UNIVERSAL HEALTH REALTY INCOME TRUST REPORTS 2024 FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS

Rhea-AI Summary

Universal Health Realty Income Trust (NYSE:UHT) reported strong financial results for Q4 and full-year 2024. Q4 net income reached $4.7 million ($0.34 per diluted share), up from $3.6 million ($0.26 per diluted share) in Q4 2023. Full-year 2024 net income was $19.2 million ($1.39 per diluted share), compared to $15.4 million in 2023.

The company's Funds from Operations (FFO) for Q4 2024 were $11.8 million ($0.85 per diluted share), increasing from $11.4 million in Q4 2023. Full-year FFO reached $47.9 million ($3.46 per diluted share), up from $44.6 million in 2023.

Notable developments include a credit agreement expansion to $425 million from $375 million, with maturity extended to September 2028. The company also entered a new interest rate swap agreement for $85 million at 3.2725% fixed rate. The Sierra Medical Plaza I in Reno, Nevada, is now 68% leased with an estimated total cost of $35 million.

Positive

• Q4 net income increased 30.6% YoY to $4.7M
• Full-year net income grew 24.7% to $19.2M
• Credit facility expanded by $50M to $425M
• Sierra Medical Plaza I achieved 68% occupancy
• FFO per share increased to $3.46 for 2024 from $3.23 in 2023

Negative

• Interest expense increased due to higher borrowing rates
• $348.9M outstanding debt on credit facility
• Multiple vacant properties still being marketed
• Higher borrowing costs impact from interest rate increases

Insights

Financial Analyst

Universal Health Realty Income Trust (UHT) delivered solid financial growth in Q4 2024, with net income reaching $4.7 million ($0.34 per diluted share), a 30.6% year-over-year increase. The full-year performance was equally impressive, with net income of $19.2 million ($1.39 per diluted share), up 24.7% from 2023.

The REIT's property portfolio generated an additional $1.2 million in Q4 income year-over-year, demonstrating the underlying strength of its healthcare real estate assets. However, this was partially offset by $337,000 in increased interest expenses, reflecting the challenging interest rate environment that continues to pressure REITs with variable-rate debt.

From a capital structure perspective, UHT has taken strategic steps to enhance financial flexibility by expanding its credit facility to $425 million and extending the maturity to September 2028. The new interest rate swap at 3.2725% on $85 million of debt provides some protection against further rate increases, though at a significantly higher rate than the previous 1.21% swap that expired in September 2024.

The Sierra Medical Plaza I development in Reno remains a concern with only 68% occupancy despite substantial completion in March 2023. The 34% master flex lease with UHS subsidiary provides some income stability but highlights the leasing challenges in certain markets. Additionally, the vacant properties in Chicago and Evansville continue to create a drag on earnings until successfully marketed.

The quarterly dividend of $0.735 per share ($10.1 million total) represents approximately 86% of Q4 FFO, indicating the dividend remains well-covered despite higher borrowing costs. With FFO per diluted share of $3.46 for 2024, UHT maintains a reasonable annual FFO payout ratio of approximately 85%, providing some cushion for potential market volatility.

Real Estate Investment Specialist

UHT's Q4 and full-year 2024 results demonstrate resilience in the healthcare real estate sector, with FFO growth of 3.7% for the quarter and 7.1% for the year. This outpaces several healthcare REIT peers who have struggled with occupancy challenges and tenant financial pressures in the post-pandemic environment.

The REIT's financial structure shows both strengths and vulnerabilities. While the expanded $425 million credit facility provides enhanced liquidity, the $348.9 million outstanding balance represents 82% utilization, leaving relatively flexibility at $76.1 million in available capacity. More concerning is the new interest rate swap at 3.2725%, which more than doubles the previous 1.21% rate on $85 million of debt. This 206% increase in hedging costs on this portion of debt will create approximately $1.7 million in additional annual interest expense, potentially offsetting property performance gains.

