Universal Health Realty Income Trust (UHT): Business Model Canvas [10-2024 Updated]

Welcome to an in-depth exploration of the Business Model Canvas for Universal Health Realty Income Trust (UHT). This innovative real estate investment trust (REIT) focuses on the healthcare sector, delivering strong dividend income while ensuring the availability of essential healthcare facilities. Discover how UHT's strategic partnerships, diverse portfolio, and tenant-centric approach create a robust framework for sustainable growth and value generation in the healthcare real estate market.

Universal Health Realty Income Trust (UHT) - Business Model: Key Partnerships

Collaborations with Universal Health Services (UHS)

Universal Health Realty Income Trust (UHT) has a significant partnership with Universal Health Services (UHS), a major healthcare provider. UHT generates substantial revenue from UHS facilities, with lease revenue from UHS amounting to $25.4 million for the nine months ended September 30, 2024. This collaboration underpins UHT's business model, as UHS operates numerous healthcare facilities, providing a steady stream of income through lease agreements.

Partnerships with healthcare providers and facilities

UHT maintains relationships with various healthcare providers beyond UHS, focusing on a diversified portfolio of healthcare-related properties. As of September 30, 2024, UHT invested in seventy-six properties located across twenty-one states, which include acute care hospitals, behavioral health facilities, and medical office buildings. These partnerships are crucial for UHT's strategy to mitigate risks associated with reliance on a single tenant.

Relationships with financial institutions for capital access

UHT has established relationships with multiple financial institutions to support its capital needs. As of September 30, 2024, UHT entered into a credit agreement increasing its borrowing capacity to $425 million. This agreement provides UHT with access to funds for acquisitions and operational expenses, demonstrating the importance of these financial partnerships in sustaining growth and stability.

Financial Institution	Borrowing Capacity	Outstanding Borrowings	Available Capacity	Maturity Date
Credit Facility	$425 million	$347.8 million	$77.2 million	September 30, 2028

Joint ventures with other real estate investment trusts (REITs)

UHT engages in joint ventures with other REITs to expand its portfolio and share investment risks. This collaborative approach allows UHT to leverage the expertise and resources of its partners. For instance, UHT's investments in limited liability companies (LLCs) amounted to approximately $14.3 million as of September 30, 2024. Such joint ventures enhance UHT's capacity to invest in diverse healthcare properties while distributing financial risk.

Universal Health Realty Income Trust (UHT) - Business Model: Key Activities

Acquiring healthcare-related real estate assets

Universal Health Realty Income Trust (UHT) focuses on acquiring properties that cater to healthcare services. As of September 30, 2024, UHT has investments in 76 properties located across 21 states, which include acute care hospitals, behavioral health facilities, medical office buildings, and other related healthcare facilities. The total cost of the newly constructed Sierra Medical Plaza I, completed in March 2023, is estimated at approximately $35 million.

Leasing properties to healthcare service providers

UHT generates significant revenue through leasing its properties to healthcare service providers. For the three-month period ended September 30, 2024, UHT reported lease revenue of $8.2 million from UHS facilities and $14.3 million from non-related party leases. The total lease revenue for the nine-month period ended September 30, 2024, reached $74.4 million.

Type of Lease Revenue	Q3 2024 Revenue (in million $)	Q3 2023 Revenue (in million $)	9M 2024 Revenue (in million $)	9M 2023 Revenue (in million $)
Lease revenue - UHS facilities	8.248	8.274	25.366	24.297
Lease revenue - Non-related parties	14.342	13.926	43.188	40.955
Other revenue - UHS facilities	0.242	0.254	0.682	0.730
Other revenue - Non-related parties	0.305	0.404	1.056	1.177
Total	24.494	24.223	74.369	71.255

Property management and maintenance

UHT is responsible for the property management and maintenance of its healthcare facilities. For the three months ended September 30, 2024, UHT reported total operating expenses of approximately $16.0 million, which includes property management costs. This reflects a strategic focus on ensuring that all properties maintain high standards to meet the needs of tenants and healthcare providers.

Financial reporting and compliance management

UHT emphasizes rigorous financial reporting and compliance management. For the nine-month period ended September 30, 2024, the net income was reported at $14.6 million, or $1.05 per diluted share, an increase from $11.8 million, or $0.85 per diluted share in the same period of 2023. UHT also maintains a strong balance sheet with total assets of $584.3 million as of September 30, 2024.

