<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
UNIVERSAL HEALTH REALTY INCOME TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[ ] No filing fee per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fees paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
UNIVERSAL HEALTH REALTY INCOME TRUST
UNIVERSAL CORPORATE CENTER
367 SOUTH GULPH ROAD
KING OF PRUSSIA, PENNSYLVANIA 19406
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 4, 1997
Notice is hereby given that the Annual Meeting of Shareholders of Universal
Health Realty Income Trust (the "Trust") will be held on Wednesday, June 4, 1997
at 10:00 AM, at the offices of the Trust, Universal Corporate Center, 367 South
Gulph Road, King of Prussia, Pennsylvania for the following purposes:
(1) To have the holders of Trust Shares elect one Class II Trustee,
such Trustee to serve for a term of three years, until the annual
election of Trustees in the year 2000 and election and
qualification of his successor.
(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on April 21, 1997 are
entitled to vote at the Annual Meeting.
All shareholders are cordially invited to attend the meeting in person. IN
ANY EVENT, PLEASE MARK YOUR VOTES, THEN DATE AND SIGN THE ENCLOSED FORM OF PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE WHETHER OR NOT YOU
CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING. YOU MAY REVOKE YOUR PROXY IF YOU
DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO VOTE YOUR SHARES IN PERSON.
BY ORDER OF THE BOARD OF TRUSTEES
/s/ Kirk E. Gorman
KIRK E. GORMAN
Secretary
King of Prussia, Pennsylvania
April 30, 1997
<PAGE> 3
UNIVERSAL HEALTH REALTY INCOME TRUST
UNIVERSAL CORPORATE CENTER
367 SOUTH GULPH ROAD
KING OF PRUSSIA, PA 19406
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished to the shareholders of Universal Health
Realty Income Trust, a real estate investment trust organized under the laws of
the State of Maryland (the "Trust"), in connection with the solicitation of
Proxies by the Board of Trustees for use at the Annual Meeting of Shareholders,
to be held at Universal Corporate Center, 367 South Gulph Road, King of Prussia,
Pennsylvania on Wednesday, June 4, 1997 at 10:00 AM, and at any adjournment
thereof. This Proxy Statement and related form of Proxy were first sent to
shareholders of the Trust on or about April 30, 1997. The Annual Meeting is
being held to: (1) elect one Class II Trustee of the Trust, who will serve for a
term of three years until the annual election of Trustees in the year 2000 and
the election and qualification of his successor, and (2) to transact such other
business as may properly be brought before the meeting or any adjournment
thereof.
A form of Proxy for use at the meeting is enclosed. Any shareholder may
revoke a Proxy at any time before the authority granted by it is exercised by
giving written notice of revocation to the Secretary of the Trust, by submitting
another executed Proxy to the Secretary of the Trust bearing a later date (but
prior to the voting of such Proxy), or by attending the meeting and asking
(prior to the voting of such Proxy) for the return of such Proxy. Unless
otherwise indicated on the Proxy, shares represented by any Proxy will, if the
Proxy is properly executed and received by the Trust prior to the Annual
Meeting, be voted FOR the nominee for Trustee.
Only holders of record of the shares of beneficial interest of the Trust,
par value $.01 per share (the "Shares"), at the close of business on April 21,
1997 will be entitled to vote at the meeting. On that date, there were 8,952,340
Shares outstanding. Each Share is entitled to one vote on each of the matters to
be presented at the meeting. Shareholders entitled to vote for the election of
the Trustees can withhold authority to vote for them. Each nominee will be
elected if he receives a plurality of the votes cast. Broker non-votes are
treated as shares as to which the beneficial owners have withheld voting
authority and therefore are shares not entitled to vote on the matter. As of
April 21, 1997, the Trust's current trustees and officers as a group owned of
record or beneficially 41,979 Shares, representing less than 1% of the
outstanding Shares.
A copy of the Trust's Annual Report to Shareholders, including financial
statements for the year ended December 31, 1996, is enclosed.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 17, 1997, the number of
Shares and the percentage of outstanding Shares owned beneficially, within the
meaning of Securities and Exchange Commission Rule 13d-3, (i) by each person who
is known by the Trust to own beneficially more than 5% of its Shares (ii) by
each Trustee and each executive officer named in the Summary Compensation Table
and (iii) by all Trustees and executive officers of the Trust as a group.
