10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

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 incorporation or organization)	(I. R. S. Employer Identification No.)
UNIVERSAL CORPORATE CENTER 367 SOUTH GULPH ROAD KING OF PRUSSIA, Pennsylvania	19406-0958
(Address of principal executive offices)	(Zip Code)

(610) 265-0688

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Shares of beneficial interest, $0.01 par value	UHT	New York Stock Exchange

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated Filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of common shares of beneficial interest outstanding at July 31, 2023—13,822,102

UNIVERSAL HEALTH REALTY INCOME TRUST

INDEX

		PAGE NO.
PART I. FINANCIAL INFORMATION (unaudited)
Item 1.	Financial Statements
	Condensed Consolidated Statements of Income—Three and Six Months Ended June 30, 2023 and 2022	3
	Condensed Consolidated Statements of Comprehensive Income—Three and Six Months Ended June 30, 2023 and 2022	4
	Condensed Consolidated Balance Sheets—June 30, 2023 and December 31, 2022	5
	Condensed Consolidated Statements of Changes in Equity—Three and Six Months Ended June 30, 2023 and 2022	6 through 7
	Condensed Consolidated Statements of Cash Flows—Six Months Ended June 30, 2023 and 2022	8
	Notes to Condensed Consolidated Financial Statements	9 through 21
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22 through 32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32 through 34
Item 4.	Controls and Procedures	34
PART II. OTHER INFORMATION		35
Item 1A.	Risk Factors	35
Item 5.	Other Information	35
Item 6.	Exhibits	35
SIGNATURES		36

This Quarterly Report on Form 10-Q is for the quarter ended June 30, 2023. In this Quarterly Report, “we,” “us,” “our” and the “Trust” refer to Universal Health Realty Income Trust and its subsidiaries.

As disclosed in this Quarterly Report, including in Note 2 to the condensed consolidated financial statements—Relationship with Universal Health Services, Inc. (“UHS”) and Related Party Transactions, a wholly-owned subsidiary of UHS (UHS of Delaware, Inc.) serves as our Advisor pursuant to the terms of an annually renewable Advisory Agreement dated December 24, 1986, and as amended and restated as of January 1, 2019. The Advisory Agreement expires on December 31 of each year, however, it is renewable by us, subject to a determination by our Trustees who are unaffiliated with UHS, that the Advisor’s performance has been satisfactory. The Advisory Agreement was renewed for 2023 with the same terms as the Advisory Agreement in place during 2022 and 2021. Our officers are all employees of UHS through its wholly-owned subsidiary, UHS of Delaware, Inc. In addition, five of our hospital facilities are leased to wholly-owned subsidiaries of UHS, one of our hospital facilities is leased to a joint venture between a wholly-owned subsidiary of UHS and a third party, and subsidiaries of UHS are tenants of twenty medical office or general office buildings (including one newly constructed medical office building that was substantially completed during the first quarter of 2023) or free-standing emergency departments, that are either wholly or jointly-owned by us. Any reference to “UHS” or “UHS facilities” in this report is referring to Universal Health Services, Inc.’s subsidiaries, including UHS of Delaware, Inc.

In this Quarterly Report, the term “revenues” does not include the revenues of the unconsolidated limited liability companies (“LLCs”) in which we have various non-controlling equity interests ranging from 33% to 95%. As of June 30, 2023, we had investments in four jointly-owned LLCs/LPs. We currently account for our share of the income/loss from these investments by the equity method (see Note 5 to the condensed consolidated financial statements included herein).

2

Part I. Financial Information

Item I. Financial Statements

Universal Health Realty Income Trust

Condensed Consolidated Statements of Income

For the Three and Six Months Ended June 30, 2023 and 2022

(amounts in thousands, except per share information)

(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Revenues:
Lease revenue - UHS facilities (a.)	$	8,236		$	7,394		$	16,023		$	14,820
Lease revenue - Non-related parties		13,668			12,933			27,029			25,828
Other revenue - UHS facilities		245			233			476			462
Other revenue - Non-related parties		292			242			773			497
Interest income on financing leases - UHS facilities		1,365			1,369			2,731			2,739
		23,806			22,171			47,032			44,346
Expenses:
Depreciation and amortization		6,849			6,679			13,467			13,388
Advisory fees to UHS		1,323			1,266			2,625			2,490
Other operating expenses		8,250			6,986			15,771			13,853
		16,422			14,931			31,863			29,731
Income before equity in income of unconsolidated limited liability companies ("LLCs") and interest expense		7,384			7,240			15,169			14,615
Equity in income of unconsolidated LLCs		268			345			639			597
Interest expense, net		(4,176	)		(2,367	)		(7,873	)		(4,589	)
Net income	$	3,476		$	5,218		$	7,935		$	10,623
Basic earnings per share	$	0.25		$	0.38		$	0.58		$	0.77
Diluted earnings per share	$	0.25		$	0.38		$	0.57		$	0.77
Weighted average number of shares outstanding - Basic		13,784			13,768			13,781			13,766
Weighted average number of shares outstanding - Diluted		13,809			13,789			13,806			13,788

(a.) Includes bonus rental on McAllen Medical Center, a UHS acute care hospital facility of $730 and $643 for the three-month periods ended June 30, 2023 and 2022, respectively, and $1,495 and $1,321 for the six-month periods ended June 30, 2023 and 2022, respectively.

See accompanying notes to these condensed consolidated financial statements.

3

Universal Health Realty Income Trust

Condensed Consolidated Statements of Comprehensive Income

For the Three and Six Months Ended June 30, 2023 and 2022

(amounts in thousands)

(unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023			2022
Net income	$	3,476	$	5,218	$	7,935		$	10,623
Other comprehensive gain/(loss):
Unrealized derivative gain/(loss) on cash flow hedges		715		2,005		(1,032	)		7,689
Total other comprehensive gain/(loss):		715		2,005		(1,032	)		7,689
Total comprehensive income	$	4,191	$	7,223	$	6,903		$	18,312

See accompanying notes to these condensed consolidated financial statements.

4

Universal Health Realty Income Trust

Condensed Consolidated Balance Sheets

(amounts in thousands, except share information)

(unaudited)

	June 30,			December 31,
	2023			2022
Assets:
Real Estate Investments:
Buildings and improvements and construction in progress	$	642,619		$	641,338
Accumulated depreciation		(252,365	)		(248,772	)
		390,254			392,566
Land		56,631			56,631
Net Real Estate Investments		446,885			449,197
Financing receivable from UHS		83,444			83,603
Net Real Estate Investments and Financing receivable		530,329			532,800
Investments in and advances to limited liability companies ("LLCs")		9,296			9,282
Other Assets:
Cash and cash equivalents		9,459			7,614
Lease and other receivables from UHS		5,944			5,388
Lease receivable - other		8,379			8,445
Intangible assets (net of accumulated amortization of $13.1 million and    $15.4 million, respectively)		8,343			9,447
Right-of-use land assets, net		11,010			11,457
Deferred charges and other assets, net		20,203			23,107
Total Assets	$	602,963		$	607,540
Liabilities:
Line of credit borrowings	$	311,400		$	298,100
Mortgage notes payable, non-recourse to us, net		39,741			44,725
Accrued interest		335			373
Accrued expenses and other liabilities		12,531			12,873
Ground lease liabilities, net		11,010			11,457
Tenant reserves, deposits and deferred and prepaid rents		11,311			10,911
Total Liabilities		386,328			378,439
Equity:
Preferred shares of beneficial interest,    $.01 par value; 5,000,000 shares authorized;    none issued and outstanding		-			-
Common shares, $.01 par value;    95,000,000 shares authorized; issued and outstanding: 2023 - 13,822,027;    2022 - 13,803,335		138			138
Capital in excess of par value		269,923			269,472
Cumulative net income		818,596			810,661
Cumulative dividends		(883,001	)		(863,181	)
Accumulated other comprehensive income		10,979			12,011
Total Equity		216,635			229,101
Total Liabilities and Equity	$	602,963		$	607,540

See accompanying notes to these condensed consolidated financial statements.

5

Universal Health Realty Income Trust

Condensed Consolidated Statements of Changes in Equity

For the Six Months Ended June 30, 2023

(amounts in thousands)

(unaudited)

	Common Shares
					Capital in							Accumulated other
	Number				excess of		Cumulative		Cumulative			comprehensive			Total
	of Shares		Amount		par value		net income		dividends			income/(loss)			Equity
January 1, 2023		13,803	$	138	$	269,472	$	810,661	$	(863,181	)	$	12,011		$	229,101
Shares of Beneficial Interest:
Issued, net		19		—		75		—		—			—			75
Repurchased						—										-
Restricted stock-based compensation expense		—		—		376		—		—			—			376
Dividends and dividend equivalents ($1.435/share)		—		—		—		—		(19,820	)		—			(19,820	)
Comprehensive income:
Net income		—		—		—		7,935		—			—			7,935
Unrealized net loss on cash flow hedges		—		—		—		—		—			(1,032	)		(1,032	)
Subtotal - comprehensive income								7,935					(1,032	)		6,903
June 30, 2023		13,822	$	138	$	269,923	$	818,596	$	(883,001	)	$	10,979		$	216,635

Universal Health Realty Income Trust

Condensed Consolidated Statements of Changes in Equity

For the Three Months Ended June 30, 2023

(amounts in thousands)

(unaudited)

	Common Shares
					Capital in							Accumulated other
	Number				excess of		Cumulative		Cumulative			comprehensive		Total
	of Shares		Amount		par value		net income		dividends			income/(loss)		Equity
April 1, 2023		13,804	$	138	$	269,698	$	815,120	$	(873,050	)	$	10,264	$	222,170
Shares of Beneficial Interest:
Issued, net		18		—		37		—		—			—		37
Repurchased						—									-
Restricted stock-based compensation expense		—		—		188		—		—			—		188
Dividends and dividend equivalents ($.72/share)		—		—		—		—		(9,951	)		—		(9,951	)
Comprehensive income:
Net income		—		—		—		3,476		—			—		3,476
Unrealized net gain on cash flow hedges		—		—		—		—		—			715		715
Subtotal - comprehensive income								3,476					715		4,191
June 30, 2023		13,822	$	138	$	269,923	$	818,596	$	(883,001	)	$	10,979	$	216,635

See accompanying notes to these condensed consolidated financial statements.

6

Universal Health Realty Income Trust

Condensed Consolidated Statements of Changes in Equity

For the Six Months Ended June 30, 2022

(amounts in thousands)

(unaudited)

	Common Shares
					Capital in							Accumulated other
	Number				excess of		Cumulative		Cumulative			comprehensive		Total
	of Shares		Amount		par value		net income		dividends			income/(loss)		Equity
January 1, 2022		13,785	$	138	$	268,515	$	789,559	$	(823,998	)	$	1,113	$	235,327
Shares of Beneficial Interest:
Issued, net		16		—		93		—		—			—		93
Repurchased						—									-
Restricted stock-based compensation expense		—		—		431		—		—			—		431
Dividends and dividend equivalents ($1.415/share)		—		—		—		—		(19,517	)		—		(19,517	)
Comprehensive income:
Net income		—		—		—		10,623		—			—		10,623
Unrealized net gain on cash flow hedges		—		—		—		—		—			7,689		7,689
Subtotal - comprehensive income								10,623					7,689		18,312
June 30, 2022		13,801	$	138	$	269,039	$	800,182	$	(843,515	)	$	8,802	$	234,646

Universal Health Realty Income Trust

Condensed Consolidated Statements of Changes in Equity

For the Three Months Ended June 30, 2022

(amounts in thousands)

(unaudited)

	Common Shares
					Capital in							Accumulated other
	Number				excess of		Cumulative		Cumulative			comprehensive		Total
	of Shares		Amount		par value		net income		dividends			income/(loss)		Equity
April 1, 2022		13,786	$	138	$	268,792	$	794,964	$	(833,717	)	$	6,797	$	236,974
Shares of Beneficial Interest:
Issued, net		15		—		39		—		—			—		39
Repurchased						—									-
Restricted stock-based compensation expense		—		—		208		—		—			—		208
Dividends and dividend equivalents ($.71/share)		—		—		—		—		(9,798	)		—		(9,798	)
Comprehensive income:
Net income		—		—		—		5,218		—			—		5,218
Unrealized net gain on cash flow hedges		—		—		—		—		—			2,005		2,005
Subtotal - comprehensive income								5,218					2,005		7,223
June 30, 2022		13,801	$	138	$	269,039	$	800,182	$	(843,515	)	$	8,802	$	234,646

7

Universal Health Realty Income Trust

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)

	Six months ended June 30,
	2023			2022
Cash flows from operating activities:
Net income	$	7,935		$	10,623
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		13,467			13,388
Amortization related to above/below market leases, net		(73	)		(72	)
Amortization of debt premium		(24	)		(25	)
Amortization of deferred financing costs		347			359
Stock-based compensation expense		376			431
Changes in assets and liabilities:
Lease receivable		(490	)		(713	)
Accrued expenses and other liabilities		(618	)		273
Tenant reserves, deposits and deferred and prepaid rents		(241	)		(275	)
Accrued interest		(38	)		(23	)
Leasing costs paid		(604	)		(770	)
Other, net		2,285			1,744
Net cash provided by operating activities		22,322			24,940
Cash flows from investing activities:
Investments in LLCs		(3,869	)		-
Cash distributions from LLCs		369			391
Advance received from LLC		3,500			-
Additions to real estate investments, net		(8,789	)		(11,223	)
Deposit on real estate assets		(100	)		-
Cash paid for acquisition of properties		-			(13,620	)
Net cash paid as part of asset exchange transaction		-			(1,346	)
Net cash used in investing activities		(8,889	)		(25,798	)
Cash flows from financing activities:
Net borrowings on the line of credit		13,300			12,400
Repayments of mortgage notes payable		(4,995	)		(6,170	)
Financing costs paid		(132	)		(26	)
Dividends paid		(19,837	)		(19,545	)
Issuance of shares of beneficial interest, net		76			94
Net cash used in financing activities		(11,588	)		(13,247	)
Increase/(decrease) in cash and cash equivalents		1,845			(14,105	)
Cash and cash equivalents, beginning of period		7,614			22,504
Cash and cash equivalents, end of period	$	9,459		$	8,399
Supplemental disclosures of cash flow information:
Interest paid	$	7,736		$	4,333
Invoices accrued for construction and improvements	$	1,808		$	1,709

See accompanying notes to these condensed consolidated financial statements.

8

UNIVERSAL HEALTH REALTY INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(unaudited)

(1) General

This Quarterly Report on Form 10-Q is for the quarter ended June 30, 2023. In this Quarterly Report, “we,” “us,” “our” and the “Trust” refer to Universal Health Realty Income Trust and its subsidiaries.

In this Quarterly Report on Form 10-Q, the term “revenues” does not include the revenues of the unconsolidated LLCs in which we have various non-controlling equity interests ranging from 33% to 95%. As of June 30, 2023, we had investments in four jointly-owned LLCs/LPs. We currently account for our share of the income/loss from these investments by the equity method (see Note 5).

The condensed consolidated financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the SEC and reflect all normal and recurring adjustments which, in our opinion, 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 in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations, although we believe that the accompanying disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements, the notes thereto and accounting policies included in our Annual Report on Form 10-K for the year ended December 31, 2022.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes.

(2) Relationship with Universal Health Services, Inc. (“UHS”) and Related Party Transactions

Leases: We commenced operations in 1986 by purchasing certain properties from subsidiaries of UHS and immediately leasing the properties back to the respective subsidiaries. The base rentals and lease and renewal terms for each of the hospitals leased to subsidiaries of UHS as of June 30, 2023, are provided below. The base rents are paid monthly. The lease on McAllen Medical Center also provides for bonus rent which is paid quarterly based upon a computation that compares the hospital’s current quarter revenue to a corresponding quarter in the base year. The hospital leases with subsidiaries of UHS, with the exception of the lease on Clive Behavioral Health Hospital (which is operated by UHS in a joint venture with an unrelated third party), are unconditionally guaranteed by UHS and are cross-defaulted with one another. The lease for the Clive facility is guaranteed on a several basis by UHS (52%) and Catholic Health Initiatives-Iowa (48%).

The combined revenues generated from the leases on the three acute care and three behavioral health care hospital facilities leased to subsidiaries of UHS at June 30, 2023, accounted for approximately 25% and 24% of our consolidated revenues for the three months ended June 30, 2023 and 2022, respectively, and approximately 25% of our consolidated revenues for each of the six months ended June 30, 2023 and 2022. In addition to the six UHS hospital facilities, we have twenty properties consisting of medical office buildings ("MOBs"), including one newly constructed MOB that was substantially completed during the first quarter of 2023, and FEDs that are either wholly or jointly-owned by us that include, or will include, tenants which are subsidiaries of UHS. The aggregate revenues generated from UHS-related tenants comprised approximately 41% of our consolidated revenues during each of the three and six-month periods ended June 30, 2023 and 2022.

On December 31, 2021, we entered into an asset purchase and sale agreement with UHS and certain of its affiliates, which was amended during the first quarter of 2022, pursuant to the terms of which:

•a wholly-owned subsidiary of UHS purchased from us, the real estate assets of the Inland Valley Campus of Southwest Healthcare System located in Wildomar, California, at its fair market value of $79.6 million.

•two wholly-owned subsidiaries of UHS transferred to us, the real estate assets of the following properties:

oAiken Regional Medical Center, (“Aiken”), located in Aiken, South Carolina (which includes an acute care hospital and a behavioral health pavilion), at its fair-market value of approximately $57.7 million, and;

oCanyon Creek Behavioral Health (“Canyon Creek”), located in Temple, Texas, at its fair-market value of approximately $26.0 million.

•in connection with this transaction, since the fair-market value of Aiken and Canyon Creek, which totaled approximately $83.7 million in the aggregate, exceeded the $79.6 million fair-market value of the Inland Valley Campus of Southwest Healthcare System, we paid approximately $4.1 million in cash to UHS. As we no longer have a controlling interest in

9

Inland Valley Campus of Southwest Healthcare System, the transaction generated a gain of approximately $68.4 million which was included in our consolidated statement of income for the year ended December 31, 2021.

As a result of UHS’ purchase option within the lease agreements of Aiken and Canyon Creek, the transaction is accounted for as a failed sale leaseback in accordance with U.S. GAAP and the properties acquired by us in connection with the asset purchase and sale agreement with UHS, as amended, were accounted for as financing arrangements and our consolidated balance sheets as of June 30, 2023 and December 31, 2022 include financing receivables related to this transaction of $83.4 million and $83.6 million, respectively. Additionally, we structured the purchase and sale of the above-mentioned properties as a like-kind exchange of property under the provisions of Section 1031 of the Internal Revenue Code of 1986, as amended.

Also on December 31, 2021, Aiken and Canyon Creek (as lessees), entered into a master lease and individual property leases as amended, (with us as lessor), for initial lease terms on each property of approximately twelve years, ending on December 31, 2033. Subject to the terms of the master lease, Aiken and Canyon Creek have the right to renew their leases, at the then current fair market rent (as defined in the master lease), for seven, five-year optional renewal terms. Pursuant to the leases, as amended during the first quarter of 2022, the aggregate annual rental rate during 2023 on the acquired properties, which is payable to us on a monthly basis, is approximately $5.8 million ($4.0 million related to Aiken and $1.8 million related to Canyon Creek). The portion of the lease payments that is included in our consolidated statements of income, and reflected as interest income on financing leases, was approximately $1.4 million for each of the three months ended June 30, 2023 and 2022, and approximately $2.7 million for each of the six-month periods ended June 30, 2023 and 2022. There is no bonus rental component applicable to either of these leases.

Pursuant to the terms of the master leases by and among us and certain subsidiaries of UHS, dated December 24, 1986 and December 31, 2021 (the “Master Leases”), which govern the leases of McAllen Medical Center, Wellington Regional Medical Center (governed by the Master Lease dated December 24, 1986), Aiken Regional Medical Center and Canyon Creek Behavioral Health (governed by the Master Lease dated December 31, 2021, as amended), all of which are hospital properties that are wholly-owned subsidiaries of UHS, UHS has the option, among other things, to renew the leases at the lease terms described below by providing notice to us at least 90 days prior to the termination of the then current term. UHS also has the right to purchase the respective leased facilities from us at their appraised fair market value upon any of the following: (i) at the end of the lease terms or any renewal terms; (ii) upon one month’s notice should a change of control of the Trust occur, or; (iii) within the time period as specified in the leases in the event that UHS provides notice to us of their intent to offer a substitution property/properties in exchange for one (or more) of the four wholly-owned UHS hospital facilities leased from us, should we be unable to reach an agreement with UHS on the properties to be substituted. Additionally, UHS has rights of first refusal to: (i) purchase the respective leased facilities during and for a specified period after the lease terms 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 a specified period after, the lease term at the same terms and conditions pursuant to any third-party offer.

In addition, a wholly-owned subsidiary of UHS is the managing, majority member in a joint-venture with an unrelated third-party that operates, and leases from us, Clive Behavioral Health. This 100-bed behavioral health care facility is located in Clive, Iowa and was completed and opened in late December, 2020 and the hospital lease commenced on December 31, 2020. The lease on this facility is triple net and has an initial term of 20 years with five 10-year renewal options. On each January 1st through 2040 (and potentially through 2070 if the first three of five, 10-year renewal options are exercised), the annual rental will increase by 2.75% on a cumulative and compounded basis. The first three of the five 10-year renewal options will provide for annual rental as stipulated in the lease (2041 through 2070) and the two additional 10-year lease renewal options will be at fair market value lease rates (2071 through 2090). Pursuant to the lease on this facility, the joint venture has the option to, among other things, renew the lease at the terms specified in the lease agreement by providing notice to us at least 270 days prior to the termination of the then current term. The joint venture also has the right to purchase the leased facility from us at its appraised fair market value upon either of the following: (i) by providing notice at least 270 days prior to the end of the lease terms or any renewal terms, or; (ii) upon 30 days’ notice anytime within 12 months of a change of control of the Trust (UHS also has this right should the joint venture decline to exercise its purchase right). Additionally, the joint venture has rights of first offer to purchase the facility prior to any third-party sale.

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The table below details the existing lease terms and renewal options for each of the hospital leases that are related to UHS as of June 30, 2023, consisting of three acute care hospitals and three behavioral health hospitals:

Hospital Name	Annual Minimum Rent		End of Lease Term	Renewal Term (years)
McAllen Medical Center	$	5,485,000	December, 2026		5	(a)
Wellington Regional Medical Center	$	6,477,000	December, 2026		5	(b)
Aiken Regional Medical Center/Aurora Pavilion Behavioral Health Services	$	3,982,000	December, 2033		35	(c)
Canyon Creek Behavioral Health	$	1,800,000	December, 2033		35	(c)
Clive Behavioral Health Hospital	$	2,701,000	December, 2040		50	(d)

(a)UHS has one 5-year renewal option at existing lease rates (through 2031).

(b)UHS has one 5-year renewal option at fair market value lease rates (through 2031; see additional disclosure below). The annual rental will increase by 2.5% on an annual compounded basis on each January 1st through 2026.

(c)UHS has seven 5-year renewal options at fair market value lease rates (2034 through 2068). The annual rental rate will increase by 2.25% on a cumulative and compounded basis on each January 1st through 2033.

(d)The UHS-related joint venture has five 10-year renewal options; the first three of the five 10-year renewal options will be at computed lease rates as stipulated in the lease (2041 through 2070) and the last two 10-year renewal options will be at fair market lease rates (2071 through 2090). On each January 1st through 2040 (and potentially through 2070 if the first three of five, 10-year renewal options are exercised), the annual rental will increase by 2.75% on a cumulative and compounded basis.

Upon the December 31, 2021 expiration of the lease on Wellington Regional Medical Center located in West Palm Beach, Florida, a wholly-owned subsidiary of UHS exercised its fair market value renewal option and renewed the lease for a 5-year term scheduled to expire on December 31, 2026. Effective January 1, 2023, the annual lease rate for this hospital, which is payable to us monthly, is $6.5 million (there is no bonus rental component of the lease payment).

Management cannot predict whether the leases with wholly-owned subsidiaries of UHS, which have renewal options at existing lease rates or fair market value lease rates, or any of our other leases, will be renewed at the end of their lease term. If the leases are not renewed at their current rates or the fair market value lease rates, we would be required to find other operators for those facilities and/or enter into leases on terms potentially less favorable to us than the current leases. In addition, if subsidiaries of UHS exercise their options to purchase the respective leased hospital or FED facilities upon expiration of the lease terms, our future revenues could decrease if we were unable to earn a favorable rate of return on the sale proceeds received, as compared to the rental revenue currently earned pursuant to these leases.

During the first quarter of 2023, construction was substantially completed on Sierra Medical Plaza I, a multi-tenant MOB located in Reno, Nevada, consisting of approximately 86,000 rentable square feet. This MOB is located on the campus of the Northern Nevada Sierra Medical Center, a newly constructed acute care hospital that is owned and operated by a wholly-owned subsidiary of UHS, which was completed and opened during April of 2022. The cost of the MOB is estimated to be approximately $35 million, approximately $24 million of which was incurred as of June 30, 2023. In connection with this MOB, we entered into a ground lease and master flex-lease agreement with a wholly-owned subsidiary of UHS. The master flex lease agreement has a ten-year term scheduled to expire on March 31, 2033, and covers approximately 68% of the rentable square feet of the MOB at an initial minimum rent of $1.3 million annually plus a pro-rata share of the common area maintenance expenses. The master flex-lease is subject to a reduction during the term based upon the execution of third-party leases. The ground lease and the master flex lease each commenced during March, 2023.

During the fourth quarter of 2021, we purchased the 5% minority ownership interest held by a third-party member in Grayson Properties, LP which owns the Texoma Medical Plaza, an MOB located in Denison, Texas for approximately $3.1 million. The MOB is located on the campus of Texoma Medical Center, a hospital that is owned and operated by a wholly-owned subsidiary of UHS. A third-party appraisal was completed to determine the fair value of the property. As a result of this minority ownership purchase during the fourth quarter of 2021, we own 100% of the LP and are therefore consolidating this LP effective with the purchase date. There was no material impact on our net income as a result of the consolidation of this LP subsequent to the transaction. Please see Note 5 for additional disclosure surrounding this transaction.

In May, 2021, we acquired the Fire Mesa office building located in Las Vegas, Nevada for a purchase price of approximately $12.9 million. The building is 100% leased under the terms of a triple net lease by a wholly-owned subsidiary of UHS. The initial lease is scheduled to expire on August 31, 2027 and has two five-year renewal options. The acquisition of this office building was part of a series of planned tax deferred like-kind exchange transactions pursuant to Section 1031 of the Internal Revenue Code, as amended.

We are the lessee on thirteen ground leases with subsidiaries of UHS (for consolidated and unconsolidated investments), including one that commenced in March, 2023. The remaining lease terms on the ground leases with subsidiaries of UHS range from approximately

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26 years to approximately 75 years. The annual aggregate lease payments on these properties are approximately $563,000 during each of the years ended 2023 through 2027, and an aggregate of $31.4 million thereafter. See Note 7 for additional lease accounting disclosure.

