutive /share basis comparison make more sense IMO.
liuysdr profile picture
Thanks for the nice analysis! I own both. How about the quality of the management team at each of the se two companies which can‘t be measured by numbers?
@liuysdr That definitely plays a role, but that evaluation is so subjective not sure how you could differentiate the teams. Essentially results are the metric that management is evaluated by, no?

Having invested in both, I think both have excellent management teams, but MPW's Aldeg has been a visionary in seeing the hospital space as ripe for investment and that theme has more opportunity than SNF right now, as well as more growth at higher cap rates. MPW might hit a wall down the road but it has extensive networking and relationships in the hospital sector and a reputation that gives it an advantage.
Kenmare profile picture
@RealRural One metric I have used successfully in the past as a kind of proxy to assess management quality is Return on Invested Capital. It's not perfect but at least it gets at the quality of management's capital allocation decisions.
Majestic2020 profile picture
Thank you for your work.
Growth in revenue, operating income and net income are all rather immaterial to a REIT investor.
MPW out performs OHI near term because of the Pandemic.

Once the Pandemic is over, OHI will pick up the steam. The best way is to buy both. But if you ask me, I would bet in the next 2 to 3 years, OHI will outperform MPW in total returns (div plus price appreciation), it is not MPW is not as good, it is because MPW was and is still less impacted by the pandemic. So MPW will go on its normal course but OHI will come out of abnormal to being normal when that happens, OHI will outperform MPW. Still the best way to invest is to own a portfolio so you capture opportunities in all areas.
@HW12 I think you will lose that bet. The headwinds in the SNF space after the many failures of SNFs in the pandemic, resulting in law suits and re-evaluation of how poorly they are operated, are going to persist. Labor shortages are going to be exacerbated, the huge amount of bailout funds from COVID relief packages will taper off, and there is broad effort to reform an industry that revealed serious shortcomings.

In short, far more upheaval in SNFs than in major metro hospitals and specialty care facilities.
@RealRural so what is going to happen to the old people and increasing aged population ? where will they go ?
@time1 the bone factory where they will be recycled and replaced with new hoomans
I own both, and I like both, so at this point in time I'm keeping both.
@DonP111 I dumped all my OHI after the recent earnings report. OHI is about to break out of a bear flag and is heading for 30/sh and perhaps a bit lower.

MPW is one of the best bargains in the stock market right now. It takes all my strength not to buy more. It’s one of my biggest positions.
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