1
<PAGE> 4
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP OUTSTANDING SHARES
- ------------------------------------------------------------ -------------------- ------------------
<S> <C> <C>
Universal Health Services, Inc. ("UHS") 698,692(2) 7.8%
367 South Gulph Road
King of Prussia, PA 19406
Private Capital Management, Inc. 860,400(3) 9.6%
3003 Tamiami Trail North
Naples, FL 33940
Idanta Partners, Ltd. 584,924(4) 6.5%
4660 La Jolla Village Dr., Suite 850
San Diego, CA 92122
Daniel M. Cain 2,696 (6)
Cain Brothers & Company, Inc.
452 Fifth Avenue, 25th Floor
New York, NY 10018
Peter Linneman 700 (6)
University of Pennsylvania
256 S. 37th St., Third Floor
Philadelphia, PA 19104
Myles H. Tanenbaum 5,000 (6)
Arbor Enterprises
One Tower Bridge, Suite 800
W. Conshohocken, PA 19428
Alan B. Miller 68,000(5) (6)
Kirk E. Gorman 8,603 (6)
Michael R. Walker 5,000 (6)
Genesis Health Ventures
148 W. State Street
Kennett Square, PA 19348
Charles F. Boyle 673 (6)
Cheryl K. Ramagano 1,008 (6)
Timothy J. Fowler 8,323(5) (6)
3525 Piedmont Rd., N.E.
Atlanta, GA 30305
All Trustees & Executive Officers as a group (9 persons) 100,003(5) 1.1%
</TABLE>
- ---------------
(1) Unless otherwise shown, the address of each beneficial owner is c/o
Universal Health Realty Income Trust, Universal Corporate Center, 367 South
Gulph Road, King of Prussia, PA 19406.
(2) UHS has an option to maintain ownership of 5% of the outstanding Shares of
the Trust.
(3) Shares are held by Private Capital Management, Inc., a registered investment
adviser. Information is based on Amendment No. 3 to Schedule 13G dated
February 7, 1996.
(4) Shares are held by Idanta Partners, Ltd., a Texas limited partnership, and
its General Partners, David J. Dunn and Dev Purkayastha.
(5) Includes shares issuable pursuant to stock options to purchase shares of
beneficial interest held by officers of the Trust and exercisable within 60
days of February 17, 1997 as follows: Alan B. Miller (50,000); and Timothy
J. Fowler (8,024).
(6) Less than 1%.
2
<PAGE> 5
PROPOSAL NO. 1
ELECTION OF A TRUSTEE
The Trust was organized under the laws of the State of Maryland as a real
estate investment trust on August 6, 1986. All Trustees of the Trust assumed
their positions with the Trust at the inception of the Trust, with the exception
of Mr. Tanenbaum, who was elected in November 1990, and Mr. Gorman and Mr.
Walker, who were elected in December 1994. Pursuant to the Declaration of Trust,
the Trustees of the Trust have been divided into three classes, with staggered
terms. The term of the Trustee in Class II expires at the 1997 Annual Meeting,
the term of the Trustees in Class III expire at the 1998 Annual Meeting, and the
term of the Trustees in Class I expires at the 1999 Annual Meeting. At each
Annual Meeting, Trustees are elected for a term of three years to succeed those
in the class whose term is expiring at such Annual Meeting.
The persons listed below currently constitute the Trust's Board of
Trustees. The term of the Class II Trustee, Daniel M. Cain, expires at the 1997
Annual Meeting. Mr. Cain has been nominated to be elected for a three-year term.
The Trustees have no reason to believe that the nominee will be unavailable for
election; however, if the nominee becomes unavailable for any reason, the Shares
represented by the Proxy will be voted for the person, if any, who is designated
by the Board of Trustees to replace the nominee. The nominee has consented to be
named and has indicated his intent to serve if elected.
