Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

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

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

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

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

Number of common shares of beneficial interest outstanding at ~~October 31, 2017—13,734,618~~April 30, 2023—13,804,145

This Quarterly Report on Form 10-Q is for the quarter ended ~~September 30, 2017.~~March 31, 2023. In this Quarterly Report, “we,” “us,” “our” and the “Trust” refer to Universal Health Realty Income Trust and its subsidiaries.

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

In this Quarterly Report, the term “revenues” does not include the revenues of the unconsolidated limited liability companies (“LLCs”) in which we have ~~four~~ various non-controlling equity interests ranging from 33% to 95%. As of March 31, 2023, we had investments in four jointly-owned LLCs/LPs. We currently account for our share of the income/loss from these investments by the equity method (see Note 5to the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements included ~~herein)~~herein).

For the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Revenues:

Base rental - UHS facilities

$
4,242

$
4,066

$
12,625

$
12,226

Base rental - Non-related parties

10,167

9,273

30,253

27,118

Bonus rental - UHS facilities

1,126

1,118

3,656

3,557

Tenant reimbursements and other - Non-related parties

2,440

2,168

6,872

5,984

Tenant reimbursements and other - UHS facilities

219

176

683

603

18,194

16,801

54,089

49,488

Expenses:

Depreciation and amortization

6,321

5,893

18,761

16,872

Advisory fees to UHS

908

832

2,648

2,380

Other operating expenses

4,877

4,663

14,505

13,603

Transaction costs

(19
)

331

107

477

Hurricane related expenses

3,398

-

3,398

-

Hurricane insurance recoveries

(3,398
)

-

(3,398
)

-

12,087

11,719

36,021

33,332

Income before equity in income of unconsolidated limited liability
companies ("LLCs"), interest expense and gain

6,107

5,082

18,068

16,156

Equity in income of unconsolidated LLCs

384

1,110

1,959

3,396

Gain on Arlington transaction

-

-

27,196

-

Interest expense, net

(2,531
)

(2,374
)

(7,668
)

(6,783
)
Net income

$
3,960

$
3,818

$
39,555

$
12,769

Basic earnings per share

$
0.29

$
0.28

$
2.91

$
0.95

Diluted earnings per share

$
0.29

$
0.28

$
2.91

$
0.95

Weighted average number of shares outstanding - Basic

13,621

13,575

13,595

13,426

Weighted average number of share equivalents

-

-

-

5

Weighted average number of shares and equivalents
outstanding - Diluted

13,621

13,575

13,595

13,431

(a.) Includes bonus rental on McAllen Medical Center, a UHS acute care hospital facility of $764 and $678 for the three-month periods ended March 31, 2023 and 2022, respectively.

For the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022

September 30,

December 31,

2017

2016

Assets:

Real Estate Investments:

Buildings and improvements and construction in progress

$
547,358

$
534,190

Accumulated depreciation

(149,909
)

(138,588
)

397,449

395,602

Land

53,037

51,638

               Net Real Estate Investments

450,486

447,240

Investments in and advances to limited liability companies ("LLCs")

4,695

35,593

Other Assets:

Cash and cash equivalents

3,948

3,930

Base and bonus rent and other receivables from UHS

3,883

2,321

Rent receivable - other

5,864

5,291

Hurricane insurance recoveries receivable

1,898

-

Intangible assets (net of accumulated amortization of $29.6 million and
   $27.1 million at September 30, 2017 and December 31, 2016, respectively)

21,669

23,815

Deferred charges and other assets, net

6,535

6,560

               Total Assets

$
498,978

$
524,750

Liabilities:

Line of credit borrowings

$
176,700

$
201,500

Mortgage notes payable, non-recourse to us, net

83,464

114,217

Accrued interest

620

626

Accrued expenses and other liabilities

14,817

11,809

Tenant reserves, deposits and deferred and prepaid rents

10,070

5,321

               Total Liabilities

285,671

333,473

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: 2017 - 13,734,606;
   2016 - 13,599,055

137

136

Capital in excess of par value

265,132

255,656

Cumulative net income

612,056

572,501

Cumulative dividends

(664,042
)

(637,121
)
Accumulated other comprehensive income

24

105

Total Equity

213,307

191,277

Total Liabilities and Equity

$
498,978

$
524,750

Condensed Consolidated ~~Statement~~Statements of ~~Cash Flows~~Changes in Equity

Nine months ended September 30,

2017

2016

Cash flows from operating activities:

Net income

$
39,555

$
12,769

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

18,804

16,920

Amortization of debt premium

(126
)

(166
)
Stock-based compensation expense

390

354

Hurricane related expenses

3,398

—

Hurricane insurance recoveries

(3,398
)

—

Gain on Arlington transaction

(27,196
)

—

Changes in assets and liabilities:

Rent receivable

(913
)

(497
)
Accrued expenses and other liabilities

89

203

Tenant reserves, deposits and deferred and prepaid rents

3,527

604

Accrued interest

(6
)

47

Leasing costs paid

(475
)

(452
)
Other, net

(22
)

(30
)
Net cash provided by operating activities

33,627

29,752

Cash flows from investing activities:

Investments in LLCs

(532
)

(5,454
)
Repayments of advances made to LLC

216

634

Cash distributions in excess of income from LLCs

1,060

318

Additions to real estate investments, net

(10,983
)

(7,104
)
Cash proceeds received from divestiture of property, net

65,220

—

Hurricane insurance recoveries for damaged real estate property

1,500

—

Deposit on real estate assets

—

(420
)
Net cash paid for acquisition of properties

(9,040
)

(52,193
)
Cash paid to acquire minority interests in majority-owned LLCs

(7,890
)

—

Net cash provided by/(used in) investing activities

39,551

(64,219
)
Cash flows from financing activities:

Net (repayments)/borrowings on line of credit

(24,800
)

50,100

Repayments of mortgage notes payable

(43,656
)

(2,407
)
Proceeds from mortgage notes payable

13,200

—

Financing costs paid

(290
)

(307
)
Dividends paid

(26,921
)

(26,231
)
Partial settlement of dividend equivalent rights

—

(30
)
Issuance of shares of beneficial interest, net

9,307

13,430

Net cash (used in)/provided by financing activities

(73,160
)

34,555

Increase in cash and cash equivalents

18

88

Cash and cash equivalents, beginning of period

3,930

3,894

Cash and cash equivalents, end of period

$
3,948

$
3,982

Supplemental disclosures of cash flow information:

Interest paid

$
7,359

$
6,491

(1) General

In this Quarterly Report on Form 10-Q, the term “revenues” does not include the revenues of the unconsolidated LLCs in which we have various non-controlling equity interests ranging from ~~33%~~33% to ~~95%~~95%. As of ~~September 30, 2017,~~March 31, 2023, we had investments in four jointly-owned LLCs/~~LPs which own medical office buildings, all~~LPs. We currently account for our share of ~~which are accounted for~~the income/loss from these investments by the equity method (see Note 5)5). These LLCs are included in our financial statements for all periods presented on an unconsolidated basis since they are not variable interest entities for which we are the primary beneficiary, nor do we hold a controlling voting interest.

The condensed consolidated financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the SEC and reflect all normal and recurring adjustments which, in our opinion, are necessary to fairly present results for the interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations, although we believe that the accompanying disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements, the notes thereto and accounting policies included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022.