Officers and Employees: Our officers are all employees of a wholly-owned subsidiary of UHS and although as of June 30, 2023 we had no salaried employees, our officers do typically receive annual stock-based compensation awards in the form of restricted stock. In special circumstances, if warranted and deemed appropriate by the Compensation Committee of the Board of Trustees, our officers may also receive one-time special compensation awards in the form of restricted stock and/or cash bonuses.

Advisory Agreement: UHS of Delaware, Inc. (the “Advisor”), a wholly-owned subsidiary of UHS, serves as Advisor to us under an advisory agreement dated December 24, 1986, and as amended and restated as of January 1, 2019 (the “Advisory Agreement”). Pursuant to the Advisory Agreement, the Advisor is obligated to present an investment program to us, to use its best efforts to obtain investments suitable for such program (although it is not obligated to present any particular investment opportunity to us), to provide administrative services to us and to conduct our day-to-day affairs. All transactions between us and UHS must be approved by the Trustees who are unaffiliated with UHS (the “Independent Trustees”). In performing its services under the Advisory Agreement, the Advisor may utilize independent professional services, including accounting, legal, tax and other services, for which the Advisor is reimbursed directly by us. The Advisory Agreement may be terminated for any reason upon sixty days written notice by us or the Advisor. The Advisory Agreement expires on December 31 of each year; however, it is renewable by us, subject to a determination by the Independent Trustees, that the Advisor’s performance has been satisfactory. The Advisory Agreement was renewed for 2023 with the same terms as the Advisory Agreement in place during 2022 and 2021.

Our advisory fee for the three and six months ended June 30, 2023 and 2022, was computed at 0.70% of our average invested real estate assets, as derived from our condensed consolidated balance sheets. Based upon a review of our advisory fee and other general and administrative expenses, as compared to an industry peer group, the advisory fee computation remained unchanged for 2023, as compared to the last three years. The average real estate assets for advisory fee calculation purposes exclude certain items from our condensed consolidated balance sheet such as, among other things, accumulated depreciation, cash and cash equivalents, lease receivables, deferred charges and other assets. The advisory fee is payable quarterly, subject to adjustment at year-end based upon our audited financial statements. Advisory fees incurred and paid (or payable) to UHS amounted to approximately $1.3 million for each of the three-month periods ended June 30, 2023 and 2022, and were based upon average invested real estate assets of $756 million and $723 million, respectively. Advisory fees incurred and paid (or payable) to UHS amounted to approximately $2.6 million and $2.5 million for the six-month periods ended June 30, 2023 and 2022, respectively, and were based upon average invested real estate assets of $750 million and $711 million, respectively.

Share Ownership: As of June 30, 2023 and December 31, 2022, UHS owned 5.7% of our outstanding shares of beneficial interest.

SEC reporting requirements of UHS: UHS is subject to the reporting requirements of the SEC and is required to file annual reports containing audited financial information and quarterly reports containing unaudited financial information. Since the aggregate revenues generated from the UHS-related tenants comprised approximately 41% of our consolidated revenues during each of the three and six-month periods ended June 30, 2023 and 2022, and since a subsidiary of UHS is our Advisor, you are encouraged to obtain the publicly available filings for Universal Health Services, Inc. from the SEC’s website. These filings are the sole responsibility of UHS and are not incorporated by reference herein.

(3) Dividends and Equity Issuance Program

Dividends and dividend equivalents:

During the second quarter of 2023, we declared and paid dividends of approximately $10.0 million (including accrued dividends that were paid related to the vesting of restricted stock), or $.720 per share. We declared and paid dividends of approximately $9.8 million (including accrued dividends that were paid related to the vesting of restricted stock), or $.71 per share, during the second quarter of 2022. During the six-month period ended June 30, 2023, we declared and paid dividends of approximately $19.8 million, or $1.435 per share. During the six-month period ended June 30, 2022, we declared and paid dividends of approximately $19.5 million, or $1.415 per share. Dividend equivalents, which are applicable to shares of unvested restricted stock, were accrued during the first six months of 2023 and 2022 and will be paid upon vesting of the restricted stock.

Equity Issuance Program:

During the second quarter of 2020, we commenced an at-the-market (“ATM”) equity issuance program, pursuant to the terms of which we may sell, from time-to-time, common shares of our beneficial interest up to an aggregate sales price of $100 million to or through our agent banks. The common shares will be offered pursuant to the Registration Statement filed with the Securities and Exchange Commission, which became effective in June 2020.

No shares were issued pursuant to this ATM equity program during the first six months of 2023. Pursuant to this ATM program, since the program commenced in the second quarter of 2020, we have issued 2,704 shares at an average price of $101.30 per share, which generated approximately $270,000 of net proceeds (net of approximately $4,000, consisting of compensation to BofA Securities, Inc.).

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Additionally, as of June 30, 2023, we have paid or incurred approximately $508,000 in various fees and expenses related to the commencement of our ATM program.

(4) Acquisitions and Divestitures

Six Months Ended June 30, 2023:

New Construction:

In January 2022, we entered into a ground lease and master flex-lease agreement with a wholly-owned subsidiary of UHS to develop, construct and own the real property of Sierra Medical Plaza I, an MOB located in Reno, Nevada, consisting of approximately 86,000 rentable square feet. This MOB is located on the campus of the Northern Nevada Sierra Medical Center, a newly constructed hospital that is owned and operated by a wholly-owned subsidiary of UHS, which was completed and opened during April of 2022. Construction of this MOB, for which we engaged a non-related third party to act as construction manager, commenced in January, 2022, and was substantially completed in March, 2023. The aggregate cost of the MOB is estimated to be approximately $35 million, approximately $24 million of which was incurred as of June 30, 2023. The master flex lease agreement in connection with this building, which commenced in March, 2023 and has a ten-year term scheduled to expire on March 31, 2033, covers approximately 68% of the rentable square feet of the MOB at an initial minimum rent of $1.3 million annually, plus a pro-rata share of the common area maintenance expenses. The master flex lease agreement is subject to reduction based upon the execution of third-party leases. Additionally, the ground lease for this property commenced and a right-of-use asset and lease liability was recorded in connection with this lease during the first quarter of 2023.

Acquisitions:

There were no acquisitions during the first six months of 2023.

Divestitures:

There were no divestitures during the first six months of 2023.

Six Months Ended June 30, 2022:

Acquisitions:

During the first quarter of 2022, we completed two transactions, as described below, utilizing qualified third-party intermediaries as part of a series of planned tax-deferred like-kind exchange transactions pursuant to Section 1031 of the Internal Revenue Code, as amended.

In March, 2022, we acquired the Beaumont Heart and Vascular Center, a medical office building located in Dearborn, Michigan for a purchase price of approximately $5.4 million. The building, which has approximately 17,621 rentable square feet, is 100% leased to a single tenant under the terms of a triple-net lease that is scheduled to expire on November 30, 2026 and has lease escalations of 2.5% per year that commenced on December 1, 2022.

In January, 2022, we acquired the 140 Thomas Johnson Drive medical office building located in Frederick, Maryland for a purchase price of approximately $8.0 million. The building, which has approximately 20,146 rentable square feet, is 100% leased to three tenants under the terms of triple-net leases. Approximately 72% of the rentable square feet of this MOB is leased pursuant to a 15-year lease, with a remaining lease term of approximately 14 years at the time of purchase, with three, five-year renewal options.

Divestitures:

There were no divestitures during the first six months of 2022.

(5) Summarized Financial Information of Equity Affiliates

In accordance with U.S. GAAP and guidance relating to accounting for investments and real estate ventures, we account for our unconsolidated investments in LLCs/LPs which we do not control using the equity method of accounting. The third-party members in these investments have equal voting rights with regards to issues such as, but not limited to: (i) divestiture of property; (ii) annual budget approval, and; (iii) financing commitments. These investments, which represent 33% to 95% non-controlling ownership interests, are recorded initially at our cost and subsequently adjusted for our net equity in the net income, cash contributions to, and distributions from, the investments. Pursuant to certain agreements, allocations of sales proceeds and profits and losses of some of the LLC investments may be allocated disproportionately as compared to ownership interests after specified preferred return rate thresholds have been satisfied.

Distributions received from equity method investees in the consolidated statements of cash flows are classified based upon the nature of the distribution. Returns on investments are presented net of equity in income from unconsolidated investments as cash flows from operating activities. Returns of investments are classified as cash flows from investing activities.

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At June 30, 2023, we have non-controlling equity investments or commitments in four jointly-owned LLCs/LPs which own MOBs. As of June 30, 2023 we accounted for these LLCs/LPs on an unconsolidated basis pursuant to the equity method since they are not variable interest entities which we are the primary beneficiary nor do we have a controlling voting interest. The majority of these entities are joint-ventures between us and non-related parties that hold minority ownership interests in the entities. Each entity is generally self-sustained from a cash flow perspective and generates sufficient cash flow to meet its operating cash flow requirements and service the third-party debt (if applicable) that is non-recourse to us. Although there is typically no ongoing financial support required from us to these entities since they are cash-flow sufficient, we may, from time to time, provide funding for certain purposes such as, but not limited to, significant capital expenditures, leasehold improvements and debt financing. Although we are not obligated to do so, if approved by us at our sole discretion, additional cash funding is typically advanced as equity or member loans. These entities maintain property insurance on the properties.

During the fourth quarter of 2021, we purchased the 5% minority ownership interest, held by the third-party member in Grayson Properties, LP which owns the Texoma Medical Plaza, in which we previously held a noncontrolling majority ownership interest. As a result of this minority ownership purchase, we now own 100% of the LP and began to account for it on a consolidated basis effective November 1, 2021. Prior to November 1, 2021, the LP was accounted for on an unconsolidated basis pursuant to the equity method.

The following property table represents the four LLCs/LPs in which we owned a non-controlling interest and were accounted for under the equity method as of June 30, 2023:

Name of LLC/LP	Ownership			Property Owned by LLC/LP
Suburban Properties		33	%	St. Matthews Medical Plaza II
Brunswick Associates (a.)(b.)		74	%	Mid Coast Hospital MOB
FTX MOB Phase II (c.)		95	%	Forney Medical Plaza II
Grayson Properties II (d.)(e.)		95	%	Texoma Medical Plaza II

(a.)This LLC has a third-party term loan of $8.6 million, which is non-recourse to us, outstanding as of June 30, 2023.

(b.)We are the lessee with a third party on a ground lease for land.

(c.)During the first quarter of 2021, this LP paid off its $4.7 million mortgage loan upon maturity, utilizing pro rata equity contributions from the limited partners as well as a $3.5 million member loan from us to the LP which was funded utilizing borrowings from our revolving credit agreement. During the first quarter of 2023, the LP repaid $175,000 of the member loan and the remaining $3.3 million member loan balance was converted to an equity investment in the LP.

(d.)Construction of this MOB was substantially completed in December, 2020. This MOB is located in Denison, Texas on the campus of a hospital owned and operated by a wholly-owned subsidiary of UHS. We have committed to invest up to $5.0 million in equity and debt financing, $2.2 million of which has been funded as of June 30, 2023. This LP entered into a $13.1 million third-party construction loan commitment, which is non-recourse to us, which has an outstanding balance of $12.9 million as of June 30, 2023. Monthly principal and interest payments on this loan commenced on January 1, 2023. The LP developed, constructed, owns and operates the Texoma II Medical Plaza.

(e.)We are the lessee with a UHS-related party for the land related to this property.

Below are the condensed combined statements of income (unaudited) for the four LLCs/LPs accounted for under the equity method at June 30, 2023 and 2022:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(amounts in thousands)				(amounts in thousands)
Revenues	$	2,043	$	2,049	$	4,269	$	3,979
Operating expenses		812		737		1,717		1,463
Depreciation and amortization		461		463		916		923
Interest, net		198		269		439		531
Net income	$	572	$	580	$	1,197	$	1,062
Our share of net income	$	268	$	345	$	639	$	597

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Below are the condensed combined balance sheets (unaudited) for the four above-mentioned LLCs/LPs that were accounted for under the equity method as of June 30, 2023 and December 31, 2022:

	June 30, 2023			December 31, 2022
	(amounts in thousands)
Net property, including construction in progress	$	29,013		$	29,573
Other assets (a.)		5,331			4,334
Total assets	$	34,344		$	33,907
Other liabilities (a.)	$	2,781		$	2,338
Mortgage notes payable, non-recourse to us		21,506			21,802
Advances payable to us (b.)		-			3,500
Equity		10,057			6,267
Total liabilities and equity	$	34,344		$	33,907
Investments in and advances to LLCs before amounts included in
accrued expenses and other liabilities	$	9,296		$	9,282
Amounts included in accrued expenses and other liabilities		(1,724	)		(1,709	)
Our share of equity in LLCs, net	$	7,572		$	7,573

(a.)Other assets and other liabilities as of June 30, 2023 and December 31, 2022 include approximately $653,000 and $654,000, respectively, of right-of-use land assets and right-of-use land liabilities related to ground leases whereby the LLC/LP is the lessee, with third party lessors, including subsidiaries of UHS.

(b.)This 7.25% member loan to FTX MOB Phase II, LP had a maturity date of March 1, 2023. Upon the maturity date, the LP repaid $175,000 of the member loan to us and the remaining balance of $3.3 million was converted to an equity contribution by us.

As of June 30, 2023, and December 31, 2022, aggregate principal amounts due on mortgage notes payable by unconsolidated LLCs/LPs, which are accounted for under the equity method and are non-recourse to us, are as follows (amounts in thousands):

	Mortgage Loan Balance (a.)
Name of LLC/LP	6/30/2023		12/31/2022		Maturity Date
Brunswick Associates (2.80% fixed rate mortgage loan)	$	8,591	$	8,727	December, 2030
Grayson Properties II (3.70% fixed rate construction loan) (b.)		12,915		13,075	June, 2025
	$	21,506	$	21,802

(a.)All mortgage loans require monthly principal payments through maturity and include a balloon principal payment upon maturity.

(b.)This construction loan required interest on the outstanding principal balance to be paid on a monthly basis through December 1, 2022. On January 1, 2023, monthly principal and interest payments on this loan commenced.

Pursuant to the operating and/or partnership agreements of the four LLCs/LPs in which we continue to hold non-controlling ownership interests, the third-party member and the Trust, at any time, potentially subject to certain conditions, have the right to make an offer (“Offering Member”) to the other member(s) (“Non-Offering Member”) in which it either agrees to: (i) sell the entire ownership interest of the Offering Member to the Non-Offering Member (“Offer to Sell”) at a price as determined by the Offering Member (“Transfer Price”), or; (ii) purchase the entire ownership interest of the Non-Offering Member (“Offer to Purchase”) at the equivalent proportionate Transfer Price. The Non-Offering Member has 60 to 90 days to either: (i) purchase the entire ownership interest of the Offering Member at the Transfer Price, or; (ii) sell its entire ownership interest to the Offering Member at the equivalent proportionate Transfer Price. The closing of the transfer must occur within 60 to 90 days of the acceptance by the Non-Offering Member.

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(6) Recent Accounting Pronouncements

Reference Rate Reform

In March 2020, the FASB issued an accounting standard classified under FASB ASC Topic 848, “Reference Rate Reform.” The amendments in this update contain practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASC 848 is optional and may be elected over time as reference rate reform activities occur. Beginning in the first quarter of 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We will continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. In December 2022, the FASB issued ASU 2022-06, Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”) which was issued to defer the sunset date of Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform to December 31, 2024. ASU 2022-06 is effective immediately for all companies. ASU 2022-06 has no impact on the Company’s condensed consolidated financial statements for the three and six months ended June 30, 2023.

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(7) Lease Accounting

Our results for reporting periods beginning January 1, 2019 are presented under the ASC 842 lease standard. We adopted ASC 842 effective January 1, 2019 under the modified retrospective approach and elected the optional transition method to apply the provisions of ASC 842 as of the adoption date, rather than the earliest period presented. We elected to apply certain adoption related practical expedients for all leases that commenced prior to the election date. This practical expedient allowed us to not separate expenses reimbursed by our customers (“tenant reimbursements”) from the associated rental revenue if certain criteria were met.

As Lessor:

We lease most of our operating properties to customers under agreements that are typically classified as operating leases (as noted below, two of our leases are accounted for as financing arrangements effective on December 31, 2021). We recognize the total minimum lease payments provided for under the operating leases on a straight-line basis over the lease term. Generally, under the terms of our leases, the majority of our rental expenses, including common area maintenance, real estate taxes and insurance, are recovered from our customers. We record amounts reimbursed by customers in the period that the applicable expenses are incurred, which is generally ratably throughout the term of the lease. We have elected the package of practical expedients that allows lessors to not separate lease and non-lease components by class of underlying asset. This practical expedient allowed us to not separate expenses reimbursed by our customers (“tenant reimbursements”) from the associated rental revenue if certain criteria were met. We assessed these criteria and concluded that the timing and pattern of transfer for rental revenue and the associated tenant reimbursements are the same, and for the leases that qualify as operating leases, we accounted for and presented rental revenue and tenant reimbursements as a single component under Lease revenue in our consolidated statements of income for the three and six months ended June 30, 2023 and 2022.

On December 31, 2021, as a result of the asset purchase and sale transaction with UHS, as amended during the first quarter of 2022, the real estate assets of two wholly-owned subsidiaries of UHS were transferred to us (Aiken and Canyon Creek). As discussed in Note 2, these assets are accounted for as financing arrangements and our consolidated balance sheets at June 30, 2023 and December 31, 2022 reflect financing receivables related to this transaction amounting to $83.4 million and $83.6 million, respectively. Pursuant to the leases, as amended during the first quarter of 2022, the aggregate annual rental during 2023 on the acquired properties, which is payable to us on a monthly basis, amounts to approximately $5.8 million ($4.0 million related to Aiken and $1.8 million related to Canyon Creek). The portion of these lease payments that will be included in our consolidated statements of income, and reflected as interest income on financing leases, is expected to be approximately $5.5 million during the full year of 2023. Lease revenue will not be impacted by the lease payments received related to these two properties.

The components of the “Lease revenue – UHS facilities” and “Lease revenue – Non-related parties” captions for the three and six month periods ended June 30, 2023 and 2022 are disaggregated below (in thousands). Base rents are primarily stated rent amounts provided for under the leases that are recognized on a straight-line basis over the term of the lease. Bonus rents and tenant reimbursements represent amounts where tenants are contractually obligated to pay an amount that is variable in nature.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
UHS facilities:
Base rents	$	6,506	$	6,112	$	12,780	$	12,201
Bonus rents (a.)		730		643		1,494		1,321
Tenant reimbursements		1,000		639		1,749		1,298
Lease revenue - UHS facilities	$	8,236	$	7,394	$	16,023	$	14,820
Non-related parties:
Base rents		10,480		10,109		20,714		20,244
Tenant reimbursements		3,188		2,824		6,315		5,584
Lease revenue - Non-related parties	$	13,668	$	12,933	$	27,029	$	25,828

(a.) Consists of bonus rental earned in connection with McAllen Medical Center.

Disclosures Related to Vacant Facilities:

Vacancies – Specialty Hospitals:

After evaluation of the most suitable future uses for a vacant specialty hospital located in Chicago, Illinois, as well as an effort to reduce its ongoing operating and maintenance expenses, we decided to raze the building. Demolition of the former specialty hospital located

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in Chicago has been substantially completed. Demolition costs were approximately $1.5 million in the aggregate, all of which have been incurred as of June 30, 2023. These demolition costs were included in other operating expenses in our consolidated statements of income during the following periods: $332,000 during the fourth quarter of 2022, $265,000 during the first quarter of 2023 and $862,000 during the second quarter of 2023.

Including the above-mentioned demolition costs incurred during the three and six-months ended June 30, 2023, the operating expenses incurred by us in connection with the property located in Chicago, Illinois, were $983,000 and $1.4 million during the three and six-months ended June 30, 2023, respectively, (or $120,000 and $272,000 during the three and six-months ended June 30, 2023, respectively, excluding the demolition costs) as compared to $347,000 and $840,000 during the three and six-month periods ended June 30, 2022, respectively.

In addition, the aggregate operating expenses for the two vacant specialty facilities located in Evansville, Indiana, and Corpus Christi, Texas, were approximately $202,000 and $197,000 during the three-month periods ended June 30, 2023 and 2022, respectively, and approximately $389,000 and $373,000 during the six-month periods ended June 30, 2023 and 2022, respectively.

We continue to market the three above-mentioned properties to third parties. Future operating expenses related to these properties, which are estimated to be approximately $1.3 million in the aggregate during the full year of 2023 (excluding the demolition costs incurred in connection with the property in Chicago, Illinois), will be incurred by us during the time they remain owned and unleased. Should these properties continue to remain owned and unleased for an extended period of time, or should we incur substantial renovation or additional demolition costs to make the properties suitable for other operators/tenants/buyers, our future results of operations could be materially unfavorably impacted.

As Lessee:

We are the lessee with various third parties, including subsidiaries of UHS, in connection with ground leases for land at fifteen of our consolidated properties. Our right-of-use land assets represent our right to use the land for the lease term and our lease liabilities represent our obligation to make lease payments arising from the leases. Right-of-use assets and lease liabilities were recognized upon adoption of Topic 842 based on the present value of lease payments over the lease term. We utilized our estimated incremental borrowing rate, which was derived from information available as of January 1, 2019, or the commencement date of the ground lease, whichever is later, in determining the present value of lease payments for active leases on that date. A right-of-use asset and lease liability are not recognized for leases with an initial term of 12 months or less, as these short-term leases are accounted for similarly to previous guidance for operating leases. We do not currently have any ground leases with an initial term of 12 months or less. As of June 30 2023, our condensed consolidated balance sheet includes right-of-use land assets of approximately $11.0 million and ground lease liabilities of approximately $11.0 million. During the first quarter of 2023, the ground lease for the newly constructed and substantially completed Sierra Medical Plaza I commenced and a right-of-use asset and lease liability was recorded in connection with this lease.

(8) Debt and Financial Instruments

Debt:

Management routinely monitors and analyzes the Trust’s capital structure in an effort to maintain the targeted balance among capital resources including the level of borrowings pursuant to our revolving credit facility, the level of borrowings pursuant to non-recourse mortgage debt secured by the real property of our properties and our level of equity including consideration of additional equity issuances pursuant to our ATM equity issuance program. This ongoing analysis considers factors such as the current debt market and interest rate environment, the current/projected occupancy and financial performance of our properties, the current loan-to-value ratio of our properties, the Trust’s current stock price, the capital resources required for anticipated acquisitions and the expected capital to be generated by anticipated divestitures. This analysis, together with consideration of the Trust’s current balance of revolving credit agreement borrowings, non-recourse mortgage borrowings and equity, assists management in deciding which capital resource to utilize when events such as refinancing of specific debt components occur or additional funds are required to finance the Trust’s growth.

On May 15, 2023 we entered into the first amendment to our amended and restated revolving credit agreement ("Credit Agreement") dated as of July 2, 2021 among the Trust as borrower, the lenders party thereto and Wells Fargo Bank, N.A., as administrative agent. The amendment replaced LIBOR rate with term SOFR plus .10% ("adjusted term SOFR") as an alternative benchmark rate for purposes under the Credit Agreement for settings of benchmark rates that occur on or after the closing date in accordance with the benchmark replacement provisions set forth in the Credit Agreement.

On July 2, 2021, we entered into an amended and restated Credit Agreement to amend and restate the previously existing $350 million credit agreement, as amended and dated June 5, 2020. Among other things, under the Credit Agreement, our aggregate revolving credit commitment was increased to $375 million from $350 million. The Credit Agreement, which is scheduled to mature on July 2, 2025, provides for a revolving credit facility in an aggregate principal amount of $375 million, including a $40 million sublimit for letters of credit and a $30 million sublimit for swingline/short-term loans. Under the terms of the Credit Agreement, we may request that the revolving line of credit be increased by up to an additional $50 million. Borrowings under the new facility are guaranteed by certain

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subsidiaries of the Trust. In addition, borrowings under the new facility are secured by first priority security interests in and liens on all equity interests in most of the Trust’s wholly-owned subsidiaries.

Borrowings under the Credit Agreement will bear interest annually at a rate equal to, at our option, at adjusted term SOFR for either one, three, or six months or the Base Rate, plus in either case, a specified margin depending on our total leverage ratio, as determined by the formula set forth in the Credit Agreement. The applicable margin prior to the first amendment ranges from 1.10% to 1.35% for LIBOR loans and 0.10% to 0.35% for Base Rate loans. The initial applicable margin after the first amendment is 1.20% for adjusted term SOFR loans and 0.20% for Base Rate loans. The Credit Agreement, as amended by the first amendment, defines “Base Rate” as the greatest of (a) the Administrative Agent’s prime rate, (b) the federal funds effective rate plus 1/2 of 1% and (c) one month adjusted term SOFR plus 1%. The Trust will also pay a quarterly revolving facility fee ranging from 0.15% to 0.35% (depending on the Trust’s total leverage ratio) on the committed amount of the Credit Agreement. The Credit Agreement also provides for options to extend the maturity date and borrowing availability for two additional six-month periods.

The margins over adjusted term SOFR, Base Rate and the facility fee are based upon our total leverage ratio. At June 30, 2023, the applicable margin over the adjusted term SOFR rate was 1.20%, the margin over the Base Rate was 0.20% and the facility fee was 0.20%.

At June 30, 2023, we had $311.4 million of outstanding borrowings and $3.1 million of letters of credit outstanding under our Credit Agreement. We had $60.5 million of available borrowing capacity, net of the outstanding borrowings and letters of credit outstanding as of June 30, 2023. There are no compensating balance requirements. At December 31, 2022, we had $298.1 million of outstanding borrowings, $3.1 million of outstanding letters of credit and $73.8 million of available borrowing capacity.

The Credit Agreement contains customary affirmative and negative covenants, including limitations on certain indebtedness, liens, acquisitions and other investments, fundamental changes, asset dispositions and dividends and other distributions. The Credit Agreement also contains restrictive covenants regarding the Trust’s ratio of total debt to total assets, the fixed charge coverage ratio, the ratio of total secured debt to total asset value, the ratio of total unsecured debt to total unencumbered asset value, and minimum tangible net worth, as well as customary events of default, the occurrence of which may trigger an acceleration of amounts then outstanding under the Credit Agreement. We are in compliance with all of the covenants in the Credit Agreement at June 30, 2023, and were in compliance with all of the covenants of the Credit Agreement at December 31, 2022. We also believe that we would remain in compliance if, based on the assumption that the majority of the potential new borrowings will be used to fund investments, the full amount of our commitment was borrowed.

