10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

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 No. 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 Number)
Universal Corporate Center 367 South Gulph Road P.O. Box 61558 King of Prussia, Pennsylvania	19406-0958 (Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: (610) 265-0688

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

Title of each Class Shares of beneficial interest, $.01 par value Name of each exchange on which registered New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes  ¨    No  x

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 of1934 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 suchfiling requirements for the past 90 days.

Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files).

Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, tothe best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. x

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

Large accelerated filer  ¨	Accelerated filer  x	Non-accelerated filer  ¨	Smaller reporting company  ¨
		(Do not check if a smaller reporting company)

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

Aggregate market value of voting shares and non-voting shares held by non-affiliates as of June 30, 2015: $574,054,742 (For the purpose of this calculation only, all members of the Board of Trustees are deemed to be affiliates). Number of shares of beneficial interest outstanding of registrant as of January 31, 2016: 13,327,067

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for our 2016 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission within 120 days after December 31, 2015 (incorporated by reference under Part III).

UNIVERSAL HEALTH REALTY INCOME TRUST

2015 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

PART I
Item 1	Business	1
Item 1A	Risk Factors	8
Item 1B	Unresolved Staff Comments	16
Item 2	Properties	17
Item 3	Legal Proceedings	23
Item 4	Mine Safety Disclosures	23
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	23
Item 6	Selected Financial Data	25
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	42
Item 8	Financial Statements and Supplementary Data	43
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	43
Item 9A	Controls and Procedures	43
Item 9B	Other Information	46
PART III
Item 10	Directors, Executive Officers and Corporate Governance	46
Item 11	Executive Compensation	46
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	46
Item 13	Certain Relationships and Related Transactions, and Director Independence	46
Item 14	Principal Accountant Fees and Services	46
PART IV
Item 15	Exhibits and Financial Statement Schedules	47
SIGNATURES		49
Index to Financial Statements and Schedule		50
Exhibit Index		85
Exhibit 10.2—Advisory Agreement renewal
Exhibit 21—Subsidiaries of Registrant
Exhibit 23.1—Consent of KPMG LLP
Exhibit 31.1—Section 302 Certification of the Chief Executive Officer
Exhibit 31.2—Section 302 Certification of the Chief Financial Officer
Exhibit 32.1—Section 906 Certification of the Chief Executive Officer
Exhibit 32.2—Section 906 Certification of the Chief Financial Officer

This Annual Report on Form 10-K is for the year ended December 31, 2015. This Annual Report modifies and supersedes documents filed prior to this Annual Report. Information that we file with the Securities and Exchange Commission (the “SEC”) in the future will automatically update and supersede information contained in this Annual Report. In this Annual Report, “we,” “us,” “our” and the “Trust” refer to Universal Health Realty Income Trust and its subsidiaries.

As disclosed in this Annual Report, including in Part I, Item 1.-Relationship with Universal Health Services, Inc. (“UHS”), 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. Our officers are all employees of UHS through its wholly-owned subsidiary, UHS of Delaware, Inc. In addition, three of our hospital facilities and two free-standing emergency departments (“FEDs”) are leased to subsidiaries of UHS and fourteen medical office buildings (MOBs”),  that are either wholly or jointly-owned by us, include tenants which are subsidiaries of UHS. 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 Annual 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%. We currently account for our share of the income/loss from these investments by the equity method (see Note 8 to the Consolidated Financial Statements included herein).

PART I

ITEM  1. Business

General

We are a real estate investment trust (“REIT”) which commenced operations in 1986. We invest in health care and human service related facilities currently including acute care hospitals, rehabilitation hospitals, sub-acute facilities, surgery centers, free-standing emergency departments, childcare centers and medical office buildings (“MOBs”). As of February 29, 2016, we have sixty-two real estate investments located in eighteen states in the United States consisting of: (i) six hospital facilities including three acute care, one rehabilitation and two sub-acute; (ii) forty-nine MOBs; (iii) three free-standing emergency departments (“FEDs”), and; (iv) four preschool and childcare centers.

Available Information

We have our principal executive offices at Universal Corporate Center, 367 South Gulph Road, King of Prussia, PA 19406. Our telephone number is (610) 265-0688. Our website is located at http://www.uhrit.com. Copies of the annual, quarterly and current reports we file with the SEC, and any amendments to those reports, are available free of charge on our website. Additionally, we have adopted governance guidelines, a Code of Business Conduct and Ethics applicable to all of our officers and directors, a Code of Ethics for Senior Officers and charters for each of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee of the Board of Trustees. These documents are also available free of charge on our website. Copies of such reports and charters are available in print to any shareholder who makes a request. Such requests should be made to our Secretary at our King of Prussia, PA corporate headquarters. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K relating to amendments to or waivers of any provision of our Code of Ethics for Senior Officers by promptly posting this information on our website. The information posted on our website is not incorporated into this Annual Report.

In accordance with Section 303A.12(a) of The New York Stock Exchange Listed Company Manual, we submitted our CEO’s Certification to the New York Stock Exchange in 2015. Additionally, contained in Exhibits 31.1 and 31.2 of this Annual Report are our CEO’s and CFO’s certifications regarding the quality of our public disclosure under Section 302 of the Sarbanes-Oxley Act of 2002.

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Overview of Facilities

As of February 29, 2016, we have investments in sixty-two facilities, located in eighteen states and consisting of the following:

Facility Name	Location	Type of Facility	Ownership		Guarantor
Southwest Healthcare System, Inland Valley Campus(A)	Wildomar, CA	Acute Care		100%	Universal Health Services, Inc.
McAllen Medical Center(A)	McAllen, TX	Acute Care		100%	Universal Health Services, Inc.
Wellington Regional Medical Center(A)	W. Palm Beach, FL	Acute Care		100%	Universal Health Services, Inc.
Kindred Hospital Chicago Central(B)	Chicago, IL	Sub-Acute Care		100%	Kindred Healthcare, Inc.
Vibra Hospital of Corpus Christi(B)	Corpus Christi, TX	Sub-Acute Care		100%	Kindred Healthcare, Inc.
HealthSouth Deaconess Rehabilitation Hospital(F)	Evansville, IN	Rehabilitation		100%	HealthSouth Corporation
Family Doctor’s Medical Office Bldg.(B)	Shreveport, LA	MOB		100%	ChristusHealth Northern Louisiana
Kelsey-Seybold Clinic at Kings Crossing(B)	Kingwood, TX	MOB		100%	Kelsey-Seybold MedicalGroup,PLLC
Professional Bldgs. at Kings Crossing Building A(B)
Building A(B)	Kingwood, TX	MOB		100%		—
Building B(B)	Kingwood, TX	MOB		100%		—
Chesterbrook Academy(B)	Audubon, PA	Preschool & Childcare		100%	Nobel Learning Comm. & Subs.
Chesterbrook Academy(B)	New Britain, PA	Preschool & Childcare		100%	Nobel Learning Comm. & Subs.
Chesterbrook Academy(B)	Newtown, PA	Preschool & Childcare		100%	Nobel Learning Comm. & Subs.
Chesterbrook Academy(B)	Uwchlan, PA	Preschool & Childcare		100%	Nobel Learning Comm. & Subs.
Southern Crescent Center I(B)	Riverdale, GA	MOB		100%		—
Southern Crescent Center, II(D)	Riverdale, GA	MOB		100%		—
Suburban Medical Plaza II(C)	Louisville, KY	MOB		33%		—
Desert Valley Medical Center(E)	Phoenix, AZ	MOB		100%		—
Cypresswood Professional Center(B)
8101	Spring, TX	MOB		100%		—
8111	Spring, TX	MOB		100%		—
Desert Springs Medical Plaza(D)	Las Vegas, NV	MOB		100%		—
701 South Tonopah Bldg.(A)	Las Vegas, NV	MOB		100%		—
Santa Fe Professional Plaza(E)	Scottsdale, AZ	MOB		100%		—
Summerlin Hospital MOB I(D)	Las Vegas, NV	MOB		100%		—
Summerlin Hospital MOB II(D)	Las Vegas, NV	MOB		100%		—
Medical Center of Western Connecticut(B)	Danbury, CT	MOB		100%		—
Mid Coast Hospital MOB(C)	Brunswick, ME	MOB		74%		—
Rosenberg Children’s Medical Plaza(E)	Phoenix, AZ	MOB		100%		—
Gold Shadow(D)
700 Shadow Lane MOB	Las Vegas, NV	MOB		100%		—
2010 & 2020 Goldring MOBs	Las Vegas, NV	MOB		100%		—
St. Mary’s Professional Office Building(C)	Reno, NV	MOB		85%		—
Apache Junction Medical Plaza(E)	Apache Junction, AZ	MOB		100%		—
Spring Valley Medical Office Building(D)	Las Vegas, NV	MOB		100%		—
Spring Valley Hospital Medical Office Building II(D)	Las Vegas, NV	MOB		100%		—
Sierra San Antonio Medical Plaza(E)	Fontana, CA	MOB		100%		—
Phoenix Children’s East Valley Care Center(E)	Phoenix, AZ	MOB		100%		—
Centennial Hills Medical Office Building(D)	Las Vegas, NV	MOB		100%		—
Palmdale Medical Plaza(D)	Palmdale, CA	MOB		100%		—
Summerlin Hospital Medical Office Building III(D)	Las Vegas, NV	MOB		100%		—
Vista Medical Terrace(D)	Sparks, NV	MOB		100%		—
The Sparks Medical Building(D)	Sparks, NV	MOB		100%		—
Auburn Medical Office Building II(E)	Auburn, WA	MOB		100%		—
Texoma Medical Plaza(G)	Denison, TX	MOB		95%		—
BRB Medical Office Building(E)	Kingwood, TX	MOB		100%		—
3811 E. Bell(E)	Phoenix, AZ	MOB		100%		—
Lake Pointe Medical Arts Building(E)	Rowlett, TX	MOB		100%		—
Forney Medical Plaza(E)	Forney, TX	MOB		100%		—
Tuscan Professional Building(E)	Irving, TX	MOB		100%		—
Emory at Dunwoody Building(E)	Atlanta, GA	MOB		100%		—
PeaceHealth Medical Clinic(E)(H)	Bellingham, WA	MOB		100%		—
Forney Medical Plaza II(J)	Forney, TX	MOB		95%		—
Northwest Texas Professional Office Tower(E)	Amarillo, TX	MOB		100%		—
5004 Poole Road MOB(A)	Denison, TX	MOB		100%		—
Ward Eagle Office Village(E)	Farmington Hills, MI	MOB		100%		—
The Children’s Clinic at Springdale(E)	Springdale, AR	MOB		100%		—
The Northwest Medical Center at Sugar Creek(E)	Bentonville, AR	MOB		100%		—
Hanover Emergency Center (E)(K)	Mechanicsville, VA	FED		100%		—
Weslaco Free-standing Emergency Department(L)	Weslaco, TX	FED		100%		—
Mission Free-standing Emergency Department(L)	Mission, TX	FED		100%		—
Haas Medical Office Park (E)(I)	Ottumwa, IA	MOB		100%	Regional Hospital Partners
Piedmont - Roswell Physician Center (M)	Sandy Springs, GA	MOB		100%		—
Piedmont - Vinings Physician Center (M)	Vinings, GA	MOB		100%		—

(A) Real estate assets owned by us and leased to subsidiaries of Universal Health Services, Inc. (“UHS”).

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(B) Real estate assets owned by us and leased to an unaffiliated third-party or parties.

(C) Real estate assets owned by a limited liability company (“LLC”) in which we have a noncontrolling ownership interests and include tenants who are unaffiliated third-parties.

(D) Real estate assets owned by us or an LLC in which we hold 100% ownership interests and include tenants who are subsidiaries of UHS.

(E) Real estate assets owned by us or an LLC in which we hold 100% ownership interests and include tenants who are unaffiliated third-parties.

(F) The lessee on the HealthSouth Deaconess Rehabilitation Hospital (“Deaconess”) is HealthSouth/Deaconess L.L.C., a joint venture between HealthSouth Properties Corporation and Deaconess Hospital, Inc. The lease with Deaconess is scheduled to expire on May 31, 2019.

(G) Real estate assets owned by an LLC or a limited partnership (“LP”) in which we have a noncontrolling ownership interest. Tenants of this MOB include subsidiaries of UHS.

(H) This MOB was acquired during the first quarter of 2012. In connection with the third-party loan agreement on this property, we are required to maintain separate financial records for the related entities.

(I) This MOB was acquired during the first quarter of 2015.

(J) Real estate assets owned by an LP in which we have a noncontrolling ownership interest as indicated above and include tenants who are unaffiliated third-parties.

(K) This free-standing emergency department was acquired during the third quarter of 2014 and has a 10-year initial term lease agreement with HCA Health Services of Virginia, Inc.

(L) This free-standing emergency department was acquired during the first quarter of 2015 and has a 10-year initial term lease agreement with a subsidiary of UHS.

(M) These MOBs, in addition to $2 million in cash, were acquired during the second quarter of 2015 in exchange for the real property of Sheffield Medical Building, and have 15-year initial term master lease agreements with Piedmont Healthcare, Inc.

Other Information

Included in our portfolio at December 31, 2015 are six hospital facilities with an aggregate investment of $130.4 million. The leases with respect to the six hospital facilities comprised approximately 29% of our consolidated revenues in 2015.  The leases with respect to the seven hospital facilities, including The Bridgeway which was sold on December 31, 2014, as discussed below, comprised approximately 33% of our consolidated revenues in 2014 and approximately 36% of our consolidated revenues in 2013.

As of January 1, 2016, the leases on our six hospital facilities have fixed terms with an average of 1.8 years remaining and include renewal options ranging from one to five, five-year terms. The remaining lease terms for each hospital facility, which vary by hospital, are included herein in Item 2. Properties.

We believe a facility’s earnings before interest, taxes, depreciation, amortization and lease rental expense (“EBITDAR”) and a facility’s EBITDAR divided by the sum of minimum rent plus additional rent payable to us (“Coverage Ratio”), which are non-GAAP financial measures, are helpful to us and our investors as a measure of the operating performance of a hospital facility. EBITDAR, which is used as an indicator of a facility’s estimated cash flow generated from operations (before rent expense, capital additions and debt service), is used by us in evaluating a facility’s financial viability and its ability to pay rent. For the hospital facilities owned by us at the end of each respective year (including The Bridgeway which was sold on December 31, 2014, as discussed herein), the combined weighted average Coverage Ratio was approximately 8.1 (ranging from 1.1 to 19.3) during 2015, 8.0 (ranging from 2.7 to 18.3) during 2014 and 6.3 (ranging from 2.5 to 18.5) during 2013. The Coverage Ratio for individual facilities varies. See “Relationship with Universal Health Services, Inc.” below for Coverage Ratio information related to the hospital facilities leased to subsidiaries of UHS.

Pursuant to the terms of the leases for our hospital facilities, free-standing emergency departments and the preschool and childcare centers, each lessee, including subsidiaries of UHS, is responsible for building operations, maintenance, renovations and property insurance. We, or the LLCs in which we have invested, are responsible for the building operations, maintenance and renovations of the MOBs, however, a portion, or in some cases all, of the expenses associated with the MOBs are passed on directly to the tenants. Cash reserves have been established to fund required building maintenance and renovations at the multi-tenant MOBs. Lessees are required to maintain all risk, replacement cost and commercial property insurance policies on the leased properties and we, or the LLC in which we have invested, are also named insureds on these policies. In addition, we, UHS or the LLCs in which we have invested, maintain property insurance on all properties. For additional information on the terms of our leases, see “Relationship with Universal Health Services, Inc.”

See our consolidated financial statements and accompanying notes to the consolidated financial statements included in this Annual Report for our total assets, liabilities, debt, revenues, income and other operating information.

Relationship with Universal Health Services, Inc. (“UHS”)

Leases:    We commenced operations in 1986 by purchasing properties of certain subsidiaries from UHS and immediately leasing the properties back to the respective subsidiaries. Most of the leases were entered into at the time we commenced operations and provided for initial terms of 13 to 15 years with up to six additional 5-year renewal terms. The current base rentals and lease and rental terms for each facility are provided below. The base rents are paid monthly and each lease also provides for additional or bonus rents which are computed and paid on a quarterly basis based upon a computation that compares current quarter revenue to a corresponding quarter in the base year. The hospital leases with subsidiaries of UHS are unconditionally guaranteed by UHS and are cross-defaulted with one another.

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The combined revenues generated from the leases on the UHS hospital facilities accounted for approximately 31% of our total revenue for the five years ended December 31, 2015 (approximately 25% for the year ended December 31, 2015 and approximately 28% and 30% for the years ended December 31, 2014 and 2013, respectively). The decrease during 2015 and 2014 as compared to 2013 is due primarily to the 2014 purchase of the third-party minority ownership interests in eight LLCs in which we previously held noncontrolling ownership interests. As a result of these transactions, we own 100% of each of these LLCs and began accounting for each on a consolidated basis effective on the dates of purchase of the minority ownership interests (January and August, 2014). Including 100% of the revenues generated at the unconsolidated LLCs in which we have various non-controlling equity interests ranging from 33% to 95%, the leases on the UHS hospital facilities accounted for approximately 20% of the combined consolidated and unconsolidated revenue for the five years ended December 31, 2015 (approximately 20% for the year ended December 31, 2015 and 22% for each of the years ended December 31, 2014 and 2013). In addition, including the two free-standing emergency departments (“FEDs”) acquired by us from subsidiaries of UHS during the first quarter of 2015 (as discussed below), sixteen MOBs/FEDs, that are either wholly or jointly-owned, include tenants which are subsidiaries of UHS.

Pursuant to the Master Lease Document by and among us and certain subsidiaries of UHS, dated December 24, 1986 (the “Master Lease”), which governs the leases of all hospital properties with subsidiaries of UHS, UHS has the option 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 at the end of the lease terms or any renewal terms at the appraised fair market value. In addition, the Master Lease, as amended during 2006, includes a change of control provision whereby UHS has the right, upon one month’s notice should a change of control of the Trust occur, to purchase any or all of the three leased hospital properties listed below at their appraised fair market value. Additionally, UHS has rights of first refusal to: (i) purchase the respective leased facilities during and for 180 days 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 180 days after, the lease term at the same terms and conditions pursuant to any third-party offer.

During the third quarter of 2014, a wholly-owned subsidiary of UHS provided notification to us that, upon expiration of The Bridgeway’s lease term which occurred in December, 2014, it intended to exercise its option to purchase the real property of the facility. Pursuant to the terms of the lease, we and the wholly-owned subsidiary of UHS were both required to obtain independent appraisals of the property to determine its fair market value. On December 31, 2014, the Bridgeway, a 103-bed behavioral health facility located in North Little Rock, Arkansas, was sold to UHS for $17.3 million. A gain on divestiture of real property of approximately $13.0 million is included in our results of operations for the twelve-month period ended December 31, 2014.  Prior to its divestiture in 2014, our revenues, net cash provided by operating activities and funds from operations included approximately $1.1 million earned annually in connection with The Bridgeway’s lease.

The table below details the existing lease terms and renewal options for our three acute care hospitals operated by wholly-owned subsidiaries of UHS:

Hospital Name	Type of Facility	Annual Minimum Rent		End of Lease Term	Renewal Term (years)
McAllen Medical Center	Acute Care	$	5,485,000	December, 2016	15(a)
Wellington Regional Medical Center	Acute Care	$	3,030,000	December, 2016	15(b)
Southwest Healthcare System, Inland Valley Campus	Acute Care	$	2,648,000	December, 2016	15(b)

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

(b) UHS has one 5-year renewal option at existing lease rates (through 2021) and two 5-year renewal options at fair market value lease rates (2022 through 2031).

During the first quarter of 2015, we purchased from wholly-owned subsidiaries of UHS, the real property of two newly-constructed and recently opened FEDs located in Weslaco and Mission, Texas. Each FED consists of approximately 13,600 square feet and is operated by wholly-owned subsidiaries of UHS. In connection with these acquisitions, ten-year lease agreements with six, 5-year renewal terms were executed with UHS for each FED. The first four, 5-year renewal terms (covering years 2025 through 2044) include 2% annual lease rate increases, computed on accumulative and compounded basis, and the last two, 5-year renewal terms (covering the years 2045 through 2054) will be at the then fair market value lease rates. These leases are cross-defaulted with one another. UHS has the option to purchase the leased properties upon the expiration of the fixed term and each five-year extended term at the fair market value at that time. The aggregate acquisition cost of these facilities was approximately $12.8 million, and the aggregate rental revenue earned by us at the commencement of the leases is approximately $900,000 annually.

Management cannot predict whether the leases with 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

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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 and 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 the these leases.  The existing lease terms for our three acute care hospitals operated by wholly-owned subsidiaries of UHS are scheduled to expire in December, 2016 and we can provide no assurance that these leases will be renewed at the existing lease rates.

Advisory Agreement:    UHS of Delaware, Inc. (the “Advisor”), a wholly-owned subsidiary of UHS, serves as Advisor to us under an Advisory Agreement (the “Advisory Agreement”) dated December 24, 1986. 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. Our advisory fee was 0.70% during each of 2015, 2014 and 2013 of our average invested real estate assets, as derived from our consolidated balance sheet. In December of 2015, based upon a review of our advisory fee and other general and administrative expenses, as compared to an industry peer group, the Advisory Agreement was renewed for 2016 pursuant to the same terms as the Advisory Agreement in place during the last three years.

The average real estate assets for advisory fee calculation purposes exclude certain items from our consolidated balance sheet such as, among other things, accumulated depreciation, cash and cash equivalents, base and bonus rent receivables, deferred charges and other assets. The advisory fee is payable quarterly, subject to adjustment at year-end based upon our audited financial statements. In addition, the Advisor is entitled to an annual incentive fee equal to 20% of the amount by which cash available for distribution to shareholders for each year, as defined in the Advisory Agreement, exceeds 15% of our equity as shown on our consolidated balance sheet, determined in accordance with generally accepted accounting principles without reduction for return of capital dividends. The Advisory Agreement defines cash available for distribution to shareholders as net cash flow from operations less deductions for, among other things, amounts required to discharge our debt and liabilities and reserves for replacement and capital improvements to our properties and investments. No incentive fees were paid during 2015, 2014 or 2013 since the incentive fee requirements were not achieved. Advisory fees incurred and paid (or payable) to UHS amounted to $2.8 million during 2015, $2.5 million during 2014 and $2.4 million during 2013 and were based upon average invested real estate assets of $401 million, $363 million and $338 million during 2015, 2014 and 2013, respectively.

Officers and Employees:    Our officers are all employees of a wholly-owned subsidiary of UHS and although as of December 31, 2015 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 compensation awards in the form of restricted stock and/or cash bonuses.

Share Ownership:    As of December 31, 2015 and 2014, UHS owned 5.9% of our outstanding shares of beneficial interest.

SEC reporting requirements of UHS:    UHS is subject to the reporting requirements of the Securities and Exchange Commission (“SEC”) and is required to file annual reports containing audited financial information and quarterly reports containing unaudited financial information. Since the leases on the hospital facilities leased to wholly-owned subsidiaries of UHS comprised approximately 25% of our consolidated revenues for the year ended December 31, 2015 and 28% and 30% of our consolidated revenues for the years ended December 31, 2014 and 2013, respectively, 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 at www.sec.gov. These filings are the sole responsibility of UHS and are not incorporated by reference herein.

Taxation

We believe we have operated in such a manner as to qualify for taxation as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, and we intend to continue to operate in such a manner. If we qualify for taxation as a REIT, we will generally not be subject to federal corporate income taxes on our net income that is currently distributed to shareholders. This treatment substantially eliminates the “double taxation”, i.e., at the corporate and shareholder levels, that usually results from investment in the stock of a corporation.

Please see the heading “If we fail to maintain our REIT status, we will become subject to federal income tax on our taxable income at regular corporate rates” under “Risk Factors” for more information.

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Competition

We compete for the acquisition, leasing and financing of health care related facilities. Our competitors include, but are not limited to, other REITs, banks and other companies, including UHS. Some of these competitors are larger and may have a lower cost of capital than we do. These developments could result in fewer investment opportunities for us and lower spreads over the cost of our capital, which would hurt our growth.

In most geographical areas in which our facilities operate, there are other facilities that provide services comparable to those offered by our facilities. In addition, some competing facilities are owned by tax-supported governmental agencies or by nonprofit corporations and may be supported by endowments and charitable contributions and exempt from property, sales and income taxes. Such exemptions and support are not available to certain operators of our facilities, including UHS. In some markets, certain competing facilities may have greater financial resources, be better equipped and offer a broader range of services than those available at our facilities. Certain hospitals that are located in the areas served by our facilities are specialty hospitals that provide medical, surgical and behavioral health services that may not be provided by the operators of our hospitals. The increase in outpatient treatment and diagnostic facilities, ambulatory surgical centers and freestanding emergency departments also increases competition for us.

In addition, the number and quality of the physicians on a hospital’s staff are important factors in determining a hospital’s success and competitive advantage. Typically, physicians are responsible for making hospital admission decisions and for directing the course of patient treatment. The operators of our facilities also compete with other health care providers in recruiting and retaining qualified hospital management, nurses and other medical personnel. From time-to-time, the operators of our acute care hospitals may experience the effects of a shortage of skilled nursing staff nationwide, which has caused and may continue to cause an increase in salaries, wages and benefits expense in excess of the inflation rate. Our operators may experience difficulties attracting and retaining qualified physicians, nurses and medical support personnel. We anticipate that our operators, including UHS, will continue to encounter increased competition in the future that could lead to a decline in patient volumes and harm their businesses, which in turn, could harm our business.

A large portion of our non-hospital properties consist of MOBs which are located either close to or on the campuses of hospital facilities. These properties are either directly or indirectly affected by the factors discussed above as well as general real estate factors such as the supply and demand of office space and market rental rates. To improve our competitive position, we anticipate that we will continue investing in additional healthcare related facilities and leasing the facilities to qualified operators, perhaps including subsidiaries of UHS.

Regulation and Other Factors

During 2015, 2014 and 2013, 25%, 25% and 28%, respectively, of our revenues were earned pursuant to leases with operators of acute care services hospitals, all of which are subsidiaries of UHS. A significant portion of the revenue earned by the operators of our acute care hospitals is derived from federal and state healthcare programs, including Medicare and Medicaid (excluding managed Medicare and Medicaid programs).

Our hospital facilities derive a significant portion of their revenue from third-party payors, including the Medicare and Medicaid programs. Changes in these government programs in recent years have resulted in limitations on reimbursement and, in some cases, reduced levels of reimbursement for healthcare services. Payments from federal and state government programs are subject to statutory and regulatory changes, administrative rulings, interpretations and determinations, requirements for utilization review, and federal and state funding restrictions, all of which could materially increase or decrease program payments, as well as affect the cost of providing service to patients and the timing of payments to facilities. Neither we nor the operators of our hospital facilities are able to predict the effect of recent and future policy changes on our respective results of operations. In addition, the uncertainty and fiscal pressures placed upon federal and state governments as a result of, among other things, the funding requirements and other provisions of the Patient Protection and Affordable Care Act, may affect the availability of taxpayer funds for Medicare and Medicaid programs. If the rates paid or the scope of services covered by government payors are reduced, there could be a material adverse effect on the business, financial position and results of operations of the operators of our hospital facilities, and in turn, ours.

In addition, the healthcare industry is required to comply with extensive and complex laws and regulations at the federal, state and local government levels relating to, among other things: hospital billing practices and prices for services; relationships with physicians and other referral sources; adequacy of medical care and quality of medical equipment and services; ownership of facilities; qualifications of medical and support personnel; confidentiality, maintenance, privacy and security issues associated with health-related information and patient medical records; the screening, stabilization and transfer of patients who have emergency medical conditions; certification, licensure and accreditation of our facilities; operating policies and procedures, and; construction or expansion of facilities and services.

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These laws and regulations are extremely complex, and, in many cases, the operators of our facilities do not have the benefit of regulatory or judicial interpretation. In the future, it is possible that different interpretations or enforcement of these laws and regulations could subject the current or past practices of our operators to allegations of impropriety or illegality or could require them to make changes in their facilities, equipment, personnel, services, capital expenditure programs and operating expenses. Although UHS and the other operators of our hospital facilities believe that their policies, procedures and practices comply with governmental regulations, no assurance can be given that they will not be subjected to additional governmental inquiries or actions, or that they would not be faced with sanctions, fines or penalties if so subjected. Even if they were to ultimately prevail, a significant governmental inquiry or action under one of the above laws, regulations or rules could have a material adverse effect upon them, and in turn, us.

Each of our hospital facilities is deemed certified, meaning that they are accredited, properly licensed under the relevant state laws and regulations and certified under the Medicare program. The effect of maintaining certified facilities is to allow such facilities to participate in the Medicare and Medicaid programs. The operators of our hospital facilities believe that the facilities are in material compliance with applicable federal, state, local and other relevant regulations and standards. However, should any of our hospital facilities lose their deemed certified status and thereby lose certification under the Medicare or Medicaid programs, such facilities would be unable to receive reimbursement from either of those programs and their business, and in turn, ours, could be materially adversely affected.

The various factors and government regulation related to the healthcare industry, such as those outlined above, affects us because:

(i) The financial ability of lessees to make rent payments to us may be affected by governmental regulations such as licensure, certification for participation in government programs, and government reimbursement, and;

(ii) Our bonus rents on the three acute care hospitals operated by subsidiaries of UHS are based on our lessees’ net revenues which in turn are affected by the amount of reimbursement such lessees receive from the government.

A significant portion of the revenue earned by the operators of our acute care hospitals is derived from federal and state healthcare programs, including Medicare and Medicaid. Under the statutory framework of the Medicare and Medicaid programs, many of the general acute care operations are subject to administrative rulings, interpretations and discretion that may affect payments made under either or both of such programs as well as by other third party payors. The federal government makes payments to participating hospitals under its Medicare program based on various formulas. For inpatient services, the operators of our acute care hospitals are subject to an inpatient prospective payment system (“IPPS”). Under IPPS, hospitals are paid a predetermined fixed payment amount for each hospital discharge. The fixed payment amount is based upon each patient’s Medicare severity diagnosis related group (“MS-DRG”). Every MS-DRG is assigned a payment rate based upon the estimated intensity of hospital resources necessary to treat the average patient with that particular diagnosis. These rates are based upon historical national average costs and do not consider the actual costs incurred by a hospital in providing care. The MS-DRG rates are adjusted annually based on geographic region and are weighted based upon a statistically normal distribution of severity.

For outpatient services, acute care hospitals are paid under an outpatient prospective payment system (“PPS”) according to ambulatory procedure codes. The outpatient PPS rate is a geographic adjusted national payment amount that includes the Medicare payment and the beneficiary co-payment. Special payments under the outpatient PPS may be made for certain new technology items and services through transitional pass-through payments and special reimbursement rates.

Three of our acute care hospital facilities operated by subsidiaries of UHS and two sub-acute care hospital facilities operated by an unaffiliated third-party are located in Texas, Florida, California and Illinois. The majority of these states have reported significant budget deficits that have resulted in reductions of Medicaid funding at various times during the last few years and which could adversely affect future levels of Medicaid reimbursement received by certain operators of our facilities, including the operators of our hospital facilities. We can provide no assurance that reductions to Medicaid revenues earned by operators of certain of our facilities, particularly our hospital operators in the above-mentioned states, will not have a material adverse effect on the future operating results of those operators which, in turn, could have a material adverse effect on us.

Executive Officers of the Registrant

Name	Age		Position
Alan B. Miller		78	Chairman of the Board, Chief Executive Officer and President
Charles F. Boyle		56	Vice President and Chief Financial Officer
Cheryl K. Ramagano		53	Vice President, Treasurer and Secretary
Timothy J. Fowler		60	Vice President, Acquisition and Development

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Mr. Alan B. Miller has been our Chairman of the Board and Chief Executive Officer since our inception in 1986 and was appointed President in February, 2003. He had previously served as our President until 1990. Mr. Miller has been Chairman of the Board and Chief Executive Officer of UHS since its inception in 1978. He previously held the title of President of UHS as well, until 2009 when Marc D. Miller was elected as President of UHS. He is the father of Marc D. Miller, who was elected to our Board of Trustees in December, 2008 and also serves as President and a member of the Board of Directors of UHS.

Mr. Charles F. Boyle was appointed Chief Financial Officer in February, 2003 and had served as our Vice President and Controller since 1991. Mr. Boyle has held various positions at UHS since 1983 and currently serves as its Vice President and Controller. He was appointed Controller of UHS in 2003 and had served as its Assistant Vice President-Corporate Accounting since 1994.

Ms. Cheryl K. Ramagano was appointed Secretary in February, 2003 and has served as our Vice President and Treasurer since 1992. Ms. Ramagano has held various positions at UHS since 1983 and currently serves as its Vice President and Treasurer. She was appointed Treasurer of UHS in 2003 and had served as its Assistant Treasurer since 1994.

Mr. Timothy J. Fowler was elected as our Vice President of Acquisition and Development upon the commencement of his employment with UHS in 1993.

ITEM 1A. Risk Factors

We are subject to numerous known and unknown risks, many of which are described below and elsewhere in this Annual Report. Any of the events described below could have a material adverse effect on our business, financial condition and results of operations. Additional risks and uncertainties that we are not aware of, or that we currently deem to be immaterial, could also impact our business and results of operations.

The revenues and results of operations of the tenants of our hospital facilities, including UHS, and our medical office buildings, are significantly affected by payments received from the government and other third party payors.

The operators of our hospital facilities and tenants of our medical office buildings derive a significant portion of their revenue from third party payors, including the Medicare and Medicaid programs. Changes in these government programs in recent years have resulted in limitations on reimbursement and, in some cases, reduced levels of reimbursement for health care services. Payments from federal and state government programs are subject to statutory and regulatory changes, administrative rulings, interpretations and determinations, requirements for utilization review, and federal and state funding restrictions, all of which could materially increase or decrease program payments, as well as affect the cost of providing service to patients and the timing of payments to facilities. Our tenants are unable to predict the effect of recent and future policy changes on their operations.

Three of our acute care hospital facilities operated by subsidiaries of UHS and two sub-acute care hospital facilities operated by an unaffiliated third-party are located in Texas, Florida, California and Illinois. The majority of these states have reported significant budget deficits that have resulted in reductions of Medicaid funding at various times during the last few years and which could adversely affect future levels of Medicaid reimbursement received by certain operators of our facilities, including the operators of our hospital facilities. We can provide no assurance that reductions to Medicaid revenues earned by operators of certain of our facilities, particularly our hospital operators in the above-mentioned states, will not have a material adverse effect on the future operating results of those operators which, in turn, could have a material adverse effect on us. In addition, the uncertainty and fiscal pressures placed upon federal and state governments as a result of, among other things, the funding requirements and other provisions of the Patient Protection and Affordable Care Act, may affect the availability of taxpayer funds for Medicare and Medicaid programs. If the rates paid or the scope of services covered by government payors are reduced, there could be a material adverse effect on the business, financial position and results of operations of the operators of our hospital facilities, and in turn, ours.

In addition to changes in government reimbursement programs, the ability of our hospital operators to negotiate favorable contracts with private payors, including managed care providers, significantly affects the revenues and operating results of those facilities. Private payors, including managed care providers, increasingly are demanding that hospitals accept lower rates of payment. Our hospital operators expect continued third party efforts to aggressively manage reimbursement levels and cost controls. Reductions in reimbursement amounts received from third party payors could have a material adverse effect on the financial position and results of operations of our hospital operators.

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Reductions or changes in Medicare funding could have a material adverse effect on the future operating results of the operators of our facilities, including UHS, which could, in turn, materially reduce our revenues and net income.

On January 3, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012 (the “2012 Act”). The 2012 Act postponed for two months sequestration cuts mandated under the Budget Control Act of 2011. The postponed sequestration cuts include a 2% annual reduction over ten years in Medicare spending to providers. Medicaid is exempt from sequestration. In order to offset the cost of the legislation, the 2012 Act reduces payments to other providers totaling almost $26 billion over ten years. Approximately half of those funds will come from reductions in Medicare reimbursement to hospitals. Although the Bipartisan Budget Act of 2013 has reduced certain sequestration-related budgetary cuts, spending reductions related to the Medicare program remain in place. On December 26, 2013, President Obama signed into law H.J. Res. 59, the Bipartisan Budget Act of 2013, which includes the Pathway for SGR Reform Act of 2013 (“the Act”). In addition, on February 15, 2014, Public Law 113-082 was enacted. The Act and subsequent federal legislation achieves new savings by extending sequestration for mandatory programs – including Medicare – for another three years, through 2024.

The 2012 Act includes a document and coding (“DCI”) adjustment and a reduction in Medicaid disproportionate share hospital (“DSH”) payments. Expected to save $10.5 billion over 10 years, the DCI adjustment decreases projected Medicare hospital payments for inpatient and overnight care through a downward adjustment in annual base payment increases. These reductions are meant to recoup what Medicare authorities consider to be “overpayments” to hospitals that occurred as a result of the transition to Medicare Severity Diagnosis Related Groups. The reduction in Medicaid DSH payments is expected to save $4.2 billion over 10 years. This provision extends the changes regarding DSH payments established by the Legislation and determines future allotments off of the rebased level. We cannot predict the effect this enactment will have on operators (including UHS), and, thus, our business.

The uncertainties of health care reform could materially affect the business and future results of operations of the operators of our facilities, including UHS, which could, in turn, materially reduce our revenues and net income.

On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (the “PPACA”). The Healthcare and Education Reconciliation Act of 2010 (the “Reconciliation Act”), which contains a number of amendments to the PPACA, was signed into law on March 30, 2010. Two primary goals of the PPACA, combined with the Reconciliation Act (collectively referred to as the “Legislation”), are to provide for increased access to coverage for healthcare and to reduce healthcare-related expenses.

Although it is expected that as a result of the Legislation there may be a reduction in uninsured patients, which should reduce our operators’ expense from uncollectible accounts receivable, the Legislation makes a number of other changes to Medicare and Medicaid which we believe may have an adverse impact on the operators of our hospital facilities. It has been projected that the Legislation will result in a net reduction in Medicare and Medicaid payments to hospitals totaling $155 billion over 10 years. The Legislation revises reimbursement under the Medicare and Medicaid programs to emphasize the efficient delivery of high quality care and contains a number of incentives and penalties under these programs to achieve these goals. The Legislation provides for decreases in the annual market basket update for federal fiscal years 2010 through 2019, a productivity offset to the market basket update beginning October 1, 2011 for Medicare Part B reimbursable items and services and beginning October 1, 2012 for Medicare inpatient hospital services. The Legislation and subsequent revisions provide for reductions to both Medicare DSH and Medicaid DSH payments. The Medicare DSH reductions began in October, 2013 with no material adverse impact to reimbursements expected until 2015 while Medicaid DSH reimbursements would not be adversely impacted until 2016. The Legislation implements a value-based purchasing program, which will reward the delivery of efficient care. Conversely, certain facilities will receive reduced reimbursement for failing to meet quality parameters; such hospitals will include those with excessive readmission or hospital-acquired condition rates.

A 2012 U.S. Supreme Court ruling limited the federal government’s ability to expand health insurance coverage by holding unconstitutional sections of the Legislation that sought to withdraw federal funding for state noncompliance with certain Medicaid coverage requirements. Pursuant to that decision, the federal government may not penalize states that choose not to participate in the Medicaid expansion program by reducing their existing Medicaid funding. Therefore, states can choose to accept or not to participate without risking the loss of federal Medicaid funding. As a result, many states, including Texas, have not expanded their Medicaid programs without the threat of loss of federal funding.

There have been several attempts in Congress to repeal or modify various provisions of the Legislation. We cannot predict whether or not any of these proposed changes to the PPACA will become law and therefore can provide no assurance that changes to the Legislation, as currently implemented, will not have a material adverse effect on the tenants/operators of our properties and, thus, our business.  

In addition, in King vs. Burwell, the Supreme Court decided in favor of the federal government’s ability to subsidize premiums paid by certain eligible individuals that obtain health insurance policies through federally facilitated exchanges. A number of our properties are located in states that utilize federally facilitated exchanges. The Supreme Court’s decision in this case ultimately preserved the viability of federally facilitated exchanges.  A different decision by the Supreme Court could have resulted in an

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increased number of uninsured patients generally, including an increase of uninsured patients treated at our hospital properties located in these states.

The various provisions in the Legislation that directly or indirectly affect Medicare and Medicaid reimbursement are scheduled to take effect over a number of years. The impact of the Legislation on healthcare providers will be subject to implementing regulations, interpretive guidance and possible future legislation or legal challenges. Certain Legislation provisions, such as those creating the Medicare Shared Savings Program and the Independent Payment Advisory Board, create uncertainty in how healthcare may be reimbursed by federal programs in the future. Thus, at this time, we cannot predict the impact of the Legislation on the future reimbursement of our hospital operators and we can provide no assurance that the Legislation will not have a material adverse effect on the future results of operations of the tenants/operators of our properties and, thus, our business.

The trend toward value-based purchasing may negatively impact the revenues of our hospital operators.

We believe that value-based purchasing initiatives of both governmental and private payers tying financial incentives to quality and efficiency of care will increasingly affect the results of operations of our hospitals and other healthcare facilities and may negatively impact their revenues if they are unable to meet expected quality standards. The Affordable Care Act contains a number of provisions intended to promote value-based purchasing in federal healthcare programs. Medicare now requires providers to report certain quality measures in order to receive full reimbursement increases for inpatient and outpatient procedures that were previously awarded automatically. In addition, hospitals that meet or exceed certain quality performance standards will receive increased reimbursement payments, and hospitals that have “excess readmissions” for specified conditions will receive reduced reimbursement. Furthermore, Medicare no longer pays hospitals additional amounts for the treatment of certain hospital-acquired conditions unless the conditions were present at admission. Beginning in Federal Fiscal Year (FFY) 2015, hospitals that rank in the worst 25% of all hospitals nationally for hospital acquired conditions in the previous year will receive reduced Medicare reimbursements. The ACA also prohibits the use of federal funds under the Medicaid program to reimburse providers for treating certain provider-preventable conditions.

There is a trend among private payers toward value-based purchasing of healthcare services, as well. Many large commercial payers require hospitals to report quality data, and several of these payers will not reimburse hospitals for certain preventable adverse events. We expect value-based purchasing programs, including programs that condition reimbursement on patient outcome measures, to become more common and to involve a higher percentage of reimbursement amounts. We are unable at this time to predict how this trend will affect the results of operations of the operators of our hospitals, but it could negatively impact their revenues if they are unable to meet quality standards established by both governmental and private payers.

Increased competition in the health care industry has resulted in lower revenues and higher costs for our operators, including UHS, and may affect our revenues, property values and lease renewal terms.

The health care industry is highly competitive and competition among hospitals and other health care providers for patients and physicians has intensified in recent years. In most geographical areas in which our facilities are operated, there are other facilities that provide services comparable to those offered by our facilities. In addition, some competing facilities are owned by tax-supported governmental agencies or by nonprofit corporations and may be supported by endowments and charitable contributions and exempt from property, sales and income taxes. Such exemptions and support are not available to certain operators of our facilities, including UHS.

In some markets, certain competing facilities may have greater financial resources, be better equipped and offer a broader range of services than those available at our facilities. Certain hospitals that are located in the areas served by our facilities are specialty hospitals that provide medical, surgical and behavioral health services that may not be provided by the operators of our hospitals. The increase in outpatient treatment and diagnostic facilities, outpatient surgical centers and freestanding ambulatory surgical centers also increases competition for our operators.

In addition, 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 430-bed acute care hospital, and Riverside County, California, the site of our Southwest Healthcare System-Inland Valley Campus, a 132-bed acute care hospital.

In addition, the number and quality of the physicians on a hospital’s staff are important factors in determining a hospital’s competitive advantage. Typically, physicians are responsible for making hospital admission decisions and for directing the course of patient treatment. Since the operators of our facilities also compete with other health care providers, they may experience difficulties in recruiting and retaining qualified hospital management, nurses and other medical personnel.

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We anticipate that our operators, including UHS, will continue to encounter increased competition in the future that could lead to a decline in patient volumes and harm their businesses, which in turn, could harm our business.

Operators that fail to comply with governmental reimbursement programs such as Medicare or Medicaid, licensing and certification requirements, fraud and abuse regulations or new legislative developments may be unable to meet their obligations to us.

Our operators, including UHS and its subsidiaries, are subject to numerous federal, state and local laws and regulations that are subject to frequent and substantial changes (sometimes applied retroactively) resulting from legislation, adoption of rules and regulations, and administrative and judicial interpretations of existing law. The ultimate timing or effect of these changes cannot be predicted. Government regulation may have a dramatic effect on our operators’ costs of doing business and the amount of reimbursement received by both government and other third-party payors. The failure of any of our operators to comply with these laws, requirements and regulations could adversely affect their ability to meet their obligations to us. These regulations include, among other items: hospital billing practices and prices for service; relationships with physicians and other referral sources; adequacy of medical care; quality of medical equipment and services; qualifications of medical and support personnel; the implementation of, and continued compliance with, electronic health records’ regulations; confidentiality, maintenance and security issues associated with health-related information and patient medical records; the screening, stabilization and transfer of patients who have emergency medical conditions; certification, licensure and accreditation of our facilities; operating policies and procedures, and; construction or expansion of facilities and services.

If our operators fail to comply with applicable laws and regulations, they could be subjected to liabilities, including criminal penalties, civil penalties (including the loss of their licenses to operate one or more facilities), and exclusion of one or more facilities from participation in the Medicare, Medicaid and other federal and state health care programs. The imposition of such penalties could jeopardize that operator’s ability to make lease or mortgage payments to us or to continue operating its facility. In addition, our bonus rents are based on net revenues of the UHS hospital facilities, which in turn are affected by the amount of reimbursement that such lessees receive from the government.

Although UHS and the other operators of our acute care facilities believe that their policies, procedures and practices comply with governmental regulations, no assurance can be given that they will not be subjected to governmental inquiries or actions, or that they would not be faced with sanctions, fines or penalties if so subjected. Because many of these laws and regulations are relatively new, in many cases, our operators don’t have the benefit of regulatory or judicial interpretation. In the future, it is possible that different interpretations or enforcement of these laws and regulations could subject their current or past practices to allegations of impropriety or illegality or could require them to make changes in the facilities, equipment, personnel, services, capital expenditure programs and operating expenses. Even if they were to ultimately prevail, a significant governmental inquiry or action under one of the above laws, regulations or rules could have a material adverse effect upon them, and in turn, us.

A worsening of the economic and employment conditions in the United States could materially affect our business and future results of operations of the operators of our facilities which could, in turn, materially reduce our revenues and net income.

Our future results of operations could be unfavorably impacted by deterioration in general economic conditions which could result in increases in the number of people unemployed and/or uninsured. Our operators’ patient volumes, revenues and financial results depend significantly on the universe of patients with health insurance, which to a large extent is dependent on the employment status of individuals in certain markets. A worsening of economic conditions may result in a higher unemployment rate which will likely increase the number of individuals without health insurance. As a result, the operators of our facilities may experience a decrease in patient volumes. Should that occur, it may result in decreased occupancy rates at our medical office buildings as well as a reduction in the revenues earned by the operators of our hospital facilities which would unfavorably impact our future bonus rentals (on the UHS hospital facilities) and may potentially have a negative impact on the future lease renewal terms and the underlying value of the hospital properties.

The deterioration of credit and capital markets may adversely affect our access to sources of funding and we cannot be certain of the availability and terms of capital to fund the growth of our business when needed.

To retain our status as a REIT, we are required to distribute 90% of our taxable income to shareholders and, therefore, we generally cannot use income from operations to fund our growth. Accordingly, our growth strategy depends, in part, upon our ability to raise additional capital at reasonable costs to fund new investments. We believe we will be able to raise additional debt and equity capital at reasonable costs to refinance our debts (including third-party debt held by various LLCs in which we own non-controlling equity interests) at or prior to their maturities and to invest at yields which exceed our cost of capital. We can provide no assurance that financing will be available to us on satisfactory terms when needed, which could harm our business. Given these uncertainties, our growth strategy is not assured and may fail.

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To fund all or a portion of our future financing needs, we rely on borrowings from various sources including fixed rate, long-term debt as well as borrowings pursuant to our revolving credit agreement. If any of the lenders were unable to fulfill their future commitments, our liquidity could be impacted, which could have a material unfavorable impact on our results of operations and financial condition.

In addition, the degree to which we are, or in the future may become, leveraged, our ability to obtain financing could be adversely impacted and could make us more vulnerable to competitive pressures. Our ability to meet existing and future debt obligations depends upon our future performance and our ability to secure additional financing on satisfactory terms, each of which is subject to financial, business and other factors that are beyond our control. Any failure by us to meet our financial obligations would harm our business.

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.

A substantial portion of our revenues are dependent upon one operator. If UHS experiences financial difficulties, or otherwise fails to make payments to us, or elects not to renew the leases on our three acute care hospitals, our revenues could be materially reduced.

For the year ended December 31, 2015, UHS accounted for 33% of our consolidated revenues. In addition, as of December 31, 2015, subsidiaries of UHS leased three of the six hospital facilities owned by us with terms expiring in 2016 (The Bridgeway was sold on December 31, 2014). We cannot assure you that UHS will continue to satisfy its obligations to us or renew existing leases upon their scheduled maturity (including renewal of the leases on three acute care hospitals at existing lease rates that are scheduled to expire in December, 2016). In addition, if subsidiaries of UHS exercise their options to purchase the respective leased hospital 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 the hospital leases. The failure or inability of UHS to satisfy its obligations to us, or should UHS elect not to renew the leases on our three acute care hospitals, our revenues and net income could be materially reduced, which could in turn reduce the amount of dividends we pay and cause our stock price to decline.

Our relationship with UHS may create conflicts of interest.

In addition to being dependent upon UHS for a substantial portion of our revenues and leases, since 1986, UHS of Delaware, Inc. (the “Advisor”), a wholly-owned subsidiary of UHS, has served as our Advisor. Pursuant to our 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. Further, all of our officers are employees of the Advisor. As of December 31, 2015 we had no salaried employees although 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 compensation awards in the form of restricted stock and/or cash bonuses. We believe that the quality and depth of the management and advisory services provided to us by our Advisor and UHS could not be replicated by contracting with unrelated third parties or by being self-advised without considerable cost increases. We believe that these relationships have been beneficial to us in the past, but we cannot guarantee that they will not become detrimental to us in the future.

All transactions with UHS must be approved by a majority of our Independent Trustees. We believe that our current leases and business dealings with UHS have been entered into on commercially reasonable terms. However, because of our historical and continuing relationship with UHS and its subsidiaries, in the future, our business dealings may not be on the same or as favorable terms as we might achieve with a third party with whom we do not have such a relationship. Disputes may arise between us and UHS that we are unable to resolve or the resolution of these disputes may not be as favorable to us as a resolution we might achieve with a third party.

We hold non-controlling equity ownership interests in various joint-ventures.

For the year ended December 31, 2015, 18% of our consolidated and unconsolidated revenues were generated by LLCs/LPs in which we hold a non-controlling equity ownership interest. As of December 31, 2015, we hold non-controlling equity ownership interests, ranging from 33% to 95%, in five LLCs/LPs.

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Our level of investment and lack of control exposes us to potential losses of our investments and revenues. Although our ownership arrangements have been beneficial to us in the past, we cannot guarantee that they will continue to be beneficial in the future.

Pursuant to the operating and/or partnership agreements of the five 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.

In addition to the above-mentioned rights of the third-party members, from time to time, we have had discussions with third-party members about purchasing or selling the interests to each other or a third party. If we were to sell our interests, we may not be able to redeploy the proceeds into assets at the same or greater return as we currently receive. During any such time that we were not able to do so, our ability to increase or maintain our dividend at current levels could be adversely affected which could cause our stock price to decline.

The bankruptcy, default, insolvency or financial deterioration of our tenants could significantly delay our ability to collect unpaid rents or require us to find new operators.

Our financial position and our ability to make distributions to our shareholders may be adversely affected by financial difficulties experienced by any of our major tenants, including bankruptcy, insolvency or a general downturn in the business. We are exposed to the risk that our operators may not be able to meet their obligations, which may result in their bankruptcy or insolvency. Although our leases and loans provide us the right to terminate an investment, evict an operator, demand immediate repayment and other remedies, the bankruptcy laws afford certain rights to a party that has filed for bankruptcy or reorganization. An operator in bankruptcy may be able to restrict our ability to collect unpaid rents or interest during the bankruptcy proceeding.

Required regulatory approvals can delay or prohibit transfers of our healthcare facilities.

Transfers of healthcare facilities to successor tenants or operators may be subject to regulatory approvals or ratifications, including, but not limited to, change of ownership approvals under certificate of need laws and Medicare and Medicaid provider arrangements that are not required for transfers of other types of commercial operations and other types of real estate. The replacement of any tenant or operator could be delayed by the regulatory approval process of any federal, state or local government agency necessary for the transfer of the facility or the replacement of the operator licensed to manage the facility. If we are unable to find a suitable replacement tenant or operator upon favorable terms, or at all, we may take possession of a facility, which might expose us to successor liability or require us to indemnify subsequent operators to whom we might transfer the operating rights and licenses, all of which may materially adversely affect our business, results of operations, and financial condition.

Real estate ownership creates risks and liabilities that may result in unanticipated losses or expenses.

Our business is subject to risks associated with real estate acquisitions and ownership, including:

· general liability, property and casualty losses, some of which may be uninsured;

· the illiquid nature of real estate and the real estate market that impairs our ability to purchase or sell our assets rapidly to respond to changing economic conditions;

· real estate market factors, such as 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;

· costs that may be incurred relating to maintenance and repair, and the need to make expenditures due to changes in governmental regulations, including the Americans with Disabilities Act;

· environmental hazards at our properties for which we may be liable, including those created by prior owners or occupants, existing tenants, mortgagors or other persons, and;

· defaults and bankruptcies by our tenants.

