<PAGE>
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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(MARK ONE)
( x ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ........ to .........
Commission file number 1-9321
UNIVERSAL HEALTH REALTY INCOME TRUST
------------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 23-6858580
------------------------------- ------------------
(State or other jurisdiction of (I.R. S. Employer
Incorporation or Organization) 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
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Number of common shares of beneficial interest outstanding at October 31, 2000 -
8,980,064
Page One of Fifteen Pages
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<PAGE>
UNIVERSAL HEALTH REALTY INCOME TRUST
I N D E X
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
<S> <C> <C>
Item 1. Financial Statements
Condensed Consolidated Statements of Income
Three and Nine Months Ended - September 30, 2000 and 1999...............................Three
Condensed Consolidated Balance Sheets -- September 30, 2000
and December 31, 1999....................................................................Four
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2000 and 1999............................................Five
Notes to Condensed Consolidated Financial Statements...................Six, Seven, Eight & Nine
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ..................................Ten, Eleven, Twelve & Thirteen
PART II. OTHER INFORMATION AND SIGNATURE ...................................Fourteen & Fifteen
</TABLE>
Page Two of Fifteen Pages
<PAGE>
Part I. Financial Information
-----------------------------
Universal Health Realty Income Trust
------------------------------------
Condensed Consolidated Statements of Income
(amounts in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
2000 1999 2000 1999
------ ------ ------- -------
<S> <C> <C> <C> <C>
Revenues (Note 2):
-------------------
Base rental - UHS facilities $3,520 $3,443 $10,561 $10,330
Base rental - Non-related parties 2,656 1,684 7,481 4,931
Bonus rental 725 655 2,272 2,181
Interest -- -- -- 281
------ ------ ------- -------
6,901 5,782 20,314 17,723
------ ------ ------- -------
Expenses:
---------
Depreciation & amortization 1,125 946 3,316 2,841
Interest expense 1,600 970 4,519 2,910
Advisory fees to UHS 341 306 1,005 905
Other operating expenses 688 333 2,082 1,347
Provision for investment losses, net -- 1,583 -- 1,583
------ ------ ------- -------
3,754 4,138 10,922 9,586
------ ------ ------- -------
Income before equity in limited liability companies 3,147 1,644 9,392 8,137
Equity in income of limited liability companies 719 622 2,190 1,868
------ ------ ------- -------
Net Income $3,866 $2,266 $11,582 $10,005
====== ====== ======= =======
Net Income per share - basic $0.43 $0.25 $1.29 $1.12
====== ====== ======= =======
Net Income per share - diluted $0.43 $0.25 $1.29 $1.11
====== ====== ======= =======
Weighted average number of shares outstanding - basic 8,979 8,957 8,981 8,954
Weighted average number of share equivalents 29 22 20 24
------ ------ ------- -------
Weighted average number of shares and
equivalents outstanding - diluted 9,008 8,979 9,001 8,978
====== ====== ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page Three of Fifteen Pages
<PAGE>
Universal Health Realty Income Trust
------------------------------------
Condensed Consolidated Balance Sheets
-------------------------------------
(amounts in thousands)
----------------------
(unaudited)
-----------
<TABLE>
<CAPTION>
September 30, December 31,
Assets: 2000 1999
--------- ---------
<S> <C> <C>
Real Estate Investments:
Buildings & improvements $164,486 $154,792
Accumulated depreciation (41,079) (37,800)
--------- ---------
123,407 116,992
Land 24,279 23,128
Construction in progress 13 1,247
--------- ---------
Net Real Estate Investments 147,699 141,367
--------- ---------
Investments in limited liability companies 39,009 35,748
Other Assets:
Cash 309 852
Bonus rent receivable from UHS 735 723
Rent receivable from non-related parties 190 67
Deferred charges and other assets, net 423 64
--------- ---------
$188,365 $178,821
========= =========
Liabilities and Shareholders' Equity:
Liabilities:
Bank borrowings $85,216 $75,600
Note payable to UHS 1,347 1,289
Accrued interest 739 411
Accrued expenses & other liabilities 1,876 1,367
Tenant reserves, escrows, deposits and prepaid rents 369 404
Minority interest 62 75
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: 2000 - 8,980,064
1999 - 8,990,825 90 90
Capital in excess of par value 129,107 129,255
Cumulative net income 152,012 140,430
Cumulative dividends (182,453) (170,100)
--------- ---------
Total Shareholders' Equity 98,756 99,675
--------- ---------
$188,365 $178,821
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page Four of Fifteen Pages
