KING OF PRUSSIA, Pa., July 24 /PRNewswire-FirstCall/ -- Universal Health Realty Income Trust announced today that for the quarter ended June 30, 2006, net income was $6.9 million, or $.58 per diluted share, as compared to $6.2 million, or $.52 per diluted share, for the same quarter in the prior year. Favorably impacting net income during the second quarter of 2006 is the recognition of a previously deferred gain of $1.9 million, or $.16 per diluted share, resulting from the sale of our interest in an unconsolidated limited liability company ("LLC") during the fourth quarter of 2005. Favorably impacting net income during the second quarter of 2005 was a gain of $1.2 million, or $.10 per diluted share, related to the recovery of replacement costs of real estate assets at Wellington Regional Medical Center ("Wellington") that were damaged by hurricanes Frances and Jeanne during 2004.
Funds from operations ("FFO") were $7.4 million and FFO per diluted share were $.63 during each of the three months ended June 30, 2006 and June 30, 2005. The second quarter dividend of $.565 per share was paid on June 30, 2006.
For the six month period ended June 30, 2006, net income was $11.8 million, or $1.00 per diluted share, as compared to $13.8 million, or $1.16 per diluted share, during the prior year six month period. Included in net income during the six month period ended June 30, 2006 is the recognition of a previously deferred gain of $1.9 million, or $.16 per diluted share, as mentioned above. Included in net income during the six month period ended June 30, 2005 was a gain of $1.0 million, or $.09 per diluted share, resulting from the sale of real property by an unconsolidated LLC and a gain of $2.7 million, or $.23 per diluted share, related to the recovery of replacement costs of real estate assets at Wellington. FFO were $14.8 million, or $1.24 per diluted share, during the six month period ended June 30, 2006 as compared to $14.6 million, or $1.24 per diluted share, during the prior year six month period.
At June 30, 2006, our shareholders' equity was $154.4 million and our liabilities for borrowed funds were $39.5 million, including mortgage debt of consolidated entities, which is non-recourse to us, totaling $25.2 million.
On July 21, 2006, we completed the previously disclosed transfer of the real property assets and all rights attendant thereto (including insurance proceeds) of Chalmette Medical Center ("Chalmette") to Universal Health Services, Inc. ("UHS") in exchange and substitution for newly constructed real property assets ("Capital Additions") owned by UHS at Wellington, The Bridgeway ("Bridgeway") and Southwest Healthcare System-Inland Valley Campus ("Inland Valley"). Also on July 21, 2006, upon the completion of the Chalmette exchange and substitution agreement, we entered into amended and restated leases with each of the individual lessees to reflect the rents payable on the respective Capital Additions at Wellington, Bridgeway and Inland Valley.
Universal Health Realty Income Trust, a real estate investment trust, invests in healthcare and human service related facilities including acute care hospitals, behavioral healthcare facilities, rehabilitation hospitals, sub-acute care facilities, surgery centers, childcare centers and medical office buildings. We have forty-three real estate investments in fifteen states.
Funds from operations, is a widely recognized measure of REIT performance. Although FFO is a non-GAAP financial measure, we believe that information regarding FFO is helpful to shareholders and potential investors. We compute FFO 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. To facilitate a clear understanding of our historical operating results, FFO should be examined in conjunction with net income determined in accordance with GAAP. FFO does 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 should not be used as: (i) an indication of our financial performance determined in accordance with GAAP; (ii) as an alternative to cash flow from operating activities determined in accordance with GAAP; (iii) as a measure of our liquidity; (iv) nor is FFO 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 is shown below.
The matters discussed in this report, as well as the news releases issued from time to time by us, include certain statements containing the words "believes," "anticipates," "intends," "expects" and words of similar import, which constitute "forward-looking statements" within the meaning of Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. 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.
