Universal Health Realty Income Trust Reports 2017 Fourth Quarter and Full Year Financial Results
03/01/2018
As reflected on the attached Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule"), and as discussed below in Hurricane Harvey Impact, our financial results for the three months ended
As calculated on the Supplemental Schedule, our adjusted funds from operations ("AFFO"), which excludes the impact of hurricane related expenses, hurricane related insurance recoveries and depreciation and amortization expense incurred by us and our unconsolidated affiliates, was
As a result of the temporary closure of certain of our medical office buildings located in the
Consolidated Results of Operations - Twelve-Month Periods Ended December 31, 2017 and 2016:
For the twelve-month period ended December 31, 2017, reported net income was
As reflected on the attached Supplemental Schedule, and as discussed below, our financial results for the twelve months ended
As calculated on the Supplemental Schedule, our AFFO, which excludes the impact of hurricane related expenses, hurricane related insurance recoveries, the impact of the gain recorded in connection with the Arlington Transaction and depreciation and amortization expense incurred by us and our unconsolidated affiliates, increased to
Our adjusted net income and AFFO for the twelve months ended
Dividend Information:
The fourth quarter dividend of
Capital Resources Information:
At December 31, 2017, we had
Acquisitions and Divestiture in Connection With Planned Like-Kind Exchange Transactions Pursuant to Section 1031 of the
During 2016 and 2017, as part of a series of planned tax deferred like-kind exchange transactions pursuant to Section 1031 of the Internal Revenue Code, we: (i) divested in March, 2017, the
The two 2016 acquisitions, as well as the two 2017 acquisitions mentioned below, were planned and executed in accordance with the provisions of Section 1031 of the Internal Revenue Code. Therefore, we believe they qualify as tax deferred like-kind exchange transactions in connection with the below-mentioned divestiture of
2017 Transactions:
In March, 2017, we divested:
- The
St. Mary's Professional Office Building located inReno, Nevada . The divestiture ofSt. Mary's generated an aggregate of approximately$57.3 million of net cash proceeds to us. These proceeds, which were net of closing costs and the purchase price paid for the minority member's ownership interest in a related joint-venture entity, included repayment to us of a$21.4 million member loan. Our results of operations for the twelve-month period endedDecember 31, 2017 include a net gain of$27.2 million (net of related transaction costs) recorded in connection with this transaction (referred to as the "Arlington transaction").
In July, 2017, we acquired:
- The Health Center at
Hamburg located inHamburg, Pennsylvania for an aggregate purchase price of approximately$4.8 million (including transaction costs). This medical office building, which consists of approximately 15,400 rentable square feet, is 100% leased under the terms of a fifteen year triple net lease and had a remaining lease term of approximately 8.5 years at the time of purchase, with two, five year renewal options.
In September, 2017, we acquired:
- Las
Palmas Del Sol , located inEl Paso, Texas , for an aggregate purchase price of approximately$4.2 million (including transaction costs). This FED, which consists of approximately 9,395 rentable square feet, is 100% leased under the terms of a ten year triple net lease that had a remaining lease term of approximately 9 years at the time of purchase, with two, five year renewal options.
At-The-Market Equity Issuance Program ("ATM Program"):
We maintained an at-the-market equity issuance program ("ATM") pursuant to the terms of which we could sell, from time-to-time, common shares of our beneficial interest up to an aggregate sales price of approximately
Pursuant to the ATM Program, during 2017, we issued 127,499 shares at an average price of
Hurricane Harvey Impact:
In late August, 2017, five of our medical office buildings listed below located in the
As discussed below, we believe we are entitled to insurance recovery proceeds for substantially all of the costs incurred related to the remediation, repair and reconstruction of each of these properties, subject to certain deductibles and other limitations. In addition, during the period these properties are non-operational, we believe we are entitled to business interruption insurance recoveries for the lost income related to each of these properties, subject to certain deductibles and other limitations.
