Universal Health Realty Income Trust (UHT)

Risks

• COVID-19 and other pandemics, epidemics, or public health threats may adversely affect the business of our tenants, our business, and our results of operations and financial condition.
• There is a high degree of uncertainty regarding the implementation and impact of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the Paycheck Protection Program and Health Care Enhancement Act (the “PPPHCE Act”) and the American Rescue Plan Act of 2021 (the “ARPA”), which could impact the total amount and types of assistance and benefits our tenants will receive.
• 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.
• Reductions or changes in Medicare and Medicaid 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.
• 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.
• Required regulatory approvals can delay or prohibit transfers of our healthcare facilities.
• 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.
• 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.
• Our relationship with UHS may create conflicts of interest.
• We hold non-controlling equity ownership interests in various joint-ventures.
• 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.
• Real estate ownership creates risks and liabilities that may result in unanticipated losses or expenses.
• If we fail to maintain our REIT status, we will become subject to federal income tax on our taxable income at regular corporate rates.
• Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow.
• Dividends paid by REITs generally do not qualify for reduced tax rates.
• 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.
• 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.
• 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.
• Increasing investor interest in our sector and consolidation at the operator or REIT level could increase competition and reduce our profitability.
• We may be required to incur substantial renovation costs to make certain of our healthcare properties suitable for other operators and tenants.
• A cyber security incident could cause a violation of HIPAA, breach of member privacy, or other negative impacts.
• 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.
• 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.
• Catastrophic weather and other natural events, whether caused by climate change or otherwise, could result in damage to our properties.
• The market value of our common stock could be substantially affected by various factors.
• When interest rates increase, our common stock may decline in price.
• 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.