Pursuant to the Declaration of Trust, a majority of the Trust's Trustees
must be "Independent Trustees" with each class of Trustees containing at least
one Independent Trustee. The Declaration of Trust defines an "Independent
Trustee" as a Trustee who is not an affiliate of Universal Health Services, Inc.
("UHS"), the parent company of the Trust's Advisor, and does not perform any
services for the Trust, except as Trustee.
The following information is furnished with respect to the nominee for
election as a Trustee and each member of the Board of Trustees whose term of
office will continue after the meeting.
<TABLE>
<CAPTION>
CLASS OF PRINCIPAL OCCUPATION TRUSTEE
NAME TRUSTEE AGE DURING THE LAST FIVE YEARS SINCE
- ----------------------------- -------- --- ------------------------------------------ -------
<S> <C> <C> <C> <C>
NOMINEE FOR TERM
EXPIRING IN 1997
Daniel M. Cain* II 52 President, Cain Brothers & Company, Inc. 1986
Prior thereto, senior partner in Cain
Brothers & Company, Inc. since 1982.
TRUSTEES WHOSE TERMS
EXPIRE IN 1998
Kirk E. Gorman III 46 President and Chief Financial Officer of 1994
the Trust since 1990, Secretary of the
Trust since December 1994 and Vice
President and Chief Financial Officer of
the Trust since 1987. Senior Vice
President, Treasurer and Chief Financial
Officer of UHS since December 1992.
Michael R. Walker* III 48 Founder, Chairman and Chief Executive 1994
Officer of Genesis Health Ventures, Inc.
since 1985. Prior thereto, the Founder and
President of Health Group Care Centers,
Inc. (currently Health Care and Re-
tirement Corporation), and the Chief
Financial Officer for the nursing center
division of Hospital Affiliates
International. Director of Renal Treatment
Centers, Inc.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
CLASS OF PRINCIPAL OCCUPATIONS TRUSTEE
NAME TRUSTEE AGE DURING THE LAST FIVE YEARS SINCE
- ----------------------------- -------- --- ------------------------------------------ -------
<S> <C> <C> <C> <C>
TRUSTEES WHOSE TERMS
EXPIRE IN 1999
Alan B. Miller I 59 Chairman of the Board and Chief Executive 1986
Officer of the Trust since 1986. Chairman
of the Board, President and Chief
Executive Officer of UHS since 1978.
Director of CDI Corp., Genesis Health
Ventures and Penn Mutual Life Insurance
Company.
Peter Linneman* I 46 Albert Sussman Professor of Real Estate, 1986
Finance, and Public Policy, the Wharton
School of Business--University of
Pennsylvania; Economic Consultant. Also
serves as a Director of Gables Residential
Property Trust, Rockefeller Center
Properties Inc., Kranzco Realty Trust and
Nevada Investment Holdings.
Myles H. Tanenbaum* I 66 Chairman of the Board of Arbor Enterprises 1990
since 1989, President of Arbor Property
Trust (NYSE)(successor to EQK Green Acres,
L.P.) since 1986. Prior thereto, President
and Trustee of EQK Realty Investors, and
CEO/Chairman-General Partner of EQK
Partners. Director of Pep Boys (NYSE) and
Arbor Property Trust, and member of the
Board of Trustees of the University of
Pennsylvania.
</TABLE>
- ---------------
* Independent Trustee
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Trust's
trustees and executive officers, and persons who own more than ten percent of a
registered class of the Trust's equity securities, to file with the Securities
and Exchange Commission and the New York Stock Exchange initial reports of
ownership and reports of changes in ownership of the Shares and other equity
securities of the Trust. Based on reports filed with the Trust, the Trust
believes all required reports of executive officers and Trustees were filed in a
timely manner.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The Trust has no salaried employees and the Trust's officers, who are all
employees of UHS of Delaware, Inc., received no cash compensation from the Trust
in 1996, 1995 and 1994. The following tables set forth various information with
respect to the compensation of the five most highly compensated officers of the
Trust. There were no options granted in 1996.
