KING OF PRUSSIA, Pa.,
April 26, 2021 /PRNewswire/ --
Universal Health Realty Income Trust (NYSE:UHT) announced today
that for the three-month period ended March 31, 2021, net
income was $5.6 million, or
$.41 per diluted share, as compared
to $4.6 million, or $.33 per diluted share, during the first quarter
of 2020.
As calculated on the attached Schedule of Non-GAAP Supplemental
Information ("Supplemental Schedule"), our funds from operations
("FFO"), were $12.7 million, or
$.92 per diluted share, during the
first quarter of 2021, as compared to $11.2
million, or $.82 per diluted
share, during the first quarter of 2020.
The increase in net income of $1.0
million, or $.08 per diluted,
generated during the first quarter of 2021, as compared to the
first quarter of 2020, was due to: (i) an increase of $315,000, or $.02
per diluted share, in bonus rental earned on the three hospital
facilities leased to subsidiaries of Universal Health Services,
Inc. ("UHS"); (ii) an increase of $176,000, or $.01
per diluted share, due to a decrease in our interest expense
resulting primarily from a decrease in the average cost of
borrowings pursuant to our revolving credit agreement, and; (iii)
an increase of $541,000, or
$.04 per diluted share, resulting
from an aggregate net increase in the income generated at various
properties, including the income recorded in connection with the
newly constructed Clive Behavioral Health facility, a 100-bed
behavioral health care facility located in Clive, Iowa, that was completed in late
December, 2020.
During the first quarter of 2021, as compared to the first
quarter of 2020, our FFO increased $1.5
million, or $.10 per diluted
share. The increase was due primarily to the increased net income,
as discussed above, as well as an increase in depreciation and
amortization expense, largely due to the deprecation expense
recorded in connection with the recently completed Clive Behavioral
Health facility.
Dividend Information:
The first quarter dividend of $.695 per share, or $9.6
million in the aggregate, was declared on March 3, 2021 and paid on March 31, 2021.
Capital Resources Information:
At March 31, 2021, we had $247.7
million of borrowings outstanding pursuant to the terms of
our $350 million credit agreement and
$96.7 million of available borrowing
capacity, net of outstanding borrowings and letters of credit. The
credit agreement has a scheduled maturity date of March, 2022,
however, we have the option to extend the maturity date for up to
two additional six-month periods.
Disclosures Related to Certain Hospital Facilities:
Southwest Healthcare System, Inland Valley Campus:
As previously disclosed, a wholly-owned subsidiary of UHS has
notified us that it is planning to terminate the existing lease on
Southwest Healthcare System, Inland Valley Campus, upon the
scheduled expiration of the current lease term on December 31, 2021. As permitted pursuant to the
terms of the lease, UHS has the right to purchase the leased
property at its appraised fair market value at the end of the
existing lease term. However, UHS has proposed exchanging potential
substitution properties, with an aggregate fair market value
substantially equal to that of Southwest Healthcare System, Inland
Valley Campus, in return for the real estate assets of the Inland
Valley Campus. The proposed substitution properties consist
of one acute care hospital (including a behavioral health pavilion)
and a newly constructed behavioral health hospital. The Independent
Trustees of the Board have approved the proposed property
substitution subject to satisfactory due diligence and completion
of definitive agreements. The effective date of the property
substitution is expected to coincide with the scheduled lease
maturity date of December 31, 2021.
Pursuant to the terms of the lease on the Inland Valley Campus, we
earned $1.1 million of lease revenue
during the three-month period ended March
31, 2021 ($662,000 in base
rental and $454,000 in bonus rental)
and $4.4 million of lease revenue
during the year ended December 31,
2020 ($2.6 million in base
rental and $1.8 million in bonus
rental).
Kindred Hospital Chicago Central:
The existing lease on Kindred Hospital Chicago Central, a 95-bed
specialty hospital located in Chicago,
Illinois, is scheduled to expire on December 31, 2021. The tenant of the facility has
recently notified us that they do not intend to renew the lease
upon its scheduled expiration. We have begun marketing this
property to potential new tenants. However, should this property be
vacant for an extended period of time, or should we experience a
decrease in the lease rate on a future lease as compared to the
current lease, or incur substantial renovation costs to make the
property suitable for another operator/tenant, our future results
of operations could be unfavorably impacted. Pursuant to the
terms of the lease, we earned approximately $390,000 of lease revenue during the three-month
period ended March 31, 2021 and
$1.6 million of lease revenue during
the twelve-month period ended December 31,
2020.
