KING OF PRUSSIA, Pa.,
Oct. 25, 2019 /PRNewswire/ --
Universal Health Realty Income Trust (NYSE:UHT) announced today
that for the three-month period ended September 30, 2019,
reported net income was $4.7 million,
or $.34 per diluted share, as
compared to $4.4 million, or
$.32 per diluted share, during the
third quarter of 2018.
As calculated on the attached Schedule of Non-GAAP Supplemental
Information ("Supplemental Schedule"), our funds from operations
("FFO"), were $11.4 million, or
$.83 per diluted share, during the
third quarter of 2019, as compared to $10.7
million, or $.78 per diluted
share, during the third quarter of 2018.
Consolidated Results of Operations - Nine-Month Periods Ended
September 30, 2019 and 2018:
For the nine-month period ended September
30, 2019, our reported net income was $13.1 million, or $.95 per diluted share, as compared to
$19.8 million, or $1.44 per diluted share, during the first nine
months of 2018.
As also calculated on the Supplemental Schedule, our FFO were
$33.3 million, or $2.42 per diluted share, during the first nine
months of 2019, as compared to $34.2
million, or $2.49 per diluted
share, during the first nine months of 2018.
As reflected on the attached Supplemental Schedule, our
financial results for the nine-month period ended September 30, 2019 included a gain of
$250,000, or $.01 per diluted share, related to the sale of a
parcel of land located at one of our buildings. Our financial
results for the nine-month period ended September 30, 2018 included $4.5 million, or $.33 per diluted share, of hurricane insurance
recoveries in excess of damaged property write-downs received in
connection with damage sustained from Hurricane Harvey which
occurred in August, 2017. Excluding the impact of these items from
each respective nine-month period, and as calculated on the
Supplemental Schedule, our adjusted net income was $12.9 million, or $.94 per diluted share, during the nine-month
period ended September 30, 2019, as
compared to $15.2 million, or
$1.11 per diluted share, during the
nine-month period ended September 30,
2018.
Our net income, adjusted net income and FFO for the nine months
ended September 30, 2018 included a
net increase of approximately $1.3
million, or $.10 per diluted
share, related to the favorable impact from a lease termination
agreement entered into during the second quarter of 2018
($1.7 million, or $.12 per diluted share), partially offset by the
unfavorable impact of the non-recurring repairs and remediation
expenses incurred at one of our medical office buildings
($400,000, or $.02 per diluted share). In addition, our net
income, adjusted net income and FFO during the nine months ended
September 30, 2018 included the
favorable impact of approximately $1.2
million, or $.08 per diluted share, resulting from
business interruption insurance recovery proceeds recorded during
the nine-month period ended September
30, 2018. Included in this amount, which covered the
period of late August, 2017 through June 30,
2018 (after satisfaction of the applicable deductibles), was
approximately $500,000, or
$.04 per diluted share, related to
the period of August, 2017 through December
31, 2017.
Dividend Information:
The third quarter dividend of $.68
per share, or $9.4 million in the
aggregate, was declared on September 4,
2019 and paid on September 30,
2019.
Capital Resources Information:
At September 30, 2019, we had
$205.7 million of borrowings
outstanding pursuant to the terms of our $300 million credit agreement and $94.3 million of available borrowing capacity.
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.
Lease Expirations/Vacancies of Two Hospital
Facilities:
As disclosed in our Form 10-K for the year ended December 31, 2018, and our Forms 10-Q for the
quarters ended March 31, 2019 and
June 30, 2019, the tenants in two of
our hospital facilities had provided notice to us that they did not
intend to renew the leases upon the scheduled expiration of the
respective facilities. The combined revenues generated from the
leases on these two hospital facilities comprised approximately 2%
of our consolidated revenues during each of the years ended
December 31, 2018 and 2017.
The leases on these two hospital facilities, located in
Evansville, Indiana, and
Corpus Christi, Texas, expired on
May 31, 2019 and June 1, 2019, respectively. The Evansville, Indiana hospital tenant entered
into a short-term lease with us (which expired on September 30, 2019), at a substantially increased
lease rate as compared to the original lease rate. The lease
revenue generated from this facility amounted to $842,000 during the three-month period ended
September 30, 2019 (as compared to
$178,000 per quarter pursuant to the
terms of the original lease). The tenant that occupied the hospital
in Evansville, Indiana, vacated
the property on September 30, 2019
and the tenant that occupied the hospital in Corpus Christi, Texas, vacated the property on
June 1, 2019.