UNIVERSAL HEALTH REALTY INCOME TRUST
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------- -----------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL
FISCAL SALARY COMPENSATION AWARDS OPTIONS OTHER
NAME AND PRINCIPAL POSITION YEAR ($) BONUS($) ($) ($) (#) COMPENSATION($)
- ------------------------------- ------ ------ -------- ------------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alan B. Miller, 1996 -- -- -- -- -- --
Chairman of the Board and 1995 -- -- -- -- -- --
Chief Executive Officer 1994 -- -- -- -- -- --
Kirk E. Gorman, 1996 -- -- -- -- -- --
President, Chief Financial 1995 -- -- -- -- -- --
Officer, Secretary and 1994 -- -- -- -- -- --
Trustee
Charles F. Boyle, 1996 -- -- -- -- -- --
Vice President and Controller 1995 -- -- -- -- -- --
1994 -- -- -- -- --
Cheryl K. Ramagano, 1996 -- -- -- -- -- --
Vice President and Treasurer 1995 -- -- -- -- -- --
1994 -- -- -- -- -- --
Timothy J. Fowler, 1996 -- -- -- -- -- --
Vice President, 1995 -- -- -- -- -- --
Acquisitions and Development 1994 -- -- -- -- -- --
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED ON VALUE FISCAL YEAR-END(#) FISCAL YEAR-END($)(2)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan B. Miller..................... 0 0 50,000 0 $ 181,250 $0
Kirk E. Gorman..................... 25,000 $68,750 0 0 0 $0
Charles F. Boyle................... 5,000 $13,125 0 0 0 $0
Cheryl K. Ramagano................. 5,000 $13,125 0 0 0 $0
Timothy J. Fowler.................. 1,976 $ 5,681 8,024 0 $ 35,105 $0
</TABLE>
- ---------------
(1) Based on the difference between the exercise price and the closing sale
price of the shares of beneficial interest on the New York Stock Exchange on
the date of exercise.
(2) Based on the difference between the exercise price and the closing sale
price of the shares of beneficial interest on the New York Stock Exchange on
December 31, 1996 of $20.50 per share.
5
<PAGE> 8
REPORT OF EMPLOYEE BENEFITS COMMITTEE
The Trust has no salaried employees and the Trust's officers, who are all
employees of UHS of Delaware, Inc., receive no cash compensation from the Trust.
The Trust historically has not paid any cash compensation to its officers. The
Trust has established, however, incentive plans to incentivize those persons to
render greater service to the Trust. In 1992, the Trust granted options to
purchase 50,000 shares, 25,000 shares, 5,000 shares and 5,000 shares to Alan B.
Miller, Chairman of the Board and Chief Executive Officer of the Trust, Kirk E.
Gorman, President, Chief Financial Officer, Secretary and Trustee of the Trust,
Charles F. Boyle, Vice President and Controller of the Trust and Cheryl K.
Ramagano, Vice President and Treasurer of the Trust, respectively. In 1993, the
Trust granted options to purchase 10,000 shares to Timothy J. Fowler, Vice
President, Acquisitions and Development, upon his joining the Trust. During
1996, 36,976 options were exercised. Only Mr. Gorman had previously received any
compensation from the Trust, a grant of 2,500 shares pursuant to the Trust's
Restricted Stock Plan in 1988. No awards were made in 1994, 1995, or 1996.
The Employee Benefits Committee, which is composed of independent trustees
of the Trust, believes that in the absence of cash compensation, it is important
to provide the officers of the Trust, including the chief executive officer, an
incentive to increase shareholder value by awarding a benefit only if
shareholders of the Trust receive a benefit through an increase in the price of
the Shares. The Employee Benefits Committee will evaluate from time to time the
compensation payable to its officers in light of the performance of the Trust,
the individuals involved and competitive factors.
EMPLOYEE BENEFITS COMMITTEE
Daniel M. Cain
Peter Linneman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Alan B. Miller is a member of the Compensation Committee of Genesis
Health Ventures in which Mr. Michael R. Walker serves as the Chairman and Chief
Executive Officer.
Mr. Daniel M. Cain has from time to time performed investment banking
services for the Trust. No compensation was paid to him for any services in
1996.