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

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

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

In ~~April, 2017,~~January 2022, we entered into a ground lease and master flex-lease agreement with a wholly-owned subsidiary of UHS to develop, construct and own the ~~recently constructed Henderson~~real property of Sierra Medical Plaza I, an MOB ~~received its certificate~~located in Reno, Nevada, consisting of ~~occupancy. Henderson Medical Plaza~~approximately 86,000 rentable square feet. This MOB is located on the campus of the ~~Henderson Hospital~~Northern Nevada Sierra Medical Center, a newly constructed ~~acute care~~ hospital that is owned and operated by a wholly-owned subsidiary of UHS, ~~and~~which was completed and opened during April of 2022. Construction of this MOB, for which we engaged a non-related third party to act as construction manager, commenced in January, 2022, and was substantially completed in March, 2023. The cost of the MOB is estimated to be approximately $34.6 million, approximately $22.3 million of which was incurred as of March 31, 2023. The master flex lease agreement in connection with this building, which commenced in March, 2023, is for approximately 68% of the rentable square feet of the MOB at an initial minimum rent of $1.3 million annually, and is subject to reduction based upon the execution of third-party leases.

During the fourth quarter of ~~2016. A ground lease has been executed between~~2021, we purchased the ~~limited liability company that~~5% minority ownership interest held by a third-party member in Grayson Properties, LP which owns the Texoma Medical Plaza, an MOB located in Denison, Texas for approximately $3.1 million. The MOB is located on the campus of Texoma Medical Center, a hospital that is owned and operated by a wholly-owned subsidiary of UHS. A third-party appraisal was completed to determine the fair value of the property. As a result of this minority ownership purchase during the fourth quarter of 2021, we own 100% of the LP and are therefore consolidating this LP effective with the purchase date. There was no material impact on our net income as a result of the consolidation of this LP subsequent to the transaction. Please see Note 5 for additional disclosure surrounding this transaction.

In May, 2021, we acquired the Fire Mesa office building located in Las Vegas, Nevada for a purchase price of approximately $12.9 million. The building is 100% leased under the terms of a triple net lease by a wholly-owned subsidiary of UHS. The initial lease is scheduled to expire on August 31, 2027 and has two five-year renewal options. As discussed in Note 4, the acquisition of this office building was part of a series of planned tax deferred like-kind exchange transactions pursuant to Section 1031 of the Internal Revenue Code, as amended.

We are the lessee on thirteen ground leases with subsidiaries of UHS (for consolidated and unconsolidated investments), including one that commenced in March, 2023. The remaining lease terms on the ground leases with subsidiaries of UHS range from approximately 26 years to approximately 75 years. The annual aggregate lease payments on these properties are approximately $530,099 during each of the years ended 2023 through 2027, and an aggregate of $29.5 million thereafter. See Note 7 for additional lease accounting disclosure.

Officers and Employees: Our officers are all employees of a wholly-owned subsidiary of UHS ~~the terms of which include a seventy-five year lease term with two, ten-year renewal options at the lessee’s option at an adjusting lease rate. We have invested $14.3 million on the development~~ and ~~construction of this MOB~~although as of ~~September 30, 2017.~~March 31, 2023 we had no salaried employees, our officers do typically receive annual stock-based compensation awards in the form of restricted stock. In special circumstances, if warranted and deemed appropriate by the Compensation Committee of the Board of Trustees, our officers may also receive one-time special compensation awards in the form of restricted stock and/or cash bonuses.

Advisory Agreement: UHS of Delaware, Inc. (the “Advisor”), a wholly-owned subsidiary of UHS, serves as Advisor to us under an ~~Advisory Agreement~~advisory agreement dated December 24, 1986, and as amended and restated as of January 1, 2019 (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. The Advisory Agreement was renewed for 2023 with the same terms as the Advisory Agreement in place during 2022 and 2021.

Our advisory fee ~~is 0.70%~~for the three months ended March 31, 2023 and 2022, was computed at 0.70% of our average invested real estate assets, as derived from our condensed consolidated balance ~~sheet. In December of 2016, based~~sheets. 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~~advisory fee computation remained unchanged for ~~2017 pursuant~~2023, as compared to the ~~same terms as the Advisory Agreement in place during 2016.~~

last three years. The average real estate assets for advisory fee calculation purposes exclude certain items from our condensed consolidated balance sheet such as, among other things, accumulated depreciation, cash and cash equivalents, ~~restricted cash, base and bonus rent~~lease receivables, deferred charges and other assets. The advisory fee is payable quarterly, subject to adjustment at year-end based upon our audited financial statements. 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 the first nine months of 2017 or 2016 since the incentive fee requirements were not achieved. Advisory fees incurred and paid (or payable) to UHS amounted to ~~$908,000~~approximately $1.3 million and ~~$832,000~~$1.2 million for the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, respectively, and were based upon average invested real estate assets of ~~$519~~$744 million and ~~$475~~$699 million, ~~for the three-month periods ended September 30, 2017 and 2016,~~ respectively. Advisory fees incurred and paid (or payable) to UHS amounted to $2.6 million and $2.4 million for the nine months ended September 30, 2017 and 2016, respectively, and were based upon average invested real estate assets of $504 million and $453 million for the nine-month periods ended September 30, 2017 and 2016, respectively.

~~Officers and Employees:~~ Our officers are all employees of a wholly-owned subsidiary of UHS and although as of September 30, 2017 we had no salaried employees, our officers do typically receive annual stock-based compensation awards in the form of restricted

stock. In special circumstances, if warranted and deemed appropriate by the Compensation Committee of the Board of Trustees, our officers may also receive one-time special compensation awards in the form of restricted stock and/or cash bonuses.

Share Ownership: As of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, UHS owned ~~5.7% and 5.8%, respectively,~~5.7% of our outstanding shares of beneficial interest.

SEC reporting requirements of UHS: UHS is subject to the reporting requirements of the SEC and is required to file annual reports containing audited financial information and quarterly reports containing unaudited financial information. Since the ~~leases on~~aggregate revenues generated from the ~~hospital facilities leased to wholly-owned subsidiaries of UHS~~UHS-related tenants comprised approximately ~~22%~~40% and ~~23%~~41% of our consolidated revenues during the three-month periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016, respectively, and comprised approximately 22% and 24% of our consolidated revenues during the nine-month periods ended September 30, 2017 and 2016,~~2022, 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) Dividends and Equity Issuance Program

~~Dividends:~~Dividends and dividend equivalents:

During the first quarter of 2023, we declared and paid dividends of approximately $9.9 million, or $.715 per share. We declared and paid dividends of ~~$9.0~~approximately $9.7 million, or ~~$.66~~$.70 per share, during the ~~third~~first quarter of ~~2017 and $8.8 million, or $.65 per share,~~2022. Dividend equivalents, which are applicable to shares of unvested restricted stock, were accrued during the ~~third~~first quarters of 2023 and 2022 and will be paid upon vesting of the restricted stock.

Equity Issuance Program:

During the second quarter of 2016. We declared and paid dividends of $26.9 million, or $1.975 per share, during the nine-month period ended September 30, 2017 and $26.2 million, or $1.945 per share, during the nine-month period ended September 30, 2016.

