Universal Health Realty me Trust(UHT) - 2024 Q3 - Quarterly Results

Universal Health Realty Income Trust Q3 2024 Earnings Release This report details Universal Health Realty Income Trust's financial and operational performance for Q3 and the first nine months of 2024 Financial Performance The Trust achieved year-over-year growth in net income and FFO for Q3 and YTD 2024, driven by property income and expense reductions, despite higher interest costs Third Quarter 2024 Results (Three-Month Period) The third quarter of 2024 saw increases in net income, diluted EPS, FFO, and FFO per diluted share compared to the prior year Q3 2024 vs. Q3 2023 Financial Highlights (Millions) | Metric | Q3 2024 (Millions) | Q3 2023 (Millions) | Change (Millions) | | :--- | :--- | :--- | :--- | | Net Income | $4.0 | $3.9 | +$0.1 | | Diluted EPS | $0.29 | $0.28 | +$0.01 | | FFO | $11.3 | $11.2 | +$0.1 | | FFO per Diluted Share | $0.82 | $0.81 | +$0.01 | - The increase in Q3 net income was primarily driven by a $451,000 net increase in income from various properties, partially offset by a $326,000 increase in interest expense[1] Year-to-Date 2024 Results (Nine-Month Period) The first nine months of 2024 demonstrated substantial growth in net income and FFO, driven by property income and reduced Chicago property expenses Nine Months 2024 vs. 2023 Financial Highlights (Millions) | Metric | Nine Months 2024 (Millions) | Nine Months 2023 (Millions) | Change (Millions) | | :--- | :--- | :--- | :--- | | Net Income | $14.6 | $11.8 | +$2.8 | | Diluted EPS | $1.05 | $0.85 | +$0.20 | | FFO | $36.1 | $33.2 | +$2.9 | | FFO per Diluted Share | $2.61 | $2.40 | +$0.21 | - The $2.8 million increase in nine-month net income resulted from a $2.5 million increase in income from various properties and a $1.9 million reduction in expenses related to the Chicago property, partially offset by a $1.6 million increase in interest expense[2][3] Shareholder Returns The Trust declared and paid a third-quarter dividend of $0.73 per share, reflecting an increase from the prior year - A third-quarter dividend of $0.73 per share, totaling $10.1 million, was declared on September 4, 2024, and paid on September 30, 2024[4] Dividend Per Share Comparison ($) | Period | Dividend per Share ($) | | :--- | :--- | | Q3 2024 | $0.730 | | Q3 2023 | $0.720 | | Nine Months 2024 | $2.185 | | Nine Months 2023 | $2.155 | Capital Structure and Liquidity The Trust enhanced financial flexibility by upsizing its credit facility to $425 million and extending maturity to 2028, while also entering an $85 million interest rate swap to manage risk Capital Resources The company amended its credit agreement, increasing borrowing capacity to $425 million and extending maturity, with $77.2 million available as of September 30, 2024 - On September 30, 2024, the company amended its credit agreement, increasing borrowing capacity to $425 million (from $375 million) and extending the maturity date to September 30, 2028, with an option for two additional six-month extensions[5] - As of September 30, 2024, the Trust had $347.8 million of borrowings outstanding under its revolving credit agreement, with $77.2 million of available borrowing capacity[5] Financial Instruments The Trust entered an $85 million interest rate swap agreement with a fixed rate of 3.2725% to hedge cash flows through September 2028 - In October 2024, the Trust entered into an interest rate swap agreement on a notional amount of $85 million to hedge cash flows[8] - The swap has a fixed interest rate of 3.2725%, is effective from October 2, 2024, to September 30, 2028, and replaced two expired agreements[8][9] Portfolio and Operational Updates The Trust completed Sierra Medical Plaza I construction, secured a ten-year master lease for 68% of its space, and managed other asset dispositions and marketing efforts Project Development (Sierra Medical Plaza I) Construction of Sierra Medical Plaza I, an 86,000 sq. ft. medical office building, is substantially complete, with 68% leased under a ten-year master lease - Construction was substantially completed in March 2023 on Sierra Medical Plaza I, an 86,000 sq. ft. medical office building (MOB) in Reno, Nevada[6] - A ten-year master flex lease commenced in March 2023, covering approximately 68% of the MOB's rentable space at an initial minimum annual