UNIVERSAL HEALTH REALTY INCOME TRUST REPORTS 2021 FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS
02/24/2022
As reflected on the attached Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule"), our financial results for the three-month period ended
The increase in our adjusted net income of
As calculated on the Supplemental Schedule, our funds from operations ("FFO"), were
During the fourth quarter of 2021, as compared to the fourth quarter of 2020, our FFO increased
Consolidated Results of Operations - Twelve-Month Periods Ended
For the twelve-month period ended
As reflected on the attached Supplemental Schedule, our financial results for the year ended
The increase in our adjusted net income of
As calculated on the Supplemental Schedule, our FFO were
During the full year of 2021, as compared to the comparable period of 2020, our FFO increased by
Dividend Information:
The fourth quarter dividend of
Capital Resources Information:
At
Asset Purchase and Sale Agreement with UHS:
As previously disclosed on Form 8-K, as filed on
- a wholly-owned subsidiary of UHS purchased from us, the real estate assets of the Inland Valley Campus of
Southwest Healthcare System located inWildomar, California , at its fair market value of$79.6 million . - two wholly-owned subsidiaries of UHS transferred to us, the real estate assets of the following properties:
- Aiken
Regional Medical Center ("Aiken "), located inAiken, South Carolina (which includes an acute care hospital and a behavioral health pavilion), at its fair-market value of approximately$57.7 million , and; Canyon Creek Behavioral Health ("Canyon Creek"), located inTemple, Texas , at its fair-market value of approximately$24.7 million .- in connection with this transaction, since the fair-market value of
Aiken and Canyon Creek, which totaled approximately$82.4 million in the aggregate, exceeded the$79.6 million fair-market value of the Inland Valley Campus ofSouthwest Healthcare System , we paid approximately$2.8 million in cash to UHS. This transaction generated a gain of approximately$68.4 million which is included in our consolidated statement of income for the three and twelve-month periods endedDecember 31, 2021 .
We structured the purchase and sale of the above-mentioned properties as a like-kind exchange of property under the provisions of Section 1031 of the Internal Revenue Code of 1986, as amended.
Also on
Other Recent Asset Divestiture/Acquisition Transactions:
During the fourth quarter of 2021 and first quarter of 2022, we completed two transactions as follows, 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 November, 2021, we sold the Auburn Medical Office
Building II , located inAuburn, Washington , for a sale price of approximately$24.9 million , net of closing costs. This divestiture generated a gain of approximately$17.6 million which is included in our consolidated statement of income for the three and twelve-month periods endedDecember 31, 2021 ; - In January, 2022, we acquired
140 Thomas Johnson Drive , a medical office building with 20,146 rentable square feet, located inFrederick, 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.
Construction of
In January, 2022, we entered into a ground lease and master flex-lease agreement with a wholly-owned subsidiary of UHS with the intent to develop, construct and own the real property of Sierra Medical
Purchase of Minority Interest in
During the fourth quarter of 2021, we paid approximately
Property Disclosures Related to Certain Facilities:
Upon the
Facilities in
The leases on two specialty facilities, located in
The aggregate annual operating expenses (excluding depreciation and amortization expense) incurred by us in connection with the