13

In addition to the foregoing risks, we cannot predict whether the leases on our properties, including the leases on the properties leased to subsidiaries of UHS, which have options to purchase the respective leased facilities at the end of the lease or renewal terms at the appraised fair market value, will be renewed at their current rates at the end of the lease terms in 2016. If the leases are not renewed, we may be required to find other operators for these facilities and/or enter into leases with less favorable terms. The exercise of purchase options for our facilities may result in a less favorable rate of return for us than the rental revenue currently earned on such facilities. Further, the purchase options and rights of first refusal granted to the respective lessees to purchase or lease the respective leased facilities, after the expiration of the lease term, may adversely affect our ability to sell or lease a facility, and may present a potential conflict of interest between us and UHS since the price and terms offered by a third-party are likely to be dependent, in part, upon the financial performance of the facility during the final years of the lease term.

Significant potential liabilities and rising insurance costs and availability may have an adverse effect on the operations of our operators, which may negatively impact their ability to meet their obligations to us.

As is typical in the healthcare industry, in the ordinary course of business, our operators, including UHS, are subject to medical malpractice lawsuits, product liability lawsuits, class action lawsuits and other legal actions. Some of these actions may involve large claims, as well as significant defense costs. If their ultimate liability for professional and general liability claims could change materially from current estimates, if such policy limitations should be partially or fully exhausted in the future, or payments of claims exceed estimates or are not covered by insurance, it could have a material adverse effect on the operations of our operators and, in turn, us.

Property insurance rates, particularly for earthquake insurance in California, have also continued to increase. Our tenants and operators, including UHS, may be unable to fulfill their insurance, indemnification and other obligations to us under their leases and mortgages and thereby potentially expose us to those risks. In addition, our tenants and operators may be unable to pay their lease or mortgage payments, which could potentially decrease our revenues and increase our collection and litigation costs. Moreover, to the extent we are required to foreclose on the affected facilities, our revenues from those facilities could be reduced or eliminated for an extended period of time. In addition, we may in some circumstances be named as a defendant in litigation involving the actions of our operators. Although we have no involvement in the activities of our operators and our standard leases generally require our operators to carry insurance to cover us in certain cases, a significant judgment against us in such litigation could exceed our and our operators’ insurance coverage, which would require us to make payments to cover the judgment.

If we fail to maintain our REIT status, we will become subject to federal income tax on our taxable income at regular corporate rates.

In order to qualify as a REIT, we must comply with certain highly technical and complex Internal Revenue Code provisions. Although we believe we have been qualified as a REIT since our inception, there can be no assurance that we have been so qualified or will remain qualified in the future. Failure to qualify as a REIT may subject us to income tax liabilities, including federal income tax at regular corporate rates. The additional income tax incurred may significantly reduce the cash flow available for distribution to shareholders and for debt service. In addition, if disqualified, we might be barred from qualification as a REIT for four years following disqualification. Also, if disqualified, we will not be allowed a deduction for distributions to stockholders in computing our taxable income and we could be subject to increased state and local income taxes.

Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow.

Even if we remain qualified for taxation as a REIT, we may be subject to certain federal, state and local taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes. Any of these taxes would decrease cash available for the payment of our debt obligations.

Dividends paid by REITs generally do not qualify for reduced tax rates.

In general, dividends (qualified) paid by a U.S. corporation to individual U.S. shareholders are subject to Federal income tax at a maximum rate of 20% (subject to certain additional taxes for certain taxpayers). In contrast, since we are a REIT, our distributions to individual U.S. shareholders are not eligible for the reduced rates which apply to distributions from regular corporations, and thus may be subject to Federal income tax at a rate as high as 39.6% (subject to certain additional taxes for certain taxpayers).

14

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.

To obtain the favorable tax treatment associated with qualifying as a REIT, in general, we are required each year to distribute to our shareholders at least 90% of our net taxable income. In addition, we are subject to a tax on any undistributed portion of our income at regular corporate rates and might also be subject to a 4% excise tax on this undistributed income. To meet the distribution requirements necessary to achieve the tax benefits associated with qualifying as a REIT, we could be required to: (i) seek borrowed funds even if conditions are not favorable for borrowing; (ii) issue equity which could have a dilutive effect on the future dividends and share value of our existing shareholders, and/or; (iii) divest assets that we might have otherwise decided to retain. Securing funds through these other non-operating means could adversely affect our financial condition and future results of operations.

Complying with REIT requirements may cause us to forego otherwise attractive opportunities.

To qualify as a REIT for federal income tax purposes, we continually must satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our stock. We may be unable to pursue investments that would be otherwise advantageous to us in order to satisfy the source-of-income, asset-diversification or distribution requirements for qualifying as a REIT. Thus, compliance with the REIT requirements may hinder our ability to make certain attractive investments.

The market value of our common stock could be substantially affected by various factors.

Many factors, certain of which are outside of our control, could have an adverse effect on the share price of our common stock. These factors include certain of the risks discussed herein, our financial condition, performance and prospects, the market for similar securities issued by REITs, demographic changes, operating results of our operators and other hospital companies, changes in our financial estimates or recommendations of securities analysts, speculation in the press or investment community, the possible effects of war, terrorist and other hostilities, adverse weather conditions, the level of seasonal illnesses, changes in general conditions in the economy, financial markets or overall interest rate environment, or other developments affecting the health care industry.

Ownership limitations and anti-takeover provisions in our declaration of trust and bylaws and under Maryland law and in our leases with UHS may delay, defer or prevent a change in control or other transactions that could provide shareholders with a take-over premium. We are subject to significant anti-takeover provisions.

In order to protect us against the risk of losing our REIT status for federal income tax purposes, our declaration of trust permits our Trustees to redeem shares acquired or held in excess of 9.8% of the issued and outstanding shares of our voting stock and, which in the opinion of the Trustees, would jeopardize our REIT status. In addition, any acquisition of our common or preferred shares that would result in our disqualification as a REIT is null and void. The right of redemption may have the effect of delaying, deferring or preventing a change in control of our company and could adversely affect our shareholders’ ability to realize a premium over the market price for the shares of our common stock.

Our declaration of trust authorizes our Board of Trustees to issue additional shares of common and preferred stock and to establish the preferences, rights and other terms of any series of preferred stock that we issue. Although our Board of Trustees has no intention to do so at the present time, it could establish a series of preferred stock that could delay, defer or prevent a transaction or a change in control that might involve the payment of a premium over the market price for our common stock or otherwise be in the best interests of our shareholders.

The Master Lease Documents by and among us and certain subsidiaries of UHS, which governs the three acute care hospital properties and the freestanding emergency departments leased to subsidiaries of UHS, includes a change of control provision. The change of control provision grants UHS the right, upon one month’s notice should a change of control of the Trust occur, to purchase any or all of the leased hospital properties at their appraised fair market values. The exercise of this purchase option may result in a less favorable rate of return earned on the sales proceeds received than the rental revenue currently earned on such facilities.

These provisions could discourage unsolicited acquisition proposals or make it more difficult for a third-party to gain control of us, which could adversely affect the market price of our securities and prevent shareholders from receiving a take-over premium.

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We depend heavily on key management personnel and the departure of one or more of our key executives or a significant portion of our operators’ local hospital management personnel could harm our business.

The expertise and efforts of our senior executives and key members of our operators’ local hospital management personnel are critical to the success of our business. The loss of the services of one or more of our senior executives or of a significant portion of our operators’ local hospital management personnel could significantly undermine our management expertise and our operators’ ability to provide efficient, quality health care services at our facilities, which could harm their business, and in turn, harm our business.

Increasing investor interest in our sector and consolidation at the operator or REIT level could increase competition and reduce our profitability.

Our business is highly competitive and we expect that it may become more competitive in the future. We compete for the acquisition, leasing and financing of health care related facilities. Our competitors include, but are not limited to, other REITs, banks and other companies, including UHS, some of which are larger and may have a lower cost of capital than we do. These developments could result in fewer investment opportunities for us and lower spreads over our cost of our capital, which would hurt our growth. Increased competition makes it more challenging for us to identify and successfully capitalize on opportunities that meet our business goals and could improve the bargaining power of property owners seeking to sell, thereby impeding our investment, acquisition and development activities. If we cannot capitalize on our development pipeline, identify and purchase a sufficient quantity of healthcare facilities at favorable prices or if we are unable to finance acquisitions on commercially favorable terms, our business, results of operations and financial condition may be materially adversely affected.

We may be required to incur substantial renovation costs to make certain of our healthcare properties suitable for other operators and tenants.

Healthcare facilities are typically highly customized and may not be easily adapted to non-healthcare-related uses. The improvements generally required to conform a property to healthcare use, such as upgrading electrical, gas and plumbing infrastructure, are costly and at times tenant-specific. A new or replacement operator or tenant may require different features in a property, depending on that operator’s or tenant’s particular operations. If a current operator or tenant is unable to pay rent and vacates a property, we may incur substantial expenditures to modify a property before we are able to secure another operator or tenant. Also, if the property needs to be renovated to accommodate multiple operators or tenants, we may incur substantial expenditures before we are able to re-lease the space. These expenditures or renovations may materially adversely affect our business, results of operations and financial condition.

We are subject to significant corporate regulation as a public company and failure to comply with all applicable regulations could subject us to liability or negatively affect our stock price.

As a publicly traded company, we are subject to a significant body of regulation, including the Sarbanes-Oxley Act of 2002. While we have developed and instituted a corporate compliance program based on what we believe are the current best practices in corporate governance and continue to update this program in response to newly implemented or changing regulatory requirements, we cannot provide assurance that we are or will be in compliance with all potentially applicable corporate regulations. For example, we cannot provide assurance that in the future our management will not find a material weakness in connection with its annual review of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. We also cannot provide assurance that we could correct any such weakness to allow our management to assess the effectiveness of our internal control over financial reporting as of the end of our fiscal year in time to enable our independent registered public accounting firm to state that we have maintained effective internal control over financial reporting as of the end of our fiscal year. If we fail to comply with any of these regulations, we could be subject to a range of regulatory actions, fines or other sanctions or litigation. If we must disclose any material weakness in our internal control over financial reporting, our stock price could decline.

Different interpretations of accounting principles could have a material adverse effect on our results of operations or financial condition.

Generally accepted accounting principles are complex, continually evolving and may be subject to varied interpretation by us, our independent registered public accounting firm and the SEC. Such varied interpretations could result from differing views related to specific facts and circumstances. Differences in interpretation of generally accepted accounting principles could have a material adverse effect on our financial position or results of operations.

Item  1B. Unresolved Staff Comments

None.

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ITEM 2. Properties

The following table shows our investments in hospital facilities leased to UHS and other non-related parties and also provides information related to various properties in which we have significant investments, some of which are accounted for by the equity method. The capacity in terms of beds (for the hospital facilities) and the five-year occupancy levels are based on information provided by the lessees.

																			Lease Term
		Number																			End of			% of RSF
		of																			initial			under
		available		Average Occupancy(1)																	or	Renewal		lease with			Range of
Hospital Facility Name and	Type of	beds @																	Minimum		renewed	term		guaranteed			guaranteed
Location	facility	12/31/2015		2015			2014			2013			2012			2011			rent(5)		term	(years)		escalators			escalation
Southwest Healthcare System: Inland Valley Campus(2)(7)    Wildomar, California	Acute Care		132		63	%		59	%		58	%		62	%		70	%	$	2,648,000	2016		15		0	%		—
McAllen Medical Center(3)(7)    McAllen, Texas	Acute Care		430		48	%		44	%		43	%		43	%		45	%		5,485,000	2016		15		0	%		—
Wellington Regional Medical    Center(7)    West Palm Beach, Florida	Acute Care		153		56	%		59	%		58	%		69	%		73	%		3,030,000	2016		15		0	%		—
HealthSouth Deaconess Rehab.    Hospital(8)    Evansville, Indiana	Rehabilitation		85		80	%		80	%		79	%		79	%		75	%		714,000	2019		5		0	%		—
Vibra Hospital of Corpus    Christi Corpus Christi, Texas	Sub- Acute Care		74		56	%		58	%		58	%		53	%		54	%		738,000	2019		25		100	%		3	%
Kindred Hospital Chicago    Central(9)    Chicago, Illinois	Sub- Acute Care		84		52	%		54	%		51	%		51	%		46	%		1,474,000	2016		5		0	%		—

																	Lease Term
																			End of		% of RSF
																			initial		under
	Type	Average Occupancy(1)																	or	Renewal	lease with			Range of
	of																Minimum		renewed	term	guaranteed			guaranteed
Facility Name and Location	facility	2015			2014			2013			2012			2011			rent(5)		term	(years)	escalators			escalation
Spring Valley MOB I(4)    Las Vegas, Nevada	MOB		61	%		60	%		64	%		68	%		75	%	$	714,000	2016-2021	Various		91	%	2%-3%
Spring Valley MOB II(4)    Las Vegas, Nevada	MOB		84	%		77	%		76	%		76	%		67	%		1,079,000	2016-2022	Various		34	%	1%-3%
Summerlin Hospital MOB I(4)    Las Vegas, Nevada	MOB		62	%		66	%		77	%		81	%		90	%		964,000	2016-2020	Various		66	%	2%-3%
Summerlin Hospital MOB II(4)    Las Vegas, Nevada	MOB		74	%		78	%		74	%		82	%		83	%		1,496,000	2016-2021	Various		69	%	2%-3%
Summerlin Hospital MOB III(4)    Las Vegas, Nevada	MOB		100	%		90	%		81	%		71	%		64	%		1,830,000	2016-2024	Various		53	%	2%-3%
St. Mary’s Professional    Office Building(6)    Reno, Nevada	MOB		100	%		100	%		98	%		99	%		100	%		4,491,000	2016-2025	Various		31	%	2%-3%
Rosenberg Children’s    Medical Plaza    Phoenix, Arizona	MOB		99	%		99	%		99	%		100	%		100	%		1,746,000	2016-2020	Various		59	%	3%
Gold Shadow—700    Shadow(4)    Las Vegas, Nevada	MOB		99	%		97	%		84	%		82	%		78	%		886,000	2016-2020	Various		57	%	2%
Gold Shadow—2010 & 2020    Goldring MOBs (4)    Las Vegas, Nevada	MOB		67	%		64	%		92	%		95	%		95	%		1,213,000	2016-2023	Various		76	%	2%-3%
Centennial Hills MOB(4)    Las Vegas, Nevada	MOB		73	%		71	%		62	%		62	%		63	%		1,432,000	2016-2024	Various		48	%	2%-3%
Deset Springs Medical Plaza (4)    Las Vegas, Nevada	MOB		53	%		52	%		56	%		68	%		69	%		917,000	2016-2025	Various		96	%	2%-3%
PeaceHealth Medical Clinic(10)    Bellingham,    Washington	MOB		100	%		100	%		100	%		100	%		0	%		2,565,000	2021	20		100	%	1%

(1) Average occupancy rate for the hospital facilities is based on the average number of available beds occupied during each of the five years ended December 31, 2015. Average available beds is the number of beds which are actually in service at any given time for immediate patient use with the necessary equipment and staff available for patient care. A hospital may have appropriate licenses for more beds than are in service for a number of reasons, including lack of demand, incomplete construction and anticipation of future needs. The average occupancy rate of a hospital is affected by a number of factors, including the number of physicians using the hospital, changes in the number of beds, the composition and size of the population of the community in which the hospital is located, general and local economic conditions, variations in local medical

17

and surgical practices and the degree of outpatient use of the hospital services. Average occupancy rate for the multi-tenant medical office buildings is based on the occupied square footage of each building, including any applicable master leases.

(2) In July, 2002, the operations of Inland Valley Regional Medical Center (“Inland Valley”) were merged with the operations of Rancho Springs Medical Center (“Rancho Springs”), an acute care hospital located in California and also operated by UHS, the real estate assets of which are not owned by us. Inland Valley, our lessee, was merged into Universal Health Services of Rancho Springs, Inc. The merged entity is now doing business as Southwest Healthcare System (“Southwest Healthcare”). As a result of merging the operations of the two facilities, the revenues of Southwest Healthcare include the revenues of both Inland Valley and Rancho Springs. Although we do not own the real estate assets of the Rancho Springs facility, Southwest Healthcare became the lessee on the lease relating to the real estate assets of the Inland Valley facility. Since the bonus rent calculation for the Inland Valley campus is based on net revenues and the financial results of the two facilities are no longer separable, the lease was amended during 2002 to exclude from the bonus rent calculation the estimated net revenues generated at the Rancho Springs campus (as calculated pursuant to a percentage based allocation determined at the time of the merger). The average occupancy rates shown for this facility for all years were based on the combined number of beds occupied at the Inland Valley and Rancho Springs campuses.

(3) During the first quarter of 2001, UHS purchased the assets and operations of the 60-bed McAllen Heart Hospital located in McAllen, Texas. Upon the acquisition by UHS, the Heart Hospital began operating under the same license as an integrated department of McAllen Medical Center. As a result of combining the operations of the two facilities, the revenues of McAllen Medical Center include revenues generated by the Heart Hospital, the real property of which is not owned by us. Accordingly, since the bonus rent calculation for McAllen Medical Center is based on the combined net revenues of the two facilities, the McAllen Medical Center lease was amended during 2001 to exclude from the bonus rent calculation, the estimated net revenues generated at the Heart Hospital (as calculated pursuant to a percentage based allocation determined at the time of the merger). In addition, during 2000, UHS purchased the South Texas Behavioral Health Center, a behavioral health care facility located in McAllen, Texas. In 2006, a newly constructed replacement facility for the South Texas Behavioral Health Center was completed and opened. The license for this facility, the real property of which is not owned by us, was also merged with the license for McAllen Medical Center. There was no amendment to the McAllen Medical Center lease related to the operations of the South Texas Behavioral Health Center and its revenues are excluded from the bonus rent calculation. In 2015, the newly constructed Weslaco and Mission Free Standing Emergency Departments (“FEDs”) were completed and opened. The license for these facilities is part of the license of McAllen Medical Center. The real property of these two FEDs was purchased by us and leased back to McAllen Medical Center. There was no amendment to the McAllen Medical Center lease related to the operations of the FEDs and their revenues will be excluded from the bonus rent calculation. No assurance can be given as to the effect, if any, the consolidation of the facilities as mentioned above, had on the underlying value of McAllen Medical Center. Base rental commitments and the guarantee by UHS under the original lease continue for the remainder of the lease terms. The average occupancy rates are based upon the combined occupancy and combined number of beds at McAllen Medical Center and McAllen Heart Hospital.

(4) The real estate assets of this facility are owned by us (either directly or through an LLC in which we hold 100% of the ownership interest) and include tenants who are subsidiaries of UHS.

(5) Minimum rent amounts contain impact of straight-line rent adjustments, if applicable.

(6) The real estate assets of this facility are owned by an LLC in which we hold a 75% non-controlling ownership interest as of December 31, 2015.

(7) See Note 2 to the consolidated financial statements-Relationship with UHS and Related Party Transactions, regarding UHS’s purchase option, right of first refusal and change of control purchase option related to these properties.

(8) The lessee of this facility has a purchase option which is exercisable, subject to certain terms and conditions, at the expiration of each lease term. If exercised, the purchase option stipulates that the purchase price be the fair market value of the facility, subject to stipulated minimum and maximum prices. As currently being utilized, we believe the estimated current fair market value of the property is between the stipulated minimum and maximum prices. The lessee also has a first refusal to purchase right which, if applicable and subject to certain terms and conditions, grants the lessee the option to purchase the property at the same terms and conditions as an accepted third-party offer.

(9) The lessee of this facility has a purchase option which is exercisable, subject to certain terms and conditions, at the expiration of each lease term. If exercised, the purchase option stipulates that the purchase price be the fair market value of the facility, subject to a stipulated minimum price. We believe the estimated current fair market value of the property exceeds the stipulated minimum price. The lessee also has a first refusal to purchase right which, if applicable and subject to certain terms and conditions, grants the lessee the option to purchase the property at the same terms and conditions as an accepted third-party offer.   The existing lease on this facility, which had a Coverage Ratio of 1.1 during 2015, is scheduled to expire in December, 2016 and we can provide no assurance that it will be renewed at existing lease rates upon maturity.   

(10) This MOB was acquired in January, 2012.

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Leasing Trends at Our Significant Medical Office Buildings

During 2015, we had a total of 60 new or renewed leases related to the medical office buildings indicated above, in which we have significant investments, some of which are accounted for by the equity method. These leases comprised approximately 14% of the aggregate rentable square feet of these properties (4% related to renewed leases and 10% related to new leases). Rental rates, tenant improvement costs and rental concessions vary from property to property based upon factors such as, but not limited to, the current occupancy and age of our buildings, local overall economic conditions, proximity to hospital campuses and the vacancy rates, rental rates and capacity of our competitors in the market. The weighted-average tenant improvement costs associated with these new or renewed leases was approximately $11 per square foot during 2015. The weighted-average leasing commissions on the new and renewed leases commencing during 2015 was approximately 2% of base rental revenue over the term of the leases. The average aggregate value of the tenant concessions, generally consisting of rent abatements, provided in connection with new and renewed leases commencing during 2015 was approximately 2% of the future aggregate base rental revenue over the lease terms. Rent abatements were, or will be, recognized in our results of operations under the straight-line method over the lease term regardless of when payments are due. In connection with lease renewals executed during 2015, the weighted-average rental rates, as compared to rental rates on the expired leases, decreased by approximately 3%.

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Set forth is information detailing the rentable square feet (“RSF”) associated with each of our investments as of December 31, 2015 and the percentage of RSF on which leases expire during the next five years and thereafter. For the MOBs that have scheduled lease expirations during 2016 of 20% or greater (of RSF), we have included information regarding estimated market rates relative to lease rates on the expiring leases.

						Percentage of RSF with lease expirations
	Total RSF		Available for Lease Jan. 1, 2016			2016			2017			2018			2019			2020			2021 and Later
Hospital Investments:
McAllen Medical Center		422,276		0	%		100	%		0	%		0	%		0	%		0	%		0	%
Wellington Regional Medical Center		196,489		0	%		100	%		0	%		0	%		0	%		0	%		0	%
Southwest Healthcare System - Inland Valley		164,377		0	%		100	%		0	%		0	%		0	%		0	%		0	%
Kindred Hospital Chicago Central		115,554		0	%		100	%		0	%		0	%		0	%		0	%		0	%
HealthSouth Deaconess Rehab. Hospital		77,440		0	%		0	%		0	%		0	%		100	%		0	%		0	%
Vibra Hospital Corpus Christi		69,700		0	%		0	%		0	%		0	%		100	%		0	%		0	%
Sub-total Hospitals		1,045,836		0	%		86	%		0	%		0	%		14	%		0	%		0	%
Medical Office Buildings:
Saint Mary's Professional Office Building		190,754		0	%		2	%		8	%		0	%		2	%		43	%		45	%
Goldshadow - 2010 - 2020 Goldring MOB's		74,774		28	%		9	%		25	%		2	%		3	%		7	%		26	%
Goldshadow - 700 Shadow Lane MOB (a.)		42,060		1	%		21	%		11	%		19	%		25	%		23	%		0	%
Texoma Medical Plaza		115,284		0	%		0	%		2	%		6	%		2	%		54	%		36	%
Suburban Medical Plaza II		103,011		0	%		11	%		1	%		6	%		2	%		0	%		80	%
Desert Springs Medical Plaza		102,579		45	%		2	%		0	%		14	%		8	%		0	%		31	%
Peace Health Medical Clinic		98,886		0	%		0	%		0	%		0	%		0	%		0	%		100	%
Centennial Hills Medical Office Building		96,573		26	%		10	%		2	%		13	%		5	%		22	%		22	%
Summerlin Hospital MOB II		92,313		24	%		10	%		13	%		13	%		20	%		0	%		20	%
Summerlin Hospital MOB I (a.)		89,636		37	%		31	%		9	%		4	%		4	%		15	%		0	%
The Sparks Medical Building		35,127		0	%		13	%		4	%		6	%		3	%		17	%		57	%
Vista Medical Terrace		50,921		51	%		8	%		10	%		10	%		0	%		7	%		14	%
3811 E. Bell		80,379		59	%		1	%		18	%		10	%		3	%		4	%		5	%
Summerlin Hospital MOB III		77,713		0	%		16	%		0	%		6	%		44	%		10	%		24	%
Mid Coast Hospital MOB (b.)		74,629		0	%		77	%		0	%		7	%		0	%		0	%		16	%
North West Texas Professional Office Tower (c.)		72,351		0	%		50	%		3	%		0	%		0	%		0	%		47	%
Rosenberg Children's Medical Plaza		66,231		1	%		17	%		0	%		74	%		5	%		3	%		0	%
Sierra San Antonio Medical Plaza		59,160		32	%		6	%		9	%		7	%		3	%		0	%		43	%
Palmdale Medical Plaza		58,150		38	%		8	%		5	%		9	%		0	%		9	%		31	%
Spring Valley Medical Office Building		57,828		36	%		14	%		30	%		12	%		2	%		0	%		6	%
Spring Valley Medical Office Building II		57,432		15	%		7	%		0	%		39	%		14	%		17	%		8	%
Southern Crescent Center II		53,680		39	%		10	%		0	%		0	%		8	%		4	%		39	%
Desert Valley Medical Center		53,625		13	%		11	%		9	%		11	%		7	%		9	%		40	%
Tuscan Professional Building		52,868		26	%		8	%		0	%		12	%		0	%		30	%		24	%
Lake Pointe Medical Arts Building		50,974		0	%		0	%		33	%		23	%		14	%		17	%		13	%
Forney Medical Plaza		50,947		9	%		0	%		0	%		72	%		0	%		0	%		19	%
Southern Crescent Center I		41,897		68	%		0	%		6	%		21	%		5	%		0	%		0	%
Auburn Medical Office Building		41,311		10	%		0	%		9	%		0	%		0	%		20	%		61	%
BRB Medical Office Building		40,733		9	%		4	%		0	%		17	%		3	%		67	%		0	%
Cypresswood Professional Center - 8101		10,200		100	%		0	%		0	%		0	%		0	%		0	%		0	%
Cypresswood Professional Center - 8111		29,882		10	%		0	%		11	%		7	%		16	%		56	%		0	%
Medical Center of Western Connecticut		36,141		0	%		0	%		24	%		5	%		71	%		0	%		0	%
Phoenix Children’s East Valley Care Center		30,960		0	%		0	%		0	%		0	%		0	%		0	%		100	%
Forney Medical Plaza II		30,507		67	%		0	%		0	%		5	%		0	%		0	%		28	%
Apache Junction Medical Plaza		26,901		9	%		4	%		22	%		0	%		0	%		0	%		65	%
Santa Fe Professional Plaza		24,883		25	%		6	%		11	%		11	%		17	%		10	%		20	%
Professional Bldg at King's Crossing - Bldg A		11,528		100	%		0	%		0	%		0	%		0	%		0	%		0	%
Professional Bldg at King's Crossing - Bldg B		12,790		0	%		0	%		32	%		20	%		11	%		18	%		19	%
The Children's Clinic at Springdale		9,761		0	%		0	%		0	%		0	%		0	%		0	%		100	%

20

						Percentage of RSF with lease expirations
	Total RSF		Available for Lease Jan. 1, 2016			2016			2017			2018			2019			2020			2021 and Later
Northwest Medical Center at Sugar Creek		13,696		0	%		0	%		0	%		0	%		0	%		0	%		100	%
Kelsey-Seybold Clinic at King's Crossing		20,470		0	%		0	%		0	%		0	%		0	%		100	%		0	%
Emory at Dunwoody Building		20,366		0	%		0	%		0	%		0	%		0	%		0	%		100	%
Piedmont - Roswell Physicians Center		19,927		0	%		0	%		0	%		0	%		0	%		0	%		100	%
Piedmont - Vinings Physicians Center		16,790		0	%		0	%		0	%		0	%		0	%		0	%		100	%
Ward Eagle Office Village		16,282		0	%		0	%		0	%		0	%		0	%		0	%		100	%
Haas Medical Office Park		15,850		0	%		0	%		0	%		0	%		0	%		0	%		100	%
Family Doctor's MOB		12,050		0	%		0	%		0	%		0	%		0	%		0	%		100	%
701 South Tonopah Building		10,747		0	%		0	%		0	%		0	%		0	%		0	%		100	%
5004 Pool Road MOB		4,400		0	%		0	%		0	%		0	%		0	%		0	%		100	%
Preschool and Childcare Centers:
Chesterbrook Academy - Audubon		8,300		0	%		0	%		0	%		0	%		0	%		0	%		100	%
Chesterbrook Academy - Uwchlan		8,163		0	%		0	%		0	%		0	%		0	%		0	%		100	%
Chesterbrook Academy - Newtown		8,100		0	%		0	%		0	%		0	%		0	%		0	%		100	%
Chesterbrook Academy - New Britain		7,998		0	%		0	%		0	%		100	%		0	%		0	%		0	%
Ambulatory Care Centers:
Hanover Freestanding Emergency Center		22,000		0	%		0	%		0	%		0	%		0	%		0	%		100	%
Mission Freestanding Emergency Center		13,578		0	%		0	%		0	%		0	%		0	%		0	%		100	%
Weslaco Freestanding Emergency Center		13,578		0	%		0	%		0	%		0	%		0	%		0	%		100	%
Sub-total Other Investments		2,537,674		17	%		10	%		7	%		11	%		6	%		13	%		36	%
Total		3,583,510		12	%		32	%		5	%		8	%		9	%		9	%		25	%

(a) The estimated market rates related to the 2016 expiring RSF are greater than the lease rates on the expiring leases by an average of approximately 3%.

(b) The estimated market rates related to the 2016 expiring RSF are greater than the lease rates on the expiring leases by an average of approximately 2%.

(c) The estimated market rates related to the 2016 expiring RSF are greater than the lease rates on the expiring leases by an average of approximately 1%.

On a combined basis, based upon the aggregate revenues and square footage for the hospital facilities owned as of December 31, 2015 and 2014 (including The Bridgeway for 2014 which was sold on December 31, 2014), the average effective annual rental per square foot was $17.83 and $17.47, respectively. On a combined basis, based upon the aggregate consolidated and unconsolidated revenues and the estimated average occupied square footage for our MOBs and childcare centers owned as of December 31, 2015 and 2014, the average effective annual rental per square foot was $28.34 and $27.22, respectively. On a combined basis, based upon the aggregate consolidated and unconsolidated revenues and estimated average occupied square footage for all of our properties owned as of December 31, 2015 and 2014, the average effective annual rental per square foot was $24.84 and $23.83, respectively. The estimated average occupied square footage for 2015 was calculated by averaging the unavailable rentable square footage on January 1, 2015 and January 1, 2016. The estimated average occupied square footage for 2014 was calculated by averaging the unavailable rentable square footage on January 1, 2014 and January 1, 2015.

During 2015, one of the UHS-related hospitals (McAllen Medical Center) generated revenues that comprised more than 10% of our consolidated revenues. None of the properties had book values greater than 10% of our consolidated assets as of December 31, 2015. Including 100% of the revenues generated at the properties owned by our unconsolidated LLCs, none of our unconsolidated LLCs had revenues greater than 10% of the combined consolidated and unconsolidated revenues during 2015. Including 100% of the book values of the properties owned by our unconsolidated LLCs, none of the properties had book values greater than 10% of the consolidated and unconsolidated assets.

The following table sets forth the average effective annual rental per square foot for 2015, based upon average occupied square feet for McAllen Medical Center:

Property	2015 Average Occupied Square Feet		2015 Revenues		2015 Average Effective Rental Per Square Foot
McAllen Medical Center		422,276	$	7,122,000	$	16.87

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The following table sets forth lease expirations for each of the next ten years for properties owned or invested in as of December 31, 2015.

	Expiring Square Feet		Number of Tenants		AnnualRentals of Expiring Leases(1)		Percentage of Annual Rentals(2)
Hospital properties
2016		898,696	4		$	12,637,054		17	%
2017		0	0		0			0	%
2018		0	0		0			0	%
2019		147,140	2			1,452,066		2	%
2020		0	0		0			0	%
2021		0	0		0			0	%
2022		0	0		0			0	%
2023		0	0		0			0	%
2024		0	0		0			0	%
2025		0	0		0			0	%
Thereafter		0	0		0			0	%
Subtotal-hospital facilities		1,045,836		6	$	14,089,120		19	%
Other consolidated properties
2016		173,385	59		$	4,591,022		6	%
2017		148,297	49			4,149,419		6	%
2018		253,764	66			7,588,862		10	%
2019		141,637	38			4,141,667		6	%
2020		194,677	50			5,838,536		8	%
2021		240,192	34			6,607,829		9	%
2022		137,069	15			3,459,019		5	%
2023		99,192	19			2,791,250		4	%
2024		42,544	4			1,361,585		2	%
2025		101,193	11			1,341,406		2	%
Thereafter		70,216	5			1,518,765		2	%
Subtotal-other consolidated properties		1,602,166		350	$	43,389,360		60	%
Other unconsolidated properties (MOBs)
2016		72,037	11		$	1,923,699		2	%
2017		19,146	6			565,608		1	%
2018		19,434	6			589,126		1	%
2019		7,334	4			213,357		0	%
2020		146,591	16			4,341,190		6	%
2021		16,915	5			477,670		1	%
2022		29,279	7			835,970		1	%
2023		24,808	6			865,224		1	%
2024		40,113	7			1,236,728		2	%
2025		118,080	11			3,425,026		5	%
Thereafter		6,944	1			410,087		1	%
Subtotal-other unconsolidated properties		500,681		80	$	14,883,685		21	%
Total all properties at December 31, 2015		3,148,683		436	$	72,362,165		100	%

(1) The annual rentals of expiring leases reflected above were calculated based upon each property’s 2015 average rental rate per occupied square foot applied to each property’s scheduled lease expirations (on a square foot basis). These amounts include the data related to the unconsolidated LLCs/LPs in which we hold various non-controlling ownership interests at December 31, 2015 and exclude the bonus rentals earned on the UHS hospital facilities.

(2) The percentages of annual rentals reflected above were calculated based upon the annual rentals of expiring leases (as reflected above) divided by the total annual rentals of expiring leases (as reflected above).

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ITEM 3. Legal Proceedings

None

ITEM  4. Mine Safety Disclosures

Not applicable

PART II

ITEM  5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our shares of beneficial interest are listed on the New York Stock Exchange. The high and low closing sales prices for our shares of beneficial interest for each quarter in the years ended December 31, 2015 and 2014 are summarized below:

	2015				2014
	High Price		Low Price		High Price		Low Price
First Quarter	$	56.87	$	49.08	$	44.21	$	40.03
Second Quarter	$	56.86	$	46.46	$	44.55	$	41.73
Third Quarter	$	50.35	$	43.54	$	44.74	$	41.26
Fourth Quarter	$	53.40	$	46.76	$	49.13	$	41.47

Holders

As of January 31, 2016, there were approximately 371 shareholders of record of our shares of beneficial interest.

Dividends

It is our intention to declare quarterly dividends to the holders of our shares of beneficial interest so as to comply with applicable sections of the Internal Revenue Code governing REITs. Our revolving credit facility limits our ability to increase dividends in excess of 95% of cash available for distribution, as defined in our revolving credit agreement, unless additional distributions are required to be made so as to comply with applicable sections of the Internal Revenue Code and related regulations governing REITs. In each of the past two years, dividends per share were declared as follows:

	2015		2014
First Quarter	$	.635	$	.625
Second Quarter		.640		.630
Third Quarter		.640		.630
Fourth Quarter		.645		.635
	$	2.560	$	2.520

Stock Price Performance Graph

The following graph compares our performance with that of the S&P 500 and a group of peer companies, where performance has been weighted based on market capitalization. Companies in our peer group are as follows: HCP, Inc., Nationwide Health Properties, Inc. (included until July, 2011 when it was acquired by Ventas, Inc.), Omega Healthcare Investors, Inc., Welltower, Inc. (previously known as Health Care REIT, Inc.), Healthcare Realty Trust, Inc., LTC Properties, Inc., and National Health Investors, Inc.

The total cumulative return on investment (change in the year-end stock price plus reinvested dividends) for each of the periods for us, the peer group and the S&P 500 composite is based on the stock price or composite index at the end of fiscal 2010.

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	Base		INDEXED RETURNS
	Period		Years Ending
Company Name / Index	Dec 10		Dec 11		Dec 12		Dec 13		Dec 14		Dec 15
Universal Health Realty Income Trust	$	100	$	113.73	$	155.99	$	130.51	$	165.99	$	181.58
S&P 500 Index	$	100	$	102.11	$	118.45	$	156.82	$	178.29	$	180.75
Peer Group	$	100	$	115.60	$	137.07	$	125.67	$	172.12	$	162.52

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ITEM 6. Selected Financial Data

The following table contains our selected financial data for, or at the end of, each of the five years ended December 31, 2015. You should read this table in conjunction with our consolidated financial statements and related notes contained elsewhere in this Annual Report and Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

	(000s, except per share amounts)
	2015			2014			2013			2012			2011
Operating Results:
Total revenues(1)	$	63,950		$	59,786		$	54,280		$	53,950		$	29,494
Net income(2)	$	23,691		$	51,551		$	13,169		$	19,477		$	73,794
Balance Sheet Data:
Real estate investments, net of accumulated    depreciation(1)(3)	$	390,496		$	380,109		$	297,748		$	314,386		$	288,633
Investments in LLCs, net of liabilities(1)(4)		30,492			8,605			39,201			28,636			33,057
Intangible assets, net of accumulated amortization(3)		19,757			23,123			20,782			26,293			28,081
Total assets(1)(3)		458,901			428,866			374,179			383,554			371,241
Total indebtedness, including debt premium(1)(3)(5)		252,704			213,155			199,987			197,936			174,836
Other Data:
Funds from operations(6)	$	38,349		$	35,937		$	34,955		$	34,280		$	32,468
Cash provided by (used in):
Operating activities		38,178			32,796			31,294			30,783			21,372
Investing activities		(44,309	)		(4,038	)		(13,373	)		(8,565	)		(7,454	)
Financing activities		6,164			(29,815	)		(17,491	)		(30,819	)		(7,426	)
Per Share Data:
Basic earnings per share:
Total basic earnings per share(2)	$	1.78		$	3.99		$	1.04		$	1.54		$	5.84
Diluted earnings per share:
Total diluted earnings per share(2)	$	1.78		$	3.99		$	1.04		$	1.54		$	5.83
Dividends per share	$	2.560		$	2.520		$	2.495		$	2.460		$	2.425
Other Information (in thousands)
Weighted average number of shares outstanding—basic		13,293			12,927			12,689			12,661			12,644
Weighted average number of shares and share equivalents    outstanding—diluted		13,301			12,934			12,701			12,669			12,649

(1) As discussed in Note 1 “Summary of Significant Accounting Policies—Investments in Limited Liability Companies”, our consolidated financial statements only include the consolidated accounts of our consolidated investments.

(2) Net income and earnings per share during 2015 includes: (i) an $8.7 million gain recorded in connection with a property exchange transaction, as discussed below, and; (ii) $243,000 of transaction costs related to various transactions during 2015.      Net income and earnings per share during 2014 includes: (i) a $25.4 million gain recorded in connection with our purchase of third-party minority ownership interests in eight LLCs (January and August, 2014, as discussed below) in which we formerly held non-controlling majority ownership interests (we own 100% of each of these entities since the effective dates); (ii) a $13.0 million gain on the divestiture of real property (the Bridgeway), and; (iii) $427,000 of transaction costs related to the 2014 acquisition and divestiture activity previously mentioned. Net income and earnings per share during 2013 includes approximately $200,000 of transaction costs related to the acquisition of three MOBs during 2013 and the first quarter of 2014. Net income and earnings per share during 2012 includes an $8.5 million gain on the divestitures of properties owned by two unconsolidated LLCs in which we formerly held non-controlling majority ownership interests, and $680,000 of transaction costs related to the acquisition of a medical clinic and medical office building in 2012. Net income and earnings per share data during 2011 includes: (i) a $28.6 million gain recorded in connection with our purchase of third-party minority ownership interests in various LLCs in which we formerly held non-controlling majority ownership interests (we own 100% of each of these entities since that time); (ii) a $35.8 million gain on the divestitures of properties owned by unconsolidated LLCs in which we formerly held non-controlling majority ownership interests; (iii) $518,000 of transaction costs related to the acquisition of four MOBs during 2011 and the first quarter of 2012, and; (iv) a $5.4 million charge for a provision for asset impairment recorded on a certain MOB.

(3) Amounts include: (i) the fair value of the real property (as of 2014) of the eight previously unconsolidated LLCs, which we began consolidating during the first and third quarters of 2014, subsequent to our purchase of the third-party minority ownership interests on January 1, 2014 and August 1, 2014 (we owned 100% of each of these entities at December 31, 2014), and; (ii) the fair values of the real property (as of 2011) of various previously unconsolidated LLCs, which we began consolidating during

25

the fourth quarter of 2011 subsequent to our purchase of the third-party minority ownership interests (we owned 100% of each of these entities at December 31, 2011).

(4) Investments in LLCs at December 31, 2014, 2013, 2012 and 2011 reflect the consolidation of various LLCs, as mentioned in notes 2 and 3 above, as well as the divestiture of property owned by various unconsolidated LLCs during 2012 and 2011. Additionally, at December 31, 2013, Investments in LLCs reflects the deconsolidation of Palmdale Medical Properties. This LLC was deemed to be a variable interest entity during the term of the master lease and was consolidated in our financial statements through June 30, 2013 since we were the primary beneficiary through that date. Effective July 1, 2013, this LLC is no longer be deemed a variable interest entity and is accounted for in our financial statements on an unconsolidated basis pursuant to the equity method. Effective January 1, 2014, Investments in LLCs reflects the consolidation of Palmdale Medical Properties, since we purchased the third-party minority ownership interests in Palmdale and began accounting for this LLC on a consolidated basis as of that date.

(5) Excludes third-party debt that is non-recourse to us, incurred by unconsolidated LLCs in which we hold various non-controlling equity interests as follows: $28.9 million as of December 31, 2015, $52.7 million as of December 31, 2014, $80.1 million as of December 31, 2013, $77.5 million as of December 31, 2012 and $101.8 million as of December 31, 2011 (See Note 8 to the consolidated financial statements).

(6) Our funds from operations (“FFO”) during 2015, 2014, 2013, 2012 and 2011 are net of reductions for transaction costs of $243,000 $427,000, $203,000, $680,000 and $518,000, respectively.

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, and adjusted funds from operations (“AFFO”) and AFFO per diluted share, which are non-GAAP financial measures (“GAAP” is Generally Accepted Accounting Principles in the United States of America), are helpful to our investors as measures of our operating performance. We compute FFO, as reflected below, 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. AFFO was also computed for 2015, 2014, 2013, 2012 and 2011, as reflected below, since we believe it is helpful to our investors since it adjusts for the effect of the transaction costs related to acquisitions. FFO/AFFO do 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/AFFO 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.    

A reconciliation of our reported net income to FFO and AFFO for each of the last five years is shown below:

	(000s)
	2015			2014			2013		2012			2011
Net income	$	23,691		$	51,551		$	13,169	$	19,477		$	73,794
Depreciation and amortization expense on real    property/intangibles:
Consolidated investments		21,710			20,548			18,496		20,030			7,173
Unconsolidated affiliates		1,690			2,290			3,290		3,293			10,558
Provision for asset impairment		—			—			—		—			5,354
Less gains:
Gain on property exchange		(8,742	)		—			—		—			—
Gains on fair value recognition resulting from the    purchase of minority interests in    majority-owned LLCs, net		—			(25,409	)		—		—			(28,576	)
Gain on divestiture of real property		—			(13,043	)		—		—			—
Gains on divestiture of properties owned by    unconsolidated LLCs, net		—			—			—		(8,520	)		(35,835	)
Funds From Operations		38,349			35,937			34,955		34,280			32,468
Transaction costs		243			427			203		680			518
Adjusted Funds From Operations	$	38,592		$	36,364		$	35,158	$	34,960		$	32,986

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ITEM 7. 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, rehabilitation hospitals, sub-acute facilities, surgery centers, free-standing emergency departments, childcare centers and medical office buildings (“MOBs”). As of February 29, 2016, we have sixty-two real estate investments or commitments in eighteen states consisting of:

· six hospital facilities including three acute care, one rehabilitation and two sub-acute;

· three free-standing emergency departments (“FEDs”);

· forty-nine medical office buildings (“MOBs”), including five owned by unconsolidated LLCs, and;

· four preschool and childcare centers.

Forward Looking Statements

This report contains “forward-looking statements” that reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities. Forward-looking statements include, among other things, the information concerning our possible future results of operations, business and growth strategies, financing plans, expectations that regulatory developments or other matters will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, and the benefits and synergies to be obtained from our completed and any future acquisitions, and statements of our goals and objectives, and other similar expressions concerning matters that are not historical facts. Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “appears,” “projects” and similar expressions, as well as statements in future tense, identify 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:

· a substantial portion of our revenues are dependent upon one operator, Universal Health Services, Inc. (“UHS”). We cannot assure you that subsidiaries of UHS will renew the leases on our three acute care hospitals (which are scheduled to expire in December, 2016) and two FEDs at existing lease rates or fair market value lease rates. In addition, if subsidiaries of UHS exercise their options to purchase the respective leased hospital facilities upon expiration of the lease terms, 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;

· 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;

· 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, loan repayments and other restructuring;

· our ability to continue to obtain capital on acceptable terms, including borrowed funds, to fund future growth of our business;

· the outcome of known and unknown litigation, government investigations, and liabilities and other claims asserted against us or the operators of our facilities;

27

· failure of the 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; 

· the potential unfavorable impact on our business of 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 could result in increases in the number of people unemployed and/or insured and likely increase the number of individuals without health insurance; as a result, the operators of our facilities may experience decreases 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 could materially affect the business of our operators, including UHS, which may unfavorably impact our future bonus rentals (on the UHS hospital facilities) and may potentially have a negative impact on the future lease renewal terms and the underlying value of the hospital properties;

· 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;

· government regulations, including changes in the reimbursement levels under the Medicare and Medicaid program resulting from, among other things, the various health care reform initiatives being implemented;

· there have been several attempts in Congress to repeal or modify various provisions of the Patient Protection and Affordable Care Act (the “PPACA”). We cannot predict whether or not any of these proposed changes to the PPACA will become law and therefore can provide no assurance that changes to the PPACA, as currently implemented, will not have a material adverse effect on the future operating results of the tenants/operators of our properties and, thus, our business;

· 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 payors 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 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;

· in August, 2011, the Budget Control Act of 2011 (the “2011 Act”) was enacted into law. The 2011 Act 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. The 2011 Act provides for new spending on program integrity initiatives intended to reduce fraud and abuse under the Medicare program. Among its other provisions, the law established a bipartisan Congressional committee, known as the Joint Select Committee 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 2011 Act.  We cannot predict whether Congress will restructure the implemented Medicare payment reductions or what federal other deficit reduction initiatives may be proposed by Congress going forward. We also cannot predict the effect these enactments will have on operators (including UHS), and, thus, our business;

· in March, 2010, the Health Care and Education Reconciliation Act of 2010 and the Patient Protection and Affordable Care Act were enacted into law and created significant changes to health insurance coverage for U.S. citizens as well as material revisions to the federal Medicare and state Medicaid programs. The two combined primary goals of these acts are to provide for increased access to coverage for healthcare and to reduce healthcare-related expenses. Medicare, Medicaid and other health care industry changes are scheduled to be implemented at various times during this decade. We cannot predict the effect, if any, these enactments will have on operators (including UHS) and, thus, our business;

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· competition for our operators from other REITs; 

· 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 430-bed acute care hospital, and Riverside County, California, the site of our Southwest Healthcare System-Inland Valley Campus, a 132-bed acute care hospital;

· changes in, or inadvertent violations of, tax laws and regulations and other factors than can affect REITs and our status as a REIT;

· 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 interests in five LLCs/LPs in which we hold non-controlling equity interests. In addition, pursuant to the operating and/or partnership agreements of the five entities 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;

· fluctuations in the value of our common stock, and;

· 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

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.  

We consider our critical accounting policies to be those that require us to make significant judgments and estimates when we prepare our financial statements, including the following:

Revenue Recognition:    Our revenues consist primarily of rentals received from tenants, which are comprised of minimum rent (base rentals), bonus rentals and reimbursements from tenants for their pro-rata share of expenses such as common area maintenance costs, real estate taxes and utilities.

The minimum rent for all hospital facilities is fixed over the initial term or renewal term of the respective leases. Rental income recorded by our properties, including our consolidated and unconsolidated MOBs, relating to leases in excess of one year in length, is recognized using the straight-line method under which contractual rents are recognized evenly over the lease term regardless of when payments are due. The amount of rental revenue resulting from straight-line rent adjustments is dependent on many factors including the nature and amount of any rental concessions granted to new tenants, stipulated rent increases under existing leases, as well as the acquisitions and sales of properties that have existing in-place leases with terms in excess of one year. As a result, the straight-line adjustments to rental revenue may vary from period-to-period. Bonus rents are recognized when earned based upon increases in each facility’s net revenue in excess of stipulated amounts. Bonus rentals are determined and paid each quarter based upon a computation

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that compares the respective facility’s current quarter’s net revenue to the corresponding quarter in the base year. Tenant reimbursements for operating expenses are accrued as revenue in the same period the related expenses are incurred.

Real Estate Investments:    On the date of acquisition, the purchase price of a property is allocated to the property’s land, buildings and intangible assets based upon our estimates of their fair values. Depreciation is computed using the straight-line method over the useful lives of the buildings and capital improvements. The value of intangible assets is amortized over the remaining lease term.

Asset Impairment:    Real estate investments and related intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the property might not be recoverable. A property to be held and used is considered impaired only if management’s estimate of the aggregate future cash flows, less estimated capital expenditures, to be generated by the property, undiscounted and without interest charges, are less than the carrying value of the property. This estimate takes into consideration factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition, local market conditions and other factors.

The determination of undiscounted cash flows requires significant estimates by management, including the expected course of action at the balance sheet date that would lead to such cash flows. Subsequent changes in estimated undiscounted cash flows arising from changes in anticipated action to be taken with respect to the property could impact the determination of whether an impairment exists and whether the effects could materially impact our net income. To the extent estimated undiscounted cash flows are less than the carrying value of the property, the loss will be measured as the excess of the carrying amount of the property over the fair value of the property.

Assessment of the recoverability by us of certain lease related costs must be made when we have reason to believe that a tenant might not be able to perform under the terms of the lease as originally expected. This requires us to make estimates as to the recoverability of such costs. If we determine that the intangible assets are not recoverable from future cash flows, the excess of carrying value of the intangible asset over its estimated fair value is charged to income.

An other than temporary impairment of an investment in an LLC is recognized when the carrying value of the investment is not considered recoverable based on evaluation of the severity and duration of the decline in value, including projected declines in cash flow. To the extent impairment has occurred, the excess carrying value of the asset over its estimated fair value is charged to income.

Federal Income Taxes:    No provision has been made for federal income tax purposes since we qualify as a REIT under Sections 856 to 860 of the Internal Revenue Code of 1986, and intend to continue to remain so qualified. As such, we are exempt from federal income taxes and we are required to distribute at least 90% of our real estate investment taxable income to our shareholders.

We are subject to a federal excise tax computed on a calendar year basis. The excise tax equals 4% of the amount by which 85% of our ordinary income plus 95% of any capital gain income for the calendar year exceeds cash distributions during the calendar year, as defined. No provision for excise tax has been reflected in the financial statements as no tax is expected to be due.

Earnings and profits, which determine the taxability of dividends to shareholders, will differ from net income reported for financial reporting purposes due to the differences for federal tax purposes in the cost basis of assets and in the estimated useful lives used to compute depreciation and the recording of provision for investment losses.

Relationship with UHS and Related Party Transactions:

For disclosure related to our relationship with UHS, please refer to Note 2 to the consolidated financial statements—Relationship with UHS and Related Party Transactions.

Results of Operations

Year ended December 31, 2015 as compared to the year ended December 31, 2014:

Effective August 1, 2014, we purchased the minority ownership interests, ranging from 5% to 15%, held by third-party members in six LLCs in which we previously held noncontrolling majority ownership interests. As a result of these minority ownership purchases, we now own 100% of each of these six LLCs and our Consolidated Statement of Income for the year ended December 31, 2015 includes the revenues and expenses associated with each of these properties. Prior to August 1, 2014, these LLCs were accounted for on an unconsolidated basis pursuant to the equity method, as discussed above, and our Consolidated Statement of Income for the year ended December 31, 2014 includes the revenues and expenses associated with each of these properties for the five-month period ended December 31, 2014.

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The table below provides supplemental financial information related to each of the above-mentioned entities for the seven-month period ended July 31, 2014, and also presents the twelve-month period of 2014 on an “As Adjusted” financial statement presentation basis similar to the presentation applied for each entity for the twelve-month period ended December 31, 2015. Other than increased depreciation and amortization expense resulting from the amortization of the intangible assets recorded in connection with these transactions, there was no material impact to our net income as a result of the consolidation of these LLCs.

