KING OF PRUSSIA, Pa., July 19 /PRNewswire-FirstCall/ -- Universal Health Realty Income Trust announced today that for the quarter ended June 30, 2004, net income was $6.4 million or $.54 per diluted share as compared to $5.3 million or $.45 per diluted share for the same quarter in the prior year. Included in net income and earnings per diluted share during the quarter ended June 30, 2004, was a gain of $1.0 million or $.09 per diluted share resulting from the sale of real property by an unconsolidated limited liability company (“LLC”). Funds from operations (FFO) increased 4% to $7.7 million and FFO per diluted share increased 3% to $.65 during the second quarter of 2004 as compared to $7.4 million and $.63 per diluted share, respectively, for the same quarter in the prior year. The second quarter dividend of $.50 per share was paid on June 30, 2004 and represents a dividend payout of 77% of FFO.
For the six month period ended June 30, 2004, net income was $11.5 million or $.97 per diluted share as compared to $11.0 million or $.93 per diluted share for the prior year period. Included in net income and earnings per diluted share were gains on sales of real property by unconsolidated LLCs of $1.0 million or $.09 per diluted share during the six months ended June 30, 2004 and $365,000 or $.03 per diluted share during the six months ended June 30, 2003. For the six month period ended June 30, 2004, FFO increased 4% to $15.4 million or $1.31 per diluted share as compared to $14.8 million or $1.26 per diluted share for the same period in the prior year.
At June 30, 2004, our shareholders’ equity was $153.1 million and our liabilities for borrowed funds were $50.9 million, including mortgage debt of consolidated LLCs of $22.3 million, which is non-recourse to us.
Effective March 31, 2004, we adopted Financial Interpretation No. 46R (“FIN 46R”), “Consolidation of Variable Interest Entities,” an Interpretation of ARB No. 51. Consequently, the June 30, 2004 Consolidated Balance Sheet includes the: (i) assets; (ii) liabilities; (iii) third-party borrowings, which are non-recourse to us, and; (iv) minority interests, of three of our LLC investments that meet the criteria of a variable interest entity and where we are deemed to be the primary beneficiary. As a result of FIN 46R, assets of $39.4 million and borrowings, which are non-recourse to us, of $22.3 million were recorded on our Consolidated Balance Sheet as of June 30, 2004. Also as a consequence of FIN 46R, beginning on April 1, 2004, we began consolidating the results of operations of these LLC investments on our Consolidated Statements of Income. Accordingly, for the three and six month periods ended June 30, 2004, our Consolidated Statements of Income included $1.6 million of revenue, $292,000 of depreciation & amortization expense, $582,000 of other operating expenses and $432,000 of interest expense recorded in connection with the consolidation of these LLCs. There was no impact on our net income as a result of the consolidation of these LLCs.
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 (“FFO”), is a widely recognized measure of REIT performance. Although FFO is a non-GAAP (generally accepted accounting principles) 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 us. 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.
Universal Health Realty Income Trust Consolidated Statements of Income For the Three and Six Months Ended June 30, 2004 and 2003 (amounts in thousands, except per share amounts) (unaudited) Three Months Six Months Ended June 30, Ended June 30, 2004 2003 2004 2003 Revenues: Base rental - UHS facilities $3,710 $3,183 $6,895 $6,436 Base rental - Non-related parties 2,795 2,300 5,106 4,545 Bonus rental - UHS facilities 1,192 1,157 2,454 2,365 Tenant reimbursements and other - Non-related parties 769 378 1,168 865 Tenant reimbursements and other - UHS facilities 215 0 215 0 8,681 7,018 15,838 14,211 Expenses: Depreciation and amortization 1,439 1,130 2,585 2,242 Advisory fees to UHS 367 362 741 712 Other operating expenses 1,480 819 2,269 1,646 3,286 2,311 5,595 4,600 Income before equity in unconsolidated limited liability companies (“LLCs”) and interest expense 5,395 4,707 10,243 9,611 Equity in income of unconsolidated LLCs (including gain on sale of real property of $1,009 in second quarter of 2004 and $365 in first quarter of 2003) 1,942 1,242 2,791 2,628 Interest expense (918) (634) (1,567) (1,254) Net income $6,419 $5,315 $11,467 $10,985 Net income per share - Basic $0.55 $0.45 $0.98 $0.94 Net income per share - Diluted $0.54 $0.45 $0.97 $0.93 Weighted average number of shares outstanding - Basic 11,741 11,708 11,739 11,704 Weighted average number of share equivalents 66 67 67 66 Weighted average number of shares and equivalents - Diluted 11,807 11,775 11,806 11,770 Calculation of Funds From Operations (“FFO”): Three Months Six Months Ended June 30, Ended June 30, 2004 2003 2004 2003 Net income $6,419 $5,315 $11,467 $10,985 Plus: Depreciation and amortization expense: Consolidated investments 1,380 1,103 2,483 2,202 Unconsolidated affiliates 897 997 2,507 1,983 Less: Gain on LLCs’ sale of real property (1,009) 0 (1,009) (365) Funds from operations (FFO) $7,687 $7,415 $15,448 $14,805 Funds from operations (FFO) per share - Basic $0.65 $0.63 $1.32 $1.26 Funds from operations (FFO) per share - Diluted $0.65 $0.63 $1.31 $1.26 Dividend paid per share $0.500 $0.490 $0.995 $0.975 Universal Health Realty Income Trust Consolidated Balance Sheets (dollar amounts in thousands) (unaudited) June 30, December 31, Assets: 2004 2003 Real Estate Investments: Buildings and improvements $201,703 $160,079 Accumulated depreciation (59,994) (52,219) 141,709 107,860 Land 24,913 22,929 Net Real Estate Investments 166,622 130,789 Investments in and advances to limited liability companies (“LLCs”) 38,218 61,001 Other Assets: Cash 1,245 628 Bonus rent receivable from UHS 1,192 1,093 Rent receivable - other 259 107 Deferred charges and other assets, net 1,039 673 Total Assets $208,575 $194,291 Liabilities and Shareholders’ Equity: Liabilities: Line of credit borrowings $24,404 $32,963 Mortgage note payable, non-recourse to us 4,135 4,279 Mortgage notes payable of consolidated LLCs, non-recourse to us 22,348 - Accrued interest 484 310 Accrued expenses and other liabilities 1,807 1,826 Fair value of derivative instruments 1,406 2,254 Tenant reserves, escrows, deposits and prepaid rents 689 461 Total Liabilities 55,273 42,093 Minority interests 241 - 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: 2004 - 11,746,428; 2003 - 11,736,395 117 117 Capital in excess of par value 185,985 185,675 Cumulative net income 232,550 221,083 Accumulated other comprehensive loss (1,298) (2,065) Cumulative dividends (264,293) (252,612) Total Shareholders’ Equity 153,061 152,198 Total Liabilities and Shareholders’ Equity $208,575 $194,291
Universal Health Realty Income Trust
CONTACT: Cheryl K. Ramagano, Vice President & Treasurer of UniversalHealth Realty Income Trust, +1-610-768-3300