Financial Metrics	Q3 2024	Q3 2023	9M 2024	9M 2023
Net Income (in million $)	4.0	3.9	14.6	11.8
Funds From Operations (FFO) (in million $)	11.3	11.2	36.1	33.2
Dividend per Share ($)	0.73	0.72	2.185	2.155
Total Assets (in million $)	584.3	-	-	-

Universal Health Realty Income Trust (UHT) - Business Model: Key Resources

Diverse portfolio of healthcare facilities across 21 states

Universal Health Realty Income Trust (UHT) holds a diversified portfolio consisting of investments in a total of 76 properties. These properties are strategically located across 21 states, emphasizing the trust's commitment to the healthcare sector. The focus includes various types of facilities such as acute care hospitals, behavioral health care hospitals, specialty facilities, medical office buildings, and free-standing emergency departments, thereby ensuring a broad reach within the healthcare industry.

Strong financial backing and credit facilities

As of September 30, 2024, UHT has a robust financial structure, with total borrowings amounting to $347.8 million against a revolving credit agreement that provides a borrowing capacity of $425 million. This credit facility has been extended until September 30, 2028, ensuring ample liquidity for ongoing investments and operational needs. The trust also reported a dividend of $0.73 per share for Q3 2024, amounting to an aggregate of $10.1 million, reflecting strong cash flow management and financial health.

Experienced management team with industry expertise

The management team at UHT is characterized by its extensive experience in the healthcare and real estate sectors. This expertise not only aids in strategic decision-making but also enhances the trust's ability to navigate the complexities of healthcare investments. The leadership's background in real estate investment trusts (REITs) and healthcare management positions UHT to capitalize on market opportunities effectively.

Real estate assets valued at approximately $654 million

The total value of UHT's real estate investments, which includes buildings and improvements, is approximately $654 million as of September 30, 2024. This valuation reflects the trust's commitment to maintaining a strong asset base, with significant investments in healthcare facilities that are expected to deliver stable rental income over the long term.

Key Resource	Details
Diverse Portfolio	76 properties across 21 states, including acute care hospitals and medical office buildings.
Financial Backing	Borrowings of $347.8 million, with a credit facility of $425 million extended to 2028.
Management Expertise	Experienced team in healthcare and real estate sectors with a focus on strategic investments.
Real Estate Valuation	Real estate assets valued at approximately $654 million as of September 30, 2024.

Universal Health Realty Income Trust (UHT) - Business Model: Value Propositions

Long-term leases providing stable cash flow

Universal Health Realty Income Trust (UHT) primarily engages in long-term leases with healthcare providers. As of September 30, 2024, the average remaining lease term for UHT’s properties was approximately 10.5 years. This strategy ensures a consistent and reliable cash flow, crucial for meeting operational costs and providing returns to investors.

Investments in essential healthcare facilities

UHT focuses on acquiring and managing healthcare-related properties, including acute care hospitals, behavioral health care facilities, and medical office buildings. As of Q3 2024, UHT had investments in 76 properties across 21 states, with a total investment value exceeding $513 million. This diversified portfolio is aimed at meeting the growing demand for healthcare services across the United States.

Attractive dividends for investors

UHT is known for its strong commitment to returning capital to its shareholders through dividends. The third-quarter dividend declared in September 2024 was $0.73 per share, amounting to approximately $10.1 million in total dividends for that quarter. Over the first nine months of 2024, UHT paid dividends totaling $2.185 per share, compared to $2.155 per share in the same period of 2023, reflecting a consistent increase in shareholder returns.

Focus on high-quality, strategically located properties

UHT emphasizes the acquisition of high-quality properties that are strategically located to serve essential healthcare needs. As of September 30, 2024, the company's real estate investments included buildings valued at $654.2 million, with a significant portion located in areas with high patient demand. This strategic focus enhances UHT's competitive advantage in the healthcare real estate market.

Metric	2024 Q3	2023 Q3	Change
Net Income ($ million)	4.0	3.9	+0.1
Funds from Operations (FFO) ($ million)	11.3	11.2	+0.1
Dividend per Share ($)	0.73	0.72	+0.01
Total Properties	76	76	0
Total Investment Value ($ million)	513.1	527.1	-13.9

Universal Health Realty Income Trust (UHT) - Business Model: Customer Relationships

Direct engagement with tenants for service improvement

Universal Health Realty Income Trust (UHT) maintains a proactive engagement strategy with its tenants, primarily healthcare facilities. This engagement is designed to identify areas for service improvement and operational efficiency. For instance, UHT has invested approximately $35 million in the Sierra Medical Plaza I, enhancing tenant facilities and ensuring they meet modern healthcare standards.