The Sierra Medical Plaza I development highlights both opportunity and risk in UHT's portfolio. Despite being located on a UHS hospital campus and having a 34% master flex lease, the property remains 32% vacant nearly two years after completion. This suggests challenging medical office market conditions in Reno and raises questions about the $35 million investment return timeline.

UHT's tenant relationship with UHS creates a double-edged sword: stability through master leases and hospital-adjacent locations, but concentration risk with a single operator. This relationship has historically benefited UHT through steady occupancy on UHS-anchored properties.

The quarterly dividend of $0.735 ($2.94 annualized) represents an FFO payout ratio of 85%, which is moderate for healthcare REITs but leaves minimal room for additional interest expense pressure or occupancy challenges. With interest rates likely to remain elevated through 2025, UHT's debt structure will continue to face headwinds that may constrain future FFO growth despite solid property-level performance.

Consolidated Results of Operations - Three-Month Periods Ended December 31, 2024 and 2023:

KING OF PRUSSIA, Pa., Feb. 26, 2025 /PRNewswire/ -- Universal Health Realty Income Trust (NYSE:UHT) announced today that for the three-month period ended December 31, 2024, net income was $4.7 million, or $.34 per diluted share, as compared to $3.6 million, or $.26 per diluted share, during the fourth quarter of 2023.

As reflected on the attached Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule"), our financial results for the three-month period ended December 31, 2023 included a loss on divestiture of approximately $232,000, or $.02 per diluted share, in connection with the sale of a vacant specialty facility located in Corpus Christi, Texas, in December, 2023. After adjusting our reported results for this loss on divestiture, our adjusted net income was $3.8 million, or $.28 per diluted share during the three-month period ended December 31, 2023.

The increase in our adjusted net income of $836,000, or $.06 per diluted share, during the three-month period ended December 31, 2024, as compared to the fourth quarter of 2023, consisted of the following: (i) an increase of $1.2 million, or $.08 per diluted share, resulting from an aggregate net increase in the income generated at various properties, partially offset by; (ii) a decrease of $337,000, or $.02 per diluted share, resulting from an increase in interest expense due primarily to increases in our average effective borrowing rate (which gives effect to various interest rate swap agreements) and our average outstanding borrowings pursuant to the terms of our revolving credit agreement. 

As calculated on the attached Supplemental Schedule, our funds from operations ("FFO") were $11.8 million, or $.85 per diluted share, during the fourth quarter of 2024, as compared to $11.4 million, or $.82 per diluted share, during the fourth quarter of 2023. The increase of $374,000, or $.03 per diluted share, was due primarily to the above-mentioned increase in our adjusted net income during the fourth quarter of 2024, as compared to the fourth quarter of 2023, partially offset by a decrease in depreciation and amortization expense.    

Consolidated Results of Operations - Twelve-Month Periods Ended December 31, 2024 and 2023:

For the twelve-month period ended December 31, 2024, net income was $19.2 million, or $1.39 per diluted share, as compared to $15.4 million, or $1.11 per diluted share during the full year of 2023.

As reflected on the Supplemental Schedule, our financial results for the year ended December 31, 2023 included the above-mentioned loss on divestiture of real estate assets of approximately $232,000 recorded during the fourth quarter of 2023. After adjusting our reported results for the loss on divestiture, our adjusted net income was $15.6 million, or $1.13 per diluted share during the year ended December 31, 2023.

The increase in our adjusted net income of $3.6 million, or $.26 per diluted share, during the year ended December 31, 2024, as compared to the comparable period of 2023, consisted of the following: (i) an increase of $3.5 million, or $.26 per diluted share, resulting from an aggregate net increase in the income generated at various properties; (ii) an increase of $2.0 million, or $.14 per diluted share, resulting from a reduction in the expenses related to our property located in Chicago, Illinois, including $1.1 million from demolition expenses incurred during the twelve months of 2023, and $610,000 related to a property tax reduction recorded during the year ended December 31, 2024 which related primarily to prior periods, partially offset by; (iii) a decrease of $1.9 million, or $.14 per diluted share, resulting from an increase in interest expense due primarily to increases in our average effective borrowing rate (which gives effect to various interest rate swap agreements) and our average outstanding borrowings pursuant to the terms of our revolving credit agreement.  