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 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
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
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
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
Consolidated Statements of Income For the Three and Twelve Months Ended (amounts in thousands, except share information) (unaudited) |
||||||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||||||
|
|
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Revenues: |
||||||||||||||||
Lease revenue - UHS facilities (a.) |
$ |
7,925 |
$ |
6,328 |
$ |
29,896 |
$ |
24,571 |
||||||||
Lease revenue - Non-related parties |
13,000 |
13,036 |
52,324 |
51,562 |
||||||||||||
Other revenue - UHS facilities |
222 |
215 |
891 |
882 |
||||||||||||
Other revenue - Non-related parties |
263 |
251 |
1,079 |
995 |
||||||||||||
21,410 |
19,830 |
84,190 |
78,010 |
|||||||||||||
Expenses: |
||||||||||||||||
Depreciation and amortization |
6,927 |
6,421 |
27,478 |
25,581 |
||||||||||||
Advisory fees to UHS |
1,134 |
1,059 |
4,406 |
4,141 |
||||||||||||
Other operating expenses |
5,956 |
5,711 |
23,441 |
22,284 |
||||||||||||
14,017 |
13,191 |
55,325 |
52,006 |
|||||||||||||
Income before equity in income of unconsolidated limited liability companies ("LLCs"), gains on divestitures of real estate assets and interest expense |
7,393 |
6,639 |
28,865 |
26,004 |
||||||||||||
Equity in income of unconsolidated LLCs |
455 |
335 |
1,796 |
1,706 |
||||||||||||
Gains on divestitures of real estate assets |
86,010 |
- |
87,314 |
- |
||||||||||||
Interest expense, net |
(2,243) |
(1,974) |
(8,809) |
(8,263) |
||||||||||||
Net income |
$ |
91,615 |
$ |
5,000 |
$ |
109,166 |
$ |
19,447 |
||||||||
Basic earnings per share |
$ |
6.66 |
$ |
0.36 |
$ |
7.94 |
$ |
1.42 |
||||||||
Diluted earnings per share |
$ |
6.65 |
$ |
0.36 |
$ |
7.92 |
$ |
1.41 |
||||||||
Weighted average number of shares outstanding - Basic |
13,763 |
13,749 |
13,757 |
13,743 |
||||||||||||
Weighted average number of shares outstanding - Diluted |
13,784 |
13,771 |
13,779 |
13,765 |
||||||||||||
(a.) Includes bonus rental on UHS acute-care hospital facilities of |
Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule") For the Three Months Ended (amounts in thousands, except share information) (unaudited) |
||||||||||||||||
Calculation of Adjusted Net Income |
||||||||||||||||
Three Months Ended |
Three Months Ended |
|||||||||||||||
|
|
|||||||||||||||
Amount |
Per Diluted Share |
Amount |
Per Diluted Share |
|||||||||||||
Net income |
$ |
91,615 |
$ |
6.65 |
$ |
5,000 |
$ |
0.36 |
||||||||
Adjustments: |
||||||||||||||||
Less: Gains on divestitures of real estate assets |
(86,010) |
(6.24) |
- |
- |
||||||||||||
Subtotal adjustments to net income |
(86,010) |
(6.24) |
- |
- |
||||||||||||
Adjusted net income |
$ |
5,605 |
$ |
0.41 |
$ |
5,000 |
$ |
0.36 |
||||||||
Calculation of Funds From Operations ("FFO") |
||||||||||||||||
Three Months Ended |
Three Months Ended |
|||||||||||||||
|
|
|||||||||||||||
Amount |
Per Diluted Share |
Amount |
Per Diluted Share |
|||||||||||||
Net income |
$ |
91,615 |
$ |
6.65 |
$ |
5,000 |
$ |
0.36 |
||||||||
Plus: Depreciation and amortization expense: |
||||||||||||||||
Consolidated investments |
6,927 |
0.50 |
6,421 |
0.47 |
||||||||||||
Unconsolidated affiliates |
353 |
0.03 |
333 |
0.02 |
||||||||||||
Less: Gains on divestitures of real estate assets |
(86,010) |
(6.24) |
- |
- |
||||||||||||
FFO |
$ |
12,885 |
$ |
0.93 |
$ |
11,754 |
$ |
0.85 |
||||||||
Dividend paid per share |
$ |
0.705 |
$ |
0.695 |
Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule") For the Twelve Months Ended (amounts in thousands, except share information) (unaudited) |
||||||||||||||||
Calculation of Adjusted Net Income |
||||||||||||||||
Twelve Months Ended |
Twelve Months Ended |
|||||||||||||||
|
|
|||||||||||||||
Amount |
Per Diluted Share |
Amount |
Per Diluted Share |
|||||||||||||
Net income |
$ |
109,166 |
$ |
7.92 |
$ |
19,447 |
$ |
1.41 |
||||||||
Adjustments: |
||||||||||||||||
Less: Gains on divestitures of real estate assets |
(87,314) |
(6.34) |
- |
- |
||||||||||||
Subtotal adjustments to net income |
(87,314) |
(6.34) |
- |
- |
||||||||||||
Adjusted net income |
$ |
21,852 |
$ |
1.59 |
$ |
19,447 |
$ |
1.41 |
||||||||
Calculation of Funds From Operations ("FFO") |
||||||||||||||||
Twelve Months Ended |
Twelve Months Ended |
|||||||||||||||
|
|
|||||||||||||||
Amount |
Per Diluted Share |
Amount |
Per Diluted Share |
|||||||||||||
Net income |
$ |
109,166 |
$ |
7.92 |
$ |
19,447 |
$ |
1.41 |
||||||||
Plus: Depreciation and amortization expense: |
||||||||||||||||
Consolidated investments |
27,478 |
2.00 |
25,581 |
1.86 |
||||||||||||
Unconsolidated affiliates |
1,549 |
0.11 |
1,202 |
0.09 |
||||||||||||
Less: Gains on divestitures of real estate assets |
(87,314) |
(6.34) |
- |
- |
||||||||||||
FFO |
$ |
50,879 |
$ |
3.69 |
$ |
46,230 |
$ |
3.36 |
||||||||
Dividend paid per share |
$ |
2.800 |
$ |
2.760 |
Consolidated Balance Sheets (amounts in thousands, except share information) (unaudited) |
||||||||
|
|
|||||||
2021 |
2020 |
|||||||
Assets: |
||||||||
Real Estate Investments: |
||||||||
Buildings and improvements and construction in progress |
$ |
608,836 |
$ |
605,292 |
||||
Accumulated depreciation |
(225,584) |
(216,648) |
||||||
383,252 |
388,644 |
|||||||
Land |
54,897 |
55,157 |
||||||
Net Real Estate Investments |
438,149 |
443,801 |
||||||
Financing receivable from UHS |
82,439 |
- |
||||||
Net Real Estate Investments and Financing receivable |
520,588 |
443,801 |
||||||
Investments in and advances to limited liability companies ("LLCs") |
10,139 |
4,278 |
||||||
Other Assets: |
||||||||
Cash and cash equivalents |
22,504 |
5,742 |
||||||
Lease and other receivables from UHS |
4,641 |
3,199 |
||||||
Lease receivable - other |
7,109 |
7,504 |
||||||
Intangible assets (net of accumulated amortization of |
9,972 |
11,742 |
||||||
Right-of-use land assets, net |
11,495 |
8,914 |
||||||
Deferred charges and other assets, net |
11,971 |
8,829 |
||||||
Total Assets |
$ |
598,419 |
$ |
494,009 |
||||
Liabilities: |
||||||||
Line of credit borrowings |
$ |
271,900 |
$ |
236,200 |
||||
Mortgage notes payable, non-recourse to us, net |
56,866 |
58,895 |
||||||
Accrued interest |
346 |
351 |
||||||
Accrued expenses and other liabilities |
12,157 |
19,802 |
||||||
Ground lease liabilities, net |
11,495 |
8,914 |
||||||
Tenant reserves, deposits and deferred and prepaid rents |
10,328 |
10,842 |
||||||
Total Liabilities |
363,092 |
335,004 |
||||||
Equity: |
||||||||
Preferred shares of beneficial interest, |
- |
- |
||||||
Common shares, |
138 |
138 |
||||||
Capital in excess of par value |
268,515 |
267,368 |
||||||
Cumulative net income and other |
789,559 |
680,727 |
||||||
Cumulative dividends |
(823,998) |
(785,413) |
||||||
Accumulated other comprehensive income/(loss) |
1,113 |
(3,815) |
||||||
Total Equity |
235,327 |
159,005 |
||||||
Total Liabilities and Equity |
$ |
598,419 |
$ |
494,009 |
View original content:https://www.prnewswire.com/news-releases/universal-health-realty-income-trust-reports-2021-fourth-quarter-and-full-year-financial-results-301490232.html
SOURCE
Charles Boyle, Chief Financial Officer, (610) 768-3300