Although we are in the process of marketing each property for
lease to new tenants, should these properties remain vacant for an
extended period of time, or should we experience decreased lease
rates on future leases, as compared to prior/expired lease rates,
or incur substantial renovation costs to make the properties
suitable for other operators/tenants, our future results of
operations could be materially unfavorably
impacted.
New Construction Projects:
Behavioral Health Hospital - Clive,
Iowa
In late July, 2019, a wholly-owned subsidiary of ours entered
into an agreement to build and lease a newly constructed 108-bed
behavioral health care hospital located in Clive, Iowa. The lease on this facility, which
is triple net and has an initial term of 20 years with five,
10-year renewal options, was executed with Clive Behavioral Health,
LLC, a joint venture between Universal Health Services, Inc.
("UHS") and Catholic Health Initiatives-Iowa, Corp. (d/b/a Mercy
One Des Moines Medical Center).
Construction of this hospital, for which we have engaged a
wholly-owned subsidiary of UHS to act as project manager, is
expected to be completed in the fall of 2020. The hospital lease
will commence upon issuance of the certificate of occupancy. The
approximate cost of the project is estimated at $37.5 million and the initial annual rent is
estimated to be approximately $2.7
million.
Medical Office Building - Denison,
Texas
In September, 2019, we entered into an agreement whereby we will
own a 95% ownership interest in Grayson Properties II LP, which
will develop, construct, own and operate the Texoma Medical Plaza
II, a 75,000 rentable square feet medical office building ("MOB")
located in Denison, Texas. This
MOB, which is scheduled to be completed in late 2020, will be
located on the campus of Texoma Medical Center, a hospital that is
owned and operated by a wholly-owned subsidiary of UHS. A
10-year master flex lease has been executed with the wholly-owned
subsidiary of UHS for approximately 50% of the rentable square feet
of the MOB, which is subject to reduction contingent upon future
occupancy of the building. We have committed to invest up to
$17.9 million in equity or member
loans in the development and construction of this MOB.
Adoption of ASU 2016-02, "Leases (Topic 842): Amendments to
the FASB Accounting Standards Codification":
Effective January 1, 2019, we
adopted ASU 2016-02 which requires lessees to, among other things,
recognize right-of-use assets and lease liabilities on the balance
sheet. As a result of our adoption of ASU 2016-02, in connection
with ground leases where we are the lessee, our consolidated
balance sheet as of September 30,
2019 includes right-of-use land assets ($9.0 million) and ground lease liabilities
($9.0 million). Prior period
financial statement amounts were not adjusted for the effects of
this new standard.
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, rehabilitation hospitals, sub-acute
care facilities, medical/office buildings, free-standing emergency
departments and childcare centers. We have investments in
seventy-one properties located in twenty states, including two that
are currently under construction.
This press release contains forward-looking statements based on
current management expectations. Numerous factors, including those
disclosed herein, those related to healthcare and healthcare real
estate 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 and Risk Factors
in our Form 10-K for the year ended
December 31, 2018 and in Item 2 – Forward-Looking
Statements and Certain Risk Factors in our Form 10-Q for the
quarterly period ended June 30,
2019), may cause the results to differ materially from those
anticipated in the forward-looking statements. Many of the factors
that will determine our future results are beyond our capability to
control or predict. These statements are subject to risks and
uncertainties and therefore actual results may differ materially.
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.
We believe that adjusted net income and adjusted net income per
diluted share (as reflected on the attached Supplemental
Schedules), 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 and hurricane proceeds in excess of
damaged property write-downs.
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 and hurricane recovery
proceeds in excess of damaged property write-downs 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, 2018 and our report on Form 10-Q for the
quarterly period ended June 30, 2019.
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, 2019 and 2018
|
(amounts in
thousands, except per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease revenue -
UHS facilities (a.)
