Core Viewpoint - Universal Health Realty Income Trust (UHT) is a small-cap REIT focused on the healthcare sector, demonstrating slow but steady growth over the past decade while operating in a growing niche and offering a high dividend yield [1] Group 1: Company Overview - UHT is a small-cap REIT that owns properties in the healthcare sector [1] - The company has experienced slow but steady growth over the last ten years [1] - UHT operates in a niche market that is currently expanding [1] Group 2: Investment Strategy - The focus is on investment ideas involving companies that provide healthy dividends and have clear potential for capital appreciation [1] - The strategy includes identifying undervalued shares based on fundamentals, peer comparisons, and historical levels [1] - High odds for capital appreciation are sought through foreseeable catalysts [1] Group 3: Shareholder Value - The investment approach emphasizes finding businesses that reward shareholders in two ways: through dividends and capital appreciation [1] - The company is noted for its commitment to rewarding shareholders [1]

Core Insights - Universal Health Realty Income Trust (UHT) is a small-cap REIT focused on the healthcare sector, demonstrating slow but steady growth over the past decade [1] - The company operates in a growing niche, offers a high dividend yield, and has potential for capital appreciation [1] - The investment strategy emphasizes identifying undervalued companies with strong fundamentals and potential catalysts for growth [1] Company Overview - UHT is characterized by its ownership of healthcare properties and has maintained a consistent growth trajectory [1] - The company is positioned to reward shareholders through dividends and capital appreciation opportunities [1] Investment Strategy - The focus is on companies that provide healthy dividends and exhibit clear potential for capital appreciation [1] - The investment approach includes filtering for companies that are temporarily undervalued compared to their fundamentals, peers, and historical performance [1] - A preference for businesses with high odds for capital appreciation driven by foreseeable catalysts is highlighted [1]

Real Estate Investments - As of September 30, 2025, the company has 77 real estate investments or commitments located in 21 states, including 6 hospital facilities and 61 medical/office buildings[99]. Revenue Sources - Approximately 39% of the company's consolidated revenues during the three-month period ended September 30, 2025, were derived from one operator, UHS[103]. Financial Performance - Net income for the three-month period ended September 30, 2025, was $4.0 million, unchanged from the same period in 2024[111]. - Revenues increased by $808,000 to $25.3 million during the three-month period ended September 30, 2025, compared to $24.5 million in the same period of 2024[112]. - For the nine-month period ended September 30, 2025, net income was $13.3 million, a decrease of $1.3 million from $14.6 million in the corresponding period of 2024[111]. - Funds From Operations (FFO) increased by $908,000 to $12.2 million during the third quarter of 2025, compared to $11.3 million in the third quarter of 2024[119]. - FFO for the first nine months of 2025 decreased by $166,000 to $35.9 million, compared to $36.1 million in the same period of 2024[120]. Interest and Expenses - The increase in interest rates over the past few years has significantly raised the company's interest expense, negatively impacting net income and cash provided by operating activities[104]. - Interest expense remained stable at $4.8 million for the three-month periods ended September 30, 2025, and 2024, while it increased to $14.2 million from $13.9 million for the nine-month periods[122]. - The average effective cost of borrowings decreased to 5.93% during the third quarter of 2025, down from 6.93% in the comparable quarter of 2024[122]. - Other operating expenses totaled $19.8 million for the nine-month period ended September 30, 2025, compared to $19.5 million in the same period of 2024[117]. Legislative and Economic Risks - Legislation enacted on July 4, 2025, may limit Medicaid enrollment and expenditure, potentially reducing revenues for the operators of the company's properties[104]. - The company faces inflationary pressures affecting its tenants, which could impact their ability to make rental payments[104]. - The company is subject to various legislative initiatives that may result in major changes in the healthcare delivery system, potentially impacting operators' financial conditions[105]. - The Budget Control Act of 2011 has imposed annual Medicare payment reductions, which may affect the operators of the company's properties[105]. - The company faces potential negative financial impacts from legislative changes affecting health care delivery and reimbursement[110]. - The company is exposed to risks from economic conditions that could lead to declines in patient volumes and occupancy rates at its medical office buildings[105]. Cash Flow and Financing Activities - Net cash provided by operating activities increased to $35.5 million for the nine months ended September 30, 2025, up from $33.8 million in the same period of 2024, representing a $1.7 million increase[124]. - Net cash used in investing activities was $12.4 million during the first nine months of 2025, compared to $11.2 million in the same period of 2024[126]. - Net cash used in financing activities decreased to $23.2 million for the nine months ended September 30, 2025, down from $24.4 million in the same period of 2024[129]. - Dividends paid amounted to $30.7 million in the first nine months of 2025, compared to $30.2 million in the same period of 2024[135]. - The company declared and paid dividends that were approximately $4.8 million greater than net cash provided by operating activities during the first nine months of 2025[135]. - The company received $8.2 million of net borrowings pursuant to its Credit Agreement during the nine months ended September 30, 2025[130]. - The company expects to finance all capital expenditures and acquisitions using internally generated funds and additional funds from its Credit Agreement[139]. Borrowings and Credit Agreement - The company had $357.1 million of outstanding borrowings under its $425 million Credit Agreement as of September 30, 2025, with $67.9 million of available borrowing capacity[146]. - The maturity date of the credit agreement has been extended to September 30, 2028, from July 2025, and the aggregate borrowing capacity has increased to $425 million from $375 million[142]. - The applicable margin over the Adjusted Term SOFR rate for revolving loans was 1.20% as of September 30, 2025[144]. - Aggregate borrowings under the credit agreement for the quarter ended September 30, 2025, were $14.9 million, compared to $17.2 million for the same quarter in 2024[147]. - The company remains in compliance with all covenants in the credit agreement as of September 30, 2025[148]. Tangible Net Worth and Leverage - As of September 30, 2025, the company's tangible net worth was $152.5 million, exceeding the covenant requirement of $125 million[149]. - The total leverage ratio was 44.0% as of September 30, 2025, remaining below the maximum limit of 60%[149]. - The company had various non-recourse mortgages with a combined carrying value of approximately $18.7 million as of September 30, 2025[151]. - The fair value of the mortgages outstanding as of September 30, 2025, was approximately $17.6 million, compared to a carrying value of approximately $18.7 million[151]. - The company has no off-balance sheet arrangements as of September 30, 2025[152].