6
<PAGE> 9
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent the Trust specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
(THE TRUST, S&P 500, PEER GROUP)
<TABLE>
<CAPTION>
UNIVERSAL HEALTH
MEASUREMENT PERIOD REALTY INCOME
(FISCAL YEAR COVERED) TRUST S&P 500 PEER GROUP
<S> <C> <C> <C>
1991 100 100 100
1992 93.52 107.62 101.32
1993 112.28 118.46 121.14
1994 122.05 120.03 124.63
1995 147.10 165.13 157.37
1996 184.08 203.05 192.71
</TABLE>
The total cumulative return on investment (change in the year-end stock
price plus reinvested dividends) for each of the periods for the Trust, the peer
group and the S&P 500 Composite is based on the stock price or composite index
at the end of fiscal 1991.
The above graph compares the performance of the Trust with that of the S&P
500 and a group of peer companies with the investment weighted on market
capitalization. Companies in the peer group are as follows: Meditrust Corp.,
Health Care Property Investors, Inc., Nationwide Health Properties, Inc.,
American Health Properties, Inc., Health & Retirement Properties Trust, Health
Equity Properties, Incorporated and Health Care REIT, Inc.
7
<PAGE> 10
BOARD OF TRUSTEES
MEETINGS OF THE BOARD
Regular meetings of the Trustees are generally held quarterly, while
special meetings are called when necessary. Before each meeting, Trustees are
furnished with an agenda and background materials relating to matters to be
discussed. During 1996, there were eight Board meetings. All Trustees attended
at least 75% of the meetings.
COMPENSATION OF TRUSTEES
Each Independent Trustee is paid by the Trust annual compensation of
$10,000 for service as a Trustee plus $500 for attendance, in person, at each
meeting of the Board of Trustees or Committee meeting thereof on a day on which
the Board of Trustees does not meet. In addition, the Trust reimburses all
Trustees for travel expenses incurred in connection with their duties as
Trustees of the Trust. In 1992, the Board of Trustees and the shareholders
adopted a Share Compensation Plan For Outside Trustees, pursuant to which
Trustees may elect to receive their annual compensation in the form of Shares in
lieu of cash. No Trustee elected to receive Shares in 1996.
AUDIT COMMITTEE
The Audit Committee is responsible for providing assistance to the Board of
Trustees in fulfilling its responsibilities relating to corporate accounting and
reporting practices and in maintaining a direct line of communication between
the Trustees and the independent accountants. It recommends the firm to be
appointed independent auditor, reviews the scope and results of the audit with
the independent auditors and considers the adequacy of the internal accounting
and control procedures of the Company. The Audit Committee met once in 1996.
Members of this Committee are Daniel M. Cain and Peter Linneman.
EMPLOYEE BENEFITS COMMITTEE
The Employee Benefits Committee was established December 1, 1988 and is
responsible for administering the Restricted Share Purchase Plan and the Stock
Option Plan. It has full authority in its discretion from time to time, and at
any time, to select those employees of the Trust, as the term employee is
defined in the plans, to whom Shares or options will be granted, to determine
the number of Shares subject thereto, the times at which such Shares shall be
sold or options granted, the time at which the restrictions on the Shares shall
lapse or the options shall vest, and the terms and conditions of the agreements
to be entered into by the employees with the Trust. The Employee Benefits
Committee did not meet in 1996. Members of this Committee are Daniel M. Cain and
Peter Linneman.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
RELATIONSHIP WITH UHS
THE ADVISOR AND THE ADVISORY AGREEMENT
The Trust, with the approval of the Board of Trustees, including all the
Independent Trustees, has entered into an Advisory Agreement with UHS of
Delaware, Inc. (the "Advisor"), a Delaware corporation and wholly owned
subsidiary of UHS, pursuant to which the Advisor will act as advisor to the
Trust with respect to the Trust's operations. Mr. Alan B. Miller serves as
Director and President of the Advisor and of UHS. ; Mr. Kirk E. Gorman serves as
Director, Vice President and Chief Financial Officer of the Advisor ; Mr. Steve
Filton serves as Director, Vice President and Controller of the Advisor ; Mr.