The following table includes a summary of the required compliance ratios, giving effect to the covenants contained in the Credit Agreement (dollar amounts in thousands):

	Covenant		June 30, 2023			December 31, 2022
Tangible net worth	$	125,000	$	208,292		$	219,654
Total leverage	< 60%			43.9	%		42.9	%
Secured leverage	< 30%			5.0	%		5.6	%
Unencumbered leverage	< 60%			43.4	%		41.8	%
Fixed charge coverage	> 1.50x		3.6x			4.3x

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As indicated on the following table, we have various mortgages, all of which are non-recourse to us, included on our condensed consolidated balance sheet as of June 30, 2023 (amounts in thousands):

Facility Name	Outstanding Balance (in thousands) (a.)			Interest Rate			Maturity Date
2704 North Tenaya Way fixed rate mortgage loan (b.)	$	6,165			4.95	%	November, 2023
Summerlin Hospital Medical Office Building III fixed    rate mortgage loan (b.)		12,431			4.03	%	April, 2024
Tuscan Professional Building fixed rate mortgage loan		1,394			5.56	%	June, 2025
Phoenix Children’s East Valley Care Center fixed rate    mortgage loan		8,068			3.95	%	January, 2030
Rosenberg Children's Medical Plaza fixed rate mortgage loan		11,900			4.42	%	September, 2033
Total, excluding net debt premium and net financing fees		39,958
Less net financing fees		(233	)
Plus net debt premium		16
Total mortgages notes payable, non-recourse to us, net	$	39,741

(a.)All mortgage loans require monthly principal payments through maturity and either fully amortize or include a balloon principal payment upon maturity.

(b.)This loan is scheduled to mature within the next twelve months at which time we will either refinance pursuant to a new mortgage loan or repay the mortgage balance in full utilizing borrowings under our Credit Agreement.

On January 3, 2023, the $4.2 million fixed rate mortgage loan on Desert Valley Medical Center was fully repaid utilizing borrowings under our Credit Agreement.

At June 30, 2023 and December 31, 2022, we had various mortgages, all of which were non-recourse to us, included in our condensed consolidated balance sheet. The mortgages are secured by the real property of the buildings as well as property leases and rents. The mortgages outstanding as of June 30, 2023, had a combined carrying value of approximately $40.0 million and a combined fair value of approximately $37.8 million. The mortgages outstanding as of December 31, 2022, had a combined carrying value of approximately $45.0 million and a combined fair value of approximately $43.2 million. The fair value of our debt was computed based upon quotes received from financial institutions. We consider these to be “level 2” in the fair value hierarchy as outlined in the authoritative guidance for disclosure in connection with debt instruments. Changes in market rates on our fixed rate debt impacts the fair value of debt, but it has no impact on interest incurred or cash flow.

Financial Instruments:

In March 2020, we entered into an interest rate swap agreement on a total notional amount of $55 million with a fixed interest rate of 0.565% that we designated as a cash flow hedge. The interest rate swap became effective on March 25, 2020 and is scheduled to mature on March 25, 2027. On May 15, 2023, this interest rate swap agreement was modified to replace the benchmark rate from LIBOR to term SOFR. If one-month term SOFR is above 0.505%, the counterparty pays us, and if one-month term SOFR is less than 0.505%, we pay the counterparty, the difference between the fixed rate of 0.505% and one-month term SOFR.

In January 2020, we entered into an interest rate swap agreement on a total notional amount of $35 million with a fixed interest rate of 1.4975% that we designated as a cash flow hedge. The interest rate swap became effective on January 15, 2020 and is scheduled to mature on September 16, 2024. On May 15, 2023, this interest rate swap agreement was modified to replace the benchmark rate from LIBOR to term SOFR. If the one-month term SOFR is above 1.41%, the counterparty pays us, and if the one-month term SOFR is less than 1.41%, we pay the counterparty, the difference between the fixed rate of 1.41% and one-month term SOFR.

During the third quarter of 2019, we entered into an interest rate swap agreement on a total notional amount of $50 million with a fixed interest rate of 1.144% that we designated as a cash flow hedge. The interest rate swap became effective on September 16, 2019 and is scheduled to mature on September 16, 2024. On May 15, 2023, this interest rate swap agreement was modified to replace the benchmark rate from LIBOR to term SOFR. If one-month term SOFR is above 1.064%, the counterparty pays us, and if one-month term SOFR is less than 1.064%, we pay the counterparty, the difference between the fixed rate of 1.064% and one-month term SOFR.

We measure our interest rate swaps at fair value on a recurring basis. The fair value of our interest rate swaps is based on quotes from third parties. We consider those inputs to be “level 2” in the fair value hierarchy as outlined in the authoritative guidance for disclosures in connection with derivative instruments and hedging activities. At June 30, 2023, the fair value of our interest rate swaps was a net asset of $11.0 million which is included in deferred charges and other assets on the accompanying condensed consolidated balance sheet. During the second quarter of 2023, we received approximately $1.4 million from the counterparty, adjusted for the previous quarter accrual, pursuant to the terms of the swaps. During the first six months of 2023, we received approximately $2.6 million from the counterparty, adjusted for the previous quarter accrual, pursuant to the terms of the swaps. From inception of the swap agreements through June 30, 2023 we paid or accrued approximately $2.5 million to the counterparty, offset by approximately $4.3 million in

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receipts from the counterparty, adjusted for accruals, pursuant to the terms of the swap. During the second quarter of 2022, we paid or accrued approximately $122,000 to the counterparty, offset by $35,000 in receipts from the counterparty, adjusted for the previous quarter accrual, pursuant to the terms of the swaps. During the first six months of 2022, we paid or accrued approximately $412,000 to the counterparty by us, offset by $35,000 in receipts from the counterparty, adjusted for the previous quarter accrual, pursuant to the terms of the swaps. Cash flow hedges are accounted for by recording the fair value of the derivative instrument on the balance sheet as either an asset or a liability, with a corresponding amount recorded in accumulated other comprehensive income (“AOCI”) within shareholders’ equity. Amounts are reclassified from AOCI to the income statement in the period or periods the hedged transaction affects earnings. We do not expect any gains or losses on our interest rate swaps to be reclassified to earnings in the next twelve months.

(9) Segment Reporting

Our primary business is investing in and leasing healthcare and human service facilities through direct ownership or through joint ventures, which aggregate into a single reportable segment. We actively manage our portfolio of healthcare and human service facilities and may from time to time make decisions to sell lower performing properties not meeting our long-term investment objectives. The proceeds of sales are typically reinvested in new developments or acquisitions, which we believe will meet our planned rate of return. It is our intent that all healthcare and human service facilities will be owned or developed for investment purposes. Our revenue and net income are generated from the operation of our investment portfolio.

Our portfolio is located throughout the United States, however, we do not distinguish or group our operations on a geographical basis for purposes of allocating resources or measuring performance. We review operating and financial data for each property on an individual basis; therefore, we define an operating segment as our individual properties. Individual properties have been aggregated into one reportable segment based upon their similarities with regard to both the nature and economics of the facilities, tenants and operational processes, as well as long-term average financial performance. No individual property meets the requirements necessary to be considered its own segment.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are a real estate investment trust (“REIT”) that commenced operations in 1986. We invest in healthcare and human service related facilities currently including acute care hospitals, behavioral health care hospitals, specialty facilities, free-standing emergency departments, childcare centers and medical/office buildings. As of August 1, 2023, we have seventy-six real estate investments or commitments located in twenty-one states consisting of:

•six hospital facilities consisting of three acute care hospitals and three behavioral health care hospitals;

•four free-standing emergency departments (“FEDs”);

•fifty-nine medical/office buildings, including four owned by unconsolidated limited liability companies (“LLCs”)/limited liability partnerships (“LPs”);

•four preschool and childcare centers;

•two specialty facilities that are currently vacant, and;

•one property comprised of vacant land located in Chicago, Illinois.

Forward Looking Statements and Certain Risk Factors

You should carefully review all of the information contained in this Quarterly Report, and should particularly consider any risk factors that we set forth in our Annual Report on Form 10-K for the year ended December 31, 2022, this Quarterly Report and in other reports or documents that we file from time to time with the Securities and Exchange Commission (the “SEC”). In this Quarterly Report, we state our beliefs of future events and of our future financial performance. This Quarterly Report contains “forward-looking statements” that reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities. Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “appears,” “projects” and similar expressions, or the negative of those words and expressions, as well as statements in future tense, identify forward-looking statements. You should be aware that those statements are only our predictions. Actual events or results may differ materially. In evaluating those statements, you should specifically consider various factors, including the risks described elsewhere herein and in our Annual Report on Form 10-K for the year ended December 31, 2022 in Item 1A Risk Factors and in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Forward Looking Statements and in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Forward Looking Statements and Certain Risk Factors, as included herein. Those factors may cause our actual results to differ materially from any of our forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved. Forward-looking information is based on information available at the time and/or our good faith belief with respect to future events and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Such factors include, among other things, the following:

•Future operations and financial results of our tenants, and in turn ours, could be materially impacted by numerous factors and future developments. Such factors and developments include, but are not limited to, the impact of the COVID-19; changes in patient volumes and payer mix caused by deteriorating macroeconomic conditions (including increases in uninsured and underinsured patients as the result of business closings and layoffs); potential disruptions to clinical staffing and shortages and disruptions related to supplies required for our tenants’ employees and patients, including equipment, pharmaceuticals and medical supplies, potential increases to expenses incurred by our tenants related to staffing, supply chain or other expenditures; the impact of our indebtedness and the ability to refinance such indebtedness on acceptable terms; disruptions in the financial markets and the business of financial institutions which could impact our ability to access capital or increase associated borrowing costs; and changes in general economic conditions nationally and regionally in the markets our properties are located, including higher sustained rates of unemployment and underemployment levels and reduced consumer spending and confidence.

•The nationwide shortage of nurses and other clinical staff and support personnel has been a significant operating issues facing our healthcare provider tenants, including UHS. In some areas, the labor scarcity is putting a strain on the resources of our tenants and their staff, which has required them to utilize higher-cost temporary labor and pay premiums above standard compensation for essential workers. In addition to significantly increasing the labor cost of our tenants, the healthcare staffing shortage could also require the operators of our hospital facilities to limit the services provided which would have an adverse effect on their operating revenues. There may be significant declines in future bonus rental revenue earned on one acute care hospital leased to a subsidiary of UHS to the extent that the hospital experiences significant declines

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in patient volumes and revenues. These factors may result in the inability or unwillingness on the part of some of our tenants to make timely payment of their rent to us at current levels or to seek to amend or terminate their leases which, in turn, would have an adverse effect on our occupancy levels and our revenue and cash flow and the value of our properties, and potentially, our ability to maintain our dividend at current levels.

•Recent legislation has provided grant funding to hospitals and other healthcare providers to assist them during the COVID-19 pandemic. There can be no assurance as to the total amount of financial and other types of assistance our tenants will receive under this legislation or how it will affect operations of our tenants’ competitors. There can be no assurance as to whether our tenants would be required to repay any previously granted funding, due to noncompliance with grant terms or otherwise. Moreover, we are unable to assess the extent to which anticipated negative impacts on our tenants (and, in turn, us) arising from the COVID-19 pandemic will be offset by amounts or benefits received or to be received under reimbursement policies and regulatory flexibilities favorable to providers during the Public Health Emergency (“PHE”) declared in response to the COVID-19 pandemic. Although the federal government had previously declared COVID-19 a national emergency, that declaration expired on May 11, 2023. At that time, many of the favorable payment provisions available to our tenants during the declared national emergency ended, as they were only available for the duration of the PHE. Most states have ended their state-level emergency declarations. We cannot predict whether the loss of any such favorable conditions available to providers during the declared PHE will ultimately have a negative financial impact on our tenants (and in turn, us).

•A substantial portion of our revenues are dependent upon one operator, UHS, which comprised approximately 41% of our consolidated revenues for the three and six-month periods ended June 30, 2023 and 2022. As previously disclosed, on December 31, 2021, a wholly-owned subsidiary of UHS purchased the real estate assets of Inland Valley Campus of Southwest Healthcare System from us and in exchange, transferred the real estate assets of Aiken Regional Medical Center and Canyon Creek Behavioral Health to us. These transactions were approved by the Independent Trustees of our Board, as well as the UHS Board of Directors. The aggregate annual rental rate during 2023 pursuant to the leases, as amended, for the two facilities transferred to us is approximately $5.8 million; there is no bonus rent component applicable to either of these leases. Please see Note 7 to the condensed consolidated financial statements - Lease Accounting, for additional information related to this asset purchase and sale transaction between us and UHS.

•We cannot assure you that subsidiaries of UHS will renew the leases on the hospital facilities and free-standing emergency departments, upon the scheduled expirations of the existing lease terms. In addition, if subsidiaries of UHS exercise their options to purchase the respective leased hospital facilities and FEDs, and do not enter into a substitution arrangement upon expiration of the lease terms or otherwise, our future revenues and results of operations could decrease if we were unable to earn a favorable rate of return on the sale proceeds received, as compared to the rental revenue currently earned pursuant to these leases. Please see Note 2 to the consolidated financial statements - Relationship with Universal Health Services, Inc. (“UHS”) and Related Party Transactions, for additional information related to a lease renewal between us and Wellington Regional Medical Center, a wholly-owned subsidiary of UHS.

•In certain of our markets, the general real estate market has been unfavorably impacted by increased competition/capacity and decreases in occupancy and rental rates which may adversely impact our operating results and the underlying value of our properties.

•A number of legislative initiatives have recently been passed into law that may result in major changes in the health care delivery system on a national or state level to the operators of our facilities, including UHS. No assurances can be given that the implementation of these new laws will not have a material adverse effect on the business, financial condition or results of operations of our operators.

•The potential indirect impact of the Tax Cuts and Jobs Act of 2017, signed into law on December 22, 2017, which makes significant changes to corporate and individual tax rates and calculation of taxes, which could potentially impact our tenants and jurisdictions, both positively and negatively, in which we do business, as well as the overall investment thesis for REITs.

•A subsidiary of UHS is our Advisor and our officers are all employees of a wholly-owned subsidiary of UHS, which may create the potential for conflicts of interest.

•Lost revenues resulting from the exercise of purchase options, lease expirations and renewals and other transactions (see Note 7 to the condensed consolidated financial statements – Lease Accounting for additional disclosure related to lease expirations and subsequent vacancies that occurred during the second and third quarters of 2019 and the fourth quarter of 2021 on three specialty hospital facilities, one of which is in the process of being demolished).

•Potential unfavorable tax consequences and reduced income resulting from an inability to complete, within the statutory timeframes, anticipated tax deferred like-kind exchange transactions pursuant to Section 1031 of the Internal Revenue Code, if, and as, applicable from time-to-time.

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•In 2021, the rate of inflation in the United States began to increase and has since risen to levels not experienced in over 40 years. Our tenants are experiencing inflationary pressures, primarily in personnel costs, and we anticipate impacts on other cost areas within the next twelve months. The extent of any future impacts from inflation on our tenants’ businesses and results of operations will be dependent upon how long the elevated inflation levels persist and the extent to which the rate of inflation further increases, if at all, neither of which we are able to predict. If elevated levels of inflation were to persist or if the rate of inflation were to accelerate, expenses of our tenants, and our direct operating expenses that are not passed on to our tenants, could increase faster than anticipated and may require utilization of our and our tenants’ capital resources sooner than expected. Further, given the complexities of the reimbursement landscape in which our tenants operate, their payers may be unwilling or unable to increase reimbursement rates to compensate for inflationary impacts. This may impact their ability and willingness to make rental payments. In addition, the increased interest rates on our borrowings and increased construction costs could affect our ability to make additional attractive investments. As such, the effects of inflation may unfavorably impact our future expenses and rental revenue and may potentially have a negative impact on the future lease renewal terms, the underlying value of our properties, our ability to access the capital markets on favorable terms and to grow our portfolio and the value of our common shares.

•The potential unfavorable impact on our business of the deterioration in national, regional and local economic and business conditions, including a worsening of credit and/or capital market conditions, which may adversely affect our ability to obtain capital which may be required to fund the future growth of our business and refinance existing debt with near term maturities.

•A deterioration in general economic conditions which may result in increases in the number of people unemployed and/or insured and likely increase the number of individuals without health insurance. Under these circumstances, the operators of our facilities may experience declines in patient volumes which could result in decreased occupancy rates at our medical office buildings.

•A worsening of the economic and employment conditions in the United States would likely materially affect the business of our operators, including UHS, which would likely unfavorably impact our future bonus rental revenue (on one UHS hospital facility) and may potentially have a negative impact on the future lease renewal terms and the underlying value of the hospital properties.

•The outcome and effects of known and unknown litigation, government investigations, and liabilities and other claims asserted against us, UHS or the other operators of our facilities. UHS and its subsidiaries are subject to legal actions, purported shareholder class actions and shareholder derivative cases, governmental investigations and regulatory actions and the effects of adverse publicity relating to such matters. Since UHS comprised approximately 41% of our consolidated revenues during the three and six months ended June 30, 2023, and since a subsidiary of UHS is our Advisor, you are encouraged to obtain and review the disclosures contained in the Legal Proceedings section of Universal Health Services, Inc.’s Forms 10-Q and 10-K, as publicly filed with the Securities and Exchange Commission. Those filings are the sole responsibility of UHS and are not incorporated by reference herein.

•Failure of UHS or the other operators of our hospital facilities to comply with governmental regulations related to the Medicare and Medicaid licensing and certification requirements could have a material adverse impact on our future revenues and the underlying value of the property.

•Real estate market factors, including without limitation, the supply and demand of office space and market rental rates, changes in interest rates as well as an increase in the development of medical office condominiums in certain markets.

•The impact of property values and results of operations of severe weather conditions, including the effects of hurricanes.

•Government regulations, including changes in the reimbursement levels under the Medicare and Medicaid programs.

•The issues facing the health care industry that affect the operators of our facilities, including UHS, such as: changes in, or the ability to comply with, existing laws and government regulations; unfavorable changes in the levels and terms of reimbursement by third party payers or government programs, including Medicare (including, but not limited to, the potential unfavorable impact of future reductions to Medicare reimbursements resulting from the Budget Control Act of 2011, as discussed in the next bullet point below) and Medicaid (most states have reported significant budget deficits that have, in the past, resulted in the reduction of Medicaid funding to the operators of our facilities, including UHS); demographic changes; the ability to enter into managed care provider agreements on acceptable terms; an increase in uninsured and self-pay patients which unfavorably impacts the collectability of patient accounts; decreasing in-patient admission trends; technological and pharmaceutical improvements that may increase the cost of providing, or reduce the demand for, health care, and; the ability to attract and retain qualified medical personnel, including physicians.

•The Budget Control Act of 2011 imposed annual spending limits for most federal agencies and programs aimed at reducing budget deficits by $917 billion between 2012 and 2021, according to a report released by the Congressional Budget Office. Among its other provisions, the law established a bipartisan Congressional committee, known as the Joint Select Committee

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on Deficit Reduction (the “Joint Committee”), which was tasked with making recommendations aimed at reducing future federal budget deficits by an additional $1.5 trillion over 10 years. The Joint Committee was unable to reach an agreement by the November 23, 2011 deadline and, as a result, across-the-board cuts to discretionary, national defense and Medicare spending were implemented on March 1, 2013 resulting in Medicare payment reductions of up to 2% per fiscal year with a uniform percentage reduction across all Medicare programs. The Bipartisan Budget Act of 2015, enacted on November 2, 2015, continued the 2% reductions to Medicare reimbursement imposed under the Budget Control Act of 2011. Recent legislation suspended payment reductions through December 31, 2021 in exchange for extended cuts through 2030. Subsequent legislation extended the payment reduction suspension through March 31, 2022, with a 1% payment reduction from then until June 30, 2022 and the full 2% payment reduction thereafter. The most recent legislation extended these reductions through 2032. We cannot predict whether Congress will restructure the implemented Medicare payment reductions or what other federal budget deficit reduction initiatives may be proposed by Congress going forward. We also cannot predict the effect these enactments will have on the operators of our properties (including UHS), and thus, our business.

•An increasing number of legislative initiatives have been passed into law that may result in major changes in the health care delivery system on a national or state level. Legislation has already been enacted that has eliminated the penalty for failing to maintain health coverage that was part of the original Patient Protection and Affordable Care Act (the “ACA”). President Biden has undertaken and is expected to undertake executive actions that will strengthen the ACA and may reverse the policies of the prior administration. To date, the Biden administration has issued executive orders implementing a special enrollment period permitting individuals to enroll in health plans outside of the annual open enrollment period and reexamining policies that may undermine the ACA or the Medicaid program. The American Rescue Plan Act of 2021's expansion of subsidies to purchase coverage through an exchange, which the Inflation Reduction Act of 2022, passed on August 16, 2022, continues through 2025, is anticipated to increase exchange enrollment. It is also anticipated that these policies, to the extent that they remain as implemented, may create additional cost and reimbursement pressures on hospitals, including ours. In addition, while attempts to repeal the entirety of the ACA have not been successful to date, a key provision of the ACA was eliminated as part of the Tax Cuts and Jobs Act and on December 14, 2018, a federal U.S. District Court Judge in Texas ruled the entire ACA is unconstitutional. That ruling was ultimately appealed to the United States Supreme Court, which decided in California v. Texas that the plaintiffs in the matter lacked standing to bring their constitutionality claims. On September 7, 2022, the Legislation faced its most recent challenge when a Texas Federal District Court judge, in the case of Braidwood Management v. Becerra, ruled that certain Legislation provisions violate the Appointments Clause of the U.S. Constitution and the Religious Freedom Restoration Act. The government has appealed the decision to the U.S. Circuit Court of Appeals for the Fifth Circuit. Any future efforts to challenge, replace or replace the Legislation or expand or substantially amend its provision is unknown.

•There can be no assurance that if any of the announced or proposed changes described above are implemented there will not be negative financial impact on the operators of our hospitals, which material effects may include a potential decrease in the market for health care services or a decrease in the ability of the operators of our hospitals to receive reimbursement for health care services provided which could result in a material adverse effect on the financial condition or results of operations of the operators of our properties, and, thus, our business.

•Competition for properties include, but are not limited to, other REITs, private investors and firms, banks and other companies, including UHS. In addition, we may face competition from other REITs for our tenants.

•The operators of our facilities face competition from other health care providers, including physician owned facilities and other competing facilities, including certain facilities operated by UHS but the real property of which is not owned by us. Such competition is experienced in markets including, but not limited to, McAllen, Texas, the site of our McAllen Medical Center, a 370-bed acute care hospital.

•Changes in, or inadvertent violations of, tax laws and regulations and other factors that can affect REITs and our status as a REIT, including possible future changes to federal tax laws that could materially impact our ability to defer gains on divestitures through like-kind property exchanges.

•The individual and collective impact of the changes made by the CARES Act on REITs and their security holders are uncertain and may not become evident for some period of time; it is also possible additional legislation could be enacted in the future as a result of the COVID-19 pandemic which may affect the holders of our securities.

•Should we be unable to comply with the strict income distribution requirements applicable to REITs, utilizing only cash generated by operating activities, we would be required to generate cash from other sources which could adversely affect our financial condition.

•Our ownership interest in four LLCs/LPs in which we hold non-controlling equity interests. In addition, pursuant to the operating and/or partnership agreements of the four LLCs/LPs in which we continue to hold non-controlling ownership

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interests, the third-party member and the Trust, at any time, potentially subject to certain conditions, have the right to make an offer (“Offering Member”) to the other member(s) (“Non-Offering Member”) in which it either agrees to: (i) sell the entire ownership interest of the Offering Member to the Non-Offering Member (“Offer to Sell”) at a price as determined by the Offering Member (“Transfer Price”), or; (ii) purchase the entire ownership interest of the Non-Offering Member (“Offer to Purchase”) at the equivalent proportionate Transfer Price. The Non-Offering Member has 60 to 90 days to either: (i) purchase the entire ownership interest of the Offering Member at the Transfer Price, or; (ii) sell its entire ownership interest to the Offering Member at the equivalent proportionate Transfer Price. The closing of the transfer must occur within 60 to 90 days of the acceptance by the Non-Offering Member. Please see Note 5 to the condensed consolidated financial statements – Summarized Financial Information of Equity Affiliates for additional disclosure related to a fourth quarter, 2021 transaction between us and the minority partner in Grayson Properties, LP.

•Fluctuations in the value of our common stock, which, among other things could be affected by the current increasing interest rate environment.

•Other factors referenced herein or in our other filings with the Securities and Exchange Commission.

Given these uncertainties, risks and assumptions, you are cautioned not to place undue reliance on such forward-looking statements. Our actual results and financial condition, including the operating results of our lessees and the facilities leased to subsidiaries of UHS, could differ materially from those expressed in, or implied by, the forward-looking statements.

Forward-looking statements speak only as of the date the statements are made. We assume no obligation to publicly update any forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except as may be required by law. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

Critical Accounting Policies and Estimates

There have been no significant changes to our critical accounting policies or estimates from those disclosed in our 2022 Annual Report on Form 10-K.

Results of Operations

During the three-month period ended June 30, 2023, net income was $3.5 million, as compared to $5.2 million during the second quarter of 2022. The $1.7 million decrease was attributable to:

•a decrease of $1.8 million resulting from an increase in interest expense due to increases in our average borrowing rate and average outstanding borrowings;

•a decrease of $862,000 resulting from demolition expenses incurred during the second quarter of 2023 related to the property located in Chicago, Illinois, as discussed in Note 7 to the condensed consolidated financial statements, and;

•a net increase of $929,000 resulting from an aggregate net increase in the income generated at various properties, including a reduction of $227,000 in expenses related to the property located in Chicago, Illinois.

During the six-month period ended June 30, 2023, net income was $7.9 million, as compared to $10.6 million during the six-month period ended June 30, 2022. The $2.7 million decrease was attributable to:

•a decrease of $3.3 million resulting from an increase in interest expense due to increases in our average borrowing rate and average outstanding borrowings;

•a decrease of $1.1 million resulting from demolition expenses incurred during the first six months of 2023 related to the property located in Chicago, Illinois, and;

•a net increase of $1.7 million resulting from an aggregate net increase in the income generated at various properties, including a reduction of $568,000 in expenses related to the property located in Chicago, Illinois.

Revenues increased $1.6 million, or 7.4%, to $23.8 million during the three-month period ended June 30, 2023, as compared to $22.2 million during the three-month period ended June 30, 2022. The increase during the second quarter of 2023, as compared to the second quarter of 2022, was primarily due to an aggregate net increase generated at various properties, including the revenues generated at a newly constructed and recently opened MOB located in Reno, Nevada.

Revenues increased $2.7 million, or 6.1%, to $47.0 million during the six-month period ended June 30, 2023, as compared to $44.3 million during the six-month period ended June 30, 2022. The increase during the first six months of 2023, as compared to the first six months of 2022, was primarily due to an aggregate net increase generated at various properties, including the revenues generated at a newly constructed and recently opened MOB located in Reno, Nevada.

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A large portion of the expenses associated with our consolidated medical office buildings is passed on directly to the tenants either directly as tenant reimbursements of common area maintenance expenses or included in base rental amounts. Tenant reimbursements for operating expenses are accrued as revenue in the same period the related expenses are incurred and are included as lease revenue in our condensed consolidated statements of income.

