Consolidated Results of Operations - Three-Month Periods
Ended March 31, 2022 and 2021:
KING OF
PRUSSIA, Pa., April 25,
2022 /PRNewswire/ -- Universal Health Realty Income
Trust (NYSE:UHT) announced today that for the three-month period
ended March 31, 2022, net income was $5.4 million, or $.39 per diluted share, as compared to
$5.6 million, or $.41 per diluted share, during the first quarter
of 2021.
As calculated on the attached Schedule of Non-GAAP Supplemental
Information ("Supplemental Schedule"), our funds from operations
("FFO"), were $12.4 million, or
$.90 per diluted share, during the
first quarter of 2022, as compared to $12.7
million, or $.92 per diluted
share, during the first quarter of 2021.
The decrease in our net income of $181,000, or $.02
per diluted share, during the first quarter of 2022, as compared to
the first quarter of 2021, was due primarily to: (i) a decrease of
$884,000, or $.06 per diluted share, related to a vacant
specialty hospital located in Chicago,
Illinois, on which, as discussed below, the lease expired on
December 31, 2021, partially offset
by; (ii) a net increase of $431,000,
or $.03 per diluted share, resulting
from the asset purchase and sale agreement with Universal Health
Services, Inc. ("UHS") that occurred on December 31, 2021, as discussed below, and; (iii)
an increase of $335,000, or
$.02 per diluted share, resulting
from the impact of the fair market value lease renewal on
Wellington Regional Medical Center, which became effective on
January 1, 2022.
During the first quarter of 2022, as compared to the first
quarter of 2021, our FFO decreased $326,000, or $.02
per diluted share. The decrease was due to the above-mentioned
$181,000, or $.02 per diluted share, decrease in net income
experienced during the first quarter of 2022, as compared to the
first quarter of 2021, as well as a $145,000 decrease in depreciation and
amortization expense incurred on our consolidated and
unconsolidated investments.
Dividend Information:
The first quarter dividend of $.705 per share, or $9.7
million in the aggregate, was declared on March 9, 2022 and paid on March 31, 2022.
Capital Resources
Information:
At March 31, 2022 we had
$275.1 million of borrowings
outstanding pursuant to the terms of our credit agreement and
$96.7 million of available borrowing
capacity as of that date, net of outstanding borrowings and letters
of credit.
Property Acquisitions During the
First Quarter of 2022:
During the first quarter of 2022, we completed the following
acquisitions utilizing qualified third-party intermediaries as part
of a series of anticipated tax-deferred-like-kind exchange
transactions pursuant to Section 1031 of the Internal Revenue Code,
as amended:
- In March, 2022, we acquired the Beaumont Heart and Vascular
Center, a medical office building with 17,621 rentable square feet,
located in Dearborn, Michigan, for
a purchase price of approximately $5.4
million. The building is 100% leased to a single tenant
under triple-net leases that expire in November, 2026.
- In January, 2022, we acquired 140 Thomas Johnson Drive, a
medical office building with 20,146 rentable square feet, located
in Frederick, Maryland, for a
purchase price of approximately $8.0
million. The building is 100% leased to three tenants under
the terms of triple-net leases. Approximately 72% of the rentable
square feet of this MOB is leased pursuant to a 15-year lease, with
a remaining lease term of approximately 14 years at the time of
purchase, with three, five-year renewal options.
Disclosures Related to Certain
Facilities:
Asset Purchase and Sale Agreement
with UHS on December 31,
2021:
As previously disclosed on Form 8-K as filed on January 4, 2022, on December 31, 2021, we entered into an asset
purchase and sale agreement with UHS and certain of its affiliates.
Pursuant to the terms of the asset purchase and sale agreement,
which was amended during the first quarter of 2022, a wholly-owned
subsidiary of UHS purchased from us the real estate assets of the
Inland Valley Campus of Southwest Healthcare System (at its fair
market value of $79.6 million), and
two wholly-owned subsidiaries of UHS transferred to us the real
estate assets of Aiken Regional Medical Center (at its fair market
value of $57.7 million) and Canyon
Creek Behavioral Health (at its fair market value of $26.0 million). In connection with this
transaction, since the $83.7 million
aggregate fair market value of Aiken Regional Medical Center
("Aiken") located in Aiken, South Carolina, and Canyon Creek
Behavioral Health ("Canyon Creek") located in Temple, Texas, exceeded the $79.6 million fair market value of the Inland
Valley Campus of Southwest Healthcare System, we paid approximately
$4.1 million in cash to UHS. Aiken
Regional Medical Center includes an acute care hospital and a
behavioral health pavilion.
