Earnings

Universal Health Realty's Third-Quarter FFO Stalls

The Tip Desk · November 10, 2026 · 2 min read

Funds from operations were $12.3 million, or $.88 a share, as net income rose to $4.9 million, or $.35 a share.

Universal Health Realty Income Trust (UHT) reported funds from operations of $12.3 million, or $.88 a diluted share, for the three months ended September 30, 2026, up only $53,000 from $12.2 million a year earlier and leaving per-share FFO unchanged.

Net income was $4.9 million, or $.35 a share, compared with $4.0 million, or $.29 a share, in the third quarter of 2025. The company said the $913,000, or $.06 a share, increase consisted primarily of a $901,000 net increase in income resulting from nonrecurring depreciation expense recorded in the year-ago quarter, a $287,000 interest-expense benefit from a lower average effective borrowing rate, and a $275,000 reduction from a one-time settlement and release agreement executed in the third quarter of 2025.

Total revenues were $25.3 million, essentially unchanged from $25.3 million a year earlier. Lease revenue from UHS facilities rose $54,000 to $8.4 million, and lease revenue from non-related parties rose $120,000 to $14.9 million. Other non-related-party revenue fell $156,000 to $421,000, and interest income on UHS financing leases declined $13,000 to $1.3 million.

Depreciation and amortization fell to $7.1 million from $7.9 million a year earlier, the nonrecurring item the company cited as the main driver of the net-income increase. Interest expense, net, declined to $4.5 million from $4.8 million, which the company tied to a lower average effective borrowing rate, partially offset by higher average borrowings under the credit agreement.

Bonus rental on McAllen Medical Center, a UHS acute care hospital, was $1.0 million in the third quarter of 2026 versus $895,000 a year earlier.

Sequential FFO fell to $12.3 million, or $.88 a share, from $12.5 million, or $.90 a share, in the second quarter of 2026.

The third-quarter dividend was raised to $.75 a share, or $10.4 million in the aggregate, from $.74 a share paid in the prior quarter.

As of September 30, 2026, line-of-credit borrowings were $377.7 million, leaving $97.3 million of available capacity under the $475 million credit agreement that matures September 30, 2028.

In October 2026 the company sold one of two remaining Chicago land parcels for $1.96 million net of closing and related costs, representing about 42% of remaining acreage as of September 30, 2026. It expects a gain of approximately $1.90 million in the fourth quarter of 2026.

Construction of the $34 million, 80,000-square-foot Miller Medical Plaza in Palm Beach Gardens, Florida, is now expected to be completed in December 2026. A wholly-owned UHS subsidiary has executed a 10-year master flex lease covering about 75% of rentable square feet.

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