~~Equity Issuance Program:~~

~~During the third quarter of 2017,~~2020, we ~~issued new shares in connection with our~~commenced an at-the-market (“ATM”) equity issuance program, pursuant to the terms of which we may sell, from time-to-time, common shares of our beneficial interest up to an aggregate sales price of ~~approximately $23.3~~$100 million to or through ~~Merrill Lynch, Pierce, Fenner and Smith, Incorporated (“Merrill Lynch”), as sales~~our agent ~~and/or principal.~~banks. The common shares ~~were~~will be offered pursuant to the Registration Statement filed with the Securities and Exchange Commission, which became effective ~~during the fourth quarter of 2015.~~in June 2020.

~~Pursuant~~No shares were issued pursuant to ~~the~~this ATM ~~Program,~~equity program during the first ~~nine months of 2017, there were 127,499 shares issued at an average price of $74.71 per share (all of which were issued during the third~~ quarter of ~~2017), which generated approximately $9.1 million of cash net proceeds (net of approximately $400,000, consisting of compensation of $238,000~~2023. Pursuant to ~~Merrill Lynch, as well as $162,000 of other various fees and expenses). Since inception of~~ this ATM program, ~~including shares issued under a prior Registration Statement filed with~~since the ~~Securities and Exchange Commission~~program commenced in ~~November, 2012,~~the second quarter of 2020, we have issued ~~957,415~~2,704 shares at an average price of ~~$52.22~~$101.30 per share, which generated approximately ~~$47.9 million~~$270,000 of net proceeds (net of approximately ~~$2.1 million,~~$4,000, consisting of compensation to BofA Securities, Inc.). Additionally, as of ~~$1.25 million to Merrill Lynch as well as $840,000 of other~~March 31, 2023, we have paid or incurred approximately $508,000 in various fees and ~~expenses). As~~expenses related to the commencement of ~~September 30, 2017, we have met~~ our ~~aggregate sales threshold of $23.3 million pursuant to this~~ATM program.

~~During September, 2017,~~In January 2022, we ~~acquired~~entered into a ground lease and master flex-lease agreement with a wholly-owned subsidiary of UHS to develop, construct and own the ~~Las Palmas Del Sol Emergency Center~~real property of Sierra Medical Plaza I, an MOB located in ~~El Paso, Texas for a purchase price~~Reno, Nevada, consisting of approximately ~~$4.2 million.~~86,000 rentable square feet. This ~~FED~~MOB is ~~100% leased under~~located on the ~~terms of a ten year triple net lease that has a remaining lease term of approximately 9 years at the time of purchase, with two, five year renewal options.~~

During July, 2017, we acquired The Health Center at Hamburg located in Hamburg, Pennsylvania for a purchase price of approximately $4.7 million. This medical office building is 100% leased under the terms of a fifteen year triple net lease and has a remaining lease term of approximately 8.5 years at the time of purchase, with two, five year renewal options.

~~These acquisitions were planned and executed in accordance with the provisions of Section 1031~~campus of the ~~Internal Revenue Code~~Northern Nevada Sierra Medical Center, a newly constructed hospital that is owned and ~~therefore~~operated by a wholly-owned subsidiary of UHS, which was completed and opened during April of 2022. Construction of this MOB, for which we ~~believe they both qualify~~engaged a non-related third party to act as ~~tax deferred like-kind exchange transactions,~~construction manager, commenced in January, 2022, and was substantially completed in March, 2023. The cost of the MOB is estimated to be approximately $34.6 million, approximately $22.3 million of which was incurred as ~~discussed below,~~of March 31, 2023. The master flex lease agreement in connection with ~~the below-mentioned divestiture of St. Mary’s Professional Office Building~~this building, which commenced in March, ~~2017.~~

~~The aggregate purchase price~~2023, is for these acquisitions was preliminarily allocated to the assets acquired and liabilities assumed consisting of tangible property and intangible assets and liabilities, based on the fair values estimated at the acquisition dates. The intangible assets consistapproximately 68% of the ~~value~~rentable square feet of the ~~in-place leases~~MOB at an initial minimum rent of $1.3 million annually, and is subject to reduction based upon the ~~properties at~~execution of third-party leases. Additionally, during the ~~time~~three months ended March 31, 2023, the ground lease for this property commenced and a right-of-use asset and lease liability was recorded in connection with this lease.

There were no acquisitions during the first three months of ~~acquisition, and~~2023.

There were no divestitures during the ~~intangible liabilities consist~~first three months of 2023.

During the ~~value~~first quarter of a below-market lease at the time of acquisition. The value of the in-place leases and below-market lease will be amortized over the average remaining lease term of each property at the time of acquisition.

~~During March, 2017, Arlington Medical Properties, LLC, a formerly jointly-owned limited liability company in which~~2022, we ~~held an 85% noncontrolling ownership interest, sold the real estate assets of St. Mary’s Professional Office Building (“St. Mary’s”)~~completed two transactions, as described below, utilizing qualified third-party intermediaries as part of a series of planned ~~tax deferred~~tax-deferred like-kind exchange transactions pursuant to Section 1031 of the Internal Revenue ~~Code. St. Mary’s is~~Code, as amended.

In March, 2022, we acquired the Beaumont Heart and Vascular Center, a ~~multi-tenant~~ medical office building located in ~~Reno, Nevada. A third party member owned the remaining 15% of Arlington Medical Properties LLC, which we acquired prior to the divestiture of St. Mary’s~~Dearborn, Michigan for a purchase price of ~~$7.9~~approximately $5.4 million.

The ~~divestiture of St. Mary’s generated an aggregate of~~building, which has approximately ~~$57.3 million of net cash proceeds~~17,621 rentable square feet, is 100% leased to ~~us. These proceeds, which were net of closing costs and~~a single tenant under the ~~purchase price paid for the minority member’s ownership interest in the LLC, include repayment to us~~terms of a ~~$21.4 million member loan. Our results~~triple-net lease that is scheduled to expire on November 30, 2026 and has lease escalations of ~~operations for~~2.5% per year that commenced on December 1, 2022.

In January, 2022, we acquired the ~~nine-month period ended September 30, 2017 include a net gain of $27.2 million (net of related transaction costs) recorded in connection with this transaction.~~

During the first quarter of 2016, we began the development and construction of the Henderson Medical Plaza, an MOB located on the campus of the Henderson Hospital Medical Center which is owned by a UHS subsidiary and opened in late October, 2016. The MOB was completed and opened during April, 2017. We have invested $14.3 million on the development and construction of this MOB as of September 30, 2017.

The aggregate purchase price for these acquisitions was allocated to the assets acquired and liabilities assumed consisting of tangible property and intangible assets and liabilities, based on the fair value at acquisition as detailed in the table below. Previous reported estimated purchase price allocations that have been finalized did not have a material impact on our consolidated financial statements. The intangible assets include the value of in-place leases at the properties at the time of acquisition as well as the above market lease values, if applicable. The value of the in-place leases will be amortized over the average remaining lease terms of approximately 6 to 12 years at the time of acquisition. The above/below market leases, which are reflected below as intangible assets/below-market intangibles will be amortized over the remaining term of the respective leases. The estimated aggregate allocation is as follows:Divestitures:

There were no divestitures during the first ~~nine~~three months of ~~2016.~~2022.