Year Ended December 31, 2015 as compared to the Year Ended December 31, 2014:

	As reported in Consolidated Statements of Income for the Year Ended December 31, 2015			As reported in Consolidated Statements of Income for the Year Ended December 31, 2014			2014 Adjustments (a.)			“As Adjusted” Twelve Months Ended December 31, 2014			“As Adjusted” Variance
Revenues	$	63,950		$	59,786		$	3,581		$	63,367		$	583
Expenses:
Depreciation and amortization		22,108			20,885			732			21,617			(491	)
Advisory fees to UHS		2,810			2,545			—			2,545			(265	)
Other operating expenses		18,152			16,882			1,644			18,526			374
Transaction costs		243			427			—			427			184
		43,313			40,739			2,376			43,115			(198	)
Income before equity in income of unconsolidated LLCs,    interest expense and gains		20,637			19,047			1,205			20,252			385
Equity in income of unconsolidated LLCs		2,536			2,428			(551	)		1,877			659
Gain on property exchange		8,742			-			—			-			8,742
Gains on fair value recognition resulting from purchase    of minority interests in majority-owned LLCs		-			25,409			—			25,409			(25,409	)
Gain on divestiture of real property	-	-			13,043						13,043			(13,043)
Interest expense, net		(8,224	)		(8,376	)		(654	)		(9,030	)		806
Net income	$	23,691		$	51,551		$	-		$	51,551		$	(27,860)

(a.) Adjustments consist of revenues and expenses for the seven months ended July 31, 2014, for the six LLCs that we began consolidating effective August 1, 2014, as mentioned above.

For the year ended December 31, 2015, net income was $23.7 million as compared to $51.6 million during 2014.  The $27.9 million decrease in net income during 2015, as compared to 2014, was primarily attributable to the following, as computed utilizing the “As Adjusted” Variance column indicated on the table above:

· a decrease of approximately $25.4 million from the aggregate gain recorded during 2014 on the fair value recognition resulting from the purchase of minority interests in majority-owned LLCs, as discussed above;

· a decrease of approximately $13.0 million from the gain recorded during 2014 on the divestiture of real property (The Bridgeway);

· an increase of approximately $8.7 million due to the gain recorded during the second quarter of 2015 in connection with a property exchange transaction;

· a decrease of $491,000 (“As Adjusted”) attributable to a net increase in depreciation and amortization expense partially resulting from the fair value recognition recorded in connection with our acquisition of minority ownership interests in various LLCs in August, 2014;

· an increase of $806,000 attributable to a decrease in interest expense (“As Adjusted”) due primarily to the repayment of three third-party mortgages (during the third quarter of 2014 and the first and fourth quarters of 2015) utilizing funds borrowed under our revolving credit facility which bears interest at a comparatively lower interest rate, and a decrease in our average cost of borrowings under our revolving credit facility;

· an increase of $659,000 (“As Adjusted”) in equity in income of unconsolidated LLCs, resulting from combined net increases at various unconsolidated properties, and;

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· other combined net increases of approximately $876,000, including the income generated at properties acquired during 2015. 

Total revenue increased $583,000 (“As Adjusted”) during the year ended December 31, 2015, as compared to 2014, due primarily to the revenues generated at MOBs acquired during the third quarter of 2014 and the first and second quarters of 2015.

Included in our other operating expenses are expenses related to the consolidated medical office buildings, which totaled $16.4 million and $16.9 million (“As Adjusted”) for the years ended December 31, 2015 and 2014, respectively.  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 tenant reimbursement revenue in our consolidated statements of income.

During 2015, we had a total of 60 new or renewed leases related to the medical office buildings in which we have significant investments, some of which are accounted for by the equity method. These leases comprised approximately 14% of the aggregate rentable square feet of these properties (4% related to renewed leases and 10% related to new leases). Rental rates, tenant improvement costs and rental concessions vary from property to property based upon factors such as, but not limited to, the current occupancy and age of our buildings, local overall economic conditions, proximity to hospital campuses and the vacancy rates, rental rates and capacity of our competitors in the market. The weighted-average tenant improvement costs associated with these new or renewed leases was approximately $11 per square foot during 2015. The weighted-average leasing commissions on the new and renewed leases commencing during 2015 was approximately 2% of base rental revenue over the term of the leases. The average aggregate value of the tenant concessions, generally consisting of rent abatements, provided in connection with new and renewed leases commencing during 2015 was approximately 2% of the future aggregate base rental revenue over the lease terms. Rent abatements were, or will be, recognized in our results of operations under the straight-line method over the lease term regardless of when payments are due. In connection with lease renewals executed during 2015, the weighted-average rental rates, as compared to rental rates on the expired leases, decreased by approximately 3%.

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, and adjusted funds from operations (“AFFO”) and AFFO per diluted share, which are non-GAAP financial measures (“GAAP” is Generally Accepted Accounting Principles in the United States of America), are helpful to our investors as measures of our operating performance. We compute FFO, as reflected below, 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. AFFO was also computed for the years ended 2015 and 2014, as reflected below, since we believe it is helpful to our investors since it adjusts for the effect of the transaction costs related to acquisitions. FFO/AFFO do 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/AFFO 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 and AFFO for 2015 and 2014 (in thousands):

	2015		2014
Net income	$	23,691	$	51,551
Depreciation and amortization expense on consolidated    investments		21,710		20,548
Depreciation and amortization expense on unconsolidated    affiliates		1,690		2,290
Gain on property exchange		(8,742)		—
Gains on fair value recognition resulting from the purchase    of minority interests in majority-owned LLCs		—		(25,409)
Gain on divestiture of real property		—		(13,043)
Funds From Operations	$	38,349	$	35,937
Transaction costs		243		427
Adjusted Funds From Operations	$	38,592	$	36,364

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 Our FFO increased $2.4 million to $38.3 million during 2015, as compared to $35.9 million during 2014.  The increase in FFO during 2015, as compared to 2014, related primarily to: (i) a net increase in income generated at our properties, including the income generated at our properties acquired at various times during 2015 and 2014, and; (ii) the $806,000 net decrease in interest expense (“As Adjusted”), as discussed above.  Our AFFO increased $2.2 million to $38.6 million during 2015, as compared to $36.4 million during 2014. The increase in AFFO during 2015, as compared to 2014, related primarily to the increase in FFO, as discussed above, offset by the $184,000 decrease in transaction costs incurred during 2015 as compared to 2014.

Year ended December 31, 2014 as compared to the year ended December 31, 2013:

As mentioned above, effective August 1, 2014, we purchased the minority ownership interests, ranging from 5% to 15%, held by third-party members in six LLCs in which we previously held noncontrolling majority ownership interests. As a result of these minority ownership purchases, we now own 100% of each of these six LLCs and our Consolidated Statement of Income for the year ended December 31, 2014 includes the revenues and expenses associated with each of these properties for the five-month period ended December 31, 2014. Prior to August 1, 2014, these LLCs were accounted for on an unconsolidated basis pursuant to the equity method, as discussed above.

Effective January 1, 2014, we purchased the 5% minority ownership interests held by third-party members in Palmdale Medical Properties (“Palmdale”) and Sparks Medical Properties, two LLCs in which we previously held noncontrolling majority ownership interests. As a result of these minority ownership purchases, we now own 100% of each of these LLCs and our Consolidated Statement of Income for the year ended December 31, 2014 includes the revenues and expenses associated with each of these properties. Prior to January 1, 2014, these LLCs were accounted for on an unconsolidated basis pursuant to the equity method. Prior to our purchase of the minority ownership interest in Palmdale, and as a result of a master lease agreement with a wholly-owned subsidiary of UHS which expired on July 1, 2013, Palmdale was previously included in our financial statements on a consolidated basis during the period of January 1, 2013 through June 30, 2013, and on an unconsolidated basis during the period of July 1, 2013 through December 31, 2013.

The table below provides supplemental financial information related to each of the above-mentioned entities for the year ended December 31, 2013 and also presents 2013 on an “As Adjusted” financial statement presentation basis similar to the presentation applied for each entity for the year ended December 31, 2014. Other than the increased depreciation and amortization expense resulting from the amortization of the intangible assets recorded in connection with these transactions, there was no material impact to our net income as a result of the consolidation of these LLCs.

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Year Ended December 31, 2014 as compared to the Year Ended December 31, 2013:

	Asreported in Consolidated Statements of Income for the Year Ended December 31, 2014			As reported in Consolidated Statements of Income for the Year Ended December 31, 2013			2013 Adjustments (a.)			“As Adjusted” Year Ended December 31, 2013			“As Adjusted” Variance
Revenues	$	59,786		$	54,280		$	4,184		$	58,464		$	1,322
Expenses:
Depreciation and amortization		20,885			18,753			1,044			19,797			(1,088	)
Advisory fees to UHS		2,545			2,369			0			2,369			(176	)
Other operating expenses		16,882			14,409			2,083			16,492			(390	)
Transaction costs		427			203			0			203			(224	)
		40,739			35,734			3,127			38,861			(1,878	)
Income before equity in income of unconsolidated LLCs,    interest expense and gains		19,047			18,546			1,057			19,603			(556	)
Equity in income of unconsolidated LLCs		2,428			2,095			(207	)		1,888			540
Gains on fair value recognition resulting from purchase of    minority interests in majority-owned LLCs		25,409			0			0			0			25,409
Gain on divestiture of real property		13,043			0			0			0			13,043
Interest expense, net		(8,376	)		(7,472	)		(850	)		(8,322	)		(54	)
Net income	$	51,551		$	13,169		$	0		$	13,169		$	38,382

(a.) Adjustments include: (i) revenue and expense impact for the five months ended December 31, 2013, for the six LLCs that we began consolidating effective August 1, 2014, as mentioned above, and; (ii) revenue and expense impact for the six months ended December 31, 2013 for Palmdale Medical Properties that we began consolidating effective January 1, 2014 (this LLC was accounted for on a consolidated basis for the first six months of 2013), and; (iii) revenue and expense impact for the year ended December 31, 2013 for Sparks Medical Properties that we began consolidating effective January 1, 2014.

During 2014, net income increased $38.4 million to $51.6 million as compared to $13.2 million during 2013. The increase was primarily attributable to the following, as computed utilizing the “As Adjusted” Variance column indicated on the table above:

· an increase of approximately $25.4 million from the aggregate gain recorded during 2014 on the fair value recognition resulting from purchase of minority interests in majority-owned LLCs, as discussed above;

· an increase of approximately $13.0 million from the gain recorded during 2014 on the divestiture of real property (The Bridgeway);

· an increase of $347,000 in bonus rental earned on the hospital facilities leased to wholly-owned subsidiaries of UHS;

· a decrease of approximately $1.1 million (“As Adjusted”) attributable to a net increase in depreciation and amortization expense, resulting primarily from the fair value recognition recorded in connection with our acquisition of minority ownership interests in eight LLCs in January and August, 2014;

· a decrease of $224,000 resulting from the increase in transaction costs, and;

· other combined net increase of approximately $895,000, including net income generated at properties acquired during 2014 and 2013.

Total revenues increased by $1.3 million (“As Adjusted”) during 2014 as compared to 2013 primarily due to: (i) the revenues generated at MOBs acquired during 2014 and 2013; (ii) an increase in bonus rental revenue, as mentioned above, and; (iii) other combined net changes at existing properties.

Included in our other operating expenses are expenses related to the consolidated medical office buildings, which totaled $15.5 million and $14.8 million (“As Adjusted”) for 2014 and 2013, respectively. 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

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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 tenant reimbursement revenue in our consolidated statements of income.

During 2014, we had a total of 80 new or renewed leases related to the medical office buildings, in which we have significant investments, some of which are accounted for by the equity method. These leases comprised approximately 11% of the aggregate rentable square feet of these properties (6% related to renewed leases and 5% related to new leases). Rental rates, tenant improvement costs and rental concessions vary from property to property based upon factors such as, but not limited to, the current occutopancy and age of our buildings, local overall economic conditions, proximity to hospital campuses and the vacancy rates, rental rates and capacity of our competitors in the market. The weighted-average tenant improvement costs associated with these new or renewed leases was approximately $22 per square foot during 2014. The weighted-average leasing commissions on the new and renewed leases commencing during 2014 was approximately 2% of base rental revenue over the term of the leases. The average aggregate value of the tenant concessions, generally consisting of rent abatements, provided in connection with new and renewed leases commencing during 2014 was approximately 2% of the future aggregate base rental revenue over the lease terms. Rent abatements were, or will be, recognized in our results of operations under the straight-line method over the lease term regardless of when payments are due. In connection with lease renewals executed during 2014, the weighted-average rental rates, as compared to rental rates on the expired leases, decreased by approximately 1%.

Below is a reconciliation of our reported net income to FFO and AFFO for 2014 and 2013 (in thousands):

	2014			2013
Net income	$	51,551		$	13,169
Depreciation and amortization expense on consolidated investments		20,548			18,496
Depreciation and amortization expense on unconsolidated affiliates		2,290			3,290
Gains on fair value recognition resulting from the purchase of    minority interests in majority-owned LLCs		(25,409	)		—
Gain on divestiture of real property		(13,043	)		—
Funds From Operations		35,937			34,955
Transaction costs		427			203
Adjusted Funds From Operations	$	36,364		$	35,158

Our FFO increased $1.0 million to $35.9 million during 2014, as compared to $35.0 million during 2013.  The increase in FFO during 2014, as compared to 2013, related primarily to a net increase in income generated at our properties, including the income generated at our properties acquired at various times during 2014 and 2013.  Our AFFO increased $1.2 million to $36.4 million during 2014, as compared to $35.2 million during 2013. The increase in AFFO during 2014, as compared to 2013, related primarily to the increase in FFO, as discussed above, plus a $224,000 increase in transaction costs incurred during 2014 as compared to 2013.

Effects of Inflation

Inflation has not had a material impact on our results of operations over the last three years. However, since the healthcare industry is very labor intensive and salaries and benefits are subject to inflationary pressures, as are supply and other costs, we and the operators of our hospital facilities cannot predict the impact that future economic conditions may have on our/their ability to contain future expense increases. Depending on general economic and labor market conditions, the operators of our hospital facilities may experience unfavorable labor market conditions, including a shortage of nurses which may cause an increase in salaries, wages and benefits expense in excess of the inflation rate. Their ability to pass on increased costs associated with providing healthcare to Medicare and Medicaid patients is limited due to various federal, state and local laws which have been enacted that, in certain cases, limit their ability to increase prices. Therefore, there can be no assurance that these factors will not have a material adverse effect on the future results of operations of the operators of our facilities which may affect their ability to make lease payments to us.

Most of our leases contain provisions designed to mitigate the adverse impact of inflation. Our hospital leases require all building operating expenses, including maintenance, real estate taxes and other costs, to be paid by the lessee. In addition, certain of the hospital leases contain bonus rental provisions, which require the lessee to pay additional rent to us based on increases in the revenues of the facility over a base year amount. In addition, most of our MOB leases require the tenant to pay an allocable share of operating expenses, including common area maintenance costs, insurance and real estate taxes. These provisions may reduce our exposure to increases in operating costs resulting from inflation. To the extent that some leases do not contain such provisions, our future operating results may be adversely impacted by the effects of inflation.

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Liquidity and Capital Resources

Year ended December 31, 2015 as compared to December 31, 2014:

Net cash provided by operating activities

Net cash provided by operating activities was $38.2 million during 2015 as compared to $32.8 million during 2014.  The $5.4 million increase was attributable to:

· a favorable change of approximately $3.2 million due to an increase in net income plus the adjustments to reconcile net income to net cash provided by operating activities (depreciation and amortization, amortization of debt premium, stock-based compensation, gain on property exchange, gain on divestiture of real property and gains on purchases of minority interests in majority-owned LLCs), as discussed above in Results of Operations, and;

· a favorable change of approximately $2.1 million in tenant reserves, escrows, deposits and prepaid rents, and;

· other combined net favorable changes of approximately $109,000.

Net cash used in investing activities

Net cash used in investing activities was $44.3 million during 2015 as compared to $4.0 million during 2014.

2015:

During 2015, we used $44.3 million of net cash in investing activities as follows:

· spent $667,000 to fund equity investments in unconsolidated LLCs;

· spent $22.8 million in advances in the form of a member loan to an unconsolidated LLC;

· spent $5.3 million in additions to real estate investments primarily for tenant improvements at various MOBs;

· spent $150,000 consisting of a deposit on real estate assets;

· spent $16.8 million to acquire the real estate assets of a medical office building and two free-standing emergency departments;

· spent $2.3 million for payment of a note payable related to the purchase of third-party minority interests in six majority-owned LLCs during the third quarter of 2014, as discussed above;

· received $306,000 of cash as repayment for the above-mentioned member loan to an unconsolidated LLC;

· received $224,000 of cash in excess of income related to our unconsolidated LLCs ($2.8 million of cash distributions received less $2.5 million of equity in income of unconsolidated LLCs);

· received $1.1 million of cash proceeds in connection with the refinancing of third-party debt by a majority-owned LLC in which we hold a noncontrolling ownership interest, and;

· received $2.0 million of cash proceeds in connection with the property exchange with an unrelated third party.

2014:

During 2014, we used $4.0 million of net cash in investing activities as follows:

· spent $1.3 million to fund equity investments in unconsolidated LLCs;

· spent $2.9 million on additions to real estate investments primarily for tenant improvements at various MOBs;

· spent $15.6 million to acquire the real estate assets of three medical office buildings;

· spent $4.7 million (plus a net note payable of $2.3 million to the previous third-party minority interest member, which was satisfied during January, 2015, as noted above) to acquire the minority interests in eight majority-owned LLCs in two separate transactions effective August 1, 2014 and January 1, 2014, as previously discussed;

· spent $100,000 consisting of a deposit on real estate assets related to the acquisition of a medical office building that we purchased during the first quarter of 2015;

· received $17.3 million of cash proceeds in connection with the sale of the real property of The Bridgeway, as discussed above;

· received $2.3 million of cash distribution proceeds in connection with refinancing of third-party debt by the LP that owns the Texoma Medical Plaza in which we have a 95% non-controlling equity interest, and;

· received $1.0 million of cash in excess of income related to our unconsolidated LLCs ($3.4 million of cash distributions received less $2.4 million of equity in income of unconsolidated LLCs);

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Net cash provided by/(used in) financing activities

Net cash provided by financing activities was $6.2 million during 2015, as compared to $29.8 million of net cash used in financing activities during 2014.

2015:

The $6.2 million of net cash provided by financing activities during 2015 consisted of:

· received $52.4 million of additional borrowings on our revolving line of credit;

· received $5.2 million of proceeds related to a new mortgage note payable (refinance) that is non-recourse to us;

· received $1.7 million of net cash from the issuance of shares of beneficial interest ($1.1 million relates to shares issued in late December, 2014, as discussed below);

· paid $17.8 million on mortgages and other notes payable that are non-recourse to us, (including the pay-off of the $4.9 million and $5.9 million outstanding mortgages on the Spring Valley Medical Office Building and the Palmdale Medical Plaza, respectively, utilizing funds borrowed under our revolving credit facility);

· paid $1.1 million of financing costs paid on the new revolving credit facility and a new mortgage note payable refinance;

· paid $34.1 million of dividends, and;

2014:

The $29.8 million of net cash used in financing activities during 2014 consisted of:

· received $19.3 million of net cash from the issuance of shares of beneficial interest, $19.0 million of which related to our at-the-market equity issuance program (as discussed below) and approximately $250,000 of which was primarily related to our dividend reinvestment program;

· paid $32.7 million of dividends;

· paid $12.3 million on mortgage and other notes payable that are non-recourse to us (including the pay-off of the $9.1 million outstanding mortgage balance on the Summerlin Hospital Medical Office Building I utilizing borrowed funds under our revolving credit facility);

· paid $4.0 million net repayments on our revolving line of credit, and;

· paid $94,000 as partial settlement of accrued dividend equivalent rights.

At-The-Market Equity Issuance Program (“ATM”):

We filed a Registration Statement with the Securities and Exchange Commission which became effective in November, 2015, under which we can offer up to an aggregate of $100 million of our securities pursuant to supplemental prospectuses which we may file from time to time.  No offering will be made except pursuant to such supplemental prospectuses.

There were no shares issued pursuant to an ATM program during 2015. During 2013 and 2014, pursuant to an ATM equity issuance program in effect at that time (which has since expired), we issued an aggregate of 580,900 shares at an average price of $45.97 per share, which generated approximately $25.6 million of net cash proceeds or receivables (net of approximately $1.1 million, consisting of compensation of $667,000 to Merrill Lynch, as well as $391,000 of other various fees and expenses), as follows:

· 2014:    We issued 426,187 shares at an average price of $47.51 per share which generated approximately $19.5 million of net cash proceeds or receivables (net of approximately $700,000, consisting of compensation of $506,000 to Merrill Lynch, as well as $195,000 of other various fees and expenses), and;

· 2013:    We issued 154,713 shares at an average price of $41.71 per share which generated approximately $6.1 million of net cash proceeds or receivables (net of $357,000, consisting of compensation of $161,000 to Merrill Lynch, as well as $196,000 of other various fees and expenses).

In connection with the ATM program, our consolidated balance sheet included approximately $1.1 million at December 31, 2014, and $600,000 at December 31, 2013, of net proceeds due to us in connection with shares issued in late December 2014 and 2013, respectively. The net cash proceeds related to these shares were received by us in early January 2015, and early January, 2014, respectively, and are included in cash received for the issuance of shares of beneficial interest, net, on the Consolidated Statements of Cash Flows for the years ended December 31, 2015 and 2014, respectively.      

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Year ended December 31, 2014 as compared to December 31, 2013:

Net cash provided by operating activities

Net cash provided by operating activities was $32.8 million during 2014 as compared to $31.3 million during 2013. The $1.5 million increase was attributable to:

· a favorable change of approximately $2.2 million due to an increase in net income plus the adjustments to reconcile net income to net cash provided by operating activities (depreciation and amortization, amortization on debt premium, stock-based compensation, gain on divestiture of real property and gains on purchases of minority interests in majority owned LLCs), as discussed above in Results of Operations;

· an unfavorable change of approximately $1.0 million in accrued expenses and other liabilities resulting primarily from the timing of accrued expenses and other liabilities disbursements;

· an unfavorable change of $319,000 in tenant reserves, escrows, deposits and prepaid rents resulting primarily from a decrease in prepaid rents, and;

· other combined net favorable changes of $646,000, including a favorable change in rent receivable of approximately $200,000.

Net cash used in investing activities

Net cash used in investing activities was $4.0 million during 2014 as compared to $13.4 million during 2013.  The factors contributing to the $4.0 million of net cash used in investing activities during 2014 are detailed above.

2013:

During 2013, we used $13.4 million of net cash in investing activities as follows:

· spent $3.0 million to fund equity investments in unconsolidated LLCs;

· spent $4.6 million in advances in the form of member loans to unconsolidated LLCs;

· spent $3.4 million on additions to real estate investments primarily for tenant improvements at various MOBs;

· spent $4.7 million to acquire the real estate assets of two medical office buildings;

· spent $150,000 consisting of a deposit on real estate assets related to the acquisition of two medical office buildings that we purchased during the first quarter of 2014;

· received $2.3 million of cash in excess of income related to our unconsolidated LLCs ($4.4 million of cash distributions received less $2.1 million of equity in income of unconsolidated LLCs), and;

· received $114,000 in repayments of advances previously made to an unconsolidated LLC.

Net cash used in financing activities

Net cash used in financing activities was $29.8 million during 2014 as compared to $17.5 million during 2013.  The factors contributing to the $29.8 million of cash used in financing activities during 2014 are detailed above.

2013:

During 2013, we used $17.5 million of net cash financing activities as follows:

· received $12.0 million from additional net borrowings on our revolving line of credit;

· received $11.2 million of proceeds related to the refinancing of a mortgage note payable that is non-recourse to us;

· received $5.8 million of net cash from the issuance of shares of beneficial interest, $5.5 million of which related to our at-the-market equity issuance program (as discussed above) and approximately $250,000 of which was related to our dividend reinvestment program;

· paid $31.8 million of dividends;

· paid $14.4 million on mortgage and other notes payable that are non-recourse to us (including the pay-off of a mortgage note payable that was refinanced during the first quarter of 2013, resulting in the above-mentioned $11.2 million of mortgage proceeds to us);

· paid $101,000 as partial settlement of accrued dividend equivalent rights, and;

· paid $95,000 of financing costs on mortgage and other notes payable.

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Additional cash flow and dividends paid information for 2015, 2014 and 2013:

As indicated on our consolidated statements of cash flows, we generated net cash provided by operating activities of $38.2 million during 2015, $32.8 million during 2014 and $31.3 million during 2013. As also indicated on our statements of cash flows, noncash expenses such as depreciation and amortization expense, amortization of debt premium, stock-based compensation expense and gains recorded during 2015 and 2014, are the primary differences between our net income and net cash provided by operating activities for each year. In addition, as reflected in the cash flows from investing activities section, we received $224,000 during 2015, $1.0 million during 2014 and $2.3 million during 2013, of cash distributions in excess of income from various unconsolidated LLCs which represents our share of the net cash flow distributions from these entities. These cash distributions in excess of income represent operating cash flows net of capital expenditures and debt repayments made by the LLCs.

We therefore generated $38.4 million during 2015, $33.8 million during 2014 and $33.6 million during 2013, related to the operating activities of our properties recorded on a consolidated and an unconsolidated basis. We paid dividends of $34.1 million during 2015, $32.7 million during 2014 and $31.8 million during 2013. During 2015, the $38.4 million of cash generated related to the operating activities of our properties exceeded the $34.1 million of dividends paid by approximately $4.3 million. During 2014, the $33.8 million of net cash generated related to the operating activities of our properties exceeded the $32.7 million of dividends paid by approximately $1.1 million. During 2013, the $33.6 million of net cash generated related to the operating activities of our properties exceeded the $31.8 million of dividends paid by approximately $1.9 million.

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 each of the last three years. Therefore, the funding source for our dividend payments is not wholly dependent on the operating cash flow generated by our properties in any given period. 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 jointly-owned in LLCs, and; (iii) our future capital commitments and debt repayments, including those of our jointly-owned 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.

Included in the various sources of cash were: (i) funds generated from the repayments of advances made from us to LLCs ($306,000 in 2015 and $114,000 in 2013); (ii) $2.0 million in 2015 of cash received in connection with the property exchange transaction, as discussed above;  (iii) cash distributions of refinancing proceeds from LLCs ($1.1 million in 2015 and $2.3 million in 2014); (iv) $17.3 million in 2014 of funds generated from the divestiture of real property; (v) net borrowings on our revolving credit agreement ($52.4 million during 2015 and $12.0 million during 2013), and; (vi) issuance of shares of beneficial interest ($1.7 million during 2015, $19.3 million during 2014 and $5.8 million during 2013).

In addition to the dividends paid, the following were also included in the various uses of cash: (i) investments in LLCs ($667,000 during 2015, $1.3 million during 2014 and $3.0 million during 2013); (ii) advances made to LLCs/third-party partners ($22.8 million during 2015 and $4.6 million during 2013); (iii) additions to real estate investments and acquisitions of real property ($5.3 million during 2015, $2.9 million in 2014 and $3.4 million in 2013); (iv) acquisitions of medical office buildings ($16.8 million in 2015, $15.6 million in 2014 and $4.7 million in 2013); (v) acquisition of minority interests in majority-owned LLCs ($2.3 million during 2015 and $4.7 million in 2014); (vi) net repayments on our revolving credit agreement ($4.0 million during 2014); (vii) net repayments of mortgage, construction, third-party partners and other loans payable of consolidated MOBs and LLCs, net of financing costs ($12.6 million during 2015, $12.3 million during 2014 and $3.3 million during 2013); (viii) partial settlement of dividend equivalent rights ($75,000 during 2015 and approximately $100,000 during each of 2014 and 2013); (ix) deposits on real estate assets ($150,000 during 2015, $100,000 during 2014 and $150,000 during 2013), and; (x) financing costs paid ($1.1 million during 2015 and $95,000 during 2013).

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) the issuance of equity pursuant to our at-the-market (“ATM”) equity issuance program; (ii) borrowings under our $185 million revolving credit facility (which has $39.3 million of available borrowing capacity, net of outstanding borrowings and letters of credit, as of December 31, 2015); (iii) borrowings under or refinancing of existing third-party debt pursuant to mortgage loan agreements entered into by our LLCs, and/or; (iv) the issuance of other long-term debt.

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We believe that our operating cash flows, cash and cash equivalents, available borrowing capacity under our revolving credit facility, equity issuance capacity pursuant to the terms of the ATM program, 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 $185 million revolving credit facility, the level of borrowings pursuant to non-course mortgage debt secured by the real property of our properties and our level of equity including consideration of additional equity issuances pursuant to our at-the-market 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 facility 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 March 27, 2015, we entered into a new $185 million revolving credit agreement (“Credit Agreement”). The Credit Agreement, which will mature in March, 2019, replaced our previous revolving credit facility which was scheduled to mature in July, 2015. The Credit Agreement includes a $50 million sub limit for letters of credit and a $20 million sub limit for swingline/short-term loans. The Credit Agreement also provides a one-time option to extend the maturity date for an additional one year period, and an option to increase the total facility borrowing capacity up to an additional $50 million, subject to lender agreement. 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 the Trust’s wholly-owned subsidiaries. Borrowings made pursuant to the Credit Agreement will bear interest, at our option, at one, two, three, or six month LIBOR plus an applicable margin ranging from 1.50% to 2.00% or at the Base Rate plus an applicable margin ranging from 0.50% to 1.00%. The Credit Agreement 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 LIBOR plus 1%. A commitment fee of 0.20% to 0.40% (depending on our total leverage ratio) will be charged on the average unused portion of the revolving credit commitments. The margins over LIBOR, Base Rate and the commitment fee are based upon our ratio of debt to total capital. At December 31, 2015, the applicable margin over the LIBOR rate was 1.625%, the margin over the Base Rate was 0.625%, and the commitment fee was 0.25%.

At December 31, 2015, we had $142.2 million of outstanding borrowings and $3.5 million of letters of credit outstanding against our revolving credit agreement. The carrying amount and fair value of borrowings outstanding pursuant to the Credit Agreement was $142.2 million at December 31, 2015. We had $39.3 million of available borrowing capacity, net of the outstanding borrowings and letters of credit outstanding as of December 31, 2015. There are no compensating balance requirements. The average amount outstanding under our revolving credit agreement was $114.3 million in 2015 with a corresponding effective interest rate, including commitment fees, of 2.1%.  The average amounts outstanding under our previous revolving credit agreement (which was replaced in March, 2015, as discussed above), were $104.6 million in 2014 and $86.3 million in 2013 with corresponding effective interest rates, including commitment fees, of 2.4% in 2014 and 2.2% in 2013.

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 net worth, as well as customary events of default, the occurrence of which may trigger an acceleration of amounts outstanding under the Credit Agreement. We are in compliance with all of the covenants at December 31, 2015. We also believe that we would remain in compliance if the full amount of our commitment was borrowed.

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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			December 31, 2015
Tangible net worth		$	125,000		$	175,285
Total leverage	< 60			%		45.0	%
Secured leverage	< 30			%		19.8	%
Unencumbered leverage	< 60			%		42.2	%
Fixed charge coverage	> 1.50x					3.3x

We have fourteen mortgages, all of which are non-recourse to us, included on our consolidated balance sheet as of December 31, 2015, with a combined outstanding balance of $110.3 million (excluding net debt premium of $298,000 at December 31, 2015). The following table summarizes our outstanding mortgages, excluding net debt premium, at December 31, 2015 (amounts in thousands):

Facility Name	Outstanding Balance (in thousands)(a.)		Interest Rate			Maturity Date
Summerlin Hospital Medical Office Building III    floating rate mortgage loan (b.)	$	10,695		3.49	%	December, 2016
Peace Health fixed rate mortgage loan		20,790		5.64	%	April, 2017
Auburn Medical II floating rate mortgage loan		6,954		2.99	%	April, 2017
Medical Center of Western Connecticut fixed rate    mortgage loan		4,663		6.00	%	June, 2017
Summerlin Hospital Medical Office Building II fixed    rate mortgage loan		11,419		5.50	%	October, 2017
Phoenix Children’s East Valley Care Center fixed rate    mortgage loan		6,348		5.88	%	December, 2017
Centennial Hills Medical Office Building floating rate    mortgage loan		10,339		3.49	%	January, 2018
Sparks Medical Building/Vista Medical Terrace floating    rate mortgage loan		4,351		3.49	%	February, 2018
Rosenberg Children’s Medical Plaza fixed rate    mortgage loan		8,317		4.85	%	May, 2018
Vibra Hospital-Corpus Christi fixed rate mortgage loan		2,815		6.50	%	July, 2019
700 Shadow Lane and Goldring MOBs fixed rate    mortgage loan		6,428		4.54	%	June, 2022
BRB Medical Office Building fixed rate mortgage loan		6,498		4.27	%	December, 2022
Desert Valley Medical Center fixed rate mortgage loan		5,200		3.62	%	January, 2023
Tuscan Professional Building fixed rate mortgage loan		5,439		5.56	%	June, 2025
Total	$	110,256

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

(b.) This loan is scheduled to mature during December, 2016, at which time we will decide whether to refinance pursuant to a new mortgage loan or by utilizing borrowings under our revolving credit facility.

The mortgages are secured by the real property of the buildings as well as property leases and rents. The mortgages have a combined fair value of approximately $112.4 million as of December 31, 2015. 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.

At December 31, 2014, we had sixteen mortgages, all of which were non-recourse to us, included in our consolidated balance sheet. The combined outstanding balance of these sixteen mortgages was $122.9 million (excluding net debt premium of $523,000 at December 31, 2014), and had a combined fair value of approximately $124.7 million at December 31, 2014.

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Contractual Obligations:

The following table summarizes the schedule of maturities of our outstanding borrowing under our revolving credit facility (“Credit Agreement”), the outstanding mortgages applicable to our properties recorded on a consolidated basis and our other contractual obligations as of December 31, 2015 (amounts in thousands):

	Payments Due by Period (dollars in thousands)
Debt and Contractual Obligation	Total		Less than 1 Year		2-3 years		4-5 years		More than 5 years
Long-term non-recourse debt-fixed(a)(b)	$	77,917	$	2,273	$	52,511	$	4,748	$	18,385
Long-term non-recourse debt-variable(a)(b)		32,339		11,441		20,898		—		—
Long-term debt-variable(c)		142,150		—		—		142,150		—
Estimated future interest payments on debt outstanding as    of December 31, 2015(d)		22,518		8,016		10,490		2,497		1,515
Equity and debt financing commitments(e)		2,234		2,234		—		—		—
Total contractual obligations	$	277,158	$	23,964	$	83,899	$	149,395	$	19,900

(a) The mortgages are secured by the real property of the buildings as well as property leases and rents. Property-specific debt is detailed above.

(b) Consists of non-recourse debt with a fair value of approximately $112.4 million as of December 31, 2015. 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. Excludes $28.9 million of combined third-party debt outstanding as of December 31, 2015, that is non-recourse to us, at the unconsolidated LLCs in which we hold various non-controlling ownership interests (see Note 8 to the consolidated financial statements).

(c) Consists of $142.2 million of borrowings outstanding as of December 31, 2015 under the terms of our $185 million Credit Agreement which matures on March 27, 2019. The amount outstanding approximates fair value as of December 31, 2015.

(d) Assumes that all debt outstanding as of December 31, 2015, including borrowings under the Credit Agreement, and the fourteen loans, which are non-recourse to us, remain outstanding until the stated maturity date of the debt agreements at the same interest rates which were in effect as of December 31, 2015. We have the right to repay borrowings under the Credit Agreement at any time during the terms of the agreement, without penalty. Interest payments are expected to be paid utilizing cash flows from operating activities or borrowings under our revolving Credit Agreement.

(e) As of December 31, 2015, we have equity investment and debt financing commitments remaining in connection with our investments in various unconsolidated LLCs. As of December 31, 2015, we had outstanding letters of credit which secured the majority of these equity and debt financing commitments. The $39.3 million of available borrowing capacity as of December 31, 2015, pursuant to the terms of our Credit Agreement, is net of the standby letters of credit outstanding at that time. Our remaining financing commitments related to our investments in unconsolidated LLCs are as follows (in thousands):

	Amount
Grayson Properties	$	149
FTX MOB Phase II		928
Arlington Medical Properties		1,157
Total	$	2,234

Off Balance Sheet Arrangements

As of December 31, 2015, we are party to certain off balance sheet arrangements consisting of standby letters of credit and equity and debt financing commitments as detailed on the above “Contractual Obligations” table. Our outstanding letters of credit at December 31, 2015 totaled $3.5 million consisting of: (i) $1.9 million related to Centennial Hills Medical Properties; (ii) $646,000 related to Banburry Medical Properties, and; (iii) $966,000 related to FTX MOB Phase II.

ITEM  7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risks Associated with Financial Instruments

As of December 31, 2015, 2014, and 2013, we had no material outstanding interest rate swap agreements.

During the third quarter of 2013, we entered into an interest rate cap on a total notional amount of $10 million whereby we paid a premium of $136,000. During the first quarter of 2014, we entered into two additional interest rate cap agreements on a total notional amount of $20 million whereby we paid premiums of $134,500. In exchange for the premium payments, the counterparties agreed to pay us the difference between 1.50% and one-month LIBOR if one-month LIBOR rises above 1.50% during the term of the

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cap. From inception through December 31, 2014, no payments have been made to us by the counterparties pursuant to the terms of these caps which expire on January 13, 2017.

The sensitivity analysis related to our fixed and variable rate debt assumes current market rates with all other variables held constant. The fair value of our debt is approximately $255 million. The difference between actual amounts outstanding and fair value is approximately $2.1 million.

The table below presents information about our financial instruments that are sensitive to changes in interest rates, including debt obligations as of December 31, 2015. For debt obligations, 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)	2016			2017			2018			2019			2020			Thereafter			Total
Long-term debt:
Fixed rate:
Debt(a)	$	2,273		$	43,402		$	9,109		$	3,607		$	1,141		$	18,385		$	77,917
Average interest rates		5.3	%		5.1	%		4.8	%		4.6	%		4.4	%		4.6	%		4.8	%
Variable rate:
Debt(b)	$	11,441		$	7,170		$	13,728		$	142,150		$	—		$	—		$	174,489
Average interest rates		2.3	%		2.2	%		2.0	%		2.0	%		—			—			2.1	%
Interest rate caps:
Notional amount	$	—		$	30,000		$	—		$	—		$	—		$	—		$	30,000
Interest rates		—			1.5	%		—			—			—			—			1.5	%

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

(b) Includes $32.3 million of non-recourse mortgage notes payable and of $142.2 million of outstanding borrowings under the terms of our $185 million revolving credit agreement.

As calculated based upon our variable rate debt outstanding as of December 31, 2015 that is subject to interest rate fluctuations, each 1% change in interest rates would impact our net income by approximately $1.7 million.

ITEM  8. Financial Statements and Supplementary Data

Our Consolidated Balance Sheets, Consolidated Statements of Income, Comprehensive Income, Changes in Equity and Cash Flows, together with the report of KPMG LLP, an independent registered public accounting firm, are included elsewhere herein. Reference is made to the “Index to Financial Statements and Schedule.”

ITEM  9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

ITEM  9A. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

As of December 31, 2015, under the supervision and with the participation of our management, including our 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 and 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 Securities and Exchange Act of 1934 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 fourth quarter of 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

43

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining an adequate system of internal control over our financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment, including testing, using the criteria in Internal Control—Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on its assessment, management has concluded that we maintained effective internal control over financial reporting as of December 31, 2015, based on criteria in Internal Control—Integrated Framework (2013), issued by the COSO. The effectiveness of our internal control over financial reporting as of December 31, 2015 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included herein.

44

Report of Independent Registered Public Accounting Firm

The Shareholders and Board of Trustees

Universal Health Realty Income Trust:

We have audited Universal Health Realty Income Trust’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Universal Health Realty Income Trust’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Universal Health Realty Income Trust maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Universal Health Realty Income Trust and subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2015, and the financial statement schedule III, real estate and accumulated depreciation, and our report dated March 4, 2016 expressed an unqualified opinion on those consolidated financial statements and financial statement schedule.

(signed) KPMG LLP

Philadelphia, Pennsylvania

March 4, 2016

45

ITEM 9B. Other Information 

None.

PART III

ITEM 10. Directors, Executive Officers and Corporate Governance

There is hereby incorporated by reference the information to appear under the captions “Proposal No. 1” (Election of Trustees), “Section 16(a) Beneficial Ownership Reporting Compliance” and “Corporate Governance” in our Proxy Statement to be filed with the Securities and Exchange Commission within 120 days after December 31, 2015. See also “Executive Officers of the Registrant” appearing in Item 1 hereof.

ITEM 11. Executive Compensation

There is hereby incorporated by reference information to appear under the caption “Executive Compensation” in our Proxy Statement to be filed with the Securities and Exchange Commission within 120 days after December 31, 2015.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

There is hereby incorporated by reference the information to appear under the caption “Security Ownership of Certain Beneficial Owners and Management” in our Proxy Statement to be filed with the Securities and Exchange Commission within 120 days after December 31, 2015.

ITEM 13. Certain Relationships and Related Transactions, and Director Independence

There is hereby incorporated by reference the information to appear under the captions “Certain Relationships and Related Transactions” and “Corporate Governance” in our Proxy Statement to be filed with the Securities and Exchange Commission within 120 days after December 31, 2015.

ITEM 14. Principal Accounting Fees and Services

There is hereby incorporated herein by reference the information to appear under the caption “Relationship with Independent Registered Public Accounting Firm” in our Proxy Statement, to be filed with the Securities and Exchange Commission within 120 days after December 31, 2015.

46

PART IV

ITEM 15. Exhibits, Financial Statement Schedules

(a) Documents filed as part of this report:

(1) Financial Statements: See “Index to Financial Statements and Schedule”

(2) Financial Statement Schedules: See “Index to Financial Statements and Schedule”

(3) Exhibits:

3.1 Declaration of Trust, dated as of August 1986, previously filed as Exhibit 4.1 to the Trust’s Registration Statement on Form S-3 (File No. 333-60638) is incorporated herein by reference.

3.2 Amendment to Declaration of Trust, dated as of June 15, 1993, previously filed as Exhibit 4.2 to the Trust’s Registration Statement on Form S-3 (File No. 333-60638) is incorporated herein by reference.

3.3 Amended and restated bylaws previously filed as Exhibit 4.3 to the Trust’s registration statement on Form S-3 (File No. 333-60638) is incorporated herein by reference.

3.4 Amendment to the bylaws, effective as of September 6, 2013, previously filed as Exhibit 3.2 to the Trust’s Current Report on Form 8-K dated September 6, 2013, is incorporated herein by reference.

10.1 Advisory Agreement, dated as of December 24, 1986, between UHS of Delaware, Inc. and the Trust, previously filed as Exhibit 10.2 to the Trust’s Current Report on Form 8-K dated December 24, 1986, is incorporated herein by reference.

10.2 Agreement dated December 10, 2015, to renew Advisory Agreement dated as of December 24, 1986 between Universal Health Realty Income Trust and UHS of Delaware, Inc. is filed herewith.

10.3 Contract of Acquisition, dated as of August 1986, between the Trust and certain subsidiaries of Universal Health Services, Inc., previously filed as Exhibit 10.2 to Amendment No. 3 of the Registration Statement on Form S-11 and S-2 of Universal Health Services, Inc. and the Trust (File No. 33-7872), is incorporated herein by reference.

10.4 Form of Leases, including Form of Master Lease Document Leases, between certain subsidiaries of Universal Health Services, Inc. and the Trust, previously filed as Exhibit 10.3 to Amendment No. 3 of the Registration Statement on Form S-11 and Form S-2 of Universal Health Services, Inc. and the Trust (File No. 33-7872), is incorporated herein by reference.

10.5 Corporate Guaranty of Obligations of Subsidiaries Pursuant to Leases and Contract of Acquisition, dated December 1986, issued by Universal Health Services, Inc. in favor of the Trust, previously filed as Exhibit 10.5 to the Trust’s Current Report on Form 8-K dated December 24, 1986, is incorporated herein by reference.

10.6 Lease, dated December 22, 1993, between the Trust and THC-Chicago, Inc., as lessee, previously filed as Exhibit 10.14 to the Trust’s Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated herein by reference.

10.7* Universal Health Realty Income Trust 1997 Incentive Plan, previously filed as Exhibit 10.1 to the Trust’s Form 10-Q for the quarter ended September 30, 1997, is incorporated herein by reference.

10.8 Credit Agreement, dated as of March 27, 2015, by and among the Trust, a syndicate of lenders 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 SunTrust Bank as Co-Documentation Agents, previously filed as Exhibit 10.1 to the Trust’s Current Report on Frm 8-K dated March 27, 2015, is incorporated herein by reference.

10.9 Dividend Reinvestment and Share Purchase Plan included in the Trust’s Registration Statement on Form S-3 (Registration No. 333-81763) filed on June 28, 1999, is incorporated herein by reference.

10.10 Asset Exchange and Substitution Agreement, dated as of April 24, 2006, by and among the Trust and Universal Health Services, Inc. and certain of its subsidiaries, previously filed as Exhibit 10.1 to the Trust’s Current Report on Form 8-K dated April 25, 2006, is incorporated herein by reference.

47

10.11 Amendment No. 1 to the Master Lease Document, between certain subsidiaries of Universal Health Services, Inc. and the Trust, previously filed as Exhibit 10.2 to the Trust’s Current Report on Form 8-K dated April 25, 2006, is incorporated herein by reference.

10.12* Universal Health Realty Income Trust 2007 Restricted Stock Plan, previously filed as Exhibit 10.1 to the Trust’s Current Report on Form 8-K, dated April 27, 2007, is incorporated herein by reference.

10.13* Form of Restricted Stock Agreement, previously filed as Exhibit 10.2 to the Trust’s Current Report on Form 8-K dated April 27, 2007, is incorporated herein by reference.

11 Statement re computation of per share earnings is set forth on the Consolidated Statements of Income.

21 Subsidiaries of Registrant, filed herewith.

23.1 Consent of Independent Registered Public Accounting Firm, filed herewith.

31.1 Certification from the Trust’s Chief Executive Officer Pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934, filed herewith.

31.2 Certification from the Trust’s Chief Financial Officer Pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934, filed herewith.

32.1 Certification from the Trust’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.2 Certification from the Trust’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

101.INS XBRL Instance Document, filed herewith.

101.SCH XBRL Taxonomy Extension Schema Document, filed herewith.

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document, filed herewith.

101.DEF XBRL Taxonomy Extension Definition Linkbase Document, filed herewith.

101.LAB XBRL Taxonomy Extension Label Linkbase Document, filed herewith.

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document, filed herewith.

* Management contract or compensatory plan or arrangement.

Exhibits, other than those incorporated by reference, have been included in copies of this Annual Report filed with the Securities and Exchange Commission. Shareholders of the Trust will be provided with copies of those exhibits upon written request to the Trust.

48

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

UNIVERSAL HEALTH REALTY INCOME TRUST
By:	/S/    ALAN B. MILLER
	Alan B. Miller, Chairman of the Board, Chief Executive Officer and President

Date: March 4, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signatures	Title	Date
/S/    ALAN B. MILLER         Alan B. Miller	Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer)	March 4, 2016
/S/    JAMES E. DALTON, JR.         James E. Dalton, Jr.	Trustee	March 4, 2016
/S/    MILES L. BERGER         Miles L. Berger	Trustee	March 4, 2016
/S/    ELLIOT J. SUSSMAN         Elliot J. Sussman, M.D., M.B.A.	Trustee	March 4, 2016
/S/    ROBERT F. MCCADDEN         Robert F. McCadden	Trustee	March 4, 2016
/S/    MARC D. MILLER         Marc D. Miller	Trustee	March 4, 2016
/S/    CHARLES F. BOYLE         Charles F. Boyle	Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	March 4, 2016

49

INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

	Page
Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements and Schedule	51
Consolidated Balance Sheets—December 31, 2015 and December 31, 2014	52
Consolidated Statements of Income—Years Ended December 31, 2015, 2014 and 2013	53
Consolidated Statements of Comprehensive Income —Years Ended December 31, 2015, 2014 and 2013	54
Consolidated Statements of Changes in Equity—Years Ended December 31, 2015, 2014 and 2013	55
Consolidated Statements of Cash Flows—Years Ended December 31, 2015, 2014 and 2013	56
Notes to the Consolidated Financial Statements	58
Schedule III—Real Estate and Accumulated Depreciation—December 31, 2015	77
Notes to Schedule III—December 31, 2015	84

50

Report of Independent Registered Public Accounting Firm

The Shareholders and Board of Trustees

Universal Health Realty Income Trust:

We have audited the accompanying consolidated balance sheets of Universal Health Realty Income Trust and subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2015. In connection with our audits of the consolidated financial statements, we also have audited financial statement schedule III, real estate and accumulated depreciation. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Universal Health Realty Income Trust and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule III, real estate and accumulated depreciation, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Universal Health Realty Income Trust’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 4, 2016 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

(signed) KPMG LLP

Philadelphia, Pennsylvania

March 4, 2016

51

UNIVERSAL HEALTH REALTY INCOME TRUST

CONSOLIDATED BALANCE SHEETS

(dollar amounts in thousands)

	December 31,			December 31,
	2015			2014
Assets:
Real Estate Investments:
Buildings and improvements	$	469,933		$	451,005
Accumulated depreciation		(121,161	)		(106,480	)
		348,772			344,525
Land		41,724			35,584
Net real estate investments		390,496			380,109
Investments in and advances to limited liability companies ("LLCs")		31,597			8,605
Other Assets:
Cash and cash equivalents		3,894			3,861
Base and bonus rent receivable from UHS		2,116			2,086
Rent receivable - other		4,292			4,219
Intangible assets (net of accumulated amortization of $25.1 million and    $19.7 million at December 31, 2015 and December 31, 2014, respectively)		19,757			23,123
Deferred charges, goodwill and other assets, net		6,749			6,863
Total Assets	$	458,901		$	428,866
Liabilities:
Line of credit borrowings	$	142,150		$	89,750
Mortgage and other notes payable, non-recourse to us (including net debt    premium of $298 and $523 at December 31, 2015 and December 31, 2014,    respectively)		110,554			123,405
Accrued interest		504			545
Accrued expenses and other liabilities		6,807			8,522
Tenant reserves, escrows, deposits and prepaid rents		3,844			2,063
Total Liabilities		263,859			224,285
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: 2015 - 13,327,020; 2014 -13,301,204		133			133
Capital in excess of par value		241,700			240,835
Cumulative net income		555,286			531,595
Cumulative dividends		(601,983	)		(567,894	)
Accumulated other comprehensive loss		(94	)		(88	)
Total Equity		195,042			204,581
Total Liabilities and Equity	$	458,901		$	428,866

See the accompanying notes to these consolidated financial statements.

52

UNIVERSAL HEALTH REALTY INCOME TRUST

CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands, except per share amounts)

	Year ended December 31,
	2015			2014			2013
Revenues:
Base rental - UHS facilities	$	15,955		$	15,601		$	14,773
Base rental - Non-related parties		35,157			31,386			27,955
Bonus rental - UHS facilities		4,565			4,607			4,260
Tenant reimbursements and other - Non-related parties		7,490			7,490			6,812
Tenant reimbursements and other - UHS facilities		783			702			480
		63,950			59,786			54,280
Expenses:
Depreciation and amortization		22,108			20,885			18,753
Advisory fees to UHS		2,810			2,545			2,369
Other operating expenses		18,152			16,882			14,409
Transaction costs		243			427			203
		43,313			40,739			35,734
Income before equity in income of unconsolidated limited liability    companies ("LLCs"), interest expense and gains		20,637			19,047			18,546
Equity in income of unconsolidated LLCs		2,536			2,428			2,095
Gain on property exchange		8,742			—			—
Gains on fair value recognition resulting from the purchase of minority    interests in majority-owned LLCs		—			25,409			—
Gain on divestiture of real property		—			13,043			—
Interest expense, net		(8,224	)		(8,376	)		(7,472	)
Net income	$	23,691		$	51,551		$	13,169
Basic earnings per share	$	1.78		$	3.99		$	1.04
Diluted earnings per share	$	1.78		$	3.99		$	1.04
Weighted average number of shares outstanding - Basic		13,293			12,927			12,689
Weighted average number of share equivalents		8			7			12
Weighted average number of shares and equivalents outstanding - Diluted		13,301			12,934			12,701

See the accompanying notes to these consolidated financial statements.

53

UNIVERSAL HEALTH REALTY INCOME TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollar amounts in thousands)

	Year ended December 31,
	2015			2014			2013
Net Income	$	23,691		$	51,551		$	13,169
Other comprehensive income/(loss):
Unrealized derivative (losses)/gains on interest rate caps		(97	)		(115	)		(57	)
Amortization of interest rate cap fees		91			84			—
Total other comprehensive income/(loss):		(6	)		(31	)		(57	)
Total comprehensive income	$	23,685		$	51,520		$	13,112

See the accompanying notes to these consolidated financial statements.

