KING OF PRUSSIA, Pa.,
Oct. 25, 2021 /PRNewswire/
-- Universal Health Realty Income Trust (NYSE: UHT) announced
today that for the three-month period ended September 30,
2021, net income was $5.3 million, or
$.39 per diluted share, as compared
to $5.2 million, or $.38 per diluted share, during the third quarter
of 2020.
As calculated on the attached Schedule of Non-GAAP Supplemental
Information ("Supplemental Schedule"), our funds from operations
("FFO"), were $12.6 million, or
$.92 per diluted share, during the
third quarter of 2021, as compared to $11.9
million, or $.86 per diluted
share, during the third quarter of 2020.
The increase in our net income of $151,000, or $.01
per diluted share, during the third quarter of 2021, as compared to
the third quarter of 2020, was due to: (i) an increase of
$289,000, or $.02 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; (ii) an increase of $148,000, or $.01
per diluted share, in bonus rental earned on the three hospital
facilities leased to subsidiaries of Universal Health Services,
Inc. ("UHS"), partially offset by; (iii) a decrease of $286,000, or $.02
per diluted share, due to an increase in interest expense due
primarily to an increase in our average borrowings outstanding
under our credit agreement.
During the third quarter of 2021, as compared to the third
quarter of 2020, our FFO increased $735,000, or $.06
per diluted share. The increase was due to the $151,000, or $.01
per diluted share, of increased net income, as discussed above, as
well as an increase in depreciation and amortization expense,
largely due to the depreciation expense recorded in connection with
the Clive Behavioral Health facility.
Consolidated Results of Operations - Nine-Month Periods Ended
September 30, 2021 and 2020:
For the nine-month period ended September 30, 2021, net
income was $17.6 million, or
$1.27 per diluted share, as compared
to $14.4 million, or $1.05 per diluted share during the first nine
months of 2020.
As calculated on the Supplemental Schedule, our FFO were
$38.0 million, or $2.76 per diluted share, during the first nine
months of 2021, as compared to $34.5
million, or $2.50 per diluted
share, during the first nine months of 2020.
As reflected on the Supplemental Schedule, after adjusting the
reported results for the nine-month period ended September 30, 2021 for the $1.3 million gain realized during the second
quarter of 2021 on the sale of a medical office building located in
Springdale, AR, our adjusted net
income was $16.2 million, or
$1.18 per diluted share, during the
first nine months of 2021.
The increase in our adjusted net income of $1.8 million, or $.13 per diluted share, during the first nine
months of 2021, as compared to the comparable period of 2020, was
due to: (i) an increase of approximately $1.4 million, or $.10 per diluted share, resulting from a net
aggregate increase net income, resulting primarily from the income
generated at various properties, including the income recorded in
connection with the newly constructed Clive Behavioral Health
facility; (ii) an increase of $694,000, or $.05
per diluted share, in bonus rental earned on the three hospital
facilities leased to subsidiaries of UHS, partially offset by;
(iii) a decrease of $277,000, or
$.02 per diluted share, due to an
increase in interest expense.
During the first nine months of 2021, as compared to the
comparable period of 2020, our FFO increased $3.5 million, or $.26 per diluted share. The increase was due
primarily to the $1.8 million, or
$.13 per diluted share, of increased
adjusted net income, as discussed above, as well as an increase in
depreciation and amortization expense, largely due to the
depreciation expense recorded in connection with the Clive
Behavioral Health facility.
Dividend Information:
The third quarter dividend of $.70
per share, or $9.6 million in the
aggregate, was declared on September 8,
2021 and paid on September 30,
2021.
Capital Resources Information:
On July 2, 2021, we entered into
an amended and restated credit agreement which increased the
borrowing capacity to $375 million
(from $350 million previously) and
extended the maturity date to July, 2025 (from March, 2022
previously). We have the option to extend the maturity date for up
to two additional six-month periods.
