Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 2, 2016

 

 

UNIVERSAL HEALTH REALTY INCOME TRUST

(Exact name of registrant as specified in its charter)

 

 

 

Maryland   1-9321   23-6858580

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

Universal Corporate Center

367 South Gulph Road

King of Prussia, Pennsylvania

  19406
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (610) 265-0688

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d 2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 


Item 8.01 Other Events.

The consolidated financial results of Universal Health Realty Income Trust for the three-month period ended March 31, 2016 are set forth below.

Consolidated Results of Operations - Three-Month Periods Ended March 31, 2016 and 2015:

For the three-month period ended March 31, 2016, reported net income was $4.4 million, or $.33 per diluted share, as compared to $3.7 million, or $.28 per diluted share, during the first quarter of 2015.

As reflected on the attached Schedule of Non-GAAP Supplemental Information (“Supplemental Schedule”), our reported results include transaction costs incurred during each of the quarters ended March 31, 2016 and 2015. After neutralizing the impact of these transactions costs our adjusted net income was $4.5 million, or $.34 per diluted share, during the first quarter of 2016, as compared to $3.8 million, or $.28 per diluted share, during the first quarter of 2015. The $757,000, or $.06 per diluted share, increase in our adjusted net income during the first quarter of 2016, as compared to the first quarter of 2015, was due primarily to increased net income generated at various properties and the favorable impact on our net income resulting from a property exchange transaction completed during the second quarter of 2015.

As calculated on the Supplemental Schedule, our adjusted funds from operations (“AFFO”), which excludes the impact of depreciation and amortization incurred by us and our unconsolidated affiliates as well as transaction costs, were $10.3 million, or $.77 per diluted share, during the first quarter of 2016, as compared to $9.6 million, or $.72 per diluted share during the first quarter of 2015. The increase in our AFFO of $720,000, or $.05 per diluted share, during the first quarter of 2016, as compared to the first quarter of 2015, was primarily attributable to the above-mentioned increase in our adjusted net income.

Acquisitions:

In March, 2016, we purchased the Madison Professional Office Building located in Madison, Alabama for approximately $10.1 million. This multi-tenant property consists of approximately 30,100 rentable square feet and is fully occupied with an average remaining lease term of approximately six years at the time of acquisition.

Dividend Information:

The first quarter dividend of $.645 per share was paid on March 31, 2016.

Capital Resources Information:

At March 31, 2016, we had $159.7 million of borrowings outstanding pursuant to the terms of our $185 million revolving credit agreement and $22.3 million of available borrowing capacity, net of outstanding borrowings and letters of credit.

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, rehabilitation hospitals, sub-acute care facilities, surgery centers, free-standing emergency departments, childcare centers and medical office buildings. We have investments in sixty-three properties located in nineteen states.

This Form 8-K contains forward-looking statements based on current management expectations. Numerous factors, including those disclosed herein, those related to healthcare and healthcare real estate 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 and Risk Factors in our Form 10-K for the year ended December 31, 2015), may cause the results to differ materially from those anticipated in the forward-looking statements. Many of the factors that will determine our future results are beyond our capability to control or predict. These statements are subject to risks and uncertainties and therefore actual results may differ materially. 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.

We believe that adjusted net income and adjusted net income per diluted share (as reflected on the attached Supplemental Schedules), 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

 

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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 nonrecurring or non-operational in nature including items such as, but not limited to transaction costs.

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, and adjusted funds from operations (“AFFO”) and AFFO 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. AFFO was also computed for the three-month periods ended March 31, 2016 and 2015, as reflected on the Supplemental Schedules and discussed herein, and includes the adjustments made for transaction costs related to acquisitions. FFO/AFFO do 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/AFFO 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/AFFO 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, 2015. 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.

(more)

 

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Universal Health Realty Income Trust

Consolidated Statements of Income

For the Three Months Ended March 31, 2016 and 2015

(amounts in thousands, except per share amounts)

(unaudited)

 

     Three Months Ended
March 31,
 
     2016     2015  

Revenues:

    

Base rental - UHS facilities

   $ 4,081      $ 3,906   

Base rental - Non-related parties

     8,815        8,869   

Bonus rental - UHS facilities

     1,246        1,218   

Tenant reimbursements and other - Non-related parties

     1,873        2,009   

Tenant reimbursements and other - UHS facilities

     211        200   
  

 

 

   

 

 

 
     16,226        16,202   
  

 

 

   

 

 

 

Expenses:

    

Depreciation and amortization

     5,436        5,523   

Advisory fees to UHS

     767        666   

Other operating expenses

     4,400        4,722   

Transaction costs

     82        57   
  

 

 

   

 

 

 
     10,685        10,968   
  

 

 

   

 

 

 

Income before equity in income of unconsolidated limited liability companies (“LLCs”) and interest expense

