Universal Health Realty me Trust(UHT) - 2019 Q2 - Quarterly Report

Real Estate Investments - As of July 31, 2019, the company has 69 real estate investments across 20 states, including 6 hospital facilities, 55 medical/office buildings, 4 free-standing emergency departments, and 4 childcare centers[94]. - The company has 55 medical/office buildings, including 4 owned by unconsolidated LLCs/LPs, which may impact its overall revenue structure[97]. - Six hospital facilities accounted for approximately 25% of consolidated revenues in 2018, with two leases not being renewed, which comprised about 2% of consolidated revenues[122][123]. Financial Performance - Net income for the three-month period ended June 30, 2019, was $4.3 million, a decrease of $1.5 million compared to $5.8 million in the same period of 2018[115]. - For the six-month period ended June 30, 2019, net income was $8.5 million, down from $15.4 million in the same period of 2018, representing a decrease of $6.9 million[115]. - Funds From Operations (FFO) for the three months ended June 30, 2019, was $10.978 million, a decrease of $1.0 million or $0.08 per diluted share compared to $12.018 million in the same period of 2018[118]. - FFO for the six months ended June 30, 2019, was $21.931 million, down from $23.509 million in the same period of 2018[118]. - FFO decreased by $1.6 million, or $0.11 per diluted share, in the first six months of 2019 compared to the same period in 2018[119]. - Net cash provided by operating activities was $21.5 million for the six months ended June 30, 2019, down from $23.2 million in the same period of 2018, a decrease of $1.8 million[124]. - Net cash used in investing activities was $3.0 million in the first half of 2019, compared to $3.8 million in the same period of 2018[124]. - Net cash used in financing activities was $17.5 million during the first six months of 2019, compared to $17.0 million in the same period of 2018[127]. - The company declared dividends of $18.6 million during the first half of 2019, compared to $18.3 million in the same period of 2018[131]. Risks and Challenges - The company experienced a loss of revenues from lease expirations and renewals, with two hospital facilities comprising approximately 2% of consolidated revenues for the years ended December 31, 2018, and 2017[99]. - The company faces risks from legislative changes in the healthcare delivery system, which may adversely affect the operators of its facilities, including UHS[100]. - The company is subject to potential conflicts of interest as UHS is both a significant operator and advisor[98]. - The company’s operations could be negatively impacted by economic conditions, including increased unemployment and uninsured individuals, affecting patient volumes[99]. - The company’s financial performance may be influenced by changes in Medicare and Medicaid reimbursement levels, which could result in reduced revenues[100]. - The company’s future performance is uncertain due to various risks, including competition from other healthcare providers and potential changes in tax laws affecting REITs[102]. Capital and Financing - The company’s ability to obtain capital on acceptable terms is critical for future growth and refinancing existing debt[99]. - The company expects to finance capital expenditures and acquisitions using internally generated funds and additional borrowings[135]. - As of June 30, 2019, the company had $191.6 million of outstanding borrowings and $108.4 million of available borrowing capacity under its Credit Agreement[138]. - The company had $108.4 million of available borrowing capacity under its $300 million revolving credit agreement as of June 30, 2019[134]. - The company maintained compliance with all covenants in its Credit Agreement as of June 30, 2019, including a tangible net worth of $172.8 million, exceeding the required $125 million[140]. - The total leverage ratio was 40.3% as of June 30, 2019, below the maximum limit of 60%[140]. - The company reported a fixed charge coverage ratio of 4.0x, well above the required minimum of 1.50x[140]. - The total outstanding balance of mortgages as of June 30, 2019, was $61.6 million, with a combined fair value of approximately $64.1 million[142]. - The company fully repaid a $2.5 million fixed rate mortgage loan on Vibra Hospital – Corpus Christi on April 2, 2019, utilizing borrowings under its Credit Agreement[141]. - The company believes it would remain in compliance with covenants even if the full amount of its commitment was borrowed[139]. Other Financial Information - The company recorded a decrease in interest expense of approximately $360,000 due to an increase in the average cost of borrowings under its revolving credit agreement[115]. - The company recognized a gain on the sale of land amounting to $250,000 during the first quarter of 2019[118]. - Other operating expenses related to consolidated medical office buildings totaled $4.5 million for the three months ended June 30, 2019, compared to $4.9 million in the same period of 2018[115]. - The company received $5.5 million in additional insurance recovery proceeds related to Hurricane Harvey, bringing total recoveries to $12.5 million[121]. - The company funded $598,000 in equity investments in unconsolidated LLCs and $3.0 million in capital additions to real estate investments during the first half of 2019[125]. - There were no off-balance sheet arrangements other than equity and debt financing commitments as of June 30, 2019[144]. - The company has various mortgages secured by real property, with interest rates ranging from 3.62% to 5.56%[141]. - There have been no material changes in market risk disclosures during the first six months of 2019[146].