Included in our other operating expenses (excluding ground lease expenses) are expenses related to the consolidated medical office buildings and three vacant properties (the demolition of one of these vacant properties was substantially completed during the second quarter of 2023) amounting to $6.5 million during the second quarter of 2023 (excluding $862,000 of demolition expenses incurred during the second quarter of 2023) and $6.0 million during the second quarter of 2022. The $453,000 increase in other operating expenses related to these facilities during the second quarter of 2023, as compared to the second quarter of 2022, was due to net increases experienced at various properties, including the impact of the recently opened MOB located in Reno, Nevada.

Other operating expenses related to the consolidated medical office buildings and three vacant specialty facilities, as applicable, totaled $12.9 million and $12.1 million for the six-month periods ended June 30, 2023 and 2022, respectively. The $838,000 increase in our other operating expenses during the first six months of 2023, as compared to the first six months of 2022, was primarily due to increases experienced at various properties, including the impact of the recently opened MOB located in Reno, Nevada.

Funds from operations (“FFO”) is a widely recognized measure of performance for Real Estate Investment Trusts (“REITs”). We believe that FFO and FFO per diluted share, which are non-GAAP financial measures, are helpful to our investors as measures of our operating performance. 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 we interpret the definition. FFO adjusts for the effects of certain items, such as gains on transactions that occurred during the periods presented. To the extent a REIT recognizes a gain or loss with respect to the sale of incidental assets, the REIT has the option to exclude or include such gains and losses in the calculation of FFO. We have opted to exclude gains and losses from sales of incidental assets in our calculation of FFO, if and when applicable. 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) an alternative to cash flow from operating activities determined in accordance with GAAP; (iii) a measure of our liquidity, or; (iv) an indicator of funds available for our cash needs, including our ability to make cash distributions to shareholders.

Below is a reconciliation of our reported net income to FFO for the three and six-month periods ended June 30, 2023 and 2022 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	3,476	$	5,218	$	7,935	$	10,623
Depreciation and amortization expense on consolidated    investments		6,849		6,679		13,467		13,388
Depreciation and amortization expense on unconsolidated    affiliates		298		295		591		590
Funds From Operations	$	10,623	$	12,192	$	21,993	$	24,601
Weighted average number of shares outstanding - Diluted		13,809		13,789		13,806		13,788
Funds From Operations per diluted share	$	0.77	$	0.88	$	1.59	$	1.78

Our FFO decreased $1.6 million during the second quarter of 2023, as compared to the second quarter of 2022. The net decrease was primarily due to: (i) a decrease in net income of $1.7 million, as discussed above, offset by; (ii) a $173,000 increase in depreciation and amortization expense incurred by our consolidated and unconsolidated affiliates.

Our FFO decreased $2.6 million during the first six months of 2023, as compared to the first six months of 2022. The net decrease was primarily due to: (i) a decrease in net income of $2.7 million, as discussed above, offset by; (ii) an $80,000 increase in depreciation and amortization expense incurred by our consolidated and unconsolidated affiliates.

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Other Operating Results

Interest Expense:

As reflected in the schedule below, interest expense was $4.2 million and $2.4 million during the three-month periods ended June 30, 2023 and 2022, respectively, and $7.9 million and $4.6 million during the six-month periods ended June 30, 2023 and 2022, respectively (amounts in thousands):

	Three Months Ended June 30, 2023			Three Months Ended June 30, 2022			Six Months Ended June 30, 2023			Six Months Ended June 30, 2022
Revolving credit agreement	$	4,989		$	1,550		$	9,484		$	2,718
Mortgage interest		434			584			872			1,196
Interest rate swaps (income)/expense, net (a.)		(1,416	)		87			(2,643	)		374
Amortization of financing fees		177			183			348			361
Amortization of fair value of debt		(12	)		(13	)		(24	)		(26	)
Capitalized interest on major projects		-			(35	)		(149	)		(56	)
Other interest		4			11			(15	)		22
Interest expense, net	$	4,176		$	2,367		$	7,873		$	4,589

(a.)Represents interest paid (to us)/by us to the counterparties pursuant to three interest rate swaps with a combined notional amount of $140 million.

Interest expense increased by $1.8 million during the three-month period ended June 30, 2023, as compared to the comparable period of 2022, due primarily to: (i) a $3.4 million increase in the interest expense on our revolving credit agreement primarily resulting from increases in our average cost of borrowings (6.59% average effective rate during the second quarter of 2023, as compared to 2.28% average effective rate during the comparable quarter of 2022) and in our average outstanding borrowings ($303.8 million during the three months ended June 30, 2023 as compared to $272.5 million in the comparable quarter of 2022); (ii) a $35,000 increase due to a decrease in capitalized interest on a major project that was substantially completed during the first quarter of 2023, partially offset by; (iii) a $1.5 million favorable change in interest rate swap income/expense; (iv) a $150,000 decrease in mortgage interest expense, and; (v) a $12,000 net decrease in other combined interest expenses.

Interest expense increased by $3.3 million during the six-month period ended June 30, 2023, as compared to the comparable period of 2022, due primarily to: (i) a $6.8 million increase in the interest expense on our revolving credit agreement primarily resulting from increases in our average cost of borrowings (6.33% average effective rate during the first six months of 2023, as compared to 2.02% average effective rate during the comparable six months of 2022) and in our average outstanding borrowings ($302.4 million during the six months ended June 30, 2023 as compared to $270.8 million in the comparable six-month period of 2022), partially offset by; (ii) a $3.0 million favorable change in interest rate swap income/expense; (iii) a $324,000 decrease in mortgage interest expense; (iv) a $93,000 decrease due to an increase in capitalized interest on a major project, and; (v) a $48,000 decrease in other interest expenses.

Disclosures Related to Certain Facilities

Please refer to Note 7 to the consolidated financial statements - Lease Accounting, for additional information regarding certain of our vacant specialty hospital facilities consisting of Evansville, Indiana; Corpus Christi, Texas, and; Chicago, Illinois (the demolition of the Chicago, Illinois facility was substantially completed during the second quarter of 2023).

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Liquidity and Capital Resources

Net cash provided by operating activities

Net cash provided by operating activities was $22.3 million during the six-month period ended June 30, 2023 as compared to $24.9 million during the comparable period of 2022. The $2.6 million net decrease was attributable to:

•an unfavorable change of $2.7 million due to a decrease in net income plus/minus the adjustments to reconcile net income to net cash provided by operating activities (depreciation and amortization, amortization related to above/below market leases, amortization of debt premium, amortization of deferred financing costs and stock-based compensation), as discussed above;

•an unfavorable change of $891,000 in accrued expenses and other liabilities, due primairly to construction costs and other payables that were accrued during the fourth quarter of 2022 and paid during the first six months of 2023;

•a favorable change of $223,000 in lease receivable;

•a favorable change of $166,000 in leasing costs paid, and;

•other combined net favorable changes of $560,000.

Net cash used in investing activities

Net cash used in investing activities was $8.9 million during the first six months of 2023 as compared to $25.8 million during the first six months of 2022.

During the six-month period ended June 30, 2023 we funded: (i) $8.8 million in additions to real estate investments including construction costs related to the Sierra Medical Plaza I medical office building located in Reno, Nevada, that was substantially completed during the first quarter of 2023, as well as tenant improvements at various MOBs; (ii) $3.9 million in equity investments in unconsolidated LLCs, and; (iii) $100,000 in deposits on real estate assets. In addition, during the six months ended June 30, 2023, we received: (i) $369,000 of cash in excess of income from LLCs, and; (ii) $3.5 million of repayments of an advance we provided to an unconsolidated LLC during 2021.

During the six-month period ended June 30, 2022 we funded: (i) $13.6 million, including transaction costs, on the acquisitions of the Beaumont Heart and Vascular Center in March, 2022, and; the 140 Thomas Johnson Drive medical office building in January, 2022, as discussed in Note 4 to the consolidated financial statements–Acquisitions and Divestitures; (ii) $11.2 million in additions to real estate investments including construction costs related to the Sierra Medical Plaza I medical office building located in Reno, Nevada, that was substantially completed during the first quarter of 2023, as well as tenant improvements at various MOBs, and; (iii) $1.3 million as part of the asset purchase and sale agreement with UHS, as discussed in Note 2 to the consolidated financial statements-Relationship with UHS and Related Party Transactions. In addition, during the six-months ended June 30, 2022, we received approximately $391,000 of cash in excess of income from LLCs.

Net cash used in financing activities

Net cash used in financing activities was $11.6 million during the six months ended June 30, 2023, as compared to $13.2 million during the six months ended June 30, 2022.

During the six-month period ended June 30, 2023, we paid: (i) $5.0 million on mortgage notes payable that are non-recourse to us, including a $4.2 million repayment of a fixed rate mortgage loan that matured during the first quarter of 2023; (ii) $132,000 of financing costs related to the amendment to our revolving credit agreement, and; (iii) $19.8 million of dividends, including $58,000 of previously accrued dividends. Additionally, during the six months ended June 30, 2023, we received: (i) $13.3 million of net borrowings on our revolving credit agreement, and; (ii) $76,000 of net cash from the issuance of shares of beneficial interest.

During the six-month period ended June 30, 2022, we paid: (i) $6.2 million on mortgage notes payable that are non-recourse to us, including a $5.1 million repayment of a fixed rate mortgage loan that matured during the second quarter of 2022; (ii) $26,000 of financing costs related to the revolving credit agreement, and; (iii) $19.5 million of dividends, including $60,000 of previously accrued dividends. Additionally, during the six months ended June 30, 2022, we received: (i) $12.4 million of net borrowings on our revolving credit agreement, and; (ii) $94,000 of net cash from the issuance of shares of beneficial interest.

During 2020, we commenced an at-the-market (“ATM”) equity issuance program, pursuant to the terms of which we may sell, from time-to-time, common shares of our beneficial interest up to an aggregate sales price of $100 million to or through our agent banks. No shares were issued pursuant to this ATM equity program during the first six months of 2023 and no shares were issued pursuant to this ATM equity program during the year ended December 31, 2022.

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Additional cash flow and dividends paid information for the six-month periods ended June 30, 2023 and 2022:

As indicated on our condensed consolidated statement of cash flows, we generated net cash provided by operating activities of $22.3 million and $24.9 million during the six-month periods ended June 30, 2023 and 2022, respectively. As also indicated on our statement of cash flows, non-cash expenses including depreciation and amortization expense, amortization related to above/below market leases, amortization of debt premium, amortization of deferred financing costs and stock-based compensation expense, as well as changes in certain assets and liabilities, are the primary differences between our net income and net cash provided by operating activities during each period.

We declared and paid dividends of $19.8 million and $19.5 million during the six-month periods ended June 30, 2023 and 2022, respectively. During the first six months of 2023, the $22.3 million of net cash provided by operating activities was $2.5 million greater than the $19.8 million of dividends paid during the first six months of 2023. During the first six months of 2022, the $24.9 million of net cash provided by operating activities was approximately $5.4 million greater than the $19.5 million of dividends paid during the first six months of 2022.

As indicated in the cash flows from investing activities and cash flows from financing activities sections of the statements of cash flows, there were various other sources and uses of cash during the six months ended June 30, 2023 and 2022. From time to time, various other sources and uses of cash may include items such as investments and advances made to/from LLCs, additions to real estate investments, acquisitions/divestiture of properties, net borrowings/repayments of debt, and proceeds generated from the issuance of equity. Therefore, in any given period, the funding source for our dividend payments is not wholly dependent on the operating cash flow generated by our properties. Rather, our dividends as well as our capital reinvestments into our existing properties, acquisitions of real property and other investments are funded based upon the aggregate net cash inflows or outflows from all sources and uses of cash from the properties we own either in whole or through LLCs, as outlined above.

In determining and monitoring our dividend level on a quarterly basis, our management and Board of Trustees consider many factors in determining the amount of dividends to be paid each period. These considerations primarily include: (i) the minimum required amount of dividends to be paid in order to maintain our REIT status; (ii) the current and projected operating results of our properties, including those owned in LLCs, and; (iii) our future capital commitments and debt repayments, including those of our LLCs. Based upon the information discussed above, as well as consideration of projections and forecasts of our future operating cash flows, management and the Board of Trustees have determined that our operating cash flows have been sufficient to fund our dividend payments. Future dividend levels will be determined based upon the factors outlined above with consideration given to our projected future results of operations.

We expect to finance all capital expenditures and acquisitions and pay dividends utilizing internally generated and additional funds. Additional funds may be obtained through: (i) borrowings under our $375 million revolving credit agreement (which had $60.5 million of available borrowing capacity, net of outstanding borrowings and letters of credit as of June 30, 2023); (ii) borrowings under or refinancing of existing third-party debt pursuant to mortgage loan agreements entered into by our consolidated and unconsolidated LLCs/LPs; (iii) the issuance of equity pursuant to our ATM program, and/or; (iv) the issuance of other long-term debt.

We believe that our operating cash flows, cash and cash equivalents, available borrowing capacity under our revolving credit agreement and access to the capital markets provide us with sufficient capital resources to fund our operating, investing and financing requirements for the next twelve months, including providing sufficient capital to allow us to make distributions necessary to enable us to continue to qualify as a REIT under Sections 856 to 860 of the Internal Revenue Code of 1986. In the event we need to access the capital markets or other sources of financing, there can be no assurance that we will be able to obtain financing on acceptable terms or within an acceptable time. Our inability to obtain financing on terms acceptable to us could have a material unfavorable impact on our results of operations, financial condition and liquidity.

Credit facilities and mortgage debt

Management routinely monitors and analyzes the Trust’s capital structure in an effort to maintain the targeted balance among capital resources including the level of borrowings pursuant to our revolving credit facility, the level of borrowings pursuant to non-recourse mortgage debt secured by the real property of our properties and our level of equity including consideration of additional equity issuances pursuant to our ATM equity issuance program. This ongoing analysis considers factors such as the current debt market and interest rate environment, the current/projected occupancy and financial performance of our properties, the current loan-to-value ratio of our properties, the Trust’s current stock price, the capital resources required for anticipated acquisitions and the expected capital to be generated by anticipated divestitures. This analysis, together with consideration of the Trust’s current balance of revolving credit agreement borrowings, non-recourse mortgage borrowings and equity, assists management in deciding which capital resource to utilize when events such as refinancing of specific debt components occur or additional funds are required to finance the Trust’s growth.

On May 15, 2023 we entered into the first amendment to our amended and restated revolving credit agreement ("Credit Agreement") dated as of July 2, 2021 among the Trust as borrower, the lenders party thereto and Wells Fargo Bank, N.A., as administrative agent. The amendment replaced LIBOR rate with term SOFR plus .10% ("adjusted term SOFR") as an alternative benchmark rate for purposes under the Credit Agreement for settings of benchmark rates that occur on or after the closing date in accordance with the benchmark replacement provisions set forth in the Credit Agreement.

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On July 2, 2021, we entered into an amended and restated Credit Agreement to amend and restate the previously existing $350 million credit agreement, as amended and dated June 5, 2020. Among other things, under the Credit Agreement, our aggregate revolving credit commitment was increased to $375 million from $350 million. The Credit Agreement, which is scheduled to mature on July 2, 2025, provides for a revolving credit facility in an aggregate principal amount of $375 million, including a $40 million sublimit for letters of credit and a $30 million sublimit for swingline/short-term loans. Under the terms of the Credit Agreement, we may request that the revolving line of credit be increased by up to an additional $50 million. Borrowings under the new facility are guaranteed by certain subsidiaries of the Trust. In addition, borrowings under the new facility are secured by first priority security interests in and liens on all equity interests in most of the Trust’s wholly-owned subsidiaries.

Borrowings under the Credit Agreement will bear interest annually at a rate equal to, at our option, at adjusted term SOFR for either one, three, or six months or the Base Rate, plus in either case, a specified margin depending on our total leverage ratio, as determined by the formula set forth in the Credit Agreement. The applicable margin prior to the first amendment ranges from 1.10% to 1.35% for LIBOR loans and 0.10% to 0.35% for Base Rate loans. The initial applicable margin after the first amendment is 1.20% for adjusted term SOFR loans and 0.20% for Base Rate loans. The Credit Agreement, as amended by the first amendment, defines “Base Rate” as the greatest of (a) the Administrative Agent’s prime rate, (b) the federal funds effective rate plus 1/2 of 1% and (c) one month adjusted term SOFR plus 1%. The Trust will also pay a quarterly revolving facility fee ranging from 0.15% to 0.35% (depending on the Trust’s total leverage ratio) on the committed amount of the Credit Agreement. The Credit Agreement also provides for options to extend the maturity date and borrowing availability for two additional six-month periods.

The margins over adjusted term SOFR, Base Rate and the facility fee are based upon our total leverage ratio. At June 30, 2023, the applicable margin over the adjusted term SOFR rate was 1.20%, the margin over the Base Rate was 0.20% and the facility fee was 0.20%.

At June 30, 2023, we had $311.4 million of outstanding borrowings and $3.1 million of letters of credit outstanding under our Credit Agreement. We had $60.5 million of available borrowing capacity, net of the outstanding borrowings and letters of credit outstanding as of June 30, 2023. There are no compensating balance requirements. At December 31, 2022, we had $298.1 million of outstanding borrowings, $3.1 million of outstanding letters of credit and $73.8 million of available borrowing capacity.

The Credit Agreement contains customary affirmative and negative covenants, including limitations on certain indebtedness, liens, acquisitions and other investments, fundamental changes, asset dispositions and dividends and other distributions. The Credit Agreement also contains restrictive covenants regarding the Trust’s ratio of total debt to total assets, the fixed charge coverage ratio, the ratio of total secured debt to total asset value, the ratio of total unsecured debt to total unencumbered asset value, and minimum tangible net worth, as well as customary events of default, the occurrence of which may trigger an acceleration of amounts then outstanding under the Credit Agreement. We are in compliance with all of the covenants in the Credit Agreement at June 30, 2023, and were in compliance with all of the covenants of the Credit Agreement at December 31, 2022. We also believe that we would remain in compliance if, based on the assumption that the majority of the potential new borrowings will be used to fund investments, the full amount of our commitment was borrowed.

The following table includes a summary of the required compliance ratios, giving effect to the covenants contained in the Credit Agreement (dollar amounts in thousands):

	Covenant		June 30, 2023			December 31, 2022
Tangible net worth	$	125,000	$	208,292		$	219,654
Total leverage	< 60%			43.9	%		42.9	%
Secured leverage	< 30%			5.0	%		5.6	%
Unencumbered leverage	< 60%			43.4	%		41.8	%
Fixed charge coverage	> 1.50x		3.6x			4.3x

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As indicated on the following table, we have various mortgages, all of which are non-recourse to us, included on our condensed consolidated balance sheet as of June 30, 2023 (amounts in thousands):

Facility Name	Outstanding Balance (in thousands) (a.)			Interest Rate			Maturity Date
2704 North Tenaya Way fixed rate mortgage loan (b.)	$	6,165			4.95	%	November, 2023
Summerlin Hospital Medical Office Building III fixed    rate mortgage loan (b.)		12,431			4.03	%	April, 2024
Tuscan Professional Building fixed rate mortgage loan		1,394			5.56	%	June, 2025
Phoenix Children’s East Valley Care Center fixed rate    mortgage loan		8,068			3.95	%	January, 2030
Rosenberg Children's Medical Plaza fixed rate mortgage loan		11,900			4.42	%	September, 2033
Total, excluding net debt premium and net financing fees		39,958
Less net financing fees		(233	)
Plus net debt premium		16
Total mortgages notes payable, non-recourse to us, net	$	39,741

(a.)All mortgage loans require monthly principal payments through maturity and either fully amortize or include a balloon principal payment upon maturity.

(b.)This loan is scheduled to mature within the next twelve months at which time we will either refinance pursuant to a new mortgage loan or repay the mortgage balance in full utilizing borrowings under our Credit Agreement.

On January 3, 2023, the $4.2 million fixed rate mortgage loan on Desert Valley Medical Center was fully repaid utilizing borrowings under our Credit Agreement.

At June 30, 2023 and December 31, 2022, we had various mortgages, all of which were non-recourse to us, included in our condensed consolidated balance sheet. The mortgages are secured by the real property of the buildings as well as property leases and rents. The mortgages outstanding as of June 30, 2023, had a combined carrying value of approximately $40.0 million and a combined fair value of approximately $37.8 million. The mortgages outstanding as of December 31, 2022, had a combined carrying value of approximately $45.0 million and a combined fair value of approximately $43.2 million.

Changes in market rates on our fixed rate debt impacts the fair value of debt, but it has no impact on interest incurred or cash flow.

Off Balance Sheet Arrangements

As of June 30, 2023, we are party to certain off balance sheet arrangements consisting of standby letters of credit and equity and debt financing commitments. Our outstanding letters of credit at June 30, 2023 totaled $3.1 million related to Grayson Properties II. As of December 31, 2022, we had off balance sheet arrangements consisting of standby letters of credit and equity and debt financing commitments. Our outstanding letters of credit at December 31, 2022 totaled $3.1 million related to Grayson Properties II.

Acquisition and Divestiture Activity

Please see Note 4 to the consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

LIBOR Transition

In 2017, the U.K. Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to phase out LIBOR and stop compelling banks to submit rates for its calculation. In 2021, the FCA further announced that effective January 1, 2022, the one week and two-month USD LIBOR tenors are no longer being published, and all other USD LIBOR tenors will cease to be published after June 30, 2023.

The Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee which identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative to USD-LIBOR in derivatives and other financial contracts. We are not able to predict how the markets will respond to SOFR or any other alternative reference rate as the transition away from LIBOR continues. Any changes adopted by FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.

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On May 15, 2023 we entered into the first amendment to our amended and restated revolving credit agreement ("Credit Agreement") dated as of July 2, 2021 among the Trust as borrower, the lenders party thereto and Wells Fargo Bank, N.A., as administrative agent. The amendment replaces LIBOR Rate with adjusted term SOFR as an alternative benchmark rate for purposes under the Credit Agreement for settings of benchmark rates the occur on or after the closing date in accordance with the benchmark replacement provisions set forth in the Credit Agreement.

Financial Instruments

In March 2020, we entered into an interest rate swap agreement on a total notional amount of $55 million with a fixed interest rate of 0.565% that we designated as a cash flow hedge. The interest rate swap became effective on March 25, 2020 and is scheduled to mature on March 25, 2027. On May 15, 2023, this interest rate swap agreement was modified to replace the benchmark rate from LIBOR to term SOFR. If one-month term SOFR is above 0.505%, the counterparty pays us, and if one-month term SOFR is less than 0.505%, we pay the counterparty, the difference between the fixed rate of 0.505% and one-month term SOFR.

In January 2020, we entered into an interest rate swap agreement on a total notional amount of $35 million with a fixed interest rate of 1.4975% that we designated as a cash flow hedge. The interest rate swap became effective on January 15, 2020 and is scheduled to mature on September 16, 2024. On May 15, 2023, this interest rate swap agreement was modified to replace the benchmark rate from LIBOR to term SOFR. If the one-month term SOFR is above 1.41%, the counterparty pays us, and if the one-month term SOFR is less than 1.41%, we pay the counterparty, the difference between the fixed rate of 1.41% and one-month term SOFR.

During the third quarter of 2019, we entered into an interest rate swap agreement on a total notional amount of $50 million with a fixed interest rate of 1.144% that we designated as a cash flow hedge. The interest rate swap became effective on September 16, 2019 and is scheduled to mature on September 16, 2024. On May 15, 2023, this interest rate swap agreement was modified to replace the benchmark rate from LIBOR to term SOFR. If one-month term SOFR is above 1.064%, the counterparty pays us, and if one-month term SOFR is less than 1.064%, we pay the counterparty, the difference between the fixed rate of 1.064% and one-month term SOFR.

We measure our interest rate swaps at fair value on a recurring basis. The fair value of our interest rate swaps is based on quotes from third parties. We consider those inputs to be “level 2” in the fair value hierarchy as outlined in the authoritative guidance for disclosures in connection with derivative instruments and hedging activities. At June 30, 2023, the fair value of our interest rate swaps was a net asset of $11.0 million which is included in deferred charges and other assets on the accompanying condensed consolidated balance sheet. During the second quarter of 2023, we received approximately $1.4 million from the counterparty, adjusted for the previous quarter accrual, pursuant to the terms of the swaps. During the first six months of 2023, we received approximately $2.6 million from the counterparty, adjusted for the previous quarter accrual, pursuant to the terms of the swaps. From inception of the swap agreements through June 30, 2023 we paid or accrued approximately $2.5 million to the counterparty, offset by approximately $4.3 million in receipts from the counterparty, adjusted for accruals, pursuant to the terms of the swap. During the second quarter of 2022, we paid or accrued approximately $122,000 to the counterparty, offset by $35,000 in receipts from the counterparty, adjusted for the previous quarter accrual, pursuant to the terms of the swaps. During the first six months of 2022, we paid or accrued approximately $412,000 to the counterparty by us, offset by $35,000 in receipts from the counterparty, adjusted for the previous quarter accrual, pursuant to the terms of the swaps. Cash flow hedges are accounted for by recording the fair value of the derivative instrument on the balance sheet as either an asset or a liability, with a corresponding amount recorded in accumulated other comprehensive income (“AOCI”) within shareholders’ equity. Amounts are reclassified from AOCI to the income statement in the period or periods the hedged transaction affects earnings. We do not expect any gains or losses on our interest rate swaps to be reclassified to earnings in the next twelve months.

The sensitivity analysis related to our fixed and variable rate debt assumes current market rates with all other variables held constant. As of June 30, 2023, the fair value and carrying value of our debt is approximately $349.2 million and $351.4 million, respectively. As of that date, the carrying value exceeds the fair value by approximately $2.2 million.

33

The table below presents information about our financial instruments that are sensitive to changes in interest rates. The interest rate swaps include the $50 million swap agreement entered into during the third quarter of 2019, the $35 million swap agreement entered into in January, 2020 and the $55 million swap agreement entered into in March, 2020. For debt obligations, the amounts of which are as of June 30, 2023, the table presents principal cash flows and related weighted average interest rates by contractual maturity dates.

	Maturity Date, Year Ending December 31
(Dollars in thousands)	2023			2024			2025			2026			2027			Thereafter			Total
Long-term debt:
Fixed rate:
Debt(a)	$	6,897		$	13,550		$	939		$	600		$	626		$	17,346		$	39,958
Average interest rates		4.40	%		4.40	%		4.30	%		4.20	%		4.20	%		4.30	%		4.40	%
Variable rate:
Debt(b)	$	—		$	—		$	311,400		$	—		$	—		$	—		$	311,400
Average interest rates	—			—				6.40	%	—			—			—				6.40	%
Interest rate swaps:
Notional amount(c)	$	—		$	85,000		$	—		$	—		$	55,000		$	—		$	140,000
Interest rates	—				1.210	%	—			—				0.505	%	—				0.990	%

(a)Consists of non-recourse mortgage notes payable.

(b)Includes $311.4 million of outstanding borrowings under the terms of our $375 million revolving credit agreement which has a maturity date of July 2, 2025.

(c)Includes a $50 million interest rate swap that became effective on September 16, 2019, and a $35 million interest rate swap that became effective on January 15, 2020, both of which are scheduled to mature during 2024. Additionally, included is a $55 million interest rate swap that became effective on March 25, 2020, which is scheduled to mature in 2027.

