UNIVERSAL HEALTH REALTY INCOME TRUST REPORTS 2021 FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS
Universal Health Realty Income Trust (NYSE:UHT) reported a significant increase in net income for Q4 2021, totaling $91.6 million, or $6.65 per diluted share, compared to $5.0 million, or $0.36 per diluted share in Q4 2020. This rise was heavily influenced by $86.0 million in gains from the divestiture of real estate assets. Adjusted net income was $5.6 million, up from $5.0 million year-over-year. FFO also increased to $12.9 million, indicating ongoing operational strength amidst higher interest expenses and vacancies in certain properties.
- Q4 2021 net income rose to $91.6 million, a significant increase from $5.0 million in Q4 2020.
- Gains from divestitures amounted to $86.0 million, boosting overall financial performance.
- Adjusted net income improved to $5.6 million, compared to $5.0 million in the prior year.
- FFO increased to $12.9 million, compared to $11.8 million in Q4 2020.
- Increased interest expenses due to higher borrowings.
- Vacant properties resulting in an estimated $2.5 million in annual operating expenses.
KING OF PRUSSIA, Pa., Feb. 24, 2022 /PRNewswire/ -- Universal Health Realty Income Trust (NYSE:UHT) announced today that for the three-month period ended December 31, 2021, net income was
As reflected on the attached Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule"), our financial results for the three-month period ended December 31, 2021 include gains of
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 December 31, 2021 and 2020:
For the twelve-month period ended December 31, 2021, net income was
As reflected on the attached Supplemental Schedule, our financial results for the year ended December 31, 2021 include gains of
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 $.705 per share, or
Capital Resources Information:
At December 31, 2021, we had
Asset Purchase and Sale Agreement with UHS:
As previously disclosed on Form 8-K, as filed on January 4, 2022, on December 31, 2021, we entered into an asset purchase and sale agreement with UHS and certain of its affiliates pursuant to the terms of which:
- a wholly-owned subsidiary of UHS purchased from us, the real estate assets of the Inland Valley Campus of Southwest Healthcare System located in Wildomar, 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 in Aiken, 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 in Temple, 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 of Southwest 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 ended December 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 December 31, 2021, Aiken and Canyon Creek (as lessees), entered into a master lease and individual property leases (with us as lessor), for initial lease terms on each property of approximately twelve years, ending on December 31, 2033. Subject to the terms of the master lease, Aiken and Canyon Creek have the right to renew their leases, at the then current fair market rent (as defined in the master lease), for seven, five-year optional renewal terms. The aggregate annual rental during 2022 pursuant to the leases for these two facilities, which is payable to us on a monthly basis, amounts to approximately
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 in Auburn, 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 ended December 31, 2021; - In January, 2022, we acquired 140 Thomas Johnson Drive, a medical office building with 20,146 rentable square feet, located in Frederick, Maryland, for a purchase price of approximately
$8.0 million . The building is100% leased to three tenants under the terms of triple-net leases. Approximately72% 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 New Medical Office Building:
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 Plaza I, an MOB located in Reno, Nevada, consisting of approximately 86,000 rentable square feet. This MOB will be located on the campus of the Northern Nevada Sierra Medical Center, a newly constructed hospital that is owned and operated by a wholly-owned subsidiary of UHS, which is scheduled to be completed and opened during the first quarter of 2022. Construction of this MOB, for which we have engaged a non-related third party to act as construction manager, commenced in January, 2022. The cost of the MOB is estimated to be approximately
Purchase of Minority Interest in Majority-Owned Limited Partnership:
During the fourth quarter of 2021, we paid approximately
Property Disclosures Related to Certain Facilities:
Wellington Regional Medical Center:
Upon the December 31, 2021 expiration of the lease on this acute care hospital located in West Palm Beach, Florida, a wholly-owned subsidiary of UHS exercised its fair market value renewal option and renewed the lease for a 5-year term scheduled to expire on December 31, 2026. Effective January 1, 2022, the annual fair market value lease rate for this hospital, which is payable to us monthly, is
Facilities in Evansville, Indiana, Corpus Christi, Texas and Chicago, Illinois:
The leases on two specialty facilities, located in Evansville, Indiana, and Corpus Christi, Texas, expired on May 31, 2019 and June 1, 2019, respectively. Each facility has remained vacant since 2019. The lease on the 4058 W. Melrose specialty facility, located in Chicago, Illinois, expired on December 31, 2021 and the facility is currently vacant. Pursuant to the terms of the lease on the 4058 W. Melrose property, we earned approximately
The aggregate annual operating expenses (excluding depreciation and amortization expense) incurred by us in connection with the Evansville, Indiana, and Corpus Christi, Texas, facilities amounted to
General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures:
Universal Health Realty Income Trust, a real estate investment trust, invests in healthcare and human-service related facilities including acute care hospitals, behavioral health care hospitals, specialty hospitals, medical/office buildings, free-standing emergency departments and childcare centers. We have investments or commitments in seventy-five properties located in twenty-one states.
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 Securities and Exchange Commission (as set forth in Item 1A-Risk Factors and in Item 7-Forward-Looking Statements in our Form 10-K for the year ended December 31, 2021, may cause the results to differ materially from those anticipated in the forward-looking statements. 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.
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 the United States of America), are helpful to our investors as measures of our operating performance. In addition, we believe that, when applicable, comparing and discussing our financial results based on these measures, as calculated, is helpful to our investors since it neutralizes the effect in each year of material items that are non-recurring or non-operational in nature including items such as, but not limited to, gains on transactions.
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 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. FFO adjusts for the effects of certain items, such as gains on transactions that occurred during the periods presented. FFO does 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 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 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, 2021. 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.
Universal Health Realty Income Trust Consolidated Statements of Income For the Three and Twelve Months Ended December 31, 2021 and 2020 (amounts in thousands, except share information) (unaudited) | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
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 | ||||||||||||||||
Universal Health Realty Income Trust Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule") For the Three Months Ended December 31, 2021 and 2020 (amounts in thousands, except share information) (unaudited) | ||||||||||||||||
Calculation of Adjusted Net Income | ||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||
December 31, 2021 | December 31, 2020 | |||||||||||||||
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 | |||||||||||||||
December 31, 2021 | December 31, 2020 | |||||||||||||||
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 | ||||||||||||
Universal Health Realty Income Trust Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule") For the Twelve Months Ended December 31, 2021 and 2020 (amounts in thousands, except share information) (unaudited) | ||||||||||||||||
Calculation of Adjusted Net Income | ||||||||||||||||
Twelve Months Ended | Twelve Months Ended | |||||||||||||||
December 31, 2021 | December 31, 2020 | |||||||||||||||
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 | |||||||||||||||
December 31, 2021 | December 31, 2020 | |||||||||||||||
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 | ||||||||||||
Universal Health Realty Income Trust Consolidated Balance Sheets (amounts in thousands, except share information) (unaudited) | ||||||||
December 31, | December 31, | |||||||
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, $.01 par value; | 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 Universal Health Realty Income Trust
FAQ
What was Universal Health Realty Income Trust's (UHT) net income for Q4 2021?
How much did UHT gain from real estate asset divestitures in Q4 2021?
What was the adjusted net income for UHT in 2021?
What was the funds from operations (FFO) for UHT in Q4 2021?
What are the projected operating expenses for UHT's vacant properties?