54

UNIVERSAL HEALTH REALTY INCOME TRUST

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Common Shares				Capital in											UHT			Non-
	Number				excess of			Cumulative		Cumulative			Accumulated other			Shareholders'			controlling			Total
	of Shares		Amount		par value			net income		dividends			comprehensiveloss			Equity			Interests			Equity
January 1, 2013		12,689	$	127	$	214,094		$	466,875	$	(503,425	)		—		$	177,671		$	74		$	177,745
Shares of Beneficial Interest:
Issued		170		1		6,323			—		—			—			6,324			—			6,324
Partial settlement of dividend equivalent rights		—		—		(101	)		—		—			—			(101	)		—			(101	)
Restricted stock-based compensation expense		—		—		375			—		—			—			375			—			375
Dividends ($2.495/share)		—		—		—			—		(31,751	)		—			(31,751	)		—			(31,751	)
Deconsolidation of LLC		—		—		—			—		—			—			—			(74	)		(74	)
Comprehensive income:
Net income		—		—		—			13,169		—			—			13,169			—			13,169
Unrealized loss on interest rate cap		—		—		—			—		—			(57	)		(57	)		—			(57	)
Subtotal - comprehensive income		—		—		—			13,169		—			(57	)		13,112			—			13,112
January 1, 2014		12,859		128		220,691			480,044		(535,176	)		(57	)		165,630			—			165,630
Shares of Beneficial Interest:
Issued		443		5		19,839			—		—			—			19,844			—			19,844
Partial settlement of dividend equivalent rights		—		—		(94	)		—		—			—			(94	)		—			(94	)
Restricted stock-based compensation expense		—		—		399			—		—			—			399			—			399
Dividends ($2.52/share)		—		—		—			—		(32,718	)		—			(32,718	)		—			(32,718	)
Comprehensive income:
Net income		—		—		—			51,551		—			—			51,551						51,551
Unrealized loss on interest rate cap		—		—		—			—		—			(31	)		(31	)		—			(31	)
Subtotal - comprehensive income									51,551					(31	)		51,520			—			51,520
January 1, 2015		13,302		133		240,835			531,595		(567,894	)		(88	)		204,581			—			204,581
Shares of Beneficial Interest:
Issued		25		-		513			-		-			-			513			-			513
Partial settlement of dividend equivalent rights		-		-		(75	)		—		—			—			(75	)		—			(75	)
Restricted stock-based compensation expense		—		—		427			—		—			—			427			—			427
Dividends ($2.56/share)		—		—		-			—		(34,089	)		—			(34,089	)		—			(34,089	)
Comprehensive income:
Net income		-		-		-			23,691		-			-			23,691						23,691
Unrealized loss on interest rate cap		—		—		—			-		—			(6	)		(6	)		-			(6	)
Subtotal - comprehensive income									23,691					(6	)		23,685			—			23,685
December 31, 2015		13,327	$	133	$	241,700		$	555,286	$	(601,983	)	$	(94	)	$	195,042		$	—		$	195,042

See the accompanying notes to these consolidated financial statements.

55

UNIVERSAL HEALTH REALTY INCOME TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

	Year ended December 31,
	2015			2014			2013
Cash flows from operating activities:
Net income	$	23,691		$	51,551		$	13,169
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		22,198			20,975			18,843
Amortization of debt premium		(225	)		(312	)		(433	)
Stock-based compensation expense		427			399			375
Gain on property exchange		(8,742	)		—			—
Gain on divestiture of real property		—			(13,043	)		—
Gains on purchase of minority interests in majority-owned LLCs		—			(25,409	)		—
Changes in assets and liabilities:
Rent receivable		(290	)		(555	)		(746	)
Accrued expenses and other liabilities		(184	)		(509	)		523
Tenant reserves, escrows, deposits and prepaid rents		1,781			(303	)		16
Accrued interest		(41	)		(62	)		(22	)
Other, net		(437	)		64			(431	)
Net cash provided by operating activities		38,178			32,796			31,294
Cash flows from investing activities:
Investments in LLCs		(667	)		(1,337	)		(3,013	)
Repayments of advances made to LLCs		306			—			114
Advances made to LLCs		(22,795	)		—			(4,580	)
Cash distributions in excess of income from LLCs		224			1,029			2,346
Cash distribution of refinancing proceeds from LLCs		1,045			2,280			—
Additions to real estate investments, net		(5,257	)		(2,866	)		(3,415	)
Cash received for property exchange		2,000			—			—
Deposits on real estate assets		(150	)		(100	)		(150	)
Net cash paid for acquisition of properties		(16,765	)		(15,600	)		(4,675	)
Cash paid to acquire minority interests in majority-owned LLCs		(2,250	)		(4,744	)		—
Cash proceeds received from divestiture of real property		—			17,300			—
Net cash used in investing activities		(44,309	)		(4,038	)		(13,373	)
Cash flows from financing activities:
Net borrowings/(repayments) on line of credit		52,400			(3,950	)		11,950
Proceeds from mortgages and other notes payable		5,200			—			11,150
Repayments of mortgages and other notes payable		(17,826	)		(12,327	)		(14,401	)
Financing costs paid		(1,114	)		—			(95	)
Dividends paid		(34,089	)		(32,718	)		(31,751	)
Partial settlement of dividends equivalent rights		(75	)		(94	)		(101	)
Issuance of shares of beneficial interest, net		1,668			19,274			5,757
Net cash provided by/(used in) financing activities		6,164			(29,815	)		(17,491	)
Increase/(decrease) in cash and cash equivalents		33			(1,057	)		430
Increase/(decrease) in cash due to recording of LLCs on a consolidated/unconsolidated basis		—			1,581			(141	)
Cash and cash equivalents, beginning of period		3,861			3,337			3,048
Cash and cash equivalents, end of period	$	3,894		$	3,861		$	3,337
Supplemental disclosures of cash flow information:
Interest paid	$	8,025		$	8,268		$	7,517
Supplemental disclosures of non-cash transactions:
Consolidaton of LLCs:
Net real estate investments	$	—		$	84,064		$	—
Cash and cash equivalents		—			1,581			—

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Intangible assets		—			6,490			—
Rent receivable - other		—			388			—
Deferred charges and other assets, net		—			100			—
Investment in LLCs		—			(28,616	)		—
Mortgage and other notes payable, non-recourse to us		—			(29,758	)		—
Accrued interest		—			(116	)		—
Accrued expenses and other liabilities		—			(1,245	)		—
Tenant reserves, escrows, deposits and prepaid rents		—			(485	)		—
Note payable to previous third-party member		—			(2,250	)		—
Gains on purchases of minority interests in majority-owned LLCs		—			(25,409	)		—
Cash paid for purchase of minority interests in majority-owned LLCs	$	—		$	4,744		$	—
Deconsolidaton of LLC:
Net real estate investments	$	—		$	—		$	11,597
Cash and cash equivalents		—			—			141
Rent receivable - other		—			—			207
Deferred charges, goodwill and other assets, net		—			—			135
Mortgage and other notes payable, non-recourse to us		—			—			(6,215	)
Other liabilities		—			—			(368	)
Third-party equity interest		—			—			(54	)
Investment in LLC	$	—		$	—		$	5,443
Property Exchange Transaction:
Net assets acquired in property exchange	$	9,886		$	—		$	—
Net assets relinquished in property exchange		(3,144	)		—			—

See accompanying notes to these consolidated financial statements.

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UNIVERSAL HEALTH REALTY INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Universal Health Realty Income Trust and subsidiaries (the “Trust”) is organized as a Maryland real estate investment trust. We invest in healthcare and human service related facilities currently including acute care hospitals, rehabilitation hospitals, sub-acute facilities, surgery centers, free-standing emergency departments, childcare centers and medical office buildings. As of February 29, 2016, we have sixty-two real estate investments or commitments located in eighteen states consisting of:

· six hospital facilities including three acute care, one rehabilitation and two sub-acute;

· three free-standing emergency departments (“FEDs”);

· forty-nine medical office buildings, including five owned by unconsolidated limited liability companies (“LLCs”), and;

· four preschool and childcare centers.

Our future results of operations could be unfavorably impacted by deterioration in general economic conditions which could result in increases in the number of people unemployed and/or uninsured. Should that occur, it may result in decreased occupancy rates at our medical office buildings as well as a reduction in the revenues earned by the operators of our hospital facilities which would unfavorably impact our future bonus rentals (on the three Universal Health Services, Inc. hospital facilities) and may potentially have a negative impact on the future lease renewal terms and the underlying value of the hospital properties.  Management is unable to predict the effect, if any, that these factors may have on the operating results of our lessees or on their ability to meet their obligations under the terms of their leases with us. Management’s estimate of future cash flows from our leased properties could be materially affected in the near term, if certain of the leases are not renewed or renewed with less favorable terms at the end of their lease terms.

Revenue Recognition

Our revenues consist primarily of rentals received from tenants, which are comprised of minimum rent (base rentals), bonus rentals and reimbursements from tenants for their pro-rata share of expenses such as common area maintenance costs, real estate taxes and utilities.

The minimum rent for all hospital facilities is fixed over the initial term or renewal term of the respective leases. Rental income recorded by our properties, including our consolidated and unconsolidated MOBs, relating to leases in excess of one year in length, is recognized using the straight-line method under which contractual rents are recognized evenly over the lease term regardless of when payments are due. The amount of rental revenue resulting from straight-line rent adjustments is dependent on many factors including the nature and amount of any rental concessions granted to new tenants, stipulated rent increases under existing leases, as well as the acquisitions and sales of properties that have existing in-place leases with terms in excess of one year. As a result, the straight-line adjustments to rental revenue may vary from period-to-period. Bonus rents are recognized when earned based upon increases in each facility’s net revenue in excess of stipulated amounts. Bonus rentals are determined and paid each quarter based upon a computation that compares the respective facility’s current quarter’s net revenue to the corresponding quarter in the base year. Tenant reimbursements for operating expenses are accrued as revenue in the same period the related expenses are incurred.

Real Estate Investments

On the date of acquisition, the purchase price of a property is allocated to the assets acquired (land, buildings and intangible assets) and liabilities assumed based upon our estimates of their fair values. Intangible assets include the value of in-place leases, above market leases and leasehold interest in land at the time of acquisition. Substantially all of our intangible assets consist of the value of in-place leases at December 31, 2015, and will be amortized over the remaining lease terms (aggregate weighted average of 4.1 years at December 31, 2015) and is expected to result in estimated aggregate amortization expense of $4.6 million, $4.0 million, $2.7 million $2.0 million and $1.8 million for 2016, 2017, 2018, 2019 and 2020, respectively. Amortization expense on intangible values of in place leases was $5.5 million for the year ended December 31, 2015, $6.1 million for the year ended December 31, 2014 and $6.0 million for the year ended December 31, 2013. Depreciation is computed using the straight-line method over the estimated useful lives of the buildings and capital improvements. The estimated original useful lives of our buildings ranges from 25-45 years and the estimated original useful lives of capital improvements ranges from 3-35 years. On a consolidated basis, depreciation expense

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was $16.2 million for the year ended December 31, 2015, $14.4 million for the year ended December 31, 2014 and $12.5 million for the year ended December 31, 2013.

Cash and Cash Equivalents

We consider all highly liquid investment instruments with original maturities of three months or less to be cash equivalents.

Asset Impairment

Real estate investments and related intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the property might not be recoverable. A property to be held and used is considered impaired only if management’s estimate of the aggregate future cash flows, less estimated capital expenditures, to be generated by the property, undiscounted and without interest charges, are less than the carrying value of the property. This estimate takes into consideration factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition, local market conditions and other factors.

The determination of undiscounted cash flows requires estimates by management, including the expected course of action at the balance sheet date that would lead to such cash flows. Subsequent changes in estimated undiscounted cash flows arising from changes in anticipated action to be taken with respect to the property could impact the determination of whether an impairment exists and whether the effects could materially impact our net income. To the extent estimated undiscounted cash flows are less than the carrying value of the property, the loss will be measured as the excess of the carrying amount of the property over the fair value of the property.

Assessment of the recoverability by us of certain lease related costs must be made when we have reason to believe that a tenant might not be able to perform under the terms of the lease as originally expected. This requires us to make estimates as to the recoverability of such costs. If we determine that the intangible assets are not recoverable from future cash flows, the excess of carrying value of the intangible asset over its estimated fair value is charged to income.

An other than temporary impairment of an investment in an LLC is recognized when the carrying value of the investment is not considered recoverable based on evaluation of the severity and duration of the decline in value, including projected declines in cash flow. To the extent impairment has occurred, the excess carrying value of the asset over its estimated fair value is charged to income.

Investments in Limited Liability Companies (“LLCs”)

In accordance with the Financial Accounting Standards Board’s (“FASB”) standards and guidance relating to accounting for investments and real estate ventures, we account for our unconsolidated investments in LLCs 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.

At December 31, 2015, we have non-controlling equity investments or commitments in five jointly-owned LLCs which own MOBs. We accounted for these LLCs on an unconsolidated basis pursuant to the equity method since they are not variable interest entities. The majority of these LLCs are joint-ventures between us and non-related parties that manage and hold minority ownership interests in the entities. Each LLC 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 fundings are typically advanced as equity or member loans. These LLCs maintain property insurance on the properties.

Palmdale Medical Properties was consolidated in our financial statements through June 30, 2013 at which time its master lease with a wholly-owned subsidiary of UHS expired. For the period of July 1, 2013 through December 31, 2013, we accounted for Palmdale Medical Properties under the equity method. As discussed below, as a result of our purchase of the third-party minority ownership interest in Palmdale Medical Properties, effective January 1, 2014, we began accounting for Palmdale Medical Properties on a consolidated basis.

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Effective August 1, 2014, we purchased the third-party minority ownership interests, ranging from 5% to 15%, in six LLCs (Desert Valley Medical Center, Santa Fe Professional Plaza, Rosenberg Children’s Medical Plaza, Sierra San Antonio Medical Plaza, Phoenix Children’s East Valley Care Center and 3811 E. Bell Medical Building Medical Plaza). Effective January 1, 2014, we purchased the third-party minority ownership interests (5% for each LLC) in Palmdale Medical Properties and Sparks Medical Properties. We formerly held non-controlling majority ownership interests in all of these LLCs, and as a result of our purchase of the minority ownership interests, we now hold 100% of the ownership interests in these LLCs which own MOBs. As a result, we began accounting for the six LLCs mentioned above on a consolidated basis effective August 1, 2014 and we began accounting for Palmdale Medical Properties and Sparks Medical Properties on a consolidated basis effective January 1, 2014, as discussed below. Each of the property’s assets and liabilities were recorded at their fair values (see Note 3 to the consolidated financial statements for additional disclosure). Other than an increase in depreciation and amortization expense resulting from the fair value recognition related to the purchase of the minority ownership interests, these transactions did not have a material impact on our results of operations.

Federal Income Taxes

No provision has been made for federal income tax purposes since we qualify as a real estate investment trust under Sections 856 to 860 of the Internal Revenue Code of 1986, and intend to continue to remain so qualified. As such, we are exempt from federal income taxes and we are required to distribute at least 90% of our real estate investment taxable income to our shareholders.

We are subject to a federal excise tax computed on a calendar year basis. The excise tax equals 4% of the amount by which 85% of our ordinary income plus 95% of any capital gain income for the calendar year exceeds cash distributions during the calendar year, as defined. No provision for excise tax has been reflected in the financial statements as no tax was due.

Earnings and profits, which determine the taxability of dividends to shareholders, will differ from net income reported for financial reporting purposes due to the differences for federal tax purposes in the cost basis of assets and in the estimated useful lives used to compute depreciation and the recording of provision for impairment losses.

The aggregate gross cost basis and net book value of the properties for federal income tax purposes are approximately $489 million and $325 million, respectively, at December 31, 2015.

Stock-Based Compensation

We expense the grant-date fair value of restricted stock awards over the vesting period. We recognize the grant-date fair value of equity-based compensation and account for these transactions using the fair-value based method.

The expense associated with share-based compensation arrangements is a non-cash charge. In the Consolidated Statements of Cash Flows, share-based compensation expense is an adjustment to reconcile net income to cash provided by operating activities.

Fair Value

Fair value is a market-based measurement, not an entity-specific measurement and determined based upon the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, accounting requirements establish a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Level 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). In instances when it is necessary to establish the fair value of our real estate investments and investments in LLCs we use unobservable inputs which are typically based on our own assumptions.

The fair value of our real estate investments, components of real estate investments and debt assumed in conjunction with acquisition and impairment activity, are considered to be Level 3 valuations as they are primarily based upon an income capitalization approach. Significant inputs into the models used to determine fair value of real estate investments and components of real estate investments include future cash flow projections, holding period, terminal capitalization rate and discount rates. Additionally the fair value of land takes into consideration comparable sales, as adjusted for site specific factors. The fair value of real estate investments is based upon significant judgments made by management, and accordingly, we typically obtain assistance from third party valuation specialists. Significant inputs into the models used to determine the fair value of assumed mortgages included the outstanding balance, term, stated interest rate and current market rate of the mortgage.

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The carrying amounts reported in the balance sheet for cash, receivables, and short-term borrowings approximate their fair values due to the short-term nature of these instruments. Accordingly, these items are excluded from the fair value disclosures included elsewhere in these notes to the consolidated financial statements.

See Note 3-Acquisitions and Dispositions, for disclosure related to the $25.4 million net gain recorded during 2014 in connection with the fair value recognition of the assets and liabilities, including third-party debt, resulting from the purchase of minority ownership interests in majority-owned LLCs.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

New Accounting Standards

Except as noted below there were no new accounting pronouncements during 2015 that impacted, or are expected to impact us.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASU 2016-02 supersedes the previous leases standard, Leases (Topic 840). The standard is effective on January 1, 2019, with early adoption permitted. We are currently in the process of evaluating the impact the adoption of ASU 2016-02 will have on our financial position or results of operations.

In April 2015, the FASB issued an update to the accounting standard relating to the presentation of debt issuance costs. Under the new guidance, debt issuance costs related to a recognized debt liability will be presented on the balance sheet as a direct deduction from the debt liability. This amendment becomes effective for annual periods beginning on or after December 15, 2015, and interim periods beginning on or after December 15, 2015; however, early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis, which amends the consolidation requirements in Accounting Standards Codification (“ASC”) 810, Consolidation. ASU 2015-02 makes targeted amendments to the current consolidation guidance, which could change consolidation conclusions. This guidance will be effective for us beginning in our first quarter of 2016 and early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments,” which changes the reporting requirement for retrospective adjustments to provisional amounts in the measurement period. The amendments in this update require an entity to present separately on the face of the income statement or disclose in the notes, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The revised guidance is effective for annual fiscal periods beginning after December 15, 2015. We do not expect the adoption of this revised guidance to have a material impact on our consolidated financial statements.

(2) RELATIONSHIP WITH UHS AND RELATED PARTY TRANSACTIONS

Leases:    We commenced operations in 1986 by purchasing properties of certain subsidiaries from UHS and immediately leasing the properties back to the respective subsidiaries. Most of the leases were entered into at the time we commenced operations and provided for initial terms of 13 to 15 years with up to six additional 5-year renewal terms. The current base rentals and lease and rental terms for each facility are provided below. The base rents are paid monthly and each lease also provides for additional or bonus rents which are computed and paid on a quarterly basis based upon a computation that compares current quarter revenue to a

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corresponding quarter in the base year. The hospital leases with subsidiaries of UHS are unconditionally guaranteed by UHS and are cross-defaulted with one another.

The combined revenues generated from the leases on the UHS hospital facilities accounted for approximately 31% of our total revenue for the five years ended December 31, 2015 (approximately 25% for the year ended December 31, 2015 and approximately 28% and 30% for the years ended December 31, 2014 and 2013, respectively). The decrease during 2015 and 2014 as compared to 2013 is due primarily to the 2014 purchase of the third-party minority ownership interests in eight LLCs in which we previously held noncontrolling ownership interests. As a result of these transactions, we own 100% of each of these LLCs and began accounting for each on a consolidated basis effective on the dates of purchase of the minority ownership interests (January and August, 2014). Including 100% of the revenues generated at the unconsolidated LLCs in which we have various non-controlling equity interests ranging from 33% to 95%, the leases on the UHS hospital facilities accounted for approximately 20% of the combined consolidated and unconsolidated revenue for the five years ended December 31, 2015 (approximately 20% for the year ended December 31, 2015 and 22% for each of the years ended December 31, 2014 and 2013). In addition, including the two free-standing emergency departments (“FEDs”) acquired by us from subsidiaries of UHS during the first quarter of 2015 (as discussed below), sixteen MOBs/FEDs, that are either wholly or jointly-owned, include tenants which are subsidiaries of UHS.

Pursuant to the Master Lease Document by and among us and certain subsidiaries of UHS, dated December 24, 1986 (the “Master Lease”), which governs the leases of all hospital properties with subsidiaries of UHS, UHS has the option 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 at the end of the lease terms or any renewal terms at the appraised fair market value. In addition, the Master Lease, as amended during 2006, includes a change of control provision whereby UHS has the right, upon one month’s notice should a change of control of the Trust occur, to purchase any or all of the three leased hospital properties listed below at their appraised fair market value. Additionally, UHS has rights of first refusal to: (i) purchase the respective leased facilities during and for 180 days 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 180 days after, the lease term at the same terms and conditions pursuant to any third-party offer.

During the third quarter of 2014, a wholly-owned subsidiary of UHS provided notification to us that, upon expiration of The Bridgeway’s lease term which occurred in December, 2014, it intended to exercise its option to purchase the real property of the facility. Pursuant to the terms of the lease, we and the wholly-owned subsidiary of UHS were both required to obtain independent appraisals of the property to determine its fair market value. On December 31, 2014, the Bridgeway, a 103-bed behavioral health facility located in North Little Rock, Arkansas, was sold to UHS for $17.3 million. A gain on divestiture of real property of approximately $13.0 million is included in our results of operations for the twelve-month period ended December 31, 2014.  Prior to its divestiture in 2014, our revenues, net cash provided by operating activities and funds from operations included approximately $1.1 million earned annually in connection with The Bridgeway’s lease.

The table below details the existing lease terms and renewal options for our three acute care hospitals operated by wholly-owned subsidiaries of UHS:

Hospital Name	Type of Facility	Annual Minimum Rent		End of Lease Term	Renewal Term (years)
McAllen Medical Center	Acute Care	$	5,485,000	December, 2016	15(a)
Wellington Regional Medical Center	Acute Care	$	3,030,000	December, 2016	15(b)
Southwest Healthcare System, Inland Valley Campus	Acute Care	$	2,648,000	December, 2016	15(b)

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

(b) UHS has one 5-year renewal option at existing lease rates (through 2021) and two 5-year renewal options at fair market value lease rates (2022 through 2031).

During the first quarter of 2015, we purchased from wholly-owned subsidiaries of UHS, the real property of two newly-constructed and recently opened FEDs located in Weslaco and Mission, Texas. Each FED consists of approximately 13,600 square feet and is operated by wholly-owned subsidiaries of UHS. In connection with these acquisitions, ten-year lease agreements with six, 5-year renewal terms were executed with UHS for each FED. The first four, 5-year renewal terms (covering years 2025 through 2044) include 2% annual lease rate increases, computed on accumulative and compounded basis, and the last two, 5-year renewal terms (covering the years 2045 through 2054) will be at the then fair market value lease rates. These leases are cross-defaulted with one another. UHS has the option to purchase the leased properties upon the expiration of the fixed term and each five-year extended term at the fair market value at that time. The aggregate acquisition cost of these facilities was approximately $12.8 million, and the aggregate rental revenue earned by us at the commencement of the leases is approximately $900,000 annually.

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Management cannot predict whether the leases with 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 and 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 the these leases.  The existing lease terms for our three acute care hospitals operated by wholly-owned subsidiaries of UHS are scheduled to expire in December, 2016 and we can provide no assurance that these leases will be renewed at the existing lease rates.

As discussed above, Palmdale Medical Plaza, which is located in Palmdale, California, on the campus of a UHS hospital, had a master lease commitment by a wholly-owned subsidiary of UHS which expired effective as of July 1, 2013. This MOB, tenants of which include subsidiaries of UHS, was completed and opened during the third quarter of 2008 at which time the master lease commenced. The LLC that owns this MOB was deemed to be a variable interest entity during the term of the master lease and was therefore consolidated in our financial statements through June 30, 2013 since we were the primary beneficiary through that date. Effective July 1, 2013, this LLC was no longer deemed a variable interest entity and is accounted for in our financial statements on an unconsolidated basis pursuant to the equity method from July 1, 2013 through December 31, 2013.

Effective January 1, 2014, we purchased the third-party minority ownership interests in two LLCs (Palmdale Medical Properties and Sparks Medical Properties) in which we formerly held non-controlling majority ownership interest. As a result of our purchase of the minority ownership interests, we now hold 100% of the ownership interests in these LLCs (which own MOBs) and began accounting for them on a consolidated basis.

We have funded $2.8 million in equity as of December 31, 2015, and are committed to fund an additional $149,000, in exchange for a 95% non-controlling equity interest in an LP (Texoma Medical Properties) that developed, constructed, owns and operates the Texoma Medical Plaza located in Denison, Texas, which was completed and opened during the first quarter of 2010. This MOB is located on the campus of a UHS acute care hospital which is owned and operated by UHS of Texoma, Inc. (“Texoma Hospital”), a wholly-owned subsidiary of UHS. This MOB has tenants that include subsidiaries of UHS. This LP has a third-party term loan of $14.7 million, which is non-recourse to us, outstanding as of December 31, 2015. As this LLC is not considered to be a variable interest entity and does not meet the other criteria requiring consolidation of an investment, it is accounted for pursuant to the equity method.

Advisory Agreement:    UHS of Delaware, Inc. (the “Advisor”), a wholly-owned subsidiary of UHS, serves as Advisor to us under an Advisory Agreement (the “Advisory Agreement”) dated December 24, 1986. 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. Our advisory fee was 0.70% during each of 2015, 2014 and 2013 of our average invested real estate assets, as derived from our consolidated balance sheet. In December of 2015, based upon a review of our advisory fee and other general and administrative expenses, as compared to an industry peer group, the Advisory Agreement was renewed for 2016 pursuant to the same terms as the Advisory Agreement in place during the last three years.

The average real estate assets for advisory fee calculation purposes exclude certain items from our consolidated balance sheet such as, among other things, accumulated depreciation, cash and cash equivalents, base and bonus rent receivables, deferred charges and other assets. The advisory fee is payable quarterly, subject to adjustment at year-end based upon our audited financial statements. In addition, the Advisor is entitled to an annual incentive fee equal to 20% of the amount by which cash available for distribution to shareholders for each year, as defined in the Advisory Agreement, exceeds 15% of our equity as shown on our consolidated balance sheet, determined in accordance with generally accepted accounting principles without reduction for return of capital dividends. The Advisory Agreement defines cash available for distribution to shareholders as net cash flow from operations less deductions for, among other things, amounts required to discharge our debt and liabilities and reserves for replacement and capital improvements to our properties and investments. No incentive fees were paid during 2015, 2014 or 2013 since the incentive fee requirements were not achieved. Advisory fees incurred and paid (or payable) to UHS amounted to $2.8 million during 2015, $2.5 million during 2014 and $2.4 million during 2013 and were based upon average invested real estate assets of $401 million, $363 million and $338 million during 2015, 2014 and 2013, respectively.

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Officers and Employees:    Our officers are all employees of a wholly-owned subsidiary of UHS and although as of December 31, 2015 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 compensation awards in the form of restricted stock and/or cash bonuses.

Share Ownership:    As of December 31, 2015 and 2014, UHS owned 5.9% of our outstanding shares of beneficial interest.

SEC reporting requirements of UHS:    UHS is subject to the reporting requirements of the Securities and Exchange Commission (“SEC”) and is required to file annual reports containing audited financial information and quarterly reports containing unaudited financial information. Since the leases on the hospital facilities leased to wholly-owned subsidiaries of UHS comprised approximately 25% of our consolidated revenues for the year ended December 31, 2015 and 28% and 30% of our consolidated revenues for the years ended December 31, 2014 and 2013, respectively, 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) PROPERTY EXCHANGE TRANSACTION, ACQUISITIONS AND DISPOSITIONS

2015:

Property Exchange Transaction:

In May, 2015, in exchange for the real property of Sheffield Medical Building (“Sheffield”), a 73,446 square foot medical office building (“MOB”) located in Atlanta, Georgia, we received $2 million in cash and the real property of two MOBs located in Sandy Springs and Vinings, Georgia, from an unrelated third party. In connection with the two MOBs acquired in this transaction, triple net, master lease agreements applicable to 100% of the combined 36,700 rentable square feet of these properties have been executed with the counterparty. These master lease agreements have initial terms of 15 years and provide for 3% annual rent increases. In connection with this transaction, we recorded an $8.7 million gain which is included in our Consolidated Statements of Income for the year ended December 31, 2015.  This gain represented the difference between the aggregate fair value of the consideration exchanged ($2 million in cash and the real property of two MOBs) and the net book value of Sheffield.

Acquisitions:

In February, 2015, we purchased the Haas Medical Office Park, two single story buildings having an aggregate of approximately 16,000 rentable square feet, located in Ottumwa, Iowa, for approximately $4.1 million.

In January and February of 2015, we purchased from wholly-owned subsidiaries of UHS, the real property of two newly-constructed and recently opened FEDs located in Weslaco and Mission, Texas, for an aggregate acquisition cost of approximately $12.8 million. Each FED consists of approximately 13,600 square feet and is operated by wholly-owned subsidiaries of UHS. In connection with these acquisitions, ten-year lease agreements with six 5-year renewal terms were executed with UHS for each FED. In connection with the lease agreements, the lessee shall have the option to purchase the leased property upon the expiration of the fixed term and each five-year extended term at the fair market value at that time.

The aggregate purchase price for these three MOBs and two FEDs was allocated to the assets acquired and liabilities assumed consisting of tangible property and identified intangible assets, based on their respective fair values at acquisition as detailed in the table below. Substantially all of the intangible assets include the value of the in-place leases at the MOBs at the time of acquisition which will be amortized over the average remaining lease term of approximately 15.0 years at the time of acquisition (aggregate weighted average of 14.4 years at December 31, 2015) for each of the MOBs located in Sandy Springs and Vinings, Georgia and approximately 10.4 years at the time of acquisition (aggregate weighted average of 9.6 years at December 31, 2015) for the Haas Medical Office Park.

Land	$7,050
Buildings and improvements	17,518
Intangible assets	2,182
Cash received- exchange transaction	2,000
Other liabilities	(116)
Deposit paid in 2014	(100)
Net book value of property divested in exchange transaction	(3,027)
Gain on exchange transaction	(8,742)

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Net cash paid  $16,765

2014:

Acquisitions:

In August, 2014, we purchased the Hanover Emergency Center, a 22,000 rentable square feet, free-standing, full service emergency and imaging center, located in Mechanicsville, VA, for approximately $8.6 million. The single-tenant property is occupied pursuant to the terms of a 10-year lease with HCA Health Services of Virginia, Inc.

In January, 2014, we paid an aggregate of $7.2 million, (including a $150,000 deposit made in 2013), to purchase the following in a single transaction: (i) The Children’s Clinic at Springdale – a 9,800 square foot, single-tenant medical office building located in Springdale, Arkansas, and; (ii) The Northwest Medical Center at Sugar Creek – a 13,700 square foot, multi-tenant medical office building located in Bentonville, Arkansas.

The aggregate purchase price for these clinics and MOB was allocated to the assets and liabilities acquired consisting of tangible property and identified intangible assets, based on their respective fair values at acquisition as detailed in the table below. Substantially all of the intangible assets include the value of the in-place leases at the clinics and MOB at the time of acquisition which will be amortized over the average remaining lease term of approximately 9.8 years at the time of acquisition (aggregate weighted average of 8.5 years at December 31, 2015) for the Hanover Emergency Center and approximately 9.7 years at the time of acquisition (aggregate weighted average of 7.7 years at December 31, 2015) for the Arkansas facilities.

Land	$3,010
Buildings and improvements	10,664
Intangible assets	2,076
Deposit paid in 2013	(150)
Net cash paid	$15,600

Additionally, during January and August, 2014, we spent an aggregate of $7.0 million, including $4.7 million in cash plus an additional $2.3 million in the form of a note payable to the previous third-party member (which was fully repaid in January, 2015 and is reflected in “Accrued expenses and other liabilities” on our Consolidated Balance Sheet at December 31, 2014) to purchase the minority ownership interests held by third party members in eight LLCs (as noted in the table below) in which we previously held various non-controlling majority ownership interests ranging from 85% to 95%.

Name of LLC/LP	Ownership prior to minority interest purchase		Property Owned by LLC	Effective Date
Palmdale Medical Properties		95%	Palmdale Medical  Plaza	January1,2014
Sparks Medical Properties		95%	Vista Medical Terrace & Sparks  MOB	January1,2014
DVMC Properties		90%	Desert Valley Medical Center	August 1, 2014
Santa Fe Scottsdale		90%	Santa Fe Professional Plaza	August 1, 2014
PCH Medical Properties		85%	Rosenberg Children’s Medical Plaza	August 1, 2014
Sierra Medical Properties		95%	Sierra San Antonio Medical Plaza	August 1, 2014
PCH Southern Properties		95%	PhoenixChildren’sEastValleyCareCenter	August 1, 2014
3811 Bell Medical Properties		95%	3811 E. Bell	August 1, 2014

As a result of these minority ownership purchases, we now own 100% of each of these LLCs, which own medical office buildings, and began accounting for each on a consolidated basis at the effective date as noted in the table above. Pursuant to current accounting standards, at the effective date, we were required to record each property’s assets and liabilities at their fair values which resulted in the recording of a $25.4 million non-cash gain, which is included in our Consolidated Statement of Income for the twelve months ended December 31, 2014, representing the difference between the fair values and the equity method carrying value of each investment. The calculated fair value, categorized in level 3 of the fair value hierarchy and utilizing the income capitalization approach, is based upon the basis of capitalization of the net estimated earnings expectancy of the property, assuming continued use similar to the existing use of the acquired property. Each property’s continued cash flow analysis were also utilized in estimating the

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fair value of the property, whereby cash flows from the various tenants are calculated based upon lease commencement and termination dates. The capitalization rate and discount rate ranged from 7%-8.75% and 8%-9.75%, respectively.

The aggregate purchase price for these MOBs was allocated to net tangible property ($84.0 million), identified intangible assets ($6.5 million), and long term debt ($29.8 million). Substantially all of the intangible assets include the value of the in-place leases at these MOBs at the time of acquisition which will be amortized over the combined average remaining lease term of approximately 4.7 years at the time of acquisition (aggregate weighted average of 4.1 years at December 31, 2015) for the August, 2014 transactions and 5.3 years at the time of acquisition (aggregate weighted average of 4.7 years at December 31, 2015) for the January, 2014 transactions. Other than the increased depreciation and amortization expense resulting from the amortization of the intangible assets recorded in connection with these transactions, there was no material impact on our net income as a result of the consolidation of these LLCs.

Divestitures:

In December, 2014, upon expiration of The Bridgeway’s lease term, a wholly-owned subsidiary of UHS exercised its option to purchase the real property of the facility. The sale of The Bridgeway, a 103-bed behavioral health facility located in North Little Rock, Arkansas, generated $17.3 million of sale proceeds. Pursuant to the terms of the lease, we and the wholly-owned subsidiary of UHS were both required to obtain independent appraisals of the property to determine its fair market value of $17.3 million. A $13.0 gain is included in our Consolidated Statement of Income for the twelve months ended December 31, 2014, representing the difference between the fair market value and the book value of this property.

2013:

Acquisition:

In August, 2013, we purchased the Ward Eagle Office Village located in Farmington Hills, Michigan. This multi-tenant MOB, which was purchased for approximately $4.1 million, consists of approximately 16,300 rentable square feet.

In June, 2013, we purchased the 5004 Poole Road MOB, located in Denison, Texas, on the campus of Texoma Medical Center, a wholly-owned subsidiary of UHS. This single-tenant MOB, which was purchased for approximately $625,000, consists of approximately 4,400 rentable square feet and is located adjacent to our Texoma Medical Plaza MOB.

The aggregate purchase price of approximately $4.7 million for these MOBs was allocated to the assets and liabilities acquired consisting of tangible property and identifiable intangible assets, based on their respective fair values at acquisition, as detailed in the table below. Substantially all of the intangible assets include the value of the in-place leases at Ward Eagle Office Village at the time of acquisition which are being amortized over the then average remaining lease term of approximately 9.8 years (aggregate weighted average of 7.4 years at December 31, 2015).

Land	$	316
Buildings and improvements		3,749
Intangible assets		610
Other assets		21
Liabilities (real property and operating)		(11	)
Net cash paid	$	4,685

The Ward Eagle Office Village acquisition was valued utilizing the income capitalization approach. The calculated fair value, utilizing the income capitalization approach, is based upon the basis of capitalization of the net estimated earnings expectancy of the property, assuming continued use similar to the existing use of the acquired property’s continued cash flow analysis were also utilized in estimating the fair value of the property, whereby cash flows from the various tenants are calculated based upon lease commencement and termination dates.

New Construction:

The newly constructed Forney Medical Plaza II located in Forney, Texas was completed and opened in April, 2013. This multi-tenant medical office building, consisting of 30,000 rentable square feet, is owned by a limited partnership (“LP”) in which we hold a 95% non-controlling ownership interest. As this LP is not considered to be a variable interest entity, it is accounted for pursuant to the equity method.

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Divestitures:

There were no divestitures during 2013.

As of December 31, 2015, our net intangible assets total $19.8 million (net of $25.1 million accumulated amortization) and substantially all of the amount is related to acquired, in-place leases which have a weighted average remaining amortization period of 4.1 years.

(4) LEASES

All of our leases are classified as operating leases with initial terms typically ranging from 3 to 15 years with up to five additional, five-year renewal options. Under the terms of the leases, we earn fixed monthly base rents and pursuant to the leases with subsidiaries of UHS, we may earn periodic bonus rents (see Note 1). The bonus rents from the subsidiaries of UHS, which are based upon each facility’s net revenue in excess of base amounts, are computed and paid on a quarterly basis based upon a computation that compares current quarter revenue to the corresponding quarter in the base year.

Minimum future base rents from non-cancelable leases related to properties included in our financial statements on a consolidated basis, excluding increases resulting from changes in the consumer price index, bonus rents and the impact of straight line rent, are as follows (amounts in thousands):

2016	$	49,973
2017		34,345
2018		29,594
2019		24,341
2020		19,653
Thereafter		50,914
Total minimum base rents	$	208,820

Some of the leases contain gross terms where operating expenses are included in the base rent amounts. Other leases contain net terms where the operating expenses are assessed separately from the base rentals. The table above contains a mixture of both gross and net leases, and does not include any separately calculated operating expense reimbursements. Under the terms of the hospital leases, the lessees are required to pay all operating costs of the properties including property insurance and real estate taxes. Tenants of the medical office buildings generally are required to pay their pro-rata share of the property’s operating costs.

(5) 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 $185 million revolving credit facility, the level of borrowings pursuant to non-course mortgage debt secured by the real property of our properties and our level of equity including consideration of additional equity issuances pursuant to our at-the-market 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 facility 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 March 27, 2015, we entered into a new $185 million revolving credit agreement (“Credit Agreement”). The Credit Agreement, which will mature in March, 2019, replaced our previous revolving credit facility which was scheduled to mature in July, 2015. The Credit Agreement includes a $50 million sub limit for letters of credit and a $20 million sub limit for swingline/short-term loans. The Credit Agreement also provides a one-time option to extend the maturity date for an additional one year period, and an option to increase the total facility borrowing capacity up to an additional $50 million, subject to lender agreement. 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 the Trust’s wholly-owned subsidiaries. Borrowings made pursuant to the Credit Agreement will bear interest, at our option, at one, two, three, or six month LIBOR plus an applicable margin ranging from 1.50% to 2.00% or at the Base Rate plus an applicable margin ranging from 0.50% to 1.00%. The Credit Agreement defines “Base

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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 LIBOR plus 1%. A commitment fee of 0.20% to 0.40% (depending on our total leverage ratio) will be charged on the average unused portion of the revolving credit commitments. The margins over LIBOR, Base Rate and the commitment fee are based upon our ratio of debt to total capital. At December 31, 2015, the applicable margin over the LIBOR rate was 1.625%, the margin over the Base Rate was 0.625%, and the commitment fee was 0.25%.

At December 31, 2015, we had $142.2 million of outstanding borrowings and $3.5 million of letters of credit outstanding against our revolving credit agreement. The carrying amount and fair value of borrowings outstanding pursuant to the Credit Agreement was $142.2 million at December 31, 2015. We had $39.3 million of available borrowing capacity, net of the outstanding borrowings and letters of credit outstanding as of December 31, 2015. There are no compensating balance requirements. The average amount outstanding under our revolving credit agreement was $114.3 million in 2015 with a corresponding effective interest rate, including commitment fees, of 2.1%.  The average amounts outstanding under our previous revolving credit agreement (which was replaced in March, 2015, as discussed above), were $104.6 million in 2014 and $86.3 million in 2013 with corresponding effective interest rates, including commitment fees, of 2.4% in 2014 and 2.2% in 2013.

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 net worth, as well as customary events of default, the occurrence of which may trigger an acceleration of amounts outstanding under the Credit Agreement. We are in compliance with all of the covenants at December 31, 2015. We also believe that we would remain in compliance if 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			December 31, 2015
Tangible net worth		$	125,000		$	175,285
Total leverage		< 60		%		45.0	%
Secured leverage		< 30		%		19.8	%
Unencumbered leverage		< 60		%		42.2	%
Fixed charge coverage	> 1.50x			3.3x

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We have fourteen mortgages, all of which are non-recourse to us, included on our consolidated balance sheet as of December 31, 2015, with a combined outstanding balance of $110.3 million (excluding net debt premium of $298,000 at December 31, 2015). The following table summarizes our outstanding mortgages, excluding net debt premium, at December 31, 2015 (amounts in thousands):

Facility Name	Outstanding Balance (in thousands)(a.)		Interest Rate			Maturity Date
Summerlin Hospital Medical Office Building III    floating rate mortgage loan (b.)	$	10,695		3.49	%	December, 2016
Peace Health fixed rate mortgage loan		20,790		5.64	%	April, 2017
Auburn Medical II floating rate mortgage loan		6,954		2.99	%	April, 2017
Medical Center of Western Connecticut fixed rate    mortgage loan		4,663		6.00	%	June, 2017
Summerlin Hospital Medical Office Building II fixed    rate mortgage loan		11,419		5.50	%	October, 2017
Phoenix Children’s East Valley Care Center fixed rate    mortgage loan		6,348		5.88	%	December, 2017
Centennial Hills Medical Office Building floating rate    mortgage loan		10,339		3.49	%	January, 2018
Sparks Medical Building/Vista Medical Terrace floating    rate mortgage loan		4,351		3.49	%	February, 2018
Rosenberg Children’s Medical Plaza fixed rate    mortgage loan		8,317		4.85	%	May, 2018
Vibra Hospital-Corpus Christi fixed rate mortgage loan		2,815		6.50	%	July, 2019
700 Shadow Lane and Goldring MOBs fixed rate    mortgage loan		6,428		4.54	%	June, 2022
BRB Medical Office Building fixed rate mortgage loan		6,498		4.27	%	December, 2022
Desert Valley Medical Center fixed rate mortgage loan		5,200		3.62	%	January, 2023
Tuscan Professional Building fixed rate mortgage loan		5,439		5.56	%	June, 2025
Total	$	110,256

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

(b.) This loan is scheduled to mature in December, 2016, at which time we will decide whether to refinance pursuant to a new mortgage loan or by utilizing borrowings under our revolving credit facility.

The mortgages are secured by the real property of the buildings as well as property leases and rents. The mortgages have a combined fair value of approximately $112.4 million as of December 31, 2015. 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.

At December 31, 2014, we had sixteen mortgages, all of which were non-recourse to us, included in our consolidated balance sheet. The combined outstanding balance of these sixteen mortgages was $122.9 million (excluding net debt premium of $523,000 at December 31, 2014), and had a combined fair value of approximately $124.7 million at December 31, 2014.

As of December 31, 2015, our aggregate consolidated scheduled debt repayments (including mortgages) are as follows (amounts in thousands):

2016	$	13,714
2017		50,572
2018		22,837
2019 (a.)		145,757
2020		1,141
Later		18,385
Total	$	252,406

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(a.) Includes repayment of $142.2 million of outstanding borrowings under the terms of our $185 million revolving credit agreement. 

Financial Instruments:

During the third quarter of 2013, we entered into an interest rate cap on a total notional amount of $10 million whereby we paid a premium of $136,000. During the first quarter of 2014, we entered into two additional interest rate cap agreements on a total notional amount of $20 million whereby we paid premiums of $134,500. In exchange for the premium payments, the counterparties agreed to pay us the difference between 1.50% and one-month LIBOR if one-month LIBOR rises above 1.50% during the term of the cap. From inception through December 31, 2014, no payments have been made to us by the counterparties pursuant to the terms of these caps which expire on January 13, 2017.

(6) DIVIDENDS AND EQUITY ISSUANCE PROGRAM

Dividends:

During each of the last three years, dividends were declared and paid by us as follows:

· 2015:    $2.56 per share of which $2.17 per share was ordinary income and $.39 per share was a return of capital distribution.

· 2014:    $2.52 per share of which $1.478 per share was ordinary income and $1.042 per share was total capital gain (total capital gain amount includes Unrecaptured Section 1250 gain of $.305 per share).

· 2013:    $2.495 per share of which $1.96 per share was ordinary income and $.535 per share was a return of capital distribution.

Equity Issuance Program:

We filed a Registration Statement with the Securities and Exchange Commission which became effective in November, 2015, under which we can offer up to an aggregate of $100 million of our securities pursuant to supplemental prospectuses which we may file from time to time.  No offering will be made except pursuant to such supplemental prospectuses.

There were no shares issued pursuant to an ATM program during 2015. During 2013 and 2014, pursuant to an ATM equity issuance program in effect at that time, which is now expired, we issued an aggregate of 580,900 shares at an average price of $45.97 per share, which generated approximately $25.6 million of net cash proceeds or receivables (net of approximately $1.1 million, consisting of compensation of $667,000 to Merrill Lynch, as well as $391,000 of other various fees and expenses), as follows:

· 2014:    We issued 426,187 shares at an average price of $47.51 per share which generated approximately $19.5 million of net cash proceeds or receivables (net of approximately $700,000, consisting of compensation of $506,000 to Merrill Lynch, as well as $195,000 of other various fees and expenses), and;

· 2013:    We issued 154,713 shares at an average price of $41.71 per share which generated approximately $6.1 million of net cash proceeds or receivables (net of $357,000, consisting of compensation of $161,000 to Merrill Lynch, as well as $196,000 of other various fees and expenses).

In connection with the ATM program, our consolidated balance sheet included approximately $1.1 million at December 31, 2014, and $600,000 at December 31, 2013, of net proceeds due to us in connection with shares issued in late December 2014 and 2013, respectively. The net cash proceeds related to these shares were received by us in early January 2015, and early January, 2014, respectively, and are included in cash received for the issuance of shares of beneficial interest, net, on the Consolidated Statements of Cash Flows for the years ended December 31, 2015 and 2014, respectively.

(7) INCENTIVE PLANS

During 2007, upon the expiration of our 1997 Incentive Plan, as discussed below, our Board of Trustees and shareholders approved the Universal Health Realty Income Trust 2007 Restricted Stock Plan (the “2007 Plan”). A total of 75,000 shares were authorized for issuance under this plan and a total of 67,555 shares, net of cancellations, have been issued pursuant to the terms of this plan, 47,975 of which have vested as of December 31, 2015. At December 31, 2015 there are 7,445 shares remaining for issuance under the terms of the 2007 Plan.

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During 2015, there were 9,730 restricted Shares of Beneficial Interest, net of cancellations, issued to the Trustees and officers of the Trust pursuant to the 2007 Plan at a weighted average grant price of $47.75 per share ($464,608 in the aggregate). These restricted shares are scheduled to vest in June of 2017 (the second anniversary of the date of grant).

During 2014, there were 9,850 restricted Shares of Beneficial Interest, net of cancellations, issued to the Trustees and officers of the Trust pursuant to the 2007 Plan at a weighted average grant price of $43.21 per share ($425,619 in the aggregate). These restricted shares are scheduled to vest in June of 2016 (the second anniversary of the date of grant).

During 2013, there were 8,730 restricted Shares of Beneficial Interest, net of cancellations, issued to the Trustees and officers of the Trust pursuant to the 2007 Plan at a weighted average grant price of $43.54 per share ($380,104 in the aggregate). These restricted shares vested in June of 2015 (the second anniversary of the date of grant).

We expense the grant-date fair value restricted stock awards under the straight-line method over the stated vesting period of the award. In connection with these grants, we recorded compensation expense of approximately $427,000, $399,000 and $375,000 and during 2015, 2014 and 2013, respectively. The remaining expenses associated with these grants is approximately $418,000 and will be recorded over the remaining weighted average vesting period for outstanding restricted Shares of Beneficial Interest of approximately one year at December 31, 2015.

Prior to its expiration in 2007, the Universal Health Realty Income Trust 1997 Incentive Plan (the “1997 Plan”) provided for the granting of stock options and dividend equivalents rights (“DERs”) to employees of the Trust, including officers and trustees. Awards granted pursuant to the 1997 Plan prior to its termination date remain exercisable, in accordance with the terms of the outstanding agreements. All stock options were granted with an exercise price equal to the fair market value on the date of the grant. The options granted vested ratably at 25% per year beginning one year after the date of grant, and expire in ten years. DERs on outstanding awards are earned in amounts equal to the cash or stock dividends declared subsequent to the date of grant. As of December 31, 2015, there were 23,000 options outstanding and exercisable under the 1997 Plan with an average exercise price of $36.53 per share and a remaining weighted average life of 1.2 years. The net expense recorded in connection with the DERs did not have a material impact on our consolidated financial statements during each of the years ended December 31, 2015, 2014 and 2013.

During the fourth quarter of 2008, the Board of Trustees of the Trust approved amendments to the outstanding stock option agreements made pursuant to the 1997 Plan. These original agreements provided for the deferred payment of dividend equivalents on shares covered by the options, with payment tied to the date the options were exercised or expire. In order to meet certain changes to tax law requirements, the agreements, as amended, provide for the current payment of dividend equivalents in the years in which dividends are declared and paid or, if later, when the related options become vested. DERs with respect to 23,000 shares, 36,000 shares and 40,000 shares were outstanding at December 31, 2015, 2014 and 2013, respectively. In December of 2015, 2014 and 2013, DERs which were vested and accrued as of each respective date, were paid to officers and Trustees of the Trust amounting to $75,000, $94,000 and $106,000, respectively.

Stock options to purchase shares of beneficial interest have been granted to eligible individuals, including our officers and trustees. Information with respect to these options, before adjustment to the option price to give effect to the dividend equivalent rights, is summarized as follows:

Outstanding Options	Number of Shares			Exercise Weighted- Average Price		Grant PriceRange (High-Low)
Balance, January 1, 2013		43,000		$	35.22	$36.53/$29.44
Exercised		(3,000	)		29.44	$29.44/$29.44
Balance, January 1, 2014		40,000		$	35.65	$36.53/$30.06
Exercised		(4,000	)		33.07	$30.06/$34.07
Balance, January 1, 2015		36,000		$	35.94	$34.90/$36.53
Exercised		(13,000	)		34.90	$34.90/$34.90
Outstanding options vested and exercisable as of    December 31, 2015		23,000		$	36.53	$36.53/$36.53

During 2015, there were 13,000 stock options exercised with a total in-the-money value of $154,500.  During 2014, there were 4,000 stock options exercised with a total in-the-money value of $44,160. During 2013, there were 3,000 stock options exercised with a total in-the-money value of $46,290.

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There were no unvested options as of December 31, 2015. The following table provides information about options outstanding and exercisable options at December 31, 2015:

	Options Outstanding and Exercisable
Number		23,000
Weighted average exercise price	$	36.53
Aggregate intrinsic value	$	310,040
Weighted average remaining contractual life		1.2

(8) SUMMARIZED FINANCIAL INFORMATION OF EQUITY AFFILIATES

In accordance with the Financial Accounting Standards Board’s (“FASB”) standards 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.

At December 31, 2015, we have non-controlling equity investments or commitments in five jointly-owned LLCs/LPs which own MOBs. As of December 31, 2015, we accounted for these LLCs/LPs on an unconsolidated basis pursuant to the equity method since they are not variable interest entities and we do not have a controlling voting interest. The majority of these entities are joint-ventures between us and non-related parties that manage and 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 fundings are typically advanced as equity or member loans. These entities maintain property insurance on the properties.

Effective August 1, 2014, we purchased the minority ownership interests, ranging from 5% to 15%, held by third-party members in six LLCs in which we previously held noncontrolling majority ownership interests, as noted in the table below. As a result of these minority ownership purchases, we now own 100% of each of these LLCs and began to account for them on a consolidated basis effective August 1, 2014. Prior to August 1, 2014, these LLCs were accounted for on an unconsolidated basis pursuant to the equity method.

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Effective January 1, 2014, we purchased the 5% minority ownership interests held by third-party members in two LLCs in which we previously held noncontrolling majority ownership interests, as noted in the table below. As a result of these minority ownership purchases, we now own 100% of each of these LLCs and account for them on a consolidated basis. Prior to January 1, 2014, these LLCs were accounted for on an unconsolidated basis pursuant to the equity method. Previously, Palmdale Medical Properties (“Palmdale”) was included in our financial statements on a consolidated basis through June 30, 2013 as a result of a master lease arrangement with a wholly-owned subsidiary of UHS, which expired on July 1, 2013.