Properties damaged and closed from Hurricane Harvey:
- Cypresswood Professional Center – located in
Spring, Texas and consisting of two medical office buildings ("MOBs") with an aggregate of approximately 40,000 rentable square feet. - Professional Buildings at King's Crossing – located in
Kingwood, Texas and consisting of two MOBs with an aggregate of approximately 24,300 rentable square feet. Kelsey-Seybold Clinic at King's Crossing – located inKingwood, Texas and consisting of one MOB with approximately 20,500 rentable square feet.
Hurricane related expenses and recoveries:
At the time of the hurricane, we maintained insurance policies with a commercial insurance carrier providing for property damage coverage, subject to certain deductibles and other limitations, of up to
When all property insurance coverage and deductibles applicable to the above-mentioned hurricane damaged buildings are considered, we believe we are entitled to recovery of substantially all hurricane related expenses and reconstruction costs, less an aggregate net deductible of
Included in our financial results for the three-month period ended
Included in our financial results for the twelve-month period ended
As of
The hurricane related expenses and insurance recoveries recorded to date are based upon the damage assessments of the real property at each of the above-mentioned properties. We are unable to assess the ultimate repair cost of the damaged property or the amount of total insurance recoveries we may ultimately receive. As of
General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures:
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
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
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, and adjusted funds from operations ("AFFO") and AFFO 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
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
Universal Health Realty Income Trust Consolidated Statements of Income For the Three and Twelve Months Ended December 31, 2017 and 2016 (amounts in thousands, except per share amounts) (unaudited) |
||||||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||||||
December 31, |
December 31, |
|||||||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||||||
Revenues: |
||||||||||||||||
Base rental - UHS facilities |
$ |
4,263 |
$ |
4,073 |
$ |
16,888 |
$ |
16,299 |
||||||||
Base rental - Non-related parties |
10,082 |
9,942 |
40,335 |
37,060 |
||||||||||||
Bonus rental - UHS facilities |
1,261 |
1,166 |
4,917 |
4,723 |
||||||||||||
Tenant reimbursements and other - Non-related parties |
2,326 |
2,129 |
9,198 |
8,113 |
||||||||||||
Tenant reimbursements and other - UHS facilities |
327 |
283 |
1,010 |
886 |
||||||||||||
18,259 |
17,593 |
72,348 |
67,081 |
|||||||||||||
Expenses: |
||||||||||||||||
Depreciation and amortization |
6,355 |
6,084 |
25,116 |
22,956 |
||||||||||||
Advisory fees to UHS |
929 |
883 |
3,577 |
3,263 |
||||||||||||
Other operating expenses |
5,006 |
4,617 |
19,511 |
18,220 |
||||||||||||
Transaction costs |
- |
51 |
107 |
528 |
||||||||||||
Hurricane related expenses |
1,569 |
- |
4,967 |
- |
||||||||||||
Hurricane insurance recoveries |
(1,569) |
- |
(4,967) |
- |
||||||||||||
12,290 |
11,635 |
48,311 |
44,967 |
|||||||||||||
Income before equity in income of unconsolidated limited |
5,969 |
5,958 |
24,037 |
22,114 |
||||||||||||