The properties acquired by us in connection with the asset
purchase and sale agreement with UHS were accounted for as
financing arrangements and our consolidated balance sheet as of
March 31, 2022 includes an
$83.7 million financing receivable
related to this transaction. Pursuant to the leases, as amended,
the aggregate annual rental during 2022 on the acquired properties,
which is payable to us on a monthly basis, amounts to approximately
$5.7 million ($3.9 million related to Aiken and $1.8
million related to Canyon Creek). The portion of the lease
payments that will be included in our consolidated statements of
income, and reflected as interest income on financing leases, is
expected to be approximately $5.5
million during the full year of 2022. Pursuant to the terms
of the previous lease on the Inland Valley Campus of Southwest
Healthcare System, we earned $4.5
million of lease revenue during the year ended December 31, 2021 ($2.6
million in base rental and $1.9
million in bonus rental).
Vacant Specialty
Facilities:
Also as previously disclosed, the lease on the specialty
hospital located in Chicago,
Illinois, expired on December 31,
2021 and the facility is currently vacant. During the
first quarter of 2021, we earned $390,000 of lease revenue in connection with this
property. The operating expenses incurred by us in connection with
this facility during the first quarter of 2022 were $494,000. Prior to 2022, the former tenant was
responsible for the operating expenses on this facility. Pursuant
to the terms of the lease that expired in December, 2021, we earned
approximately $1.6 million of lease
revenue during the 2021 full year.
We estimate that the aggregate operating expenses for the three
vacant specialty facilities, including the facility located in
Chicago, Illinois, as well as
facilities located in Evansville,
Indiana, and Corpus Christi,
Texas (which have been vacant since 2019), will approximate
$1.9 million during the remaining
nine months of 2022. Future operating expenses related to these
facilities will be incurred by us during the time they remain owned
and vacant. We continue to market these specialty facilities
to potential interested parties. However, should these properties
continue to remain vacant for an extended period of time, or should
we incur substantial renovation costs to make the properties
suitable for other operators/tenants, our future results of
operations could be materially unfavorably impacted.
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 facilities, medical/office buildings, free-standing
emergency departments and childcare centers. We have investments or
commitments in seventy-six properties located in twenty-one
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, 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. 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
certain items, such as gains on transactions that occurred 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, 2021. 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.
(more)
Universal Health
Realty Income Trust
|
Consolidated Statements
of Income
|
For the Three Months
Ended March 31, 2022 and 2021
|
(amounts in thousands,
except share information)
|
(unaudited)
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2022
|
|
|
2021
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Lease revenue -
UHS facilities (a.)
|
|
$
|
7,426
|
|
|
$
|
7,132
|
|
Lease revenue -
Non-related parties
|
|
|
12,895
|
|
|
|
13,092
|
|
Other revenue -
UHS facilities
|
|
|
229
|
|
|
|
226
|
|
Other revenue -
Non-related parties
|
|
|
255
|
|
|
|
249
|
|
Interest income
on financing leases - UHS facilities
|
|
|
1,370
|
|
|
|
-
|
|
|
|
|
22,175
|
|
|
|
20,699
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
6,709
|
|
|
|
6,787
|
|
Advisory fees to
UHS
|
|
|
1,224
|
|
|
|
1,062
|
|
Other operating
expenses
|
|
|
6,867
|
|
|
|
5,602
|
|
|
|
|
14,800
|
|
|
|
13,451
|
|
Income before equity in
income of unconsolidated limited liability companies ("LLCs") and
interest expense
|
|
|
7,375
|
|
|
|
7,248
|
|
Equity in income
of unconsolidated LLCs
|
|
|
252
|
|
|
|
471
|
|
Interest expense, net
|
|
|
(2,222)
|
|
|
|
(2,133)
|
|
Net
income
|
|
$
|
5,405
|
|
|
$
|
5,586
|
|
Basic earnings per
share
|
|
$
|
0.39
|
|
|
$
|
0.41
|
|
Diluted earnings per
share
|
|
$
|
0.39
|
|
|
$
|
0.41
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares outstanding - Basic
|
|
|
13,764
|
|
|
|
13,750
|
|
Weighted average number
of shares outstanding - Diluted
|
|
|
13,785
|
|
|
|
13,771
|
|
|
|
|
|
|
|
|
|
|
(a.) Includes bonus
rental on McAllen Medical Center, a UHS acute care hospital
facility of $678 for the three-month period ended March 31, 2022
and includes bonus rental on three UHS acute care hospital
facilities of $1,695 for the three-month period ended March 31,
2021.