Financial Performance - For the three-month period ended September 30, 2025, net income was $4.0 million, or $0.29 per diluted share, unchanged from the same period in 2024[1][2] - For the nine-month period ended September 30, 2025, net income decreased to $13.3 million, or $0.96 per diluted share, from $14.6 million, or $1.05 per diluted share in the same period of 2024[4] - The decrease in net income for the first nine months of 2025 included a $730,000 reduction in income from various properties and a $900,000 nonrecurring depreciation expense[5][6] - Net income for the nine months ended September 30, 2025, was $13,285,000, a decrease of 8.8% from $14,573,000 in 2024[25] - Funds From Operations (FFO) for the nine months ended September 30, 2025, was $35,949,000, slightly down from $36,115,000 in 2024, resulting in a per diluted share of $2.59 compared to $2.61[25] Dividends - The third quarter dividend declared was $0.74 per share, totaling $10.3 million, paid on September 30, 2025[7] - The company paid a dividend of $2.215 per share for the nine months ended September 30, 2025, compared to $2.185 per share in 2024, reflecting an increase of 1.4%[25] Assets and Liabilities - Total assets decreased to $568,037,000 as of September 30, 2025, from $580,862,000 at the end of 2024, reflecting a decline of approximately 2.2%[27] - Net real estate investments decreased to $411,575,000 as of September 30, 2025, from $425,934,000 at the end of 2024, a decline of about 3.4%[27] - Total liabilities increased to $409,463,000 as of September 30, 2025, compared to $401,321,000 at the end of 2024, marking an increase of approximately 2.8%[27] Cash and Investments - Cash and cash equivalents slightly decreased to $6,916,000 as of September 30, 2025, from $7,097,000 at the end of 2024[27] - Investments in limited liability companies (LLCs) rose to $20,817,000 as of September 30, 2025, up from $13,948,000 in 2024, indicating a significant increase of approximately 49.5%[27] Borrowing and Credit - As of September 30, 2025, the company had $67.9 million of available borrowing capacity under its $425 million credit agreement[8] - The increase in interest expense was primarily due to higher average borrowings under the credit agreement[5] - The line of credit borrowings increased to $357,050,000 as of September 30, 2025, from $348,900,000 at the end of 2024, reflecting an increase of approximately 2.9%[27] Future Developments - In October 2025, the company entered into a ground lease to develop Palm Beach Gardens Medical Plaza I, an 80,000 square foot medical office building, with an estimated cost of $34 million[9][10] - The construction of the medical office building is expected to commence in November 2025[10] - The company has investments or commitments in 77 properties located in 21 states[11]