     5,541        5,234   

Equity in income of unconsolidated LLCs

     1,059        592   

Interest expense, net

     (2,172     (2,130
  

 

 

   

 

 

 

Net income

   $ 4,428      $ 3,696   
  

 

 

   

 

 

 

Basic earnings per share

   $ 0.33      $ 0.28   
  

 

 

   

 

 

 

Diluted earnings per share

   $ 0.33      $ 0.28   
  

 

 

   

 

 

 

Weighted average number of shares outstanding - Basic

     13,307        13,283   

Weighted average number of share equivalents

     7        11   
  

 

 

   

 

 

 

Weighted average number of shares and equivalents outstanding – Diluted

     13,314        13,294   
  

 

 

   

 

 

 

 

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Universal Health Realty Income Trust

Schedule of Non-GAAP Supplemental Information (“Supplemental Schedule”)

For the three months ended March 31, 2016 and 2015

(in thousands, except per share amounts)

(unaudited)

Calculation of Adjusted Net Income

 

     Three Months Ended
March 31, 2016
     Three Months Ended
March 31, 2015
 
     Amount      Per
Diluted Share
     Amount      Per
Diluted Share
 

Net income

   $ 4,428       $ 0.33       $ 3,696       $ 0.28   

Adjustments:

           

Transaction costs

     82         0.01         57         0.00   
  

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal adjustments to net income

     82         0.01         57         0.00   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net income

   $ 4,510       $ 0.34       $ 3,753       $ 0.28   
  

 

 

    

 

 

    

 

 

    

 

 

 

Calculation of Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”)

 

     Three Months Ended
March 31, 2016
     Three Months Ended
March 31, 2015
 
     Amount      Per
Diluted Share
     Amount      Per
Diluted Share
 

Net income

   $ 4,428       $ 0.33       $ 3,696       $ 0.28   

Plus: Depreciation and amortization expense:

           

Consolidated investments

     5,333         0.40         5,410         0.41   

Unconsolidated affiliates

     450         0.03         410         0.03   
  

 

 

    

 

 

    

 

 

    

 

 

 

FFO

     10,211         0.76         9,516         0.72   

Transaction costs

     82         0.01         57         0.00   
  

 

 

    

 

 

    

 

 

    

 

 

 

AFFO

   $ 10,293       $ 0.77       $ 9,573       $ 0.72   
  

 

 

    

 

 

    

 

 

    

 

 

 

Dividend paid per share

      $ 0.645          $ 0.635   
     

 

 

       

 

 

 

 

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Universal Health Realty Income Trust

Consolidated Balance Sheets

(dollar amounts in thousands)

(unaudited)

 

     March 31,
2016
    December 31,
2015
 

Assets:

    

Real Estate Investments:

    

Buildings and improvements

   $ 478,405      $ 469,933   

Accumulated depreciation

     (125,287     (121,161
  

 

 

   

 

 

 
     353,118        348,772   

Land

     44,053        41,724   
  

 

 

   

 

 

 

Net Real Estate Investments

     397,171        390,496   
  

 

 

   

 

 

 

Investments in and advances to limited liability companies (“LLCs”)

     36,835        31,597   

Other Assets:

    

Cash and cash equivalents

     4,316        3,894   

Base and bonus rent receivable from UHS

     2,350        2,116   

Rent receivable - other

     4,569        4,292   

Intangible assets (net of accumulated amortization of $23.3 million and $25.1 million at March 31, 2016 and December 31, 2015, respectively)

     19,736        19,757   

Deferred charges and other assets, net

     6,130        6,351   
  

 

 

   

 

 

 

Total Assets

   $ 471,107      $ 458,503   
  

 

 

   

 

 

 

Liabilities:

    

Line of credit borrowings

   $ 159,650      $ 142,150   

Mortgage and other notes payable, non-recourse to us

     109,332        110,156   

Accrued interest

     538        504   

Accrued expenses and other liabilities

     6,107        6,807   

Tenant reserves, escrows, deposits and prepaid rents

     4,418        3,844   
  

 

 

   

 

 

 

Total Liabilities

     280,045        263,461   
  

 

 

   

 

 

 

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: 2016 - 13,328,033; 2015 - 13,327,020

     133        133   

Capital in excess of par value

     241,867        241,700   

Cumulative net income

     559,714        555,286   

Cumulative dividends

     (610,579     (601,983

Accumulated other comprehensive loss

     (73     (94
  

 

 

   

 

 

 

Total Equity

     191,062        195,042   
  

 

 

   

 

 

 

Total Liabilities and Equity

   $ 471,107      $ 458,503   
  

 

 

   

 

 

 

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  UNIVERSAL HEALTH REALTY INCOME TRUST
Date: May 2, 2016   By:  

/s/ Charles F. Boyle

  Name:   Charles F. Boyle
  Title:   Vice President and Chief Financial Officer

 

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