<PAGE>
Universal Health Realty Income Trust
------------------------------------
Condensed Consolidated Statements of Cash Flows
-----------------------------------------------
(amounts in thousands, unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
-----------------------------------------
2000 1999
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $11,582 $10,005
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation & amortization 3,316 2,841
Amortization of interest rate cap - 62
Provision for investment losses, net - 1,583
Changes in assets and liabilities:
Rent receivable (135) 14
Accrued expenses & other liabilities 218 20
Tenant escrows, deposits & deferred rents (35) 70
Accrued interest 328 288
Deferred charges & other (341) (54)
------------- ------------
Net cash provided by operating activities 14,933 14,829
------------- ------------
Cash flows from investing activities:
Investments in limited liability companies ("LLCs") (4,174) (8,774)
Advances received from LLCs - 10,041
Acquisitions and additions to land, buildings and CIP (9,320) (366)
Proceeds received from sale of assets - 998
Cash distributions in excess of income from LLCs 913 823
------------- ------------
Net cash (used in) provided by investing activities (12,581) 2,722
------------- ------------
Cash flows from financing activities:
Additional borrowings 9,665 -
Repayments of long-term debt (49) (5,900)
Dividends paid (12,353) (12,136)
Repurchase shares of beneficial interest (181) -
Issuance of shares of beneficial interest 23 150
------------- ------------
Net cash used in financing activities (2,895) (17,886)
------------- ------------
Decrease in cash (543) (335)
Cash, beginning of period 852 572
------------- ------------
Cash, end of period $309 $237
============= ============
Supplemental disclosures of cash flow information:
Interest paid $4,133 $2,506
</TABLE>
See accompanying notes to these condensed financial statements.
Page Five of Fifteen Pages
<PAGE>
UNIVERSAL HEALTH REALTY INCOME TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(unaudited)
(1) General
The financial statements included herein have been prepared by the Trust,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission and reflect all adjustments which, in the opinion of the
Trust, are necessary to fairly present results for the interim periods. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the Trust
believes that the accompanying disclosures are adequate to make the information
presented not misleading. It is suggested that these financial statements be
read in conjunction with the financial statements, accounting policies and the
notes thereto included in the Trust's Annual Report on Form 10-K for the year
ended December 31, 1999.
In this Quarterly Report on Form 10-Q, the term "revenues" does not include the
revenues of the unconsolidated limited liability companies in which the Trust
has various non-controlling equity interests ranging from 33% to 99%. The Trust
accounts for its share of the income/loss from these investments by the equity
method.
(2) Relationship with Universal Health Services, Inc.
Approximately 62% and 71% for the three month periods ended September 30, 2000
and 1999, respectively, and 63% and 70% for the nine month periods ended
September 30, 2000 and 1999, respectively, of the Trust's consolidated revenues
were earned under the terms of the leases with wholly-owned subsidiaries of
Universal Health Services, Inc. ("UHS"). UHS has unconditionally guaranteed the
obligations of its subsidiaries under the leases. Below is the detailed listing
of the revenues received from UHS and other non-related parties for the three
and nine months ended September 30, 2000 and 1999:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
(in thousands)
2000 1999 2000 1999
------ ------ ------- -------
<S> <C> <C> <C> <C>
Base rental - UHS facilities $3,520 $3,443 $10,561 $10,330
Base rental - Non-related parties 2,656 1,684 7,481 4,931
------ ------ ------- -------
Total base rental 6,176 5,127 18,042 15,261
------ ------ ------- -------
Bonus rental - UHS facilities 725 655 2,272 2,086
Bonus rental - Non-related parties 0 0 0 95
------ ------ ------- -------
Total bonus rental 725 655 2,272 2,181
------ ------ ------- -------
Interest - Non-related parties 0 0 0 281
------ ------ ------- -------
Total revenues $6,901 $5,782 $20,314 $17,723
====== ====== ======= =======
</TABLE>
Page Six of Fifteen Pages
<PAGE>
UHS owned approximately 8% of the Trust's outstanding shares of beneficial
interest as of September 30, 2000. The Trust has granted UHS an option to
purchase Trust shares in the future at fair market value to enable UHS to
maintain a 5% interest in the Trust. The Trust has no salaried employees and
the Trust's officers are all employees of UHS of Delaware, Inc., a wholly-owned
subsidiary of UHS.