At September 30, 2021 we had
$276.8 million of borrowings
outstanding pursuant to the terms of our credit agreement and
$94.6 million of available borrowing
capacity as of that date, net of outstanding borrowings and letters
of credit.
Planned Divestiture:
Auburn Medical Office Building II – In July, 2021,
as part of a series of anticipated tax deferred like-kind exchange
transactions pursuant to Section 1031 of the Internal Revenue Code,
we entered into an agreement to sell this 41,311 square foot,
multi-tenant MOB located in Auburn
Washington. The closing date on the sale of the property is
scheduled to occur no later than November
1, 2021. The assets and liabilities related to this
property are included in "Assets held for sale" or "Liabilities of
property held for sale" on our Consolidated Balance Sheet as of
September 30, 2021.
Disclosures Related to Certain Facilities:
Southwest Healthcare System, Inland Valley Campus:
As previously disclosed, a wholly-owned subsidiary of UHS
notified us of their intent 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 had the right to purchase the leased
property at its appraised fair market value at the end of the
existing lease term. However, UHS has agreed to exchange
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 substitution properties consist of one
acute care hospital (including a behavioral health pavilion) and a
newly constructed behavioral health hospital. The Independent
Trustees of our Board, as well as the UHS Board of Directors, have
approved the property substitution subject to satisfactory
completion of definitive agreements, which are in progress. 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 $3.4 million of lease revenue during the
nine-month period ended September 30,
2021 ($2.0 million in base
rental and $1.4 million 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:
Also as previously disclosed, 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 notified us that they do not intend to renew
the lease upon its scheduled expiration. We are 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 $1.2 million of lease revenue during the
nine-month period ended September 30,
2021 and approximately $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 or
commitments 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 and in Item
2-Forward-Looking Statements and Certain Risk Factors in our
Form 10-Q for the quarter ended June 30,
2021), 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
wholly-owned subsidiaries of UHS to the extent that each hospital
experiences a 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. 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 and
Nine Months Ended September 30, 2021 and 2020
|
(amounts in
thousands, except share information)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease revenue -
UHS facilities (a.)
|
|
$
|
7,574
|
|
$
|
6,381
|
|
$
|
21,971
|
|
$
|
18,243
|
Lease revenue -
Non-related parties
|
|
|
13,115
|
|
|
12,841
|
|
|
39,324
|
|
|
38,526
|
Other revenue -
UHS facilities
|
|
|
236
|
|
|
232
|
|
|
669
|
|
|
667
|
Other revenue -
Non-related parties
|
|
|
280
|
|
|
238
|
|
|
816
|
|
|
744
|
|
|
|
21,205
|
|
|
19,692
|
|
|
62,780
|
|
|
58,180
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
6,813
|
|
|
6,399
|
|
|
20,551
|
|
|
19,160
|
Advisory fees
to UHS
|
|
|
1,121
|
|
|
1,039
|
|
|
3,272
|
|
|
3,082
|
Other operating
expenses
|
|
|
5,980
|
|
|
5,614
|
|
|
17,485
|
|
|
16,573
|
|
|
|
13,914
|
|
|
13,052
|
|
|
41,308
|
|
|
38,815
|
Income before equity
in income of unconsolidated limited
liability companies ("LLCs"), gain on sale and interest
expense
|
|
|
7,291
|
|
|
6,640
|
|
|
21,472
|
|
|
19,365
|
Equity in
income of unconsolidated LLCs
|
|
|
303
|
|
|
517
|
|
|
1,341
|
|
|
1,371
|
Gain on sale of real
estate assets
|
|
|
-
|
|
|
-
|
|
|
1,304
|
|
|
-
|
Interest expense,
net
|
|
|
(2,250)
|
|
|
(1,964)
|
|
|
(6,566)
|
|
|
(6,289)
|
Net income
|
|
$
|
5,344
|
|
$
|
5,193
|
|
$
|
17,551
|
|
$
|
14,447
|
Basic earnings per
share
|
|
$
|
0.39
|
|
$
|
0.38
|
|
$
|
1.28
|
|
$
|
1.05
|
Diluted earnings per
share
|
|
$
|
0.39
|
|
$
|
0.38
|
|
$
|
1.27
|
|
$
|
1.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding - Basic
|
|
|
13,762
|
|
|
13,748
|
|
|
13,755
|
|
|
13,741
|
Weighted average
number of shares outstanding - Diluted
|
|
|
13,783
|
|
|
13,770
|
|
|
13,777
|
|
|
13,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a.) Includes bonus
rental on UHS acute-care hospital facilities of $1,828 and $1,680
for the three-month periods ended
September 30, 2021 and 2020, respectively, and $5,171 and $4,477
for the nine-month periods ended September 30, 2021
and 2020, respectively.