As calculated on the attached Supplemental Schedule, our FFO were $47.9 million, or $3.46 per diluted share, during the year ended December 31, 2024, as compared to $44.6 million, or $3.23 per diluted share during the comparable period of 2023. The increase of $3.3 million, or $.23 per diluted share, was due primarily to the above-mentioned increase in our adjusted net income during the year ended December 31, 2024, as compared to the year ended December 31, 2023, partially offset by a decrease in depreciation and amortization expense.     

Dividend Information:

The fourth quarter dividend of $.735 per share, or $10.1 million in the aggregate, was declared on November 25, 2024 and paid on December 31, 2024.

Capital Resources and Financial Instruments:

On September 30, 2024, we entered into a second amended and restated credit agreement which increased the borrowing capacity to $425 million (from $375 million previously) and extended the maturity date to September 30, 2028 (from July, 2025 previously).  We have the option to extend the maturity date for up to two additional six-month periods.

At December 31, 2024, we had $348.9 million of borrowings outstanding pursuant to the terms of our $425 million revolving credit agreement and $76.1 million of available borrowing capacity as of that date, net of outstanding borrowings.

In October, 2024, we entered into an interest rate swap agreement on a total notional amount of $85 million with a fixed interest rate of 3.2725% that we designated as a cash flow hedge. The interest rate swap became effective on October 2, 2024 and is scheduled to mature on September 30, 2028. If one-month term SOFR is above 3.2725%, the counterparty pays us, and if one-month term SOFR is less than 3.2725%, we pay the counterparty the difference between the fixed rate of 3.2725% and one-month term SOFR.

This interest rate swap agreement replaced two interest rate swaps agreements that expired on September 16, 2024 with a combined aggregate notional amount of $85 million and a combined average fixed interest rate of 1.21%.

Sierra Medical Plaza I:

In March, 2023, construction was substantially completed on the Sierra Medical Plaza I, an 86,000 rentable square foot MOB located in Reno, Nevada. This MOB is located on the campus of the Northern Nevada Sierra Medical Center, a hospital that is owned and operated by a wholly-owned subsidiary of UHS, which was completed and opened during April, 2022. The MOB is 68% leased including a ten-year master flex lease for 34% of the rentable square feet. The master flex lease agreement is subject to reduction based upon the execution of third-party leases  The aggregate cost of the MOB is estimated to be approximately $35 million, approximately $30 million of which was incurred as of December 31, 2024.

Vacant Land/Specialty Facilities:

Demolition of the former specialty hospital located in Chicago, Illinois, was completed during 2023. The aggregate demolition expenses amounted to approximately $1.5 million ($1.1 million of which were incurred during the first and second quarters of 2023 and $332,000 of which were incurred during the fourth quarter of 2022).

We continue to market the vacant properties located in Chicago, Illinois and Evansville, Indiana. Future operating expenses related to these properties, will be incurred by us during the time they remain owned and unleased.

In December, 2023, we sold the vacant specialty facility in Corpus Christi, Texas, for proceeds of approximately $3.9 million, net of closing costs. This divestiture generated a loss of approximately $232,000 which is included in our consolidated statements of income for the three and twelve-month periods ended December 31, 2023.

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 facilities, medical/office buildings, free-standing emergency departments and childcare centers. We have investments or commitments in seventy-six properties located in twenty-one states.

This press release contains forward-looking statements based on current management expectations. Numerous factors, including those disclosed herein, 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, 2024), 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. Future operations and financial results of our tenants, and in turn ours, could be materially impacted by various developments including, but not limited to, decreases in staffing availability and related increases to wage expense experienced by our tenants resulting from the shortage of nurses and other clinical staff and support personnel, the impact of government and administrative regulation of 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 related to supplies required for our tenants' employees and patients; and potential increases to other expenditures.