Equity in income of unconsolidated LLCs |
457 |
1,060 |
2,416 |
4,456 |
||||||||||||
Hurricane insurance recovery proceeds in excess of |
2,033 |
- |
2,033 |
- |
||||||||||||
Gain on Arlington transaction |
- |
- |
27,196 |
- |
||||||||||||
Interest expense, net |
(2,395) |
(2,572) |
(10,063) |
(9,355) |
||||||||||||
Net income |
$ |
6,064 |
$ |
4,446 |
$ |
45,619 |
$ |
17,215 |
||||||||
Basic earnings per share |
$ |
0.44 |
$ |
0.33 |
$ |
3.35 |
$ |
1.28 |
||||||||
Diluted earnings per share |
$ |
0.44 |
$ |
0.33 |
$ |
3.35 |
$ |
1.28 |
||||||||
Weighted average number of shares outstanding - Basic |
13,716 |
13,579 |
13,625 |
13,464 |
||||||||||||
Weighted average number of share equivalents |
- |
- |
- |
4 |
||||||||||||
Weighted average number of shares and equivalents outstanding - Diluted |
13,716 |
13,579 |
13,625 |
13,468 |
Universal Health Realty Income Trust Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule") For the three months ended December 31, 2017 and 2016 (in thousands, except per share amounts) (unaudited) |
||||||||||||||||
Calculation of Adjusted Net Income |
||||||||||||||||
Three Months Ended |
Three Months Ended |
|||||||||||||||
December 31, 2017 |
December 31, 2016 |
|||||||||||||||
Amount |
Per Diluted Share |
Amount |
Per Diluted Share |
|||||||||||||
Net income |
$ |
6,064 |
$ |
0.44 |
$ |
4,446 |
$ |
0.33 |
||||||||
Adjustments: |
||||||||||||||||
Plus: Hurricane related expenses |
1,569 |
0.11 |
- |
- |
||||||||||||
Less: Hurricane insurance recovery proceeds in excess of |
(1,569) |
(0.11) |
- |
- |
||||||||||||
Hurricane insurance recoveries |
(2,033) |
(0.15) |
- |
- |
||||||||||||
Subtotal adjustments to net income |
(2,033) |
(0.15) |
- |
- |
||||||||||||
Adjusted net income |
$ |
4,031 |
$ |
0.29 |
$ |
4,446 |
$ |
0.33 |
||||||||
Calculation of Adjusted Funds From Operations ("AFFO") |
||||||||||||||||
Three Months Ended |
Three Months Ended |
|||||||||||||||
December 31, 2017 |
December 31, 2016 |
|||||||||||||||
Amount |
Per Diluted Share |
Amount |
Per Diluted Share |
|||||||||||||
Net income |
$ |
6,064 |
$ |
0.44 |
$ |
4,446 |
$ |
0.33 |
||||||||
Plus: Depreciation and amortization expense: |
||||||||||||||||
Consolidated investments |
6,220 |
0.46 |
5,944 |
0.44 |
||||||||||||
Unconsolidated affiliates |
259 |
0.02 |
473 |
0.03 |
||||||||||||
Less: Hurricane insurance recovery proceeds in excess of |
(2,033) |
(0.15) |
- |
- |
||||||||||||
Funds From Operations ("FFO") |
10,510 |
0.77 |
10,863 |
0.80 |
||||||||||||
Hurricane related expenses |
1,569 |
0.11 |
- |
- |
||||||||||||
Hurricane insurance recoveries |
(1,569) |
(0.11) |
- |
- |
||||||||||||
AFFO |
$ |
10,510 |
$ |
0.77 |
$ |
10,863 |
$ |
0.80 |
||||||||
Dividend paid per share |
$ |
0.665 |
$ |
0.655 |
Universal Health Realty Income Trust Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule") For the twelve months ended December 31, 2017 and 2016 (in thousands, except per share amounts) (unaudited) |
||||||||||||||||
Calculation of Adjusted Net Income |
||||||||||||||||
Twelve Months Ended |
Twelve Months Ended |
|||||||||||||||
December 31, 2017 |
December 31, 2016 |
|||||||||||||||
Amount |
Per Diluted Share |
Amount |
Per Diluted Share |
|||||||||||||
Net income |
$ |
45,619 |
$ |
3.35 |
$ |
17,215 |
$ |
1.28 |
||||||||
Adjustments: |
||||||||||||||||
Plus: Hurricane related expenses |
4,967 |
0.36 |
- |
- |
||||||||||||
Less: Gain on Arlington transaction |