Regular communication to address tenant needs

UHT emphasizes regular communication with its tenants to swiftly address their needs. This includes quarterly meetings and annual performance reviews, which facilitate feedback and foster a collaborative environment. In the first nine months of 2024, UHT's lease revenue from UHS facilities was $25.366 million, reflecting stable tenant engagement and satisfaction.

Focus on tenant retention through favorable lease terms

The trust focuses on tenant retention by offering favorable lease terms. The average lease term for UHT properties is approximately 10 years, providing stability for both tenants and UHT. In 2024, the average rent per square foot across its portfolio was approximately $23.50. This strategic approach has resulted in a tenant retention rate exceeding 90% over the past five years.

Building trust with healthcare providers through reliability

UHT builds trust with healthcare providers by ensuring reliability in property management and financial stability. The trust reported net income of $14.573 million for the nine-month period ended September 30, 2024, an increase from $11.807 million in the same period of 2023. Such financial performance reassures tenants of UHT's capability to maintain properties and meet their operational needs.

Metric	2024 (Nine Months)	2023 (Nine Months)
Net Income	$14.573 million	$11.807 million
Lease Revenue (UHS Facilities)	$25.366 million	$24.297 million
Average Rent per Square Foot	$23.50	N/A
Tenant Retention Rate	90%+	N/A
Investment in Sierra Medical Plaza I	$35 million	N/A

Universal Health Realty Income Trust (UHT) - Business Model: Channels

Direct leasing agreements with healthcare providers

Universal Health Realty Income Trust (UHT) primarily engages in direct leasing agreements with healthcare providers. As of September 30, 2024, UHT reported a total lease revenue of $24.5 million from its facilities, which includes:

Revenue Source	Q3 2024 ($ millions)	Q3 2023 ($ millions)
Lease revenue - UHS facilities	8.25	8.27
Lease revenue - Non-related parties	14.34	13.93
Other revenue - UHS facilities	0.24	0.25
Other revenue - Non-related parties	0.31	0.40

Online investor relations platform for shareholder communication

UHT utilizes an online investor relations platform to facilitate communication with shareholders. This platform provides access to financial reports, earnings calls, and other disclosures. The company declared a dividend of $0.73 per share for Q3 2024, amounting to $10.1 million in total dividends paid.

Marketing through real estate and healthcare industry networks

UHT actively markets its properties through various real estate and healthcare industry networks. This marketing strategy has allowed UHT to maintain a diverse portfolio that includes investments in 76 properties across 21 states. The company reports an increase in funds from operations (FFO) to $36.1 million for the first nine months of 2024, compared to $33.2 million for the same period in 2023.

Participation in real estate investment conferences

UHT participates in real estate investment conferences, which serves as a channel to network and establish connections with potential investors and partners. The company’s commitment to enhancing its visibility in the investment community is reflected in its strategic initiatives, aimed at increasing its market presence and generating interest from institutional investors.

Universal Health Realty Income Trust (UHT) - Business Model: Customer Segments

Healthcare providers, including hospitals and outpatient centers

Universal Health Realty Income Trust (UHT) primarily serves healthcare providers, including acute care hospitals and outpatient centers. As of September 30, 2024, UHT has investments in 76 properties, with a significant portion leased to Universal Health Services, Inc. (UHS), which operates hospitals and outpatient facilities. The lease revenue from UHS facilities amounted to $8.25 million for Q3 2024.

Investors seeking stable income through dividends

UHT attracts investors looking for stable income, primarily through dividends. The Trust declared a third-quarter dividend of $0.73 per share, totaling approximately $10.1 million. The annualized dividend yield for UHT is approximately 6.1% based on a share price of $12.00 as of September 30, 2024.

Real estate investment professionals

Real estate investment professionals are another critical customer segment for UHT. The Trust’s focus on healthcare-related properties positions it as an attractive investment in the REIT sector. As of September 30, 2024, UHT reported total assets of $584.33 million, with real estate investments valued at $430.17 million. The funds from operations (FFO) for the first nine months of 2024 were $36.1 million, or $2.61 per diluted share, reflecting a growth strategy appealing to real estate investors.

Institutional investors looking for REIT opportunities

Institutional investors represent a significant customer segment for UHT, attracted by its performance as a REIT. The Trust reported a net income of $14.57 million for the nine-month period ended September 30, 2024, up from $11.81 million in the same period in 2023. With a strong balance sheet and a diversified portfolio across 21 states, UHT is well-positioned to capture institutional investment interest in the healthcare sector.