(5) Summarized Financial Information of Equity Affiliates

In accordance with ~~professional standards~~U.S. GAAP and guidance relating to accounting for investments and real estate ventures, we account for our unconsolidated investments in LLCs/LPs which we do not control using the equity method of accounting. The third-party members in these investments have equal voting rights with regards to issues such as, but not limited to: (i) divestiture of property; (ii) annual budget approval, and; (iii) financing commitments. These investments, which represent ~~33%~~33% to ~~95%~~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.

InDistributions received from equity method investees in the ~~Condensed Consolidated Statements~~consolidated statements of ~~Cash Flows, distributions and~~cash flows are classified based upon the nature of the distribution. Returns on investments are presented net of equity in ~~net~~ income ~~are presented net~~from unconsolidated investments as cash flows from operating activities. ~~Cumulative distributions received exceeding cumulative equity in earnings represent returns~~Returns of investments ~~and~~ are classified as cash flows from investing ~~activities in the Condensed Consolidated Statements of Cash Flows.~~activities.

At ~~September 30, 2017,~~March 31, 2023, we have non-controlling equity investments or commitments in four jointly-owned LLCs/LPs which own MOBs. As of ~~September 30, 2017,~~March 31, 2023 we accounted for these LLCs/LPs on an unconsolidated basis pursuant to the equity method since they are not variable interest entities ~~and~~which we are the primary beneficiary nor do ~~not~~we have a controlling voting interest. The majority of these entities are joint-ventures between us and non-related parties that hold minority ownership interests in the entities. Each entity is generally

self-sustained from a cash flow perspective and generates sufficient cash flow to meet its operating cash flow requirements and service the third-party debt (if applicable) that is non-recourse to us. Although there is typically no ongoing financial support required from us to these entities since they are cash-flow sufficient, we may, from time to time, provide funding for certain purposes such as, but not limited to, significant capital expenditures, leasehold improvements and debt financing. Although we are not obligated to do so, if approved by us at our sole discretion, additional cash ~~fundings are~~funding is typically advanced as equity or member loans. These entities maintain property insurance on the properties.

During ~~March, 2017, Arlington~~the fourth quarter of 2021, we purchased the 5% minority ownership interest, held by the third-party member in Grayson Properties, LP which owns the Texoma Medical ~~Properties, LLC, a formerly jointly-owned limited liability company~~Plaza, in which we previously held a noncontrolling majority ownership interest. As a result of this minority ownership purchase, we now own 100% of the LP and began to account for it on a consolidated basis effective November 1, 2021. Prior to November 1, 2021, the LP was accounted for on an 85% noncontrolling ownership interest, sold the real estate assets of St. Mary’s Professional Office Building (“St. Mary’s”) as part of a series of planned tax deferred like-kind exchange transactionsunconsolidated basis pursuant to ~~Section 1031 of~~ the ~~Internal Revenue Code. A third party member owned the remaining 15% of Arlington Medical Properties LLC, which we acquired prior to the divestiture of St. Mary’s.~~equity method.

The following property table represents the four ~~LLCs~~LLCs/LPs in which we ~~own~~owned a ~~noncontrolling~~non-controlling interest and were accounted for under the equity method as of ~~September 30, 2017:~~March 31, 2023:



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

(a.)

This LLC has a third-party term loan of $8.7 million, which is non-recourse to us, outstanding as of March 31, 2023.

~~(a.)~~

~~This LLC has a third-party term loan, which is non-recourse to us, of $8.5 million outstanding as of September 30, 2017.~~

~~(b.)~~

This building is on the campus of a UHS hospital and has tenants that include subsidiaries of UHS. This LLC has a third-party term loan, which is non-recourse to us, of $14.3 million outstanding as of September 30, 2017.

(b.)

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

~~(c.)~~

We have committed to invest up to $2.5 million in equity and debt financing, of which $2.1 million has been funded as of September 30, 2017. This LLC has a third-party term loan, which is non-recourse to us, of $5.2 million outstanding as of September 30, 2017.

(c.)

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

(d.)

Construction of this MOB was substantially completed in December, 2020. This MOB is located in Denison, Texas on the campus of a hospital owned and operated by a wholly-owned subsidiary of UHS. We have committed to invest up to $4.8 million in equity and debt financing, $1.8 million of which has been funded as of March 31, 2023. This LP entered into a $13.1 million third-party construction loan commitment, which is non-recourse to us, which has an outstanding balance of $13.0 million as of March 31, 2023. Monthly principal and interest payments on this loan commenced on January 1, 2023. The LP developed, constructed, owns and operates the Texoma II Medical Plaza.

(e.)

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

Below are the condensed combined statements of income (unaudited) for the ~~LLCs~~four LLCs/LPs accounted for under the equity method ~~during the three~~at March 31, 2023 and nine months ended September 30, 2017 and 2016. The nine months ended September 30, 2017 include the financial results of Arlington Medical Properties, LLC, through the March 13, 2017 divestiture date. The three and nine months ended September 30, 2016, include the financial results of Arlington Medical Properties, LLC for the entire three and nine months ended September 30, 2016. 2022:


	Three Months Ended March 31,
	2023		2022
	(amounts in thousands)
Revenues	$	2,226	$	1,930
Operating expenses		905		726
Depreciation and amortization		455		460
Interest, net		241		262
Net income	$	625	$	482
Our share of net income	$	371	$	252

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

(amounts in thousands)
(amounts in thousands)

Revenues

$
2,426

$
3,776

$
8,419

$
11,437

Operating expenses

933

1,329

3,122

4,025

Depreciation and amortization

483

646

1,547

1,910

Interest, net

342

636

1,241

1,928

Net income

$
668

$
1,165

$
2,509

$
3,574

Our share of net income (a.)

$
384

$
1,110

$
1,959

$
3,396

~~(a.)~~

Our share of net income for the three months ended September 30, 2016 includes approximately $291,000 of interest income earned by us on an advance made to Arlington Medical Properties, LLC. This advance was repaid to us effective with the previously mentioned Arlington Medical Properties, LLC transaction during March, 2017, therefore there was no interest income earned by us on this advance during the three months ended September 30, 2017. Our share of net income for the nine months ended September 30, 2017 and 2016 includes approximately $284,000 and $880,000, respectively, of interest income earned by us on the advance made to Arlington Medical Properties, LLC.

Below are the condensed combined balance sheets (unaudited) for the four above-mentioned ~~LLCs~~LLCs/LPs that were accounted for under the equity method as of ~~September 30, 2017 and the five LLCs (including Arlington Medical Properties, LLC, which was divested during the first quarter of 2017) that were accounted for under the equity method as of December~~March 31, ~~2016:~~

September 30,
2017

December 31,
2016

(amounts in thousands)

Net property, including CIP

$
33,123

$
60,970

Other assets

3,672

4,598

Total assets

$
36,795

$
65,568

Liabilities

$
2,686

$
3,334

Mortgage notes payable, non-recourse to us

27,979

28,367

Advances payable to us

-

21,638

Equity

6,130

12,229

Total liabilities and equity

$
36,795

$
65,568

Our share of equity in and advances to LLCs reflected as:

   Investments in LLCs

$
4,695

$
13,955

   Advances to LLCs

-

21,638

Investments in and advances to LLCs before

   amounts included in accrued expenses and other liabilities

4,695

35,593

   Amounts included in accrued expenses and other liabilities

(1,790
)

(1,862
)
Our share of equity in and advances to LLCs, net

$
2,905

$
33,731

~~As of September 30, 2017,~~2023 and December 31, ~~2016,~~2022:


	March 31, 2023			December 31, 2022
	(amounts in thousands)
Net property, including construction in progress	$	29,112		$	29,573
Other assets (a.)		5,272			4,334
Total assets	$	34,384		$	33,907

Other liabilities (a.)	$	2,417		$	2,338
Mortgage notes payable, non-recourse to us		21,653			21,802
Advances payable to us (b.)		-			3,500
Equity		10,314			6,267
Total liabilities and equity	$	34,384		$	33,907

Investments in and advances to LLCs before amounts included in
accrued expenses and other liabilities	$	9,599		$	9,282
Amounts included in accrued expenses and other liabilities		(1,719	)		(1,709	)
Our share of equity in LLCs, net	$	7,880		$	7,573

(a.)