UHS of Delaware, Inc. (the "Advisor"), serves as Advisor to the Trust under an
Advisory Agreement dated December 24, 1986 between the Advisor and the Trust
(the "Advisory Agreement"). The Advisory Agreement expires on December 31 of
each year, however, it is renewable by the Trust, subject to a determination by
the Trustees who are unaffiliated with UHS, that the Advisor's performance has
been satisfactory. The Advisory Agreement may be terminated for any reason upon
sixty days written notice by the Trust or the Advisor. The Advisory Agreement
has been renewed for 2000. 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. The Advisory fee is payable quarterly, subject to adjustment
at year end based upon audited financial statements of the Trust. In both 1999
and 2000, the Trustees awarded a $50,000 bonus to the President of the Trust who
also serves as a Trustee. Also in both 1999 and 2000, UHS of Delaware, Inc.
agreed to a $50,000 reduction in the annual advisory fee paid by the Trust.
Advisory fees paid to UHS amounted to $341,000 and $306,000 for the three months
ended September 30, 2000 and 1999, and $1,005,000 and $905,000 for the nine
month periods ended September 30, 2000 and 1999, respectively.
During the second quarter of 2000, Meridell Achievement Center, Inc., a
subsidiary of UHS, exercised its option pursuant to the lease to purchase the
leased property upon the December 31, 2000 expiration of the initial lease term.
The purchase price, which is based on the fair market value of the property as
defined in the lease, will be $5,450,000 which will result in a gain of
approximately $1.8 million that will be recorded at the time of sale.
(3) Dividends
A dividend of $.46 per share or $4.1 million in the aggregate was declared by
the Board of Trustees on September 8, 2000 and was paid on September 29, 2000 to
shareholders of record as of September 19, 2000.
(4) Commitments and Acquisitions
During the third quarter, the Trust committed to invest $1.9 million in exchange
for a 74% non-controlling interest in a limited liability company that will
construct and own the Mid-Coast Hospital Medical Office Building located in
Brunswick, Maine. This building, which is 100% pre-leased and which will cost
approximately $11.2 million to construct, including $8.9 million of third-party,
non-recourse debt, is expected to be completed and opened during the fourth
quarter of 2001.
Also during the third quarter, the Trust invested $2 million in a limited
liability company that owns and operates the Centinella Medical Building Complex
located in Inglewood, California.
Page Seven of Fifteen Pages
<PAGE>
(5) Accounting Pronouncement Not Yet Adopted
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of SFAS No.
133", which deferred the effective date of SFAS No. 133 for one year. The
Statement establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. The Statement requires that changes in
the derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
items in the income statement, and requires that a company must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting.
The Trust will be required to adopt SFAS No. 133 effective as of January 1, 2001
and has not yet quantified the impact of adopting this statement on its
financial statements. Further, the Trust has not determined the method of
adoption of SFAS No. 133. However, SFAS No. 133 could increase the volatility
in earnings and other comprehensive income.
(6) Summarized Financial Information of Equity Affiliates
The following table represents summarized unaudited financial information of the
limited liability companies ("LLCs") accounted for by the equity method.