Name of LLC/LP	Ownership prior to minority interest purchase		Property Owned by LLC/LP	Effective Date
Palmdale Medical Properties		95%	Palmdale Medical Plaza	January 1, 2014
Sparks Medical Properties		95%	Vista Medical Terrace & Sparks MOB	January 1, 2014
DVMC Properties		90%	Desert Valley Medical Center	August 1, 2014
Santa Fe Scottsdale		90%	Santa Fe Professional Plaza	August 1, 2014
PCH Medical Properties		85%	Rosenberg Children’s Medical Plaza	August 1, 2014
Sierra Medical Properties		95%	Sierra San Antonio Medical Plaza	August 1, 2014
PCH Southern Properties		95%	Phoenix Children’s East Valley Care Center	August 1, 2014
3811 Bell Medical Properties		95%	3811 E. Bell	August 1, 2014

The following property table represents the five LLCs or LPs in which we own a noncontrolling interest and were accounted for under the equity method as of December 31, 2015:

Name of LLC/LP	Ownership		Property Owned by LLC/LP
Suburban Properties		33%	Suburban Medical Plaza II
Brunswick Associates (a.)		74%	Mid Coast Hospital MOB
Arlington Medical Properties (b.)		75%	Saint Mary’s Professional Office Building
Grayson Properties (c.)		95%	Texoma Medical Plaza
FTX MOB Phase II (d.)		95%	Forney Medical Plaza II

(a.) This LLC has a third-party term loan of $8.8 million, which is non-recourse to us, outstanding as of December 31, 2015.

(b.) We have funded $5.2 million in equity as of December 31, 2015 and are committed to invest an additional $1.1 million.  During the fourth quarter of 2015, we advanced this LLC a member loan, the funds of which were utilized to repay its $22.8 million outstanding third-party mortgage loan on its scheduled maturity date. The terms of the member loan are similar to those in place pursuant to the third-party mortgage loan that was recently repaid. Pursuant to the terms and conditions of an agreement executed in February, 2016, we purchased an additional 10% of the ownership interest in this LLC from the existing third-party member for approximately $4.8 million in cash thereby increasing our ownership interest to 85%.  

(c.) We have funded $2.8 million in equity as of December 31, 2015, and are committed to fund an additional $149,000. This building is on the campus of a UHS hospital and has tenants that include subsidiaries of UHS. This LP has a third-party term loan of $14.7 million, which is non-recourse to us, outstanding as of December 31, 2015

(d.) We have committed to invest up to $2.5 million in equity and debt financing, of which $1.5 million has been funded as of December 31, 2015. This LP has a third-party term loan of $5.4 million, which is non-recourse to us, outstanding as of December 31, 2015.

Below are the combined statements of income for the LLCs/LPs accounted for under the equity method at December 31, 2015, 2014 and 2013. The data for the year ended December 31, 2014 includes the financial results for the six above-mentioned LLCs in which we purchased the minority ownership interests in August, 2014 for the period of January through July of 2014 (during which they were accounted for under the equity method).

	For the Year Ended December 31,
	2015		2014(b.)		2013(c.)
	(amounts in thousands)
Revenues	$	14,347	$	17,292	$	21,001
Operating expenses		5,605		6,769		8,705
Depreciation and amortization		2,398		2,968		4,039
Interest, net		2,578		4,261		6,353
Net income	$	3,766	$	3,294	$	1,904
Our share of net income (a.)	$	2,536	$	2,428	$	2,095

73

(a.) Our share of net income during 2015, 2014 and 2013, includes interest income earned by us on various advances made to LLCs of approximately $200,000, $834,000 and $1.9 million, respectively.  

(b.) As mentioned above, we began to account for six LLCs (Desert Valley Medical Center, Santa Fe Professional Plaza, Rosenberg Children’s Medical Plaza, Sierra San Antonio Medical Plaza, Phoenix Children’s East Valley Care Center and 3811 E. Bell Medical Building Medical Plaza) on a consolidated basis as of August 1, 2014. Prior to August 1, 2014, the financial results of these entities were accounted for under the equity method on an unconsolidated basis. The year ended December 31, 2014, include the financial results of the six mentioned LLCs for seven months ended July 31, 2014.

(c.) As mentioned above, we began to account for Sparks Medical Properties on a consolidated basis as of January 1, 2014. Prior to January 1, 2014, the financial results of this entity were accounted for under the equity method on an unconsolidated basis. These amounts include the financial results for Sparks Medical Properties for the years ended December 31, 2013 and 2012. In addition, we purchased the minority ownership interests in six LLCs effective August 1, 2014 (as mentioned in (b.) above) and began to account for the LLCs a consolidated basis as of that date. These amounts include the financial results for these six LLCs for the year ended December 31, 2013. As also mentioned above, we began to account for Palmdale Medical Properties on a consolidated basis as of January 1, 2014. Prior thereto, as a result of a master lease commitment with a wholly-owned subsidiary of UHS which expired effective as of July 1, 2013, the financial results of Palmdale Medical Properties was accounted for on a consolidated basis through the six-month period ended June 30, 2013 and then on an unconsolidated basis for the six-month period of July 1, 2013 through December 31, 2013. Therefore the financial results of this entity are reflected in the table above for the six-month period of July 1, 2013 through December 31, 2013.

Below are the combined balance sheets for the five LLCs that were accounted for under the equity method as of December 31, 2015 and 2014:

	December 31,
	2015			2014
	(amounts in thousands)
Net property, including CIP	$	61,668		$	62,450
Other assets		5,264			7,367
Total assets	$	66,932		$	69,817
Liabilities	$	2,538		$	3,348
Mortgage notes payable, non-recourse to us		28,895			52,728
Advances payable to us		22,489			—
Equity		13,010			13,741
Total liabilities and equity	$	66,932		$	69,817
Our share of equity and advances to LLCs reflected as:
Investments in LLCs	$	9,108		$	8,605
Advance to an LLC		22,489			—
Amounts included in accrued expenses and other liabilities		(1,105	)		—
Our share of equity and advances to LLCs, net	$	30,492		$	8,605

As of December 31, 2015, aggregate principal amounts due on mortgage notes payable by unconsolidated LLCs, which are accounted for under the equity method and are non-recourse to us, are as follows (amounts in thousands):

2016	$	530
2017		5,727
2018		445
2019		466
2020		484
2021 and After		21,243
Total	$	28,895

74

	Mortgage Loan Balance (a.)
Name of LLC/LP	12/31/2015		12/31/2014		Maturity Date
Arlington Medical Properties (b.)	$	-	$	23,287	October,2015
FTX MOB Phase II		5,427		5,548	August,2017
Grayson Properties		14,670		14,893	September, 2021
Brunswick Associates		8,798		9,000	December, 2024
	$	28,895	$	52,728

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

(b.) In October, 2015, we borrowed an additional $22.8 million under our Credit Agreement to repay this outstanding third-party mortgage loan on its scheduled maturity date. These funds were advanced as a member loan to Arlington Medical Properties, LLC pursuant to a 5.29% fixed rate note with terms similar to those in place pursuant to the recently repaid third-party mortgage loan.

Pursuant to the operating and/or partnership agreements of the five 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.

(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.

(10) QUARTERLY RESULTS (unaudited)

	2015
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
	(amounts in thousands, except per share amounts)
Revenues	$	16,202	$	16,049	$	15,686	$	16,013	$	63,950
Net income before gains	$	3,696	$	3,262	$	3,639	$	4,352	$	14,949
Gain on property exchange		—		8,742		—		—		8,742
Net income	$	3,696	$	12,004	$	3,639	$	4,352	$	23,691
Total basic earnings per share	$	0.28	$	0.90	$	0.27	$	0.33	$	1.78
Total diluted earnings per share	$	0.28	$	0.90	$	0.27	$	0.33	$	1.78

75

	2014 (a.)
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
	(amounts in thousands, except per share amounts)
Revenues	$	14,288	$	14,317	$	15,258	$	15,923	$	59,786
Net income before gains	$	3,458	$	3,408	$	3,048	$	3,185	$	13,099
Gain on fair value recognition resulting from the purchase    of minority interests in majority-owned LLCs		316		—		25,093		—		25,409
Gain on divestiture of real property		—		—		—		13,043		13,043
Net income	$	3,774	$	3,408	$	28,141	$	16,228	$	51,551
Total basic earnings per share	$	0.29	$	0.26	$	2.18	$	1.24	$	3.99
Total diluted earnings per share	$	0.29	$	0.26	$	2.18	$	1.24	$	3.99

(a.) We began to account for Palmdale Medical Properties and Sparks Medical Properties on a consolidated basis effective January 1, 2014. Additionally, we began to account for six LLCs (Desert Valley Medical Center, Santa Fe Professional Plaza, Rosenberg Children’s Medical Plaza, Sierra San Antonio Medical Plaza, Phoenix Children’s East Valley Care Center and 3811 E. Bell Medical Building Medical Plaza) on a consolidated basis as of August 1, 2014.

76

Schedule III

Universal Health Realty Income Trust

Real Estate and Accumulated Depreciation — December 31, 2015

(amounts in thousands)

										Gross amount at										Date of
										which carried										Completion of
	Initial Cost									at end of period								Accumulated		Construction,
Description	Encumbrance (d.)		Land		Building & Improv.		Adjustments to Basis (a.)			Land		Building & Improvements		CIP		Total		Depreciation as of Dec. 31, 2015		Acquisition or Significant improvement	Date Acquired	Depreciable Life
Inland Valley Regional    Medical Center    Wildomar, California		—	$	2,050	$	10,701	$	14,596		$	2,050	$	25,297			$	27,347	$	11,885	2007	1986	43 Years
McAllen Medical Center    McAllen, Texas		—		4,720		31,442		10,189			6,281		40,070				46,351		25,330	1994	1986	42 Years
Wellington Regional    Medical Center    West Palm Beach,  Florida		—		1,190		14,652		17,370			1,663		31,549				33,212		17,334	2006	1986	42 Years
HealthSouth Deaconess    Rehabilitation Hospital    Evansville, Indiana		—		500		6,945		1,062			500		8,007				8,507		5,272	1993	1989	40 Years
Kindred Hospital Chicago    Central Chicago, Illinois		—		158		6,404		1,838			158		8,242				8,400		8,242	1993	1986	25 Years
Family Doctor’s Medical    Office Building    Shreveport, Louisiana		—		54		1,526		494			54		2,020				2,074		950	1991	1995	45 Years
Kelsey-Seybold Clinic at    King’s Crossing		—		439		1,618		878			439		2,496				2,935		1,226	1995	1995	45 Years
Professional Buildings at    King’s Crossing    Kingwood, Texas		—		439		1,837		213			439		2,050				2,489		945	1995	1995	45 Years
Chesterbrook Academy    Audubon, Pennsylvania		—		307		996		—			307		996				1,303		434	1996	1996	45 Years
Chesterbrook Academy    New Britain,  Pennsylvania		—		250		744		—			250		744				994		326	1991	1996	45 Years
Chesterbrook Academy    Uwchlan, Pennsylvania		—		180		815		—			180		815				995		356	1992	1996	45 Years
Chesterbrook Academy    Newtown,  Pennsylvania		—		195		749		—			195		749				944		328	1992	1996	45 Years
The Southern Crescent    Center I (b.)		—		1,130		5,092		(2,271	)		1,130		2,821				3,951		2,344	1994	1996	45 Years
The Southern Crescent    Center II (b.)    Riverdale, Georgia		—		—		—		4,913			806		4,107				4,913		2,070	2000	1998	35 Years
The Cypresswood    Professional Center    Spring, Texas		—		573		3,842		704			573		4,546		7		5,126		2,610	1997	1997	35 Years
701 South Tonopah  Building    Las Vegas, Nevada		—		—		1,579		68			—		1,647				1,647		1,004	1999	1999	25 Years
Medical Center of Western    Connecticut    Danbury, Connecticut		4,663		1,151		5,176		544			1,151		5,720				6,871		3,124	2000	2000	30 Years
Vibra Hospital of Corpus Christi    Corpus Christi, Texas		2,815		1,104		5,508		—			1,104		5,508				6,612		1,242	2008	2008	35 Years
Apache Junction Medical Plaza (c.)    Apache Junction, AZ		—		240		3,590		668			240		4,258		67		4,565		712	2004	2004	30 Years
Auburn Medical Office    Building II (c.)    Auburn, WA		6,954		—		10,200		176			—		10,376				10,376		1,375	2009	2009	36 Years
BRB Medical Office    Building (c.)    Kingwood, Texas		6,498		430		8,970		32			430		9,002				9,432		1,178	2010	2010	37 Years
Centennial Hills Medical    Office Building (c.)    Las Vegas, NV		10,339		—		19,890		1,005			—		20,895		7		20,902		2,937	2006	2006	34 Years
Desert Springs Medical Plaza (c.)    Las Vegas, NV		—		1,200		9,560		806			1,200		10,366				11,566		1,702	1998	1998	30 Years
700 Shadow Lane &    Goldring MOBs (c.)    Las Vegas, NV		6,428		400		11,300		2,871			400		14,171		11		14,582		2,034	2003	2003	30 Years
Spring Valley Hospital MOB I (c.)    Las Vegas, NV		—		—		9,500		407			—		9,907		8		9,915		1,415	2004	2004	35 Years

77

Schedule III

Universal Health Realty Income Trust

Real Estate and Accumulated Depreciation — December 31, 2015 (continued)

(amounts in thousands)

									Gross amount at										Date of
									which carried										Completion of
	Initial Cost								at end of period								Accumulated		Construction,
Description	Encumbrance (d.)		Land		Building & Improv.		Adjustments to Basis (a.)		Land		Building & Improvements		CIP		Total		Depreciation as of Dec. 31, 2015		Acquisition or Significant improvement	Date Acquired	Depreciable Life
Spring Valley Hospital    MOB II (c.)    Las Vegas, NV		—		—		9,800		488		—		10,288				10,288		1,439	2006	2006	34 Years
Summerlin Hospital    MOB I (c.)    Las Vegas, NV		—		460		15,440		689		460		16,129		2		16,591		2,595	1999	1999	30 Years
Summerlin Hospital    MOB II (c.)    Las Vegas, NV		11,419		370		16,830		1,037		370		17,867		166		18,403		2,757	2000	2000	30 Years
Summerlin Hospital    MOB III (c.)    Las Vegas, NV		10,695		—		14,900		2,107		—		17,007				17,007		2,140	2009	2009	36 Years
Emory at Dunwoody    Building    Dunwoody, GA		—		782		3,455		—		782		3,455				4,237		527	2011	2011	35 Years
Forney Medical Plaza    Forney, TX		—		910		11,960		31		910		11,991				12,901		2,093	2011	2011	35 Years
Lake Pointe Medical Arts    Building    Rowlett, TX		—		1,100		9,000		31		1,100		9,031				10,131		1,382	2011	2011	35 Years
Tuscan Professional Building    Irving, TX		5,439		1,100		12,525		89		1,100		12,614	82			13,796		1,732	2011	2011	35 Years
Peace Health Medical    Clinic    Bellingham, WA		20,790		1,900		24,910		—		1,900		24,910				26,810		3,379	2012	2012	35 Years
Northwest Texas    Professional Office Tower    Amarillo, TX		—		—		7,180		—		—		7,180				7,180		726	2012	2012	35 Years
Ward Eagle Office Village    Farmington Hills, MI		—		220		3,220		—		220		3,220				3,440		286	2013	2013	35 Years
5004 Poole Road MOB    Denison, TX		—		96		529		—		96		529				625		46	2013	2013	35 Years
Desert Valley Medical    Center (e.)    Phoenix, AZ		5,200		2,280		4,624		235		2,280		4,859		42		7,181		278	1996	1996	30 Years
Haas Medical Office Park    Ottumwa, IA		—		—		3,571		—		—		3,571				3,571		102	2015	2015	35 Years
Hanover Emergency Center    Mechanicsville, VA		—		1,300		6,224		—		1,300		6,224				7,524		281	2014	2014	35 Years
Mission Free-standing Emergency Department    Mission, TX		—		1,441		4,696		—		1,441		4,696				6,137		143	2015	2015	35 Years
3811  E. Bell (e.)    Phoenix, AZ		—		930		6,929		60		930		6,989	3			7,922		381	2010	2010	30 Years
Northwest Medical Center    at Sugar Creek    Bentonville, AR		—		1,100		2,870		—		1,100		2,870				3,970		174	2014	2014	35 Years
The Children’s Clinic at    Springdale    Springdale, AR		—		610		1,570		—		610		1,570				2,180		119	2014	2014	35 Years
Rosenberg Children’s    Medical Plaza (e.)    Phoenix, AZ		8,317		0		23,302		27		0		23,329				23,329		1,111	2001	2001	35 Years
Phoenix Children’s East    Valley Care    Center (e.) Phoenix, AZ		6,348		1,050		10,900		—		1,050		10,900				11,950		518	2006	2006	35 Years
Palmdale Medical Plaza (e.)    Palmdale, CA		—		—		10,555		—		0		10,555		482		11,037		745	2008	2008	34 Years
Piedmont-Roswell Physician Center    Sandy Springs, GA		—		2,338		2,128		—		2,338		2,128				4,466		58	2015	2015	30 Years
Piedmont-Vinings Physician Center    Vinings, GA		—		1,348		2,418		—		1,348		2,418				3,766		64	2015	2015	30 Years

78

Schedule III

Universal Health Realty Income Trust

Real Estate and Accumulated Depreciation — December 31, 2015 (continued)

(amounts in thousands)

									Gross amount at										Date of
									which carried										Completion of
	Initial Cost								at end of period								Accumulated		Construction,
Description	Encumbrance (d.)		Land		Building & Improv.		Adjustments to Basis (a.)		Land		Building & Improvements		CIP		Total		Depreciation as of Dec. 31, 2015		Acquisition or Significant improvement	Date Acquired	Depreciable Life
Santa Fe Professional    Plaza (e.)    Scottsdale, AZ		—		1,090		1,960		145		1,090		2,105		1		3,196		126	1999	1999	30 Years
Sierra San Antonio Medical    Plaza (e.)    Fontana, CA		—		0		11,538		—		0		11,538	12			11,550		623	2006	2006	30 Years
Vista Medical Terrace &    Sparks MOB (e.)    Sparks, NV		4,351		0		9,276		403		0		9,679		153		9,832		804	2008	2008	30 Years
Weslaco Free-standing Emergency Department    Weslaco, TX		—		1,749		4,879		—		1,749		4,879				6,628		157	2015	2015	35 Years
TOTALS	$	110,256	$	38,884	$	409,825	$	61,905	$	41,724	$	468,890	$	1,043	$	511,657	$	121,161

a. Costs capitalized/divested subsequent to acquisition.

b. During 2008, a $4.6 million provision for asset impairment was recorded in connection with the real estate assets of Southern Crescent Center I & Southern Crescent Center II.

c. During 2011, we purchased the third-party minority interests in these properties in which we previously held noncontrolling majority owned interests. Since that time, these properties are wholly-owned.

d. Consists of outstanding balances as of December 31, 2015 on third-party debt that is non-recourse to us.

e. During 2014, we purchased the third-party minority interests in these properties in which we previously held noncontrolling majority owned interests. Since that time, these properties are wholly-owned.

79

UNIVERSAL HEALTH REALTY INCOME TRUST

NOTES TO SCHEDULE III

DECEMBER 31, 2015

(amounts in thousands)

(1) RECONCILIATION OF REAL ESTATE PROPERTIES

The following table reconciles the Real Estate Properties from January 1, 2013 to December 31, 2015:

	2015			2014			2013
Balance at January 1,	$	486,589		$	395,669		$	401,474
Impact of deconsolidation of an LLC(a.)		—			—			(13,185	)
Impact of consolidation of eight LLCs(b.)		—			84,064			—
Property additions		4,972			3,298			3,415
Acquisitions		24,568			13,674			4,065
Disposals		(4,472	)		(10,116	)		(100	)
Balance at December 31,	$	511,657		$	486,589		$	395,669

(2) RECONCILIATION OF ACCUMULATED DEPRECIATION

The following table reconciles the Accumulated Depreciation from January 1, 2013 to December 31, 2015:

	2015			2014			2013
Balance at January 1,	$	106,480		$	97,921		$	87,088
Impact of deconsolidation of an LLC(a.)		—			—			(1,588	)
Disposals		(1,568	)		(5,859	)		—
Current year depreciation expense		16,249			14,413			12,464
Other		—			5			(43	)
Balance at December 31,	$	121,161		$	106,480		$	97,921

(a.) The master lease with a wholly-owned subsidiary of UHS related to Palmdale Medical Properties expired effective as of July 1, 2013 and, as of that date, we began accounting for Palmdale Medical Properties on an unconsolidated basis under the equity method.

(b.) During 2014, the Trust purchased the minority ownership interests held by third-party members in eight LLCs (January and August, 2014) in which we previously held noncontrolling majority ownership interests. As a result of these minority ownership purchases, the Trust and our subsidiaries now own 100% of each of these LLCs and the financial results are included in our consolidated financial statements.

80

Exhibit Index

Exhibit No.	Exhibit
10.2	Agreement dated December 10, 2015, to renew Advisory Agreement dated as of December 24, 1986 between Universal Health Realty Income Trust and UHS of Delaware, Inc.
11	Statement re computation of per share earnings is set forth on the Consolidated Statements of Income.
21	Subsidiaries of Registrant.
23.1	Consent of Independent Registered Public Accounting Firm.
31.1	Certification from the Trust’s Chief Executive Officer Pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934.
31.2	Certification from the Trust’s Chief Financial Officer Pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934.
32.1	Certification from the Trust’s 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 from the Trust’s 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	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

81

EX-10.2

Exhibit 10.2

December 10, 2015

Steve Filton

Senior Vice President & CFO

UHS of Delaware, Inc.

367 South Gulph Road

King of Prussia, PA 19406

Dear Steve;

The Board of Trustees of Universal Health Realty Income Trust, at today’s meeting, authorized the renewal of the current Advisory Agreement between Universal Health Realty Income Trust and UHS of Delaware, Inc. (“Agreement”) upon the same terms and conditions.

This letter constitutes Universal Health Realty Income Trust’s offer to renew the Agreement, through December 31, 2016, upon the same terms and conditions.  Please acknowledge UHS of Delaware’s acceptance of this offer by signing in the space provided below and returning one copy of this letter to me.  Thank you.

Sincerely,

/s/ Cheryl K. Ramagano

Cheryl K. Ramagano

Vice President and Treasurer

Agreed and Accepted:

UHS OF DELAWARE, INC.

By: /s/ Steve Filton

Steve Filton

Senior Vice President and CFO

CC:Charles Boyle

EX-21

Exhibit 21

Subsidiaries of Registrant

Jurisdiction

3811 Bell Medical Properties, LLC	Delaware
5004 Pool Road Properties, LP	Texas
73 Medical Building, LLC	Connecticut
653 Town Center Investments, LLC	Arizona
653 Town Center Phase II, LLC	Arizona
ApaMed Properties, LLC	Arizona
Arlington Medical Properties, LLC	Arizona
Auburn Medical Properties II, LLC	Delaware
Banburry Medical Properties, LLC	Delaware
BRB/E Building One, LLC	Texas
Brunswick Associates, LLC	New York
Centennial Medical Properties, LLC	Delaware
Cimarron Medical Properties, LLC	Texas
Cobre Properties, LLC	Delaware
Cypresswood Investments, L.P	Georgia
Deerval Properties, LLC	Arizona
DesMed, LLC	Arizona
DTX Medical Properties, LLC	Texas
DVMC Properties, LLC	Arizona
Eagle Medical Properties, LLC	Michigan
Forney Deerval, LLC	Texas
Forney Willetta, LLC	Texas
FTX Healthcare GP, LLC	Texas
FTX MOB Phase II, LP	Texas
Gold Shadow Properties, LLC	Arizona
Grayson Properties, LP	Texas
Gulph Investments	Maryland
Hanover Medical Properties, LLC	Virginia
HNV Medical Properties, LLC	Nevada
NSHE TX Bay City, LLC	Texas
NSHE TX Cedar Park, LLC	Texas
NTX Healthcare Properties, LLC	Texas
NWTX Medical Properties, LLC	Texas
Oneida Medical Properties, LP	Texas
Osage Medical Properties, LLC	Arkansas
Ottumwa Medical Properties, LLC	Iowa
Palmdale Medical Properties, LLC	Delaware
Paseo Medical Properties II, LLC	Arizona
PAX Medical Holdings, LLC	Delaware
PCH Medical Properties, LLC	Arizona
PCH Southern Properties, LLC	Delaware
Riverdale Realty, LLC	Georgia
Santa Fe Scottsdale, LLC	Arizona
Saratoga Hospital Properties, LP	Texas
Sheffield Properties, LLC	Georgia
Shiloh Medical Properties, LLC	Arkansas
Sierra Medical Properties, LLC	Arizona
Sparks Medical Properties, LLC	Delaware
Spring Valley Medical Properties, LLC	Arizona
Spring Valley Medical Properties II, LLC	Delaware

Suburban Properties, LLC	Kentucky
Tuscan Medical Properties, LLC	Delaware
UHT TRS, LLC	Delaware
UHT/Ensemble Properties I, LLC	Delaware
Willetta Medical Properties, LLC	Arizona

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Trustees
Universal Health Realty Income Trust:

We consent to the incorporation by reference in the registration statements (Nos. 333‑143944 and 333-57815) on Form S-8 and in registration statements (Nos. 333-208264 and 333-81763) on Form S-3 of Universal Health Realty Income Trust and subsidiaries of our reports dated March 4, 2016, with respect to the consolidated balance sheets of Universal Health Realty Income Trust and subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2015, and the related financial statement schedule III, real estate and accumulated depreciation, and the effectiveness of internal control over financial reporting as of December 31, 2015, which reports appear in the December 31, 2015 annual report on Form 10‑K of Universal Health Realty Income Trust.

(signed) KPMG LLP

Philadelphia, Pennsylvania
March 4, 2016

1

EX-31.1

Exhibit 31.1

CERTIFICATION - Chief Executive Officer

I, Alan B. Miller, certify that:

1. I have reviewed this annual report on Form 10-K 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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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: March 4, 2016

/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 annual report on Form 10-K 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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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: March 4, 2016

/s/ Charles F. Boyle

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 Annual Report of Universal Health Realty Income Trust (the “Trust”) on Form 10-K for the year ended December 31, 2015 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

March 4, 2016

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 Annual Report of Universal Health Realty Income Trust (the “Trust”) on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles F. Boyle, 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

Vice President and Chief Financial Officer

March 4, 2016

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 - USD ($)	12 Months Ended
	Dec. 31, 2015	Jan. 31, 2016	Jun. 30, 2015
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY
Trading Symbol	UHT
Entity Registrant Name	UNIVERSAL HEALTH REALTY INCOME TRUST
Entity Central Index Key	0000798783
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		13,327,067
Entity Public Float			$ 574,054,742

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Real Estate Investments:
Buildings and improvements	$ 469,933	$ 451,005
Accumulated depreciation	(121,161)	(106,480)
Real Estate Investment Property, Net, Total	348,772	344,525
Land	41,724	35,584
Net real estate investments	390,496	380,109
Investments in and advances to limited liability companies ("LLCs")	31,597	8,605
Other Assets:
Cash and cash equivalents	3,894	3,861
Base and bonus rent receivable from UHS	2,116	2,086
Rent receivable - other	4,292	4,219
Intangible assets (net of accumulated amortization of $25.1 million and $19.7 million at December 31, 2015 and December 31, 2014, respectively)	19,757	23,123
Deferred charges, goodwill and other assets, net	6,749	6,863
Total Assets	458,901	428,866
Liabilities:
Line of credit borrowings	142,150	89,750
Mortgage and other notes payable, non-recourse to us (including net debt premium of $298 and $523 at December 31, 2015 and December 31, 2014, respectively)	110,554	123,405
Accrued interest	504	545
Accrued expenses and other liabilities	6,807	8,522
Tenant reserves, escrows, deposits and prepaid rents	3,844	2,063
Total Liabilities	$ 263,859	$ 224,285
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: 2015 - 13,327,020; 2014 -13,301,204	$ 133	$ 133
Capital in excess of par value	241,700	240,835
Cumulative net income	555,286	531,595
Cumulative dividends	(601,983)	(567,894)
Accumulated other comprehensive loss	(94)	(88)
Total Equity	195,042	204,581
Total Liabilities and Equity	$ 458,901	$ 428,866

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Statement Of Financial Position [Abstract]
Intangible assets, accumulated amortization	$ 25,100	$ 19,700
Mortgage and other notes payable, non-recourse to us, debt premium	$ 298	$ 523
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	13,327,020	13,301,204
Common shares, outstanding	13,327,020	13,301,204

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014		Dec. 31, 2013
Revenues:
Base rental - UHS facilities		$ 15,955	$ 15,601		$ 14,773
Base rental - Non-related parties		35,157	31,386		27,955
Bonus rental - UHS facilities		4,565	4,607		4,260
Tenant reimbursements and other - Non-related parties		7,490	7,490		6,812
Tenant reimbursements and other - UHS facilities		783	702		480
Revenues, Total		63,950	59,786	[1]	54,280
Expenses:
Depreciation and amortization		22,108	20,885		18,753
Advisory fees to UHS		2,810	2,545		2,369
Other operating expenses		18,152	16,882		14,409
Transaction costs		243	427		203
Costs and Expenses, Total		43,313	40,739		35,734
Income before equity in income of unconsolidated limited liability companies ("LLCs"), interest expense and gains		20,637	19,047		18,546
Equity in income of unconsolidated LLCs	[2]	2,536	2,428	[3]	2,095	[4]
Gain on property exchange		8,742
Gains on fair value recognition resulting from the purchase of minority interests in majority-owned LLCs	[1]		25,409
Gain on divestiture of real property	[1]		13,043
Interest expense, net		(8,224)	(8,376)		(7,472)
Net income		$ 23,691	$ 51,551	[1]	$ 13,169
Basic earnings per share		$ 1.78	$ 3.99	[1]	$ 1.04
Diluted earnings per share		$ 1.78	$ 3.99	[1]	$ 1.04
Weighted average number of shares outstanding - Basic		13,293	12,927		12,689
Weighted average number of share equivalents		8	7		12
Weighted average number of shares and equivalents outstanding - Diluted		13,301	12,934		12,701

[1] We began to account for Palmdale Medical Properties and Sparks Medical Properties on a consolidated basis effective January 1, 2014. Additionally, we began to account for six LLCs (Desert Valley Medical Center, Santa Fe Professional Plaza, Rosenberg Children’s Medical Plaza, Sierra San Antonio Medical Plaza, Phoenix Children’s East Valley Care Center and 3811 E. Bell Medical Building Medical Plaza) on a consolidated basis as of August 1, 2014.

[2] Our share of net income during 2015, 2014 and 2013, includes interest income earned by us on various advances made to LLCs of approximately $200,000, $834,000 and $1.9 million, respectively.

[3] As mentioned above, we began to account for six LLCs (Desert Valley Medical Center, Santa Fe Professional Plaza, Rosenberg Children’s Medical Plaza, Sierra San Antonio Medical Plaza, Phoenix Children’s East Valley Care Center and 3811 E. Bell Medical Building Medical Plaza) on a consolidated basis as of August 1, 2014. Prior to August 1, 2014, the financial results of these entities were accounted for under the equity method on an unconsolidated basis. The year ended December 31, 2014, include the financial results of the six mentioned LLCs for seven months ended July 31, 2014.

[4] As mentioned above, we began to account for Sparks Medical Properties on a consolidated basis as of January 1, 2014. Prior to January 1, 2014, the financial results of this entity were accounted for under the equity method on an unconsolidated basis. These amounts include the financial results for Sparks Medical Properties for the years ended December 31, 2013 and 2012. In addition, we purchased the minority ownership interests in six LLCs effective August 1, 2014 (as mentioned in (b.) above) and began to account for the LLCs a consolidated basis as of that date. These amounts include the financial results for these six LLCs for the year ended December 31, 2013. As also mentioned above, we began to account for Palmdale Medical Properties on a consolidated basis as of January 1, 2014. Prior thereto, as a result of a master lease commitment with a wholly-owned subsidiary of UHS which expired effective as of July 1, 2013, the financial results of Palmdale Medical Properties was accounted for on a consolidated basis through the six-month period ended June 30, 2013 and then on an unconsolidated basis for the six-month period of July 1, 2013 through December 31, 2013. Therefore the financial results of this entity are reflected in the table above for the six-month period of July 1, 2013 through December 31, 2013.

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014		Dec. 31, 2013
Statement Of Income And Comprehensive Income [Abstract]
Net Income	$ 23,691	$ 51,551	[1]	$ 13,169
Other comprehensive income/(loss):
Unrealized derivative (losses)/gains on interest rate caps	(97)	(115)		(57)
Amortization of interest rate cap fees	91	84
Total other comprehensive income/(loss):	(6)	(31)		(57)
Total comprehensive income	$ 23,685	$ 51,520		$ 13,112

[1] We began to account for Palmdale Medical Properties and Sparks Medical Properties on a consolidated basis effective January 1, 2014. Additionally, we began to account for six LLCs (Desert Valley Medical Center, Santa Fe Professional Plaza, Rosenberg Children’s Medical Plaza, Sierra San Antonio Medical Plaza, Phoenix Children’s East Valley Care Center and 3811 E. Bell Medical Building Medical Plaza) on a consolidated basis as of August 1, 2014.

XML

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common stock	Capital in excess of par value	Cumulative net income	Cumulative dividends	Accumulated other comprehensive loss	UHT Shareholders' Equity	Non-controlling Interests
Balance at Dec. 31, 2012	$ 177,745	$ 127	$ 214,094	$ 466,875	$ (503,425)		$ 177,671	$ 74
Balance, Shares at Dec. 31, 2012		12,689
Shares of Beneficial Interest:
Issued (in shares)		170
Issued	6,324	$ 1	6,323				6,324
Partial settlement of dividend equivalent rights	(101)		(101)				(101)
Restricted stock-based compensation expense	375		375				375
Dividends ($2.56/share) in 2015, and ($2.52/share) in 2014 ($2.495/share) in 2013	(31,751)				(31,751)		(31,751)
Deconsolidation of LLC	(74)							$ (74)
Comprehensive income:
Net income	13,169			13,169			13,169
Unrealized loss on interest rate cap	(57)					$ (57)	(57)
Subtotal - comprehensive income	13,112			13,169		(57)	13,112
Balance at Dec. 31, 2013	165,630	$ 128	220,691	480,044	(535,176)	(57)	165,630
Balance, Shares at Dec. 31, 2013		12,859
Shares of Beneficial Interest:
Issued (in shares)		443
Issued	19,844	$ 5	19,839				19,844
Partial settlement of dividend equivalent rights	(94)		(94)				(94)
Restricted stock-based compensation expense	399		399				399
Dividends ($2.56/share) in 2015, and ($2.52/share) in 2014 ($2.495/share) in 2013	(32,718)				(32,718)		(32,718)
Comprehensive income:
Net income	51,551			51,551			51,551
Unrealized loss on interest rate cap	(31)					(31)	(31)
Subtotal - comprehensive income	51,520			51,551		(31)	51,520
Balance at Dec. 31, 2014	204,581	$ 133	240,835	531,595	(567,894)	(88)	204,581
Balance, Shares at Dec. 31, 2014		13,302
Shares of Beneficial Interest:
Issued (in shares)		25
Issued	513		513				513
Partial settlement of dividend equivalent rights	(75)		(75)				(75)
Restricted stock-based compensation expense	427		427				427
Dividends ($2.56/share) in 2015, and ($2.52/share) in 2014 ($2.495/share) in 2013	(34,089)				(34,089)		(34,089)
Comprehensive income:
Net income	23,691			23,691			23,691
Unrealized loss on interest rate cap	(6)					(6)	(6)
Subtotal - comprehensive income	23,685			23,691		(6)	23,685
Balance at Dec. 31, 2015	$ 195,042	$ 133	$ 241,700	$ 555,286	$ (601,983)	$ (94)	$ 195,042
Balance, Shares at Dec. 31, 2015		13,327

XML

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Statement Of Stockholders Equity [Abstract]
Dividend, per share	$ 2.56	$ 2.52	$ 2.495

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014		Dec. 31, 2013
Cash flows from operating activities:
Net Income		$ 23,691,000	$ 51,551,000	[1]	$ 13,169,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		22,198,000	20,975,000		18,843,000
Amortization of debt premium		(225,000)	(312,000)		(433,000)
Stock-based compensation expense		427,000	399,000		375,000
Gain on property exchange		(8,742,000)
Gain on divestiture of real property	[1]		(13,043,000)
Gains on purchase of minority interests in majority-owned LLCs	[1]		(25,409,000)
Changes in assets and liabilities:
Rent receivable		(290,000)	(555,000)		(746,000)
Accrued expenses and other liabilities		(184,000)	(509,000)		523,000
Tenant reserves, escrows, deposits and prepaid rents		1,781,000	(303,000)		16,000
Accrued interest		(41,000)	(62,000)		(22,000)
Other, net		(437,000)	64,000		(431,000)
Net cash provided by operating activities		38,178,000	32,796,000		31,294,000
Cash flows from investing activities:
Investments in LLCs		(667,000)	(1,337,000)		(3,013,000)
Repayments of advances made to LLCs		306,000			114,000
Advances made to LLCs		(22,795,000)			(4,580,000)
Cash distributions in excess of income from LLCs		224,000	1,029,000		2,346,000
Cash distribution of refinancing proceeds from LLCs		1,045,000	2,280,000
Additions to real estate investments, net		(5,257,000)	(2,866,000)		(3,415,000)
Cash received for property exchange		2,000,000	17,300,000		0
Deposits on real estate assets		(150,000)	(100,000)		(150,000)
Net cash paid for acquisition of properties		(16,765,000)	(15,600,000)		(4,675,000)
Cash paid to acquire minority interests in majority-owned LLCs		(2,250,000)	(4,744,000)
Net cash used in investing activities		(44,309,000)	(4,038,000)		(13,373,000)
Cash flows from financing activities:
Net borrowings/(repayments) on line of credit		(52,400,000)	3,950,000		(11,950,000)
Proceeds from mortgages and other notes payable		5,200,000			11,150,000
Repayments of mortgages and other notes payable		(17,826,000)	(12,327,000)		(14,401,000)
Financing costs paid		(1,114,000)			(95,000)
Dividends paid		(34,089,000)	(32,718,000)		(31,751,000)
Partial settlement of dividends equivalent rights		(75,000)	(94,000)		(101,000)
Issuance of shares of beneficial interest, net		1,668,000	19,274,000		5,757,000
Net cash provided by/(used in) financing activities		6,164,000	(29,815,000)		(17,491,000)
Increase/(decrease) in cash and cash equivalents		33,000	(1,057,000)		430,000
Increase/(decrease) in cash due to recording of LLCs on a consolidated/unconsolidated basis			1,581,000		(141,000)
Cash and cash equivalents, beginning of period		3,861,000	3,337,000		3,048,000
Cash and cash equivalents, end of period		3,894,000	3,861,000		3,337,000
Supplemental disclosures of cash flow information:
Interest paid		8,025,000	8,268,000		7,517,000
Property Exchange Transaction:
Net assets acquired in property exchange		9,886,000
Net assets relinquished in property exchange		$ (3,144,000)
Consolidation Of Limited Liability Companies
Supplemental disclosures of non-cash transactions:
Net real estate investments			84,064,000
Cash and cash equivalents			1,581,000
Intangible assets			6,490,000
Rent receivable - other			388,000
Deferred charges and other assets, net			100,000
Investment in LLCs			(28,616,000)
Mortgage and other notes payable, non-recourse to us			(29,758,000)
Accrued interest			(116,000)
Accrued expenses and other liabilities			(1,245,000)
Tenant reserves, escrows, deposits and prepaid rents			(485,000)
Note payable to previous third-party member			(2,250,000)
Gains on purchases of minority interests in majority-owned LLCs			(25,409,000)
Cash paid for purchase of minority interests in majority-owned LLCs			$ 4,744,000
Deconsolidation of Limited Liability Companies
Supplemental disclosures of non-cash transactions:
Net real estate investments					11,597,000
Cash and cash equivalents					141,000
Rent receivable - other					207,000
Deferred charges and other assets, net					135,000
Investment in LLCs					5,443,000
Mortgage and other notes payable, non-recourse to us					(6,215,000)
Other liabilities					(368,000)
Third-party equity interest					$ (54,000)

[1] We began to account for Palmdale Medical Properties and Sparks Medical Properties on a consolidated basis effective January 1, 2014. Additionally, we began to account for six LLCs (Desert Valley Medical Center, Santa Fe Professional Plaza, Rosenberg Children’s Medical Plaza, Sierra San Antonio Medical Plaza, Phoenix Children’s East Valley Care Center and 3811 E. Bell Medical Building Medical Plaza) on a consolidated basis as of August 1, 2014.

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Universal Health Realty Income Trust and subsidiaries (the “Trust”) is organized as a Maryland real estate investment trust. We invest in healthcare and human service related facilities currently including acute care hospitals, rehabilitation hospitals, sub-acute facilities, surgery centers, free-standing emergency departments, childcare centers and medical office buildings. As of February 29, 2016, we have sixty-two real estate investments or commitments located in eighteen states consisting of:

· six hospital facilities including three acute care, one rehabilitation and two sub-acute;

· three free-standing emergency departments (“FEDs”);

· forty-nine medical office buildings, including five owned by unconsolidated limited liability companies (“LLCs”), and;

· four preschool and childcare centers.

Our future results of operations could be unfavorably impacted by deterioration in general economic conditions which could result in increases in the number of people unemployed and/or uninsured. Should that occur, it may result in decreased occupancy rates at our medical office buildings as well as a reduction in the revenues earned by the operators of our hospital facilities which would unfavorably impact our future bonus rentals (on the three Universal Health Services, Inc. hospital facilities) and may potentially have a negative impact on the future lease renewal terms and the underlying value of the hospital properties.  Management is unable to predict the effect, if any, that these factors may have on the operating results of our lessees or on their ability to meet their obligations under the terms of their leases with us. Management’s estimate of future cash flows from our leased properties could be materially affected in the near term, if certain of the leases are not renewed or renewed with less favorable terms at the end of their lease terms.

Revenue Recognition

Our revenues consist primarily of rentals received from tenants, which are comprised of minimum rent (base rentals), bonus rentals and reimbursements from tenants for their pro-rata share of expenses such as common area maintenance costs, real estate taxes and utilities.

The minimum rent for all hospital facilities is fixed over the initial term or renewal term of the respective leases. Rental income recorded by our properties, including our consolidated and unconsolidated MOBs, relating to leases in excess of one year in length, is recognized using the straight-line method under which contractual rents are recognized evenly over the lease term regardless of when payments are due. The amount of rental revenue resulting from straight-line rent adjustments is dependent on many factors including the nature and amount of any rental concessions granted to new tenants, stipulated rent increases under existing leases, as well as the acquisitions and sales of properties that have existing in-place leases with terms in excess of one year. As a result, the straight-line adjustments to rental revenue may vary from period-to-period. Bonus rents are recognized when earned based upon increases in each facility’s net revenue in excess of stipulated amounts. Bonus rentals are determined and paid each quarter based upon a computation that compares the respective facility’s current quarter’s net revenue to the corresponding quarter in the base year. Tenant reimbursements for operating expenses are accrued as revenue in the same period the related expenses are incurred.

Real Estate Investments

On the date of acquisition, the purchase price of a property is allocated to the assets acquired (land, buildings and intangible assets) and liabilities assumed based upon our estimates of their fair values. Intangible assets include the value of in-place leases, above market leases and leasehold interest in land at the time of acquisition. Substantially all of our intangible assets consist of the value of in-place leases at December 31, 2015, and will be amortized over the remaining lease terms (aggregate weighted average of 4.1 years at December 31, 2015) and is expected to result in estimated aggregate amortization expense of $4.6 million, $4.0 million, $2.7 million $2.0 million and $1.8 million for 2016, 2017, 2018, 2019 and 2020, respectively. Amortization expense on intangible values of in place leases was $5.5 million for the year ended December 31, 2015, $6.1 million for the year ended December 31, 2014 and $6.0 million for the year ended December 31, 2013. Depreciation is computed using the straight-line method over the estimated useful lives of the buildings and capital improvements. The estimated original useful lives of our buildings ranges from 25-45 years and the estimated original useful lives of capital improvements ranges from 3-35 years. On a consolidated basis, depreciation expense was $16.2 million for the year ended December 31, 2015, $14.4 million for the year ended December 31, 2014 and $12.5 million for the year ended December 31, 2013.

Cash and Cash Equivalents

We consider all highly liquid investment instruments with original maturities of three months or less to be cash equivalents.

Asset Impairment

Real estate investments and related intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the property might not be recoverable. A property to be held and used is considered impaired only if management’s estimate of the aggregate future cash flows, less estimated capital expenditures, to be generated by the property, undiscounted and without interest charges, are less than the carrying value of the property. This estimate takes into consideration factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition, local market conditions and other factors.

The determination of undiscounted cash flows requires estimates by management, including the expected course of action at the balance sheet date that would lead to such cash flows. Subsequent changes in estimated undiscounted cash flows arising from changes in anticipated action to be taken with respect to the property could impact the determination of whether an impairment exists and whether the effects could materially impact our net income. To the extent estimated undiscounted cash flows are less than the carrying value of the property, the loss will be measured as the excess of the carrying amount of the property over the fair value of the property.

Assessment of the recoverability by us of certain lease related costs must be made when we have reason to believe that a tenant might not be able to perform under the terms of the lease as originally expected. This requires us to make estimates as to the recoverability of such costs. If we determine that the intangible assets are not recoverable from future cash flows, the excess of carrying value of the intangible asset over its estimated fair value is charged to income.

An other than temporary impairment of an investment in an LLC is recognized when the carrying value of the investment is not considered recoverable based on evaluation of the severity and duration of the decline in value, including projected declines in cash flow. To the extent impairment has occurred, the excess carrying value of the asset over its estimated fair value is charged to income.

Investments in Limited Liability Companies (“LLCs”)

In accordance with the Financial Accounting Standards Board’s (“FASB”) standards and guidance relating to accounting for investments and real estate ventures, we account for our unconsolidated investments in LLCs 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.

At December 31, 2015, we have non-controlling equity investments or commitments in five jointly-owned LLCs which own MOBs. We accounted for these LLCs on an unconsolidated basis pursuant to the equity method since they are not variable interest entities. The majority of these LLCs are joint-ventures between us and non-related parties that manage and hold minority ownership interests in the entities. Each LLC 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 fundings are typically advanced as equity or member loans. These LLCs maintain property insurance on the properties.

Palmdale Medical Properties was consolidated in our financial statements through June 30, 2013 at which time its master lease with a wholly-owned subsidiary of UHS expired. For the period of July 1, 2013 through December 31, 2013, we accounted for Palmdale Medical Properties under the equity method. As discussed below, as a result of our purchase of the third-party minority ownership interest in Palmdale Medical Properties, effective January 1, 2014, we began accounting for Palmdale Medical Properties on a consolidated basis.

Effective August 1, 2014, we purchased the third-party minority ownership interests, ranging from 5% to 15%, in six LLCs (Desert Valley Medical Center, Santa Fe Professional Plaza, Rosenberg Children’s Medical Plaza, Sierra San Antonio Medical Plaza, Phoenix Children’s East Valley Care Center and 3811 E. Bell Medical Building Medical Plaza). Effective January 1, 2014, we purchased the third-party minority ownership interests (5% for each LLC) in Palmdale Medical Properties and Sparks Medical Properties. We formerly held non-controlling majority ownership interests in all of these LLCs, and as a result of our purchase of the minority ownership interests, we now hold 100% of the ownership interests in these LLCs which own MOBs. As a result, we began accounting for the six LLCs mentioned above on a consolidated basis effective August 1, 2014 and we began accounting for Palmdale Medical Properties and Sparks Medical Properties on a consolidated basis effective January 1, 2014, as discussed below. Each of the property’s assets and liabilities were recorded at their fair values (see Note 3 to the consolidated financial statements for additional disclosure). Other than an increase in depreciation and amortization expense resulting from the fair value recognition related to the purchase of the minority ownership interests, these transactions did not have a material impact on our results of operations.

Federal Income Taxes

No provision has been made for federal income tax purposes since we qualify as a real estate investment trust under Sections 856 to 860 of the Internal Revenue Code of 1986, and intend to continue to remain so qualified. As such, we are exempt from federal income taxes and we are required to distribute at least 90% of our real estate investment taxable income to our shareholders.

We are subject to a federal excise tax computed on a calendar year basis. The excise tax equals 4% of the amount by which 85% of our ordinary income plus 95% of any capital gain income for the calendar year exceeds cash distributions during the calendar year, as defined. No provision for excise tax has been reflected in the financial statements as no tax was due.

Earnings and profits, which determine the taxability of dividends to shareholders, will differ from net income reported for financial reporting purposes due to the differences for federal tax purposes in the cost basis of assets and in the estimated useful lives used to compute depreciation and the recording of provision for impairment losses.

The aggregate gross cost basis and net book value of the properties for federal income tax purposes are approximately $489 million and $325 million, respectively, at December 31, 2015.

Stock-Based Compensation

We expense the grant-date fair value of restricted stock awards over the vesting period. We recognize the grant-date fair value of equity-based compensation and account for these transactions using the fair-value based method.

The expense associated with share-based compensation arrangements is a non-cash charge. In the Consolidated Statements of Cash Flows, share-based compensation expense is an adjustment to reconcile net income to cash provided by operating activities.

Fair Value

Fair value is a market-based measurement, not an entity-specific measurement and determined based upon the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, accounting requirements establish a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Level 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). In instances when it is necessary to establish the fair value of our real estate investments and investments in LLCs we use unobservable inputs which are typically based on our own assumptions.

The fair value of our real estate investments, components of real estate investments and debt assumed in conjunction with acquisition and impairment activity, are considered to be Level 3 valuations as they are primarily based upon an income capitalization approach. Significant inputs into the models used to determine fair value of real estate investments and components of real estate investments include future cash flow projections, holding period, terminal capitalization rate and discount rates. Additionally the fair value of land takes into consideration comparable sales, as adjusted for site specific factors. The fair value of real estate investments is based upon significant judgments made by management, and accordingly, we typically obtain assistance from third party valuation specialists. Significant inputs into the models used to determine the fair value of assumed mortgages included the outstanding balance, term, stated interest rate and current market rate of the mortgage.

The carrying amounts reported in the balance sheet for cash, receivables, and short-term borrowings approximate their fair values due to the short-term nature of these instruments. Accordingly, these items are excluded from the fair value disclosures included elsewhere in these notes to the consolidated financial statements.

See Note 3-Acquisitions and Dispositions, for disclosure related to the $25.4 million net gain recorded during 2014 in connection with the fair value recognition of the assets and liabilities, including third-party debt, resulting from the purchase of minority ownership interests in majority-owned LLCs.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

New Accounting Standards

Except as noted below there were no new accounting pronouncements during 2015 that impacted, or are expected to impact us.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASU 2016-02 supersedes the previous leases standard, Leases (Topic 840). The standard is effective on January 1, 2019, with early adoption permitted. We are currently in the process of evaluating the impact the adoption of ASU 2016-02 will have on our financial position or results of operations.

In April 2015, the FASB issued an update to the accounting standard relating to the presentation of debt issuance costs. Under the new guidance, debt issuance costs related to a recognized debt liability will be presented on the balance sheet as a direct deduction from the debt liability. This amendment becomes effective for annual periods beginning on or after December 15, 2015, and interim periods beginning on or after December 15, 2015; however, early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis, which amends the consolidation requirements in Accounting Standards Codification (“ASC”) 810, Consolidation. ASU 2015-02 makes targeted amendments to the current consolidation guidance, which could change consolidation conclusions. This guidance will be effective for us beginning in our first quarter of 2016 and early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments,” which changes the reporting requirement for retrospective adjustments to provisional amounts in the measurement period. The amendments in this update require an entity to present separately on the face of the income statement or disclose in the notes, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The revised guidance is effective for annual fiscal periods beginning after December 15, 2015. We do not expect the adoption of this revised guidance to have a material impact on our consolidated financial statements.

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Relationship with UHS and Related Party Transactions

12 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

Relationship with UHS and Related Party Transactions

(2) RELATIONSHIP WITH UHS AND RELATED PARTY TRANSACTIONS

Leases:    We commenced operations in 1986 by purchasing properties of certain subsidiaries from UHS and immediately leasing the properties back to the respective subsidiaries. Most of the leases were entered into at the time we commenced operations and provided for initial terms of 13 to 15 years with up to six additional 5-year renewal terms. The current base rentals and lease and rental terms for each facility are provided below. The base rents are paid monthly and each lease also provides for additional or bonus rents which are computed and paid on a quarterly basis based upon a computation that compares current quarter revenue to a corresponding quarter in the base year. The hospital leases with subsidiaries of UHS are unconditionally guaranteed by UHS and are cross-defaulted with one another.

The combined revenues generated from the leases on the UHS hospital facilities accounted for approximately 31% of our total revenue for the five years ended December 31, 2015 (approximately 25% for the year ended December 31, 2015 and approximately 28% and 30% for the years ended December 31, 2014 and 2013, respectively). The decrease during 2015 and 2014 as compared to 2013 is due primarily to the 2014 purchase of the third-party minority ownership interests in eight LLCs in which we previously held noncontrolling ownership interests. As a result of these transactions, we own 100% of each of these LLCs and began accounting for each on a consolidated basis effective on the dates of purchase of the minority ownership interests (January and August, 2014). Including 100% of the revenues generated at the unconsolidated LLCs in which we have various non-controlling equity interests ranging from 33% to 95%, the leases on the UHS hospital facilities accounted for approximately 20% of the combined consolidated and unconsolidated revenue for the five years ended December 31, 2015 (approximately 20% for the year ended December 31, 2015 and 22% for each of the years ended December 31, 2014 and 2013). In addition, including the two free-standing emergency departments (“FEDs”) acquired by us from subsidiaries of UHS during the first quarter of 2015 (as discussed below), sixteen MOBs/FEDs, that are either wholly or jointly-owned, include tenants which are subsidiaries of UHS.

