Universal Health Realty Income Trust Universal Corporate Center


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 December 31, 2013, reported net income was $3.5 million, or $.27 per diluted share, as compared to $4.5 million, or $.36 per diluted share, during the same quarter of 2012.

After adjusting the reported results for the net impact of the items reflected on the attached Schedule of Non-GAAP Supplemental Information (“Supplemental Schedule”), consisting primarily of a $1.1 million gain realized on the divestiture of property during the fourth quarter of 2012, our adjusted net income was $3. 5 million, or $.28 per diluted share during the fourth quarter of 2013, as compared to $3.4 million, or $.27 per diluted share, during the fourth quarter of 2012.

As calculated on the attached Supplemental Schedule, our adjusted funds from operations (“AFFO”) were $9.0 million, or $.71 per diluted share, during the fourth quarter of 2013, as compared to $8.8 million, or $.70 per diluted share, during the fourth quarter of 2012.

For the twelve-month period ended December 31, 2013, reported net income was $13.2 million, or $1.04 per diluted share, as compared to $19.5 million, or $1.54 per diluted share, during the twelve-month period ended December 31, 2012.

As reflected on the Supplemental Schedule, our reported net income during the twelve-month period ended December 31, 2012 included an $8.5 million gain on divestitures of properties owned by unconsolidated LLCs. After neutralizing the impact of the gains recorded last year, as well as the transaction costs recorded during each year, our adjusted net income increased $1.7 million, or $.14 per diluted share, to $13.4 million, or $1.06 per diluted share, during 2013 as compared to $11.6 million, or $.92 per diluted share, during 2012. The $1.7 million increase in adjusted net income during 2013, as compared to 2012, was attributable primarily to a $1.8 million decrease in amortization expense recorded on intangible assets.

As calculated on the Supplemental Schedule, our AFFO were $35.2 million, or $2.77 per diluted share, during the twelve months of 2013, as compared to $35.0 million, or $2.76 per diluted share, during the comparable period of 2012.

At December 31, 2013, we had $93.7 million of borrowings outstanding under our $150 million revolving credit agreement and $47.6 million of available borrowing capacity, net of outstanding borrowings and letters of credit.

During the fourth quarter of 2013, we commenced an at-the-market 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 $50 million to or through Merrill Lynch, Pierce, Fenner and Smith Incorporated (“Merrill Lynch”), as sales agent and/or principal. Pursuant to this ATM Program, during the fourth quarter of 2013, we issued 154,713 shares at an average price of $41.71 per share which generated approximately $6.0 million of net cash proceeds (net of compensation to Merrill Lynch and other various fees and expenses).

  •   The Northwest Medical Center at Sugar Creek – a 16,700 square foot, multi-tenant medical office building located in Bentonville, Arkansas.

Additionally, effective January 1, 2014, we purchased the third-party minority ownership interests in two LLCs in which we previously held noncontrolling majority ownership interests (Palmdale Medical Properties and Sparks Medical Properties). As a result, we now own 100% of each of these LLCs, which own medical office buildings (“MOB”), and will begin accounting for each on a consolidated basis effective January 1, 2014.

  •   On August 22, 2013, we purchased the Ward Eagle Office Village, a medical office building located in Farmington Hills, Michigan. This multi-tenant MOB, which was purchased for approximately $4.1 million, consists of approximately 16,300 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 approximately 30,000 rentable square feet, is owned by a limited partnership in which we hold a 95% noncontrolling ownership interest.

Effective July 1, 2013, the master lease agreement between Palmdale Medical Properties, an LLC in which we then held a 95% noncontrolling 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 December 31, 2012, this LLC had revenues of $329,000, operating expenses of $129,000, depreciation and amortization expense of $86,000, interest expense of $103,000 and net income of $11,000. For the six months ended December 31, 2012, this LLC had revenues of $657,000, operating expenses of $266,000, depreciation and amortization expenses of $172,000, interest expense of $206,000 and net income of $13,000. 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-eight 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 Risk Factors in our Form 10-Q for the quarterly period ended September 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 twelve-month periods ended December 31, 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 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 September 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 $834,000 and $1.3 million at December 31, 2013 and December 31, 2012, respectively)      106,287        116,186   

The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here. Universal Health Realty Income Trust next reports earnings on March 03, 2014.

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