Universal Health Realty Income Trust
Consolidated Statements of Income
For the Three and Six Months Ended June 30, 2006 and 2005
(amounts in thousands, except per share amounts)
(unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
2006 2005 2006 2005
Revenues:
Base rental - UHS facilities $3,094 $3,247 $6,186 $6,404
Base rental - Non-related parties 3,101 3,038 6,168 6,049
Bonus rental - UHS facilities 1,104 1,119 2,255 2,342
Tenant reimbursements and other -
Non-related parties 935 833 1,881 1,807
Tenant reimbursements and other -
UHS facilities 94 108 197 234
8,328 8,345 16,687 16,836
Expenses:
Depreciation and amortization 1,423 1,466 2,839 2,874
Advisory fees to UHS 355 353 702 708
Other operating expenses 1,619 1,548 3,317 3,122
3,397 3,367 6,858 6,704
Income before equity in
unconsolidated limited liability
companies ("LLCs"),property damage
recovered from UHS and interest
expense 4,931 4,978 9,829 10,132
Equity in income of unconsolidated
LLCs (including recognition of
previously deferred gain of $1,860
on sale of our interest in an
unconsolidated LLC for the three
and six months ended June 30, 2006
and a gain on sale of real property
of $1,043 during the six month
period ended June 30, 2005) 2,540 815 3,265 2,796
Property damage recovered from UHS -
Wellington - 1,213 - 2,741
Interest expense, net (579) (801) (1,254) (1,884)
Net income $6,892 $6,205 $11,840 $13,785
Basic earnings per share $0.58 $0.53 $1.01 $1.17
Diluted earnings per share $0.58 $0.52 $1.00 $1.16
Weighted average number of shares
outstanding - Basic 11,782 11,762 11,780 11,759
Weighted average number of share
equivalents 79 77 79 76
Weighted average number of shares
and equivalents outstanding -
Diluted 11,861 11,839 11,859 11,835
Calculation of Funds From Operations
("FFO"):
Three Months Six Months
Ended June 30, Ended June 30,
2006 2005 2006 2005
Net income $6,892 $6,205 $11,840 $13,785
Plus: Depreciation and amortization
expense:
Consolidated
investments 1,349 1,405 2,692 2,750
Unconsolidated
affiliates 1,066 989 2,092 1,884
Less: Gain on LLC's sale of real
property - 18 - (1,043)
Previously deferred gain
on sale of our interest
in an unconsolidated LLC (1,860) - (1,860) -
Property damage recovered
from UHS - Wellington - (1,213) - (2,741)
Funds from operations
(FFO) $7,447 $7,404 $14,764 $14,635
Funds from operations
(FFO) per share - Basic $0.63 $0.63 $1.25 $1.24
Funds from operations
(FFO) per share - Diluted $0.63 $0.63 $1.24 $1.24
Dividend paid per share $0.565 $0.555 $1.125 $1.060
Universal Health Realty Income Trust
Consolidated Balance Sheets
(dollar amounts in thousands)
(unaudited)
June 30, December 31,
Assets: 2006 2005
Real Estate Investments:
Buildings and improvements $188,089 $187,451
Accumulated depreciation (60,421) (57,729)
127,668 129,722
Land 23,143 23,143
Net Real Estate Investments 150,811 152,865
Investments in and advances to
limited liability companies
("LLCs") 36,460 29,572
Other Assets:
Cash and cash equivalents 1,324 1,717
Bonus rent receivable from UHS 1,104 1,088
Rent receivable - other 1,051 1,000
Note receivable from sale of
property - 3,102
Property damage receivable from
UHS 6,259 6,259
Deferred charges and other
assets, net 1,309 1,286
Total Assets $198,318 $196,889
Liabilities and Shareholders'
Equity:
Liabilities:
Line of credit borrowings $14,300 $10,000
Mortgage note payable, non-
recourse to us 3,911 3,972
Mortgage notes payable of
consolidated LLCs, non-
recourse to us 21,316 21,576
Deferred gain on sale of our
interest in an unconsolidated LLC - 1,860
Accrued interest 323 357
Accrued expenses and other
liabilities 2,895 2,575
Fair value of derivative
instruments 20 100
Tenant reserves, escrows,
deposits and prepaid rents 860 697
Total Liabilities 43,625 41,137
Minority interests 299 302
Shareholders' Equity:
Preferred shares of beneficial
interest, $.01 par value; 5,000,000
shares authorized; none outstanding - -
Common shares, $.01 par value;
95,000,000 shares authorized; issued
and outstanding: 2006 - 11,785,542;
2005 -11,777,829 118 118
Capital in excess of par value 187,220 186,943
Cumulative net income 282,017 270,177
Accumulated other comprehensive
loss (20) (100)
Cumulative dividends (314,941) (301,688)
Total Shareholders' Equity 154,394 155,450
Total Liabilities and
Shareholders' Equity $198,318 $196,889