Pursuant to the Master Lease Document by and among us and certain subsidiaries of UHS, dated December 24, 1986 (the “Master Lease”), which governs the leases of all hospital properties with subsidiaries of UHS, UHS has the option 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 at the end of the lease terms or any renewal terms at the appraised fair market value. In addition, the Master Lease, as amended during 2006, includes a change of control provision whereby UHS has the right, upon one month’s notice should a change of control of the Trust occur, to purchase any or all of the three leased hospital properties listed below at their appraised fair market value. Additionally, UHS has rights of first refusal to: (i) purchase the respective leased facilities during and for 180 days 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 180 days after, the lease term at the same terms and conditions pursuant to any third-party offer.

During the third quarter of 2014, a wholly-owned subsidiary of UHS provided notification to us that, upon expiration of The Bridgeway’s lease term which occurred in December, 2014, it intended to exercise its option to purchase the real property of the facility. Pursuant to the terms of the lease, we and the wholly-owned subsidiary of UHS were both required to obtain independent appraisals of the property to determine its fair market value. On December 31, 2014, the Bridgeway, a 103-bed behavioral health facility located in North Little Rock, Arkansas, was sold to UHS for $17.3 million. A gain on divestiture of real property of approximately $13.0 million is included in our results of operations for the twelve-month period ended December 31, 2014.  Prior to its divestiture in 2014, our revenues, net cash provided by operating activities and funds from operations included approximately $1.1 million earned annually in connection with The Bridgeway’s lease.

The table below details the existing lease terms and renewal options for our three acute care hospitals operated by wholly-owned subsidiaries of UHS:

Hospital Name	Type of Facility	Annual Minimum Rent		End of Lease Term	Renewal Term (years)
McAllen Medical Center	Acute Care	$	5,485,000	December, 2016	15(a)
Wellington Regional Medical Center	Acute Care	$	3,030,000	December, 2016	15(b)
Southwest Healthcare System, Inland Valley Campus	Acute Care	$	2,648,000	December, 2016	15(b)

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

(b) UHS has one 5-year renewal option at existing lease rates (through 2021) and two 5-year renewal options at fair market value lease rates (2022 through 2031).

During the first quarter of 2015, we purchased from wholly-owned subsidiaries of UHS, the real property of two newly-constructed and recently opened FEDs located in Weslaco and Mission, Texas. Each FED consists of approximately 13,600 square feet and is operated by wholly-owned subsidiaries of UHS. In connection with these acquisitions, ten-year lease agreements with six, 5-year renewal terms were executed with UHS for each FED. The first four, 5-year renewal terms (covering years 2025 through 2044) include 2% annual lease rate increases, computed on accumulative and compounded basis, and the last two, 5-year renewal terms (covering the years 2045 through 2054) will be at the then fair market value lease rates. These leases are cross-defaulted with one another. UHS has the option to purchase the leased properties upon the expiration of the fixed term and each five-year extended term at the fair market value at that time. The aggregate acquisition cost of these facilities was approximately $12.8 million, and the aggregate rental revenue earned by us at the commencement of the leases is approximately $900,000 annually.

Management cannot predict whether the leases with 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 and 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 the these leases.  The existing lease terms for our three acute care hospitals operated by wholly-owned subsidiaries of UHS are scheduled to expire in December, 2016 and we can provide no assurance that these leases will be renewed at the existing lease rates.

As discussed above, Palmdale Medical Plaza, which is located in Palmdale, California, on the campus of a UHS hospital, had a master lease commitment by a wholly-owned subsidiary of UHS which expired effective as of July 1, 2013. This MOB, tenants of which include subsidiaries of UHS, was completed and opened during the third quarter of 2008 at which time the master lease commenced. The LLC that owns this MOB was deemed to be a variable interest entity during the term of the master lease and was therefore consolidated in our financial statements through June 30, 2013 since we were the primary beneficiary through that date. Effective July 1, 2013, this LLC was no longer deemed a variable interest entity and is accounted for in our financial statements on an unconsolidated basis pursuant to the equity method from July 1, 2013 through December 31, 2013.

Effective January 1, 2014, we purchased the third-party minority ownership interests in two LLCs (Palmdale Medical Properties and Sparks Medical Properties) in which we formerly held non-controlling majority ownership interest. As a result of our purchase of the minority ownership interests, we now hold 100% of the ownership interests in these LLCs (which own MOBs) and began accounting for them on a consolidated basis.

We have funded $2.8 million in equity as of December 31, 2015, and are committed to fund an additional $149,000, in exchange for a 95% non-controlling equity interest in an LP (Texoma Medical Properties) that developed, constructed, owns and operates the Texoma Medical Plaza located in Denison, Texas, which was completed and opened during the first quarter of 2010. This MOB is located on the campus of a UHS acute care hospital which is owned and operated by UHS of Texoma, Inc. (“Texoma Hospital”), a wholly-owned subsidiary of UHS. This MOB has tenants that include subsidiaries of UHS. This LP has a third-party term loan of $14.7 million, which is non-recourse to us, outstanding as of December 31, 2015. As this LLC is not considered to be a variable interest entity and does not meet the other criteria requiring consolidation of an investment, it is accounted for pursuant to the equity method.

Advisory Agreement:    UHS of Delaware, Inc. (the “Advisor”), a wholly-owned subsidiary of UHS, serves as Advisor to us under an Advisory Agreement (the “Advisory Agreement”) dated December 24, 1986. 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. Our advisory fee was 0.70% during each of 2015, 2014 and 2013 of our average invested real estate assets, as derived from our consolidated balance sheet. In December of 2015, based upon a review of our advisory fee and other general and administrative expenses, as compared to an industry peer group, the Advisory Agreement was renewed for 2016 pursuant to the same terms as the Advisory Agreement in place during the last three years.

The average real estate assets for advisory fee calculation purposes exclude certain items from our consolidated balance sheet such as, among other things, accumulated depreciation, cash and cash equivalents, base and bonus rent receivables, deferred charges and other assets. The advisory fee is payable quarterly, subject to adjustment at year-end based upon our audited financial statements. In addition, the Advisor is entitled to an annual incentive fee equal to 20% of the amount by which cash available for distribution to shareholders for each year, as defined in the Advisory Agreement, exceeds 15% of our equity as shown on our consolidated balance sheet, determined in accordance with generally accepted accounting principles without reduction for return of capital dividends. The Advisory Agreement defines cash available for distribution to shareholders as net cash flow from operations less deductions for, among other things, amounts required to discharge our debt and liabilities and reserves for replacement and capital improvements to our properties and investments. No incentive fees were paid during 2015, 2014 or 2013 since the incentive fee requirements were not achieved. Advisory fees incurred and paid (or payable) to UHS amounted to $2.8 million during 2015, $2.5 million during 2014 and $2.4 million during 2013 and were based upon average invested real estate assets of $401 million, $363 million and $338 million during 2015, 2014 and 2013, respectively.

Officers and Employees:    Our officers are all employees of a wholly-owned subsidiary of UHS and although as of December 31, 2015 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 compensation awards in the form of restricted stock and/or cash bonuses.

Share Ownership:    As of December 31, 2015 and 2014, UHS owned 5.9% of our outstanding shares of beneficial interest.

SEC reporting requirements of UHS:    UHS is subject to the reporting requirements of the Securities and Exchange Commission (“SEC”) and is required to file annual reports containing audited financial information and quarterly reports containing unaudited financial information. Since the leases on the hospital facilities leased to wholly-owned subsidiaries of UHS comprised approximately 25% of our consolidated revenues for the year ended December 31, 2015 and 28% and 30% of our consolidated revenues for the years ended December 31, 2014 and 2013, respectively, 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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Property Exchange Transaction, Acquisitions and Dispositions

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Property Exchange Transaction, Acquisitions and Dispositions

(3) PROPERTY EXCHANGE TRANSACTION, ACQUISITIONS AND DISPOSITIONS

2015:

Property Exchange Transaction:

In May, 2015, in exchange for the real property of Sheffield Medical Building (“Sheffield”), a 73,446 square foot medical office building (“MOB”) located in Atlanta, Georgia, we received $2 million in cash and the real property of two MOBs located in Sandy Springs and Vinings, Georgia, from an unrelated third party. In connection with the two MOBs acquired in this transaction, triple net, master lease agreements applicable to 100% of the combined 36,700 rentable square feet of these properties have been executed with the counterparty. These master lease agreements have initial terms of 15 years and provide for 3% annual rent increases. In connection with this transaction, we recorded an $8.7 million gain which is included in our Consolidated Statements of Income for the year ended December 31, 2015.  This gain represented the difference between the aggregate fair value of the consideration exchanged ($2 million in cash and the real property of two MOBs) and the net book value of Sheffield.

Acquisitions:

In February, 2015, we purchased the Haas Medical Office Park, two single story buildings having an aggregate of approximately 16,000 rentable square feet, located in Ottumwa, Iowa, for approximately $4.1 million.

In January and February of 2015, we purchased from wholly-owned subsidiaries of UHS, the real property of two newly-constructed and recently opened FEDs located in Weslaco and Mission, Texas, for an aggregate acquisition cost of approximately $12.8 million. Each FED consists of approximately 13,600 square feet and is operated by wholly-owned subsidiaries of UHS. In connection with these acquisitions, ten-year lease agreements with six 5-year renewal terms were executed with UHS for each FED. In connection with the lease agreements, the lessee shall have the option to purchase the leased property upon the expiration of the fixed term and each five-year extended term at the fair market value at that time.

The aggregate purchase price for these three MOBs and two FEDs was allocated to the assets acquired and liabilities assumed consisting of tangible property and identified intangible assets, based on their respective fair values at acquisition as detailed in the table below. Substantially all of the intangible assets include the value of the in-place leases at the MOBs at the time of acquisition which will be amortized over the average remaining lease term of approximately 15.0 years at the time of acquisition (aggregate weighted average of 14.4 years at December 31, 2015) for each of the MOBs located in Sandy Springs and Vinings, Georgia and approximately 10.4 years at the time of acquisition (aggregate weighted average of 9.6 years at December 31, 2015) for the Haas Medical Office Park.

Land	$7,050
Buildings and improvements	17,518
Intangible assets	2,182
Cash received- exchange transaction	2,000
Other liabilities	(116)
Deposit paid in 2014	(100)
Net book value of property divested in exchange transaction	(3,027)
Gain on exchange transaction	(8,742)
Net cash paid	$16,765

2014:

Acquisitions:

In August, 2014, we purchased the Hanover Emergency Center, a 22,000 rentable square feet, free-standing, full service emergency and imaging center, located in Mechanicsville, VA, for approximately $8.6 million. The single-tenant property is occupied pursuant to the terms of a 10-year lease with HCA Health Services of Virginia, Inc.

In January, 2014, we paid an aggregate of $7.2 million, (including a $150,000 deposit made in 2013), to purchase the following in a single transaction: (i) The Children’s Clinic at Springdale – a 9,800 square foot, single-tenant medical office building located in Springdale, Arkansas, and; (ii) The Northwest Medical Center at Sugar Creek – a 13,700 square foot, multi-tenant medical office building located in Bentonville, Arkansas.

The aggregate purchase price for these clinics and MOB was allocated to the assets and liabilities acquired consisting of tangible property and identified intangible assets, based on their respective fair values at acquisition as detailed in the table below. Substantially all of the intangible assets include the value of the in-place leases at the clinics and MOB at the time of acquisition which will be amortized over the average remaining lease term of approximately 9.8 years at the time of acquisition (aggregate weighted average of 8.5 years at December 31, 2015) for the Hanover Emergency Center and approximately 9.7 years at the time of acquisition (aggregate weighted average of 7.7 years at December 31, 2015) for the Arkansas facilities.

Land	$3,010
Buildings and improvements	10,664
Intangible assets	2,076
Deposit paid in 2013	(150)
Net cash paid	$15,600

Additionally, during January and August, 2014, we spent an aggregate of $7.0 million, including $4.7 million in cash plus an additional $2.3 million in the form of a note payable to the previous third-party member (which was fully repaid in January, 2015 and is reflected in “Accrued expenses and other liabilities” on our Consolidated Balance Sheet at December 31, 2014) to purchase the minority ownership interests held by third party members in eight LLCs (as noted in the table below) in which we previously held various non-controlling majority ownership interests ranging from 85% to 95%.

Name of LLC/LP	Ownership prior to minority interest purchase		Property Owned by LLC	Effective Date
Palmdale Medical Properties		95%	Palmdale Medical  Plaza	January1,2014
Sparks Medical Properties		95%	Vista Medical Terrace & Sparks  MOB	January1,2014
DVMC Properties		90%	Desert Valley Medical Center	August 1, 2014
Santa Fe Scottsdale		90%	Santa Fe Professional Plaza	August 1, 2014
PCH Medical Properties		85%	Rosenberg Children’s Medical Plaza	August 1, 2014
Sierra Medical Properties		95%	Sierra San Antonio Medical Plaza	August 1, 2014
PCH Southern Properties		95%	PhoenixChildren’sEastValleyCareCenter	August 1, 2014
3811 Bell Medical Properties		95%	3811 E. Bell	August 1, 2014

As a result of these minority ownership purchases, we now own 100% of each of these LLCs, which own medical office buildings, and began accounting for each on a consolidated basis at the effective date as noted in the table above. Pursuant to current accounting standards, at the effective date, we were required to record each property’s assets and liabilities at their fair values which resulted in the recording of a $25.4 million non-cash gain, which is included in our Consolidated Statement of Income for the twelve months ended December 31, 2014, representing the difference between the fair values and the equity method carrying value of each investment. The calculated fair value, categorized in level 3 of the fair value hierarchy and utilizing the income capitalization approach, is based upon the basis of capitalization of the net estimated earnings expectancy of the property, assuming continued use similar to the existing use of the acquired property. Each property’s continued cash flow analysis were also utilized in estimating the fair value of the property, whereby cash flows from the various tenants are calculated based upon lease commencement and termination dates. The capitalization rate and discount rate ranged from 7%-8.75% and 8%-9.75%, respectively.

The aggregate purchase price for these MOBs was allocated to net tangible property ($84.0 million), identified intangible assets ($6.5 million), and long term debt ($29.8 million). Substantially all of the intangible assets include the value of the in-place leases at these MOBs at the time of acquisition which will be amortized over the combined average remaining lease term of approximately 4.7 years at the time of acquisition (aggregate weighted average of 4.1 years at December 31, 2015) for the August, 2014 transactions and 5.3 years at the time of acquisition (aggregate weighted average of 4.7 years at December 31, 2015) for the January, 2014 transactions. Other than the increased depreciation and amortization expense resulting from the amortization of the intangible assets recorded in connection with these transactions, there was no material impact on our net income as a result of the consolidation of these LLCs.

Divestitures:

In December, 2014, upon expiration of The Bridgeway’s lease term, a wholly-owned subsidiary of UHS exercised its option to purchase the real property of the facility. The sale of The Bridgeway, a 103-bed behavioral health facility located in North Little Rock, Arkansas, generated $17.3 million of sale proceeds. Pursuant to the terms of the lease, we and the wholly-owned subsidiary of UHS were both required to obtain independent appraisals of the property to determine its fair market value of $17.3 million. A $13.0 gain is included in our Consolidated Statement of Income for the twelve months ended December 31, 2014, representing the difference between the fair market value and the book value of this property.

2013:

Acquisition:

In August, 2013, we purchased the Ward Eagle Office Village located in Farmington Hills, Michigan. This multi-tenant MOB, which was purchased for approximately $4.1 million, consists of approximately 16,300 rentable square feet.

In June, 2013, we purchased the 5004 Poole Road MOB, located in Denison, Texas, on the campus of Texoma Medical Center, a wholly-owned subsidiary of UHS. This single-tenant MOB, which was purchased for approximately $625,000, consists of approximately 4,400 rentable square feet and is located adjacent to our Texoma Medical Plaza MOB.

The aggregate purchase price of approximately $4.7 million for these MOBs was allocated to the assets and liabilities acquired consisting of tangible property and identifiable intangible assets, based on their respective fair values at acquisition, as detailed in the table below. Substantially all of the intangible assets include the value of the in-place leases at Ward Eagle Office Village at the time of acquisition which are being amortized over the then average remaining lease term of approximately 9.8 years (aggregate weighted average of 7.4 years at December 31, 2015).

Land	$	316
Buildings and improvements		3,749
Intangible assets		610
Other assets		21
Liabilities (real property and operating)		(11	)
Net cash paid	$	4,685

The Ward Eagle Office Village acquisition was valued utilizing the income capitalization approach. The calculated fair value, utilizing the income capitalization approach, is based upon the basis of capitalization of the net estimated earnings expectancy of the property, assuming continued use similar to the existing use of the acquired property’s continued cash flow analysis were also utilized in estimating the fair value of the property, whereby cash flows from the various tenants are calculated based upon lease commencement and termination dates.

New Construction:

The newly constructed Forney Medical Plaza II located in Forney, Texas was completed and opened in April, 2013. This multi-tenant medical office building, consisting of 30,000 rentable square feet, is owned by a limited partnership (“LP”) in which we hold a 95% non-controlling ownership interest. As this LP is not considered to be a variable interest entity, it is accounted for pursuant to the equity method.

Divestitures:

There were no divestitures during 2013.

As of December 31, 2015, our net intangible assets total $19.8 million (net of $25.1 million accumulated amortization) and substantially all of the amount is related to acquired, in-place leases which have a weighted average remaining amortization period of 4.1 years.

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Leases

12 Months Ended

Dec. 31, 2015

Leases [Abstract]

Leases

(4) LEASES

All of our leases are classified as operating leases with initial terms typically ranging from 3 to 15 years with up to five additional, five-year renewal options. Under the terms of the leases, we earn fixed monthly base rents and pursuant to the leases with subsidiaries of UHS, we may earn periodic bonus rents (see Note 1). The bonus rents from the subsidiaries of UHS, which are based upon each facility’s net revenue in excess of base amounts, are computed and paid on a quarterly basis based upon a computation that compares current quarter revenue to the corresponding quarter in the base year.

Minimum future base rents from non-cancelable leases related to properties included in our financial statements on a consolidated basis, excluding increases resulting from changes in the consumer price index, bonus rents and the impact of straight line rent, are as follows (amounts in thousands):

2016	$	49,973
2017		34,345
2018		29,594
2019		24,341
2020		19,653
Thereafter		50,914
Total minimum base rents	$	208,820

Some of the leases contain gross terms where operating expenses are included in the base rent amounts. Other leases contain net terms where the operating expenses are assessed separately from the base rentals. The table above contains a mixture of both gross and net leases, and does not include any separately calculated operating expense reimbursements. Under the terms of the hospital leases, the lessees are required to pay all operating costs of the properties including property insurance and real estate taxes. Tenants of the medical office buildings generally are required to pay their pro-rata share of the property’s operating costs.

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Debt and Financial Instruments

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Debt and Financial Instruments

(5) 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 $185 million revolving credit facility, the level of borrowings pursuant to non-course mortgage debt secured by the real property of our properties and our level of equity including consideration of additional equity issuances pursuant to our at-the-market 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 facility 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 March 27, 2015, we entered into a new $185 million revolving credit agreement (“Credit Agreement”). The Credit Agreement, which will mature in March, 2019, replaced our previous revolving credit facility which was scheduled to mature in July, 2015. The Credit Agreement includes a $50 million sub limit for letters of credit and a $20 million sub limit for swingline/short-term loans. The Credit Agreement also provides a one-time option to extend the maturity date for an additional one year period, and an option to increase the total facility borrowing capacity up to an additional $50 million, subject to lender agreement. 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 the Trust’s wholly-owned subsidiaries. Borrowings made pursuant to the Credit Agreement will bear interest, at our option, at one, two, three, or six month LIBOR plus an applicable margin ranging from 1.50% to 2.00% or at the Base Rate plus an applicable margin ranging from 0.50% to 1.00%. The Credit Agreement 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 LIBOR plus 1%. A commitment fee of 0.20% to 0.40% (depending on our total leverage ratio) will be charged on the average unused portion of the revolving credit commitments. The margins over LIBOR, Base Rate and the commitment fee are based upon our ratio of debt to total capital. At December 31, 2015, the applicable margin over the LIBOR rate was 1.625%, the margin over the Base Rate was 0.625%, and the commitment fee was 0.25%.

At December 31, 2015, we had $142.2 million of outstanding borrowings and $3.5 million of letters of credit outstanding against our revolving credit agreement. The carrying amount and fair value of borrowings outstanding pursuant to the Credit Agreement was $142.2 million at December 31, 2015. We had $39.3 million of available borrowing capacity, net of the outstanding borrowings and letters of credit outstanding as of December 31, 2015. There are no compensating balance requirements. The average amount outstanding under our revolving credit agreement was $114.3 million in 2015 with a corresponding effective interest rate, including commitment fees, of 2.1%.  The average amounts outstanding under our previous revolving credit agreement (which was replaced in March, 2015, as discussed above), were $104.6 million in 2014 and $86.3 million in 2013 with corresponding effective interest rates, including commitment fees, of 2.4% in 2014 and 2.2% in 2013.

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 net worth, as well as customary events of default, the occurrence of which may trigger an acceleration of amounts outstanding under the Credit Agreement. We are in compliance with all of the covenants at December 31, 2015. We also believe that we would remain in compliance if 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			December 31, 2015
Tangible net worth		$	125,000		$	175,285
Total leverage		< 60		%		45.0	%
Secured leverage		< 30		%		19.8	%
Unencumbered leverage		< 60		%		42.2	%
Fixed charge coverage	> 1.50x			3.3x

We have fourteen mortgages, all of which are non-recourse to us, included on our consolidated balance sheet as of December 31, 2015, with a combined outstanding balance of $110.3 million (excluding net debt premium of $298,000 at December 31, 2015). The following table summarizes our outstanding mortgages, excluding net debt premium, at December 31, 2015 (amounts in thousands):

Facility Name	Outstanding Balance (in thousands)(a.)		Interest Rate			Maturity Date
Summerlin Hospital Medical Office Building III    floating rate mortgage loan (b.)	$	10,695		3.49	%	December, 2016
Peace Health fixed rate mortgage loan		20,790		5.64	%	April, 2017
Auburn Medical II floating rate mortgage loan		6,954		2.99	%	April, 2017
Medical Center of Western Connecticut fixed rate    mortgage loan		4,663		6.00	%	June, 2017
Summerlin Hospital Medical Office Building II fixed    rate mortgage loan		11,419		5.50	%	October, 2017
Phoenix Children’s East Valley Care Center fixed rate    mortgage loan		6,348		5.88	%	December, 2017
Centennial Hills Medical Office Building floating rate    mortgage loan		10,339		3.49	%	January, 2018
Sparks Medical Building/Vista Medical Terrace floating    rate mortgage loan		4,351		3.49	%	February, 2018
Rosenberg Children’s Medical Plaza fixed rate    mortgage loan		8,317		4.85	%	May, 2018
Vibra Hospital-Corpus Christi fixed rate mortgage loan		2,815		6.50	%	July, 2019
700 Shadow Lane and Goldring MOBs fixed rate    mortgage loan		6,428		4.54	%	June, 2022
BRB Medical Office Building fixed rate mortgage loan		6,498		4.27	%	December, 2022
Desert Valley Medical Center fixed rate mortgage loan		5,200		3.62	%	January, 2023
Tuscan Professional Building fixed rate mortgage loan		5,439		5.56	%	June, 2025
Total	$	110,256

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

(b.) This loan is scheduled to mature in December, 2016, at which time we will decide whether to refinance pursuant to a new mortgage loan or by utilizing borrowings under our revolving credit facility.

The mortgages are secured by the real property of the buildings as well as property leases and rents. The mortgages have a combined fair value of approximately $112.4 million as of December 31, 2015. 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.

At December 31, 2014, we had sixteen mortgages, all of which were non-recourse to us, included in our consolidated balance sheet. The combined outstanding balance of these sixteen mortgages was $122.9 million (excluding net debt premium of $523,000 at December 31, 2014), and had a combined fair value of approximately $124.7 million at December 31, 2014.

As of December 31, 2015, our aggregate consolidated scheduled debt repayments (including mortgages) are as follows (amounts in thousands):

2016	$	13,714
2017		50,572
2018		22,837
2019 (a.)		145,757
2020		1,141
Later		18,385
Total	$	252,406

(a) Includes repayment of $142.2 million of outstanding borrowings under the terms of our $185 million revolving credit agreement.

Financial Instruments:

During the third quarter of 2013, we entered into an interest rate cap on a total notional amount of $10 million whereby we paid a premium of $136,000. During the first quarter of 2014, we entered into two additional interest rate cap agreements on a total notional amount of $20 million whereby we paid premiums of $134,500. In exchange for the premium payments, the counterparties agreed to pay us the difference between 1.50% and one-month LIBOR if one-month LIBOR rises above 1.50% during the term of the cap. From inception through December 31, 2014, no payments have been made to us by the counterparties pursuant to the terms of these caps which expire on January 13, 2017.

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Dividends and Equity Issuance Program

12 Months Ended

Dec. 31, 2015

Equity [Abstract]

Dividends and Equity Issuance Program

(6) DIVIDENDS AND EQUITY ISSUANCE PROGRAM

Dividends:

During each of the last three years, dividends were declared and paid by us as follows:

· 2015:    $2.56 per share of which $2.17 per share was ordinary income and $.39 per share was a return of capital distribution.

· 2014:    $2.52 per share of which $1.478 per share was ordinary income and $1.042 per share was total capital gain (total capital gain amount includes Unrecaptured Section 1250 gain of $.305 per share).

· 2013:    $2.495 per share of which $1.96 per share was ordinary income and $.535 per share was a return of capital distribution.

Equity Issuance Program:

We filed a Registration Statement with the Securities and Exchange Commission which became effective in November, 2015, under which we can offer up to an aggregate of $100 million of our securities pursuant to supplemental prospectuses which we may file from time to time.  No offering will be made except pursuant to such supplemental prospectuses.

There were no shares issued pursuant to an ATM program during 2015. During 2013 and 2014, pursuant to an ATM equity issuance program in effect at that time, which is now expired, we issued an aggregate of 580,900 shares at an average price of $45.97 per share, which generated approximately $25.6 million of net cash proceeds or receivables (net of approximately $1.1 million, consisting of compensation of $667,000 to Merrill Lynch, as well as $391,000 of other various fees and expenses), as follows:

· 2014:    We issued 426,187 shares at an average price of $47.51 per share which generated approximately $19.5 million of net cash proceeds or receivables (net of approximately $700,000, consisting of compensation of $506,000 to Merrill Lynch, as well as $195,000 of other various fees and expenses), and;

· 2013:    We issued 154,713 shares at an average price of $41.71 per share which generated approximately $6.1 million of net cash proceeds or receivables (net of $357,000, consisting of compensation of $161,000 to Merrill Lynch, as well as $196,000 of other various fees and expenses).

In connection with the ATM program, our consolidated balance sheet included approximately $1.1 million at December 31, 2014, and $600,000 at December 31, 2013, of net proceeds due to us in connection with shares issued in late December 2014 and 2013, respectively. The net cash proceeds related to these shares were received by us in early January 2015, and early January, 2014, respectively, and are included in cash received for the issuance of shares of beneficial interest, net, on the Consolidated Statements of Cash Flows for the years ended December 31, 2015 and 2014, respectively.

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Incentive Plans

12 Months Ended

Dec. 31, 2015

Postemployment Benefits [Abstract]

Incentive Plans

(7) INCENTIVE PLANS

During 2007, upon the expiration of our 1997 Incentive Plan, as discussed below, our Board of Trustees and shareholders approved the Universal Health Realty Income Trust 2007 Restricted Stock Plan (the “2007 Plan”). A total of 75,000 shares were authorized for issuance under this plan and a total of 67,555 shares, net of cancellations, have been issued pursuant to the terms of this plan, 47,975 of which have vested as of December 31, 2015. At December 31, 2015 there are 7,445 shares remaining for issuance under the terms of the 2007 Plan.

During 2015, there were 9,730 restricted Shares of Beneficial Interest, net of cancellations, issued to the Trustees and officers of the Trust pursuant to the 2007 Plan at a weighted average grant price of $47.75 per share ($464,608 in the aggregate). These restricted shares are scheduled to vest in June of 2017 (the second anniversary of the date of grant).

During 2014, there were 9,850 restricted Shares of Beneficial Interest, net of cancellations, issued to the Trustees and officers of the Trust pursuant to the 2007 Plan at a weighted average grant price of $43.21 per share ($425,619 in the aggregate). These restricted shares are scheduled to vest in June of 2016 (the second anniversary of the date of grant).

During 2013, there were 8,730 restricted Shares of Beneficial Interest, net of cancellations, issued to the Trustees and officers of the Trust pursuant to the 2007 Plan at a weighted average grant price of $43.54 per share ($380,104 in the aggregate). These restricted shares vested in June of 2015 (the second anniversary of the date of grant).

We expense the grant-date fair value restricted stock awards under the straight-line method over the stated vesting period of the award. In connection with these grants, we recorded compensation expense of approximately $427,000, $399,000 and $375,000 and during 2015, 2014 and 2013, respectively. The remaining expenses associated with these grants is approximately $418,000 and will be recorded over the remaining weighted average vesting period for outstanding restricted Shares of Beneficial Interest of approximately one year at December 31, 2015.

Prior to its expiration in 2007, the Universal Health Realty Income Trust 1997 Incentive Plan (the “1997 Plan”) provided for the granting of stock options and dividend equivalents rights (“DERs”) to employees of the Trust, including officers and trustees. Awards granted pursuant to the 1997 Plan prior to its termination date remain exercisable, in accordance with the terms of the outstanding agreements. All stock options were granted with an exercise price equal to the fair market value on the date of the grant. The options granted vested ratably at 25% per year beginning one year after the date of grant, and expire in ten years. DERs on outstanding awards are earned in amounts equal to the cash or stock dividends declared subsequent to the date of grant. As of December 31, 2015, there were 23,000 options outstanding and exercisable under the 1997 Plan with an average exercise price of $36.53 per share and a remaining weighted average life of 1.2 years. The net expense recorded in connection with the DERs did not have a material impact on our consolidated financial statements during each of the years ended December 31, 2015, 2014 and 2013.

During the fourth quarter of 2008, the Board of Trustees of the Trust approved amendments to the outstanding stock option agreements made pursuant to the 1997 Plan. These original agreements provided for the deferred payment of dividend equivalents on shares covered by the options, with payment tied to the date the options were exercised or expire. In order to meet certain changes to tax law requirements, the agreements, as amended, provide for the current payment of dividend equivalents in the years in which dividends are declared and paid or, if later, when the related options become vested. DERs with respect to 23,000 shares, 36,000 shares and 40,000 shares were outstanding at December 31, 2015, 2014 and 2013, respectively. In December of 2015, 2014 and 2013, DERs which were vested and accrued as of each respective date, were paid to officers and Trustees of the Trust amounting to $75,000, $94,000 and $106,000, respectively.

Stock options to purchase shares of beneficial interest have been granted to eligible individuals, including our officers and trustees. Information with respect to these options, before adjustment to the option price to give effect to the dividend equivalent rights, is summarized as follows:

Outstanding Options	Number of Shares			Exercise Weighted- Average Price		Grant PriceRange (High-Low)
Balance, January 1, 2013		43,000		$	35.22	$36.53/$29.44
Exercised		(3,000	)		29.44	$29.44/$29.44
Balance, January 1, 2014		40,000		$	35.65	$36.53/$30.06
Exercised		(4,000	)		33.07	$30.06/$34.07
Balance, January 1, 2015		36,000		$	35.94	$34.90/$36.53
Exercised		(13,000	)		34.90	$34.90/$34.90
Outstanding options vested and exercisable as of    December 31, 2015		23,000		$	36.53	$36.53/$36.53

During 2015, there were 13,000 stock options exercised with a total in-the-money value of $154,500.  During 2014, there were 4,000 stock options exercised with a total in-the-money value of $44,160. During 2013, there were 3,000 stock options exercised with a total in-the-money value of $46,290.

There were no unvested options as of December 31, 2015. The following table provides information about options outstanding and exercisable options at December 31, 2015:

	Options Outstanding and Exercisable
Number		23,000
Weighted average exercise price	$	36.53
Aggregate intrinsic value	$	310,040
Weighted average remaining contractual life		1.2

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Summarized Financial Information of Equity Affiliates

12 Months Ended

Dec. 31, 2015

Equity Method Investments And Joint Ventures [Abstract]

Summarized Financial Information of Equity Affiliates

(8) SUMMARIZED FINANCIAL INFORMATION OF EQUITY AFFILIATES

In accordance with the Financial Accounting Standards Board’s (“FASB”) standards 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.

At December 31, 2015, we have non-controlling equity investments or commitments in five jointly-owned LLCs/LPs which own MOBs. As of December 31, 2015, we accounted for these LLCs/LPs on an unconsolidated basis pursuant to the equity method since they are not variable interest entities and we do not have a controlling voting interest. The majority of these entities are joint-ventures between us and non-related parties that manage and 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 fundings are typically advanced as equity or member loans. These entities maintain property insurance on the properties.

Effective August 1, 2014, we purchased the minority ownership interests, ranging from 5% to 15%, held by third-party members in six LLCs in which we previously held noncontrolling majority ownership interests, as noted in the table below. As a result of these minority ownership purchases, we now own 100% of each of these LLCs and began to account for them on a consolidated basis effective August 1, 2014. Prior to August 1, 2014, these LLCs were accounted for on an unconsolidated basis pursuant to the equity method.

Effective January 1, 2014, we purchased the 5% minority ownership interests held by third-party members in two LLCs in which we previously held noncontrolling majority ownership interests, as noted in the table below. As a result of these minority ownership purchases, we now own 100% of each of these LLCs and account for them on a consolidated basis. Prior to January 1, 2014, these LLCs were accounted for on an unconsolidated basis pursuant to the equity method. Previously, Palmdale Medical Properties (“Palmdale”) was included in our financial statements on a consolidated basis through June 30, 2013 as a result of a master lease arrangement with a wholly-owned subsidiary of UHS, which expired on July 1, 2013.

Name of LLC/LP	Ownership prior to minority interest purchase		Property Owned by LLC/LP	Effective Date
Palmdale Medical Properties		95%	Palmdale Medical Plaza	January 1, 2014
Sparks Medical Properties		95%	Vista Medical Terrace & Sparks MOB	January 1, 2014
DVMC Properties		90%	Desert Valley Medical Center	August 1, 2014
Santa Fe Scottsdale		90%	Santa Fe Professional Plaza	August 1, 2014
PCH Medical Properties		85%	Rosenberg Children’s Medical Plaza	August 1, 2014
Sierra Medical Properties		95%	Sierra San Antonio Medical Plaza	August 1, 2014
PCH Southern Properties		95%	Phoenix Children’s East Valley Care Center	August 1, 2014
3811 Bell Medical Properties		95%	3811 E. Bell	August 1, 2014

The following property table represents the five LLCs or LPs in which we own a noncontrolling interest and were accounted for under the equity method as of December 31, 2015:

Name of LLC/LP	Ownership		Property Owned by LLC/LP
Suburban Properties		33%	Suburban Medical Plaza II
Brunswick Associates (a.)		74%	Mid Coast Hospital MOB
Arlington Medical Properties (b.)		75%	Saint Mary’s Professional Office Building
Grayson Properties (c.)		95%	Texoma Medical Plaza
FTX MOB Phase II (d.)		95%	Forney Medical Plaza II

(a.) This LLC has a third-party term loan of $8.8 million, which is non-recourse to us, outstanding as of December 31, 2015.

(b.) We have funded $5.2 million in equity as of December 31, 2015 and are committed to invest an additional $1.1 million.  During the fourth quarter of 2015, we advanced this LLC a member loan, the funds of which were utilized to repay its $22.8 million outstanding third-party mortgage loan on its scheduled maturity date. The terms of the member loan are similar to those in place pursuant to the third-party mortgage loan that was recently repaid. Pursuant to the terms and conditions of an agreement executed in February, 2016, we purchased an additional 10% of the ownership interest in this LLC from the existing third-party member for approximately $4.8 million in cash thereby increasing our ownership interest to 85%.  

(c.) We have funded $2.8 million in equity as of December 31, 2015, and are committed to fund an additional $149,000. This building is on the campus of a UHS hospital and has tenants that include subsidiaries of UHS. This LP has a third-party term loan of $14.7 million, which is non-recourse to us, outstanding as of December 31, 2015

(d.) We have committed to invest up to $2.5 million in equity and debt financing, of which $1.5 million has been funded as of December 31, 2015. This LP has a third-party term loan of $5.4 million, which is non-recourse to us, outstanding as of December 31, 2015.

Below are the combined statements of income for the LLCs/LPs accounted for under the equity method at December 31, 2015, 2014 and 2013. The data for the year ended December 31, 2014 includes the financial results for the six above-mentioned LLCs in which we purchased the minority ownership interests in August, 2014 for the period of January through July of 2014 (during which they were accounted for under the equity method).

	For the Year Ended December 31,
	2015		2014(b.)		2013(c.)
	(amounts in thousands)
Revenues	$	14,347	$	17,292	$	21,001
Operating expenses		5,605		6,769		8,705
Depreciation and amortization		2,398		2,968		4,039
Interest, net		2,578		4,261		6,353
Net income	$	3,766	$	3,294	$	1,904
Our share of net income (a.)	$	2,536	$	2,428	$	2,095

(a.) Our share of net income during 2015, 2014 and 2013, includes interest income earned by us on various advances made to LLCs of approximately $200,000, $834,000 and $1.9 million, respectively.  

(b.) As mentioned above, we began to account for six LLCs (Desert Valley Medical Center, Santa Fe Professional Plaza, Rosenberg Children’s Medical Plaza, Sierra San Antonio Medical Plaza, Phoenix Children’s East Valley Care Center and 3811 E. Bell Medical Building Medical Plaza) on a consolidated basis as of August 1, 2014. Prior to August 1, 2014, the financial results of these entities were accounted for under the equity method on an unconsolidated basis. The year ended December 31, 2014, include the financial results of the six mentioned LLCs for seven months ended July 31, 2014.

(c.) As mentioned above, we began to account for Sparks Medical Properties on a consolidated basis as of January 1, 2014. Prior to January 1, 2014, the financial results of this entity were accounted for under the equity method on an unconsolidated basis. These amounts include the financial results for Sparks Medical Properties for the years ended December 31, 2013 and 2012. In addition, we purchased the minority ownership interests in six LLCs effective August 1, 2014 (as mentioned in (b.) above) and began to account for the LLCs a consolidated basis as of that date. These amounts include the financial results for these six LLCs for the year ended December 31, 2013. As also mentioned above, we began to account for Palmdale Medical Properties on a consolidated basis as of January 1, 2014. Prior thereto, as a result of a master lease commitment with a wholly-owned subsidiary of UHS which expired effective as of July 1, 2013, the financial results of Palmdale Medical Properties was accounted for on a consolidated basis through the six-month period ended June 30, 2013 and then on an unconsolidated basis for the six-month period of July 1, 2013 through December 31, 2013. Therefore the financial results of this entity are reflected in the table above for the six-month period of July 1, 2013 through December 31, 2013.

Below are the combined balance sheets for the five LLCs that were accounted for under the equity method as of December 31, 2015 and 2014:

	December 31,
	2015			2014
	(amounts in thousands)
Net property, including CIP	$	61,668		$	62,450
Other assets		5,264			7,367
Total assets	$	66,932		$	69,817
Liabilities	$	2,538		$	3,348
Mortgage notes payable, non-recourse to us		28,895			52,728
Advances payable to us		22,489			—
Equity		13,010			13,741
Total liabilities and equity	$	66,932		$	69,817
Our share of equity and advances to LLCs reflected as:
Investments in LLCs	$	9,108		$	8,605
Advance to an LLC		22,489			—
Amounts included in accrued expenses and other liabilities		(1,105	)		—
Our share of equity and advances to LLCs, net	$	30,492		$	8,605

As of December 31, 2015, aggregate principal amounts due on mortgage notes payable by unconsolidated LLCs, which are accounted for under the equity method and are non-recourse to us, are as follows (amounts in thousands):

2016	$	530
2017		5,727
2018		445
2019		466
2020		484
2021 and After		21,243
Total	$	28,895

	Mortgage Loan Balance (a.)
Name of LLC/LP	12/31/2015		12/31/2014		Maturity Date
Arlington Medical Properties (b.)	$	-	$	23,287	October,2015
FTX MOB Phase II		5,427		5,548	August,2017
Grayson Properties		14,670		14,893	September, 2021
Brunswick Associates		8,798		9,000	December, 2024
	$	28,895	$	52,728

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

(b.) In October, 2015, we borrowed an additional $22.8 million under our Credit Agreement to repay this outstanding third-party mortgage loan on its scheduled maturity date. These funds were advanced as a member loan to Arlington Medical Properties, LLC pursuant to a 5.29% fixed rate note with terms similar to those in place pursuant to the recently repaid third-party mortgage loan.

Pursuant to the operating and/or partnership agreements of the five 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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Segment Reporting

12 Months Ended

Dec. 31, 2015

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.

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Quarterly Results

12 Months Ended

Dec. 31, 2015

Quarterly Financial Information Disclosure [Abstract]

Quarterly Results

(10) QUARTERLY RESULTS (unaudited)

	2015
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
	(amounts in thousands, except per share amounts)
Revenues	$	16,202	$	16,049	$	15,686	$	16,013	$	63,950
Net income before gains	$	3,696	$	3,262	$	3,639	$	4,352	$	14,949
Gain on property exchange		—		8,742		—		—		8,742
Net income	$	3,696	$	12,004	$	3,639	$	4,352	$	23,691
Total basic earnings per share	$	0.28	$	0.90	$	0.27	$	0.33	$	1.78
Total diluted earnings per share	$	0.28	$	0.90	$	0.27	$	0.33	$	1.78

	2014 (a.)
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
	(amounts in thousands, except per share amounts)
Revenues	$	14,288	$	14,317	$	15,258	$	15,923	$	59,786
Net income before gains	$	3,458	$	3,408	$	3,048	$	3,185	$	13,099
Gain on fair value recognition resulting from the purchase    of minority interests in majority-owned LLCs		316		—		25,093		—		25,409
Gain on divestiture of real property		—		—		—		13,043		13,043
Net income	$	3,774	$	3,408	$	28,141	$	16,228	$	51,551
Total basic earnings per share	$	0.29	$	0.26	$	2.18	$	1.24	$	3.99
Total diluted earnings per share	$	0.29	$	0.26	$	2.18	$	1.24	$	3.99

(a.) We began to account for Palmdale Medical Properties and Sparks Medical Properties on a consolidated basis effective January 1, 2014. Additionally, we began to account for six LLCs (Desert Valley Medical Center, Santa Fe Professional Plaza, Rosenberg Children’s Medical Plaza, Sierra San Antonio Medical Plaza, Phoenix Children’s East Valley Care Center and 3811 E. Bell Medical Building Medical Plaza) on a consolidated basis as of August 1, 2014.

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Real Estate and Accumulated Depreciation

12 Months Ended

Dec. 31, 2015

Real Estate And Accumulated Depreciation Disclosure [Abstract]

Real Estate and Accumulated Depreciation

Schedule III

Universal Health Realty Income Trust

Real Estate and Accumulated Depreciation — December 31, 2015

(amounts in thousands)

										Gross amount at										Date of
										which carried										Completion of
	Initial Cost									at end of period								Accumulated		Construction,
Description	Encumbrance (d.)		Land		Building & Improv.		Adjustments to Basis (a.)			Land		Building & Improvements		CIP		Total		Depreciation as of Dec. 31, 2015		Acquisition or Significant improvement	Date Acquired	Depreciable Life
Inland Valley Regional    Medical Center    Wildomar, California		—	$	2,050	$	10,701	$	14,596		$	2,050	$	25,297			$	27,347	$	11,885	2007	1986	43 Years
McAllen Medical Center    McAllen, Texas		—		4,720		31,442		10,189			6,281		40,070				46,351		25,330	1994	1986	42 Years
Wellington Regional    Medical Center    West Palm Beach,  Florida		—		1,190		14,652		17,370			1,663		31,549				33,212		17,334	2006	1986	42 Years
HealthSouth Deaconess    Rehabilitation Hospital    Evansville, Indiana		—		500		6,945		1,062			500		8,007				8,507		5,272	1993	1989	40 Years
Kindred Hospital Chicago    Central Chicago, Illinois		—		158		6,404		1,838			158		8,242				8,400		8,242	1993	1986	25 Years
Family Doctor’s Medical    Office Building    Shreveport, Louisiana		—		54		1,526		494			54		2,020				2,074		950	1991	1995	45 Years
Kelsey-Seybold Clinic at    King’s Crossing		—		439		1,618		878			439		2,496				2,935		1,226	1995	1995	45 Years
Professional Buildings at    King’s Crossing    Kingwood, Texas		—		439		1,837		213			439		2,050				2,489		945	1995	1995	45 Years
Chesterbrook Academy    Audubon, Pennsylvania		—		307		996		—			307		996				1,303		434	1996	1996	45 Years
Chesterbrook Academy    New Britain,  Pennsylvania		—		250		744		—			250		744				994		326	1991	1996	45 Years
Chesterbrook Academy    Uwchlan, Pennsylvania		—		180		815		—			180		815				995		356	1992	1996	45 Years
Chesterbrook Academy    Newtown,  Pennsylvania		—		195		749		—			195		749				944		328	1992	1996	45 Years
The Southern Crescent    Center I (b.)		—		1,130		5,092		(2,271	)		1,130		2,821				3,951		2,344	1994	1996	45 Years
The Southern Crescent    Center II (b.)    Riverdale, Georgia		—		—		—		4,913			806		4,107				4,913		2,070	2000	1998	35 Years
The Cypresswood    Professional Center    Spring, Texas		—		573		3,842		704			573		4,546		7		5,126		2,610	1997	1997	35 Years
701 South Tonopah  Building    Las Vegas, Nevada		—		—		1,579		68			—		1,647				1,647		1,004	1999	1999	25 Years
Medical Center of Western    Connecticut    Danbury, Connecticut		4,663		1,151		5,176		544			1,151		5,720				6,871		3,124	2000	2000	30 Years
Vibra Hospital of Corpus Christi    Corpus Christi, Texas		2,815		1,104		5,508		—			1,104		5,508				6,612		1,242	2008	2008	35 Years
Apache Junction Medical Plaza (c.)    Apache Junction, AZ		—		240		3,590		668			240		4,258		67		4,565		712	2004	2004	30 Years
Auburn Medical Office    Building II (c.)    Auburn, WA		6,954		—		10,200		176			—		10,376				10,376		1,375	2009	2009	36 Years
BRB Medical Office    Building (c.)    Kingwood, Texas		6,498		430		8,970		32			430		9,002				9,432		1,178	2010	2010	37 Years
Centennial Hills Medical    Office Building (c.)    Las Vegas, NV		10,339		—		19,890		1,005			—		20,895		7		20,902		2,937	2006	2006	34 Years
Desert Springs Medical Plaza (c.)    Las Vegas, NV		—		1,200		9,560		806			1,200		10,366				11,566		1,702	1998	1998	30 Years
700 Shadow Lane &    Goldring MOBs (c.)    Las Vegas, NV		6,428		400		11,300		2,871			400		14,171		11		14,582		2,034	2003	2003	30 Years
Spring Valley Hospital MOB I (c.)    Las Vegas, NV		—		—		9,500		407			—		9,907		8		9,915		1,415	2004	2004	35 Years

Schedule III

Universal Health Realty Income Trust

Real Estate and Accumulated Depreciation — December 31, 2015 (continued)

(amounts in thousands)

									Gross amount at										Date of
									which carried										Completion of
	Initial Cost								at end of period								Accumulated		Construction,
Description	Encumbrance (d.)		Land		Building & Improv.		Adjustments to Basis (a.)		Land		Building & Improvements		CIP		Total		Depreciation as of Dec. 31, 2015		Acquisition or Significant improvement	Date Acquired	Depreciable Life
Spring Valley Hospital    MOB II (c.)    Las Vegas, NV		—		—		9,800		488		—		10,288				10,288		1,439	2006	2006	34 Years
Summerlin Hospital    MOB I (c.)    Las Vegas, NV		—		460		15,440		689		460		16,129		2		16,591		2,595	1999	1999	30 Years
Summerlin Hospital    MOB II (c.)    Las Vegas, NV		11,419		370		16,830		1,037		370		17,867		166		18,403		2,757	2000	2000	30 Years
Summerlin Hospital    MOB III (c.)    Las Vegas, NV		10,695		—		14,900		2,107		—		17,007				17,007		2,140	2009	2009	36 Years
Emory at Dunwoody    Building    Dunwoody, GA		—		782		3,455		—		782		3,455				4,237		527	2011	2011	35 Years
Forney Medical Plaza    Forney, TX		—		910		11,960		31		910		11,991				12,901		2,093	2011	2011	35 Years
Lake Pointe Medical Arts    Building    Rowlett, TX		—		1,100		9,000		31		1,100		9,031				10,131		1,382	2011	2011	35 Years
Tuscan Professional Building    Irving, TX		5,439		1,100		12,525		89		1,100		12,614	82			13,796		1,732	2011	2011	35 Years
Peace Health Medical    Clinic    Bellingham, WA		20,790		1,900		24,910		—		1,900		24,910				26,810		3,379	2012	2012	35 Years
Northwest Texas    Professional Office Tower    Amarillo, TX		—		—		7,180		—		—		7,180				7,180		726	2012	2012	35 Years
Ward Eagle Office Village    Farmington Hills, MI		—		220		3,220		—		220		3,220				3,440		286	2013	2013	35 Years
5004 Poole Road MOB    Denison, TX		—		96		529		—		96		529				625		46	2013	2013	35 Years
Desert Valley Medical    Center (e.)    Phoenix, AZ		5,200		2,280		4,624		235		2,280		4,859		42		7,181		278	1996	1996	30 Years
Haas Medical Office Park    Ottumwa, IA		—		—		3,571		—		—		3,571				3,571		102	2015	2015	35 Years
Hanover Emergency Center    Mechanicsville, VA		—		1,300		6,224		—		1,300		6,224				7,524		281	2014	2014	35 Years
Mission Free-standing Emergency Department    Mission, TX		—		1,441		4,696		—		1,441		4,696				6,137		143	2015	2015	35 Years
3811  E. Bell (e.)    Phoenix, AZ		—		930		6,929		60		930		6,989	3			7,922		381	2010	2010	30 Years
Northwest Medical Center    at Sugar Creek    Bentonville, AR		—		1,100		2,870		—		1,100		2,870				3,970		174	2014	2014	35 Years
The Children’s Clinic at    Springdale    Springdale, AR		—		610		1,570		—		610		1,570				2,180		119	2014	2014	35 Years
Rosenberg Children’s    Medical Plaza (e.)    Phoenix, AZ		8,317		0		23,302		27		0		23,329				23,329		1,111	2001	2001	35 Years
Phoenix Children’s East    Valley Care    Center (e.) Phoenix, AZ		6,348		1,050		10,900		—		1,050		10,900				11,950		518	2006	2006	35 Years
Palmdale Medical Plaza (e.)    Palmdale, CA		—		—		10,555		—		0		10,555		482		11,037		745	2008	2008	34 Years
Piedmont-Roswell Physician Center    Sandy Springs, GA		—		2,338		2,128		—		2,338		2,128				4,466		58	2015	2015	30 Years
Piedmont-Vinings Physician Center    Vinings, GA		—		1,348		2,418		—		1,348		2,418				3,766		64	2015	2015	30 Years

Schedule III

Universal Health Realty Income Trust

Real Estate and Accumulated Depreciation — December 31, 2015 (continued)

(amounts in thousands)

									Gross amount at										Date of
									which carried										Completion of
	Initial Cost								at end of period								Accumulated		Construction,
Description	Encumbrance (d.)		Land		Building & Improv.		Adjustments to Basis (a.)		Land		Building & Improvements		CIP		Total		Depreciation as of Dec. 31, 2015		Acquisition or Significant improvement	Date Acquired	Depreciable Life
Santa Fe Professional    Plaza (e.)    Scottsdale, AZ		—		1,090		1,960		145		1,090		2,105		1		3,196		126	1999	1999	30 Years
Sierra San Antonio Medical    Plaza (e.)    Fontana, CA		—		0		11,538		—		0		11,538	12			11,550		623	2006	2006	30 Years
Vista Medical Terrace &    Sparks MOB (e.)    Sparks, NV		4,351		0		9,276		403		0		9,679		153		9,832		804	2008	2008	30 Years
Weslaco Free-standing Emergency Department    Weslaco, TX		—		1,749		4,879		—		1,749		4,879				6,628		157	2015	2015	35 Years
TOTALS	$	110,256	$	38,884	$	409,825	$	61,905	$	41,724	$	468,890	$	1,043	$	511,657	$	121,161

a. Costs capitalized/divested subsequent to acquisition.

b. During 2008, a $4.6 million provision for asset impairment was recorded in connection with the real estate assets of Southern Crescent Center I & Southern Crescent Center II.

c. During 2011, we purchased the third-party minority interests in these properties in which we previously held noncontrolling majority owned interests. Since that time, these properties are wholly-owned.

d. Consists of outstanding balances as of December 31, 2015 on third-party debt that is non-recourse to us.

e. During 2014, we purchased the third-party minority interests in these properties in which we previously held noncontrolling majority owned interests. Since that time, these properties are wholly-owned.

