Financial research company and tech founders who accuse Medical Properties Trust of different forms of misconduct are known to have sued large companies in the past.
Viceroy Research LLC released a report accusing Medical Properties Trust Inc., (NYSE: MPW), of non-commercial transactions and other financial misconduct in January. Viceroy Research LLC is being sued by MPT for publishing this report and making other allegations about MPT. Fiyyaz Pirani, as trustee of Imperium Irrevocable Trust and a shareholder in MPT, filed a class action lawsuit against the company, alleging that it committed fraud, misled investors, about the status for multiple hospital properties. The lawsuit targets one of MPT’s tenants, Prospect Medical Holdings Inc.
Axios reported that Pirani is also the founder of Houston software development company Raven. He has been named as the lead plaintiff in two lawsuits filed against 2U and Slack. A recent settlement of $37 million was reached in the 2U lawsuit.
Medical Properties Trust released the following statement regarding Pirani's lawsuit and Viceroy's suit:
Since over 20 years MPT has been focused on investing profitably in hospital real estate in order to create value and infrastructure for communities that are in need. We have successfully achieved this goal without distractions from baseless accusations by third parties until recently. Our stakeholders expect us to correct defamatory, false and intentionally misleading statements. We will do this with our lawsuit against Viceroy and our defense of the class action suit. We are looking forward to proving the validity of our claims and refocusing our efforts on what we do best, which is delivering value for the hospitals we invest in all over the world.
According to MPT’s lawsuit against Viceroy's Fraser John Perring - a founding member of Viceroy - has crowned him a ‘Grand Poobah’ of short selling. He was previously a social worker who had his license revoked for 'deliberately, persistently and dishonest behaviour'.
According to MPT’s lawsuit against Viceroy, Viceroy has been fined roughly $2.8m by South African financial regulators in relation to the company’s 2018 campaign that deflated the stock value for South African bank Capitec.
No one from Pirani or Viceroy was available to comment.
Medical Properties Trust has also refuted a number of claims that Viceroy made in its lawsuit against the entity.
Steven Hamner, CFO of Medical Properties Trust, told the BBJ that the concept of revenue roundtripping was one of their most important allegations. "That is not only conceptually logical or practical, but also impossible."
Viceroy, for example, claimed that MPT’s $27.5 million commitment to build a new hospital near Houston in Texas was an overpayment of a facility by several times. This supported its claim that MPT engages'revenue-round-tripping schemes', because it claimed that the cost of development of the property and the market value in question were $9.1 millions.
MPT claimed that in its lawsuit against Viceroy that virtually all the investment was made by a developer, not an operator-tenant. This does not qualify as revenue round-tripping. It also said that the property would earn it over $2 million per year for the next 20 years, more than enough to cover its investment.
Hamner also emphasized that MPT has consistently gained profits when it sells real estate, and does not overpay its hospitals.
Hamner stated, "Last Year we sold our Massachusetts Facilities into a Joint Venture and Recognized a $600 Million Gain." "That is a 50% gain, and we have only owned these facilities for five year." This is a good indicator that we are not overpaying. We almost always make money when selling facilities. We've almost always made substantial gains.
Viceroy accused MPT in one of its reports of buying hospitals in Malta "previously operated by businessmen who were under investigation for corrupt practices."
Hamner stated that 'We do not -- and have never -- owned anything in Malta. We don't own, or we've ever owned, anything there, whether directly or indirectly.
The accusations have still had an impact on MPT.
Viceroy's report was cited in MPT's suit against Viceroy. According to the lawsuit, University Health System withdrew from a possible deal in Bexar county, Texas, earlier this year.
University Health said its mission and values were not in line with MPT. MPT's suit states that a public official who was involved in the deal stated there was a "moral obligation" to avoid doing business with entities which had shady practices. This refusal to do any business with MPT or Steward, MPT’s tenant, is a direct result of the defendants' defamation.
Hamner stated that 'our shareholders have been very supportive even though they've seen the negative impact of these allegations on their financial positions. But our relationship with existing shareholders has remained strong. We are always in front of them and we try to keep everything up to date.
According to MPT’s lawsuit, S&P Global Ratings also downgraded MPT’s issuer rating from BB+ (the highest) to BB (the lowest) after Viceroy launched its campaign against MPT. MPT's share price fell over 35% by March 30 since Viceroy started its campaign.
Hamner stated that the company will continue to pursue its mission of recovery, despite seeking justice through court. Hamner also emphasized that, as in much of the rest of the world, the United States still has a huge need for hospital care. Medical Properties Trust, he said, has invested around $20 billion into hospitals over the past 20 years.
Hamner stated that MPT's 20 billion dollars over the past 20 years have gone a long ways to filling in this resource gap.