Universal Health Realty Income: Reports Financial Results For The Three And Nine Months Ended

The following excerpt is from the company's SEC filing.

KING OF PRUSSIA, PA - Universal Health Realty Income Trust (NYSE:UHT) announced today that for the three-month period ended September 30, 2013, reported net income was $3.3 million, or $.26 per diluted share, as compared to $3.0 million, or $.24 per diluted share, during the third quarter of 2012.

The increase in net income during the third quarter of 2013, as compared to the third quarter of 2012, was attributable primarily to a decrease of approximately $600,000 in amortization expense recorded on intangible assets, partially offset by approximately $300,000 of other combined unfavorable changes.

As calculated on the attached Schedule of Non-GAAP Supplemental Information (“Supplemental Schedule”), our adjusted funds from operations (“AFFO”) were $8.7 million, or $.69 per diluted share, during the third quarter of 2013, as compared to $9.0 million, or $.71 per diluted share, during the third quarter of 2012.

For the nine-month period ended September 30, 2013, reported net income was $9.7 million, or $.76 per diluted share, as compared to $15.0 million, or $1.18 per diluted share, during the comparable nine-month period of 2012.

As reflected on the Supplemental Schedule, our reported net income during the nine-month period ended September 30, 2012 included a $7.4 million net gain on the divestiture of property owned by an unconsolidated limited liability company (“LLC”). After neutralizing the impact of the gain recorded in last year’s nine-month period, as well as the transaction costs recorded during each period, our adjusted net income increased $1.6 million, or $.13 per diluted share, to $9.8 million, or $.78 per diluted share, during the first nine months of 2013 as compared to $8.3 million, or $.65 per diluted share, during the comparable period of 2012. The $1.6 million increase in adjusted net income was attributable to: (i) an increase of $1.5 million resulting from a decrease in amortization expense recorded on intangible assets, and; (ii) approximately $100,000 of other combined net favorable changes.

As calculated on the Supplemental Schedule, our AFFO were $26.2 million, or $2.06 per diluted share, during the first nine months of 2013, as compared to $26.1 million, or $2.06 per diluted share, during the comparable period of 2012.

At September 30, 2013, we had $97.1 million of borrowings outstanding under our $150 million revolving credit agreement and $43.4 million of available borrowing capacity, net of outstanding borrowings and letters of credit.

We filed a Registration Statement with the Securities and Exchange Commission which became effective in November 2012, under which we can offer up to $50 million of our securities pursuant to supplemental prospectuses which we may file from time to time. No offering will be made except pursuant to such supplemental prospectuses.

  •   On August 22, 2013, we purchased the Ward Eagle Office Village, a medical office building (“MOB”) located in Farmington Hills, Michigan. This multi-tenant MOB, which was purchased for approximately $4.1 million, consists of approximately 16,282 rentable square feet.

  •   On June 6, 2013, we purchased the 5004 Poole Road medical office building, located in Denison, Texas, on the campus of Texoma Medical Center, a wholly-owned subsidiary of Universal Health Services, Inc. (“UHS”). This single-tenant MOB, which was purchased for approximately $625,000, consists of approximately 4,400 rentable square feet and is located adjacent to our Texoma Medical Plaza MOB.

  •   The newly constructed Forney Medical Plaza II located in Forney, Texas was completed and opened in April, 2013. This multi-tenant medical office building, consisting of 30,000 rentable square feet, is owned by a limited partnership in which we hold a 95% non-controlling ownership interest.

Effective July 1, 2013, the master lease agreement between Palmdale Medical Properties, an LLC in which we hold a 95% non-controlling equity interest, and Palmdale Regional Medical Center, a wholly-owned subsidiary of UHS, expired. Therefore, effective on July 1, 2013, this LLC was no longer considered a variable interest entity and we began accounting for this LLC on an unconsolidated basis pursuant to the equity method. Prior to the expiration of the master lease, this LLC was accounted for on a consolidated basis, through June 30, 2013. For the quarter ended September 30, 2012, this LLC had revenues of $328,000, operating expenses of $137,000, depreciation and amortization expense of $86,000, third-party interest expense of $103,000 and net income of $2,000. There was no material impact to our net income as a result of the deconsolidation of this LLC.

Universal Health Realty Income Trust, a real estate investment trust, invests in healthcare and human service related facilities including acute care hospitals, behavioral healthcare facilities, rehabilitation hospitals, sub-acute care facilities, surgery centers, childcare centers and medical office buildings. We have investments in fifty-six properties located in sixteen states.

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, 2012 and in Item 2-Forward-Looking Statements and Certain Risk Factors in our Form 10-Q for the quarterly period ended June 30, 2013), 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.

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 (“GAAP” is Generally Accepted Accounting Principles in the United States of America), 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. AFFO was also computed for the three and nine-month periods ended September 30, 2013 and 2012, as reflected on the Supplemental Schedules and discussed herein, since we believe it is helpful to our investors since it adjusts for the effect of a gain on divestiture of property owned by an unconsolidated LLC (during the first nine months of 2012) and transaction costs related to acquisitions. FFO/AFFO do 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/AFFO 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/AFFO 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, 2012 and our Report on Form 10-Q for the quarterly period ended June 30, 2013. 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.

Mortgage and other notes payable, non-recourse to us (including net debt premium of $942,000 and $1.3 million at September 30, 2013 and December 31, 2012, respectively)      107,102        116,186   

The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here.

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