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

(b.)

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

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


	Mortgage Loan Balance (a.)
Name of LLC/LP	3/31/2023		12/31/2022		Maturity Date
Brunswick Associates (2.80% fixed rate mortgage loan)	$	8,659	$	8,727	December, 2030
Grayson Properties II (3.70% fixed rate construction loan) (b.)		12,994		13,075	June, 2025
	$	21,653	$	21,802

Mortgage Loan Balance (a.)

Name of LLC/LP

9/30/2017

12/31/2016

Maturity Date
FTX MOB Phase II

$
5,234

$
5,301

October, 2017 (b.)
Grayson Properties

14,252

14,438

September, 2021
Brunswick Associates

8,493

8,628

December, 2024

$
27,979

$
28,367

(a.)

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

(b.)

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

~~(a.)~~

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

~~(b.)~~

~~This loan matured on October 1, 2017, and was renewed and extended at a fixed interest rate of 5% with a revised maturity date of October 1, 2020.~~

Pursuant to the operating and/or partnership agreements of the four LLCs/LPs in which we continue to hold non-controlling ownership interests, the third-party member ~~and/or~~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.

(6) Recent Accounting Pronouncements

Reference Rate Reform

In ~~August, 2016,~~March 2020, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") issued ~~ASU No. 2016-15, Classification of Certain Cash Receipts~~an accounting standard classified under FASB ASC Topic 848, “Reference Rate Reform.” The amendments in this update contain practical expedients for reference rate reform related activities that impact debt, leases, derivatives and ~~Cash Payments, which adds or clarifies~~other contracts. The guidance in ASC 848 is optional. We will evaluate the impact of the ~~classification of certain cash receipts~~guidance and ~~payments~~may apply elections as applicable as additional changes in the ~~statement of cash flows with the intent to alleviate diversity in practice~~market occur.

(7) Lease Accounting

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

As Lessor:

We lease most of our operating properties to customers under agreements that are typically classified as operating leases (as noted below, two of our leases are accounted for as financing arrangements effective on December ~~15, 2017, with early adoption permitted.~~31, 2021). We recognize the total minimum lease payments provided for under the operating leases on a straight-line basis over the lease term. Generally, under the terms of our leases, the majority of our rental expenses, including common area maintenance, real estate taxes and insurance, are ~~currently evaluating~~recovered from our customers. We record amounts reimbursed by customers in the ~~impact~~period that the applicable expenses are incurred, which is generally ratably throughout the term of ~~this ASU on~~the lease. We have elected the package of practical expedients that allows lessors to not separate lease and non-lease components by class of underlying asset. This practical expedient allowed us to not separate expenses reimbursed by our ~~statement~~customers (“tenant reimbursements”) from the associated rental revenue if certain criteria were met. We assessed these criteria and concluded that the timing and pattern of ~~cash flows.~~

~~In February 2016,~~transfer for rental revenue and the ~~FASB~~ ~~issued ASU 2016-02, Leases (Topic 842), which sets out~~associated tenant reimbursements are the ~~principles~~same, and for the ~~recognition, measurement, presentation~~leases that qualify as operating leases, we accounted for and ~~disclosure~~presented rental revenue and tenant reimbursements as a single component under Lease revenue in our consolidated statements of income for the three months ended March 31, 2023 and 2022.

On December 31, 2021, as a result of the asset purchase and sale transaction with UHS, as amended during the first quarter of 2022, the real estate assets of two wholly-owned subsidiaries of UHS were transferred to us (Aiken and Canyon Creek). As discussed in Note 2, these assets are accounted for as financing arrangements and our consolidated balance sheets at March 31, 2023 and December 31, 2022 reflect financing receivables related to this transaction amounting to $83.5 million and $83.6 million, respectively. Pursuant to the leases, ~~for both parties~~as amended during the first quarter of 2022, the aggregate annual rental during 2023 on the acquired properties, which is payable to us on a ~~contract (i.e., lessees~~monthly basis, amounts to approximately $5.8 million ($4.0 million related to Aiken and ~~lessors)~~$1.8 million related to Canyon Creek). The ~~new standard requires lessees~~portion of these lease payments that will be included in our consolidated statements of income, and reflected as interest income on financing leases, is expected to ~~apply a dual approach, classifying leases as either finance or operating leases based on~~be approximately $5.5 million during the ~~principle~~full year of ~~whether or~~2023. Lease revenue will not be impacted by the lease ~~is effectively a financed purchase by~~payments received related to these two properties.

The components of the ~~lessee. This classification will determine whether lease expense is~~“Lease revenue – UHS facilities” and “Lease revenue – Non-related parties” captions for the three month periods ended March 31, 2023 and 2022 are disaggregated below (in thousands). Base rents are primarily stated rent amounts provided for under the leases that are recognized ~~based on an effective interest method or~~ on a straight-line basis over the term of the lease. ABonus rents and tenant reimbursements represent amounts where tenants are contractually obligated to pay an amount that is variable in nature.


	Three Months Ended
	March 31,
	2023		2022
UHS facilities:
Base rents	$	6,274	$	6,089
Bonus rents (a.)		764		678
Tenant reimbursements		749		659
Lease revenue - UHS facilities	$	7,787	$	7,426



Non-related parties:
Base rents		10,234		10,135
Tenant reimbursements		3,127		2,760
Lease revenue - Non-related parties	$	13,361	$	12,895

(a.) Includes bonus rental on McAllen Medical Center, a UHS acute care hospital facility of $764 and $678 for the three-month periods ended March 31, 2023 and 2022, respectively.

Disclosures Related to Vacant Facilities:

Vacancies – Specialty Hospitals:

After evaluation of the most suitable future uses for a vacant specialty hospital located in Chicago, Illinois, as well as an effort to reduce its ongoing operating and maintenance expenses, we decided to raze the building. Demolition, which commenced during the fourth quarter of 2022 and is expected to be completed during the second quarter of 2023, is expected to cost approximately $1.4 million. Approximately $265,000 of demolition costs were incurred during the first quarter of 2023, and are included in our other operating expenses in our consolidated statements of income. As of March 31, 2023, an aggregate of $597,000 of demolition expenses have been incurred related to this project.

Including the above-mentioned demolition costs incurred during the first quarter of 2023, the operating expenses incurred by us in connection with the property located in Chicago, Illinois, were $417,000 during the three months ended March 31, 2023 (or $152,000 excluding the $265,000 of demolition costs) as compared to $494,000 of operating expenses during the three month period ended March 31, 2022.