Amounts presented include investments in the following LLCs as of September 30,
2000:
Name of LLC Property Owned by LLC
----------- ----------------------
DSMB Properties Desert Samaritan Hospital MOBs
DVMC Properties Desert Valley Medical Center MOBs
Parkvale Properties Maryvale Samaritan Hospital MOBs
Suburban Properties Suburban Medical Center MOBs
Litchvan Investments Samaritan West Valley Medical Center
Paseo Medical Properties II Thunderbird Paseo Medical Plaza
Willeta Medical Properties Edwards Medical Plaza
DesMed Desert Springs Medical Plaza
PacPal Investments Pacifica Palms Medical Center
RioMed Investments Rio Rancho Medical Center
West Highland Holdings St. Jude Heritage Health Complex
Sante Fe Scottsdale Sante Fe Professional Plaza
653 Town Center Investments Summerlin Hospital Medical Office Building
Bayway Properties East Mesa Medical Center
23560 Madison Skypark Professional Medical Building
575 Hardy Investors Centinella Medical Building Complex
Brunswick Associates(a.) Mid-Coast Hospital Medical Office Building
(a.) As of September 30, 2000, the Trust has not yet invested any funds in this
project, however, the Trust has committed to invest $1.9 million in exchange for
a 74% non-controlling interest in a LLC that will construct and own a medical
office building in Brunswick, Maine.
Page Eight of Fifteen Pages
<PAGE>
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
---------------------------------------------------------------------------
2000 1999 2000 1999
---------------------------------------------------------------------------
(amounts in thousands)
<S> <C> <C> <C> <C>
Revenues $5,582 $4,918 $15,995 $13,286
Expenses 4,787 4,236 13,493 11,150
Net Income 795 682 2,502 2,136
UHT's share of net income 719 622 2,190 1,868
</TABLE>
As of September 30, 2000, these LLCs had approximately $89.5 million of debt
(non-recourse to the Trust) payable to third-party lending institutions.
Page Nine of Fifteen Pages
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Forward-Looking Statements
--------------------------
The matters discussed in this report, as well as the news releases issued from
time to time by the Trust, 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
the actual results, performance or achievements of the Trust's or industry
results to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among other things, the following: a substantial portion of the
Trust's revenues and income are dependent on one operator, Universal Health
Services, Inc., ("UHS"); a substantial portion of the Trust's leases are
involved in the healthcare industry which is undergoing substantial changes and
is subject to possible changes in the levels and terms of reimbursement from
third-party payors and government reimbursement programs, including Medicare and
Medicaid; the Trust's ability to finance its growth on favorable terms;
liability and other claims asserted against the Trust or operators of the
Trust's facilities, and other factors referenced herein. Additionally, the
operators of the Trust's facilities, including UHS, are confronted with other
issues such as: industry capacity; demographic changes; existing laws and
government regulations and changes in or failure to comply with laws and
governmental regulations; the ability to enter into managed care provider
agreements on acceptable terms; competition; the loss of significant customers;
technological and pharmaceutical improvements that increase the cost of
providing, or reduce the demand for healthcare; and the ability to attract and
retain qualified personnel, including physicians. Management of the Trust is
unable to predict the effect, if any, these factors will have on the operating
results of its lessees, including the facilities leased to subsidiaries of UHS.
Given these uncertainties, prospective investors are cautioned not to place
undue reliance on such forward-looking statements. The Trust disclaims any
obligation to update any such factors or to publicly announce the result of any
revisions to any of the forward-looking statements contained herein to reflect
future events or developments.
Results of Operations
---------------------
As of September 30, 2000 the Trust had investments in forty facilities located
in fifteen states. The Trust invests in healthcare and human service related
facilities including acute care hospitals, behavioral healthcare facilities,
rehabilitation hospitals, sub-acute care facilities, surgery centers, child-care
centers and medical office buildings.
The second quarter dividend of $.46 per share or $4.1 million in the aggregate
was paid on September 29, 2000.
For the quarters ended September 30, 2000 and 1999, net income totaled
$3,866,000 and $2,266,000 or $.43 and $.25 per diluted share, on net revenues of
$6,901,000 and $5,782,000, respectively. During the third quarter of 1999, the
Trust recorded a $1.6 million (net) provision for investment losses as discussed
below. For the nine months ended September 30, 2000 and 1999, net income
totaled $11,582,000 and $10,005,000 or $1.29 and $1.11 per diluted share on net
revenues of $20,314,000 and $17,723,000, respectively.