In addition, the increase in interest rates has substantially increased our borrowings costs and reduced our ability to access the capital markets on favorable terms.  Additional increases in interest rates could have a significant unfavorable impact on our future results of operations and the resulting effect on the capital markets could adversely affect our ability to carry out our strategy.        

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 or losses 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 or losses 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, 2024 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, 2024 and 2023 (amounts in thousands, except share information) (unaudited)
		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2024				2023				2024				2023
Revenues:
Lease revenue - UHS facilities (a.)		$	8,261			$	8,326			$	33,627			$	32,623
Lease revenue - Non-related parties			14,472				14,038				57,660				54,993
Other revenue - UHS facilities			220				216				902				946
Other revenue - Non-related parties			334				378				1,390				1,555
Interest income on financing leases - UHS facilities			1,355				1,362				5,432				5,458
			24,642				24,320				99,011				95,575
Expenses:
Depreciation and amortization			6,797				7,254				27,421				27,733
Advisory fees to UHS			1,388				1,366				5,481				5,323
Other operating expenses			7,198				7,545				29,313				31,170
			15,383				16,165				62,215				64,226
Income before equity in income of unconsolidated limited liability companies ("LLCs"), loss on divestiture and interest expense			9,259				8,155				36,796				31,349
Equity in income of unconsolidated LLCs			323				254				1,279				1,207
Loss on divestiture of real estate assets			-				(232)				-				(232)
Interest expense, net			(4,921)				(4,584)				(18,841)				(16,924)
Net income		$	4,661			$	3,593			$	19,234			$	15,400
Basic earnings per share		$	0.34			$	0.26			$	1.39			$	1.12
Diluted earnings per share		$	0.34			$	0.26			$	1.39			$	1.11
Weighted average number of shares outstanding - Basic			13,809				13,791				13,802				13,786
Weighted average number of shares outstanding - Diluted			13,850				13,823				13,839				13,814

(a.) Includes bonus rental on McAllen Medical Center, a UHS acute care hospital facility, of $801 and $734 for the three-month periods ended December 31, 2024 and 2023, respectively, and $3,107 and $2,953 for the twelve-month periods ended December 31, 2024 and 2023, respectively.

 

Universal Health Realty Income Trust Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule") For the Three Months Ended  December 31, 2024 and 2023 (amounts in thousands, except share information) (unaudited)
Calculation of Adjusted Net Income
		Three Months Ended								Three Months Ended
		December 31, 2024								December 31, 2023
		Amount				Per Diluted Share				Amount				Per Diluted Share
Net income		$	4,661			$	0.34			$	3,593			$	0.26
Adjustment:
Plus:  Loss on divestiture of real estate assets			-				-				232				0.02
Subtotal adjustments to net income			-				-				232				0.02
Adjusted net income		$	4,661			$	0.34			$	3,825			$	0.28
Calculation of Funds From Operations ("FFO")
		Three Months Ended								Three Months Ended
		December 31, 2024								December 31, 2023
		Amount				Per Diluted Share				Amount				Per Diluted Share
Net income		$	4,661			$	0.34			$	3,593			$	0.26
Plus: Depreciation and amortization expense:
Consolidated investments			6,797				0.49				7,254				0.52
Unconsolidated affiliates			300				0.02				305				0.02
Plus: Loss on divestiture of real estate assets			-				-				232				0.02
FFO		$	11,758			$	0.85			$	11,384			$	0.82
Dividend paid per share						$	0.735							$	0.725

 

