Universal Health Realty Income Trust Reports 2017 Third Quarter Financial Results
10/26/2017
As reflected on the attached Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule"), and as discussed below, our financial results for the three and nine months ended
As calculated on the Supplemental Schedule, our adjusted funds from operations ("AFFO"), which excludes the net impact of hurricane related expenses and hurricane insurance recoveries, and depreciation and amortization expense incurred by us and our unconsolidated affiliates, was
Consolidated Results of Operations - Nine-Month Periods Ended September 30, 2017 and 2016:
For the nine-month period ended September 30, 2017, reported net income was
As reflected on the attached Supplemental Schedule, our financial results for the first nine months of 2017 include the hurricane related expenses and hurricane insurance recoveries, as discussed above and below, and a gain of
As calculated on the Supplemental Schedule, our AFFO, which excludes the net impact of hurricane related expenses and hurricane insurance recoveries, the impact of the gain as well as depreciation and amortization expense incurred by us and our unconsolidated affiliates, increased to
Dividend Information:
The third quarter dividend of
Capital Resources Information:
At September 30, 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 nine-month period endedSeptember 30, 2017 include a net gain of$27.2 million (net of related transaction costs) recorded in connection with this transaction.
In July, 2017, we acquired:
- The Health Center at
Hamburg located inHamburg, Pennsylvania for a purchase price of approximately$4.7 million . 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 has a remaining lease term of approximately 8.5 years, with two, five year renewal options.
In September, 2017, we acquired:
- Las
Palmas Del Sol , located inEl Paso, Texas , for a purchase price of approximately$4.2 million . 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 has a remaining lease term of approximately 9 years, with two, five year renewal options.
At-The-Market Equity Issuance Program ("ATM Program"):
During the third quarter of 2017, we issued new shares in connection with our at-the-market ("ATM") equity issuance program, pursuant to the terms of which we may 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 the third quarter of 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
Included in our financial results for the three and nine-month periods ended
The hurricane related expenses and insurance recoveries recorded to date are based upon our preliminary damage assessments of the real property at each of the above-mentioned properties. However, due to the nature and extent of the damage to each property and the surrounding communities, a complete and final assessment to determine the exact nature and extent of the losses at each property has not yet been completed. We are therefore unable to assess the ultimate damage sustained at each property, the ultimate repair cost of the damaged property or the amount of total insurance recoveries we may ultimately receive. Although we believe that our ultimate insurance recoveries for claims related to hurricane losses will exceed the combined net book value of the damaged property and the incurred hurricane related expenses, the timing and amount of such proceeds cannot be determined at this time, since it will be based upon factors such as ultimate replacement costs of damaged assets and the ultimate value of the business interruption claims. Therefore, it is likely that we will record additional hurricane related expenses and hurricane insurance recoveries in future periods related to Hurricane Harvey, which could be material.