|
Universal Health
Realty Income Trust
|
Schedule of Non-GAAP
Supplemental Information ("Supplemental Schedule")
|
For the Three Months
Ended September 30, 2021 and 2020
|
(amounts in
thousands, except share information)
|
(unaudited)
|
|
Calculation of
Adjusted Net Income
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
|
September 30,
2021
|
|
September 30,
2020
|
|
|
Amount
|
|
Per
Diluted Share
|
|
Amount
|
|
Per
Diluted Share
|
Net income
|
|
$
|
5,344
|
|
$
|
0.39
|
|
$
|
5,193
|
|
$
|
0.38
|
Adjustments
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Subtotal adjustments
to net income
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Adjusted net
income
|
|
$
|
5,344
|
|
$
|
0.39
|
|
$
|
5,193
|
|
$
|
0.38
|
|
|
|
Calculation of
Funds From Operations ("FFO")
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
|
September 30,
2021
|
|
September 30,
2020
|
|
|
Amount
|
|
Per
Diluted Share
|
|
Amount
|
|
Per
Diluted Share
|
Net income
|
|
$
|
5,344
|
|
$
|
0.39
|
|
$
|
5,193
|
|
$
|
0.38
|
Plus: Depreciation and
amortization expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
investments
|
|
|
6,813
|
|
|
0.50
|
|
|
6,399
|
|
|
0.46
|
Unconsolidated
affiliates
|
|
|
460
|
|
|
0.03
|
|
|
290
|
|
|
0.02
|
FFO
|
|
$
|
12,617
|
|
$
|
0.92
|
|
$
|
11,882
|
|
$
|
0.86
|
Dividend paid per
share
|
|
|
|
|
$
|
0.700
|
|
|
|
|
$
|
0.690
|
Universal Health
Realty Income Trust
|
Schedule of Non-GAAP
Supplemental Information ("Supplemental Schedule")
|
For the Nine Months
Ended September 30, 2021 and 2020
|
(amounts in
thousands, except share information)
|
(unaudited)
|
|
Calculation of
Adjusted Net Income
|
|
|
|
Nine Months
Ended
|
|
Nine Months
Ended
|
|
|
September 30,
2021
|
|
September 30,
2020
|
|
|
Amount
|
|
Per
Diluted Share
|
|
Amount
|
|
Per
Diluted Share
|
Net income
|
|
$
|
17,551
|
|
$
|
1.27
|
|
$
|
14,447
|
|
$
|
1.05
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Gain on sale of
real estate assets
|
|
|
(1,304)
|
|
|
(0.09)
|
|
|
-
|
|
|
-
|
Subtotal adjustments
to net income
|
|
|
(1,304)
|
|
|
(0.09)
|
|
|
-
|
|
|
-
|
Adjusted net
income
|
|
$
|
16,247
|
|
$
|
1.18
|
|
$
|
14,447
|
|
$
|
1.05
|
|
|
|
Calculation of
Funds From Operations ("FFO")
|
|
|
|
Nine Months
Ended
|
|
Nine Months
Ended
|
|
|
September 30,
2021
|
|
September 30,
2020
|
|
|
Amount
|
|
Per
Diluted Share
|
|
Amount
|
|
Per
Diluted Share
|
Net income
|
|
$
|
17,551
|
|
$
|
1.27
|
|
$
|
14,447
|
|
$
|
1.05
|
Plus: Depreciation and
amortization expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
investments
|
|
|
20,551
|
|
|
1.49
|
|
|
19,160