Bruce R. Gilbert serves as Secretary of the Advisor. Alan B. Miller is Chairman
of the Board and Chief Executive Officer of the Trust,
8
<PAGE> 11
Kirk E. Gorman is President, Chief Financial Officer, Secretary and Trustee of
the Trust, Charles F. Boyle is Vice President and Controller of the Trust,
Cheryl K. Ramagano is Vice President and Treasurer of the Trust, Timothy J.
Fowler is Vice President, Acquisitions and Development, of the Trust, and Bruce
R. Gilbert serves as General Counsel to the Trust. All such persons are also
employees of the Advisor. Under the Advisory Agreement, the Advisor is obligated
to present an investment program to the Trust, to use its best efforts to obtain
investments suitable for such program (although it is not obligated to present
any particular investment opportunity to the Trust), to provide administrative
services to the Trust and to conduct the Trust's day-to-day affairs. In
performing its services under the Advisory Agreement, the Advisor may utilize
facilities, personnel and support services of various UHS affiliates, including
accounting, legal and other services, for which the Advisor will be reimbursed
directly by the Trust, but only if such services are first approved by a
majority of the Independent Trustees. No additional compensation will be paid by
the Trust for these services.
The term of the Advisory Agreement expired on December 31, 1996. The Board
of Trustees, on December 2, 1996, voted to renew the Advisory Agreement for
1997. The Advisory Agreement is renewable annually thereafter by the Trust,
subject to a determination by a majority of the Independent Trustees that the
Advisor's performance has been satisfactory, and subject to the termination
rights of the parties. The Advisory Agreement may be terminated for any reason
upon sixty days' written notice by the Trust or the Advisor.
The Advisory Agreement does not restrict the Advisor from rendering advice
to other investors (including other real estate investment trusts) or from
managing other investments, including those of investors or investments advised,
sponsored or organized by the Advisor. The Advisor also may render such services
to joint ventures and partnerships in which the Trust is a co-venturer or
partner and to the other entities in such joint ventures and partnerships, and
the Advisor is not obligated to present any particular investment opportunity to
the Trust. There is no restriction on the right of any director, officer,
employee or stockholder of the Advisor, or any affiliate of UHS, to engage in
any other business or to render services of any kind to any other corporation,
partnership or other entity (including competitive business activities). The
Advisor has informed the Board of Trustees that it does not presently intend to
provide advisory services to any other real estate investment trust and has
agreed to inform the Board of any change in such intention.
Pursuant to the Advisory Agreement, the Trust paid the Advisor $1,044,000
in respect of services rendered by the Advisor to the Trust during fiscal 1996.
The Advisory Agreement provides that the Advisor is entitled to receive an
annual advisory fee equal to .60% of the average invested real estate assets of
the Trust, as derived from its consolidated balance sheet from time to time. In
addition, the Advisor will be entitled to an annual incentive fee equal to 20%
of the amount by which cash available for distribution to shareholders for each
year, as defined in the Advisory Agreement, exceeds 15% of the Trust's equity as
shown on its balance sheet, determined in accordance with generally accepted
accounting principles without reduction for return of capital dividends. No
incentive fees were paid during 1996, 1995 or 1994. The advisory fee is payable
quarterly, subject to adjustment at year end based upon audited financial
statements of the Trust.
PROPERTIES
The Trust effectively commenced business on December 24, 1986, the closing
date for the purchase of properties from certain subsidiaries of UHS (the
"Subsidiaries"). In exchange for shares of beneficial interest, $.01 par value,
in the Trust, the Trust acquired 10 properties (the "Initial Properties") from
the Subsidiaries having an appraised value of approximately $122,000,000. The
Initial Properties were immediately leased back to the respective Subsidiaries.
In March 1988, the Trust acquired the real property of a 118-bed acute care
hospital operated by a subsidiary of UHS for approximately $9,500,000. The Trust
concurrently leased the hospital to that UHS subsidiary on a long-term basis.
The fixed term of the leases ranges from 10-15 years with up to six additional
five-year renewal options. In 1989, two of these facilities consolidated their
9
<PAGE> 12
operations. The leases all provide for minimum rents and additional rents are
payable if facility revenues increase. Additional rent is equal to 5% of the
increase in facility revenues over a base period until the facility lease rate
grows to 13.5% of the Trust's original shareholders' equity. Thereafter,
additional rent is equal to 1% of the increase in facility revenues. The
obligations under the leases are guaranteed by UHS.
