Universal Health Realty me Trust(US:UHT)2025-08-08 20:15Real 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].