As calculated based upon our variable rate debt outstanding as of June 30, 2023 that is subject to interest rate fluctuations, and giving effect to the above-mentioned interest rate swap, each 1% change in interest rates would impact our net income by approximately $1.7 million.

Item 4. Controls and Procedures

As of June 30, 2023, under the supervision and with the participation of our management, including the Trust’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we performed an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “1934 Act”).

Based on this evaluation, the CEO and CFO have concluded that our disclosure controls and procedures are effective to ensure that material information is recorded, processed, summarized and reported by management on a timely basis in order to comply with our disclosure obligations under the 1934 Act and the SEC rules thereunder.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting or in other factors during the second quarter of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

34

PART II. OTHER INFORMATION

UNIVERSAL HEALTH REALTY INCOME TRUST

Item 1A. Risk Factors

Our Annual Report on Form 10-K for the year ended December 31, 2022 includes a listing of risk factors to be considered by investors in our securities. There have been no material changes in our risk factors from those set forth in our Annual Report on Form 10-K for the year ended December 31, 2022.

Item 5. Other Information

None of the Trust’s Board of Trustees or officers adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Trust’s quarter ended June 30, 2023, as such terms are defined under Item 408(a) of Regulation S-K.

Item 6. Exhibits

(a.)Exhibits:

10.1	First Amendment, dated May 15, 2023, to the Amended and Restated Credit Agreement, dated as of July 2, 2021, among Universal Health Realty Income Trust, the Lenders Party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Bank of America, N.A., as Syndication Agent, and Fifth Third Bank, N.A., JPMorgan Chase Bank, N.A. and Truist Bank as Co-Documentation Agents, and Wells Fargo Securities, LLC and BOFA Securities, Inc., as Joint Lead Arrangers and Joint Bookrunners, as previously filed as Exhibit 10.1 to the Trust's Current Report on Form 8-K dated May 16, 2023, is incorporated herein by reference.
31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended.
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended.
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data file because iXBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data file (formatted as Inline XBRL and contained in Exhibit 101)

35

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: August 8, 2023	UNIVERSAL HEALTH REALTY INCOME TRUST (Registrant)
	/s/ Alan B. Miller
	Alan B. Miller,
	Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)
	/s/ Charles F. Boyle
	Charles F. Boyle, Senior Vice President and Chief Financial Officer (Principal Financial Officer)

36

EX-31.1

Exhibit 31.1

CERTIFICATION—Chief Executive Officer

I, Alan B. Miller, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Universal Health Realty Income Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2023

/s/ Alan B. Miller

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION—Chief Financial Officer

I, Charles F. Boyle, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Universal Health Realty Income Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2023

/s/ Charles F. Boyle

Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Universal Health Realty Income Trust (the “Trust”) on Form 10-Q for the quarter ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan B. Miller, President and Chief Executive Officer of the Trust, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(i) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust at the end of, and for the period covered by, the Report.

/s/ Alan B. Miller

President and Chief Executive Officer

August 8, 2023

A signed original of this written statement required by Section 906 has been provided to the Trust and will be retained and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Universal Health Realty Income Trust (the “Trust”) on Form 10-Q for the quarter ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles F. Boyle, Senior Vice President and Chief Financial Officer of the Trust, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(i) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust at the end of, and for the period covered by, the Report.

/s/ Charles F. Boyle

Senior Vice President and Chief Financial Officer

 August 8, 2023

A signed original of this written statement required by Section 906 has been provided to the Trust and will be retained and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2023	Jul. 31, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Entity Registrant Name	UNIVERSAL HEALTH REALTY INCOME TRUST
Entity Central Index Key	0000798783
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		13,822,102
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity File Number	1-9321
Entity Tax Identification Number	23-6858580
Entity Address, Address Line One	UNIVERSAL CORPORATE CENTER
Entity Address, Address Line Two	367 SOUTH GULPH ROAD
Entity Address, City or Town	KING OF PRUSSIA
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19406-0958
City Area Code	610
Local Phone Number	265-0688
Entity Interactive Data Current	Yes
Title of 12(b) Security	Shares of beneficial interest, $0.01 par value
Trading Symbol	UHT
Security Exchange Name	NYSE
Entity Incorporation, State or Country Code	MD
Document Quarterly Report	true
Document Transition Report	false

XML

Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenues:
Revenues, Total		$ 23,806	$ 22,171	$ 47,032	$ 44,346
Expenses:
Depreciation and amortization		6,849	6,679	13,467	13,388
Other operating expenses		8,250	6,986	15,771	13,853
Costs and Expenses, Total		16,422	14,931	31,863	29,731
Income before equity in income of unconsolidated limited liability companies ("LLCs") and interest expense		7,384	7,240	15,169	14,615
Equity in income of unconsolidated LLCs		268	345	639	597
Interest expense, net		(4,176)	(2,367)	(7,873)	(4,589)
Net income		$ 3,476	$ 5,218	$ 7,935	$ 10,623
Basic earnings per share		$ 0.25	$ 0.38	$ 0.58	$ 0.77
Diluted earnings per share		$ 0.25	$ 0.38	$ 0.57	$ 0.77
Weighted average number of shares outstanding - Basic		13,784	13,768	13,781	13,766
Weighted average number of shares outstanding - Diluted		13,809	13,789	13,806	13,788
Management Service
Expenses:
Advisory fees to UHS		$ 1,323	$ 1,266	$ 2,625	$ 2,490
UHS Facilities
Revenues:
Lease revenue	[1]	8,236	7,394	16,023	14,820
Interest income on financing leases - UHS facilities		1,365	1,369	2,731	2,739
UHS Facilities | Other
Revenues:
Other revenue		245	233	476	462
Non-Related Parties
Revenues:
Lease revenue		13,668	12,933	27,029	25,828
Non-Related Parties | Other
Revenues:
Other revenue		$ 292	$ 242	$ 773	$ 497

[1] Includes bonus rental on McAllen Medical Center, a UHS acute care hospital facility of $730 and $643 for the three-month periods ended June 30, 2023 and 2022, respectively, and $1,495 and $1,321 for the six-month periods ended June 30, 2023 and 2022, respectively.

XML

Condensed Consolidated Statements of Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
UHS Hospital Facilities | McAllen Medical Center
Bonus rental	$ 730	$ 643	$ 1,495	$ 1,321

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Net Income (Loss)	$ 3,476	$ 5,218	$ 7,935	$ 10,623
Other comprehensive gain/(loss):
Unrealized derivative gain/(loss) on cash flow hedges	715	2,005	(1,032)	7,689
Total other comprehensive gain/(loss):	715	2,005	(1,032)	7,689
Total comprehensive income	$ 4,191	$ 7,223	$ 6,903	$ 18,312

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Real Estate Investments:
Buildings and improvements and construction in progress	$ 642,619	$ 641,338
Accumulated depreciation	(252,365)	(248,772)
Real Estate Investment Property, Net, Total	390,254	392,566
Land	56,631	56,631
Net Real Estate Investments	446,885	449,197
Financing receivable from UHS	83,444	83,603
Net Real Estate Investments and Financing receivable	530,329	532,800
Investments in and advances to limited liability companies ("LLCs")	9,296	9,282
Other Assets:
Cash and cash equivalents	9,459	7,614
Lease and other receivables from UHS	5,944	5,388
Lease receivable - other	8,379	8,445
Intangible assets (net of accumulated amortization of $13.1 million and $15.4 million, respectively)	8,343	9,447
Right-of-use land assets, net	11,010	11,457
Deferred charges and other assets, net	20,203	23,107
Total Assets	602,963	607,540
Liabilities:
Line of credit borrowings	311,400	298,100
Mortgage notes payable, non-recourse to us, net	39,741	44,725
Accrued interest	335	373
Accrued expenses and other liabilities	12,531	12,873
Ground lease liabilities, net	11,010	11,457
Tenant reserves, deposits and deferred and prepaid rents	11,311	10,911
Total Liabilities	386,328	378,439
Equity:
Preferred shares of beneficial interest, $.01 par value; 5,000,000 shares authorized; none issued and outstanding
Common shares, $.01 par value; 95,000,000 shares authorized; issued and outstanding: 2023 - 13,822,027; 2022 - 13,803,335	138	138
Capital in excess of par value	269,923	269,472
Cumulative net income	818,596	810,661
Cumulative dividends	(883,001)	(863,181)
Accumulated other comprehensive income	10,979	12,011
Total Equity	216,635	229,101
Total Liabilities and Equity	$ 602,963	$ 607,540

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Intangible assets, accumulated amortization	$ 13.1	$ 15.4
Preferred shares of beneficial interest, par value	$ 0.01	$ 0.01
Preferred shares of beneficial interest, shares authorized	5,000,000	5,000,000
Preferred shares of beneficial interest, issued	0	0
Preferred shares of beneficial interest, outstanding	0	0
Common shares, par value	$ 0.01	$ 0.01
Common shares, shares authorized	95,000,000	95,000,000
Common shares, issued	13,822,027	13,803,335
Common shares, outstanding	13,822,027	13,803,335

XML

Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Thousands	Total	Common stock	Capital in excess of par value	Cumulative net income	Cumulative dividends	Accumulated other comprehensive income/(loss)
Balance at Dec. 31, 2021	$ 235,327	$ 138	$ 268,515	$ 789,559	$ (823,998)	$ 1,113
Balance, Shares at Dec. 31, 2021		13,785
Shares of Beneficial Interest:
Issued, net	93		93
Issued, net (in shares)		16
Restricted stock-based compensation expense	431		431
Dividends and dividend equivalents	(19,517)				(19,517)
Comprehensive income:
Net income	10,623			10,623
Unrealized net gain/(loss) on cash flow hedges	7,689					7,689
Subtotal - comprehensive income	18,312			10,623		7,689
Balance at Jun. 30, 2022	234,646	$ 138	269,039	800,182	(843,515)	8,802
Balance, Shares at Jun. 30, 2022		13,801
Balance at Mar. 31, 2022	236,974	$ 138	268,792	794,964	(833,717)	6,797
Balance, Shares at Mar. 31, 2022		13,786
Shares of Beneficial Interest:
Issued, net	39		39
Issued, net (in shares)		15
Restricted stock-based compensation expense	208		208
Dividends and dividend equivalents	(9,798)				(9,798)
Comprehensive income:
Net income	5,218			5,218
Unrealized net gain/(loss) on cash flow hedges	2,005					2,005
Subtotal - comprehensive income	7,223			5,218		2,005
Balance at Jun. 30, 2022	234,646	$ 138	269,039	800,182	(843,515)	8,802
Balance, Shares at Jun. 30, 2022		13,801
Balance at Dec. 31, 2022	229,101	$ 138	269,472	810,661	(863,181)	12,011
Balance, Shares at Dec. 31, 2022		13,803
Shares of Beneficial Interest:
Issued, net	75		75
Issued, net (in shares)		19
Restricted stock-based compensation expense	376		376
Dividends and dividend equivalents	(19,820)				(19,820)
Comprehensive income:
Net income	7,935			7,935
Unrealized net gain/(loss) on cash flow hedges	(1,032)					(1,032)
Subtotal - comprehensive income	6,903			7,935		(1,032)
Balance at Jun. 30, 2023	216,635	$ 138	269,923	818,596	(883,001)	10,979
Balance, Shares at Jun. 30, 2023		13,822
Balance at Mar. 31, 2023	222,170	$ 138	269,698	815,120	(873,050)	10,264
Balance, Shares at Mar. 31, 2023		13,804
Shares of Beneficial Interest:
Issued, net	37		37
Issued, net (in shares)		18
Restricted stock-based compensation expense	188		188
Dividends and dividend equivalents	(9,951)				(9,951)
Comprehensive income:
Net income	3,476			3,476
Unrealized net gain/(loss) on cash flow hedges	715					715
Subtotal - comprehensive income	4,191			3,476		715
Balance at Jun. 30, 2023	$ 216,635	$ 138	$ 269,923	$ 818,596	$ (883,001)	$ 10,979
Balance, Shares at Jun. 30, 2023		13,822

XML

Condensed Consolidated Statements of Changes in Equity (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Stockholders' Equity [Abstract]
Dividends and dividend equivalents, per share	$ 0.72	$ 0.71	$ 1.435	$ 1.415

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net income	$ 7,935	$ 10,623
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	13,467	13,388
Amortization related to above/below market leases, net	(73)	(72)
Amortization of debt premium	(24)	(25)
Amortization of deferred financing costs	347	359
Stock-based compensation expense	376	431
Changes in assets and liabilities:
Lease receivable	(490)	(713)
Accrued expenses and other liabilities	(618)	273
Tenant reserves, deposits and deferred and prepaid rents	(241)	(275)
Accrued interest	(38)	(23)
Leasing costs paid	(604)	(770)
Other, net	2,285	1,744
Net cash provided by operating activities	22,322	24,940
Cash flows from investing activities:
Investments in LLCs	(3,869)
Cash distributions from LLCs	369	391
Advance received from LLC	3,500
Additions to real estate investments, net	(8,789)	(11,223)
Deposit on real estate assets	(100)
Cash paid for acquisition of properties		(13,620)
Net cash paid as part of asset exchange transaction		(1,346)
Net cash used in investing activities	(8,889)	(25,798)
Cash flows from financing activities:
Net borrowings on the line of credit	13,300	12,400
Repayments of mortgage notes payable	(4,995)	(6,170)
Financing costs paid	(132)	(26)
Dividends paid	(19,837)	(19,545)
Issuance of shares of beneficial interest, net	76	94
Net cash used in financing activities	(11,588)	(13,247)
Increase/(decrease) in cash and cash equivalents	1,845	(14,105)
Cash and cash equivalents, beginning of period	7,614	22,504
Cash and cash equivalents, end of period	9,459	8,399
Supplemental disclosures of cash flow information:
Interest paid	7,736	4,333
Invoices accrued for construction and improvements	$ 1,808	$ 1,709

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ 3,476	$ 5,218	$ 7,935	$ 10,623

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Insider Trading Arrangements	6 Months Ended
	Jun. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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General

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

General

(1) General

This Quarterly Report on Form 10-Q is for the quarter ended June 30, 2023. In this Quarterly Report, “we,” “us,” “our” and the “Trust” refer to Universal Health Realty Income Trust and its subsidiaries.

In this Quarterly Report on Form 10-Q, the term “revenues” does not include the revenues of the unconsolidated LLCs in which we have various non-controlling equity interests ranging from 33% to 95%. As of June 30, 2023, we had investments in four jointly-owned LLCs/LPs. We currently account for our share of the income/loss from these investments by the equity method (see Note 5).

The condensed consolidated financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the SEC and reflect all normal and recurring adjustments which, in our opinion, 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 in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations, although we believe that the accompanying disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements, the notes thereto and accounting policies included in our Annual Report on Form 10-K for the year ended December 31, 2022.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes.

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Relationship with Universal Health Services, Inc. ("UHS") and Related Party Transactions

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Relationship with Universal Health Services, Inc. ("UHS") and Related Party Transactions

(2) Relationship with Universal Health Services, Inc. (“UHS”) and Related Party Transactions

Leases: We commenced operations in 1986 by purchasing certain properties from subsidiaries of UHS and immediately leasing the properties back to the respective subsidiaries. The base rentals and lease and renewal terms for each of the hospitals leased to subsidiaries of UHS as of June 30, 2023, are provided below. The base rents are paid monthly. The lease on McAllen Medical Center also provides for bonus rent which is paid quarterly based upon a computation that compares the hospital’s current quarter revenue to a corresponding quarter in the base year. The hospital leases with subsidiaries of UHS, with the exception of the lease on Clive Behavioral Health Hospital (which is operated by UHS in a joint venture with an unrelated third party), are unconditionally guaranteed by UHS and are cross-defaulted with one another. The lease for the Clive facility is guaranteed on a several basis by UHS (52%) and Catholic Health Initiatives-Iowa (48%).

The combined revenues generated from the leases on the three acute care and three behavioral health care hospital facilities leased to subsidiaries of UHS at June 30, 2023, accounted for approximately 25% and 24% of our consolidated revenues for the three months ended June 30, 2023 and 2022, respectively, and approximately 25% of our consolidated revenues for each of the six months ended June 30, 2023 and 2022. In addition to the six UHS hospital facilities, we have twenty properties consisting of medical office buildings ("MOBs"), including one newly constructed MOB that was substantially completed during the first quarter of 2023, and FEDs that are either wholly or jointly-owned by us that include, or will include, tenants which are subsidiaries of UHS. The aggregate revenues generated from UHS-related tenants comprised approximately 41% of our consolidated revenues during each of the three and six-month periods ended June 30, 2023 and 2022.

On December 31, 2021, we entered into an asset purchase and sale agreement with UHS and certain of its affiliates, which was amended during the first quarter of 2022, pursuant to the terms of which:

•a wholly-owned subsidiary of UHS purchased from us, the real estate assets of the Inland Valley Campus of Southwest Healthcare System located in Wildomar, California, at its fair market value of $79.6 million.

•two wholly-owned subsidiaries of UHS transferred to us, the real estate assets of the following properties:

oAiken Regional Medical Center, (“Aiken”), located in Aiken, South Carolina (which includes an acute care hospital and a behavioral health pavilion), at its fair-market value of approximately $57.7 million, and;

oCanyon Creek Behavioral Health (“Canyon Creek”), located in Temple, Texas, at its fair-market value of approximately $26.0 million.

•in connection with this transaction, since the fair-market value of Aiken and Canyon Creek, which totaled approximately $83.7 million in the aggregate, exceeded the $79.6 million fair-market value of the Inland Valley Campus of Southwest Healthcare System, we paid approximately $4.1 million in cash to UHS. As we no longer have a controlling interest in

Inland Valley Campus of Southwest Healthcare System, the transaction generated a gain of approximately $68.4 million which was included in our consolidated statement of income for the year ended December 31, 2021.

As a result of UHS’ purchase option within the lease agreements of Aiken and Canyon Creek, the transaction is accounted for as a failed sale leaseback in accordance with U.S. GAAP and the properties acquired by us in connection with the asset purchase and sale agreement with UHS, as amended, were accounted for as financing arrangements and our consolidated balance sheets as of June 30, 2023 and December 31, 2022 include financing receivables related to this transaction of $83.4 million and $83.6 million, respectively. Additionally, we structured the purchase and sale of the above-mentioned properties as a like-kind exchange of property under the provisions of Section 1031 of the Internal Revenue Code of 1986, as amended.

Also on December 31, 2021, Aiken and Canyon Creek (as lessees), entered into a master lease and individual property leases as amended, (with us as lessor), for initial lease terms on each property of approximately twelve years, ending on December 31, 2033. Subject to the terms of the master lease, Aiken and Canyon Creek have the right to renew their leases, at the then current fair market rent (as defined in the master lease), for seven, five-year optional renewal terms. Pursuant to the leases, as amended during the first quarter of 2022, the aggregate annual rental rate during 2023 on the acquired properties, which is payable to us on a monthly basis, is approximately $5.8 million ($4.0 million related to Aiken and $1.8 million related to Canyon Creek). The portion of the lease payments that is included in our consolidated statements of income, and reflected as interest income on financing leases, was approximately $1.4 million for each of the three months ended June 30, 2023 and 2022, and approximately $2.7 million for each of the six-month periods ended June 30, 2023 and 2022. There is no bonus rental component applicable to either of these leases.

Pursuant to the terms of the master leases by and among us and certain subsidiaries of UHS, dated December 24, 1986 and December 31, 2021 (the “Master Leases”), which govern the leases of McAllen Medical Center, Wellington Regional Medical Center (governed by the Master Lease dated December 24, 1986), Aiken Regional Medical Center and Canyon Creek Behavioral Health (governed by the Master Lease dated December 31, 2021, as amended), all of which are hospital properties that are wholly-owned subsidiaries of UHS, UHS has the option, among other things, to renew the leases at the lease terms described below by providing notice to us at least 90 days prior to the termination of the then current term. UHS also has the right to purchase the respective leased facilities from us at their appraised fair market value upon any of the following: (i) at the end of the lease terms or any renewal terms; (ii) upon one month’s notice should a change of control of the Trust occur, or; (iii) within the time period as specified in the leases in the event that UHS provides notice to us of their intent to offer a substitution property/properties in exchange for one (or more) of the four wholly-owned UHS hospital facilities leased from us, should we be unable to reach an agreement with UHS on the properties to be substituted. Additionally, UHS has rights of first refusal to: (i) purchase the respective leased facilities during and for a specified period after the lease terms 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 a specified period after, the lease term at the same terms and conditions pursuant to any third-party offer.

In addition, a wholly-owned subsidiary of UHS is the managing, majority member in a joint-venture with an unrelated third-party that operates, and leases from us, Clive Behavioral Health. This 100-bed behavioral health care facility is located in Clive, Iowa and was completed and opened in late December, 2020 and the hospital lease commenced on December 31, 2020. The lease on this facility is triple net and has an initial term of 20 years with five 10-year renewal options. On each January 1st through 2040 (and potentially through 2070 if the first three of five, 10-year renewal options are exercised), the annual rental will increase by 2.75% on a cumulative and compounded basis. The first three of the five 10-year renewal options will provide for annual rental as stipulated in the lease (2041 through 2070) and the two additional 10-year lease renewal options will be at fair market value lease rates (2071 through 2090). Pursuant to the lease on this facility, the joint venture has the option to, among other things, renew the lease at the terms specified in the lease agreement by providing notice to us at least 270 days prior to the termination of the then current term. The joint venture also has the right to purchase the leased facility from us at its appraised fair market value upon either of the following: (i) by providing notice at least 270 days prior to the end of the lease terms or any renewal terms, or; (ii) upon 30 days’ notice anytime within 12 months of a change of control of the Trust (UHS also has this right should the joint venture decline to exercise its purchase right). Additionally, the joint venture has rights of first offer to purchase the facility prior to any third-party sale.

The table below details the existing lease terms and renewal options for each of the hospital leases that are related to UHS as of June 30, 2023, consisting of three acute care hospitals and three behavioral health hospitals:

Hospital Name	Annual Minimum Rent		End of Lease Term	Renewal Term (years)
McAllen Medical Center	$	5,485,000	December, 2026		5	(a)
Wellington Regional Medical Center	$	6,477,000	December, 2026		5	(b)
Aiken Regional Medical Center/Aurora Pavilion Behavioral Health Services	$	3,982,000	December, 2033		35	(c)
Canyon Creek Behavioral Health	$	1,800,000	December, 2033		35	(c)
Clive Behavioral Health Hospital	$	2,701,000	December, 2040		50	(d)

(a)UHS has one 5-year renewal option at existing lease rates (through 2031).

(b)UHS has one 5-year renewal option at fair market value lease rates (through 2031; see additional disclosure below). The annual rental will increase by 2.5% on an annual compounded basis on each January 1st through 2026.

(c)UHS has seven 5-year renewal options at fair market value lease rates (2034 through 2068). The annual rental rate will increase by 2.25% on a cumulative and compounded basis on each January 1st through 2033.

(d)The UHS-related joint venture has five 10-year renewal options; the first three of the five 10-year renewal options will be at computed lease rates as stipulated in the lease (2041 through 2070) and the last two 10-year renewal options will be at fair market lease rates (2071 through 2090). On each January 1st through 2040 (and potentially through 2070 if the first three of five, 10-year renewal options are exercised), the annual rental will increase by 2.75% on a cumulative and compounded basis.

Upon the December 31, 2021 expiration of the lease on Wellington Regional Medical Center located in West Palm Beach, Florida, a wholly-owned subsidiary of UHS exercised its fair market value renewal option and renewed the lease for a 5-year term scheduled to expire on December 31, 2026. Effective January 1, 2023, the annual lease rate for this hospital, which is payable to us monthly, is $6.5 million (there is no bonus rental component of the lease payment).

Management cannot predict whether the leases with wholly-owned subsidiaries of UHS, which have renewal options at existing lease rates or fair market value lease rates, or any of our other leases, will be renewed at the end of their lease term. If the leases are not renewed at their current rates or the fair market value lease rates, we would be required to find other operators for those facilities and/or enter into leases on terms potentially less favorable to us than the current leases. In addition, if subsidiaries of UHS exercise their options to purchase the respective leased hospital or FED facilities upon expiration of the lease terms, our future revenues could decrease if we were unable to earn a favorable rate of return on the sale proceeds received, as compared to the rental revenue currently earned pursuant to these leases.

During the first quarter of 2023, construction was substantially completed on Sierra Medical Plaza I, a multi-tenant MOB located in Reno, Nevada, consisting of approximately 86,000 rentable square feet. This MOB is located on the campus of the Northern Nevada Sierra Medical Center, a newly constructed acute care hospital that is owned and operated by a wholly-owned subsidiary of UHS, which was completed and opened during April of 2022. The cost of the MOB is estimated to be approximately $35 million, approximately $24 million of which was incurred as of June 30, 2023. In connection with this MOB, we entered into a ground lease and master flex-lease agreement with a wholly-owned subsidiary of UHS. The master flex lease agreement has a ten-year term scheduled to expire on March 31, 2033, and covers approximately 68% of the rentable square feet of the MOB at an initial minimum rent of $1.3 million annually plus a pro-rata share of the common area maintenance expenses. The master flex-lease is subject to a reduction during the term based upon the execution of third-party leases. The ground lease and the master flex lease each commenced during March, 2023.

During the fourth quarter of 2021, we purchased the 5% minority ownership interest held by a third-party member in Grayson Properties, LP which owns the Texoma Medical Plaza, an MOB located in Denison, Texas for approximately $3.1 million. The MOB is located on the campus of Texoma Medical Center, a hospital that is owned and operated by a wholly-owned subsidiary of UHS. A third-party appraisal was completed to determine the fair value of the property. As a result of this minority ownership purchase during the fourth quarter of 2021, we own 100% of the LP and are therefore consolidating this LP effective with the purchase date. There was no material impact on our net income as a result of the consolidation of this LP subsequent to the transaction. Please see Note 5 for additional disclosure surrounding this transaction.

In May, 2021, we acquired the Fire Mesa office building located in Las Vegas, Nevada for a purchase price of approximately $12.9 million. The building is 100% leased under the terms of a triple net lease by a wholly-owned subsidiary of UHS. The initial lease is scheduled to expire on August 31, 2027 and has two five-year renewal options. The acquisition of this office building was part of a series of planned tax deferred like-kind exchange transactions pursuant to Section 1031 of the Internal Revenue Code, as amended.

We are the lessee on thirteen ground leases with subsidiaries of UHS (for consolidated and unconsolidated investments), including one that commenced in March, 2023. The remaining lease terms on the ground leases with subsidiaries of UHS range from approximately

26 years to approximately 75 years. The annual aggregate lease payments on these properties are approximately $563,000 during each of the years ended 2023 through 2027, and an aggregate of $31.4 million thereafter. See Note 7 for additional lease accounting disclosure.