Core Insights - Universal Health Realty Income Trust reported net income of $4.0 million, or $0.29 per diluted share, for Q3 2025, unchanged from Q3 2024 [1][2] - For the nine-month period ended September 30, 2025, net income decreased to $13.3 million, or $0.96 per diluted share, compared to $14.6 million, or $1.05 per diluted share in the same period of 2024 [3][4] Financial Performance - Q3 2025 net income included a one-time settlement increase of $275,000, offset by a net decrease of $256,000 primarily due to reduced income from various properties and $900,000 in nonrecurring depreciation [2] - Funds from operations (FFO) for Q3 2025 increased by $908,000 to $12.2 million, or $0.88 per diluted share, compared to $11.3 million, or $0.82 per diluted share in Q3 2024 [2][17] - For the first nine months of 2025, FFO decreased by $166,000 to $35.9 million, or $2.59 per diluted share, compared to $36.1 million, or $2.61 per diluted share in the same period of 2024 [4][18] Dividend Information - A dividend of $0.74 per share, totaling $10.3 million, was declared on September 22, 2025, and paid on September 30, 2025 [5][20] Capital Resources - As of September 30, 2025, the company had $67.9 million of available borrowing capacity under a $425 million credit agreement, which is set to expire on September 30, 2028 [6] Development Projects - In October 2025, the company entered into a ground lease to develop Palm Beach Gardens Medical Plaza I, an 80,000 square foot medical office building in Florida, with an estimated cost of $34 million [7][8]

Core Viewpoint - Universal Health Realty Income Trust (UHT) is recognized as one of the best REIT dividend stocks to buy, highlighting its strong dividend history and financial stability [1][5]. Group 1: Company Overview - UHT is a real estate investment trust focused on healthcare and human services-related properties, owning 76 properties across 21 states [2]. - The company has a robust cash balance, with an operating cash flow of $909 million in the last quarter and a cash balance of $137.6 million at the end of the quarter [3]. Group 2: Dividend Performance - UHT declared a quarterly dividend of $0.74 per share, consistent with its previous dividend, and has increased its dividends for 41 consecutive years, resulting in a dividend yield of 7.59% as of October 1 [5]. Group 3: REIT Status and Performance Factors - To maintain its REIT status, UHT must distribute at least 90% of its taxable income as dividends, which ties its performance to the acquisition and management of profitable healthcare properties [4]. - The company must navigate changes in healthcare reimbursement regulations and manage debt effectively, especially in the context of rising interest rates [4].

Core Viewpoint - The article discusses the best dividend stocks in the REIT sector, highlighting their defensive nature during market volatility and the importance of predictable cash flows [1][2]. Industry Overview - REITs are primarily domestic and less exposed to international commerce, making them a defensive investment during market dislocations due to their lease-driven income and strong margins [1]. - The predictable earnings of REITs have historically resulted in good returns, particularly attractive during market volatility [2]. - Various real estate segments may be impacted differently by economic factors such as tariffs, with industrial real estate facing challenges from economic slowdowns and supply chain issues [2]. Market Activity - The office market, which suffered during the pandemic, is showing signs of recovery, with a 42% year-over-year increase in transaction volume, reaching $25.9 billion in the first half of the year [3]. Methodology - The article's methodology involved scanning a database of nearly 1,000 hedge funds to identify REIT companies that pay regular dividends, narrowing down to 12 companies popular among elite funds [5]. Company Highlights - **Universal Health Realty Income Trust (NYSE: UHT)**: Focuses on healthcare properties, owns 76 properties across 21 states, reported an operating cash flow of $909 million, and has a dividend yield of 7.59% as of October 1 [8][9][11]. - **Arbor Realty Trust, Inc. (NYSE: ABR)**: A mortgage REIT focusing on multifamily properties, has stable long-term cash flows, offers a quarterly dividend of $0.30 per share, and has a dividend yield of 10.75% as of October 1 [12][14]. - **Innovative Industrial Properties, Inc. (NYSE: IIPR)**: Specializes in cannabis-related facilities, has 108 properties across 19 states, offers a quarterly dividend of $1.90 per share, and has a dividend yield of 13.75% as of October 1 [15][18].