General Information, Forward-Looking Statements and Risk
Factors and Non-GAAP Financial Measures:
Universal Health Realty Income Trust, a real estate investment
trust, invests in healthcare and human-service related facilities
including acute care hospitals, behavioral health care hospitals,
specialty hospitals, medical/office buildings, free-standing
emergency departments and childcare centers. We have investments in
seventy-two properties located in twenty states.
This press release contains forward-looking statements based on
current management expectations. Numerous factors, including
those disclosed herein, those related to the anticipated impact of
COVID-19 on our financial results, as well as the operations and
financial results of each of our tenants, those related to
healthcare industry trends and those detailed in our filings with
the Securities and Exchange Commission (as set forth in Item
1A-Risk Factors and in Item 7-Forward-Looking
Statements in our Form 10-K for the year ended December 31, 2020), may cause the results to
differ materially from those anticipated in the forward-looking
statements. Readers should not place undue reliance on such
forward-looking statements which reflect management's view only as
of the date hereof. We undertake no obligation to revise or update
any forward-looking statements, or to make any other
forward-looking statements, whether as a result of new information,
future events or otherwise.
Many of the factors that could affect our future results are
beyond our control or ability to predict, including the impact of
the COVID-19 pandemic. Future operations and financial results of
our tenants, and in turn ours, could be materially impacted by
developments related to COVID-19. Such developments
include, but are not limited to, the length of time and severity of
the spread of the pandemic; the volume of cancelled or rescheduled
elective procedures and the volume of COVID-19 patients treated by
the operators of our hospitals and other healthcare facilities;
measures our tenants are taking to respond to the COVID-19
pandemic; the impact of government and administrative regulation
and stimulus on the health care industry; declining patient volumes
and unfavorable changes in payer mix caused by deteriorating
macroeconomic conditions (including increases in uninsured and
underinsured patients as the result of business closings and
layoffs); potential disruptions to clinical staffing and shortages
and disruptions related to supplies required for our tenants'
employees and patients; and potential increases to expenses
incurred by our tenants related to staffing, supply chain or other
expenditures. There may be significant declines in future
bonus rental revenue earned on our hospital properties leased to
subsidiaries of UHS to the extent that each hospital continues to
experience significant decline in patient volumes. We believe that
the underlying businesses operated by certain of our other tenants
have been, at various times, either temporarily closed entirely or
operating at substantially reduced hours. These factors may
result in the inability or unwillingness on the part of some of our
tenants to make timely payment of their rent to us at current
levels or to seek to amend or terminate their leases which, in
turn, would have an adverse effect on our occupancy levels and our
revenue and cash flow and the value of our properties, and
potentially, our ability to maintain our dividend at current
levels. Due to COVID-19 restrictions and its impact on the economy,
we may experience a decrease in prospective tenants which could
unfavorably impact the volume of new leases, as well as the renewal
rate of existing leases. The COVID-19 pandemic may delay our
construction projects which could result in increased costs and
delay the timing of opening and rental payments from those
projects, although no such delays have yet occurred. The COVID-19
pandemic could also impact our indebtedness and the ability to
refinance such indebtedness on acceptable terms, as well as risks
associated with disruptions in the financial markets and the
business of financial institutions as the result of the COVID-19
pandemic which could impact us from a financing perspective; and
changes in general economic conditions nationally and regionally in
the markets our properties are located resulting from the COVID-19
pandemic. We are not able to quantify the impact that these factors
will have on our future operations, but developments related to the
COVID-19 pandemic could have a material adverse impact on our
future financial results.
We believe that, if and when applicable, adjusted net income and
adjusted net income per diluted share (as reflected on the
Supplemental Schedule), which are non-GAAP financial measures
("GAAP" is Generally Accepted Accounting Principles in the United States of America), are helpful to
our investors as measures of our operating performance. In
addition, we believe that, when applicable, comparing and
discussing our financial results based on these measures, as
calculated, is helpful to our investors since it neutralizes the
effect in each year of material items that are non-recurring or
non-operational in nature including items such as, but not limited
to, gains on transactions.