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
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Universal Health Realty Income Trust |
||||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, |
September 30, |
|||||||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||||||
Revenues: |
||||||||||||||||
Base rental - UHS facilities |
$ |
4,242 |
$ |
4,066 |
$ |
12,625 |
$ |
12,226 |
||||||||
Base rental - Non-related parties |
10,167 |
9,273 |
30,253 |
27,118 |
||||||||||||
Bonus rental - UHS facilities |
1,126 |
1,118 |
3,656 |
3,557 |
||||||||||||
Tenant reimbursements and other - Non-related parties |
2,440 |
2,168 |
6,872 |
5,984 |
||||||||||||
Tenant reimbursements and other - UHS facilities |
219 |
176 |
683 |
603 |
||||||||||||
18,194 |
16,801 |
54,089 |
49,488 |
|||||||||||||
Expenses: |
||||||||||||||||
Depreciation and amortization |
6,321 |
5,893 |
18,761 |
16,872 |
||||||||||||
Advisory fees to UHS |
908 |
832 |
2,648 |
2,380 |
||||||||||||
Other operating expenses |
4,877 |
4,663 |
14,505 |
13,603 |
||||||||||||
Transaction costs |
(19) |
331 |
107 |
477 |
||||||||||||
Hurricane related expenses |
3,398 |
- |
3,398 |
- |
||||||||||||
Hurricane insurance recoveries |
(3,398) |
- |
(3,398) |
- |
||||||||||||
12,087 |
11,719 |
36,021 |
33,332 |
|||||||||||||
Income before equity in income of unconsolidated limited |
6,107 |
5,082 |
18,068 |
16,156 |
||||||||||||
Equity in income of unconsolidated LLCs |
384 |
1,110 |
1,959 |
3,396 |
||||||||||||
Gain on fair value recognition resulting from purchase of |
- |
- |
27,196 |
- |
||||||||||||
Interest expense, net |
(2,531) |
(2,374) |
(7,668) |
(6,783) |
||||||||||||
Net income |
$ |
3,960 |
$ |
3,818 |
$ |
39,555 |
$ |
12,769 |
||||||||
Basic earnings per share |
$ |
0.29 |
$ |
0.28 |
$ |
2.91 |
$ |
0.95 |
||||||||
Diluted earnings per share |
$ |
0.29 |
$ |
0.28 |
$ |
2.91 |
$ |
0.95 |
||||||||
Weighted average number of shares outstanding - Basic |
13,621 |
13,575 |
13,595 |
13,426 |
||||||||||||
Weighted average number of share equivalents |
- |
- |
- |
5 |
||||||||||||
Weighted average number of shares and equivalents outstanding - Diluted |
13,621 |
13,575 |
13,595 |
13,431 |
Universal Health Realty Income Trust |
||||||||||||||||
Calculation of Adjusted Net Income |
||||||||||||||||
Three Months Ended |
Three Months Ended |
|||||||||||||||
September 30, 2017 |
September 30, 2016 |
|||||||||||||||
Amount |
Per Diluted Share |
Amount |
Per Diluted Share |
|||||||||||||
Net income |
$ |
3,960 |
$ |
0.29 |
$ |
3,818 |
$ |
0.28 |
||||||||
Adjustments: |
||||||||||||||||
Plus: Hurricane related expenses |
3,398 |
0.25 |
- |
- |
||||||||||||
Less: Hurricane insurance recoveries |
(3,398) |
(0.25) |
- |
- |
||||||||||||
Subtotal adjustments to net income |
- |
- |
- |
- |
||||||||||||
Adjusted net income |
$ |
3,960 |
$ |
0.29 |
$ |
3,818 |
$ |
0.28 |
||||||||
Calculation of Adjusted Funds From Operations ("AFFO") |
||||||||||||||||
Three Months Ended |
Three Months Ended |
|||||||||||||||
September 30, 2017 |
September 30, 2016 |
|||||||||||||||
Amount |
Per Diluted Share |
Amount |
Per Diluted Share |
|||||||||||||
Net income |
$ |
3,960 |
$ |
0.29 |
$ |
3,818 |
$ |
0.28 |
||||||||
Plus: Depreciation and amortization expense: |
||||||||||||||||
Consolidated investments |
6,189 |
0.46 |
5,781 |
0.43 |
||||||||||||
Unconsolidated affiliates |
302 |
0.02 |
463 |
0.03 |
||||||||||||
Funds From Operations ("FFO") |
10,451 |
0.77 |
10,062 |
0.74 |
||||||||||||
Hurricane related expenses |
3,398 |
0.25 |
- |
- |
||||||||||||
Hurricane insurance recoveries |
(3,398) |
(0.25) |
- |
- |
||||||||||||
AFFO |
$ |
10,451 |
$ |
0.77 |
$ |
10,062 |
$ |
0.74 |
||||||||
Dividend paid per share |
$ |
0.660 |
$ |
0.650 |
Universal Health Realty Income Trust |