Real Estate Investments - As of June 30, 2025, the company has 76 real estate investments or commitments located in 21 states, including 6 hospital facilities and 60 medical/office buildings[100]. Revenue Sources - Approximately 40% of the company's consolidated revenues during the three and six-month periods ended June 30, 2025, were derived from one operator, UHS[101]. Financial Performance - Net income for the three-month period ended June 30, 2025, was $4.5 million, a decrease of $784,000 from $5.3 million in the same period of 2024[110]. - Revenues increased by $134,000 to $24.9 million during the three-month period ended June 30, 2025, compared to $24.7 million in the same period of 2024[110]. - Funds From Operations (FFO) decreased by $591,000 to $11.8 million during the second quarter of 2025, compared to $12.4 million in the second quarter of 2024[114]. - FFO per diluted share was $0.85 for the three months ended June 30, 2025, compared to $0.90 for the same period in 2024[114]. - Other operating expenses totaled $6.7 million during the second quarter of 2025, compared to $6.0 million in the second quarter of 2024[111]. Interest Expense - The increase in interest rates over the past few years has significantly raised the company's interest expense, negatively impacting net income and cash provided by operating activities[102]. - Interest expense increased by $137,000 to $4.7 million during the three-month period ended June 30, 2025, compared to $4.6 million in the same period of 2024[116]. - Interest expense for the three-month period ended June 30, 2025, was $4.717 million, an increase of $137,000 compared to $4.580 million in the same period of 2024[116][117]. - The average effective cost of borrowings decreased to 5.93% during the second quarter of 2025, down from 6.92% in the comparable quarter of 2024[117]. Cash Flow - Net cash provided by operating activities was $25.3 million during the six-month period ended June 30, 2025, compared to $23.9 million in the same period of 2024, reflecting a $1.4 million increase[120]. - Net cash provided by operating activities was $25.3 million for the six months ended June 30, 2025, compared to $23.9 million for the same period in 2024, reflecting a 5.9% increase[129]. - Net cash used in investing activities was $10.7 million during the first six months of 2025, compared to $9.7 million in the same period of 2024[120]. Dividends - The company declared and paid dividends of $20.5 million during the six months ended June 30, 2025, slightly higher than the $20.2 million paid in the same period of 2024[130]. Borrowings and Credit Agreement - The company had $354.8 million of outstanding borrowings under its $425 million Credit Agreement as of June 30, 2025, with $70.2 million of available borrowing capacity[140]. - The second amendment to the Credit Agreement increased the aggregate borrowing capacity to $425 million and extended the maturity date to September 30, 2028[137]. - The applicable margin over the Adjusted Term SOFR rate for revolving loans was 1.20% as of June 30, 2025[139]. - The company received $5.9 million of net borrowings pursuant to its Credit Agreement during the six months ended June 30, 2025[124]. - The company expects to finance all capital expenditures and acquisitions using internally generated funds and additional borrowings under its Credit Agreement[133]. - The company maintained compliance with all covenants in the Credit Agreement as of June 30, 2025, including a total leverage ratio of 43.8%[142]. - The company reported aggregate borrowings of $19.6 million and repayments of $14.3 million for the quarter ended June 30, 2025[141]. - The total leverage ratio was 43.8% as of June 30, 2025, remaining below the covenant limit of 60%[143]. - The company had a tangible net worth of $158.7 million as of June 30, 2025, exceeding the covenant requirement of $125 million[143]. - The company has various non-recourse mortgages with a combined carrying value of approximately $18.9 million as of June 30, 2025[146]. - The company has no off-balance sheet arrangements as of June 30, 2025[147]. - The company anticipates that the majority of potential new borrowings will be used to fund investments[142]. Legislative and Market Risks - Legislation enacted on July 4, 2025, may limit Medicaid enrollment and expenditure, potentially reducing revenues for operators of the company's properties[102]. - The Budget Control Act of 2011 has imposed annual Medicare payment reductions of up to 2% through 2032, which may affect the operators of the company's properties[102]. - The company has experienced inflationary pressures affecting its tenants, which may impact their ability to make rental payments[102]. - The general real estate market has faced increased competition and decreases in occupancy and rental rates, adversely affecting the company's operating results[102]. - The company faces uncertainties regarding future legislative changes that could impact the healthcare delivery system and its operators[105]. Operational Risks - Cybersecurity threats pose a risk to the company's operations, with potential significant costs related to data security incidents[103]. - The company is subject to potential conflicts of interest as a subsidiary of UHS serves as its Advisor[102]. - The company experienced a decrease in occupancy rates at certain Medical Office Buildings (MOBs), impacting revenue during the first six months of 2025[110]. - During the six-month period ended June 30, 2025, the company funded $6.8 million in equity investments in unconsolidated LLCs, $3.7 million in real estate investments, and a $335,000 net advance to a third-party partner[121].