During 1991, the Trust sold to UHS a 124-bed acute care hospital for its
net book value of approximately $5.7 million, which was higher than its
appraised value. The real property of this hospital was previously leased to
UHS. Also during 1991, the Trust acquired from UHS, for approximately $4.1
million, newly constructed patient buildings on the campus of one of the
behavioral health facilities already owned by the Trust.
In 1992, one of the Subsidiaries of UHS ceased operations at the facility
leased by it from the Trust and, in 1993, UHS purchased the real property of
that facility from the Trust for approximately $3.2 million, the original
purchase price of the facility, which was higher than its appraised value, and
resulted in a $371,000 gain, which was included in the Trust's 1993 first
quarter results. Also during the fourth quarter of 1993, UHS, the former lessee
and operator of Belmont Community Hospital, sold the operations of the facility
to Transitional Hospitals Corporation ("THC"), an unaffiliated third party.
Concurrently, the Trust purchased certain related real property from UHS for $1
million in cash and a note payable with a carrying value of $1,082,000 at
December 31, 1996. The note payable has a face value of $1 million and is due on
December 31, 2001. The amount of interest payable on this note is contingent
upon the financial performance of this leased facility and its estimated face
value at the end of the initial lease term. The Trust has estimated the total
amount payable under the terms of this note and has discounted the payments to
their net present value using a 6% rate. In connection with this transaction,
UHS's lease with the Trust was terminated, and the Trust entered into an eight
year lease agreement with THC for the real property of the Belmont Community
Hospital facility.
During the third quarter of 1995, UHS purchased the assets of Westlake
Medical Center, ("Westlake") a 126-bed hospital of which the majority of real
estate assets were owned by the Trust and leased to UHS. In exchange for the
real estate assets of Westlake and the termination of the lease, the Trust
received substitution properties valued at approximately $19 million (the
Trust's original purchase price of Westlake) consisting of additional real
estate assets which were owned by UHS but related to three acute care
facilities, of which the Trust owns the real estate and which are operated by
UHS (McAllen Medical Center, Inland Valley Regional Medical Center and
Wellington Regional Medical Center). These additional real estate assets
represent major additions and expansions made to these facilities by UHS since
the purchase of the facilities by the Trust from UHS in 1986. The Trust also
purchased from UHS, additional real estate assets related to McAllen Medical
Center for approximately $1.9 million in cash. Total annual base rental payments
from UHS to the Trust on the substituted properties will be $2.4 million which
equals the total base and bonus rental earned by the Trust on the Westlake
facility during 1994 ($2.1 million base and $300,000 bonus). Total annual base
rental payments on the additional real estate assets purchased related to
McAllen Medical Center will be approximately $200,000. Bonus rental on the
substituted and purchased real estate assets will be equal to 1% of the growth
in revenues, in excess of base year amounts, generated by these additional
assets. The guarantee by UHS under the existing leases, as amended to include
the additional property, will continue.
Pursuant to the terms of the leases with UHS, the lessees have rights of
first refusal to: (i) purchase the respective leased facilities during and for
180 days after the lease terms expire at the same price, terms and conditions of
any third party offer, or; (ii) renew the lease on the respective leased
facility at the end of, and for 180 days after, the lease term on the same terms
and conditions as to any third party offer. The leases also grant the lessees
options, exercisable on at least six months notice, to purchase the respective
leased facilities at the end of the lease term or any renewal term at the
facility's then fair market value. The terms of the leases also provide that in
the event UHS discontinues operations at the leased facility for more than one
year, or
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<PAGE> 13
elects to terminate its lease prior to the expiration of its term for prudent
business reasons, UHS is obligated to offer a substitution property. If the
Trust does not accept the substitution property offered, UHS is obligated to
purchase the leased facility back from the Trust at a price equal to the greater
of its then fair market value or the original purchase price paid by the Trust.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP has been retained by the Board of Trustees, on the
recommendation of the Audit Committee, to perform all accounting and audit
services during the 1997 fiscal year. It is anticipated that representatives of
Arthur Andersen LLP will be present at the Annual Meeting and will have an
opportunity to make a statement, if they desire to do so, and to respond to any
appropriate inquiries of the Shareholders or their representatives.