Page Ten of Fifteen Pages
<PAGE>
The $1,119,000 and $2,591,000 increases in net revenues during the three and
nine month periods ended September 30, 2000 as compared to the comparable 1999
periods were due primarily to increased base rental revenue from non-related
parties. These increases resulted primarily from the revenues generated from the
Sheffield Medical Building, Orthopaedic Specialists of Nevada Building and the
medical office building located in Danbury, Connecticut, as well as the Southern
Crescent II medical office building, all of which were acquired/opened
subsequent to the third quarter of 1999.
Interest expense increased $630,000 or 65% for the three months ended September
30, 2000 as compared to the 1999 third quarter, and increased $1,609,000 or 55%
for the nine months ended September 30, 2000 over the comparable prior year
period due primarily to increased borrowings used to finance additional
investments during 1999 and 2000 and from an increase in the average cost of
borrowings. Depreciation and amortization expense increased $179,000 or 19% for
the three months ended September 30, 2000 and $475,000 or 17% for the nine
months ended September 30, 2000 compared to the comparable prior year periods
due primarily to the depreciation expense related to the fourth quarter, 1999
and first and third quarter, 2000 acquisitions.
Other operating expenses increased $355,000 during the third quarter of 2000 and
increased $735,000 during the 2000 nine month period as compared to the
comparable prior year periods. Included in the Trust's other operating expenses
were the expenses related to the medical office buildings in which the Trust has
a controlling ownership interest which totaled $511,000 and $249,000 for the
three month periods ended September 30, 2000 and 1999, respectively, and
$1,549,000 and $732,000 for the nine month periods ended September 30, 2000 and
1999, respectively. A portion of the expenses associated with the medical
office buildings are passed on directly to the tenants and are included as
revenues in the Trust's statements of income.
Included in the Trust's financial results was $719,000 and $622,000 for the
three months ended September 30, 2000 and 1999, respectively, and $2,190,000 and
$1,868,000 for the nine months ended September 30, 2000 and 1999, respectively,
of income generated from the Trust's ownership in limited liability companies
which own medical office buildings in Arizona, California, Kentucky, New Mexico
and Nevada.
During the third quarter of 1999, the Trust sold the real estate assets of
Lakeshore Hospital for net cash proceeds of $998,000. Since the book value of
this facility was reduced to zero in a prior year, the net cash proceeds
received were recorded as a gain and netted against the provision for investment
loss recorded during the third quarter of 1999. Also during the third quarter
of 1999, a provision for investment loss of $2.6 million was recorded on
Meridell Achievement Center, Inc., a behavioral health services facility
operated by, and leased to, a wholly-owned subsidiary of UHS, pursuant to the
terms of a lease that expires in December of 2000. In measuring the provision
for investment loss at that time, the Trust estimated fair value by discounting
(using the Trust's internal hurdle rate) expected future cash flows, consisting
of estimated future rental payments and residual value. During the second
quarter of 2000, the wholly-owned subsidiary of UHS exercised its option
pursuant to the lease to purchase the leased property upon the December 31, 2000
expiration of the initial lease. Pursuant to the terms of the lease agreement,
three appraisals were obtained to determine the fair market value of the
property and accordingly, the sale price was determined to be $5,450,000 which
will result in a gain of approximately $1.8 million that will be recorded at the
time of sale.
Page Eleven of Fifteen Pages
<PAGE>
Funds from operations ("FFO"), which is the sum of net income plus depreciation
expense for consolidated investments and unconsolidated investments,
amortization of interest rate cap expense and net provision for investment
losses, totaled $5.8 million and $5.4 million for the three months ended
September 30, 2000 and 1999, respectively, and $17.0 million and $16.2 million
for the nine months ended September 30, 2000 and 1999, respectively. FFO may not
be calculated in the same manner for all companies, and accordingly, FFO as
presented above may not be comparable to similarly titled measures by other
companies. FFO does not represent cash flows from operations as defined by
generally accepted accounting principles and should not be considered as an
alternative to net income as an indicator of the Trust's operating performance
or to cash flows as a measure of liquidity.