Universal Health Realty Income Trust Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule") For the Twelve Months Ended December 31, 2024 and 2023 (amounts in thousands, except share information) (unaudited)
Calculation of Adjusted Net Income
		Twelve Months Ended								Twelve Months Ended
		December 31, 2024								December 31, 2023
		Amount				Per Diluted Share				Amount				Per Diluted Share
Net income		$	19,234			$	1.39			$	15,400			$	1.11
Adjustment:
Plus:  Loss on divestiture of real estate assets			-				-				232				0.02
Subtotal adjustments to net income			-				-				232				0.02
Adjusted net income		$	19,234			$	1.39			$	15,632			$	1.13
Calculation of Funds From Operations ("FFO")
		Twelve Months Ended								Twelve Months Ended
		December 31, 2024								December 31, 2023
		Amount				Per Diluted Share				Amount				Per Diluted Share
Net income		$	19,234			$	1.39			$	15,400			$	1.11
Plus: Depreciation and amortization expense:
Consolidated investments			27,421				1.98				27,733				2.01
Unconsolidated affiliates			1,218				0.09				1,205				0.09
Plus: Loss on divestiture of real estate assets			-				-				232				0.02
FFO		$	47,873			$	3.46			$	44,570			$	3.23
Dividend paid per share						$	2.920							$	2.880

 

Universal Health Realty Income Trust Consolidated Balance Sheets (amounts in thousands, except share information) (unaudited)
		December 31,				December 31,
		2024				2023
Assets:
Real Estate Investments:
Buildings and improvements and construction in progress		$	655,996			$	649,374
Accumulated depreciation			(286,932)				(262,449)
			369,064				386,925
Land			56,870				56,870
Net Real Estate Investments			425,934				443,795
Financing receivable from UHS			82,798				83,279
Net Real Estate Investments and Financing receivable			508,732				527,074
Investments in limited liability companies ("LLCs")			13,948				9,102
Other Assets:
Cash and cash equivalents			7,097				8,212
Lease and other receivables from UHS			7,131				6,180
Lease receivable - other			7,975				8,166
Intangible assets (net of accumulated amortization of $11.3 million and    $12.5 million, respectively)			7,325				9,110
Right-of-use land assets, net			10,918				10,946
Deferred charges, notes receivable and other assets, net			17,736				17,579
Total Assets		$	580,862			$	596,369
Liabilities:
Line of credit borrowings		$	348,900			$	326,600
Mortgage notes payable, non-recourse to us, net			19,349				32,863
Accrued interest			694				490
Accrued expenses and other liabilities			10,444				13,500
Ground lease liabilities, net			10,918				10,946
Tenant reserves, deposits and deferred and prepaid rents			11,016				11,036
Total Liabilities			401,321				395,435
Equity:
Preferred shares of beneficial interest,    $.01 par value; 5,000,000 shares authorized;    none issued and outstanding			-				-
Common shares, $.01 par value;    95,000,000 shares authorized; issued and outstanding: 2024 - 13,850,608;    2023 - 13,823,899			138				138
Capital in excess of par value			271,092				270,398
Cumulative net income			845,295				826,061
Cumulative dividends			(943,396)				(902,975)
Accumulated other comprehensive income			6,412				7,312
Total Equity			179,541				200,934
Total Liabilities and Equity		$	580,862			$	596,369

 

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SOURCE Universal Health Realty Income Trust

FAQ

What was Universal Health Realty Income Trust's (UHT) Q4 2024 earnings per share?

UHT reported earnings of $0.34 per diluted share in Q4 2024, up from $0.26 in Q4 2023.

How much did UHT's credit facility increase in September 2024?

UHT's credit facility increased by $50 million to $425 million, up from $375 million previously.

What is the occupancy rate of UHT's Sierra Medical Plaza I in Reno?

Sierra Medical Plaza I is 68% leased, including a ten-year master flex lease for 34% of rentable space.

What was UHT's Funds from Operations (FFO) per share for full-year 2024?

UHT's FFO was $3.46 per diluted share for 2024, compared to $3.23 in 2023.

What is the fixed interest rate on UHT's new October 2024 swap agreement?

The new interest rate swap agreement has a fixed rate of 3.2725% on $85 million notional amount.