EXPENSES FOR PROXY SOLICITATION
The principal solicitation of Proxies is being made by mail; however,
certain officers and employees of the Trust and of the Advisor, or its
affiliates, none of whom will receive additional compensation therefor, may
solicit Proxies by telegram, telephone or other personal contact. The Trust will
bear the cost of the solicitation of the Proxies, including postage, printing
and handling and will reimburse the reasonable expenses of brokerage firms and
others for forwarding material to beneficial owners of Shares.
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS FOR
NEXT YEAR'S ANNUAL MEETING
Any proposal that a Shareholder wishes to present for consideration at the
1998 Annual Meeting must be received by the Trust no later than December 30,
1997. This date provides sufficient time for inclusion of the proposal in the
1998 proxy materials.
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<PAGE> 14
OTHER BUSINESS TO BE TRANSACTED
As of the date of this Proxy Statement, the Board of Trustees knows of no
other business to be presented for action at the Annual Meeting. As for any
business that may properly come before the Annual Meeting, the Proxies confer
discretionary authority in the persons named therein. Those persons will vote or
act in accordance with their best judgment with respect thereto.
YOU ARE URGED TO VOTE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE AT YOUR EARLIEST CONVENIENCE, WHETHER OR NOT YOU
CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON.
BY ORDER OF THE BOARD OF TRUSTEES
KIRK E. GORMAN
Secretary
King of Prussia, Pennsylvania
April 30, 1997
A COPY OF THE TRUST'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY SHAREHOLDER REQUESTING IT IN WRITING FROM: INVESTOR RELATIONS,
UNIVERSAL HEALTH REALTY INCOME TRUST, UNIVERSAL CORPORATE CENTER, 367 SOUTH
GULPH ROAD, P.O. BOX 61558, KING OF PRUSSIA, PENNSYLVANIA 19406-0958.
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<PAGE> 15
802-PS-97
<PAGE> 16
DETACH HERE OMR 1
UNIVERSAL HEALTH REALTY INCOME TRUST
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES FOR THE ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD ON JUNE 4, 1997
P Alan B. Miller and Kirk E. Gorman, and each of them, as the true
R and lawful attorneys, agents and proxies of the undersigned, with full
O power of substitution, are hereby authorized to represent and to vote,
X as designated on the reverse side, all shares of Universal Health
Y Realty Income Trust held of record by the undersigned on April 21,
1997 at the Annual Meeting of Shareholders to be held at 10:00 a.m.,
on Wednesday, June 4, 1997 at Universal Corporate Center, 367 South
Gulph Road, King of Prussia, Pennsylvania and at any adjournment
thereof. Any and all proxies heretofore given are hereby revoked.
(THIS PROXY IS CONTINUED ON REVERSE SIDE)
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
[SEE REVERSE
SIDE]
<PAGE> 17
COMPANY HIGHLIGHTS DURING 1996
- -- Ten consecutive years of increased dividends. Current level $1.70 per
share.
- -- 1996 total return to shareholders of 25.1%.
DETACH HERE OMR 1
/X/ Please mark
votes as in
this example.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED. IF NO CHOICE IS
SPECIFIED, THE PROXY WILL BE VOTED "FOR" ELECTION OF THE NOMINEE FOR TRUSTEE.
1. The Election of a Trustee:
NOMINEE: Daniel M. Cain
/ / FOR THE NOMINEE / / WITHHELD FROM THE NOMINEE
Discretionary authority is hereby granted with respect to such other matters as
may properly come before the meeting.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the Proxy Statement furnished therewith.
MARK HERE MARK HERE
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT / / THE MEETING / /
NOTE: Please sign exactly as name appears hereon. Each joint owner shall sign.
Executors, administrators, trustees, etc. should give full title.
Signature:_______________ Date:_________Signature:_______________ Date:_________