Funds from operations ("FFO") is a widely recognized measure of
performance for Real Estate Investment Trusts ("REITs"). We believe
that FFO and FFO per diluted share, which are non-GAAP financial
measures, are helpful to our investors as measures of our operating
performance. We compute FFO, as reflected on the attached
Supplemental Schedules, in accordance with standards established by
the National Association of Real Estate Investment Trusts
("NAREIT"), which may not be comparable to FFO reported by other
REITs that do not compute FFO in accordance with the NAREIT
definition, or that interpret the NAREIT definition differently
than we interpret the definition. FFO adjusts for the effects of
gains, such as gains on transactions during the periods
presented. To the extent a REIT recognizes a gain or loss
with respect to the sale of incidental assets, such as the sale of
land peripheral to operating properties, the REIT has the option to
exclude or include such gains and losses in the calculation of
FFO. We have opted to exclude gains and losses from sales of
incidental assets in our calculation of FFO. FFO does not
represent cash generated from operating activities in accordance
with GAAP and should not be considered to be an alternative to net
income determined in accordance with GAAP. In addition, FFO should
not be used as: (i) an indication of our financial performance
determined in accordance with GAAP; (ii) an alternative to
cash flow from operating activities determined in accordance with
GAAP; (iii) a measure of our liquidity, or; (iv) an indicator
of funds available for our cash needs, including our ability to
make cash distributions to shareholders. A reconciliation of our
reported net income to FFO is reflected on the Supplemental
Schedules included below.
To obtain a complete understanding of our financial performance
these measures should be examined in connection with net income,
determined in accordance with GAAP, as presented in the condensed
consolidated financial statements and notes thereto in this report
or in our other filings with the Securities and Exchange Commission
including our Report on Form 10-K for the year ended
December 31, 2020. Since the items included or excluded from
these measures are significant components in understanding and
assessing financial performance under GAAP, these measures should
not be considered to be alternatives to net income as a measure of
our operating performance or profitability. Since these measures,
as presented, are not determined in accordance with GAAP and are
thus susceptible to varying calculations, they may not be
comparable to other similarly titled measures of other companies.
Investors are encouraged to use GAAP measures when evaluating our
financial performance.
Universal Health
Realty Income Trust
Consolidated
Statements of Income
For the Three Months
Ended March 31, 2021 and 2020
(amounts in
thousands, except share information)
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2021
|
|
|
2020
|
Revenues:
|
|
|
|
|
|
|
|
Lease revenue -
UHS facilities (a.)
|
|
$
|
7,132
|
|
|
$
|
5,881
|
Lease revenue -
Non-related parties
|
|
|
13,092
|
|
|
|
12,842
|
Other revenue -
UHS facilities
|
|
|
226
|
|
|
|
214
|
Other revenue -
Non-related parties
|
|
|
249
|
|
|
|
270
|
|
|
|
20,699
|
|
|
|
19,207
|
Expenses:
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
6,787
|
|
|
|
6,380
|
Advisory fees
to UHS
|
|
|
1,062
|
|
|
|
1,016
|
Other operating
expenses
|
|
|
5,602
|
|
|
|
5,383
|
|
|
|
13,451
|
|
|
|
12,779
|
Income before equity
in income of unconsolidated limited liability companies
("LLCs") and interest expense
|
|
|
7,248
|
|
|
|
6,428
|
Equity in
income of unconsolidated LLCs
|
|
|
471
|
|
|
|
435
|
Interest expense,
net
|
|
|
(2,133)
|
|
|
|
(2,309)
|
Net income
|
|
$
|
5,586
|
|
|
$
|
4,554
|
Basic earnings per
share
|
|
$
|
0.41
|
|
|
$
|
0.33
|
Diluted earnings per
share
|
|
$
|
0.41
|
|
|
$
|
0.33
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding - Basic
|
|
|
13,750
|
|
|
|
13,736
|
Weighted average
number of shares outstanding - Diluted
|
|
|
13,771
|
|
|
|
13,758
|
|
(a.) Includes bonus
rental on UHS hospital facilities of $1,695 and $1,380 for the
three-month periods ended March 31, 2021 and 2020,
respectively.