|
|
|
1.39
|
Unconsolidated
affiliates
|
|
|
1,196
|
|
|
0.09
|
|
|
869
|
|
|
0.06
|
Less: Gain on sale of
real estate assets
|
|
|
(1,304)
|
|
|
(0.09)
|
|
|
-
|
|
|
-
|
FFO
|
|
$
|
37,994
|
|
$
|
2.76
|
|
$
|
34,476
|
|
$
|
2.50
|
Dividend paid per
share
|
|
|
|
|
$
|
2.095
|
|
|
|
|
$
|
2.065
|
Universal Health
Realty Income Trust
|
Consolidated Balance
Sheets
|
(amounts in
thousands, except share information)
|
(unaudited)
|
|
|
|
September
30,
|
|
December 31,
|
|
|
2021
|
|
2020
|
Assets:
|
|
|
|
|
|
|
Real Estate
Investments:
|
|
|
|
|
|
|
Buildings and
improvements and construction in progress
|
|
$
|
610,338
|
|
$
|
605,292
|
Accumulated
depreciation
|
|
|
(230,827)
|
|
|
(216,648)
|
|
|
|
379,511
|
|
|
388,644
|
Land
|
|
|
56,947
|
|
|
55,157
|
Net Real Estate Investments
|
|
|
436,458
|
|
|
443,801
|
Investments in limited
liability companies ("LLCs")
|
|
|
23,123
|
|
|
4,278
|
Other
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
9,347
|
|
|
5,742
|
Lease and other
receivables from UHS
|
|
|
4,246
|
|
|
3,199
|
Lease receivable -
other
|
|
|
6,841
|
|
|
7,504
|
Intangible assets (net
of accumulated amortization of $17.7 million
and $19.5 million,
respectively)
|
|
|
10,392
|
|
|
11,742
|
Right-of-use land
assets, net
|
|
|
8,891
|
|
|
8,914
|
Deferred charges and
other assets, net
|
|
|
11,012
|
|
|
8,829
|
Assets held for
sale
|
|
|
7,371
|
|
|
-
|
Total Assets
|
|
$
|
517,681
|
|
$
|
494,009
|
Liabilities:
|
|
|
|
|
|
|
Line of credit
borrowings
|
|
$
|
276,800
|
|
$
|
236,200
|
Mortgage notes
payable, non-recourse to us, net
|
|
|
57,397
|
|
|
58,895
|
Accrued
interest
|
|
|
352
|
|
|
351
|
Accrued expenses and
other liabilities
|
|
|
11,261
|
|
|
19,802
|
Ground lease
liabilities, net
|
|
|
8,891
|
|
|
8,914
|
Tenant reserves,
deposits and deferred and prepaid rents
|
|
|
11,092
|
|
|
10,842
|
Liabilities of
property held for sale
|
|
|
77
|
|
|
-
|
Total Liabilities
|
|
|
365,870
|
|
|
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 -
13,784,401; 2020 -
13,771,287
|
|
|
138
|
|
|
138
|
Capital in excess of
par value
|
|
|
268,232
|
|
|
267,368
|
Cumulative net
income
|
|
|
698,278
|
|
|
680,727
|
Cumulative
dividends
|
|
|
(814,281)
|
|
|
(785,413)
|
Accumulated other
comprehensive loss
|
|
|
(556)
|
|
|
(3,815)
|
Total Equity
|
|
|
151,811
|
|
|
159,005
|
Total Liabilities and Equity
|
|
$
|
517,681
|
|
$
|
494,009
|
View original
content:https://www.prnewswire.com/news-releases/universal-health-realty-income-trust-reports-2021-third-quarter-financial-results-301407875.html
SOURCE Universal Health Realty Income Trust