Officers and Employees: Our officers are all employees of a wholly-owned subsidiary of UHS and although as of June 30, 2023 we had no salaried employees, our officers do typically receive annual stock-based compensation awards in the form of restricted stock. In special circumstances, if warranted and deemed appropriate by the Compensation Committee of the Board of Trustees, our officers may also receive one-time special compensation awards in the form of restricted stock and/or cash bonuses.

Advisory Agreement: UHS of Delaware, Inc. (the “Advisor”), a wholly-owned subsidiary of UHS, serves as Advisor to us under an advisory agreement dated December 24, 1986, and as amended and restated as of January 1, 2019 (the “Advisory Agreement”). Pursuant to the Advisory Agreement, the Advisor is obligated to present an investment program to us, to use its best efforts to obtain investments suitable for such program (although it is not obligated to present any particular investment opportunity to us), to provide administrative services to us and to conduct our day-to-day affairs. All transactions between us and UHS must be approved by the Trustees who are unaffiliated with UHS (the “Independent Trustees”). In performing its services under the Advisory Agreement, the Advisor may utilize independent professional services, including accounting, legal, tax and other services, for which the Advisor is reimbursed directly by us. The Advisory Agreement may be terminated for any reason upon sixty days written notice by us or the Advisor. The Advisory Agreement expires on December 31 of each year; however, it is renewable by us, subject to a determination by the Independent Trustees, that the Advisor’s performance has been satisfactory. The Advisory Agreement was renewed for 2023 with the same terms as the Advisory Agreement in place during 2022 and 2021.

Our advisory fee for the three and six months ended June 30, 2023 and 2022, was computed at 0.70% of our average invested real estate assets, as derived from our condensed consolidated balance sheets. Based upon a review of our advisory fee and other general and administrative expenses, as compared to an industry peer group, the advisory fee computation remained unchanged for 2023, as compared to the last three years. The average real estate assets for advisory fee calculation purposes exclude certain items from our condensed consolidated balance sheet such as, among other things, accumulated depreciation, cash and cash equivalents, lease receivables, deferred charges and other assets. The advisory fee is payable quarterly, subject to adjustment at year-end based upon our audited financial statements. Advisory fees incurred and paid (or payable) to UHS amounted to approximately $1.3 million for each of the three-month periods ended June 30, 2023 and 2022, and were based upon average invested real estate assets of $756 million and $723 million, respectively. Advisory fees incurred and paid (or payable) to UHS amounted to approximately $2.6 million and $2.5 million for the six-month periods ended June 30, 2023 and 2022, respectively, and were based upon average invested real estate assets of $750 million and $711 million, respectively.

Share Ownership: As of June 30, 2023 and December 31, 2022, UHS owned 5.7% of our outstanding shares of beneficial interest.

SEC reporting requirements of UHS: UHS is subject to the reporting requirements of the SEC and is required to file annual reports containing audited financial information and quarterly reports containing unaudited financial information. Since the aggregate revenues generated from the UHS-related tenants comprised approximately 41% of our consolidated revenues during each of the three and six-month periods ended June 30, 2023 and 2022, and since a subsidiary of UHS is our Advisor, you are encouraged to obtain the publicly available filings for Universal Health Services, Inc. from the SEC’s website. These filings are the sole responsibility of UHS and are not incorporated by reference herein.

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Dividends and Equity Issuance Program

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Dividends and Equity Issuance Program

(3) Dividends and Equity Issuance Program

Dividends and dividend equivalents:

During the second quarter of 2023, we declared and paid dividends of approximately $10.0 million (including accrued dividends that were paid related to the vesting of restricted stock), or $.720 per share. We declared and paid dividends of approximately $9.8 million (including accrued dividends that were paid related to the vesting of restricted stock), or $.71 per share, during the second quarter of 2022. During the six-month period ended June 30, 2023, we declared and paid dividends of approximately $19.8 million, or $1.435 per share. During the six-month period ended June 30, 2022, we declared and paid dividends of approximately $19.5 million, or $1.415 per share. Dividend equivalents, which are applicable to shares of unvested restricted stock, were accrued during the first six months of 2023 and 2022 and will be paid upon vesting of the restricted stock.

Equity Issuance Program:

During the second quarter of 2020, we commenced an at-the-market (“ATM”) equity issuance program, pursuant to the terms of which we may sell, from time-to-time, common shares of our beneficial interest up to an aggregate sales price of $100 million to or through our agent banks. The common shares will be offered pursuant to the Registration Statement filed with the Securities and Exchange Commission, which became effective in June 2020.

No shares were issued pursuant to this ATM equity program during the first six months of 2023. Pursuant to this ATM program, since the program commenced in the second quarter of 2020, we have issued 2,704 shares at an average price of $101.30 per share, which generated approximately $270,000 of net proceeds (net of approximately $4,000, consisting of compensation to BofA Securities, Inc.).

Additionally, as of June 30, 2023, we have paid or incurred approximately $508,000 in various fees and expenses related to the commencement of our ATM program.

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Acquisitions and Divestitures

6 Months Ended

Jun. 30, 2023

Business Combinations [Abstract]

Acquisitions and Divestitures

(4) Acquisitions and Divestitures

Six Months Ended June 30, 2023:

New Construction:

In January 2022, we entered into a ground lease and master flex-lease agreement with a wholly-owned subsidiary of UHS to develop, construct and own the real property of Sierra Medical Plaza I, an MOB located in Reno, Nevada, consisting of approximately 86,000 rentable square feet. This MOB is located on the campus of the Northern Nevada Sierra Medical Center, a newly constructed hospital that is owned and operated by a wholly-owned subsidiary of UHS, which was completed and opened during April of 2022. Construction of this MOB, for which we engaged a non-related third party to act as construction manager, commenced in January, 2022, and was substantially completed in March, 2023. The aggregate cost of the MOB is estimated to be approximately $35 million, approximately $24 million of which was incurred as of June 30, 2023. The master flex lease agreement in connection with this building, which commenced in March, 2023 and has a ten-year term scheduled to expire on March 31, 2033, covers approximately 68% of the rentable square feet of the MOB at an initial minimum rent of $1.3 million annually, plus a pro-rata share of the common area maintenance expenses. The master flex lease agreement is subject to reduction based upon the execution of third-party leases. Additionally, the ground lease for this property commenced and a right-of-use asset and lease liability was recorded in connection with this lease during the first quarter of 2023.

Acquisitions:

There were no acquisitions during the first six months of 2023.

Divestitures:

There were no divestitures during the first six months of 2023.

Six Months Ended June 30, 2022:

Acquisitions:

During the first quarter of 2022, we completed two transactions, as described below, utilizing qualified third-party intermediaries as part of a series of planned tax-deferred like-kind exchange transactions pursuant to Section 1031 of the Internal Revenue Code, as amended.

In March, 2022, we acquired the Beaumont Heart and Vascular Center, a medical office building located in Dearborn, Michigan for a purchase price of approximately $5.4 million. The building, which has approximately 17,621 rentable square feet, is 100% leased to a single tenant under the terms of a triple-net lease that is scheduled to expire on November 30, 2026 and has lease escalations of 2.5% per year that commenced on December 1, 2022.

In January, 2022, we acquired the 140 Thomas Johnson Drive medical office building located in Frederick, Maryland for a purchase price of approximately $8.0 million. The building, which has approximately 20,146 rentable square feet, is 100% leased to three tenants under the terms of triple-net leases. Approximately 72% of the rentable square feet of this MOB is leased pursuant to a 15-year lease, with a remaining lease term of approximately 14 years at the time of purchase, with three, five-year renewal options.

Divestitures:

There were no divestitures during the first six months of 2022.

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Summarized Financial Information of Equity Affiliates

6 Months Ended

Jun. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

Summarized Financial Information of Equity Affiliates

(5) Summarized Financial Information of Equity Affiliates

In accordance with U.S. GAAP and guidance relating to accounting for investments and real estate ventures, we account for our unconsolidated investments in LLCs/LPs which we do not control using the equity method of accounting. The third-party members in these investments have equal voting rights with regards to issues such as, but not limited to: (i) divestiture of property; (ii) annual budget approval, and; (iii) financing commitments. These investments, which represent 33% to 95% non-controlling ownership interests, are recorded initially at our cost and subsequently adjusted for our net equity in the net income, cash contributions to, and distributions from, the investments. Pursuant to certain agreements, allocations of sales proceeds and profits and losses of some of the LLC investments may be allocated disproportionately as compared to ownership interests after specified preferred return rate thresholds have been satisfied.

Distributions received from equity method investees in the consolidated statements of cash flows are classified based upon the nature of the distribution. Returns on investments are presented net of equity in income from unconsolidated investments as cash flows from operating activities. Returns of investments are classified as cash flows from investing activities.

At June 30, 2023, we have non-controlling equity investments or commitments in four jointly-owned LLCs/LPs which own MOBs. As of June 30, 2023 we accounted for these LLCs/LPs on an unconsolidated basis pursuant to the equity method since they are not variable interest entities which we are the primary beneficiary nor do we have a controlling voting interest. The majority of these entities are joint-ventures between us and non-related parties that hold minority ownership interests in the entities. Each entity is generally self-sustained from a cash flow perspective and generates sufficient cash flow to meet its operating cash flow requirements and service the third-party debt (if applicable) that is non-recourse to us. Although there is typically no ongoing financial support required from us to these entities since they are cash-flow sufficient, we may, from time to time, provide funding for certain purposes such as, but not limited to, significant capital expenditures, leasehold improvements and debt financing. Although we are not obligated to do so, if approved by us at our sole discretion, additional cash funding is typically advanced as equity or member loans. These entities maintain property insurance on the properties.

During the fourth quarter of 2021, we purchased the 5% minority ownership interest, held by the third-party member in Grayson Properties, LP which owns the Texoma Medical Plaza, in which we previously held a noncontrolling majority ownership interest. As a result of this minority ownership purchase, we now own 100% of the LP and began to account for it on a consolidated basis effective November 1, 2021. Prior to November 1, 2021, the LP was accounted for on an unconsolidated basis pursuant to the equity method.

The following property table represents the four LLCs/LPs in which we owned a non-controlling interest and were accounted for under the equity method as of June 30, 2023:

Name of LLC/LP	Ownership			Property Owned by LLC/LP
Suburban Properties		33	%	St. Matthews Medical Plaza II
Brunswick Associates (a.)(b.)		74	%	Mid Coast Hospital MOB
FTX MOB Phase II (c.)		95	%	Forney Medical Plaza II
Grayson Properties II (d.)(e.)		95	%	Texoma Medical Plaza II

(a.)This LLC has a third-party term loan of $8.6 million, which is non-recourse to us, outstanding as of June 30, 2023.

(b.)We are the lessee with a third party on a ground lease for land.

(c.)During the first quarter of 2021, this LP paid off its $4.7 million mortgage loan upon maturity, utilizing pro rata equity contributions from the limited partners as well as a $3.5 million member loan from us to the LP which was funded utilizing borrowings from our revolving credit agreement. During the first quarter of 2023, the LP repaid $175,000 of the member loan and the remaining $3.3 million member loan balance was converted to an equity investment in the LP.

(d.)Construction of this MOB was substantially completed in December, 2020. This MOB is located in Denison, Texas on the campus of a hospital owned and operated by a wholly-owned subsidiary of UHS. We have committed to invest up to $5.0 million in equity and debt financing, $2.2 million of which has been funded as of June 30, 2023. This LP entered into a $13.1 million third-party construction loan commitment, which is non-recourse to us, which has an outstanding balance of $12.9 million as of June 30, 2023. Monthly principal and interest payments on this loan commenced on January 1, 2023. The LP developed, constructed, owns and operates the Texoma II Medical Plaza.

(e.)We are the lessee with a UHS-related party for the land related to this property.

Below are the condensed combined statements of income (unaudited) for the four LLCs/LPs accounted for under the equity method at June 30, 2023 and 2022:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(amounts in thousands)				(amounts in thousands)
Revenues	$	2,043	$	2,049	$	4,269	$	3,979
Operating expenses		812		737		1,717		1,463
Depreciation and amortization		461		463		916		923
Interest, net		198		269		439		531
Net income	$	572	$	580	$	1,197	$	1,062
Our share of net income	$	268	$	345	$	639	$	597

Below are the condensed combined balance sheets (unaudited) for the four above-mentioned LLCs/LPs that were accounted for under the equity method as of June 30, 2023 and December 31, 2022:

	June 30, 2023			December 31, 2022
	(amounts in thousands)
Net property, including construction in progress	$	29,013		$	29,573
Other assets (a.)		5,331			4,334
Total assets	$	34,344		$	33,907
Other liabilities (a.)	$	2,781		$	2,338
Mortgage notes payable, non-recourse to us		21,506			21,802
Advances payable to us (b.)		-			3,500
Equity		10,057			6,267
Total liabilities and equity	$	34,344		$	33,907
Investments in and advances to LLCs before amounts included in
accrued expenses and other liabilities	$	9,296		$	9,282
Amounts included in accrued expenses and other liabilities		(1,724	)		(1,709	)
Our share of equity in LLCs, net	$	7,572		$	7,573

(a.)Other assets and other liabilities as of June 30, 2023 and December 31, 2022 include approximately $653,000 and $654,000, respectively, of right-of-use land assets and right-of-use land liabilities related to ground leases whereby the LLC/LP is the lessee, with third party lessors, including subsidiaries of UHS.

(b.)This 7.25% member loan to FTX MOB Phase II, LP had a maturity date of March 1, 2023. Upon the maturity date, the LP repaid $175,000 of the member loan to us and the remaining balance of $3.3 million was converted to an equity contribution by us.

As of June 30, 2023, and December 31, 2022, aggregate principal amounts due on mortgage notes payable by unconsolidated LLCs/LPs, which are accounted for under the equity method and are non-recourse to us, are as follows (amounts in thousands):

	Mortgage Loan Balance (a.)
Name of LLC/LP	6/30/2023		12/31/2022		Maturity Date
Brunswick Associates (2.80% fixed rate mortgage loan)	$	8,591	$	8,727	December, 2030
Grayson Properties II (3.70% fixed rate construction loan) (b.)		12,915		13,075	June, 2025
	$	21,506	$	21,802

(a.)All mortgage loans require monthly principal payments through maturity and include a balloon principal payment upon maturity.

(b.)This construction loan required interest on the outstanding principal balance to be paid on a monthly basis through December 1, 2022. On January 1, 2023, monthly principal and interest payments on this loan commenced.

Pursuant to the operating and/or partnership agreements of the four LLCs/LPs in which we continue to hold non-controlling ownership interests, the third-party member and the Trust, at any time, potentially subject to certain conditions, have the right to make an offer (“Offering Member”) to the other member(s) (“Non-Offering Member”) in which it either agrees to: (i) sell the entire ownership interest of the Offering Member to the Non-Offering Member (“Offer to Sell”) at a price as determined by the Offering Member (“Transfer Price”), or; (ii) purchase the entire ownership interest of the Non-Offering Member (“Offer to Purchase”) at the equivalent proportionate Transfer Price. The Non-Offering Member has 60 to 90 days to either: (i) purchase the entire ownership interest of the Offering Member at the Transfer Price, or; (ii) sell its entire ownership interest to the Offering Member at the equivalent proportionate Transfer Price. The closing of the transfer must occur within 60 to 90 days of the acceptance by the Non-Offering Member.

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Recent Accounting Pronouncements

(6) Recent Accounting Pronouncements

Reference Rate Reform

In March 2020, the FASB issued an accounting standard classified under FASB ASC Topic 848, “Reference Rate Reform.” The amendments in this update contain practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASC 848 is optional and may be elected over time as reference rate reform activities occur. Beginning in the first quarter of 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We will continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. In December 2022, the FASB issued ASU 2022-06, Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”) which was issued to defer the sunset date of Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform to December 31, 2024. ASU 2022-06 is effective immediately for all companies. ASU 2022-06 has no impact on the Company’s condensed consolidated financial statements for the three and six months ended June 30, 2023.

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Lease Accounting

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Lease Accounting

(7) Lease Accounting

Our results for reporting periods beginning January 1, 2019 are presented under the ASC 842 lease standard. We adopted ASC 842 effective January 1, 2019 under the modified retrospective approach and elected the optional transition method to apply the provisions of ASC 842 as of the adoption date, rather than the earliest period presented. We elected to apply certain adoption related practical expedients for all leases that commenced prior to the election date. This practical expedient allowed us to not separate expenses reimbursed by our customers (“tenant reimbursements”) from the associated rental revenue if certain criteria were met.

As Lessor:

We lease most of our operating properties to customers under agreements that are typically classified as operating leases (as noted below, two of our leases are accounted for as financing arrangements effective on December 31, 2021). We recognize the total minimum lease payments provided for under the operating leases on a straight-line basis over the lease term. Generally, under the terms of our leases, the majority of our rental expenses, including common area maintenance, real estate taxes and insurance, are recovered from our customers. We record amounts reimbursed by customers in the period that the applicable expenses are incurred, which is generally ratably throughout the term of the lease. We have elected the package of practical expedients that allows lessors to not separate lease and non-lease components by class of underlying asset. This practical expedient allowed us to not separate expenses reimbursed by our customers (“tenant reimbursements”) from the associated rental revenue if certain criteria were met. We assessed these criteria and concluded that the timing and pattern of transfer for rental revenue and the associated tenant reimbursements are the same, and for the leases that qualify as operating leases, we accounted for and presented rental revenue and tenant reimbursements as a single component under Lease revenue in our consolidated statements of income for the three and six months ended June 30, 2023 and 2022.

On December 31, 2021, as a result of the asset purchase and sale transaction with UHS, as amended during the first quarter of 2022, the real estate assets of two wholly-owned subsidiaries of UHS were transferred to us (Aiken and Canyon Creek). As discussed in Note 2, these assets are accounted for as financing arrangements and our consolidated balance sheets at June 30, 2023 and December 31, 2022 reflect financing receivables related to this transaction amounting to $83.4 million and $83.6 million, respectively. Pursuant to the leases, as amended during the first quarter of 2022, the aggregate annual rental during 2023 on the acquired properties, which is payable to us on a monthly basis, amounts to approximately $5.8 million ($4.0 million related to Aiken and $1.8 million related to Canyon Creek). The portion of these lease payments that will be included in our consolidated statements of income, and reflected as interest income on financing leases, is expected to be approximately $5.5 million during the full year of 2023. Lease revenue will not be impacted by the lease payments received related to these two properties.

The components of the “Lease revenue – UHS facilities” and “Lease revenue – Non-related parties” captions for the three and six month periods ended June 30, 2023 and 2022 are disaggregated below (in thousands). Base rents are primarily stated rent amounts provided for under the leases that are recognized on a straight-line basis over the term of the lease. Bonus rents and tenant reimbursements represent amounts where tenants are contractually obligated to pay an amount that is variable in nature.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
UHS facilities:
Base rents	$	6,506	$	6,112	$	12,780	$	12,201
Bonus rents (a.)		730		643		1,494		1,321
Tenant reimbursements		1,000		639		1,749		1,298
Lease revenue - UHS facilities	$	8,236	$	7,394	$	16,023	$	14,820
Non-related parties:
Base rents		10,480		10,109		20,714		20,244
Tenant reimbursements		3,188		2,824		6,315		5,584
Lease revenue - Non-related parties	$	13,668	$	12,933	$	27,029	$	25,828

(a.) Consists of bonus rental earned in connection with McAllen Medical Center.

Disclosures Related to Vacant Facilities:

Vacancies – Specialty Hospitals:

After evaluation of the most suitable future uses for a vacant specialty hospital located in Chicago, Illinois, as well as an effort to reduce its ongoing operating and maintenance expenses, we decided to raze the building. Demolition of the former specialty hospital located

in Chicago has been substantially completed. Demolition costs were approximately $1.5 million in the aggregate, all of which have been incurred as of June 30, 2023. These demolition costs were included in other operating expenses in our consolidated statements of income during the following periods: $332,000 during the fourth quarter of 2022, $265,000 during the first quarter of 2023 and $862,000 during the second quarter of 2023.

Including the above-mentioned demolition costs incurred during the three and six-months ended June 30, 2023, the operating expenses incurred by us in connection with the property located in Chicago, Illinois, were $983,000 and $1.4 million during the three and six-months ended June 30, 2023, respectively, (or $120,000 and $272,000 during the three and six-months ended June 30, 2023, respectively, excluding the demolition costs) as compared to $347,000 and $840,000 during the three and six-month periods ended June 30, 2022, respectively.

In addition, the aggregate operating expenses for the two vacant specialty facilities located in Evansville, Indiana, and Corpus Christi, Texas, were approximately $202,000 and $197,000 during the three-month periods ended June 30, 2023 and 2022, respectively, and approximately $389,000 and $373,000 during the six-month periods ended June 30, 2023 and 2022, respectively.

We continue to market the three above-mentioned properties to third parties. Future operating expenses related to these properties, which are estimated to be approximately $1.3 million in the aggregate during the full year of 2023 (excluding the demolition costs incurred in connection with the property in Chicago, Illinois), will be incurred by us during the time they remain owned and unleased. Should these properties continue to remain owned and unleased for an extended period of time, or should we incur substantial renovation or additional demolition costs to make the properties suitable for other operators/tenants/buyers, our future results of operations could be materially unfavorably impacted.

As Lessee:

We are the lessee with various third parties, including subsidiaries of UHS, in connection with ground leases for land at fifteen of our consolidated properties. Our right-of-use land assets represent our right to use the land for the lease term and our lease liabilities represent our obligation to make lease payments arising from the leases. Right-of-use assets and lease liabilities were recognized upon adoption of Topic 842 based on the present value of lease payments over the lease term. We utilized our estimated incremental borrowing rate, which was derived from information available as of January 1, 2019, or the commencement date of the ground lease, whichever is later, in determining the present value of lease payments for active leases on that date. A right-of-use asset and lease liability are not recognized for leases with an initial term of 12 months or less, as these short-term leases are accounted for similarly to previous guidance for operating leases. We do not currently have any ground leases with an initial term of 12 months or less. As of June 30 2023, our condensed consolidated balance sheet includes right-of-use land assets of approximately $11.0 million and ground lease liabilities of approximately $11.0 million. During the first quarter of 2023, the ground lease for the newly constructed and substantially completed Sierra Medical Plaza I commenced and a right-of-use asset and lease liability was recorded in connection with this lease.

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Debt and Financial Instruments

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Debt and Financial Instruments

(8) Debt and Financial Instruments

Debt:

Management routinely monitors and analyzes the Trust’s capital structure in an effort to maintain the targeted balance among capital resources including the level of borrowings pursuant to our revolving credit facility, the level of borrowings pursuant to non-recourse mortgage debt secured by the real property of our properties and our level of equity including consideration of additional equity issuances pursuant to our ATM equity issuance program. This ongoing analysis considers factors such as the current debt market and interest rate environment, the current/projected occupancy and financial performance of our properties, the current loan-to-value ratio of our properties, the Trust’s current stock price, the capital resources required for anticipated acquisitions and the expected capital to be generated by anticipated divestitures. This analysis, together with consideration of the Trust’s current balance of revolving credit agreement borrowings, non-recourse mortgage borrowings and equity, assists management in deciding which capital resource to utilize when events such as refinancing of specific debt components occur or additional funds are required to finance the Trust’s growth.

On May 15, 2023 we entered into the first amendment to our amended and restated revolving credit agreement ("Credit Agreement") dated as of July 2, 2021 among the Trust as borrower, the lenders party thereto and Wells Fargo Bank, N.A., as administrative agent. The amendment replaced LIBOR rate with term SOFR plus .10% ("adjusted term SOFR") as an alternative benchmark rate for purposes under the Credit Agreement for settings of benchmark rates that occur on or after the closing date in accordance with the benchmark replacement provisions set forth in the Credit Agreement.

On July 2, 2021, we entered into an amended and restated Credit Agreement to amend and restate the previously existing $350 million credit agreement, as amended and dated June 5, 2020. Among other things, under the Credit Agreement, our aggregate revolving credit commitment was increased to $375 million from $350 million. The Credit Agreement, which is scheduled to mature on July 2, 2025, provides for a revolving credit facility in an aggregate principal amount of $375 million, including a $40 million sublimit for letters of credit and a $30 million sublimit for swingline/short-term loans. Under the terms of the Credit Agreement, we may request that the revolving line of credit be increased by up to an additional $50 million. Borrowings under the new facility are guaranteed by certain

subsidiaries of the Trust. In addition, borrowings under the new facility are secured by first priority security interests in and liens on all equity interests in most of the Trust’s wholly-owned subsidiaries.

Borrowings under the Credit Agreement will bear interest annually at a rate equal to, at our option, at adjusted term SOFR for either one, three, or six months or the Base Rate, plus in either case, a specified margin depending on our total leverage ratio, as determined by the formula set forth in the Credit Agreement. The applicable margin prior to the first amendment ranges from 1.10% to 1.35% for LIBOR loans and 0.10% to 0.35% for Base Rate loans. The initial applicable margin after the first amendment is 1.20% for adjusted term SOFR loans and 0.20% for Base Rate loans. The Credit Agreement, as amended by the first amendment, defines “Base Rate” as the greatest of (a) the Administrative Agent’s prime rate, (b) the federal funds effective rate plus 1/2 of 1% and (c) one month adjusted term SOFR plus 1%. The Trust will also pay a quarterly revolving facility fee ranging from 0.15% to 0.35% (depending on the Trust’s total leverage ratio) on the committed amount of the Credit Agreement. The Credit Agreement also provides for options to extend the maturity date and borrowing availability for two additional six-month periods.

The margins over adjusted term SOFR, Base Rate and the facility fee are based upon our total leverage ratio. At June 30, 2023, the applicable margin over the adjusted term SOFR rate was 1.20%, the margin over the Base Rate was 0.20% and the facility fee was 0.20%.

At June 30, 2023, we had $311.4 million of outstanding borrowings and $3.1 million of letters of credit outstanding under our Credit Agreement. We had $60.5 million of available borrowing capacity, net of the outstanding borrowings and letters of credit outstanding as of June 30, 2023. There are no compensating balance requirements. At December 31, 2022, we had $298.1 million of outstanding borrowings, $3.1 million of outstanding letters of credit and $73.8 million of available borrowing capacity.

The Credit Agreement contains customary affirmative and negative covenants, including limitations on certain indebtedness, liens, acquisitions and other investments, fundamental changes, asset dispositions and dividends and other distributions. The Credit Agreement also contains restrictive covenants regarding the Trust’s ratio of total debt to total assets, the fixed charge coverage ratio, the ratio of total secured debt to total asset value, the ratio of total unsecured debt to total unencumbered asset value, and minimum tangible net worth, as well as customary events of default, the occurrence of which may trigger an acceleration of amounts then outstanding under the Credit Agreement. We are in compliance with all of the covenants in the Credit Agreement at June 30, 2023, and were in compliance with all of the covenants of the Credit Agreement at December 31, 2022. We also believe that we would remain in compliance if, based on the assumption that the majority of the potential new borrowings will be used to fund investments, the full amount of our commitment was borrowed.