|
Universal Health
Realty Income Trust
Schedule of Non-GAAP
Supplemental Information ("Supplemental Schedule")
For the Three Months
Ended March 31, 2021 and 2020
(amounts in
thousands, except share information)
(unaudited)
|
|
Calculation of
Funds From Operations ("FFO")
|
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
March 31,
2021
|
|
|
March 31,
2020
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
Net income
|
|
$
|
5,586
|
|
|
$
|
0.41
|
|
|
$
|
4,554
|
|
|
$
|
0.33
|
Plus: Depreciation and
amortization expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
investments
|
|
|
6,787
|
|
|
|
0.49
|
|
|
|
6,380
|
|
|
|
0.47
|
Unconsolidated
affiliates
|
|
|
362
|
|
|
|
0.02
|
|
|
|
286
|
|
|
|
0.02
|
FFO
|
|
$
|
12,735
|
|
|
$
|
0.92
|
|
|
$
|
11,220
|
|
|
$
|
0.82
|
Dividend paid per
share
|
|
|
|
|
|
$
|
0.695
|
|
|
|
|
|
|
$
|
0.685
|
Universal Health
Realty Income Trust
Consolidated Balance
Sheets
(amounts in
thousands, except share information)
(unaudited)
|
|
|
|
March
31,
|
|
December 31,
|
|
|
2021
|
|
2020
|
Assets:
|
|
|
|
|
|
|
Real Estate
Investments:
|
|
|
|
|
|
|
Buildings and
improvements and construction in progress
|
|
$
|
608,366
|
|
$
|
605,292
|
Accumulated
depreciation
|
|
|
(222,521)
|
|
|
(216,648)
|
|
|
|
385,845
|
|
|
388,644
|
Land
|
|
|
55,157
|
|
|
55,157
|
Net Real Estate Investments
|
|
|
441,002
|
|
|
443,801
|
Investments in limited
liability companies ("LLCs")
|
|
|
9,087
|
|
|
4,278
|
Other
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
6,171
|
|
|
5,742
|
Lease and other
receivables from UHS
|
|
|
3,252
|
|
|
3,199
|
Lease receivable -
other
|
|
|
7,780
|
|
|
7,504
|
Intangible assets (net
of accumulated amortization of $19.0 million
and $19.5 million,
respectively)
|
|
|
11,013
|
|
|
11,742
|
Right-of-use land
assets, net
|
|
|
8,907
|
|
|
8,914
|
Deferred charges and
other assets, net
|
|
|
8,582
|
|
|
8,829
|
Total Assets
|
|
$
|
495,794
|
|
$
|
494,009
|
Liabilities:
|
|
|
|
|
|
|
Line of credit
borrowings
|
|
$
|
247,650
|
|
$
|
236,200
|
Mortgage notes
payable, non-recourse to us, net
|
|
|
58,403
|
|
|
58,895
|
Accrued
interest
|
|
|
346
|
|
|
351
|
Accrued expenses and
other liabilities
|
|
|
11,375
|
|
|
19,802
|
Ground lease
liabilities, net
|
|
|
8,907
|
|
|
8,914
|
Tenant reserves,
deposits and deferred and prepaid rents
|
|
|
10,446
|
|
|
10,842
|
Total Liabilities
|
|
|
337,127
|
|
|
335,004
|
Equity:
|
|
|
|
|
|
|
Preferred shares of
beneficial interest, $.01 par value; 5,000,000 shares
authorized; none
issued and outstanding
|
|
|
-
|
|
|
-
|
Common shares, $.01
par value;
95,000,000 shares authorized; issued and outstanding: 2021 -
13,772,095; 2020 -
13,771,287
|
|
|
138
|
|
|
138
|
Capital in excess of
par value
|
|
|
267,667
|
|
|
267,368
|
Cumulative net
income
|
|
|
686,313
|
|
|
680,727
|
Cumulative
dividends
|
|
|
(794,984)
|
|
|
(785,413)
|
Accumulated other
comprehensive (loss)/income
|
|
|
(467)
|
|
|
(3,815)
|
Total Equity
|
|
|
158,667
|
|
|
159,005
|
Total Liabilities and Equity
|
|
$
|
495,794
|
|
$
|
494,009
|
View original
content:http://www.prnewswire.com/news-releases/universal-health-realty-income-trust-reports-2021-first-quarter-financial-results-301277079.html
SOURCE Universal Health Realty Income Trust