|
|
$
|
5,821
|
|
|
$
|
5,633
|
|
|
$
|
17,265
|
|
|
$
|
16,987
|
|
Lease revenue-
Non-related parties
|
|
|
13,555
|
|
|
|
12,886
|
|
|
|
39,464
|
|
|
|
37,785
|
|
Other revenue -
UHS facilities
|
|
|
230
|
|
|
|
78
|
|
|
|
652
|
|
|
|
215
|
|
Other revenue -
Non-related parties
|
|
|
260
|
|
|
|
231
|
|
|
|
923
|
|
|
|
2,491
|
|
|
|
|
19,866
|
|
|
|
18,828
|
|
|
$
|
58,304
|
|
|
$
|
57,478
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
6,430
|
|
|
|
6,232
|
|
|
|
19,564
|
|
|
|
18,630
|
|
Advisory fees
to UHS
|
|
|
1,011
|
|
|
|
975
|
|
|
|
2,963
|
|
|
|
2,827
|
|
Other operating
expenses
|
|
|
5,566
|
|
|
|
5,118
|
|
|
|
16,106
|
|
|
|
15,771
|
|
|
|
|
13,007
|
|
|
|
12,325
|
|
|
|
38,633
|
|
|
|
37,228
|
|
Income before equity
in income of unconsolidated limited
liability companies ("LLCs"), interest expense, hurricane
insurance recovery proceeds and gain
|
|
|
6,859
|
|
|
|
6,503
|
|
|
|
19,671
|
|
|
|
20,250
|
|
Equity in
income of unconsolidated LLCs
|
|
|
453
|
|
|
|
351
|
|
|
|
1,337
|
|
|
|
1,205
|
|
Hurricane
insurance recovery proceeds in excess of
damaged
property write-downs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,535
|
|
Hurricane
business interruption insurance recovery
proceeds
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,162
|
|
Gain on sale of
land
|
|
|
-
|
|
|
|
-
|
|
|
|
250
|
|
|
|
-
|
|
Interest expense,
net
|
|
|
(2,659)
|
|
|
|
(2,480)
|
|
|
|
(8,132)
|
|
|
|
(7,369)
|
|
Net income
|
|
$
|
4,653
|
|
|
$
|
4,374
|
|
|
$
|
13,126
|
|
|
$
|
19,783
|
|
Basic earnings per
share
|
|
$
|
0.34
|
|
|
$
|
0.32
|
|
|
$
|
0.96
|
|
|
$
|
1.44
|
|
Diluted earnings per
share
|
|
$
|
0.34
|
|
|
$
|
0.32
|
|
|
$
|
0.95
|
|
|
$
|
1.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding - Basic
|
|
|
13,735
|
|
|
|
13,726
|
|
|
|
13,731
|
|
|
|
13,721
|
|
Weighted average
number of shares outstanding - Diluted
|
|
|
13,757
|
|
|
|
13,726
|
|
|
|
13,751
|
|
|
|
13,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a.) Includes bonus
rental on UHS hospital facilities of $1,428 and $1,216 for the
three-month periods ended September 30, 2019 and 2018,
respectively, and $4,174 and $3,746 for the nine-month periods
ended September 30, 2019 and 2018, respectively.
|
|
Universal Health
Realty Income Trust
|
Schedule of Non-GAAP
Supplemental Information ("Supplemental Schedule")
|
For the Three Months
Ended September 30, 2019 and 2018
|
(in thousands,
except per share amounts)
|
(unaudited)
|
|
Calculation of
Adjusted Net Income
|
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
4,653
|
|
|
$
|
0.34
|
|
|
$
|
4,374
|
|
|
$
|
0.32
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal adjustments
to net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Adjusted net
income
|
|
$
|
4,653
|
|
|
$
|
0.34
|
|
|
$
|
4,374
|
|
|
$
|
0.32
|
|
Calculation of
Funds From Operations ("FFO")
|
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
4,653
|
|
|
$
|
0.34
|
|
|
$
|
4,374
|
|
|
$
|
0.32
|
|
Plus: Depreciation and
amortization expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
investments
|
|
|
6,430
|
|
|
|
0.47
|
|
|
|
6,065
|
|
|
|
0.44
|
|
Unconsolidated
affiliates
|
|
|
280
|
|
|
|
0.02
|
|
|
|
254
|
|
|
|
0.02
|
|
FFO
|
|
$
|
11,363
|
|
|
$
|
0.83
|
|
|
$
|
10,693
|
|
|
$
|
0.78
|
|
Dividend paid per
share
|
|
|
|
|
|
$
|
0.680
|
|
|
|
|
|
|
$
|
0.670
|
|
Universal Health
Realty Income Trust
|
Schedule of Non-GAAP
Supplemental Information ("Supplemental Schedule")
|
For the Nine Months
Ended September 30, 2019 and 2018
|
(in thousands,
except per share amounts)
|
(unaudited)
|
|
Calculation of
Adjusted Net Income
|
|
|
|
Nine Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