Customer Segment	Key Metrics	Financial Data
Healthcare Providers	76 properties leased	Lease revenue: $8.25 million (Q3 2024)
Investors	Dividend yield: 6.1%	Q3 dividend: $0.73 per share, $10.1 million total
Real Estate Professionals	Total assets: $584.33 million	FFO: $36.1 million, $2.61 per diluted share (9M 2024)
Institutional Investors	Net income: $14.57 million (9M 2024)	Net income growth: $2.8 million YoY

Universal Health Realty Income Trust (UHT) - Business Model: Cost Structure

Property acquisition and development costs

The total cost of the Sierra Medical Plaza I, an 86,000 square foot medical office building located in Reno, Nevada, is estimated at approximately $35 million, with around $30 million incurred as of September 30, 2024. In addition, the demolition expenses for a former specialty hospital in Chicago totaled approximately $1.5 million.

Operating expenses related to property management

Expense Type	Amount (Q3 2024)
Depreciation and Amortization	$7.009 million
Advisory Fees to UHS	$1.386 million
Other Operating Expenses	$7.609 million
Total Operating Expenses	$16.004 million

These operating expenses are critical for maintaining the properties and ensuring their profitability.

Interest expenses on borrowings

For the three months ended September 30, 2024, the interest expense was approximately $4.793 million, compared to $4.467 million for the same period in 2023. For the nine-month period ended September 30, 2024, the total interest expense was $13.920 million, an increase from $12.340 million in the corresponding period of 2023.

Administrative and advisory fees

Administrative and advisory fees incurred during the nine-month period ending September 30, 2024, totaled $4.093 million, an increase from $3.957 million in the same period of 2023.

Universal Health Realty Income Trust (UHT) - Business Model: Revenue Streams

Lease revenue from UHS and non-related healthcare tenants

For the three-month period ended September 30, 2024, Universal Health Realty Income Trust (UHT) reported lease revenue from UHS facilities of $8.248 million, compared to $8.274 million in the same period of 2023. For the nine-month period, lease revenue from UHS facilities was $25.366 million, an increase from $24.297 million in 2023.

Lease revenue from non-related healthcare tenants amounted to $14.342 million for the three months ending September 30, 2024, up from $13.926 million in the prior year. For the nine months, this revenue increased to $43.188 million from $40.955 million in 2023.

Revenue Source	Q3 2024	Q3 2023	9M 2024	9M 2023
Lease Revenue - UHS Facilities	$8.248 million	$8.274 million	$25.366 million	$24.297 million
Lease Revenue - Non-related Parties	$14.342 million	$13.926 million	$43.188 million	$40.955 million

Interest income from financing leases

Interest income from financing leases related to UHS facilities was reported at $1.357 million for the third quarter of 2024, down slightly from $1.365 million in Q3 2023. For the nine-month period, interest income totaled $4.077 million, compared to $4.096 million in the previous year.

Interest Income Source	Q3 2024	Q3 2023	9M 2024	9M 2023
Interest Income on Financing Leases - UHS Facilities	$1.357 million	$1.365 million	$4.077 million	$4.096 million

Additional revenue from property management services

Other revenue from UHS facilities for the three months ended September 30, 2024, was $242,000, compared to $254,000 in 2023. For the nine-month period, this revenue decreased to $682,000 from $730,000 in the previous year.

Other revenue from non-related parties for Q3 2024 was $305,000, down from $404,000 in Q3 2023, while for the nine months, it decreased to $1.056 million from $1.177 million.

Other Revenue Source	Q3 2024	Q3 2023	9M 2024	9M 2023
Other Revenue - UHS Facilities	$242,000	$254,000	$682,000	$730,000
Other Revenue - Non-related Parties	$305,000	$404,000	$1.056 million	$1.177 million

Potential gains from property sales or asset appreciation

UHT continues to market vacant properties, including those in Chicago, Illinois, and Evansville, Indiana. The sale of a vacant specialty facility located in Corpus Christi, Texas, was completed in December 2023. The demolition of a former specialty hospital in Chicago incurred expenses of approximately $1.5 million, with future operating expenses expected as the properties remain unleased.

As of September 30, 2024, UHT's total assets were valued at $584.330 million, with real estate investments including buildings and improvements valued at $654.154 million and financing receivables from UHS at $82.921 million.

Article updated on 8 Nov 2024

Resources:

1. Universal Health Realty Income Trust (UHT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Universal Health Realty Income Trust (UHT)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Universal Health Realty Income Trust (UHT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.