UNIVERSAL HEALTH REALTY INCOME TRUST

NOTES TO SCHEDULE III

DECEMBER 31, 2015

(amounts in thousands)

(1) RECONCILIATION OF REAL ESTATE PROPERTIES

The following table reconciles the Real Estate Properties from January 1, 2013 to December 31, 2015:

	2015			2014			2013
Balance at January 1,	$	486,589		$	395,669		$	401,474
Impact of deconsolidation of an LLC(a.)		—			—			(13,185	)
Impact of consolidation of eight LLCs(b.)		—			84,064			—
Property additions		4,972			3,298			3,415
Acquisitions		24,568			13,674			4,065
Disposals		(4,472	)		(10,116	)		(100	)
Balance at December 31,	$	511,657		$	486,589		$	395,669

(2) RECONCILIATION OF ACCUMULATED DEPRECIATION

The following table reconciles the Accumulated Depreciation from January 1, 2013 to December 31, 2015:

	2015			2014			2013
Balance at January 1,	$	106,480		$	97,921		$	87,088
Impact of deconsolidation of an LLC(a.)		—			—			(1,588	)
Disposals		(1,568	)		(5,859	)		—
Current year depreciation expense		16,249			14,413			12,464
Other		—			5			(43	)
Balance at December 31,	$	121,161		$	106,480		$	97,921

(a.) The master lease with a wholly-owned subsidiary of UHS related to Palmdale Medical Properties expired effective as of July 1, 2013 and, as of that date, we began accounting for Palmdale Medical Properties on an unconsolidated basis under the equity method.

(b.) During 2014, the Trust purchased the minority ownership interests held by third-party members in eight LLCs (January and August, 2014) in which we previously held noncontrolling majority ownership interests. As a result of these minority ownership purchases, the Trust and our subsidiaries now own 100% of each of these LLCs and the financial results are included in our consolidated financial statements.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Nature of Operations

Nature of Operations

Universal Health Realty Income Trust and subsidiaries (the “Trust”) is organized as a Maryland real estate investment trust. We invest in healthcare and human service related facilities currently including acute care hospitals, rehabilitation hospitals, sub-acute facilities, surgery centers, free-standing emergency departments, childcare centers and medical office buildings. As of February 29, 2016, we have sixty-two real estate investments or commitments located in eighteen states consisting of:

· six hospital facilities including three acute care, one rehabilitation and two sub-acute;

· three free-standing emergency departments (“FEDs”);

· forty-nine medical office buildings, including five owned by unconsolidated limited liability companies (“LLCs”), and;

· four preschool and childcare centers.

Our future results of operations could be unfavorably impacted by deterioration in general economic conditions which could result in increases in the number of people unemployed and/or uninsured. Should that occur, it may result in decreased occupancy rates at our medical office buildings as well as a reduction in the revenues earned by the operators of our hospital facilities which would unfavorably impact our future bonus rentals (on the three Universal Health Services, Inc. hospital facilities) and may potentially have a negative impact on the future lease renewal terms and the underlying value of the hospital properties.  Management is unable to predict the effect, if any, that these factors may have on the operating results of our lessees or on their ability to meet their obligations under the terms of their leases with us. Management’s estimate of future cash flows from our leased properties could be materially affected in the near term, if certain of the leases are not renewed or renewed with less favorable terms at the end of their lease terms.

Revenue Recognition

Revenue Recognition

Our revenues consist primarily of rentals received from tenants, which are comprised of minimum rent (base rentals), bonus rentals and reimbursements from tenants for their pro-rata share of expenses such as common area maintenance costs, real estate taxes and utilities.

The minimum rent for all hospital facilities is fixed over the initial term or renewal term of the respective leases. Rental income recorded by our properties, including our consolidated and unconsolidated MOBs, relating to leases in excess of one year in length, is recognized using the straight-line method under which contractual rents are recognized evenly over the lease term regardless of when payments are due. The amount of rental revenue resulting from straight-line rent adjustments is dependent on many factors including the nature and amount of any rental concessions granted to new tenants, stipulated rent increases under existing leases, as well as the acquisitions and sales of properties that have existing in-place leases with terms in excess of one year. As a result, the straight-line adjustments to rental revenue may vary from period-to-period. Bonus rents are recognized when earned based upon increases in each facility’s net revenue in excess of stipulated amounts. Bonus rentals are determined and paid each quarter based upon a computation that compares the respective facility’s current quarter’s net revenue to the corresponding quarter in the base year. Tenant reimbursements for operating expenses are accrued as revenue in the same period the related expenses are incurred.

Real Estate Investments

Real Estate Investments

On the date of acquisition, the purchase price of a property is allocated to the assets acquired (land, buildings and intangible assets) and liabilities assumed based upon our estimates of their fair values. Intangible assets include the value of in-place leases, above market leases and leasehold interest in land at the time of acquisition. Substantially all of our intangible assets consist of the value of in-place leases at December 31, 2015, and will be amortized over the remaining lease terms (aggregate weighted average of 4.1 years at December 31, 2015) and is expected to result in estimated aggregate amortization expense of $4.6 million, $4.0 million, $2.7 million $2.0 million and $1.8 million for 2016, 2017, 2018, 2019 and 2020, respectively. Amortization expense on intangible values of in place leases was $5.5 million for the year ended December 31, 2015, $6.1 million for the year ended December 31, 2014 and $6.0 million for the year ended December 31, 2013. Depreciation is computed using the straight-line method over the estimated useful lives of the buildings and capital improvements. The estimated original useful lives of our buildings ranges from 25-45 years and the estimated original useful lives of capital improvements ranges from 3-35 years. On a consolidated basis, depreciation expense was $16.2 million for the year ended December 31, 2015, $14.4 million for the year ended December 31, 2014 and $12.5 million for the year ended December 31, 2013.

Cash and Cash Equivalents

Cash and Cash Equivalents

We consider all highly liquid investment instruments with original maturities of three months or less to be cash equivalents.

Asset Impairment

Asset Impairment

Real estate investments and related intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the property might not be recoverable. A property to be held and used is considered impaired only if management’s estimate of the aggregate future cash flows, less estimated capital expenditures, to be generated by the property, undiscounted and without interest charges, are less than the carrying value of the property. This estimate takes into consideration factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition, local market conditions and other factors.

The determination of undiscounted cash flows requires estimates by management, including the expected course of action at the balance sheet date that would lead to such cash flows. Subsequent changes in estimated undiscounted cash flows arising from changes in anticipated action to be taken with respect to the property could impact the determination of whether an impairment exists and whether the effects could materially impact our net income. To the extent estimated undiscounted cash flows are less than the carrying value of the property, the loss will be measured as the excess of the carrying amount of the property over the fair value of the property.

Assessment of the recoverability by us of certain lease related costs must be made when we have reason to believe that a tenant might not be able to perform under the terms of the lease as originally expected. This requires us to make estimates as to the recoverability of such costs. If we determine that the intangible assets are not recoverable from future cash flows, the excess of carrying value of the intangible asset over its estimated fair value is charged to income.

An other than temporary impairment of an investment in an LLC is recognized when the carrying value of the investment is not considered recoverable based on evaluation of the severity and duration of the decline in value, including projected declines in cash flow. To the extent impairment has occurred, the excess carrying value of the asset over its estimated fair value is charged to income.

Investments in Limited Liability Companies ("LLCs")

Investments in Limited Liability Companies (“LLCs”)

In accordance with the Financial Accounting Standards Board’s (“FASB”) standards and guidance relating to accounting for investments and real estate ventures, we account for our unconsolidated investments in LLCs 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.

At December 31, 2015, we have non-controlling equity investments or commitments in five jointly-owned LLCs which own MOBs. We accounted for these LLCs on an unconsolidated basis pursuant to the equity method since they are not variable interest entities. The majority of these LLCs are joint-ventures between us and non-related parties that manage and hold minority ownership interests in the entities. Each LLC 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 fundings are typically advanced as equity or member loans. These LLCs maintain property insurance on the properties.

Palmdale Medical Properties was consolidated in our financial statements through June 30, 2013 at which time its master lease with a wholly-owned subsidiary of UHS expired. For the period of July 1, 2013 through December 31, 2013, we accounted for Palmdale Medical Properties under the equity method. As discussed below, as a result of our purchase of the third-party minority ownership interest in Palmdale Medical Properties, effective January 1, 2014, we began accounting for Palmdale Medical Properties on a consolidated basis.

Effective August 1, 2014, we purchased the third-party minority ownership interests, ranging from 5% to 15%, in six LLCs (Desert Valley Medical Center, Santa Fe Professional Plaza, Rosenberg Children’s Medical Plaza, Sierra San Antonio Medical Plaza, Phoenix Children’s East Valley Care Center and 3811 E. Bell Medical Building Medical Plaza). Effective January 1, 2014, we purchased the third-party minority ownership interests (5% for each LLC) in Palmdale Medical Properties and Sparks Medical Properties. We formerly held non-controlling majority ownership interests in all of these LLCs, and as a result of our purchase of the minority ownership interests, we now hold 100% of the ownership interests in these LLCs which own MOBs. As a result, we began accounting for the six LLCs mentioned above on a consolidated basis effective August 1, 2014 and we began accounting for Palmdale Medical Properties and Sparks Medical Properties on a consolidated basis effective January 1, 2014, as discussed below. Each of the property’s assets and liabilities were recorded at their fair values (see Note 3 to the consolidated financial statements for additional disclosure). Other than an increase in depreciation and amortization expense resulting from the fair value recognition related to the purchase of the minority ownership interests, these transactions did not have a material impact on our results of operations.

Federal Income Taxes

Federal Income Taxes

No provision has been made for federal income tax purposes since we qualify as a real estate investment trust under Sections 856 to 860 of the Internal Revenue Code of 1986, and intend to continue to remain so qualified. As such, we are exempt from federal income taxes and we are required to distribute at least 90% of our real estate investment taxable income to our shareholders.

We are subject to a federal excise tax computed on a calendar year basis. The excise tax equals 4% of the amount by which 85% of our ordinary income plus 95% of any capital gain income for the calendar year exceeds cash distributions during the calendar year, as defined. No provision for excise tax has been reflected in the financial statements as no tax was due.

Earnings and profits, which determine the taxability of dividends to shareholders, will differ from net income reported for financial reporting purposes due to the differences for federal tax purposes in the cost basis of assets and in the estimated useful lives used to compute depreciation and the recording of provision for impairment losses.

The aggregate gross cost basis and net book value of the properties for federal income tax purposes are approximately $489 million and $325 million, respectively, at December 31, 2015.

Stock-Based Compensation

Stock-Based Compensation

We expense the grant-date fair value of restricted stock awards over the vesting period. We recognize the grant-date fair value of equity-based compensation and account for these transactions using the fair-value based method.

The expense associated with share-based compensation arrangements is a non-cash charge. In the Consolidated Statements of Cash Flows, share-based compensation expense is an adjustment to reconcile net income to cash provided by operating activities.

Fair Value

Fair Value

Fair value is a market-based measurement, not an entity-specific measurement and determined based upon the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, accounting requirements establish a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Level 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). In instances when it is necessary to establish the fair value of our real estate investments and investments in LLCs we use unobservable inputs which are typically based on our own assumptions.

The fair value of our real estate investments, components of real estate investments and debt assumed in conjunction with acquisition and impairment activity, are considered to be Level 3 valuations as they are primarily based upon an income capitalization approach. Significant inputs into the models used to determine fair value of real estate investments and components of real estate investments include future cash flow projections, holding period, terminal capitalization rate and discount rates. Additionally the fair value of land takes into consideration comparable sales, as adjusted for site specific factors. The fair value of real estate investments is based upon significant judgments made by management, and accordingly, we typically obtain assistance from third party valuation specialists. Significant inputs into the models used to determine the fair value of assumed mortgages included the outstanding balance, term, stated interest rate and current market rate of the mortgage.

The carrying amounts reported in the balance sheet for cash, receivables, and short-term borrowings approximate their fair values due to the short-term nature of these instruments. Accordingly, these items are excluded from the fair value disclosures included elsewhere in these notes to the consolidated financial statements.

See Note 3-Acquisitions and Dispositions, for disclosure related to the $25.4 million net gain recorded during 2014 in connection with the fair value recognition of the assets and liabilities, including third-party debt, resulting from the purchase of minority ownership interests in majority-owned LLCs.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

New Accounting Standards

New Accounting Standards

Except as noted below there were no new accounting pronouncements during 2015 that impacted, or are expected to impact us.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASU 2016-02 supersedes the previous leases standard, Leases (Topic 840). The standard is effective on January 1, 2019, with early adoption permitted. We are currently in the process of evaluating the impact the adoption of ASU 2016-02 will have on our financial position or results of operations.

In April 2015, the FASB issued an update to the accounting standard relating to the presentation of debt issuance costs. Under the new guidance, debt issuance costs related to a recognized debt liability will be presented on the balance sheet as a direct deduction from the debt liability. This amendment becomes effective for annual periods beginning on or after December 15, 2015, and interim periods beginning on or after December 15, 2015; however, early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis, which amends the consolidation requirements in Accounting Standards Codification (“ASC”) 810, Consolidation. ASU 2015-02 makes targeted amendments to the current consolidation guidance, which could change consolidation conclusions. This guidance will be effective for us beginning in our first quarter of 2016 and early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments,” which changes the reporting requirement for retrospective adjustments to provisional amounts in the measurement period. The amendments in this update require an entity to present separately on the face of the income statement or disclose in the notes, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The revised guidance is effective for annual fiscal periods beginning after December 15, 2015. We do not expect the adoption of this revised guidance to have a material impact on our consolidated financial statements.

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Relationship with UHS and Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2015

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 our three acute care hospitals operated by wholly-owned subsidiaries of UHS:

Hospital Name	Type of Facility	Annual Minimum Rent		End of Lease Term	Renewal Term (years)
McAllen Medical Center	Acute Care	$	5,485,000	December, 2016	15(a)
Wellington Regional Medical Center	Acute Care	$	3,030,000	December, 2016	15(b)
Southwest Healthcare System, Inland Valley Campus	Acute Care	$	2,648,000	December, 2016	15(b)

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

(b) UHS has one 5-year renewal option at existing lease rates (through 2021) and two 5-year renewal options at fair market value lease rates (2022 through 2031).

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Property Exchange Transaction and Acquisitions (Tables)

12 Months Ended

Dec. 31, 2015

Purchased Minority Ownership Interests

Additionally, during January and August, 2014, we spent an aggregate of $7.0 million, including $4.7 million in cash plus an additional $2.3 million in the form of a note payable to the previous third-party member (which was fully repaid in January, 2015 and is reflected in “Accrued expenses and other liabilities” on our Consolidated Balance Sheet at December 31, 2014) to purchase the minority ownership interests held by third party members in eight LLCs (as noted in the table below) in which we previously held various non-controlling majority ownership interests ranging from 85% to 95%.

Name of LLC/LP	Ownership prior to minority interest purchase		Property Owned by LLC	Effective Date
Palmdale Medical Properties		95%	Palmdale Medical  Plaza	January1,2014
Sparks Medical Properties		95%	Vista Medical Terrace & Sparks  MOB	January1,2014
DVMC Properties		90%	Desert Valley Medical Center	August 1, 2014
Santa Fe Scottsdale		90%	Santa Fe Professional Plaza	August 1, 2014
PCH Medical Properties		85%	Rosenberg Children’s Medical Plaza	August 1, 2014
Sierra Medical Properties		95%	Sierra San Antonio Medical Plaza	August 1, 2014
PCH Southern Properties		95%	PhoenixChildren’sEastValleyCareCenter	August 1, 2014
3811 Bell Medical Properties		95%	3811 E. Bell	August 1, 2014

2015 Acquisitions

Allocation of Purchase Price to Assets Acquired and Liabilities Assumed

The aggregate purchase price for these three MOBs and two FEDs was allocated to the assets acquired and liabilities assumed consisting of tangible property and identified intangible assets, based on their respective fair values at acquisition as detailed in the table below.

Land	$7,050
Buildings and improvements	17,518
Intangible assets	2,182
Cash received- exchange transaction	2,000
Other liabilities	(116)
Deposit paid in 2014	(100)
Net book value of property divested in exchange transaction	(3,027)
Gain on exchange transaction	(8,742)
Net cash paid	$16,765

2014 Acquisitions

Allocation of Purchase Price to Assets Acquired and Liabilities Assumed

The aggregate purchase price for these clinics and MOB was allocated to the assets and liabilities acquired consisting of tangible property and identified intangible assets, based on their respective fair values at acquisition as detailed in the table below.

Land	$3,010
Buildings and improvements	10,664
Intangible assets	2,076
Deposit paid in 2013	(150)
Net cash paid	$15,600

2013 Acquisitions

Allocation of Purchase Price to Assets Acquired and Liabilities Assumed

The aggregate purchase price of approximately $4.7 million for these MOBs was allocated to the assets and liabilities acquired consisting of tangible property and identifiable intangible assets, based on their respective fair values at acquisition, as detailed in the table below.

Land	$	316
Buildings and improvements		3,749
Intangible assets		610
Other assets		21
Liabilities (real property and operating)		(11	)
Net cash paid	$	4,685

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Leases (Tables)

12 Months Ended

Dec. 31, 2015

Leases [Abstract]

Schedule of Minimum Future Base Rents from Non-Cancelable Leases

Minimum future base rents from non-cancelable leases related to properties included in our financial statements on a consolidated basis, excluding increases resulting from changes in the consumer price index, bonus rents and the impact of straight line rent, are as follows (amounts in thousands):

2016	$	49,973
2017		34,345
2018		29,594
2019		24,341
2020		19,653
Thereafter		50,914
Total minimum base rents	$	208,820

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Debt and Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2015

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			December 31, 2015
Tangible net worth		$	125,000		$	175,285
Total leverage		< 60		%		45.0	%
Secured leverage		< 30		%		19.8	%
Unencumbered leverage		< 60		%		42.2	%
Fixed charge coverage	> 1.50x			3.3x

Outstanding Mortgages, Excluding Net Debt Premium

The following table summarizes our outstanding mortgages, excluding net debt premium, at December 31, 2015 (amounts in thousands)

Facility Name	Outstanding Balance (in thousands)(a.)		Interest Rate			Maturity Date
Summerlin Hospital Medical Office Building III    floating rate mortgage loan (b.)	$	10,695		3.49	%	December, 2016
Peace Health fixed rate mortgage loan		20,790		5.64	%	April, 2017
Auburn Medical II floating rate mortgage loan		6,954		2.99	%	April, 2017
Medical Center of Western Connecticut fixed rate    mortgage loan		4,663		6.00	%	June, 2017
Summerlin Hospital Medical Office Building II fixed    rate mortgage loan		11,419		5.50	%	October, 2017
Phoenix Children’s East Valley Care Center fixed rate    mortgage loan		6,348		5.88	%	December, 2017
Centennial Hills Medical Office Building floating rate    mortgage loan		10,339		3.49	%	January, 2018
Sparks Medical Building/Vista Medical Terrace floating    rate mortgage loan		4,351		3.49	%	February, 2018
Rosenberg Children’s Medical Plaza fixed rate    mortgage loan		8,317		4.85	%	May, 2018
Vibra Hospital-Corpus Christi fixed rate mortgage loan		2,815		6.50	%	July, 2019
700 Shadow Lane and Goldring MOBs fixed rate    mortgage loan		6,428		4.54	%	June, 2022
BRB Medical Office Building fixed rate mortgage loan		6,498		4.27	%	December, 2022
Desert Valley Medical Center fixed rate mortgage loan		5,200		3.62	%	January, 2023
Tuscan Professional Building fixed rate mortgage loan		5,439		5.56	%	June, 2025
Total	$	110,256

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

(b.) This loan is scheduled to mature in December, 2016, at which time we will decide whether to refinance pursuant to a new mortgage loan or by utilizing borrowings under our revolving credit facility.

Aggregate Consolidated Scheduled Debt Repayments

As of December 31, 2015, our aggregate consolidated scheduled debt repayments (including mortgages) are as follows (amounts in thousands):

2016	$	13,714
2017		50,572
2018		22,837
2019 (a.)		145,757
2020		1,141
Later		18,385
Total	$	252,406

(a) Includes repayment of $142.2 million of outstanding borrowings under the terms of our $185 million revolving credit agreement.

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Incentive Plans (Tables)

12 Months Ended

Dec. 31, 2015

Postemployment Benefits [Abstract]

Options Before Adjustment to Option Price to Give Effect to Dilutive Equivalent Rights

Information with respect to these options, before adjustment to the option price to give effect to the dividend equivalent rights, is summarized as follows:

Outstanding Options	Number of Shares			Exercise Weighted- Average Price		Grant PriceRange (High-Low)
Balance, January 1, 2013		43,000		$	35.22	$36.53/$29.44
Exercised		(3,000	)		29.44	$29.44/$29.44
Balance, January 1, 2014		40,000		$	35.65	$36.53/$30.06
Exercised		(4,000	)		33.07	$30.06/$34.07
Balance, January 1, 2015		36,000		$	35.94	$34.90/$36.53
Exercised		(13,000	)		34.90	$34.90/$34.90
Outstanding options vested and exercisable as of    December 31, 2015		23,000		$	36.53	$36.53/$36.53

Information about Options Outstanding and Exercisable Options

The following table provides information about options outstanding and exercisable options at December 31, 2015:

	Options Outstanding and Exercisable
Number		23,000
Weighted average exercise price	$	36.53
Aggregate intrinsic value	$	310,040
Weighted average remaining contractual life		1.2

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Summarized Financial Information of Equity Affiliates (Tables)

12 Months Ended

Dec. 31, 2015

Equity Method Investments And Joint Ventures [Abstract]

Limited Liability Companies Accounted for Under Equity Method

Prior to August 1, 2014, these LLCs were accounted for on an unconsolidated basis pursuant to the equity method.

Name of LLC/LP	Ownership prior to minority interest purchase		Property Owned by LLC/LP	Effective Date
Palmdale Medical Properties		95%	Palmdale Medical Plaza	January 1, 2014
Sparks Medical Properties		95%	Vista Medical Terrace & Sparks MOB	January 1, 2014
DVMC Properties		90%	Desert Valley Medical Center	August 1, 2014
Santa Fe Scottsdale		90%	Santa Fe Professional Plaza	August 1, 2014
PCH Medical Properties		85%	Rosenberg Children’s Medical Plaza	August 1, 2014
Sierra Medical Properties		95%	Sierra San Antonio Medical Plaza	August 1, 2014
PCH Southern Properties		95%	Phoenix Children’s East Valley Care Center	August 1, 2014
3811 Bell Medical Properties		95%	3811 E. Bell	August 1, 2014

The following property table represents the five LLCs or LPs in which we own a noncontrolling interest and were accounted for under the equity method as of December 31, 2015:

Name of LLC/LP	Ownership		Property Owned by LLC/LP
Suburban Properties		33%	Suburban Medical Plaza II
Brunswick Associates (a.)		74%	Mid Coast Hospital MOB
Arlington Medical Properties (b.)		75%	Saint Mary’s Professional Office Building
Grayson Properties (c.)		95%	Texoma Medical Plaza
FTX MOB Phase II (d.)		95%	Forney Medical Plaza II

(a.) This LLC has a third-party term loan of $8.8 million, which is non-recourse to us, outstanding as of December 31, 2015.

(b.) We have funded $5.2 million in equity as of December 31, 2015 and are committed to invest an additional $1.1 million.  During the fourth quarter of 2015, we advanced this LLC a member loan, the funds of which were utilized to repay its $22.8 million outstanding third-party mortgage loan on its scheduled maturity date. The terms of the member loan are similar to those in place pursuant to the third-party mortgage loan that was recently repaid. Pursuant to the terms and conditions of an agreement executed in February, 2016, we purchased an additional 10% of the ownership interest in this LLC from the existing third-party member for approximately $4.8 million in cash thereby increasing our ownership interest to 85%.  

(c.) We have funded $2.8 million in equity as of December 31, 2015, and are committed to fund an additional $149,000. This building is on the campus of a UHS hospital and has tenants that include subsidiaries of UHS. This LP has a third-party term loan of $14.7 million, which is non-recourse to us, outstanding as of December 31, 2015

(d.) We have committed to invest up to $2.5 million in equity and debt financing, of which $1.5 million has been funded as of December 31, 2015. This LP has a third-party term loan of $5.4 million, which is non-recourse to us, outstanding as of December 31, 2015.

Condensed Combined Statements of Income (Unaudited) for Limited Liability Companies Accounted for Under Equity Method

Below are the combined statements of income for the LLCs/LPs accounted for under the equity method at December 31, 2015, 2014 and 2013.

	For the Year Ended December 31,
	2015		2014(b.)		2013(c.)
	(amounts in thousands)
Revenues	$	14,347	$	17,292	$	21,001
Operating expenses		5,605		6,769		8,705
Depreciation and amortization		2,398		2,968		4,039
Interest, net		2,578		4,261		6,353
Net income	$	3,766	$	3,294	$	1,904
Our share of net income (a.)	$	2,536	$	2,428	$	2,095

(a.) Our share of net income during 2015, 2014 and 2013, includes interest income earned by us on various advances made to LLCs of approximately $200,000, $834,000 and $1.9 million, respectively.  

(b.) As mentioned above, we began to account for six LLCs (Desert Valley Medical Center, Santa Fe Professional Plaza, Rosenberg Children’s Medical Plaza, Sierra San Antonio Medical Plaza, Phoenix Children’s East Valley Care Center and 3811 E. Bell Medical Building Medical Plaza) on a consolidated basis as of August 1, 2014. Prior to August 1, 2014, the financial results of these entities were accounted for under the equity method on an unconsolidated basis. The year ended December 31, 2014, include the financial results of the six mentioned LLCs for seven months ended July 31, 2014.

(c.) As mentioned above, we began to account for Sparks Medical Properties on a consolidated basis as of January 1, 2014. Prior to January 1, 2014, the financial results of this entity were accounted for under the equity method on an unconsolidated basis. These amounts include the financial results for Sparks Medical Properties for the years ended December 31, 2013 and 2012. In addition, we purchased the minority ownership interests in six LLCs effective August 1, 2014 (as mentioned in (b.) above) and began to account for the LLCs a consolidated basis as of that date. These amounts include the financial results for these six LLCs for the year ended December 31, 2013. As also mentioned above, we began to account for Palmdale Medical Properties on a consolidated basis as of January 1, 2014. Prior thereto, as a result of a master lease commitment with a wholly-owned subsidiary of UHS which expired effective as of July 1, 2013, the financial results of Palmdale Medical Properties was accounted for on a consolidated basis through the six-month period ended June 30, 2013 and then on an unconsolidated basis for the six-month period of July 1, 2013 through December 31, 2013. Therefore the financial results of this entity are reflected in the table above for the six-month period of July 1, 2013 through December 31, 2013.

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

Below are the combined balance sheets for the five LLCs that were accounted for under the equity method as of December 31, 2015 and 2014:

	December 31,
	2015			2014
	(amounts in thousands)
Net property, including CIP	$	61,668		$	62,450
Other assets		5,264			7,367
Total assets	$	66,932		$	69,817
Liabilities	$	2,538		$	3,348
Mortgage notes payable, non-recourse to us		28,895			52,728
Advances payable to us		22,489			—
Equity		13,010			13,741
Total liabilities and equity	$	66,932		$	69,817
Our share of equity and advances to LLCs reflected as:
Investments in LLCs	$	9,108		$	8,605
Advance to an LLC		22,489			—
Amounts included in accrued expenses and other liabilities		(1,105	)		—
Our share of equity and advances to LLCs, net	$	30,492		$	8,605

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

As of December 31, 2015, aggregate principal amounts due on mortgage notes payable by unconsolidated LLCs, which are accounted for under the equity method and are non-recourse to us, are as follows (amounts in thousands):

2016	$	530
2017		5,727
2018		445
2019		466
2020		484
2021 and After		21,243
Total	$	28,895

	Mortgage Loan Balance (a.)
Name of LLC/LP	12/31/2015		12/31/2014		Maturity Date
Arlington Medical Properties (b.)	$	-	$	23,287	October,2015
FTX MOB Phase II		5,427		5,548	August,2017
Grayson Properties		14,670		14,893	September, 2021
Brunswick Associates		8,798		9,000	December, 2024
	$	28,895	$	52,728

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

(b.) In October, 2015, we borrowed an additional $22.8 million under our Credit Agreement to repay this outstanding third-party mortgage loan on its scheduled maturity date. These funds were advanced as a member loan to Arlington Medical Properties, LLC pursuant to a 5.29% fixed rate note with terms similar to those in place pursuant to the recently repaid third-party mortgage loan.

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Quarterly Results (Tables)

12 Months Ended

Dec. 31, 2015

Quarterly Financial Information Disclosure [Abstract]

Quarterly Results for Operating Activities

	2015
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
	(amounts in thousands, except per share amounts)
Revenues	$	16,202	$	16,049	$	15,686	$	16,013	$	63,950
Net income before gains	$	3,696	$	3,262	$	3,639	$	4,352	$	14,949
Gain on property exchange		—		8,742		—		—		8,742
Net income	$	3,696	$	12,004	$	3,639	$	4,352	$	23,691
Total basic earnings per share	$	0.28	$	0.90	$	0.27	$	0.33	$	1.78
Total diluted earnings per share	$	0.28	$	0.90	$	0.27	$	0.33	$	1.78

	2014 (a.)
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
	(amounts in thousands, except per share amounts)
Revenues	$	14,288	$	14,317	$	15,258	$	15,923	$	59,786
Net income before gains	$	3,458	$	3,408	$	3,048	$	3,185	$	13,099
Gain on fair value recognition resulting from the purchase    of minority interests in majority-owned LLCs		316		—		25,093		—		25,409
Gain on divestiture of real property		—		—		—		13,043		13,043
Net income	$	3,774	$	3,408	$	28,141	$	16,228	$	51,551
Total basic earnings per share	$	0.29	$	0.26	$	2.18	$	1.24	$	3.99
Total diluted earnings per share	$	0.29	$	0.26	$	2.18	$	1.24	$	3.99

(a.) We began to account for Palmdale Medical Properties and Sparks Medical Properties on a consolidated basis effective January 1, 2014. Additionally, we began to account for six LLCs (Desert Valley Medical Center, Santa Fe Professional Plaza, Rosenberg Children’s Medical Plaza, Sierra San Antonio Medical Plaza, Phoenix Children’s East Valley Care Center and 3811 E. Bell Medical Building Medical Plaza) on a consolidated basis as of August 1, 2014.

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Summary of Significant Accounting Policies - Additional Information (Detail) $ in Millions	12 Months Ended
	Dec. 31, 2015 USD ($) Property State	Dec. 31, 2014 USD ($) Property	Dec. 31, 2013 USD ($)	Aug. 01, 2014 Property	Jan. 01, 2014 Property
Significant Accounting Policies [Line Items]
Number of real estate investments	62
Number of states that real estate investments are located | State	18
Intangible assets, estimated aggregate amortization expenses for 2016 | $	$ 4.6
Intangible assets, estimated aggregate amortization expenses for 2017 | $	4.0
Intangible assets, estimated aggregate amortization expenses for 2018 | $	2.7
Intangible assets, estimated aggregate amortization expenses for 2019 | $	2.0
Intangible assets, estimated aggregate amortization expenses for 2020 | $	1.8
Amortization expense, intangible assets | $	5.5	$ 6.1	$ 6.0
Depreciation expense | $	$ 16.2	$ 14.4	$ 12.5
Percentage of minority ownership interests by parent		100.00%
Federal excise tax rate when amount of 85% of ordinary income plus 95% of any capital gain income exceeds cash distributions	4.00%
Gross cost basis of properties for federal income tax purposes | $	$ 489.0
Net book value of the properties for federal income tax purposes | $	325.0
Net gain on fair value recognition resulting from the purchase of minority interests in majority-owned LLCs | $	$ 25.4
Palmdale Medical Properties and Sparks Medical Properties
Significant Accounting Policies [Line Items]
Number of real estate investments					2
Percentage of minority ownership purchased from third-party members				5.00%	5.00%
Percentage of minority ownership interests by parent	100.00%			100.00%
In Place Leases
Significant Accounting Policies [Line Items]
Intangible asset, useful life	4 years 1 month 6 days
Minimum
Significant Accounting Policies [Line Items]
Non-controlling equity interest, ownership percentage	33.00%
Percentage of minority ownership purchased from third-party members				5.00%
Percentage of real estate investment taxable income that should be distributed to remain exempt from federal income taxes	90.00%
Maximum
Significant Accounting Policies [Line Items]
Non-controlling equity interest, ownership percentage	95.00%
Percentage of minority ownership purchased from third-party members				15.00%
Buildings | Minimum
Significant Accounting Policies [Line Items]
Estimated original useful lives of property plant and equipment	25 years
Buildings | Maximum
Significant Accounting Policies [Line Items]
Estimated original useful lives of property plant and equipment	45 years
Capital Improvements | Minimum
Significant Accounting Policies [Line Items]
Estimated original useful lives of property plant and equipment	3 years
Capital Improvements | Maximum
Significant Accounting Policies [Line Items]
Estimated original useful lives of property plant and equipment	35 years
Limited Liability Companies
Significant Accounting Policies [Line Items]
Number of real estate investments		8		6	6
Limited Liability Companies | Palmdale Medical Properties and Sparks Medical Properties
Significant Accounting Policies [Line Items]
Percentage of minority ownership interests by parent				100.00%
Limited Liability Companies | Minimum
Significant Accounting Policies [Line Items]
Percentage of minority ownership purchased from third-party members				5.00%
Limited Liability Companies | Maximum
Significant Accounting Policies [Line Items]
Percentage of minority ownership purchased from third-party members				15.00%
Hospitals
Significant Accounting Policies [Line Items]
Number of real estate investments	6
Hospitals | Acute Care
Significant Accounting Policies [Line Items]
Number of real estate investments	3
Hospitals | Rehabilitation
Significant Accounting Policies [Line Items]
Number of real estate investments	1
Hospitals | Sub-acute
Significant Accounting Policies [Line Items]
Number of real estate investments	2
Mission and Weslaco Freestanding Emergency Departments
Significant Accounting Policies [Line Items]
Number of real estate investments	3
Medical office buildings
Significant Accounting Policies [Line Items]
Number of real estate investments	49
Medical office buildings | Majority Owned Subsidiary Unconsolidated
Significant Accounting Policies [Line Items]
Number of real estate investments	5
Medical office buildings | Limited Liability Companies
Significant Accounting Policies [Line Items]
Number of real estate investments	5
Preschool and childcare Centers
Significant Accounting Policies [Line Items]
Number of real estate investments	4

XML

Relationship with UHS and Related Party Transactions - Additional Information (Detail)	1 Months Ended	3 Months Ended	12 Months Ended				60 Months Ended
	Dec. 31, 2014 USD ($)	Mar. 31, 2015 USD ($) ft² Property	Dec. 31, 2015 USD ($) Property Time Option	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2015 USD ($) Property Time Option	Aug. 01, 2014	Jan. 01, 2014 Property
Related Party Transaction [Line Items]
Cash received for property exchange			$ 2,000,000	$ 17,300,000	$ 0
Number of real estate investments | Property			62				62
Percentage of minority ownership interests by parent	100.00%			100.00%
Annual advisory fee as percentage of average invested real estate assets	0.70%		0.70%	0.70%	0.70%		0.70%
Advisory fee			$ 2,810,000	$ 2,545,000	$ 2,369,000
Texoma Medical Properties
Related Party Transaction [Line Items]
Non-controlling equity interest, ownership percentage			95.00%				95.00%
Committed investment in equity, funded			$ 2,800,000				$ 2,800,000
Committed investment in equity and debt financing			149,000				149,000
Third-party term loan			$ 14,700,000				$ 14,700,000
Palmdale Medical Properties and Sparks Medical Properties
Related Party Transaction [Line Items]
Number of real estate investments | Property									2
Percentage of minority ownership interests by parent			100.00%				100.00%	100.00%
Mission and Weslaco Freestanding Emergency Departments
Related Party Transaction [Line Items]
Number of real properties purchased | Property		2
Area of acquired building | ft²		13,600
Lease agreement period		10 years
Estimated acquisition cost of free-standing emergency departments		$ 12,800,000
Estimated rental revenues		$ 900,000
Mission and Weslaco Freestanding Emergency Departments | First four renewal options
Related Party Transaction [Line Items]
Percentage increase in annual lease rate		2.00%
The Bridgeway
Related Party Transaction [Line Items]
Lease term scheduled end date			2014-12	2014-12
Cash received for property exchange	$ 17,300,000			$ 17,300,000
Gain on divestiture of property				13,000,000
Amount of annual lease earned				$ 1,100,000	$ 1,100,000	$ 1,100,000
Minimum
Related Party Transaction [Line Items]
Non-controlling equity interest, ownership percentage			33.00%				33.00%
Minimum | Mission and Weslaco Freestanding Emergency Departments | First four renewal options
Related Party Transaction [Line Items]
Additional renewal terms, covering year		2025
Minimum | Mission and Weslaco Freestanding Emergency Departments | Last two renewal options
Related Party Transaction [Line Items]
Additional renewal terms, covering year		2045
Minimum | 5 Unconsolidated Limited Liability Companies
Related Party Transaction [Line Items]
Non-controlling equity interest, ownership percentage			33.00%				33.00%
Maximum
Related Party Transaction [Line Items]
Number of term renewal options | Option			5				5
Non-controlling equity interest, ownership percentage			95.00%				95.00%
Maximum | Mission and Weslaco Freestanding Emergency Departments | First four renewal options
Related Party Transaction [Line Items]
Additional renewal terms, covering year		2044
Maximum | Mission and Weslaco Freestanding Emergency Departments | Last two renewal options
Related Party Transaction [Line Items]
Additional renewal terms, covering year		2054
Maximum | 5 Unconsolidated Limited Liability Companies
Related Party Transaction [Line Items]
Non-controlling equity interest, ownership percentage			95.00%				95.00%
Universal Health Services, Inc
Related Party Transaction [Line Items]
Number of term renewal options | Time			6				6
Additional renewal terms			5 years
Number of medical office buildings and free standing emergency departments | Property			16
Number of free standing emergency departments | Property			2
Option to renew lease, notice period prior to termination date of current term			90 days
Period to purchase respective leased facilities at same price after lease terms			180 days
Renewal period of respective leased facilities at same price after lease terms			180 days
Lease term scheduled end date			2016-12
Number of renewal options at existing lease rates | Time			3
Percentage ownership of outstanding shares	5.90%		5.90%	5.90%			5.90%
Universal Health Services, Inc | Customer Concentration Risk | Revenues
Related Party Transaction [Line Items]
Percentage of revenues generated from leases			25.00%	28.00%	30.00%		31.00%
Universal Health Services, Inc | Customer Concentration Risk | Combined consolidated and unconsolidated revenue
Related Party Transaction [Line Items]
Percentage of revenues generated from leases			20.00%	22.00%	22.00%		20.00%
Universal Health Services, Inc | Minimum
Related Party Transaction [Line Items]
Initial lease terms			13 years
Universal Health Services, Inc | Maximum
Related Party Transaction [Line Items]
Initial lease terms			15 years
Universal Health Services of Delaware Inc
Related Party Transaction [Line Items]
Annual incentive fee to Advisor as percentage of cash available for distribution			20.00%				20.00%
Incentive fees			$ 0	$ 0	$ 0
Advisory fee			2,800,000	2,500,000	2,400,000
Average invested real estate assets			$ 401,000,000	$ 363,000,000	$ 338,000,000
Universal Health Services of Delaware Inc | Minimum
Related Party Transaction [Line Items]
Percentage of equity to be exceeded for incentive distribution			15.00%				15.00%

XML

Existing Lease Terms and Renewal Options for Each of UHS Hospital Facilities (Detail)	12 Months Ended
	Dec. 31, 2015 USD ($)
McAllen Medical Center
Operating Leased Assets [Line Items]
Type of Facility	Acute Care
Annual Minimum Rent	$ 5,485,000
End of Lease Term	2016-12
Renewal Term (years)	15 years	[1]
Wellington Regional Medical Center
Operating Leased Assets [Line Items]
Type of Facility	Acute Care
Annual Minimum Rent	$ 3,030,000
End of Lease Term	2016-12
Renewal Term (years)	15 years	[2]
Southwest Healthcare System, Inland Valley Campus
Operating Leased Assets [Line Items]
Type of Facility	Acute Care
Annual Minimum Rent	$ 2,648,000
End of Lease Term	2016-12
Renewal Term (years)	15 years	[2]

[1] (a)UHS has three 5-year renewal options at existing lease rates (through 2031).

[2] (b)UHS has one 5-year renewal option at existing lease rates (through 2021) and two 5-year renewal options at fair market value lease rates (2022 through 2031).

XML

Existing Lease Terms and Renewal Options for Each of UHS Hospital Facilities (Parenthetical) (Detail) - Universal Health Services, Inc	12 Months Ended
	Dec. 31, 2015 Time RenewalOption
Operating Leased Assets [Line Items]
Number of renewal options at existing lease rates | Time	3
McAllen Medical Center
Operating Leased Assets [Line Items]
Number of renewal options at existing lease rates | Time	3
Renewal options term at existing lease rates	5 years
Renewal options at existing lease rates expiration year	2031
Wellington Regional Medical Center And Southwest Healthcare System
Operating Leased Assets [Line Items]
Number of renewal options at existing lease rates | RenewalOption	1
Renewal options term at existing lease rates	5 years
Renewal options at existing lease rates expiration year	2021
Number of renewal options at fair market value lease rates | RenewalOption	2
Renewal options term at fair market value lease rates	5 years
Wellington Regional Medical Center And Southwest Healthcare System | Minimum
Operating Leased Assets [Line Items]
Renewal options at fair market value lease rates expiration year	2022
Wellington Regional Medical Center And Southwest Healthcare System | Maximum
Operating Leased Assets [Line Items]
Renewal options at fair market value lease rates expiration year	2031

XML

Property Exchange Transaction, Acquisitions, Dispositions and New Construction - Additional Information (Detail)		1 Months Ended							2 Months Ended	3 Months Ended			12 Months Ended
		Aug. 31, 2015 USD ($) ft²	May. 31, 2015 USD ($) ft² Property	Feb. 28, 2015 USD ($) ft² Time Building	Dec. 31, 2014 USD ($) Property	Aug. 31, 2014	Jan. 31, 2014 USD ($) ft²	Apr. 30, 2013 ft²	Feb. 28, 2015 USD ($) ft² Property Time	Jun. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Mar. 31, 2014 USD ($)	Dec. 31, 2015 USD ($) Property Time Option	Dec. 31, 2014 USD ($) Property	Dec. 31, 2013 USD ($)	Aug. 01, 2014 Property	Jan. 01, 2014 Property	Aug. 31, 2013 USD ($) ft²	Jun. 30, 2013 USD ($) ft²
Business Acquisitions And Dispositions [Line Items]
Cash received for property exchange transaction													$ 2,000,000	$ 17,300,000	$ 0
Net rentable area | ft²				16,000					16,000
Gain on property exchange										$ 8,742,000			8,742,000
Number of Buildings purchased | Building				2
Total purchase price				$ 4,100,000					$ 4,100,000
Deposits on real estate assets													150,000	100,000	150,000
Aggregate purchase price in connection with the purchase of minority ownership interests					$ 7,000,000									7,000,000
Cash paid for purchase of minority interests in majority-owned LLCs													$ 2,250,000	4,744,000
Payment for acquisition, notes payable					$ 2,300,000									$ 2,300,000
Maturity date, notes payable														Jan. 05, 2015
Number of real estate investments | Property													62
Percentage of minority ownership interests by parent					100.00%									100.00%
Gain from the remeasurement of fair value	[1]										$ 25,093,000	$ 316,000		$ 25,409,000
Purchase price allocation, tangible property					$ 84,000,000									84,000,000
Purchase price allocation, identifiable intangible assets					6,500,000									6,500,000
Purchase price allocation, long term debt					29,800,000									29,800,000
Net intangible assets													$ 19,800,000
Intangible assets, accumulated amortization					19,700,000								$ 25,100,000	19,700,000
In Place Leases
Business Acquisitions And Dispositions [Line Items]
Intangible assets amortization period at date of acquisition													4 years 1 month 6 days
The Bridgeway
Business Acquisitions And Dispositions [Line Items]
Cash received for property exchange transaction					17,300,000									$ 17,300,000
Lease term scheduled end date													2014-12	2014-12
Property at fair value					$ 17,300,000									$ 17,300,000
Gain on divestiture of property														$ 13,000,000
Minimum
Business Acquisitions And Dispositions [Line Items]
Ownership prior to minority interest purchase					85.00%									85.00%
Capitalization Rate														7.00%
Discount rate														8.00%
Non-controlling ownership interest													33.00%
Maximum
Business Acquisitions And Dispositions [Line Items]
Number of term renewal options | Option													5
Ownership prior to minority interest purchase					95.00%									95.00%
Capitalization Rate														8.75%
Discount rate														9.75%
Non-controlling ownership interest													95.00%
Piedmont Roswell Physician Center Sandy Springs GA
Business Acquisitions And Dispositions [Line Items]
Intangible assets amortization period at date of acquisition				15 years									14 years 4 months 24 days
Piedmont Vinings Physician Center Vinings GA
Business Acquisitions And Dispositions [Line Items]
Intangible assets amortization period at date of acquisition				15 years									14 years 4 months 24 days
Haas Medical Office Park
Business Acquisitions And Dispositions [Line Items]
Intangible assets amortization period at date of acquisition				10 years 4 months 24 days									9 years 7 months 6 days
Mission and Weslaco Freestanding Emergency Departments
Business Acquisitions And Dispositions [Line Items]
Lease agreement period									10 years
Total purchase price				$ 12,800,000					$ 12,800,000
Number of real properties purchased | Property									2
Area of acquired building | ft²				13,600					13,600
Number of real estate investments | Property													3
Universal Health Services, Inc
Business Acquisitions And Dispositions [Line Items]
Number of term renewal options | Time													6
Additional renewal terms													5 years
Lease term scheduled end date													2016-12
Universal Health Services, Inc | Mission and Weslaco Freestanding Emergency Departments
Business Acquisitions And Dispositions [Line Items]
Number of term renewal options | Time				6					6
Additional renewal terms									5 years
Limited Liability Companies
Business Acquisitions And Dispositions [Line Items]
Number of real estate investments | Property					8									8		6	6
2 MOBs ("exchange properties")
Business Acquisitions And Dispositions [Line Items]
Number of assets acquired | Property			2
Percentage of rentable area covered by the agreement			100.00%
Net rentable area | ft²			36,700
Lease agreement period			15 years
Percentage of annual rent increase			3.00%
Hanover Emergency Center
Business Acquisitions And Dispositions [Line Items]
Net rentable area | ft²		22,000
Total purchase price		$ 8,600,000
Intangible assets amortization period at date of acquisition						9 years 9 months 18 days							8 years 6 months
Lease term		10 years
Children's Clinic and Northwest Medical Center
Business Acquisitions And Dispositions [Line Items]
Intangible assets amortization period at date of acquisition						9 years 8 months 12 days							7 years 8 months 12 days
Net cash paid for acquisition of medical office buildings							$ 7,200,000
Deposits on real estate assets															150,000,000
Children's Clinic
Business Acquisitions And Dispositions [Line Items]
Area of acquired building | ft²							9,800
Northwest Medical Center
Business Acquisitions And Dispositions [Line Items]
Area of acquired building | ft²							13,700
August 1, 2014 Acquisitions
Business Acquisitions And Dispositions [Line Items]
Intangible assets amortization period at date of acquisition						4 years 8 months 12 days							4 years 1 month 6 days
January 1, 2014 Acquisitions
Business Acquisitions And Dispositions [Line Items]
Intangible assets amortization period at date of acquisition							5 years 3 months 18 days						4 years 8 months 12 days
Ward Eagle Office Village Medical Office Building
Business Acquisitions And Dispositions [Line Items]
Net rentable area | ft²																		16,300
Total purchase price																		$ 4,100,000
5004 Poole Road MOB Office building
Business Acquisitions And Dispositions [Line Items]
Net rentable area | ft²																			4,400
Total purchase price																			$ 625,000
2013 Acquisitions
Business Acquisitions And Dispositions [Line Items]
Total purchase price															$ 4,700,000
Intangible assets amortization period at date of acquisition													7 years 4 months 24 days		9 years 9 months 18 days
Aggregate purchase price in connection with the purchase of minority ownership interests															$ 4,685,000
Payment for acquisition, notes payable															11,000
Purchase price allocation, identifiable intangible assets															$ 610,000
Forney Medical Plaza
Business Acquisitions And Dispositions [Line Items]
Rentable medical office building | ft²								30,000
Non-controlling ownership interest								95.00%
Sheffield Medical Building Atlanta, Georgia
Business Acquisitions And Dispositions [Line Items]
Area of disposed building | ft²			73,446
Cash received for property exchange transaction			$ 2,000,000

[1] We began to account for Palmdale Medical Properties and Sparks Medical Properties on a consolidated basis effective January 1, 2014. Additionally, we began to account for six LLCs (Desert Valley Medical Center, Santa Fe Professional Plaza, Rosenberg Children’s Medical Plaza, Sierra San Antonio Medical Plaza, Phoenix Children’s East Valley Care Center and 3811 E. Bell Medical Building Medical Plaza) on a consolidated basis as of August 1, 2014.