13,126
|
|
|
$
|
0.95
|
|
|
$
|
19,783
|
|
|
$
|
1.44
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Hurricane
insurance recovery proceeds in excess of
damaged property write-downs
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,535)
|
|
|
|
(0.33)
|
|
Less: Gain on sale of
land
|
|
|
(250)
|
|
|
|
(0.01)
|
|
|
|
-
|
|
|
|
-
|
|
Subtotal adjustments
to net income
|
|
|
(250)
|
|
|
|
(0.01)
|
|
|
|
(4,535)
|
|
|
|
(0.33)
|
|
Adjusted net
income
|
|
$
|
12,876
|
|
|
$
|
0.94
|
|
|
$
|
15,248
|
|
|
$
|
1.11
|
|
Calculation of
Funds From Operations ("FFO")
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
13,126
|
|
|
$
|
0.95
|
|
|
$
|
19,783
|
|
|
$
|
1.44
|
|
Plus: Depreciation and
amortization expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
investments
|
|
|
19,564
|
|
|
|
1.42
|
|
|
|
18,175
|
|
|
|
1.32
|
|
Unconsolidated
affiliates
|
|
|
854
|
|
|
|
0.06
|
|
|
|
779
|
|
|
|
0.06
|
|
Less: Hurricane
insurance recovery proceeds in excess of
damaged property write-downs
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,535)
|
|
|
|
(0.33)
|
|
Less: Gain on sale of
land
|
|
|
(250)
|
|
|
|
(0.01)
|
|
|
|
-
|
|
|
|
-
|
|
FFO
|
|
$
|
33,294
|
|
|
$
|
2.42
|
|
|
$
|
34,202
|
|
|
$
|
2.49
|
|
Dividend paid per
share
|
|
|
|
|
|
$
|
2.035
|
|
|
|
|
|
|
$
|
2.005
|
|
Universal Health
Realty Income Trust
|
Consolidated Balance
Sheets
|
(dollar amounts in
thousands, except share data)
|
(unaudited)
|
|
|
|
September
30,
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
Assets:
|
|
|
|
|
|
|
|
|
Real Estate
Investments:
|
|
|
|
|
|
|
|
|
Buildings and
improvements and construction in progress
|
|
$
|
563,760
|
|
|
$
|
557,650
|
|
Accumulated
depreciation
|
|
|
(189,330)
|
|
|
|
(173,316)
|
|
|
|
|
374,430
|
|
|
|
384,334
|
|
Land
|
|
|
54,726
|
|
|
|
53,396
|
|
Net Real Estate Investments
|
|
|
429,156
|
|
|
|
437,730
|
|
Investments in limited
liability companies ("LLCs")
|
|
|
5,120
|
|
|
|
5,019
|
|
Other
Assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
6,515
|
|
|
|
5,036
|
|
Lease and other
receivables from UHS
|
|
|
3,011
|
|
|
|
2,739
|
|
Lease receivable -
other
|
|
|
7,080
|
|
|
|
7,469
|
|
Intangible assets (net
of accumulated amortization of $25.5 million and
$27.6 million, respectively)
|
|
|
14,944
|
|
|
|
17,407
|
|
Right-of-use land
assets, net
|
|
|
8,951
|
|
|
|
-
|
|
Deferred charges and
other assets, net
|
|
|
9,103
|
|
|
|
8,356
|
|
Total Assets
|
|
$
|
483,880
|
|
|
$
|
483,756
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Line of credit
borrowings
|
|
$
|
205,650
|
|
|
$
|
196,400
|
|
Mortgage notes
payable, non-recourse to us, net
|
|
|
61,153
|
|
|
|
64,881
|
|
Accrued
interest
|
|
|
370
|
|
|
|
450
|
|
Accrued expenses and
other liabilities
|
|
|
12,103
|
|
|
|
11,765
|
|
Ground lease
liabilities, net
|
|
|
8,951
|
|
|
|
-
|
|
Tenant reserves,
deposits and deferred and prepaid rents
|
|
|
11,028
|
|
|
|
11,650
|
|
Total Liabilities
|
|
|
299,255
|
|
|
|
285,146
|
|
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:
2019 - 13,757,059;
2018
- 13,746,803
|
|
|
138
|
|
|
|
137
|
|
Capital in excess of
par value
|
|
|
266,478
|
|
|
|
266,031
|
|
Cumulative net
income
|
|
|
655,442
|
|
|
|
642,316
|
|
Cumulative
dividends
|
|
|
(737,994)
|
|
|
|
(710,006)
|
|
Accumulated other
comprehensive income
|
|
|
561
|
|
|
|
132
|
|
Total Equity
|
|
|
184,625
|
|
|
|
198,610
|
|
Total Liabilities and Equity
|
|
$
|
483,880
|
|
|
$
|
483,756
|
|
View original
content:http://www.prnewswire.com/news-releases/universal-health-realty-income-trust-reports-2019-third-quarter-financial-results-300945244.html
SOURCE Universal Health Realty Income Trust