KING OF PRUSSIA, PA — Universal Health Realty Income Trust (NYSE: UHT) reported a 23% increase in third-quarter net income, benefiting from lower interest expenses and a favorable year-over-year depreciation comparison, while its core real estate earnings remained largely unchanged.
The King of Prussia-based healthcare real estate investment trust earned $4.9 million, or 35 cents per diluted share, for the three months ended Sept. 30, 2026, compared with $4 million, or 29 cents per share, a year earlier.
Funds from operations, a closely watched measure of real estate investment trust performance, increased $53,000 to $12.3 million. FFO per diluted share held steady at 88 cents.
The difference between reported profit growth and relatively flat FFO reflects the impact of depreciation accounting on the company’s results.
Approximately $901,000 of the quarterly earnings improvement resulted primarily from nonrecurring depreciation expense recorded during the third quarter of 2025.
Lower interest expenses contributed another $287,000 as the company’s average effective borrowing rate declined, partially offset by higher average borrowings under its credit agreement.
Those gains were reduced by the absence of a $275,000 benefit associated with a settlement and release agreement involving a medical office building in the prior-year quarter.
For the first nine months of 2026, net income rose to $15.9 million, or $1.14 per diluted share, from $13.3 million, or 96 cents per share, during the comparable 2025 period.
Excluding a $724,000 gain from a Chicago land sale, adjusted net income totaled $15.1 million, or $1.09 per diluted share.
Nine-month FFO increased to $37.1 million, or $2.67 per diluted share, from $35.9 million, or $2.59 per share, a year earlier.
The company attributed the improvement in adjusted earnings to increased income at several properties and lower financing costs. Reduced interest expense contributed $773,000 over the nine-month period.
Universal Health Realty also continued to manage its capital resources while advancing development projects.
As of Sept. 30, the trust had $377.7 million outstanding under its $475 million credit agreement, leaving $97.3 million in available borrowing capacity.
The agreement matures Sept. 30, 2028, with options to extend the maturity date for two additional six-month periods.
The company paid a third-quarter dividend of 75 cents per share on Sept. 30, representing an aggregate distribution of $10.4 million.
In October, Universal Health Realty sold a parcel of land in Chicago for approximately $1.96 million in net cash proceeds.
The property represented about 42% of the acreage the company still owned in Chicago at the end of September. The trust expects to recognize a gain of approximately $1.9 million from the transaction in its fourth-quarter results.
The sale followed a separate Chicago land transaction in June that generated $746,000 in net proceeds and the $724,000 gain included in the company’s nine-month earnings.
Universal Health Realty is also nearing completion of Miller Medical Plaza, an 80,000-square-foot medical office building in Palm Beach Gardens, Florida.
Construction began in February 2026, with completion expected in December. The project carries an estimated cost of $34 million.
The building is located on the campus of Alan B. Miller Medical Center, an acute care hospital owned and operated by a subsidiary of Universal Health Services that opened in May.
A Universal Health Services subsidiary has entered into a 10-year master flex lease covering approximately 75% of the medical office building’s rentable space, subject to reductions as third-party leases are executed.
The lease will begin when construction is completed.
Universal Health Realty has investments or commitments in 77 properties across 21 states, including acute care hospitals, behavioral health facilities, medical office buildings, specialty healthcare properties and freestanding emergency departments.
The trust identified potential Medicaid funding reductions, healthcare staffing costs, reimbursement pressures and borrowing rates among the factors that could affect future results.
Its third-quarter performance reflected improved reported profitability and lower financing costs, while FFO remained nearly unchanged from the prior year.
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