The following table includes a summary of the required compliance ratios, giving effect to the covenants contained in the Credit Agreement (dollar amounts in thousands):

	Covenant		June 30, 2023			December 31, 2022
Tangible net worth	$	125,000	$	208,292		$	219,654
Total leverage	< 60%			43.9	%		42.9	%
Secured leverage	< 30%			5.0	%		5.6	%
Unencumbered leverage	< 60%			43.4	%		41.8	%
Fixed charge coverage	> 1.50x		3.6x			4.3x

As indicated on the following table, we have various mortgages, all of which are non-recourse to us, included on our condensed consolidated balance sheet as of June 30, 2023 (amounts in thousands):

Facility Name	Outstanding Balance (in thousands) (a.)			Interest Rate			Maturity Date
2704 North Tenaya Way fixed rate mortgage loan (b.)	$	6,165			4.95	%	November, 2023
Summerlin Hospital Medical Office Building III fixed    rate mortgage loan (b.)		12,431			4.03	%	April, 2024
Tuscan Professional Building fixed rate mortgage loan		1,394			5.56	%	June, 2025
Phoenix Children’s East Valley Care Center fixed rate    mortgage loan		8,068			3.95	%	January, 2030
Rosenberg Children's Medical Plaza fixed rate mortgage loan		11,900			4.42	%	September, 2033
Total, excluding net debt premium and net financing fees		39,958
Less net financing fees		(233	)
Plus net debt premium		16
Total mortgages notes payable, non-recourse to us, net	$	39,741

(a.)All mortgage loans require monthly principal payments through maturity and either fully amortize or include a balloon principal payment upon maturity.

(b.)This loan is scheduled to mature within the next twelve months at which time we will either refinance pursuant to a new mortgage loan or repay the mortgage balance in full utilizing borrowings under our Credit Agreement.

On January 3, 2023, the $4.2 million fixed rate mortgage loan on Desert Valley Medical Center was fully repaid utilizing borrowings under our Credit Agreement.

At June 30, 2023 and December 31, 2022, we had various mortgages, all of which were non-recourse to us, included in our condensed consolidated balance sheet. The mortgages are secured by the real property of the buildings as well as property leases and rents. The mortgages outstanding as of June 30, 2023, had a combined carrying value of approximately $40.0 million and a combined fair value of approximately $37.8 million. The mortgages outstanding as of December 31, 2022, had a combined carrying value of approximately $45.0 million and a combined fair value of approximately $43.2 million. The fair value of our debt was computed based upon quotes received from financial institutions. We consider these to be “level 2” in the fair value hierarchy as outlined in the authoritative guidance for disclosure in connection with debt instruments. Changes in market rates on our fixed rate debt impacts the fair value of debt, but it has no impact on interest incurred or cash flow.

Financial Instruments:

In March 2020, we entered into an interest rate swap agreement on a total notional amount of $55 million with a fixed interest rate of 0.565% that we designated as a cash flow hedge. The interest rate swap became effective on March 25, 2020 and is scheduled to mature on March 25, 2027. On May 15, 2023, this interest rate swap agreement was modified to replace the benchmark rate from LIBOR to term SOFR. If one-month term SOFR is above 0.505%, the counterparty pays us, and if one-month term SOFR is less than 0.505%, we pay the counterparty, the difference between the fixed rate of 0.505% and one-month term SOFR.

In January 2020, we entered into an interest rate swap agreement on a total notional amount of $35 million with a fixed interest rate of 1.4975% that we designated as a cash flow hedge. The interest rate swap became effective on January 15, 2020 and is scheduled to mature on September 16, 2024. On May 15, 2023, this interest rate swap agreement was modified to replace the benchmark rate from LIBOR to term SOFR. If the one-month term SOFR is above 1.41%, the counterparty pays us, and if the one-month term SOFR is less than 1.41%, we pay the counterparty, the difference between the fixed rate of 1.41% and one-month term SOFR.

During the third quarter of 2019, we entered into an interest rate swap agreement on a total notional amount of $50 million with a fixed interest rate of 1.144% that we designated as a cash flow hedge. The interest rate swap became effective on September 16, 2019 and is scheduled to mature on September 16, 2024. On May 15, 2023, this interest rate swap agreement was modified to replace the benchmark rate from LIBOR to term SOFR. If one-month term SOFR is above 1.064%, the counterparty pays us, and if one-month term SOFR is less than 1.064%, we pay the counterparty, the difference between the fixed rate of 1.064% and one-month term SOFR.

We measure our interest rate swaps at fair value on a recurring basis. The fair value of our interest rate swaps is based on quotes from third parties. We consider those inputs to be “level 2” in the fair value hierarchy as outlined in the authoritative guidance for disclosures in connection with derivative instruments and hedging activities. At June 30, 2023, the fair value of our interest rate swaps was a net asset of $11.0 million which is included in deferred charges and other assets on the accompanying condensed consolidated balance sheet. During the second quarter of 2023, we received approximately $1.4 million from the counterparty, adjusted for the previous quarter accrual, pursuant to the terms of the swaps. During the first six months of 2023, we received approximately $2.6 million from the counterparty, adjusted for the previous quarter accrual, pursuant to the terms of the swaps. From inception of the swap agreements through June 30, 2023 we paid or accrued approximately $2.5 million to the counterparty, offset by approximately $4.3 million in

receipts from the counterparty, adjusted for accruals, pursuant to the terms of the swap. During the second quarter of 2022, we paid or accrued approximately $122,000 to the counterparty, offset by $35,000 in receipts from the counterparty, adjusted for the previous quarter accrual, pursuant to the terms of the swaps. During the first six months of 2022, we paid or accrued approximately $412,000 to the counterparty by us, offset by $35,000 in receipts from the counterparty, adjusted for the previous quarter accrual, pursuant to the terms of the swaps. Cash flow hedges are accounted for by recording the fair value of the derivative instrument on the balance sheet as either an asset or a liability, with a corresponding amount recorded in accumulated other comprehensive income (“AOCI”) within shareholders’ equity. Amounts are reclassified from AOCI to the income statement in the period or periods the hedged transaction affects earnings. We do not expect any gains or losses on our interest rate swaps to be reclassified to earnings in the next twelve months.

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Segment Reporting

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Segment Reporting

(9) Segment Reporting

Our primary business is investing in and leasing healthcare and human service facilities through direct ownership or through joint ventures, which aggregate into a single reportable segment. We actively manage our portfolio of healthcare and human service facilities and may from time to time make decisions to sell lower performing properties not meeting our long-term investment objectives. The proceeds of sales are typically reinvested in new developments or acquisitions, which we believe will meet our planned rate of return. It is our intent that all healthcare and human service facilities will be owned or developed for investment purposes. Our revenue and net income are generated from the operation of our investment portfolio.

Our portfolio is located throughout the United States, however, we do not distinguish or group our operations on a geographical basis for purposes of allocating resources or measuring performance. We review operating and financial data for each property on an individual basis; therefore, we define an operating segment as our individual properties. Individual properties have been aggregated into one reportable segment based upon their similarities with regard to both the nature and economics of the facilities, tenants and operational processes, as well as long-term average financial performance. No individual property meets the requirements necessary to be considered its own segment.

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Relationship with Universal Health Services, Inc. ("UHS") and Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Existing Lease Terms and Renewal Options for Each of UHS Hospital Facilities

The table below details the existing lease terms and renewal options for each of the hospital leases that are related to UHS as of June 30, 2023, consisting of three acute care hospitals and three behavioral health hospitals:

Hospital Name	Annual Minimum Rent		End of Lease Term	Renewal Term (years)
McAllen Medical Center	$	5,485,000	December, 2026		5	(a)
Wellington Regional Medical Center	$	6,477,000	December, 2026		5	(b)
Aiken Regional Medical Center/Aurora Pavilion Behavioral Health Services	$	3,982,000	December, 2033		35	(c)
Canyon Creek Behavioral Health	$	1,800,000	December, 2033		35	(c)
Clive Behavioral Health Hospital	$	2,701,000	December, 2040		50	(d)

(a)UHS has one 5-year renewal option at existing lease rates (through 2031).

(b)UHS has one 5-year renewal option at fair market value lease rates (through 2031; see additional disclosure below). The annual rental will increase by 2.5% on an annual compounded basis on each January 1st through 2026.

(c)UHS has seven 5-year renewal options at fair market value lease rates (2034 through 2068). The annual rental rate will increase by 2.25% on a cumulative and compounded basis on each January 1st through 2033.

(d)The UHS-related joint venture has five 10-year renewal options; the first three of the five 10-year renewal options will be at computed lease rates as stipulated in the lease (2041 through 2070) and the last two 10-year renewal options will be at fair market lease rates (2071 through 2090). On each January 1st through 2040 (and potentially through 2070 if the first three of five, 10-year renewal options are exercised), the annual rental will increase by 2.75% on a cumulative and compounded basis.

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Summarized Financial Information of Equity Affiliates (Tables)

6 Months Ended

Jun. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

Limited Liability Companies Accounted for Under Equity Method

The following property table represents the four LLCs/LPs in which we owned a non-controlling interest and were accounted for under the equity method as of June 30, 2023:

Name of LLC/LP	Ownership			Property Owned by LLC/LP
Suburban Properties		33	%	St. Matthews Medical Plaza II
Brunswick Associates (a.)(b.)		74	%	Mid Coast Hospital MOB
FTX MOB Phase II (c.)		95	%	Forney Medical Plaza II
Grayson Properties II (d.)(e.)		95	%	Texoma Medical Plaza II

(a.)This LLC has a third-party term loan of $8.6 million, which is non-recourse to us, outstanding as of June 30, 2023.

(b.)We are the lessee with a third party on a ground lease for land.

(c.)During the first quarter of 2021, this LP paid off its $4.7 million mortgage loan upon maturity, utilizing pro rata equity contributions from the limited partners as well as a $3.5 million member loan from us to the LP which was funded utilizing borrowings from our revolving credit agreement. During the first quarter of 2023, the LP repaid $175,000 of the member loan and the remaining $3.3 million member loan balance was converted to an equity investment in the LP.

(d.)Construction of this MOB was substantially completed in December, 2020. This MOB is located in Denison, Texas on the campus of a hospital owned and operated by a wholly-owned subsidiary of UHS. We have committed to invest up to $5.0 million in equity and debt financing, $2.2 million of which has been funded as of June 30, 2023. This LP entered into a $13.1 million third-party construction loan commitment, which is non-recourse to us, which has an outstanding balance of $12.9 million as of June 30, 2023. Monthly principal and interest payments on this loan commenced on January 1, 2023. The LP developed, constructed, owns and operates the Texoma II Medical Plaza.

(e.)We are the lessee with a UHS-related party for the land related to this property.

Condensed Combined Statements of Income (Unaudited) for LLCs/LPs Accounted Under Equity Method

Below are the condensed combined statements of income (unaudited) for the four LLCs/LPs accounted for under the equity method at June 30, 2023 and 2022:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(amounts in thousands)				(amounts in thousands)
Revenues	$	2,043	$	2,049	$	4,269	$	3,979
Operating expenses		812		737		1,717		1,463
Depreciation and amortization		461		463		916		923
Interest, net		198		269		439		531
Net income	$	572	$	580	$	1,197	$	1,062
Our share of net income	$	268	$	345	$	639	$	597

Condensed Combined Balance Sheets (Unaudited) for LLCs/LPs Accounted Under Equity Method

Below are the condensed combined balance sheets (unaudited) for the four above-mentioned LLCs/LPs that were accounted for under the equity method as of June 30, 2023 and December 31, 2022:

	June 30, 2023			December 31, 2022
	(amounts in thousands)
Net property, including construction in progress	$	29,013		$	29,573
Other assets (a.)		5,331			4,334
Total assets	$	34,344		$	33,907
Other liabilities (a.)	$	2,781		$	2,338
Mortgage notes payable, non-recourse to us		21,506			21,802
Advances payable to us (b.)		-			3,500
Equity		10,057			6,267
Total liabilities and equity	$	34,344		$	33,907
Investments in and advances to LLCs before amounts included in
accrued expenses and other liabilities	$	9,296		$	9,282
Amounts included in accrued expenses and other liabilities		(1,724	)		(1,709	)
Our share of equity in LLCs, net	$	7,572		$	7,573

(a.)Other assets and other liabilities as of June 30, 2023 and December 31, 2022 include approximately $653,000 and $654,000, respectively, of right-of-use land assets and right-of-use land liabilities related to ground leases whereby the LLC/LP is the lessee, with third party lessors, including subsidiaries of UHS.

(b.)This 7.25% member loan to FTX MOB Phase II, LP had a maturity date of March 1, 2023. Upon the maturity date, the LP repaid $175,000 of the member loan to us and the remaining balance of $3.3 million was converted to an equity contribution by us.

Aggregate Principal Amounts due on Mortgage and Construction Notes Payable by Unconsolidated LLC's/LPs Accounted Under Equity Method

As of June 30, 2023, and December 31, 2022, aggregate principal amounts due on mortgage notes payable by unconsolidated LLCs/LPs, which are accounted for under the equity method and are non-recourse to us, are as follows (amounts in thousands):

	Mortgage Loan Balance (a.)
Name of LLC/LP	6/30/2023		12/31/2022		Maturity Date
Brunswick Associates (2.80% fixed rate mortgage loan)	$	8,591	$	8,727	December, 2030
Grayson Properties II (3.70% fixed rate construction loan) (b.)		12,915		13,075	June, 2025
	$	21,506	$	21,802

(a.)All mortgage loans require monthly principal payments through maturity and include a balloon principal payment upon maturity.

(b.)This construction loan required interest on the outstanding principal balance to be paid on a monthly basis through December 1, 2022. On January 1, 2023, monthly principal and interest payments on this loan commenced.

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Lease Accounting (Tables)

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Components of the "Lease Revenue - UHS facilities" and "Lease Revenue - Non-related Parties" Captions

The components of the “Lease revenue – UHS facilities” and “Lease revenue – Non-related parties” captions for the three and six month periods ended June 30, 2023 and 2022 are disaggregated below (in thousands). Base rents are primarily stated rent amounts provided for under the leases that are recognized on a straight-line basis over the term of the lease. Bonus rents and tenant reimbursements represent amounts where tenants are contractually obligated to pay an amount that is variable in nature.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
UHS facilities:
Base rents	$	6,506	$	6,112	$	12,780	$	12,201
Bonus rents (a.)		730		643		1,494		1,321
Tenant reimbursements		1,000		639		1,749		1,298
Lease revenue - UHS facilities	$	8,236	$	7,394	$	16,023	$	14,820
Non-related parties:
Base rents		10,480		10,109		20,714		20,244
Tenant reimbursements		3,188		2,824		6,315		5,584
Lease revenue - Non-related parties	$	13,668	$	12,933	$	27,029	$	25,828

(a.) Consists of bonus rental earned in connection with McAllen Medical Center.

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Debt and Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Summary of Required Compliance Ratios Giving Effect to New Covenants in Credit Agreement

The following table includes a summary of the required compliance ratios, giving effect to the covenants contained in the Credit Agreement (dollar amounts in thousands):

	Covenant		June 30, 2023			December 31, 2022
Tangible net worth	$	125,000	$	208,292		$	219,654
Total leverage	< 60%			43.9	%		42.9	%
Secured leverage	< 30%			5.0	%		5.6	%
Unencumbered leverage	< 60%			43.4	%		41.8	%
Fixed charge coverage	> 1.50x		3.6x			4.3x

Outstanding Mortgages, Excluding Net Debt Premium

As indicated on the following table, we have various mortgages, all of which are non-recourse to us, included on our condensed consolidated balance sheet as of June 30, 2023 (amounts in thousands):

Facility Name	Outstanding Balance (in thousands) (a.)			Interest Rate			Maturity Date
2704 North Tenaya Way fixed rate mortgage loan (b.)	$	6,165			4.95	%	November, 2023
Summerlin Hospital Medical Office Building III fixed    rate mortgage loan (b.)		12,431			4.03	%	April, 2024
Tuscan Professional Building fixed rate mortgage loan		1,394			5.56	%	June, 2025
Phoenix Children’s East Valley Care Center fixed rate    mortgage loan		8,068			3.95	%	January, 2030
Rosenberg Children's Medical Plaza fixed rate mortgage loan		11,900			4.42	%	September, 2033
Total, excluding net debt premium and net financing fees		39,958
Less net financing fees		(233	)
Plus net debt premium		16
Total mortgages notes payable, non-recourse to us, net	$	39,741

(a.)All mortgage loans require monthly principal payments through maturity and either fully amortize or include a balloon principal payment upon maturity.

(b.)This loan is scheduled to mature within the next twelve months at which time we will either refinance pursuant to a new mortgage loan or repay the mortgage balance in full utilizing borrowings under our Credit Agreement.

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General - Additional Information (Detail)	Jun. 30, 2023 Property
Limited Liability Companies
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Number of real estate investments	4
4 Unconsolidated Limited Liability Companies / Limited Partner | Minimum
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Non-controlling equity interest, ownership percentage	33.00%
4 Unconsolidated Limited Liability Companies / Limited Partner | Maximum
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Non-controlling equity interest, ownership percentage	95.00%

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Relationship with Universal Health Services, Inc. ("UHS") and Related Party Transactions - Additional Information (Detail)		1 Months Ended		3 Months Ended				6 Months Ended		12 Months Ended
		Jan. 31, 2022 ft²	May 31, 2021 USD ($)	Jun. 30, 2023 USD ($) Time Hospital	Mar. 31, 2023 USD ($) ft² Lease Property	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($) Subsidiary	Jun. 30, 2023 USD ($) Bed Time Hospital RenewalOption	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($) Subsidiary
Related Party Transaction [Line Items]
Number of bed facility | Bed								100
Annual advisory fee as percentage of average invested real estate assets				0.70%		0.70%		0.70%	0.70%
Grayson Properties
Related Party Transaction [Line Items]
Minority ownership interest held by a third-party											5.00%
Ownership percentage upon completion of the minority ownership purchase											100.00%
Minority ownership interest											$ 3,100,000
Aiken Regional Medical Center
Related Party Transaction [Line Items]
Monthly lease rent receivable							$ 4,000,000
Canyon Creek Behavioral Health
Related Party Transaction [Line Items]
Monthly lease rent receivable							1,800,000
Aiken Regional Medical Center and Canyon Creek Behavioral Health
Related Party Transaction [Line Items]
Fair market value of real estate assets received								$ 83,400,000		$ 83,600,000
Lease expiration date											Dec. 31, 2033
Lease renewal term				5 years				5 years
Monthly lease rent receivable							$ 5,800,000
Lease payments expected				$ 1,400,000		$ 1,400,000		$ 2,700,000	$ 2,700,000
Term of lease											12 years
Number of term renewal options | Time				7				7
Aiken Regional Medical Center and Canyon Creek Behavioral Health | Bonus Rents
Related Party Transaction [Line Items]
Lease revenue								$ 0
Universal Health Services, Inc
Related Party Transaction [Line Items]
Number of acute care hospital leased | Hospital				3				3
Number of behavioral health care hospital leased | Hospital				3				3
Number of hospital facilities leased | Hospital								6
Number of medical office buildings and free standing emergency departments | Property					20
Lease revenue	[1]			$ 8,236,000		7,394,000		$ 16,023,000	14,820,000
Option to renew lease, notice period prior to termination date of current term								90 days
Number of ground leases | Lease					13
Aggregate lease payments for 2027				563,000				$ 563,000
Aggregate lease payments for thereafter				$ 31,400,000				$ 31,400,000
Percentage ownership of outstanding shares				5.70%				5.70%		5.70%
Percentage of lease guaranteed								52.00%
Universal Health Services, Inc | Minimum
Related Party Transaction [Line Items]
Remaining lease terms on ground leases								26 years
Universal Health Services, Inc | Maximum
Related Party Transaction [Line Items]
Remaining lease terms on ground leases								75 years
Universal Health Services, Inc | Bonus Rents
Related Party Transaction [Line Items]
Lease revenue	[2]			$ 730,000		643,000		$ 1,494,000	1,321,000
Universal Health Services, Inc | Acute Care Hospitals
Related Party Transaction [Line Items]
Number of hospitals operating lease terms of existing and renewal options | Hospital								3
Universal Health Services, Inc | Wellington Regional Medical Center
Related Party Transaction [Line Items]
Percentage of annual rental increase on cumulative and compound basis								2.50%
Universal Health Services, Inc | Clive, Iowa | Clive Behavioral Health
Related Party Transaction [Line Items]
Initial lease term on property								20 years
Lessee operating lease, existence of option to extend								true
Percentage of annual rental increase on cumulative and compound basis								2.75%
Option to renew lease, notice period prior to termination date of current term								270 days
Renewal option term								10 years
Operating Lease Additional Number Of Renewal Options At Fair Market Value Lease Rates | RenewalOption								2
Renewal options term at fair market value lease rates								10 years
Period to purchase respective leased facilities prior to end of lease term or renewal terms								270 days
Number of term renewal options | Time				5				5
Number of lease renewal option exercised | Time								3
Universal Health Services, Inc | Clive, Iowa | Clive Behavioral Health | Minimum
Related Party Transaction [Line Items]
Renewal options at fair market value lease rates expiration year								2071
Universal Health Services, Inc | Clive, Iowa | Clive Behavioral Health | Maximum
Related Party Transaction [Line Items]
Renewal options at fair market value lease rates expiration year								2090
Universal Health Services, Inc | Palm Beach, Florida | Wellington Regional Medical Center
Related Party Transaction [Line Items]
Monthly lease rent receivable				$ 6,500,000				$ 6,500,000
Operating lease renewal term				5 years				5 years
Universal Health Services, Inc | Subsidiary
Related Party Transaction [Line Items]
Number of wholly-owned subsidiaries | Subsidiary							2
Financing receivable				$ 83,400,000				$ 83,400,000		$ 83,600,000
Universal Health Services, Inc | Asset Purchase and Sale Agreement | Subsidiary
Related Party Transaction [Line Items]
Cash received for sale of real estate asset							$ 4,100,000
Gain on sale of real estate assets											$ 68,400,000
Universal Health Services, Inc | Asset Purchase and Sale Agreement | Subsidiary | Inland Valley Campus of Southwest Healthcare System | Wildomar, California
Related Party Transaction [Line Items]
Fair market value of real estate asset sold							79,600,000
Universal Health Services, Inc | Asset Purchase and Sale Agreement | Subsidiary | Aiken Regional Medical Center | Aiken, South Carolina
Related Party Transaction [Line Items]
Fair market value of real estate assets received							57,700,000
Universal Health Services, Inc | Asset Purchase and Sale Agreement | Subsidiary | Canyon Creek Behavioral Health | Temple, Texas
Related Party Transaction [Line Items]
Fair market value of real estate assets received							26,000,000
Universal Health Services, Inc | Asset Purchase and Sale Agreement | Subsidiary | Aiken Regional Medical Center and Canyon Creek Behavioral Health
Related Party Transaction [Line Items]
Number of wholly-owned subsidiaries | Subsidiary											2
Fair market value of real estate assets received							$ 83,700,000
Universal Health Services, Inc | Ground Lease and Master Flex-lease Agreement | Reno, Nevada | Sierra Medical Plaza I
Related Party Transaction [Line Items]
Cost Of Medical Office Building Incurred								24,000,000
Rentable square feet | ft²		86,000			86,000
Cost of medical office building					$ 35,000,000			$ 35,000,000
Percentage of rentable square feet		68.00%			68.00%
Universal Health Services, Inc | Ground Lease and Master Flex-lease Agreement | Reno, Nevada | Sierra Medical Plaza I | Minimum
Related Party Transaction [Line Items]
Initial rent					$ 1,300,000
Universal Health Services, Inc | Master flex lease agreement | Reno, Nevada | Sierra Medical Plaza I
Related Party Transaction [Line Items]
Lease expiration date								Mar. 31, 2033
Lease renewal term				10 years				10 years
Term of lease				10 years				10 years
Fire Mesa Office Building [Member]
Related Party Transaction [Line Items]
Lease expiration date			Aug. 31, 2027
Payment to acquire business			$ 12,900,000
Lease percentage			100.00%
Universal Health Services of Delaware Inc
Related Party Transaction [Line Items]
Advisory fee				$ 1,300,000		1,300,000		$ 2,600,000	2,500,000
Average invested real estate assets				$ 756,000,000		$ 723,000,000		$ 750,000,000	$ 711,000,000
Catholic Health Initiatives Iowa
Related Party Transaction [Line Items]
Percentage of lease guaranteed								48.00%
Customer Concentration Risk | Revenues | Universal Health Services, Inc
Related Party Transaction [Line Items]
Percentage of revenues generated from leases and tenants				25.00%		24.00%		25.00%	25.00%
Customer Concentration Risk | Revenues | Universal Health Services, Inc | Tenants
Related Party Transaction [Line Items]
Percentage of revenues generated from leases and tenants				41.00%		41.00%		41.00%	41.00%

[1] Includes bonus rental on McAllen Medical Center, a UHS acute care hospital facility of $730 and $643 for the three-month periods ended June 30, 2023 and 2022, respectively, and $1,495 and $1,321 for the six-month periods ended June 30, 2023 and 2022, respectively.

[2] Consists of bonus rental earned in connection with McAllen Medical Center.

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Existing Lease Terms and Renewal Options for Each of UHS Hospital Facilities (Detail) - Universal Health Services, Inc	6 Months Ended
	Jun. 30, 2023 USD ($)
McAllen Medical Center
Operating Leased Assets [Line Items]
Annual Minimum Rent	$ 5,485,000	[1]
End of Lease Term	2026-12	[1]
Renewal Term (years)	5 years	[1]
Wellington Regional Medical Center
Operating Leased Assets [Line Items]
Annual Minimum Rent	$ 6,477,000	[2]
End of Lease Term	2026-12	[2]
Renewal Term (years)	5 years	[2]
Aiken Regional Medical Center/Aurora Pavilion Behavioral Health Services
Operating Leased Assets [Line Items]
Annual Minimum Rent	$ 3,982,000	[3]
End of Lease Term	2033-12	[3]
Renewal Term (years)	35 years	[3]
Canyon Creek Behavioral Health
Operating Leased Assets [Line Items]
Annual Minimum Rent	$ 1,800,000	[3]
End of Lease Term	2033-12	[3]
Renewal Term (years)	35 years	[3]
Clive Behavioral Health Hospital
Operating Leased Assets [Line Items]
Annual Minimum Rent	$ 2,701,000	[4]
End of Lease Term	2040-12	[4]
Renewal Term (years)	50 years	[4]

[1] UHS has one 5-year renewal option at existing lease rates (through 2031).

[2] UHS has one 5-year renewal option at fair market value lease rates (through 2031; see additional disclosure below). The annual rental will increase by 2.5% on an annual compounded basis on each January 1st through 2026.

[3] UHS has seven 5-year renewal options at fair market value lease rates (2034 through 2068). The annual rental rate will increase by 2.25% on a cumulative and compounded basis on each January 1st through 2033.

[4] The UHS-related joint venture has five 10-year renewal options; the first three of the five 10-year renewal options will be at computed lease rates as stipulated in the lease (2041 through 2070) and the last two 10-year renewal options will be at fair market lease rates (2071 through 2090). On each January 1st through 2040 (and potentially through 2070 if the first three of five, 10-year renewal options are exercised), the annual rental will increase by 2.75% on a cumulative and compounded basis.