(27,196) |
(2.00) |
- |
- |
||||||||||||
Hurricane insurance recovery proceeds in excess of damaged property write-downs |
(2,033) |
(0.15) |
||||||||||||||
Hurricane insurance recoveries |
(4,967) |
(0.36) |
- |
- |
||||||||||||
Subtotal adjustments to net income |
(29,229) |
(2.15) |
- |
- |
||||||||||||
Adjusted net income |
$ |
16,390 |
$ |
1.20 |
$ |
17,215 |
$ |
1.28 |
||||||||
Calculation of Adjusted Funds From Operations ("AFFO") |
||||||||||||||||
Twelve Months Ended |
Twelve Months Ended |
|||||||||||||||
December 31, 2017 |
December 31, 2016 |
|||||||||||||||
Amount |
Per Diluted Share |
Amount |
Per Diluted Share |
|||||||||||||
Net income |
$ |
45,619 |
$ |
3.35 |
$ |
17,215 |
$ |
1.28 |
||||||||
Plus: Depreciation and amortization expense: |
||||||||||||||||
Consolidated investments |
24,598 |
1.81 |
22,493 |
1.67 |
||||||||||||
Unconsolidated affiliates |
1,240 |
0.09 |
1,851 |
0.14 |
||||||||||||
Less: Hurricane insurance recovery proceeds in excess of |
(2,033) |
(0.15) |
- |
- |
||||||||||||
Gain on Arlington transaction |
(27,196) |
(2.00) |
- |
- |
||||||||||||
Funds From Operations ("FFO") |
42,228 |
3.10 |
41,559 |
3.09 |
||||||||||||
Hurricane related expenses |
4,967 |
0.36 |
- |
- |
||||||||||||
Hurricane insurance recoveries |
(4,967) |
(0.36) |
- |
- |
||||||||||||
AFFO |
$ |
42,228 |
$ |
3.10 |
$ |
41,559 |
$ |
3.09 |
||||||||
Dividend paid per share |
$ |
2.640 |
$ |
2.600 |
Universal Health Realty Income Trust Consolidated Balance Sheets (dollar amounts in thousands) (unaudited) |
||||||||
December 31, |
December 31, |
|||||||
2017 |
2016 |
|||||||
Assets: |
||||||||
Real Estate Investments: |
||||||||
Buildings and improvements and construction in progress |
$ |
546,634 |
$ |
534,190 |
||||
Accumulated depreciation |
(153,379) |
(138,588) |
||||||
393,255 |
395,602 |
|||||||
Land |
53,142 |
51,638 |
||||||
Net Real Estate Investments |
446,397 |
447,240 |
||||||
Investments in and advances to limited liability companies ("LLCs") |
4,671 |
35,593 |
||||||
Other Assets: |
||||||||
Cash and cash equivalents |
3,387 |
3,930 |
||||||
Base and bonus rent and other receivables from UHS |
2,680 |
2,321 |
||||||
Rent receivable - other |
6,422 |
5,291 |
||||||
Intangible assets (net of accumulated amortization of $28.7 million and |
20,559 |
23,815 |
||||||
Deferred charges and other assets, net |
5,892 |
6,560 |
||||||
Total Assets |
$ |
490,008 |
$ |
524,750 |
||||
Liabilities: |
||||||||
Line of credit borrowings |
$ |
181,050 |
$ |
201,500 |
||||
Mortgage notes payable, non-recourse to us, net |
75,359 |
114,217 |
||||||
Accrued interest |
540 |
626 |
||||||
Accrued expenses and other liabilities |
12,188 |
11,809 |
||||||
Tenant reserves, deposits and deferred and prepaid rents |
10,310 |
5,321 |
||||||
Total Liabilities |
279,447 |
333,473 |
||||||
Equity: |
||||||||
Preferred shares of beneficial interest, |
- |
- |
||||||
Common shares, $.01 par value; |
137 |
136 |
||||||
Capital in excess of par value |
265,335 |
255,656 |
||||||
Cumulative net income |
618,120 |
572,501 |
||||||
Cumulative dividends |
(673,175) |
(637,121) |
||||||
Accumulated other comprehensive income |
144 |
105 |
||||||
Total Equity |
210,561 |
191,277 |
||||||
Total Liabilities and Equity |
$ |
490,008 |
$ |
524,750 |
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SOURCE
Charles Boyle, Chief Financial Officer, (610) 768-3300