Core Viewpoint - Universal Health Realty Income Trust (UHT) experienced a decline in stock price and financial performance for the second quarter of 2025, attributed to various operational challenges and increased expenses [1][2][8]. Financial Performance - UHT reported a net income of $4.5 million ($0.32 per diluted share) for Q2 2025, down 14.9% from $5.3 million ($0.38 per diluted share) in Q2 2024, reflecting a 15.8% year-over-year drop in earnings per share (EPS) [2]. - Funds from operations (FFO) decreased 4.8% to $11.8 million ($0.85 per diluted share) from $12.4 million ($0.90 per diluted share) year-over-year [3]. - Revenue remained relatively flat, increasing slightly to $24.9 million from $24.7 million a year earlier [3]. Revenue Breakdown - Lease revenue from Universal Health Services (UHS) facilities fell 0.9% to $8.4 million from $8.5 million, while lease revenue from non-related parties rose 1.5% to $14.6 million from $14.4 million [4]. Key Business Metrics - For the six-month period ended June 30, 2025, UHT's net income declined 12.4% to $9.3 million ($0.67 per diluted share) from $10.6 million ($0.76 per diluted share) [5]. - FFO for the same period decreased 4.3% to $23.7 million ($1.71 per diluted share) from $24.8 million ($1.79 per diluted share) [5]. Expense Analysis - Total expenses for Q2 2025 increased 5.8% to $16 million from $15.2 million, primarily due to higher depreciation and operating costs [6]. - Interest expense grew 2.9% to $4.7 million from $4.6 million due to elevated borrowings [6]. Balance Sheet Overview - As of June 30, 2025, UHT held $6.6 million in cash and cash equivalents, down from $7.1 million as of December 31, 2024 [7]. - Total assets declined to $573 million from $580.9 million at year-end 2024, while total equity fell to $165.2 million from $179.5 million [12]. Management Commentary - Management highlighted ongoing operational headwinds, including staffing shortages, wage pressures, regulatory uncertainties, and macroeconomic challenges affecting patient volumes [8]. - Concerns were raised regarding potential cuts in Medicaid funding and the impact of further interest rate hikes on borrowing costs [9]. Capital and Dividend Updates - UHT reported available borrowing capacity of $70.2 million under its $425 million credit facility, net of $354.8 million in outstanding borrowings [10]. - A second-quarter dividend of $0.74 per share was declared, up from $0.73 a year earlier, totaling $10.3 million [11]. Other Developments - Investment in limited liability companies increased to $20.9 million from $13.9 million at the end of 2024, with no new acquisitions or divestitures reported [12].

Core Insights - Universal Health Realty Income Trust reported a year-over-year decline in net income and FFO per share, attributed to the absence of a prior-year property tax benefit and increased interest costs [1][5] - Revenue showed a slight increase compared to the previous year, indicating stable but pressured financial performance [1][5] - The company announced a slight dividend increase, with the dividend paid per share rising to $0.74 from $0.73 a year ago [1][9] Financial Performance - EPS (GAAP, diluted) decreased to $0.32 from $0.38, a decline of 15.8% [2] - FFO per share (non-GAAP, diluted) fell to $0.85 from $0.90, a decrease of 5.6% [2] - Revenue increased to $24.9 million from $24.7 million, reflecting a 0.8% growth [2] - Net income dropped to $4.5 million from $5.3 million, a decline of 14.8% [2] Business Model and Strategic Priorities - The company operates as a healthcare-focused REIT with a portfolio of 76 properties across 21 states, leasing to both related and third-party healthcare providers [3] - A key aspect of the business model is the relationship with Universal Health Services, Inc. (UHS), which serves as a major tenant and external advisor [3][4] - The company aims to maintain compliance with REIT status by distributing at least 90% of its taxable income as dividends [4] Operating Environment - Lease income from UHS facilities remained stable at $8.4 million, while lease revenue from third-party tenants was $14.57 million [6] - Approximately 40% of revenue for the year ended December 31, 2024, came from UHS facilities, indicating a consistent revenue stream [6] - Operating expenses increased, with higher depreciation, amortization, and interest expenses due to increased borrowings [7] Risks and Challenges - The company expressed caution regarding the healthcare operating environment, highlighting tenant risks related to staffing shortages, government healthcare funding, and patient volumes [8] - Nearly 27% of the company's revenue in both 2024 and 2023 was derived from tenants reliant on federal and state programs like Medicare and Medicaid, indicating potential vulnerability [8] Future Outlook - Management did not provide financial guidance for upcoming quarters, emphasizing risks associated with interest rates, tenant financial health, and changes in government healthcare reimbursement [10] - The company noted that further increases in interest rates could impact future results by raising borrowing costs [10]