|
|
Universal Health
Realty Income Trust
|
Schedule
of Non-GAAP Supplemental
Information ("Supplemental Schedule")
|
For the Three Months
Ended March 31, 2022 and 2021
|
(amounts in thousands,
except share information)
|
(unaudited)
|
|
Calculation of
Adjusted Net Income
|
|
|
|
Three Months Ended
|
|
|
Three Months Ended
|
|
|
|
March 31, 2022
|
|
|
March 31, 2021
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
5,405
|
|
|
$
|
0.39
|
|
|
$
|
5,586
|
|
|
$
|
0.41
|
|
Adjustments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Subtotal adjustments to
net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Adjusted net
income
|
|
$
|
5,405
|
|
|
$
|
0.39
|
|
|
$
|
5,586
|
|
|
$
|
0.41
|
|
Calculation of Funds
From Operations ("FFO")
|
|
|
|
Three Months Ended
|
|
|
Three Months Ended
|
|
|
|
March 31, 2022
|
|
|
March 31, 2021
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
5,405
|
|
|
$
|
0.39
|
|
|
$
|
5,586
|
|
|
$
|
0.41
|
|
Plus:
Depreciation and amortization expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
investments
|
|
|
6,709
|
|
|
|
0.49
|
|
|
|
6,787
|
|
|
|
0.49
|
|
Unconsolidated
affiliates
|
|
|
295
|
|
|
|
0.02
|
|
|
|
362
|
|
|
|
0.02
|
|
FFO
|
|
$
|
12,409
|
|
|
$
|
0.90
|
|
|
$
|
12,735
|
|
|
$
|
0.92
|
|
Dividend paid per
share
|
|
|
|
|
|
$
|
0.705
|
|
|
|
|
|
|
$
|
0.695
|
|
Universal Health
Realty Income Trust
|
Consolidated Balance
Sheets
|
(amounts in thousands,
except share information)
|
(unaudited)
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
Assets:
|
|
|
|
|
|
|
|
|
Real Estate Investments:
|
|
|
|
|
|
|
|
|
Buildings and improvements and construction in
progress
|
|
$
|
622,757
|
|
|
$
|
608,836
|
|
Accumulated depreciation
|
|
|
(231,459)
|
|
|
|
(225,584)
|
|
|
|
|
391,298
|
|
|
|
383,252
|
|
Land
|
|
|
56,631
|
|
|
|
54,897
|
|
Net Real Estate Investments
|
|
|
447,929
|
|
|
|
438,149
|
|
Financing receivable from UHS
|
|
|
83,741
|
|
|
|
82,439
|
|
Net Real Estate Investments and Financing receivable
|
|
|
531,670
|
|
|
|
520,588
|
|
Investments in and advances to limited liability companies
("LLCs")
|
|
|
9,960
|
|
|
|
10,139
|
|
Other Assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
8,879
|
|
|
|
22,504
|
|
Lease and other receivables from UHS
|
|
|
4,397
|
|
|
|
4,641
|
|
Lease receivable - other
|
|
|
7,763
|
|
|
|
7,109
|
|
Intangible assets (net of accumulated amortization of $14.8
million and
$14.2 million, respectively)
|
|
|
11,175
|
|
|
|
9,972
|
|
Right-of-use land assets, net
|
|
|
11,486
|
|
|
|
11,495
|
|
Deferred charges and other assets, net
|
|
|
17,119
|
|
|
|
11,971
|
|
Total Assets
|
|
$
|
602,449
|
|
|
$
|
598,419
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Line of credit borrowings
|
|
$
|
275,100
|
|
|
$
|
271,900
|
|
Mortgage notes payable, non-recourse to us, net
|
|
|
56,346
|
|
|
|
56,866
|
|
Accrued interest
|
|
|
343
|
|
|
|
346
|
|
Accrued expenses and other liabilities
|
|
|
11,779
|
|
|
|
12,157
|
|
Ground lease liabilities, net
|
|
|
11,486
|
|
|
|
11,495
|
|
Tenant reserves, deposits and deferred and prepaid
rents
|
|
|
10,421
|
|
|
|
10,328
|
|
Total Liabilities
|
|
|
365,475
|
|
|
|
363,092
|
|
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: 2022 -
13,786,277;
2021 - 13,785,345
|
|
|
138
|
|
|
|
138
|
|
Capital in excess of par value
|
|
|
268,792
|
|
|
|
268,515
|
|
Cumulative net income
|
|
|
794,964
|
|
|
|
789,559
|
|
Cumulative dividends
|
|
|
(833,717)
|
|
|
|
(823,998)
|
|
Accumulated other comprehensive income
|
|
|
6,797
|
|
|
|
1,113
|
|
Total Equity
|
|
|
236,974
|
|
|
|
235,327
|
|
Total Liabilities
and Equity
|
|
$
|
602,449
|
|
|
$
|
598,419
|
|
View original
content:https://www.prnewswire.com/news-releases/universal-health-realty-income-trust-reports-2022-first-quarter-financial-results-301532295.html
SOURCE Universal Health Realty Income Trust