In addition, the aggregate operating expenses for the two vacant specialty facilities located in Evansville, Indiana, and Corpus Christi, Texas, were approximately $187,000 and $175,000 during the three-month periods ended March 31, 2023 and 2022, respectively.

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

As Lessee:

We are the lessee with various third parties, including subsidiaries of UHS, in connection with ground leases for land at fifteen of our consolidated properties. Our right-of-use land assets represent our right to use the land for the lease term and our lease liabilities represent our obligation to make lease payments arising from the leases. Right-of-use assets and lease liabilities were recognized upon adoption of Topic 842 based on the present value of lease payments over the lease term. We utilized our estimated incremental borrowing rate, which was derived from information available as of January 1, 2019, or the commencement date of the ground lease, whichever is ~~also required to record a~~later, in determining the present value of lease payments for active leases on that date.A right-of-use asset and a lease liability are not recognized for ~~all~~ leases with ~~a term of greater than 12 months regardless of their classification. Leases with a~~an initial term of 12 months or less, ~~will be~~as these short-term leases are accounted for ~~similar~~similarly to ~~existing~~previous 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 2014, the FASB issued ASU 2014-09,~~ ~~Revenue From Contracts With Customers~~ (“ASU 2014-09”), which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In 2015, the FASB provided for a one-year deferral of the effective date for ASU 2014-09, which is now effective for us beginning January 1, 2018. We expect to adopt the standard using the modified retrospective approach, which requires a cumulative-effect adjustment to equity as of the date of adoption. We do not ~~expect this adoption to~~currently have ~~a significant impact on~~any ground leases with an initial term of 12 months or less. As of March 31 2023, our condensed consolidated ~~financial statements, as a substantial portion~~balance sheet includes right-of-use land assets of ~~our revenue consists~~approximately $11.8 million and ground lease liabilities of ~~rental income from leasing arrangements, which is specifically excluded from ASU 2014-09.~~

~~In January, 2017,~~approximately $11.8 million. During the ~~FASB issued ASU 2017-01, “Business Combinations (Topic 805) - Clarifying~~three months ended March 31, 2023, the ~~Definition of a Business” to clarify the definition of a business in order to allow~~ground lease for the evaluation of whether transactions should be accounted for as acquisitions or disposals of assets or businesses. ASU 2017-01 will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We expect that future property acquisitions will generally qualify asnewly constructed and substantially completed Sierra Medical Plaza I commenced and a right-of-use asset ~~acquisitions under the standard, which permits the capitalization of acquisition costs to the underlying assets. We adopted~~and lease liability was recorded in connection with this ~~new guidance effective January 1, 2017. This new guidance is not expected to have a significant impact on our financial statements.~~lease.

~~(7)~~(8) Debt and Financial Instruments

Debt:

Management routinely monitors and analyzes the Trust’s capital structure in an effort to maintain the targeted balance among capital resources including the level of borrowings pursuant to our ~~$250 million~~ revolving credit ~~agreement,~~facility, the level of borrowings pursuant to non-recourse mortgage debt secured by the real property of our properties and our level of equity including consideration of additional equity issuances pursuant to our ATM equity issuance program. This ongoing analysis considers factors such as the current debt market and interest rate environment, the current/projected occupancy and financial performance of our properties, the current loan-to-value ratio of our properties, the Trust’s current stock price, the capital resources required for anticipated acquisitions and the expected capital to be generated by anticipated divestitures. This analysis, together with consideration of the Trust’s current balance of revolving credit agreement borrowings, non-recourse mortgage borrowings and equity, assists management in deciding which capital resource to utilize when events such as refinancing of specific debt components occur or additional funds are required to finance the Trust’s growth.

On ~~May 24, 2016,~~July 2, 2021, we entered into an amended ~~our~~and restated revolving credit agreement (“Credit Agreement”) to ~~among~~amend and restate the previously existing $350 million credit agreement, as amended and dated June 5, 2020 (“Prior Credit Agreement”). Among other things, ~~increase~~under the ~~borrowing capacity~~Credit Agreement, our aggregate revolving credit commitment was increased to ~~$250~~$375 million from ~~$185 million previously.~~$350 million. The ~~amended~~ Credit Agreement, which is scheduled to mature on July 2, 2025, provides for a revolving credit facility in ~~March, 2019, includes~~an aggregate principal amount of $375 million, including a ~~$40~~$40 million ~~sub limit~~sublimit for letters of credit and a ~~$20~~$30 million ~~sub limit~~sublimit for swingline/short-term loans. ~~The~~Under the terms of the Credit Agreement, ~~also provides a one-time option to extend~~we may request that the ~~maturity date for an additional one year period, and an option to increase the total facility borrowing capacity~~revolving line of credit be increased by up to an additional ~~$50 million, subject to lender agreement.~~$50 million. Borrowings under the ~~Credit Agreement~~new facility are guaranteed by certain subsidiaries of the Trust. In addition, borrowings under the ~~Credit Agreement~~new facility are secured by first priority security interests in and liens on all equity interests in most of the Trust’s wholly-owned subsidiaries.

Borrowings ~~made pursuant to~~under the Credit Agreement will bear interest annually at a rate equal to, at our option, at either LIBOR (for one, ~~two,~~ three, or six ~~month LIBOR plus an applicable margin ranging from 1.50% to 2.00%~~months) or at the Base Rate, plus anin either case, a specified margin depending on our ratio of debt to total capital, as determined by the formula set forth in the Credit Agreement. The applicable margin ~~ranging~~ranges from ~~0.50%~~1.10% to ~~1.00%.~~1.35% for LIBOR loans and 0.10% to 0.35% for Base Rate loans. The initial applicable margin is 1.25% for LIBOR loans and 0.25% for Base Rate loans. The Credit Agreement defines “Base Rate” as the greatest ~~of:~~of (a) the ~~administrative agent’s~~Administrative Agent’s prime ~~rate;~~rate, (b) the federal funds effective rate plus 1/2 of 1%~~, and;~~ and (c) one month LIBOR plus 1%1%. ~~A commitment~~The Trust will also pay a quarterly revolving facility fee ~~of 0.20%~~ranging from 0.15% to ~~0.40%~~0.35% (depending on ~~our total leverage ratio) will be charged~~the Trust’s ratio of debt to asset value) on the ~~average unused portion~~revolving committed amount of the ~~revolving credit commitments.~~ Credit Agreement. The Credit Agreement also provides for options to extend the maturity date and borrowing availability for two additional six-month periods.

The margins over LIBOR, Base Rate and the ~~commitment~~facility fee are based upon our ~~ratio of debt to~~ total ~~capital.~~leverage ratio. At ~~September 30, 2017,~~March 31, 2023, the applicable margin over the LIBOR rate was ~~1.625%~~1.20%, the margin over the Base Rate was ~~0.625%,~~0.20% and the ~~commitment~~facility fee was ~~0.25%~~0.20%.

At ~~September 30, 2017,~~March 31, 2023, we had ~~$176.7~~$308.4 million of outstanding borrowings and ~~$1.5~~$3.1 million of letters of credit outstanding under our Credit Agreement. We had ~~$71.8~~$63.5 million of available borrowing capacity, net of the outstanding borrowings and letters of credit outstanding as of ~~September 30, 2017.~~March 31, 2023. There are no compensating balance requirements. At December 31, 2022, we had $298.1 million of outstanding borrowings, $3.1 million of outstanding letters of credit and $73.8 million of available borrowing capacity.