rent of $1.3 million[6] - The total estimated cost for the MOB is approximately $35 million, with about $30 million incurred as of September 30, 2024[6] Asset Dispositions and Management Demolition of the Chicago specialty hospital is complete, a Corpus Christi facility was sold, and marketing continues for vacant properties in Chicago and Evansville - Demolition of the former specialty hospital in Chicago was completed in 2023 at an aggregate cost of approximately $1.5 million[7] - In December 2023, the vacant specialty facility in Corpus Christi, Texas was sold[7] - The Trust continues to market vacant properties located in Chicago, Illinois, and Evansville, Indiana[7] Financial Statements The consolidated financial statements present the Trust's financial position and performance, including income statements, balance sheets, and FFO reconciliations Consolidated Statements of Income The income statement summarizes total revenues, expenses, net income, and diluted EPS for Q3 and the nine-month periods of 2024 and 2023 Income Statement Summary (Thousands) | Account | Q3 2024 (Thousands) | Q3 2023 (Thousands) | Nine Months 2024 (Thousands) | Nine Months 2023 (Thousands) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $24,494 | $24,223 | $74,369 | $71,255 | | Total Expenses | $20,497 | $20,351 | $60,254 | $59,448 | | Net Income | $3,997 | $3,872 | $14,573 | $11,807 | | Diluted EPS | $0.29 | $0.28 | $1.05 | $0.85 | Consolidated Balance Sheets The balance sheet provides a snapshot of the Trust's financial position, detailing assets, liabilities, and equity as of September 30, 2024 Balance Sheet Summary (Thousands) | Account | Sep 30, 2024 (Thousands) | Dec 31, 2023 (Thousands) | | :--- | :--- | :--- | | Net Real Estate Investments | $430,165 | $443,795 | | Total Assets | $584,330 | $596,369 | | Line of credit borrowings | $347,750 | $326,600 | | Total Liabilities | $402,691 | $395,435 | | Total Equity | $181,639 | $200,934 | Non-GAAP Reconciliations (FFO) This section provides reconciliations of net income to Funds From Operations (FFO) for both the third quarter and nine-month periods Q3 FFO Reconciliation (Thousands) | Account | Q3 2024 (Thousands) | Q3 2023 (Thousands) | | :--- | :--- | :--- | | Net Income | $3,997 | $3,872 | | Plus: Depreciation & Amortization | $7,320 | $7,321 | | FFO | $11,317 | $11,193 | Nine Months FFO Reconciliation (Thousands) | Account | Nine Months 2024 (Thousands) | Nine Months 2023 (Thousands) | | :--- | :--- | :--- | | Net Income | $14,573 | $11,807 | | Plus: Depreciation & Amortization | $21,542 | $21,379 | | FFO | $36,115 | $33,186 | Disclosures This section provides an overview of the Trust's operations as a REIT, outlines forward-looking statement disclaimers and associated risks, and explains the use of non-GAAP financial measures About the Company Universal Health Realty Income Trust operates as a REIT, investing in 76 healthcare facilities across 21 states - Universal Health Realty Income Trust is a REIT that invests in seventy-six properties located in twenty-one states, including acute care hospitals, behavioral health hospitals, specialty facilities, and medical office buildings[9] Forward-Looking Statements and Risk Factors The press release contains forward-looking statements, warning that future results could be materially impacted by various operational and market risks - The press release contains forward-looking statements and warns that future results could be materially impacted by various factors, including staffing shortages, wage expense increases for tenants, government regulation of the healthcare industry, declining patient volumes, unfavorable payer mix from macroeconomic conditions, and increased borrowing costs due to rising interest rates[9] Non-GAAP Financial Measures The company utilizes non-GAAP financial measures, such as Funds from Operations (FFO), to provide investors with additional insights into operating performance - The company uses non-GAAP financial measures such as Funds from Operations (FFO) and adjusted net income, which it believes are helpful to investors for measuring operating performance[9] - FFO is computed in accordance with standards from the National Association of Real Estate Investment Trusts (NAREIT) and is not an alternative to net income or cash flow from operations under GAAP[9][10]