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Existing Lease Terms and Renewal Options for Each of UHS Hospital Facilities (Parenthetical) (Detail) - Universal Health Services, Inc	6 Months Ended
	Jun. 30, 2023 Renewaloptions
McAllen Medical Center
Operating Leased Assets [Line Items]
Number of renewal option at existing lease rates	1
Renewal options term at fair market value lease rates	5 years
Renewal options at fair market value lease rates expiration year	2031
Wellington Regional Medical Center
Operating Leased Assets [Line Items]
Number of renewal options at fair market value lease rates	1
Renewal options term at existing lease rates	5 years
Renewal option at existing lease rates expiration year	2031
Percentage of annual rental increase	2.50%
Aiken Regional Medical Center and Canyon Creek Behavioral Health
Operating Leased Assets [Line Items]
Number of renewal options at fair market value lease rates	7
Renewal options term at fair market value lease rates	5 years
Percentage of annual rental increase on cumulative and compound basis	2.25%
Aiken Regional Medical Center and Canyon Creek Behavioral Health | Minimum
Operating Leased Assets [Line Items]
Renewal options at fair market value lease rates expiration year	2034
Aiken Regional Medical Center and Canyon Creek Behavioral Health | Maximum
Operating Leased Assets [Line Items]
Renewal options at fair market value lease rates expiration year	2068
Clive Behavioral Health Hospital
Operating Leased Assets [Line Items]
Number of renewal options at fair market value lease rates	5
Renewal options term at fair market value lease rates	10 years
Clive Behavioral Health Hospital | First Three Year Renewal Options
Operating Leased Assets [Line Items]
Percentage of annual rental increase on cumulative and compound basis	2.75%
Clive Behavioral Health Hospital | Minimum | First Three Year Renewal Options
Operating Leased Assets [Line Items]
Renewal options at lease rate stipulated in lease expiration year	2041
Clive Behavioral Health Hospital | Minimum | Last Two Year Renewal Options
Operating Leased Assets [Line Items]
Renewal options at fair market value lease rates expiration year	2071
Clive Behavioral Health Hospital | Maximum | First Three Year Renewal Options
Operating Leased Assets [Line Items]
Renewal options at lease rate stipulated in lease expiration year	2070
Clive Behavioral Health Hospital | Maximum | Last Two Year Renewal Options
Operating Leased Assets [Line Items]
Renewal options at fair market value lease rates expiration year	2090

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Dividends and Equity Issuance Program - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2020
Dividends and Equity Issuance [Line Items]
Dividends declared and paid	$ 10,000,000	$ 9,800,000	$ 19,837,000	$ 19,545,000
Declared and paid dividends, per share	$ 0.72	$ 0.71	$ 1.435	$ 1.415
At-The-Market Equity Issuance Program (ATM)
Dividends and Equity Issuance [Line Items]
Aggregate sales of threshold amount					$ 100,000,000
Share issued			0		2,704
Average sale price per share					$ 101.3
Net cash proceeds from stock issued					$ 270,000
Payment of stock issuance cost					$ 4,000
At-The-Market Equity Issuance Program (ATM) | Other Expenses
Dividends and Equity Issuance [Line Items]
Payments for stock issuance			$ 508,000

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Acquisitions and Divestitures - Additional Information (Detail) $ in Millions	1 Months Ended		3 Months Ended	6 Months Ended
	Mar. 31, 2022 USD ($) ft²	Jan. 31, 2022 USD ($) ft² Tenant Time	Mar. 31, 2023 USD ($) ft²	Jun. 30, 2023 USD ($) Disposition Acquisition	Jun. 30, 2022 Disposition
Business Acquisitions And Dispositions [Line Items]
Number of acquisitions | Acquisition				0
Number of dispositions | Disposition				0	0
Beaumont Heart And Vascular Center | Dearborn Michigan
Business Acquisitions And Dispositions [Line Items]
Lease expiration date	Nov. 30, 2026
Lease commencing date	Dec. 01, 2022
Percentage of lease escalations	2.5
Payment to acquire business	$ 5.4
Percentage of lease	100.00%
Rentable square feet | ft²	17,621
140 Thomas Johnson Drive Medical Office Building | Frederick, Maryland
Business Acquisitions And Dispositions [Line Items]
Payment to acquire business		$ 8.0
Percentage of lease		100.00%
Number of tenants | Tenant		3
Percentage of rentable square feet		72.00%
Rentable square feet | ft²		20,146
Double net lease agreement period		15 years
Initial lease terms		14 years
Number of term renewal options | Time		3
Renewal Term (years)		5 years
Sierra Medical Plaza I | Reno, Nevada | Ground Lease and Master Flex-lease Agreement | Universal Health Services, Inc
Business Acquisitions And Dispositions [Line Items]
Percentage of rentable square feet		68.00%	68.00%
Rentable square feet | ft²		86,000	86,000
Cost of medical office building			$ 35.0	$ 35.0
Cost Of Medical Office Building Incurred				$ 24.0
Sierra Medical Plaza I | Reno, Nevada | Ground Lease and Master Flex-lease Agreement | Universal Health Services, Inc | Minimum [Member]
Business Acquisitions And Dispositions [Line Items]
Initial rent			$ 1.3
Sierra Medical Plaza I | Reno, Nevada | Master flex lease agreement | Universal Health Services, Inc
Business Acquisitions And Dispositions [Line Items]
Lease expiration date				Mar. 31, 2033
Lease contract term				10 years
Term of lease				10 years

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Summarized Financial Information of Equity Affiliates - Additional Information (Detail) - Property	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2021
Grayson Properties
Schedule Of Equity Method Investments [Line Items]
Minority ownership interest held by a third-party		5.00%
Ownership percentage upon completion of the minority ownership purchase		100.00%
Limited Liability Companies | Medical office buildings
Schedule Of Equity Method Investments [Line Items]
Number of real estate investments	4
Minimum
Schedule Of Equity Method Investments [Line Items]
Number of days for Non-Offering Member either to purchase or sell its entire ownership interest to or from Offering Member	60 days
Maximum
Schedule Of Equity Method Investments [Line Items]
Number of days for Non-Offering Member either to purchase or sell its entire ownership interest to or from Offering Member	90 days
4 Unconsolidated Limited Liability Companies / Limited Partner | Minimum
Schedule Of Equity Method Investments [Line Items]
Non-controlling equity interest, ownership percentage	33.00%
4 Unconsolidated Limited Liability Companies / Limited Partner | Maximum
Schedule Of Equity Method Investments [Line Items]
Non-controlling equity interest, ownership percentage	95.00%

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Limited Liability Companies Accounted for Under Equity Method (Detail)	6 Months Ended
	Jun. 30, 2023
Suburban Properties
Schedule Of Equity Method Investments [Line Items]
Ownership	33.00%
Property Owned by LLC/LP	St. Matthews Medical Plaza II
Brunswick Associates
Schedule Of Equity Method Investments [Line Items]
Ownership	74.00%	[1],[2]
Property Owned by LLC/LP	Mid Coast Hospital MOB	[1],[2]
FTX MOB Phase II limited partnership
Schedule Of Equity Method Investments [Line Items]
Ownership	95.00%	[3]
Property Owned by LLC/LP	Forney Medical Plaza II	[3]
Grayson Properties Two L P
Schedule Of Equity Method Investments [Line Items]
Ownership	95.00%	[4],[5]
Property Owned by LLC/LP	Texoma Medical Plaza II	[4],[5]

[1] This LLC has a third-party term loan of $8.6 million, which is non-recourse to us, outstanding as of June 30, 2023.

[2] We are the lessee with a third party on a ground lease for land.

[3] During the first quarter of 2021, this LP paid off its $4.7 million mortgage loan upon maturity, utilizing pro rata equity contributions from the limited partners as well as a $3.5 million member loan from us to the LP which was funded utilizing borrowings from our revolving credit agreement. During the first quarter of 2023, the LP repaid $175,000 of the member loan and the remaining $3.3 million member loan balance was converted to an equity investment in the LP.

[4] Construction of this MOB was substantially completed in December, 2020. This MOB is located in Denison, Texas on the campus of a hospital owned and operated by a wholly-owned subsidiary of UHS. We have committed to invest up to $5.0 million in equity and debt financing, $2.2 million of which has been funded as of June 30, 2023. This LP entered into a $13.1 million third-party construction loan commitment, which is non-recourse to us, which has an outstanding balance of $12.9 million as of June 30, 2023. Monthly principal and interest payments on this loan commenced on January 1, 2023. The LP developed, constructed, owns and operates the Texoma II Medical Plaza.

[5] We are the lessee with a UHS-related party for the land related to this property.

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Limited Liability Companies Accounted for Under Equity Method (Parenthetical) (Detail) - USD ($)	3 Months Ended	6 Months Ended
	Mar. 31, 2021	Jun. 30, 2023
Brunswick Associates
Schedule Of Equity Method Investments [Line Items]
Third-party term loan		$ 8,600,000
Grayson Properties | Denison Texas
Schedule Of Equity Method Investments [Line Items]
Commitment to investment		2,200,000
FTX MOB Phase II limited partnership
Schedule Of Equity Method Investments [Line Items]
Member loan used to repay mortgage loan	$ 3,500,000
Repayment of loan	$ 4,700,000	175,000
Loan balance converted to equity invesment		3,300,000
Grayson Properties II LP
Schedule Of Equity Method Investments [Line Items]
Construction loan		13,100,000
Construction loan outstanding balance		12,900,000
Grayson Properties II LP | Maximum | Denison Texas
Schedule Of Equity Method Investments [Line Items]
Commitment to investment		$ 5,000,000

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Condensed Combined Statements of Income (Unaudited) for LLCs/LPs Accounted Under Equity Method (Detail) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Schedule Of Equity Method Investments [Line Items]
Revenues	$ 23,806		$ 22,171		$ 47,032	$ 44,346
Net income					7,935	10,623
Our share of net income	$ 268		$ 345		639	597
Equity Method Investment, Nonconsolidated Investee or Group of Investees
Schedule Of Equity Method Investments [Line Items]
Revenues		$ 2,043		$ 2,049	4,269	3,979
Operating expenses		812		737	1,717	1,463
Depreciation and amortization		461		463	916	923
Interest, net		198		269	439	531
Net income		572		580	1,197	1,062
Equity Method Investment, Nonconsolidated Investee or Group of Investees
Schedule Of Equity Method Investments [Line Items]
Our share of net income		$ 268		$ 345	$ 639	$ 597

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Condensed Combined Balance Sheets (Unaudited) for LLCs/LPs Accounted Under Equity Method (Detail) - USD ($) $ in Thousands		Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Schedule Of Equity Method Investments [Line Items]
Total Assets		$ 602,963		$ 607,540
Equity		216,635	$ 222,170	229,101	$ 234,646	$ 236,974	$ 235,327
Total Liabilities and Equity		602,963		607,540
Investments in and advances to LLCs before amounts included in accrued expenses and other liabilities		9,296		9,282
Equity Method Investment, Nonconsolidated Investee or Group of Investees
Schedule Of Equity Method Investments [Line Items]
Net property, including construction in progress		29,013		29,573
Other assets	[1]	5,331		4,334
Total Assets		34,344		33,907
Other liabilities	[1]	2,781		2,338
Mortgage notes payable, non-recourse to us		21,506		21,802
Advances payable to us	[2]			3,500
Equity		10,057		6,267
Total Liabilities and Equity		34,344		33,907
Investments in and advances to LLCs before amounts included in accrued expenses and other liabilities		9,296		9,282
Amounts included in accrued expenses and other liabilities		(1,724)		(1,709)
Equity Method Investment, Nonconsolidated Investee or Group of Investees
Schedule Of Equity Method Investments [Line Items]
Our share of equity in LLCs, net		$ 7,572		$ 7,573

[1] Other assets and other liabilities as of June 30, 2023 and December 31, 2022 include approximately $653,000 and $654,000, respectively, of right-of-use land assets and right-of-use land liabilities related to ground leases whereby the LLC/LP is the lessee, with third party lessors, including subsidiaries of UHS.

[2] This 7.25% member loan to FTX MOB Phase II, LP had a maturity date of March 1, 2023. Upon the maturity date, the LP repaid $175,000 of the member loan to us and the remaining balance of $3.3 million was converted to an equity contribution by us.

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Condensed Combined Balance Sheets for LLCs/LPs Accounted Under Equity Method (Parenthetical) (Detail) - USD ($)	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Schedule Of Equity Method Investments [Line Items]
Right-of-use land assets	$ 11,010,000	$ 11,457,000
Right-of-use land liabilities	11,010,000	11,457,000
Limited Liability Companies
Schedule Of Equity Method Investments [Line Items]
Right-of-use land assets	653,000	654,000
Right-of-use land liabilities	$ 654,000	$ 653,000
FTX MOB Phase II limited partnership
Schedule Of Equity Method Investments [Line Items]
Maturity date	Mar. 01, 2023

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Aggregate Principal Amounts due on Mortgage and Construction Notes Payable by Unconsolidated LLC's/LPs Accounted Under Equity Method (Detail) - Equity Method Investments - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2023	Dec. 31, 2022
Schedule Of Equity Method Investments [Line Items]
Mortgage Loan Balance	[1]	$ 21,506	$ 21,802
Grayson Properties II LP
Schedule Of Equity Method Investments [Line Items]
Mortgage Loan Balance	[1],[2]	$ 12,915	13,075
Maturity Date	[2]	2025-06
Brunswick Associates
Schedule Of Equity Method Investments [Line Items]
Mortgage Loan Balance	[1]	$ 8,591	$ 8,727
Maturity Date		2030-12

[1] All mortgage loans require monthly principal payments through maturity and include a balloon principal payment upon maturity.

[2] This construction loan required interest on the outstanding principal balance to be paid on a monthly basis through December 1, 2022. On January 1, 2023, monthly principal and interest payments on this loan commenced.

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Recent Accounting Pronouncements - Additional Information (Details) - ASU 2022-06	Jun. 30, 2023
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Change in Accounting Principle, Accounting Standards Update, Adopted [true false]	true
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false]	true

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Lease Accounting - Additional Information (Detail)		3 Months Ended					6 Months Ended		12 Months Ended
		Jun. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($) Subsidiary	Jun. 30, 2023 USD ($) Facility Land Lease Property	Jun. 30, 2022 USD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 Subsidiary
Leases Disclosure [Line Items]
Number of properties | Property							2
Operating expenses excluding depreciation and amortization expense		$ 202,000			$ 197,000		$ 389,000	$ 373,000
Lessee in connection with ground leases for land | Land							15
Right-of-use land assets		11,010,000		$ 11,457,000			$ 11,010,000			$ 11,457,000
Ground lease liabilities		11,010,000		11,457,000			11,010,000			11,457,000
Specialty Hospital In Chicago, Illinois
Leases Disclosure [Line Items]
Lease Demolition Cost							1,500,000
Other operating expenses demolition costs		862,000	$ 265,000	$ 332,000
Operating expenses demolition costs		983,000			347,000		1,400,000	840,000
Operating expenses excluding demolition		120,000					$ 272,000
Specialty Hospital In Chicago, Illinois | Forecast
Leases Disclosure [Line Items]
Operating expenses excluding demolition									$ 1,300,000
Evansville Rehabilitation Hospital Evansville, Indiana and Corpus Christi Facility Corpus Christi, Texas
Leases Disclosure [Line Items]
Number of specialty facilities | Facility							2
Aiken Regional Medical Center and Canyon Creek Behavioral Health
Leases Disclosure [Line Items]
Fair market value of real estate assets received							$ 83,400,000			$ 83,600,000
Monthly lease rent receivable						$ 5,800,000
Lease payments expected		1,400,000			1,400,000		2,700,000	2,700,000
Lease expiration date											Dec. 31, 2033
Aiken Regional Medical Center and Canyon Creek Behavioral Health | Forecast
Leases Disclosure [Line Items]
Lease payments expected									$ 5,500,000
Aiken Regional Medical Center
Leases Disclosure [Line Items]
Monthly lease rent receivable						4,000,000
Canyon Creek Behavioral Health
Leases Disclosure [Line Items]
Monthly lease rent receivable						$ 1,800,000
Universal Health Services, Inc
Leases Disclosure [Line Items]
Lease revenue	[1]	$ 8,236,000			$ 7,394,000		$ 16,023,000	$ 14,820,000
Universal Health Services, Inc | Subsidiary
Leases Disclosure [Line Items]
Number of wholly-owned subsidiaries | Subsidiary						2
Financing Arrangements
Leases Disclosure [Line Items]
Number of lease property | Lease							2
Asset Purchase and Sale Agreement | Universal Health Services, Inc | Subsidiary | Aiken Regional Medical Center and Canyon Creek Behavioral Health
Leases Disclosure [Line Items]
Number of wholly-owned subsidiaries | Subsidiary											2
Fair market value of real estate assets received						$ 83,700,000

[1] Includes bonus rental on McAllen Medical Center, a UHS acute care hospital facility of $730 and $643 for the three-month periods ended June 30, 2023 and 2022, respectively, and $1,495 and $1,321 for the six-month periods ended June 30, 2023 and 2022, respectively.

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Lease Accounting - Components of the "Lease Revenue - UHS facilities" and "Lease Revenue - Non-related Parties" Captions (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Universal Health Services, Inc
Leases Disclosure [Line Items]
Lease revenue	[1]	$ 8,236	$ 7,394	$ 16,023	$ 14,820
Universal Health Services, Inc | Base Rents
Leases Disclosure [Line Items]
Lease revenue		6,506	6,112	12,780	12,201
Universal Health Services, Inc | Bonus Rents
Leases Disclosure [Line Items]
Lease revenue	[2]	730	643	1,494	1,321
Universal Health Services, Inc | Tenant Reimbursements
Leases Disclosure [Line Items]
Lease revenue		1,000	639	1,749	1,298
Non-Related Parties
Leases Disclosure [Line Items]
Lease revenue		13,668	12,933	27,029	25,828
Non-Related Parties | Base Rents
Leases Disclosure [Line Items]
Lease revenue		10,480	10,109	20,714	20,244
Non-Related Parties | Tenant Reimbursements
Leases Disclosure [Line Items]
Lease revenue		$ 3,188	$ 2,824	$ 6,315	$ 5,584

[1] Includes bonus rental on McAllen Medical Center, a UHS acute care hospital facility of $730 and $643 for the three-month periods ended June 30, 2023 and 2022, respectively, and $1,495 and $1,321 for the six-month periods ended June 30, 2023 and 2022, respectively.

[2] Consists of bonus rental earned in connection with McAllen Medical Center.

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Debt and Financial Instruments - Additional Information (Detail)					1 Months Ended		3 Months Ended			6 Months Ended
	May 15, 2023	Jan. 03, 2023 USD ($)	Jul. 02, 2021 USD ($)	Mar. 27, 2018 USD ($) Option	Mar. 31, 2020 USD ($) Derivative	Jan. 31, 2020 USD ($) Derivative	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Sep. 30, 2019 USD ($) Derivative	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Debt Instrument [Line Items]
Net borrowings on the line of credit										$ 13,300,000	$ 12,400,000
Outstanding borrowings under revolving credit agreement							$ 311,400,000			311,400,000		$ 298,100,000
Letters Of Credit Outstanding Amount							3,100,000			3,100,000		3,100,000
Available borrowing capacity							60,500,000			60,500,000		73,800,000
Compensating Balance Amount							0			0
Interest Rate Swap
Debt Instrument [Line Items]
Derivative interest rate cap, net payment received or accrued from counterparties								$ 122,000
Derivative interest rate cap, payment received or accrued from counterparties										2,600,000
Derivative interest rate cap, offset due to counterparties								$ 35,000,000		4,300,000	35,000
Interest Rate Swap Agreement One | Cash Flow Hedge
Debt Instrument [Line Items]
Number of interest rate cap agreements | Derivative					1
Derivative instruments, fixed rate					0.565%
Notional amount					$ 55,000,000
Expiration date of interest rate					Mar. 25, 2027
Interest Rate Swap Agreement Two | Cash Flow Hedge
Debt Instrument [Line Items]
Number of interest rate cap agreements | Derivative						1
Derivative instruments, fixed rate						1.4975%
Notional amount						$ 35,000,000
Expiration date of interest rate						Sep. 16, 2024
Interest Rate Swap Agreement Three | Cash Flow Hedge
Debt Instrument [Line Items]
Number of interest rate cap agreements | Derivative									1
Derivative instruments, fixed rate									1.144%
Notional amount									$ 50,000,000
Expiration date of interest rate									Sep. 16, 2024
Level 2
Debt Instrument [Line Items]
Mortgage loan fair value							37,800,000			37,800,000		43,200,000
Mortgage debt							40,000,000			40,000,000		$ 45,000,000
Derivative interest rate cap, net payment received or accrued from counterparties										2,500,000	$ 412,000
Derivative interest rate cap, payment received or accrued from counterparties							1,400,000
Level 2 | Interest Rate Swap
Debt Instrument [Line Items]
Liability derivatives, fair value							$ 11,000,000			$ 11,000,000
Desert Valley Medical Center Fixed Rate Mortgage Loan | Nonrecourse
Debt Instrument [Line Items]
Repayment of mortgage loan		$ 4,200,000
Base Rate
Debt Instrument [Line Items]
Margin points added to the reference rate				0.20%
Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Margin points added to the reference rate	0.10%			1.20%
Secured Overnight Financing Rate (SOFR) | Interest Rate Swap Agreement One | Cash Flow Hedge
Debt Instrument [Line Items]
Derivative instruments, fixed rate	0.505%
Secured Overnight Financing Rate (SOFR) | Interest Rate Swap Agreement Two | Cash Flow Hedge
Debt Instrument [Line Items]
Derivative instruments, fixed rate	1.41%
Secured Overnight Financing Rate (SOFR) | Interest Rate Swap Agreement Three | Cash Flow Hedge
Debt Instrument [Line Items]
Derivative instruments, fixed rate	1.064%
Credit Agreement
Debt Instrument [Line Items]
Outstanding borrowing			$ 350,000,000	$ 375,000,000
Net borrowings on the line of credit			350,000,000	$ 50,000,000
Unsecured revolving amended credit agreement terminated date				Jul. 02, 2025
Increase in borrowing capacity			$ 375,000,000
Number of additional six month extension options | Option				2
Credit Agreement | Swingline/Short-Term Loans
Debt Instrument [Line Items]
Outstanding borrowing				$ 30,000,000
Credit Agreement | Letters of Credit
Debt Instrument [Line Items]
Outstanding borrowing				$ 40,000,000
Revolving A Facility
Debt Instrument [Line Items]
Credit facility, Interest Rate Terms										Borrowings under the Credit Agreement will bear interest annually at a rate equal to, at our option, at adjusted term SOFR for either one, three, or six months or the Base Rate, plus in either case, a specified margin depending on our total leverage ratio, as determined by the formula set forth in the Credit Agreement. The applicable margin prior to the first amendment ranges from 1.10% to 1.35% for LIBOR loans and 0.10% to 0.35% for Base Rate loans.
Base rate description										the greatest of (a) the Administrative Agent’s prime rate, (b) the federal funds effective rate plus 1/2 of 1% and (c) one month adjusted term SOFR plus 1%.
Revolving A Facility | Minimum
Debt Instrument [Line Items]
Facility fee payable on commitment				0.15%
Revolving A Facility | Minimum | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Margin points added to the reference rate				1.10%
Revolving A Facility | Minimum | Base Rate
Debt Instrument [Line Items]
Margin points added to the reference rate				0.10%
Revolving A Facility | Minimum | Federal Funds Effective Rate
Debt Instrument [Line Items]
Margin points added to the base rate				0.50%
Revolving A Facility | Minimum | Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Margin points added to the base rate				1.00%
Revolving A Facility | Maximum
Debt Instrument [Line Items]
Facility fee payable on commitment				0.35%
Revolving A Facility | Maximum | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Margin points added to the reference rate				1.35%
Revolving A Facility | Maximum | Base Rate
Debt Instrument [Line Items]
Margin points added to the reference rate				0.35%
Revolving B Facility
Debt Instrument [Line Items]
Facility fee payable on commitment										0.20%
Revolving B Facility | Base Rate
Debt Instrument [Line Items]
Margin points added to the reference rate										0.20%
Revolving B Facility | Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Margin points added to the reference rate										1.20%

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Summary of Required Compliance Ratios in Connection with Terms of Credit Agreement (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Covenant, Tangible net worth	$ 125,000
Tangible net worth	$ 208,292	$ 219,654
Total leverage	43.90%	42.90%
Secured leverage	5.00%	5.60%
Unencumbered leverage	43.40%	41.80%
Fixed charge coverage	3.60%	4.30%
Maximum
Debt Instrument [Line Items]
Covenant, Total leverage	60.00%
Covenant, Secured leverage	30.00%
Covenant, Unencumbered leverage	60.00%
Minimum
Debt Instrument [Line Items]
Covenant, Fixed charge coverage	1.50%

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Summary of Outstanding Mortgages, Excluding Net Debt Premium (Detail) - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Total mortgages notes payable, non-recourse to us, net		$ 39,741	$ 44,725
Nonrecourse
Debt Instrument [Line Items]
Outstanding Balance	[1]	39,958
Less net financing fees	[1]	(233)
Plus net debt premium	[1]	16
Total mortgages notes payable, non-recourse to us, net	[1]	39,741
2704 North Tenaya Way Fixed Rate Mortgage Loan | Nonrecourse
Debt Instrument [Line Items]
Outstanding Balance	[1],[2]	$ 6,165
Interest Rate	[2]	4.95%
Maturity Date	[2]	2023-11
Summerlin Hospital Medical Office Building III Fixed Rate Mortgage Loan | Nonrecourse
Debt Instrument [Line Items]
Outstanding Balance	[1],[2]	$ 12,431
Interest Rate	[2]	4.03%
Maturity Date	[2]	2024-04
Tuscan Professional Building Fixed Rate Mortgage Loan | Nonrecourse
Debt Instrument [Line Items]
Outstanding Balance	[1]	$ 1,394
Interest Rate		5.56%
Maturity Date		2025-06
Phoenix Children East Valley Care Center Fixed Rate Mortgage Loan | Nonrecourse
Debt Instrument [Line Items]
Outstanding Balance	[1]	$ 8,068
Interest Rate		3.95%
Maturity Date		2030-01
Rosenberg Children's Medical Plaza Fixed Rate Mortgage Loan | Nonrecourse
Debt Instrument [Line Items]
Outstanding Balance	[1]	$ 11,900
Interest Rate		4.42%
Maturity Date		2033-09

[1] All mortgage loans require monthly principal payments through maturity and either fully amortize or include a balloon principal payment upon maturity.

[2] This loan is scheduled to mature within the next twelve months at which time we will either refinance pursuant to a new mortgage loan or repay the mortgage balance in full utilizing borrowings under our Credit Agreement.

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Segment Reporting - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2023 Segment
Segment Reporting [Abstract]
Number of reportable segments	1