The Credit Agreement contains customary affirmative and negative covenants, including limitations on certain indebtedness, liens, acquisitions and other investments, fundamental changes, asset dispositions and dividends and other distributions. The Credit Agreement also contains restrictive covenants regarding the Trust’s ratio of total debt to total assets, the fixed charge coverage ratio, the ratio of total secured debt to total asset value, the ratio of total unsecured debt to total unencumbered asset value, and minimum tangible net worth, as well as customary events of default, the occurrence of which may trigger an acceleration of amounts then outstanding under the Credit Agreement. We are in compliance with all of the covenants in the Credit Agreement at ~~September 30, 2017.~~March 31, 2023, and were in compliance with all of the covenants of the Credit Agreement at December 31, 2022. We also believe that we would remain in compliance if, based on the assumption that the majority of the potential new borrowings will be used to fund investments, the full amount of our commitment was borrowed.

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


	Covenant		March 31, 2023			December 31, 2022
Tangible net worth	$	125,000	$	213,293		$	219,654
Total leverage	< 60%			43.4	%		42.9	%
Secured leverage	< 30%			5.0	%		5.6	%
Unencumbered leverage	< 60%			42.7	%		41.8	%
Fixed charge coverage	> 1.50x		4.0x			4.3x

	~~Covenant~~	~~September 30,~~ ~~2017~~
~~Tangible net worth~~	~~> =$136,170~~	~~$191,638~~
~~Total leverage~~	~~< 60%~~		~~41.6~~	%
~~Secured leverage~~	~~< 30%~~		~~12.8~~	%
~~Unencumbered leverage~~	~~< 60%~~		~~38.1~~	%
~~Fixed charge coverage~~	~~> 1.50x~~	~~3.7x~~

As indicated on the following table, we have ~~twelve~~various mortgages, all of which are non-recourse to us, included on our condensed consolidated balance sheet as of ~~September 30, 2017, with a combined outstanding balance of $83.7 million, excluding net debt premium of $310,000 and net financing fees of $553,000~~March 31, 2023 (amounts in thousands):


Facility Name	Outstanding Balance (in thousands) (a.)			Interest Rate			Maturity Date
2704 North Tenaya Way fixed rate mortgage loan (b.)	$	6,209			4.95	%	November, 2023
Summerlin Hospital Medical Office Building III fixed rate mortgage loan (b.)		12,474			4.03	%	April, 2024
Tuscan Professional Building fixed rate mortgage loan		1,558			5.56	%	June, 2025
Phoenix Children’s East Valley Care Center fixed rate mortgage loan		8,136			3.95	%	January, 2030
Rosenberg Children's Medical Plaza fixed rate mortgage loan		11,964			4.42	%	September, 2033
Total, excluding net debt premium and net financing fees		40,341
Less net financing fees		(250	)
Plus net debt premium		28
Total mortgages notes payable, non-recourse to us, net	$	40,119

Facility Name

Outstanding
Balance
(in thousands)(a)

Interest
Rate

Maturity
Date
Summerlin Hospital Medical Office Building II fixed
   rate mortgage loan (b.)

$
10,834

5.50
%

October, 2017
Phoenix Children’s East Valley Care Center fixed rate
   mortgage loan (c.)

6,087

5.88
%

December, 2017
Centennial Hills Medical Office Building floating rate
   mortgage loan (d.)

9,830

4.48
%

January, 2018
Sparks Medical Building/Vista Medical Terrace
   floating rate mortgage loan (d.)

4,153

4.48
%

February, 2018
Rosenberg Children’s Medical Plaza fixed rate
   mortgage loan (d.)

8,013

4.85
%

May, 2018
Vibra Hospital-Corpus Christi fixed rate mortgage loan

2,650

6.50
%

July, 2019
700 Shadow Lane and Goldring MOBs fixed rate
   mortgage loan

6,107

4.54
%

June, 2022
BRB Medical Office Building fixed rate mortgage loan

6,174

4.27
%

December, 2022
Desert Valley Medical Center fixed rate mortgage loan

4,980

3.62
%

January, 2023
2704 North Tenaya Way fixed rate mortgage loan

7,040

4.95
%

November, 2023
Summerlin Hospital Medical Office Building III fixed
   rate mortgage loan

13,199

4.03
%

April, 2024
Tuscan Professional Building fixed rate mortgage loan

4,640

5.56
%

June, 2025
Total, excluding net debt premium and net financing fees

83,707

     Less net financing fees

(553
)

     Plus net debt premium

310

Total mortgages notes payable, non-recourse to us, net

$
83,464

(a.)

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

(b.)

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

~~(a.)~~

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

~~(b.)~~

~~During October, 2017, upon its maturity, this $10.8~~On January 3, 2023, the $4.2 million fixed ~~rate mortgage loan was fully repaid utilizing borrowings under our Credit Agreement.~~

~~(c.)~~

~~This loan is scheduled to mature in December, 2017, at which time we intend to refinance with a new $9.4 million, 3.95% fixed rate mortgage loan with a maturity date of December, 2029.~~

~~(d.)~~

This loan is scheduled to mature within the next twelve months, at which time we will decide whether to refinance pursuant to a new mortgage loan or repay utilizing borrowings under our Credit Agreement.

~~On July 3, 2017, upon its maturity, the $6.6 million floating~~ rate mortgage loan on ~~the Auburn~~Desert Valley Medical ~~Office Building II~~Center was fully repaid utilizing borrowings under our Credit Agreement.

~~On June 1, 2017, upon its maturity, the $4.5 million fixed rate mortgage loan on the Medical Center of Western Connecticut was fully repaid utilizing borrowings under our Credit Agreement.~~

~~On April 3, 2017, upon its maturity, the $20.2 million fixed rate mortgage loan on the Peace Health Medical Clinic was fully repaid utilizing borrowings under our Credit Agreement.~~

OnAt March 31, ~~2017, upon its maturity, a $10.3 million floating rate mortgage loan on Summerlin Hospital Medical Office Building III was fully repaid. In April, 2017,~~2023 and December 31, 2022, we ~~refinanced this property with a $13.2 million fixed rate mortgage, as shown above.~~

had various mortgages, all of which were non-recourse to us, included in our condensed consolidated balance sheet. The mortgages are secured by the real property of the buildings as well as property leases and rents. The mortgages ~~have~~outstanding as of March 31, 2023, had a combined carrying value of approximately $40.3 million and a combined fair value of approximately ~~$85.0 million~~$38.6 million. The mortgages outstanding as of ~~September 30, 2017.~~December 31, 2022, had a combined carrying value of approximately $45.0 million and a combined fair value of approximately $43.2 million. The fair value of our debt was computed based upon quotes received from financial institutions. We consider these to be “level 2” in the fair value hierarchy as outlined in the authoritative guidance for disclosure in connection with debt instruments. Changes in market rates on our fixed rate debt impacts the fair value of debt, but it has no impact on interest incurred or cash flow.