XML

Allocation of Purchase Price to Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Business Acquisition [Line Items]
Intangible assets		$ 6,500
Liabilities (real property and operating)		(2,300)
Net cash paid		7,000
2015 Acquisitions
Business Acquisition [Line Items]
Land	$ 7,050
Buildings and improvements	17,518
Intangible assets	2,182
Cash received- exchange transaction	2,000
Other liabilities	(116)
Deposit paid in 2014	(100)
Net book value of property divested in exchange transaction	(3,027)
Gain on exchange transaction	(8,742)
Net cash paid	$ 16,765
2014 Acquisitions
Business Acquisition [Line Items]
Land		3,010
Buildings and improvements		10,664
Intangible assets		2,076
Deposit paid in 2014		(150)
Net cash paid		$ 15,600
2013 Acquisitions
Business Acquisition [Line Items]
Land			$ 316
Buildings and improvements			3,749
Intangible assets			610
Other assets			21
Liabilities (real property and operating)			(11)
Net cash paid			$ 4,685

XML

Purchased Minority Ownership Interest (Detail)	12 Months Ended
	Dec. 31, 2015	Aug. 01, 2014	Jan. 01, 2014
Palmdale Medical Properties
Business Acquisition [Line Items]
Ownership prior to minority interest purchase	95.00%		95.00%
Property Owned by LLC	Palmdale Medical Plaza
Effective Date	Jan. 01, 2014
Sparks Medical Properties
Business Acquisition [Line Items]
Ownership prior to minority interest purchase	95.00%		95.00%
Property Owned by LLC	Vista Medical Terrace & Sparks MOB
Effective Date	Jan. 01, 2014
DVMC Properties
Business Acquisition [Line Items]
Ownership prior to minority interest purchase	90.00%	90.00%
Property Owned by LLC	Desert Valley Medical Center
Effective Date	Aug. 01, 2014
Santa Fe Scottsdale
Business Acquisition [Line Items]
Ownership prior to minority interest purchase	90.00%	90.00%
Property Owned by LLC	Santa Fe Professional Plaza
Effective Date	Aug. 01, 2014
PCH Medical Properties
Business Acquisition [Line Items]
Ownership prior to minority interest purchase	85.00%	85.00%
Property Owned by LLC	Rosenberg Children’s Medical Plaza
Effective Date	Aug. 01, 2014
Sierra Medical Properties
Business Acquisition [Line Items]
Ownership prior to minority interest purchase	95.00%	95.00%
Property Owned by LLC	Sierra San Antonio Medical Plaza
Effective Date	Aug. 01, 2014
PCH Southern Properties
Business Acquisition [Line Items]
Ownership prior to minority interest purchase	95.00%	95.00%
Property Owned by LLC	Phoenix Children’s East Valley Care Center
Effective Date	Aug. 01, 2014
3811 Bell Medical Properties
Business Acquisition [Line Items]
Ownership prior to minority interest purchase	95.00%	95.00%
Property Owned by LLC	3811 E. Bell
Effective Date	Aug. 01, 2014

XML

Leases - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2015 Option
Leases Disclosure [Line Items]
Renewal option term	5 years
Minimum
Leases Disclosure [Line Items]
Operating Lease Terms	3 years
Maximum
Leases Disclosure [Line Items]
Operating Lease Terms	15 years
Number of term renewal options	5

XML

Schedule of minimum future base rents from non-cancelable leases (Detail) $ in Thousands	Dec. 31, 2015 USD ($)
Leases [Abstract]
2016	$ 49,973
2017	34,345
2018	29,594
2019	24,341
2020	19,653
Thereafter	50,914
Total minimum base rents	$ 208,820

XML

Debt and Financial Instruments - Additional Information (Detail)				3 Months Ended		12 Months Ended
	Dec. 31, 2015 USD ($) MortgageLoan		Mar. 27, 2015 USD ($) Option	Mar. 31, 2014 USD ($) Derivative	Sep. 30, 2013 USD ($) Derivative	Dec. 31, 2015 USD ($) MortgageLoan		Dec. 31, 2014 USD ($) MortgageLoan	Dec. 31, 2013 USD ($)
Debt Instrument [Line Items]
Outstanding borrowings under revolving credit agreement	$ 142,150,000					$ 142,150,000		$ 89,750,000
Outstanding borrowings under letter of credit	3,500,000					3,500,000
Available borrowing capacity	$ 39,300,000					39,300,000
Average amounts outstanding under our revolving credit agreement						$ 114,300,000		$ 104,600,000	$ 86,300,000
Effective interest rate	2.10%					2.10%		2.40%	2.20%
Line of credit, fair value of borrowings outstanding	$ 142,200,000					$ 142,200,000
Number of non-recourse mortgages | MortgageLoan	14					14		16
Balance of Non Recourse Mortgages	$ 110,256,000	[1]				$ 110,256,000	[1]	$ 122,900,000
Mortgage and other notes payable, non-recourse to us, debt premium	298,000					298,000		523,000
Mortgage loan fair value	112,400,000					112,400,000		$ 124,700,000
Interest Rate Cap
Debt Instrument [Line Items]
Number of interest rate cap agreements | Derivative				2	1
Notional amount				$ 20,000,000	$ 10,000,000
Premium paid				$ 134,500	$ 136,000
Expiration date of interest rate cap				Jan. 13, 2017	Jan. 13, 2017
LIBOR | Interest Rate Cap
Debt Instrument [Line Items]
Derivative instruments, LIBOR rate				1.50%	1.50%
New Revolving Credit Facility Agreement
Debt Instrument [Line Items]
Outstanding borrowing	$ 185,000,000		$ 185,000,000			$ 185,000,000
Unsecured revolving credit agreement terminated date			2019-03
Number of additional one year extension options | Option			1
Proceeds from Lines of Credit			$ 50,000,000
Credit facility, Interest Rate Terms						One, two, three, or six month LIBOR plus an applicable margin ranging from 1.50% to 2.00% or at the Base Rate plus an applicable margin ranging from 0.50% to 1.00%.
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 LIBOR plus 1%.
Fee payable on unused portion of commitment	0.25%
New Revolving Credit Facility Agreement | LIBOR
Debt Instrument [Line Items]
Margin points added to the reference rate	1.625%
New Revolving Credit Facility Agreement | Base Rate
Debt Instrument [Line Items]
Margin points added to the reference rate	0.625%
New Revolving Credit Facility Agreement | Swingline/Short-Term Loans
Debt Instrument [Line Items]
Outstanding borrowing			20,000,000
New Revolving Credit Facility Agreement | Letters of Credit
Debt Instrument [Line Items]
Outstanding borrowing			$ 50,000,000
Previous Revolving Credit Facility
Debt Instrument [Line Items]
Unsecured revolving credit agreement terminated date			2015-07
Minimum | New Revolving Credit Facility Agreement
Debt Instrument [Line Items]
Fee payable on unused portion of commitment			0.20%
Minimum | New Revolving Credit Facility Agreement | LIBOR
Debt Instrument [Line Items]
Margin points added to the reference rate			1.50%
Margin points added to the base rate			1.00%
Minimum | New Revolving Credit Facility Agreement | Base Rate
Debt Instrument [Line Items]
Margin points added to the reference rate			0.50%
Minimum | New Revolving Credit Facility Agreement | Federal Funds Effective Rate
Debt Instrument [Line Items]
Margin points added to the base rate			0.50%
Maximum | New Revolving Credit Facility Agreement
Debt Instrument [Line Items]
Fee payable on unused portion of commitment			0.40%
Maximum | New Revolving Credit Facility Agreement | LIBOR
Debt Instrument [Line Items]
Margin points added to the reference rate			2.00%
Maximum | New Revolving Credit Facility Agreement | Base Rate
Debt Instrument [Line Items]
Margin points added to the reference rate			1.00%

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

XML

Summary of Required Compliance Ratios in Connection with Terms of Credit Agreement (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($)
Debt Instrument [Line Items]
Covenant, Tangible net worth	$ 125,000
Tangible net worth	$ 175,285
Total leverage	45.00%
Secured leverage	19.80%
Unencumbered leverage	42.20%
Fixed charge coverage	3.30%
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		12 Months Ended
		Dec. 31, 2015		Dec. 31, 2014
Debt Instrument [Line Items]
Outstanding Balance		$ 110,256	[1]	$ 122,900
Summerlin Hospital Medical Office Building III floating rate mortgage loan
Debt Instrument [Line Items]
Outstanding Balance	[1],[2]	$ 10,695
Debt Instrument Interest Rate Stated Percentage	[2]	3.49%
Maturity Date	[2]	2016-12
Peace Health fixed rate mortgage loan
Debt Instrument [Line Items]
Outstanding Balance	[1]	$ 20,790
Debt Instrument Interest Rate Stated Percentage		5.64%
Maturity Date		2017-04
Auburn Medical II floating rate mortgage loan
Debt Instrument [Line Items]
Outstanding Balance	[1]	$ 6,954
Debt Instrument Interest Rate Stated Percentage		2.99%
Maturity Date		2017-04
Medical Center of Western Connecticut fixed rate mortgage loan
Debt Instrument [Line Items]
Outstanding Balance	[1]	$ 4,663
Debt Instrument Interest Rate Stated Percentage		6.00%
Maturity Date		2017-06
Summerlin Hospital Medical Office Building II fixed rate mortgage loan
Debt Instrument [Line Items]
Outstanding Balance	[1]	$ 11,419
Debt Instrument Interest Rate Stated Percentage		5.50%
Maturity Date		2017-10
Phoenix Children's East Valley Care Center Fixed Rate Mortgage Loan
Debt Instrument [Line Items]
Outstanding Balance	[1]	$ 6,348
Debt Instrument Interest Rate Stated Percentage		5.88%
Maturity Date		2017-12
Centennial Hills Medical Office Building floating rate mortgage loan
Debt Instrument [Line Items]
Outstanding Balance	[1]	$ 10,339
Debt Instrument Interest Rate Stated Percentage		3.49%
Maturity Date		2018-01
Sparks Medical Building/Vista Medical Terrace Floating Rate Mortgage Loan
Debt Instrument [Line Items]
Outstanding Balance	[1]	$ 4,351
Debt Instrument Interest Rate Stated Percentage		3.49%
Maturity Date		2018-02
Rosenberg Children's Medical Plaza Fixed Rate Mortgage Loan
Debt Instrument [Line Items]
Outstanding Balance	[1]	$ 8,317
Debt Instrument Interest Rate Stated Percentage		4.85%
Maturity Date		2018-05
Vibra Hospital-Corpus Christi fixed rate mortgage loan
Debt Instrument [Line Items]
Outstanding Balance	[1]	$ 2,815
Debt Instrument Interest Rate Stated Percentage		6.50%
Maturity Date		2019-07
700 Shadow Lane and Goldring MOBs fixed rate mortgage loan
Debt Instrument [Line Items]
Outstanding Balance	[1]	$ 6,428
Debt Instrument Interest Rate Stated Percentage		4.54%
Maturity Date		2022-06
BRB Medical Office Building fixed rate mortgage loan
Debt Instrument [Line Items]
Outstanding Balance	[1]	$ 6,498
Debt Instrument Interest Rate Stated Percentage		4.27%
Maturity Date		2022-12
Desert Valley Medical Center Floating Rate Mortgage Loan
Debt Instrument [Line Items]
Outstanding Balance	[1]	$ 5,200
Debt Instrument Interest Rate Stated Percentage		3.62%
Maturity Date		2023-01
Tuscan Professional Building fixed rate mortgage loan
Debt Instrument [Line Items]
Outstanding Balance	[1]	$ 5,439
Debt Instrument Interest Rate Stated Percentage		5.56%
Maturity Date		2025-06

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

[2] This loan is scheduled to mature in December, 2016, at which time we will decide whether to refinance pursuant to a new mortgage loan or by utilizing borrowings under our revolving credit facility.

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Aggregate Consolidated Scheduled Debt Repayment (Detail) $ in Thousands	Dec. 31, 2015 USD ($)
Debt Disclosure [Abstract]
2016	$ 13,714
2017	50,572
2018	22,837
2019	145,757	[1]
2020	1,141
Later	18,385
Total	$ 252,406

[1] Includes repayment of $142.2 million of outstanding borrowings under the terms of our $185 million revolving credit agreement.

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Aggregate Consolidated Scheduled Debt Repayment (Parenthetical) (Detail) - USD ($)	Dec. 31, 2015	Mar. 27, 2015	Dec. 31, 2014
Schedule Of Equity Method Investments [Line Items]
Line of credit borrowings	$ 142,150,000		$ 89,750,000
New Revolving Credit Facility Agreement
Schedule Of Equity Method Investments [Line Items]
Outstanding borrowing	$ 185,000,000	$ 185,000,000

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Dividends and Equity Issuance Program - Additional Information (Detail) - USD ($)	12 Months Ended			27 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2015	Nov. 30, 2015
Dividends and Equity Issuance [Line Items]
Declared and paid dividends, per share	$ 2.56	$ 2.52	$ 2.495
Ordinary income per share	2.17	1.478	1.96
Capital gain per share	$ 0.39	$ 1.042	$ 0.535
Securities, aggregate offer price					$ 100,000,000
At-The-Market (ATM) Equity Issuance Program
Dividends and Equity Issuance [Line Items]
Share issued	0	426,187	154,713	580,900
Average sale price per share		$ 47.51	$ 41.71	$ 45.97
Net cash proceeds from stock issued		$ 19,500,000	$ 6,100,000	$ 25,600,000
Payment of stock issuance cost		700,000	357,000	1,100,000
Net proceeds receivable		1,100,000	600,000
At-The-Market (ATM) Equity Issuance Program | Other Expense
Dividends and Equity Issuance [Line Items]
Payment of stock issuance cost		195,000	196,000	391,000
At-The-Market (ATM) Equity Issuance Program | Compensation to Merrill Lynch
Dividends and Equity Issuance [Line Items]
Payment of stock issuance cost		$ 506,000	$ 161,000	$ 667,000
Capital gain
Dividends and Equity Issuance [Line Items]
Unrecaptured Section 1250 gain dividends per share		$ 0.305

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Incentive Plans - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Equity Incentive Plan [Line Items]
Options outstanding and exercisable	23,000
Options outstanding and exercisable, average price per share	$ 36.53
Dividend equivalent rights, outstanding	23,000	36,000	40,000
Dividend equivalent rights paid to officers and Trustees	$ 75,000	$ 94,000	$ 106,000
Number of stock options exercised during the period, shares	13,000	4,000	3,000
Value of stock options exercised during the period	$ 154,500	$ 44,160	$ 46,290
Number of unvested options during the period	0
Incentive Plan 2007
Equity Incentive Plan [Line Items]
Number of shares authorized for issuance	75,000
Shares issued, net of cancellation	67,555
Number of shares vested	47,975
Number of shares remaining for issuance	7,445
Restricted shares issued, net of cancellation	9,730	9,850	8,730
Restricted shares issued, weighted average grant price	$ 47.75	$ 43.21	$ 43.54
Restricted shares of beneficial interest, net of cancellations, issued, value	$ 464,608	$ 425,619	$ 380,104
Restricted shares, Vesting Period	2017-06	2016-06	2015-06
Compensation expenses	$ 427,000	$ 399,000	$ 375,000
Compensation expenses remained to be recognized in future	$ 418,000
Compensation expenses not yet recognized, period of recognition	1 year
1997 Plan
Equity Incentive Plan [Line Items]
Options granted, vesting percentage per year starting from one year from date of grant	25.00%
Options, expiration period	10 years
Options outstanding and exercisable	23,000
Options outstanding and exercisable, average price per share	$ 36.53
Outstanding stock options, remaining weighted average life	1 year 2 months 12 days

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Options Before Adjustment to Option Price to Give Effect to Dilutive Equivalence (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares outstanding options, beginning balance	36,000	40,000	43,000
Number of shares outstanding options, exercised	(13,000)	(4,000)	(3,000)
Number of shares outstanding options, ending balance	23,000	36,000	40,000
Exercise weighted average price, outstanding option beginning balance	$ 35.94	$ 35.65	$ 35.22
Exercise weighted average price, outstanding option Exercised	34.90	33.07	29.44
Exercise weighted average price, outstanding option Ending balance	36.53	35.94	35.65
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant price, Beginning balance	34.90	36.53	36.53
Grant price, Exercised	34.90	30.06	29.44
Grant price, ending Balance		34.90	36.53
Grant price, vested and exercisable	36.53
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant price, Beginning balance	36.53	30.06	29.44
Grant price, Exercised	34.90	34.07	29.44
Grant price, ending Balance		$ 36.53	$ 30.06
Grant price, vested and exercisable	$ 36.53

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Options Outstanding and Exercisable Options (Detail)	12 Months Ended
	Dec. 31, 2015 USD ($) $ / shares shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Number | shares	23,000
Weighted average exercise price | $ / shares	$ 36.53
Aggregate intrinsic value | $	$ 310,040
Weighted average remaining contractual life	1 year 2 months 12 days

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Summarized Financial Information of Equity Affiliates - Additional Information (Detail) - Property	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Aug. 01, 2014	Jan. 01, 2014
Schedule Of Equity Method Investments [Line Items]
Number of real estate investments	62
Percentage of minority ownership interests by parent		100.00%
Palmdale Medical Properties and Sparks Medical Properties
Schedule Of Equity Method Investments [Line Items]
Number of real estate investments				2
Percentage of minority ownership purchased from third-party members			5.00%	5.00%
Percentage of minority ownership interests by parent	100.00%		100.00%
Medical office buildings
Schedule Of Equity Method Investments [Line Items]
Number of real estate investments	49
Limited Liability Companies / Limited Partner | Medical office buildings
Schedule Of Equity Method Investments [Line Items]
Number of real estate investments	5
Limited Liability Companies
Schedule Of Equity Method Investments [Line Items]
Number of real estate investments		8	6	6
Limited Liability Companies | Palmdale Medical Properties and Sparks Medical Properties
Schedule Of Equity Method Investments [Line Items]
Percentage of minority ownership interests by parent			100.00%
Limited Liability Companies | Medical office buildings
Schedule Of Equity Method Investments [Line Items]
Number of real estate investments	5
Minimum
Schedule Of Equity Method Investments [Line Items]
Non-controlling equity interest, ownership percentage	33.00%
Percentage of minority ownership purchased from third-party members			5.00%
Number of days for Non-Offering Member either to purchase or sell its entire ownership interest to or from Offering Member	60 days
Minimum | Limited Liability Companies
Schedule Of Equity Method Investments [Line Items]
Percentage of minority ownership purchased from third-party members			5.00%
Maximum
Schedule Of Equity Method Investments [Line Items]
Non-controlling equity interest, ownership percentage	95.00%
Percentage of minority ownership purchased from third-party members			15.00%
Number of days for Non-Offering Member either to purchase or sell its entire ownership interest to or from Offering Member	90 days
Maximum | Limited Liability Companies
Schedule Of Equity Method Investments [Line Items]
Percentage of minority ownership purchased from third-party members			15.00%
5 Unconsolidated Limited Liability Companies / Limited Partner | Minimum
Schedule Of Equity Method Investments [Line Items]
Non-controlling equity interest, ownership percentage	33.00%
5 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)		12 Months Ended
		Dec. 31, 2015	Aug. 01, 2014	Jan. 01, 2014
Equity Method Investments | Suburban Properties
Schedule Of Equity Method Investments [Line Items]
Property Owned by LLC/LP		Suburban Medical Plaza II
Ownership		33.00%
Equity Method Investments | Brunswick Associates
Schedule Of Equity Method Investments [Line Items]
Property Owned by LLC/LP	[1]	Mid Coast Hospital MOB
Ownership	[1]	74.00%
Equity Method Investments | Arlington Medical Properties
Schedule Of Equity Method Investments [Line Items]
Property Owned by LLC/LP	[2]	Saint Mary’s Professional Office Building
Ownership	[2]	75.00%
Equity Method Investments | Grayson Properties
Schedule Of Equity Method Investments [Line Items]
Property Owned by LLC/LP	[3]	Texoma Medical Plaza
Ownership	[3]	95.00%
Equity Method Investments | FTX MOB Phase II limited partnership
Schedule Of Equity Method Investments [Line Items]
Property Owned by LLC/LP	[4]	Forney Medical Plaza II
Ownership	[4]	95.00%
Palmdale Medical Properties
Schedule Of Equity Method Investments [Line Items]
Ownership prior to minority interest purchase		95.00%		95.00%
Property Owned by LLC/LP		Palmdale Medical Plaza
Effective Date		Jan. 01, 2014
Sparks Medical Properties
Schedule Of Equity Method Investments [Line Items]
Ownership prior to minority interest purchase		95.00%		95.00%
Property Owned by LLC/LP		Vista Medical Terrace & Sparks MOB
Effective Date		Jan. 01, 2014
DVMC Properties
Schedule Of Equity Method Investments [Line Items]
Ownership prior to minority interest purchase		90.00%	90.00%
Property Owned by LLC/LP		Desert Valley Medical Center
Effective Date		Aug. 01, 2014
Santa Fe Scottsdale
Schedule Of Equity Method Investments [Line Items]
Ownership prior to minority interest purchase		90.00%	90.00%
Property Owned by LLC/LP		Santa Fe Professional Plaza
Effective Date		Aug. 01, 2014
PCH Medical Properties
Schedule Of Equity Method Investments [Line Items]
Ownership prior to minority interest purchase		85.00%	85.00%
Property Owned by LLC/LP		Rosenberg Children’s Medical Plaza
Effective Date		Aug. 01, 2014
Sierra Medical Properties
Schedule Of Equity Method Investments [Line Items]
Ownership prior to minority interest purchase		95.00%	95.00%
Property Owned by LLC/LP		Sierra San Antonio Medical Plaza
Effective Date		Aug. 01, 2014
PCH Southern Properties
Schedule Of Equity Method Investments [Line Items]
Ownership prior to minority interest purchase		95.00%	95.00%
Property Owned by LLC/LP		Phoenix Children’s East Valley Care Center
Effective Date		Aug. 01, 2014
3811 Bell Medical Properties
Schedule Of Equity Method Investments [Line Items]
Ownership prior to minority interest purchase		95.00%	95.00%
Property Owned by LLC/LP		3811 E. Bell
Effective Date		Aug. 01, 2014

[1] This LLC has a third-party term loan of $8.8 million, which is non-recourse to us, outstanding as of December 31, 2015.

[2] We have funded $5.2 million in equity as of December 31, 2015 and are committed to invest an additional $1.1 million. During the fourth quarter of 2015, we advanced this LLC a member loan, the funds of which were utilized to repay its $22.8 million outstanding third-party mortgage loan on its scheduled maturity date. The terms of the member loan are similar to those in place pursuant to the third-party mortgage loan that was recently repaid. Pursuant to the terms and conditions of an agreement executed in February, 2016, we purchased an additional 10% of the ownership interest in this LLC from the existing third-party member for approximately $4.8 million in cash thereby increasing our ownership interest to 85%.

[3] We have funded $2.8 million in equity as of December 31, 2015, and are committed to fund an additional $149,000. This building is on the campus of a UHS hospital and has tenants that include subsidiaries of UHS. This LP has a third-party term loan of $14.7 million, which is non-recourse to us, outstanding as of December 31, 2015

[4] We have committed to invest up to $2.5 million in equity and debt financing, of which $1.5 million has been funded as of December 31, 2015. This LP has a third-party term loan of $5.4 million, which is non-recourse to us, outstanding as of December 31, 2015.

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Limited Liability Companies Accounted for Under Equity Method (Parenthetical) (Detail) - USD ($)	1 Months Ended	3 Months Ended	12 Months Ended
	Oct. 31, 2015	Dec. 31, 2015	Dec. 31, 2015
Brunswick Associates
Schedule Of Equity Method Investments [Line Items]
Third-party term loan		$ 8,800,000	$ 8,800,000
Arlington Medical Properties
Schedule Of Equity Method Investments [Line Items]
Committed investment in equity and debt financing, funded		5,200,000	5,200,000
Commitment to investment		1,100,000	$ 1,100,000
Proceeds from Lines of Credit	$ 22,800,000	$ 22,800,000
Percentage of minority ownership purchased from third-party members		10.00%	10.00%
Business acquisition additional consideration		$ 4,800,000	$ 4,800,000
Cash payment made purchased addition of ownership interest			85.00%
Grayson Properties
Schedule Of Equity Method Investments [Line Items]
Third-party term loan		14,700,000	$ 14,700,000
Committed investment in equity and debt financing, funded		2,800,000	2,800,000
Commitment to investment		149,000	149,000
FTX MOB Phase II limited partnership
Schedule Of Equity Method Investments [Line Items]
Third-party term loan		5,400,000	5,400,000
Committed investment in equity and debt financing, funded		1,500,000	1,500,000
Commitment to investment		$ 2,500,000	$ 2,500,000

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Condensed Combined Statement of Income for Limited Liabilities Accounted for under Equity Method (Detail) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014	[1]	Dec. 31, 2013	[2]
Equity Method Investments And Joint Ventures [Abstract]
Revenues		$ 14,347	$ 17,292		$ 21,001
Operating expenses		5,605	6,769		8,705
Depreciation and amortization		2,398	2,968		4,039
Interest, net		2,578	4,261		6,353
Net income		3,766	3,294		1,904
Our share of net income	[3]	$ 2,536	$ 2,428		$ 2,095

[1] As mentioned above, we began to account for six LLCs (Desert Valley Medical Center, Santa Fe Professional Plaza, Rosenberg Children’s Medical Plaza, Sierra San Antonio Medical Plaza, Phoenix Children’s East Valley Care Center and 3811 E. Bell Medical Building Medical Plaza) on a consolidated basis as of August 1, 2014. Prior to August 1, 2014, the financial results of these entities were accounted for under the equity method on an unconsolidated basis. The year ended December 31, 2014, include the financial results of the six mentioned LLCs for seven months ended July 31, 2014.

[2] As mentioned above, we began to account for Sparks Medical Properties on a consolidated basis as of January 1, 2014. Prior to January 1, 2014, the financial results of this entity were accounted for under the equity method on an unconsolidated basis. These amounts include the financial results for Sparks Medical Properties for the years ended December 31, 2013 and 2012. In addition, we purchased the minority ownership interests in six LLCs effective August 1, 2014 (as mentioned in (b.) above) and began to account for the LLCs a consolidated basis as of that date. These amounts include the financial results for these six LLCs for the year ended December 31, 2013. As also mentioned above, we began to account for Palmdale Medical Properties on a consolidated basis as of January 1, 2014. Prior thereto, as a result of a master lease commitment with a wholly-owned subsidiary of UHS which expired effective as of July 1, 2013, the financial results of Palmdale Medical Properties was accounted for on a consolidated basis through the six-month period ended June 30, 2013 and then on an unconsolidated basis for the six-month period of July 1, 2013 through December 31, 2013. Therefore the financial results of this entity are reflected in the table above for the six-month period of July 1, 2013 through December 31, 2013.

[3] Our share of net income during 2015, 2014 and 2013, includes interest income earned by us on various advances made to LLCs of approximately $200,000, $834,000 and $1.9 million, respectively.

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Condensed Combined Statement of Income for Limited Liabilities Accounted for under Equity Method (Parenthetical) (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Equity Method Investments And Joint Ventures [Abstract]
Interest income earned on various advances made to LLCs	$ 200,000	$ 834,000	$ 1,900,000

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Condensed Combined Balance Sheets of Limited Liabilities Accounted for under Equity Method (Detail) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Equity Method Investments And Joint Ventures [Abstract]
Net property, including CIP	$ 61,668	$ 62,450
Other assets	5,264	7,367
Total assets	66,932	69,817
Liabilities	2,538	3,348
Mortgage notes payable, non-recourse to us	28,895	52,728
Advances payable to us	22,489
Equity	13,010	13,741
Total liabilities and equity	66,932	69,817
Our share of equity and advances to LLCs reflected as:
Investments in LLCs	9,108	8,605
Advance to an LLC	22,489
Amounts included in accrued expenses and other liabilities	(1,105)
Our share of equity and advances to LLCs, net	$ 30,492	$ 8,605

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Aggregate Principal Amounts Due on Mortgage Notes Payable by Unconsolidated LLCs, Accounted Under Equity Method (Detail) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014
Schedule Of Equity Method Investments [Line Items]
2016		$ 13,714
2017		50,572
2018		22,837
2019	[1]	145,757
2020		1,141
2021 and After		18,385
Total		252,406
Mortgage Loan Balance		28,895	$ 52,728
Equity Method Investments
Schedule Of Equity Method Investments [Line Items]
2016		530
2017		5,727
2018		445
2019		466
2020		484
2021 and After		21,243
Total		28,895
Mortgage Loan Balance	[2]	$ 28,895	52,728
Equity Method Investments | Arlington Medical Properties
Schedule Of Equity Method Investments [Line Items]
Mortgage Loan Balance	[2],[3]		23,287
Maturity Date	[3]	2015-10
Equity Method Investments | FTX MOB Phase II
Schedule Of Equity Method Investments [Line Items]
Mortgage Loan Balance	[2]	$ 5,427	5,548
Maturity Date		2017-08
Equity Method Investments | Grayson Properties
Schedule Of Equity Method Investments [Line Items]
Mortgage Loan Balance	[2]	$ 14,670	14,893
Maturity Date		2021-09
Equity Method Investments | Brunswick Associates
Schedule Of Equity Method Investments [Line Items]
Mortgage Loan Balance	[2]	$ 8,798	$ 9,000
Maturity Date		2024-12

[1] Includes repayment of $142.2 million of outstanding borrowings under the terms of our $185 million revolving credit agreement.

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

[3] In October, 2015, we borrowed an additional $22.8 million under our Credit Agreement to repay this outstanding third-party mortgage loan on its scheduled maturity date. These funds were advanced as a member loan to Arlington Medical Properties, LLC pursuant to a 5.29% fixed rate note with terms similar to those in place pursuant to the recently repaid third-party mortgage loan.

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Aggregate Principal Amounts Due on Mortgage Notes Payable by Unconsolidated LLCs, Accounted Under Equity Method (Parenthetical) (Detail) - Arlington Medical Properties - USD ($) $ in Millions	1 Months Ended	3 Months Ended
	Oct. 31, 2015	Dec. 31, 2015
Schedule Of Equity Method Investments [Line Items]
Proceeds from Lines of Credit	$ 22.8	$ 22.8
Debt Instrument Interest Rate Stated Percentage	5.29%

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Segment Reporting - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2015 Segment
Segment Reporting [Abstract]
Number of reportable segments	1

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Quarterly Results (Detail) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended												12 Months Ended
		Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014		Sep. 30, 2014		Jun. 30, 2014	[1]	Mar. 31, 2014		Dec. 31, 2015	Dec. 31, 2014		Dec. 31, 2013
Quarterly Financial Information Disclosure [Abstract]
Revenues		$ 16,013	$ 15,686	$ 16,049	$ 16,202	$ 15,923	[1]	$ 15,258	[1]	$ 14,317		$ 14,288	[1]	$ 63,950	$ 59,786	[1]	$ 54,280
Net income before gains		4,352	3,639	3,262	3,696	3,185	[1]	3,048	[1]	3,408		3,458	[1]	14,949	13,099	[1]
Gain on property exchange				8,742										8,742
Gains on fair value recognition resulting from the purchase of minority interests in majority-owned LLCs	[1]							25,093				316			25,409
Gain on divestiture of real property	[1]					13,043									13,043
Net income		$ 4,352	$ 3,639	$ 12,004	$ 3,696	$ 16,228	[1]	$ 28,141	[1]	$ 3,408		$ 3,774	[1]	$ 23,691	$ 51,551	[1]	$ 13,169
Total basic earnings per share		$ 0.33	$ 0.27	$ 0.90	$ 0.28	$ 1.24	[1]	$ 2.18	[1]	$ 0.26		$ 0.29	[1]	$ 1.78	$ 3.99	[1]	$ 1.04
Total diluted earnings per share		$ 0.33	$ 0.27	$ 0.90	$ 0.28	$ 1.24	[1]	$ 2.18	[1]	$ 0.26		$ 0.29	[1]	$ 1.78	$ 3.99	[1]	$ 1.04

[1] We began to account for Palmdale Medical Properties and Sparks Medical Properties on a consolidated basis effective January 1, 2014. Additionally, we began to account for six LLCs (Desert Valley Medical Center, Santa Fe Professional Plaza, Rosenberg Children’s Medical Plaza, Sierra San Antonio Medical Plaza, Phoenix Children’s East Valley Care Center and 3811 E. Bell Medical Building Medical Plaza) on a consolidated basis as of August 1, 2014.

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Schedule III Real Estate and Accumulated Depreciation (Detail) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Real Estate and Accumulated Depreciation [Line Items]
Encumbrance	[1]	$ 110,256
Initial Cost, Land		38,884
Initial Cost, Building & Improvements		409,825
Adjustments to Basis	[2]	61,905
Land		41,724
Buildings and Improvements		468,890
CIP		1,043
Total		511,657	$ 486,589	$ 395,669	$ 401,474
Accumulated Depreciation		121,161	$ 106,480
Inland Valley Regional Medical Center Wildomar, California
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		2,050
Initial Cost, Building & Improvements		10,701
Adjustments to Basis	[2]	14,596
Land		2,050
Buildings and Improvements		25,297
Total		27,347
Accumulated Depreciation		$ 11,885
Date of Completion of Construction, Acquisition or Significant Improvement		2007
Date Acquired		1986
Depreciable Life		43 years
McAllen Medical Center McAllen, Texas
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 4,720
Initial Cost, Building & Improvements		31,442
Adjustments to Basis	[2]	10,189
Land		6,281
Buildings and Improvements		40,070
Total		46,351
Accumulated Depreciation		$ 25,330
Date of Completion of Construction, Acquisition or Significant Improvement		1994
Date Acquired		1986
Depreciable Life		42 years
Wellington Regional Medical Center West Palm Beach, Florida
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 1,190
Initial Cost, Building & Improvements		14,652
Adjustments to Basis	[2]	17,370
Land		1,663
Buildings and Improvements		31,549
Total		33,212
Accumulated Depreciation		$ 17,334
Date of Completion of Construction, Acquisition or Significant Improvement		2006
Date Acquired		1986
Depreciable Life		42 years
HealthSouth Deaconess Rehabilitation Hospital Evansville, Indiana
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 500
Initial Cost, Building & Improvements		6,945
Adjustments to Basis	[2]	1,062
Land		500
Buildings and Improvements		8,007
Total		8,507
Accumulated Depreciation		$ 5,272
Date of Completion of Construction, Acquisition or Significant Improvement		1993
Date Acquired		1989
Depreciable Life		40 years
Kindred Hospital Chicago Central Chicago, Illinois
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 158
Initial Cost, Building & Improvements		6,404
Adjustments to Basis	[2]	1,838
Land		158
Buildings and Improvements		8,242
Total		8,400
Accumulated Depreciation		$ 8,242
Date of Completion of Construction, Acquisition or Significant Improvement		1993
Date Acquired		1986
Depreciable Life		25 years
Family Doctor's Medical Office Building Shreveport, Louisiana
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 54
Initial Cost, Building & Improvements		1,526
Adjustments to Basis	[2]	494
Land		54
Buildings and Improvements		2,020
Total		2,074
Accumulated Depreciation		$ 950
Date of Completion of Construction, Acquisition or Significant Improvement		1991
Date Acquired		1995
Depreciable Life		45 years
Kelsey-Seybold Clinic at King's Crossing
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 439
Initial Cost, Building & Improvements		1,618
Adjustments to Basis	[2]	878
Land		439
Buildings and Improvements		2,496
Total		2,935
Accumulated Depreciation		$ 1,226
Date of Completion of Construction, Acquisition or Significant Improvement		1995
Date Acquired		1995
Depreciable Life		45 years
Professional Buildings at King's Crossing Kingwood, Texas
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 439
Initial Cost, Building & Improvements		1,837
Adjustments to Basis	[2]	213
Land		439
Buildings and Improvements		2,050
Total		2,489
Accumulated Depreciation		$ 945
Date of Completion of Construction, Acquisition or Significant Improvement		1995
Date Acquired		1995
Depreciable Life		45 years
Chesterbrook Academy Audubon, Pennsylvania
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 307
Initial Cost, Building & Improvements		996
Land		307
Buildings and Improvements		996
Total		1,303
Accumulated Depreciation		$ 434
Date of Completion of Construction, Acquisition or Significant Improvement		1996
Date Acquired		1996
Depreciable Life		45 years
Chesterbrook Academy New Britain, Pennsylvania
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 250
Initial Cost, Building & Improvements		744
Land		250
Buildings and Improvements		744
Total		994
Accumulated Depreciation		$ 326
Date of Completion of Construction, Acquisition or Significant Improvement		1991
Date Acquired		1996
Depreciable Life		45 years
Chesterbrook Academy Uwchlan, Pennsylvania
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 180
Initial Cost, Building & Improvements		815
Land		180
Buildings and Improvements		815
Total		995
Accumulated Depreciation		$ 356
Date of Completion of Construction, Acquisition or Significant Improvement		1992
Date Acquired		1996
Depreciable Life		45 years
Chesterbrook Academy Newtown, Pennsylvania
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 195
Initial Cost, Building & Improvements		749
Land		195
Buildings and Improvements		749
Total		944
Accumulated Depreciation		$ 328
Date of Completion of Construction, Acquisition or Significant Improvement		1992
Date Acquired		1996
Depreciable Life		45 years
The Southern Crescent Center I
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land	[3]	$ 1,130
Initial Cost, Building & Improvements	[3]	5,092
Adjustments to Basis	[2],[3]	(2,271)
Land	[3]	1,130
Buildings and Improvements	[3]	2,821
Total	[3]	3,951
Accumulated Depreciation	[3]	$ 2,344
Date of Completion of Construction, Acquisition or Significant Improvement	[3]	1994
Date Acquired	[3]	1996
Depreciable Life	[3]	45 years
The Southern Crescent Center II Riverdale, Georgia
Real Estate and Accumulated Depreciation [Line Items]
Adjustments to Basis	[2],[3]	$ 4,913
Land	[3]	806
Buildings and Improvements	[3]	4,107
Total	[3]	4,913
Accumulated Depreciation	[3]	$ 2,070
Date of Completion of Construction, Acquisition or Significant Improvement	[3]	2000
Date Acquired	[3]	1998
Depreciable Life	[3]	35 years
The Cypresswood Professional Center Spring,Texas
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 573
Initial Cost, Building & Improvements		3,842
Adjustments to Basis	[2]	704
Land		573
Buildings and Improvements		4,546
CIP		7
Total		5,126
Accumulated Depreciation		$ 2,610
Date of Completion of Construction, Acquisition or Significant Improvement		1997
Date Acquired		1997
Depreciable Life		35 years
701 South Tonopah Building Las Vegas, Nevada
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Building & Improvements		$ 1,579
Adjustments to Basis	[2]	68
Buildings and Improvements		1,647
Total		1,647
Accumulated Depreciation		$ 1,004
Date of Completion of Construction, Acquisition or Significant Improvement		1999
Date Acquired		1999
Depreciable Life		25 years
Medical Center of Western Connecticut Danbury, Connecticut
Real Estate and Accumulated Depreciation [Line Items]
Encumbrance	[1]	$ 4,663
Initial Cost, Land		1,151
Initial Cost, Building & Improvements		5,176
Adjustments to Basis	[2]	544
Land		1,151
Buildings and Improvements		5,720
Total		6,871
Accumulated Depreciation		$ 3,124
Date of Completion of Construction, Acquisition or Significant Improvement		2000
Date Acquired		2000
Depreciable Life		30 years
Vibra Hospital of Corpus Christi Corpus Christi, Texas
Real Estate and Accumulated Depreciation [Line Items]
Encumbrance	[1]	$ 2,815
Initial Cost, Land		1,104
Initial Cost, Building & Improvements		5,508
Land		1,104
Buildings and Improvements		5,508
Total		6,612
Accumulated Depreciation		$ 1,242
Date of Completion of Construction, Acquisition or Significant Improvement		2008
Date Acquired		2008
Depreciable Life		35 years
Apache Junction Medical Plaza (c.) Apache Junction, AZ
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land	[4]	$ 240
Initial Cost, Building & Improvements	[4]	3,590
Adjustments to Basis	[2],[4]	668
Land	[4]	240
Buildings and Improvements	[4]	4,258
CIP	[4]	67
Total	[4]	4,565
Accumulated Depreciation	[4]	$ 712
Date of Completion of Construction, Acquisition or Significant Improvement	[4]	2004
Date Acquired	[4]	2004
Depreciable Life	[4]	30 years
Auburn Medical Office Building II (c.) Auburn, WA
Real Estate and Accumulated Depreciation [Line Items]
Encumbrance	[1],[4]	$ 6,954
Initial Cost, Building & Improvements	[4]	10,200
Adjustments to Basis	[2],[4]	176
Buildings and Improvements	[4]	10,376
Total	[4]	10,376
Accumulated Depreciation	[4]	$ 1,375
Date of Completion of Construction, Acquisition or Significant Improvement	[4]	2009
Date Acquired	[4]	2009
Depreciable Life	[4]	36 years
BRB Medical Office Building Kingwood, Texas
Real Estate and Accumulated Depreciation [Line Items]
Encumbrance	[1],[4]	$ 6,498
Initial Cost, Land	[4]	430
Initial Cost, Building & Improvements	[4]	8,970
Adjustments to Basis	[2],[4]	32
Land	[4]	430
Buildings and Improvements	[4]	9,002
Total	[4]	9,432
Accumulated Depreciation	[4]	$ 1,178
Date of Completion of Construction, Acquisition or Significant Improvement	[4]	2010
Date Acquired	[4]	2010
Depreciable Life	[4]	37 years
Centennial Hills Medical Office Building Las Vegas, NV
Real Estate and Accumulated Depreciation [Line Items]
Encumbrance	[1],[4]	$ 10,339
Initial Cost, Building & Improvements	[4]	19,890
Adjustments to Basis	[2],[4]	1,005
Buildings and Improvements	[4]	20,895
CIP	[4]	7
Total	[4]	20,902
Accumulated Depreciation	[4]	$ 2,937
Date of Completion of Construction, Acquisition or Significant Improvement	[4]	2006
Date Acquired	[4]	2006
Depreciable Life	[4]	34 years
Desert Springs Medical Plaza Las Vegas, NV
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land	[4]	$ 1,200
Initial Cost, Building & Improvements	[4]	9,560
Adjustments to Basis	[2],[4]	806
Land	[4]	1,200
Buildings and Improvements	[4]	10,366
Total	[4]	11,566
Accumulated Depreciation	[4]	$ 1,702
Date of Completion of Construction, Acquisition or Significant Improvement	[4]	1998
Date Acquired	[4]	1998
Depreciable Life	[4]	30 years
700 Shadow Lane & Goldring MOBs Las Vegas, NV
Real Estate and Accumulated Depreciation [Line Items]
Encumbrance	[1],[4]	$ 6,428
Initial Cost, Land	[4]	400
Initial Cost, Building & Improvements	[4]	11,300
Adjustments to Basis	[2],[4]	2,871
Land	[4]	400
Buildings and Improvements	[4]	14,171
CIP	[4]	11
Total	[4]	14,582
Accumulated Depreciation	[4]	$ 2,034
Date of Completion of Construction, Acquisition or Significant Improvement	[4]	2003
Date Acquired	[4]	2003
Depreciable Life	[4]	30 years
Spring Valley Hospital MOB I Las Vegas, NV
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Building & Improvements	[4]	$ 9,500
Adjustments to Basis	[2],[4]	407
Buildings and Improvements	[4]	9,907
CIP	[4]	8
Total	[4]	9,915
Accumulated Depreciation	[4]	$ 1,415
Date of Completion of Construction, Acquisition or Significant Improvement	[4]	2004
Date Acquired	[4]	2004
Depreciable Life	[4]	35 years
Spring Valley Hospital MOB II Las Vegas, NV
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Building & Improvements	[4]	$ 9,800
Adjustments to Basis	[2],[4]	488
Buildings and Improvements	[4]	10,288
Total	[4]	10,288
Accumulated Depreciation	[4]	$ 1,439
Date of Completion of Construction, Acquisition or Significant Improvement	[4]	2006
Date Acquired	[4]	2006
Depreciable Life	[4]	34 years
Summerlin Hospital MOB Las Vegas, NV
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land	[4]	$ 460
Initial Cost, Building & Improvements	[4]	15,440
Adjustments to Basis	[2],[4]	689
Land	[4]	460
Buildings and Improvements	[4]	16,129
CIP	[4]	2
Total	[4]	16,591
Accumulated Depreciation	[4]	$ 2,595
Date of Completion of Construction, Acquisition or Significant Improvement	[4]	1999
Date Acquired	[4]	1999
Depreciable Life	[4]	30 years
Summerlin Hospital MOB II Las Vegas, NV
Real Estate and Accumulated Depreciation [Line Items]
Encumbrance	[1],[4]	$ 11,419
Initial Cost, Land	[4]	370
Initial Cost, Building & Improvements	[4]	16,830
Adjustments to Basis	[2],[4]	1,037
Land	[4]	370
Buildings and Improvements	[4]	17,867
CIP	[4]	166
Total	[4]	18,403
Accumulated Depreciation	[4]	$ 2,757
Date of Completion of Construction, Acquisition or Significant Improvement	[4]	2000
Date Acquired	[4]	2000
Depreciable Life	[4]	30 years
Summerlin Hospital MOB III Las Vegas, NV
Real Estate and Accumulated Depreciation [Line Items]
Encumbrance	[1],[4]	$ 10,695
Initial Cost, Building & Improvements	[4]	14,900
Adjustments to Basis	[2],[4]	2,107
Buildings and Improvements	[4]	17,007
Total	[4]	17,007
Accumulated Depreciation	[4]	$ 2,140
Date of Completion of Construction, Acquisition or Significant Improvement	[4]	2009
Date Acquired	[4]	2009
Depreciable Life	[4]	36 years
Emory at Dunwoody Building Dunwoody, GA
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 782
Initial Cost, Building & Improvements		3,455
Land		782
Buildings and Improvements		3,455
Total		4,237
Accumulated Depreciation		$ 527
Date of Completion of Construction, Acquisition or Significant Improvement		2011
Date Acquired		2011
Depreciable Life		35 years
Forney Medical Plaza Forney, TX
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 910
Initial Cost, Building & Improvements		11,960
Adjustments to Basis	[2]	31
Land		910
Buildings and Improvements		11,991
Total		12,901
Accumulated Depreciation		$ 2,093
Date of Completion of Construction, Acquisition or Significant Improvement		2011
Date Acquired		2011
Depreciable Life		35 years
Lake Pointe Medical Arts Building Rowlett, TX
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 1,100
Initial Cost, Building & Improvements		9,000
Adjustments to Basis	[2]	31
Land		1,100
Buildings and Improvements		9,031
Total		10,131
Accumulated Depreciation		$ 1,382
Date of Completion of Construction, Acquisition or Significant Improvement		2011
Date Acquired		2011
Depreciable Life		35 years
Tuscan Professional Building Irving, TX
Real Estate and Accumulated Depreciation [Line Items]
Encumbrance	[1]	$ 5,439
Initial Cost, Land		1,100
Initial Cost, Building & Improvements		12,525
Adjustments to Basis	[2]	89
Land		1,100
Buildings and Improvements		12,614
CIP		82
Total		13,796
Accumulated Depreciation		$ 1,732
Date of Completion of Construction, Acquisition or Significant Improvement		2011
Date Acquired		2011
Depreciable Life		35 years
Peace Health Medical Clinic
Real Estate and Accumulated Depreciation [Line Items]
Encumbrance	[1]	$ 20,790
Initial Cost, Land		1,900
Initial Cost, Building & Improvements		24,910
Land		1,900
Buildings and Improvements		24,910
Total		26,810
Accumulated Depreciation		$ 3,379
Date of Completion of Construction, Acquisition or Significant Improvement		2012
Date Acquired		2012
Depreciable Life		35 years
Northwest Texas Professional Office Tower
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Building & Improvements		$ 7,180
Buildings and Improvements		7,180
Total		7,180
Accumulated Depreciation		$ 726
Date of Completion of Construction, Acquisition or Significant Improvement		2012
Date Acquired		2012
Depreciable Life		35 years
Ward Eagle Office Village Medical Office Building
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 220
Initial Cost, Building & Improvements		3,220
Land		220
Buildings and Improvements		3,220
Total		3,440
Accumulated Depreciation		$ 286
Date of Completion of Construction, Acquisition or Significant Improvement		2013
Date Acquired		2013
Depreciable Life		35 years
5004 Poole Road MOB Office building
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 96
Initial Cost, Building & Improvements		529
Land		96
Buildings and Improvements		529
Total		625
Accumulated Depreciation		$ 46
Date of Completion of Construction, Acquisition or Significant Improvement		2013
Date Acquired		2013
Depreciable Life		35 years
Desert Valley Medical Center Phoenix A Z
Real Estate and Accumulated Depreciation [Line Items]
Encumbrance	[1],[5]	$ 5,200
Initial Cost, Land	[5]	2,280
Initial Cost, Building & Improvements	[5]	4,624
Adjustments to Basis	[2],[5]	235
Land	[5]	2,280
Buildings and Improvements	[5]	4,859
CIP	[5]	42
Total	[5]	7,181
Accumulated Depreciation	[5]	$ 278
Date of Completion of Construction, Acquisition or Significant Improvement	[5]	1996
Date Acquired	[5]	1996
Depreciable Life	[5]	30 years
Haas Medical Office Park , Ottumwa, IA
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Building & Improvements		$ 3,571
Buildings and Improvements		3,571
Total		3,571
Accumulated Depreciation		$ 102
Date of Completion of Construction, Acquisition or Significant Improvement		2015
Date Acquired		2015
Depreciable Life		35 years
Hanover Emergency Center, Mechanicsville, VA
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 1,300
Initial Cost, Building & Improvements		6,224
Land		1,300
Buildings and Improvements		6,224
Total		7,524
Accumulated Depreciation		$ 281
Date of Completion of Construction, Acquisition or Significant Improvement		2014
Date Acquired		2014
Depreciable Life		35 years
Mission Free standing Emergency Department Mission, TX
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 1,441
Initial Cost, Building & Improvements		4,696
Land		1,441
Buildings and Improvements		4,696
Total		6,137
Accumulated Depreciation		$ 143
Date of Completion of Construction, Acquisition or Significant Improvement		2015
Date Acquired		2015
Depreciable Life		35 years
3811 E.Bell Phoenix, AZ
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land	[5]	$ 930
Initial Cost, Building & Improvements	[5]	6,929
Adjustments to Basis	[2],[5]	60
Land	[5]	930
Buildings and Improvements	[5]	6,989
CIP	[5]	3
Total	[5]	7,922
Accumulated Depreciation	[5]	$ 381
Date of Completion of Construction, Acquisition or Significant Improvement	[5]	2010
Date Acquired	[5]	2010
Depreciable Life	[5]	30 years
Northwest Medical Center at Sugar Creek, Bentonville, AR
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 1,100
Initial Cost, Building & Improvements		2,870
Land		1,100
Buildings and Improvements		2,870
Total		3,970
Accumulated Depreciation		$ 174
Date of Completion of Construction, Acquisition or Significant Improvement		2014
Date Acquired		2014
Depreciable Life		35 years
The Children's Clinic at Springdale, Springdale, AR
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 610
Initial Cost, Building & Improvements		1,570
Land		610
Buildings and Improvements		1,570
Total		2,180
Accumulated Depreciation		$ 119
Date of Completion of Construction, Acquisition or Significant Improvement		2014
Date Acquired		2014
Depreciable Life		35 years
Rosenberg Children's Medical Plaza, Phoenix, AZ
Real Estate and Accumulated Depreciation [Line Items]
Encumbrance	[1],[5]	$ 8,317
Initial Cost, Land	[5]	0
Initial Cost, Building & Improvements	[5]	23,302
Adjustments to Basis	[2],[5]	27
Land	[5]	0
Buildings and Improvements	[5]	23,329
Total	[5]	23,329
Accumulated Depreciation	[5]	$ 1,111
Date of Completion of Construction, Acquisition or Significant Improvement	[5]	2001
Date Acquired	[5]	2001
Depreciable Life	[5]	35 years
Phoenix Children's East Valley Care Center, Phoenix, AZ
Real Estate and Accumulated Depreciation [Line Items]
Encumbrance	[1],[5]	$ 6,348
Initial Cost, Land	[5]	1,050
Initial Cost, Building & Improvements	[5]	10,900
Land	[5]	1,050
Buildings and Improvements	[5]	10,900
Total	[5]	11,950
Accumulated Depreciation	[5]	$ 518
Date of Completion of Construction, Acquisition or Significant Improvement	[5]	2006
Date Acquired	[5]	2006
Depreciable Life	[5]	35 years
Palmdale Medical Plaza, Palmdale, CA
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Building & Improvements	[5]	$ 10,555
Land	[5]	0
Buildings and Improvements	[5]	10,555
CIP	[5]	482
Total	[5]	11,037
Accumulated Depreciation	[5]	$ 745
Date of Completion of Construction, Acquisition or Significant Improvement	[5]	2008
Date Acquired	[5]	2008
Depreciable Life	[5]	34 years
Piedmont Roswell Physician Center Sandy Springs GA
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 2,338
Initial Cost, Building & Improvements		2,128
Land		2,338
Buildings and Improvements		2,128
Total		4,466
Accumulated Depreciation		$ 58
Date of Completion of Construction, Acquisition or Significant Improvement		2015
Date Acquired		2015
Depreciable Life		30 years
Piedmont Vinings Physician Center Vinings GA
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 1,348
Initial Cost, Building & Improvements		2,418
Land		1,348
Buildings and Improvements		2,418
Total		3,766
Accumulated Depreciation		$ 64
Date of Completion of Construction, Acquisition or Significant Improvement		2015
Date Acquired		2015
Depreciable Life		30 years
Santa Fe Professional Plaza, Scottsdale, AZ
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land	[5]	$ 1,090
Initial Cost, Building & Improvements	[5]	1,960
Adjustments to Basis	[2],[5]	145
Land	[5]	1,090
Buildings and Improvements	[5]	2,105
CIP	[5]	1
Total	[5]	3,196
Accumulated Depreciation	[5]	$ 126
Date of Completion of Construction, Acquisition or Significant Improvement	[5]	1999
Date Acquired	[5]	1999
Depreciable Life	[5]	30 years
Sierra San Antonio Medical Plaza, Fontana, CA
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land	[5]	$ 0
Initial Cost, Building & Improvements	[5]	11,538
Land	[5]	0
Buildings and Improvements	[5]	11,538
CIP	[5]	12
Total	[5]	11,550
Accumulated Depreciation	[5]	$ 623
Date of Completion of Construction, Acquisition or Significant Improvement	[5]	2006
Date Acquired	[5]	2006
Depreciable Life	[5]	30 years
Vista Medical Terrace & Sparks MOB, Sparks, NV
Real Estate and Accumulated Depreciation [Line Items]
Encumbrance	[1],[5]	$ 4,351
Initial Cost, Land	[5]	0
Initial Cost, Building & Improvements	[5]	9,276
Adjustments to Basis	[2],[5]	403
Land	[5]	0
Buildings and Improvements	[5]	9,679
CIP	[5]	153
Total	[5]	9,832
Accumulated Depreciation	[5]	$ 804
Date of Completion of Construction, Acquisition or Significant Improvement	[5]	2008
Date Acquired	[5]	2008
Depreciable Life	[5]	30 years
Weslaco Free-standing Emergency Department
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land		$ 1,749
Initial Cost, Building & Improvements		4,879
Land		1,749
Buildings and Improvements		4,879
Total		6,628
Accumulated Depreciation		$ 157
Date of Completion of Construction, Acquisition or Significant Improvement		2015
Date Acquired		2015
Depreciable Life		35 years

[1] Consists of outstanding balances as of December 31, 2015 on third-party debt that is non-recourse to us.

[2] Costs capitalized/divested subsequent to acquisition.

[3] During 2008, a $4.6 million provision for asset impairment was recorded in connection with the real estate assets of Southern Crescent Center I & Southern Crescent Center II.

[4] During 2011, we purchased the third-party minority interests in these properties in which we previously held noncontrolling majority owned interests. Since that time, these properties are wholly-owned.

[5] During 2014, we purchased the third-party minority interests in these properties in which we previously held noncontrolling majority owned interests. Since that time, these properties are wholly-owned.

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Schedule III Real Estate and Accumulated Depreciation (Parenthetical) (Detail) $ in Millions	12 Months Ended
	Dec. 31, 2008 USD ($)
Real Estate And Accumulated Depreciation Disclosure [Abstract]
Provision for asset impairment	$ 4.6

XML

Reconciliation of Real Estate Properties and Accumulated Depreciation (Detail) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Real Estate And Accumulated Depreciation Disclosure [Abstract]
Beginning balance		$ 486,589	$ 395,669	$ 401,474
Impact of deconsolidation of an LLC	[1]			(13,185)
Impact of consolidation of eight LLCs	[2]		84,064
Property additions		4,972	3,298	3,415
Acquisitions		24,568	13,674	4,065
Disposals		(4,472)	(10,116)	(100)
Ending balance		511,657	486,589	395,669
Beginning balance		106,480	97,921	87,088
Impact of deconsolidation of an LLC	[1]			(1,588)
Disposals		(1,568)	(5,859)
Current year depreciation expense		16,249	14,413	12,464
Other			5	(43)
Ending balance		$ 121,161	$ 106,480	$ 97,921

[1] The master lease with a wholly-owned subsidiary of UHS related to Palmdale Medical Properties expired effective as of July 1, 2013 and, as of that date, we began accounting for Palmdale Medical Properties on an unconsolidated basis under the equity method.

[2] During 2014, the Trust purchased the minority ownership interests held by third-party members in eight LLCs (January and August, 2014) in which we previously held noncontrolling majority ownership interests. As a result of these minority ownership purchases, the Trust and our subsidiaries now own 100% of each of these LLCs and the financial results are included in our consolidated financial statements.

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Reconciliation of Real Estate Properties and Accumulated Depreciation (Parenthetical) (Detail)	Dec. 31, 2014
Real Estate and Accumulated Depreciation [Line Items]
Percentage of minority ownership interests by parent	100.00%
Universal Health Services
Real Estate and Accumulated Depreciation [Line Items]
Percentage of minority ownership interests by parent	100.00%