Liquidity and Capital Resources
-------------------------------
Net cash provided by operating activities was $14.9 million for the nine months
ended September 30, 2000 and $14.8 million for the nine months ended September
30, 1999. The $104,000 net favorable change during the first nine months of 2000
as compared to the comparable prior year period was primarily attributable to:
(i) a $407,000 favorable change in net income plus the addback of the non-cash
charges (depreciation, amortization, amortization of interest rate cap expense
and provision for investment losses, net); (ii) a $198,000 favorable change in
accrued expenses and other liabilities; (iii) a $287,000 unfavorable change in
other assets, and; (iv) $214,000 of other net unfavorable changes.
During the first nine months of 2000, the $15.8 million of cash generated from
operating activities, including the cash distributions received from the various
LLCs in which the Trust owns a non-controlling interest and the $9.6 million of
additional borrowings were used primarily to: (i) purchase a medical office
building located in Danbury, Connecticut ($6.4 million); (ii) purchase a 95%
equity interest in a limited liability company that owns and operates Skypark
Professional Medical Building located in Torrance, California ($1.8 million);
(iii) purchase a 98% equity interest in a limited liability company that owns
and operates the Centinella Medical Building Complex located in Inglewood,
California ($2.0 million); (iv) finance construction of the Southern Crescent II
Medical Office Building, which was completed and opened during the third quarter
of 2000, and capital expenditures ($2.8 million), and; (v) pay dividends ($12.4
million).
During the first nine months of 1999, the $15.7 million of cash generated from
operating activities, including the cash distributions received from the various
LLCs in which the Trust owns a non-controlling interest, the $10.0 million of
cash received for the repayments of three short-term loans advanced to separate
LLCs during 1998, the $998,000 proceeds recorded from the sale of Lakeshore
Hospital and the $335,000 reduction in cash were used primarily to: (i) purchase
a 95% equity interest in a limited liability company that owns the Santa Fe
Professional Plaza located in Scottsdale, Arizona ($1.2 million); (ii) purchase
a 98% equity interest in a limited liability company that owns the Summerlin
Hospital Medical Office Building located in Las Vegas, Nevada ($5.0 million);
(iii) purchase a 75% equity interest in a limited liability company that owns
the East Mesa Medical Center located in Mesa, Arizona ($1.6 million); (iv)
invest additional capital in existing LLCs ($1.0 million); (v) repay debt ($5.9
million); (vi) finance capital expenditures ($366,000), and; (vii) pay dividends
($12.1 million).
Page Twelve of Fifteen Pages
<PAGE>
As of September 30, 2000, the Trust had approximately $17 million of unused
borrowing capacity under the terms of its $100 million revolving credit
agreement. The agreement expires on June 24, 2003, at which time all amounts
then outstanding are required to be repaid. During the first quarter of 2000,
the Board of Trustees approved a stock repurchase program under which the Trust
is authorized to purchase up to 500,000 shares, or approximately 6%, of its
outstanding stock. Pursuant to the terms of this program, the Trust repurchased
a total of 12,200 shares at an average repurchase price of $14.82 per share
($181,000 in the aggregate) as of September 30, 2000.
Page Thirteen of Fifteen Pages
<PAGE>
PART II. OTHER INFORMATION
UNIVERSAL HEALTH REALTY INCOME TRUST
Item 3. Quantitative and Qualitative Disclosures About Market Risk
-------------------------------------------------------------------
There have been no material changes in quantitative and qualitative disclosures
in 2000. Reference is made to Item 7 in the Annual Report on Form 10-K for the
year ended December 31, 1999.
Item 6. Exhibits and Reports on Form 8-K
----------------------------------------
(a) Exhibits:
27. Financial Data Schedule
All other items of this report are inapplicable.
Page Fourteen of Fifteen Pages
<PAGE>
Signatures
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 thereunto duly authorized.
Date: November 13, 2000 UNIVERSAL HEALTH REALTY INCOME TRUST
(Registrant)
/s/ Kirk E. Gorman
---------------------------------------
Kirk E. Gorman, President,
Chief Financial Officer, Secretary and
Trustee
(Principal Financial Officer and Duly
Authorized Officer.)
Page Fifteen of Fifteen Pages