||||||||||||||||
Calculation of Adjusted Net Income |
||||||||||||||||
Nine Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, 2017 |
September 30, 2016 |
|||||||||||||||
Amount |
Per Diluted Share |
Amount |
Per Diluted Share |
|||||||||||||
Net income |
$ |
39,555 |
$ |
2.91 |
$ |
12,769 |
$ |
0.95 |
||||||||
Adjustments: |
||||||||||||||||
Plus: Hurricane related expenses |
3,398 |
0.25 |
- |
- |
||||||||||||
Less: Gain on fair value recognition resulting from purchase |
(27,196) |
(2.00) |
- |
- |
||||||||||||
Hurricane insurance recoveries |
(3,398) |
(0.25) |
- |
- |
||||||||||||
Subtotal adjustments to net income |
(27,196) |
(2.00) |
- |
- |
||||||||||||
Adjusted net income |
$ |
12,359 |
$ |
0.91 |
$ |
12,769 |
$ |
0.95 |
||||||||
Calculation of Adjusted Funds From Operations ("AFFO") |
||||||||||||||||
Nine Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, 2017 |
September 30, 2016 |
|||||||||||||||
Amount |
Per Diluted Share |
Amount |
Per Diluted Share |
|||||||||||||
Net income |
$ |
39,555 |
$ |
2.91 |
$ |
12,769 |
$ |
0.95 |
||||||||
Plus: Depreciation and amortization expense: |
||||||||||||||||
Consolidated investments |
18,378 |
1.35 |
16,549 |
1.23 |
||||||||||||
Unconsolidated affiliates |
981 |
0.07 |
1,378 |
0.11 |
||||||||||||
Less: Gain on fair value recognition resulting from purchase |
(27,196) |
(2.00) |
- |
- |
||||||||||||
Funds From Operations ("FFO") |
31,718 |
2.33 |
30,696 |
2.29 |
||||||||||||
Hurricane related expenses |
3,398 |
0.25 |
- |
- |
||||||||||||
Hurricane insurance recoveries |
(3,398) |
(0.25) |
- |
- |
||||||||||||
AFFO |
$ |
31,718 |
$ |
2.33 |
$ |
30,696 |
$ |
2.29 |
||||||||
Dividend paid per share |
$ |
1.975 |
$ |
1.945 |
Universal Health Realty Income Trust |
||||||||
September 30, |
December 31, |
|||||||
2017 |
2016 |
|||||||
Assets: |
||||||||
Real Estate Investments: |
||||||||
Buildings and improvements and construction in progress |
$ |
547,358 |
$ |
534,190 |
||||
Accumulated depreciation |
(149,909) |
(138,588) |
||||||
397,449 |
395,602 |
|||||||
Land |
53,037 |
51,638 |
||||||
Net Real Estate Investments |
450,486 |
447,240 |
||||||
Investments in and advances to limited liability companies ("LLCs") |
4,695 |
35,593 |
||||||
Other Assets: |
||||||||
Cash and cash equivalents |
3,948 |
3,930 |
||||||
Base and bonus rent and other receivables from UHS |
3,883 |
2,321 |
||||||
Rent receivable - other |
5,864 |
5,291 |
||||||
Hurricane insurance recoveries receivable |
1,898 |
- |
||||||
Intangible assets (net of accumulated amortization of $29.6 million and |
21,669 |
23,815 |
||||||
Deferred charges and other assets, net |
6,535 |
6,560 |
||||||
Total Assets |
$ |
498,978 |
$ |
524,750 |
||||
Liabilities: |
||||||||
Line of credit borrowings |
$ |
176,700 |
$ |
201,500 |
||||
Mortgage notes payable, non-recourse to us, net |
83,464 |
114,217 |
||||||
Accrued interest |
620 |
626 |
||||||
Accrued expenses and other liabilities |
14,817 |
11,809 |
||||||
Tenant reserves, deposits and deferred and prepaid rents |
10,070 |
5,321 |
||||||
Total Liabilities |
285,671 |
333,473 |
||||||
Equity: |
||||||||
Preferred shares of beneficial interest, |
- |
- |
||||||
Common shares, $.01 par value; |
137 |
136 |
||||||
Capital in excess of par value |
265,132 |
255,656 |
||||||
Cumulative net income |
612,056 |
572,501 |
||||||
Cumulative dividends |
(664,042) |
(637,121) |
||||||
Accumulated other comprehensive income |
24 |
105 |
||||||
Total Equity |
213,307 |
191,277 |
||||||
Total Liabilities and Equity |
$ |
498,978 |
$ |
524,750 |
View original content:http://www.prnewswire.com/news-releases/universal-health-realty-income-trust-reports-2017-third-quarter-financial-results-300544243.html
SOURCE
Charles Boyle, Chief Financial Officer, (610) 768-3300