At December 31, 2016, we had fifteen mortgages, all of which were non-recourse to us, included in our consolidated balance sheet. The combined outstanding balance of these fifteen mortgages was $114.2 million (excluding net debt premium of $436,000 and net financing fees of $381,000), and had a combined fair value of approximately $115.7 million.

Financial Instruments:

~~During the third quarter of 2013,~~In March 2020, 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 the January, 2017 expiration, no payments were made to us by the counterparties pursuant to the terms of these caps.

During the second quarter of 2016, we entered into an interest rate cap on the total notional amount of $30 million whereby we paid a premium of $115,000. In exchange for the premium payment, 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. This interest rate cap became effective in January, 2017, coinciding with the expiration of the above-mentioned interest rate caps and expires in March, 2019.

~~During the third quarter of 2016, we entered into an additional interest rate cap~~swap agreement on a total notional amount of ~~$30~~$55 million ~~whereby~~with a fixed interest rate of 0.565% that we ~~paid~~designated as a ~~premium of $55,000. In exchange for~~cash flow hedge. The interest rate swap became effective on March 25, 2020 and is scheduled to mature on March 25, 2027. If the ~~premium payment,~~one-month LIBOR is above 0.565%, the ~~counterparties agreed to~~counterparty pays us, and if the one-month LIBOR is less than 0.565%, we pay usthe counterparty, the difference between ~~1.5%~~the fixed rate of 0.565% and one-month ~~LIBOR if~~LIBOR.

In January 2020, we entered into an interest rate swap agreement on a total notional amount of $35 million with a fixed interest rate of 1.4975% that we designated as a cash flow hedge. The interest rate swap became effective on January 15, 2020 and is scheduled to mature on September 16, 2024. If the one-month LIBOR ~~rises~~is above ~~1.5% during~~1.4975%, the ~~term~~counterparty pays us, and if the one-month LIBOR is less than 1.4975%, we pay the counterparty, the difference between the fixed rate of 1.4975% and one-month LIBOR.

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

We measure our interest rate swaps at fair value on a recurring basis. The fair value of our interest rate swaps is based on quotes from third parties. We consider those inputs to be “level 2” in the fair value hierarchy as outlined in the authoritative guidance for disclosures in connection with derivative instruments and hedging activities. At March 31, 2023, the fair value of our interest rate swaps was a net asset of $10.3 million which is included in deferred charges and other assets on the accompanying condensed consolidated balance sheet. During the first quarter of 2023, we received approximately $1.2 million from the counterparty, adjusted for the previous quarter accrual, pursuant to the terms of the ~~cap. This~~swaps. During the first quarter of 2022, we paid or accrued approximately $289,000 to the counterparty, adjusted for the previous quarter accrual, pursuant to the terms of the swaps. From inception of the swap agreements through March 31, 2023 we paid or accrued approximately $2.5 million to the counterparty by us, offset by approximately $2.8 million in receipts from the counterparty, adjusted for accruals, pursuant to the terms of the swap. Cash flow hedges are accounted for by recording the fair value of the derivative instrument on the balance sheet as either an asset or a liability, with a corresponding amount recorded in accumulated other comprehensive income (“AOCI”) within shareholders’ equity. Amounts are reclassified from AOCI to

the income statement in the period or periods the hedged transaction affects earnings. We do not expect any gains or losses on our interest rate ~~cap became effective~~swaps to be reclassified to earnings in ~~October, 2016 and expires in March, 2019.~~the next twelve months.

~~(8)~~(9) Segment Reporting

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

Our portfolio is located throughout the United States, however, we do not distinguish or group our operations on a geographical basis for purposes of allocating resources or measuring performance. We review operating and financial data for each property on an individual basis; therefore, we define an operating segment as our individual properties. Individual properties have been aggregated

into one reportable segment based upon their similarities with regard to both the nature and economics of the facilities, tenants and operational processes, as well as long-term average financial performance. No individual property meets the requirements necessary to be considered its own segment.

In late August, 2017, five of our medical office buildings listed below located in the Houston, Texas area incurred extensive water damage as a result of Hurricane Harvey. Since the hurricane, each of these properties remain temporarily closed and non-operational as we continue to assess the damage before restoring the properties to an operational condition. Although we can provide no assurance on the estimated re-opening dates, it is expected that the buildings will be closed through the remainder of 2017 and into the first half of 2018. In the aggregate, these properties comprised approximately 2% of our consolidated revenues during the six months ended June 30, 2017.

As discussed below, we believe we are entitled to insurance recovery proceeds for substantially all of the costs incurred related to the remediation, repair and reconstruction of each of these properties, subject to certain deductibles and other limitations. In addition, during the period that these properties are non-operational, we believe we are entitled to business interruption insurance recoveries for the lost income related to each of these properties, subject to certain deductibles and other limitations.

At the time of the hurricane, we maintained insurance policies with a commercial insurance carrier providing for property damage coverage, subject to certain deductibles and other limitations, of up to $20 million in the aggregate applicable to the impacted properties and up to $50 million in the aggregate for business interruption coverage pursuant to a shared limit policy. Additionally, we have insurance coverage under the National Flood Insurance Program providing for property damage coverage of up to $500,000 per each of the 5 buildings, subject to certain deductibles and other limitations. When all property insurance coverage and deductibles applicable to the above-mentioned hurricane damaged buildings are considered, we believe we are entitled to recovery of substantially all hurricane related expenses and reconstruction costs, less an aggregate net deductible of $25,000. In addition, pursuant to the business interruption policy, we believe we are entitled to substantially all lost income at these properties resulting from the hurricane, less an aggregate deductible of $100,000. However, we can provide no assurance that we will ultimately collect, after satisfaction of the applicable deductibles, substantially all of the hurricane related expenses and reconstruction costs and the lost income resulting from the related interruption of business at the impacted properties.

Included in our financial results for the three and nine-month periods ended September 30, 2017 are hurricane related expenses of approximately $3.4 million consisting of $2.2 million related to property damage and $1.2 million related to remediation and demolition expenses. Also included in our financial results for the three and nine-month periods ended September 30, 2017 are hurricane related insurance recoveries of approximately $3.4 million ($1.5 million of which was received in September, 2017), reflecting probable recovery of our preliminary estimate of hurricane related expenses which we believe are less than the total commercial insurance proceeds due to us in connection with property damage and related expenses. As of September 30, 2017, our financial statements do not include any business interruption insurance recoveries, however, we expect that business interruption insurance recoveries will be recognized in future periods when recovery proceeds are probable and/or insurance carrier notifications are received.

The hurricane related expenses and insurance recoveries recorded to date are based upon our preliminary damage assessments of the real property at each of the above-mentioned properties. However, due to the nature and extent of the damage to the each property and the surrounding communities, a complete and final assessment to determine the exact nature and extent of the losses at each property has not yet been completed. We are therefore unable to assess the ultimate damage sustained at each property, the ultimate repair cost of the damaged property or the amount of total insurance recoveries we may ultimately receive. Although we believe that our ultimate insurance recoveries for claims related to hurricane losses will exceed the combined net book value of the damaged property and the incurred hurricane related expenses, the timing and amount of such proceeds cannot be determined at this time, since it will be based upon factors such as ultimate replacement costs of damaged assets and the ultimate value of the business interruption claims. Therefore, it is likely that we will record additional hurricane related expenses and hurricane insurance recoveries in future periods related to Hurricane Harvey, which could be material.

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

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~~behavioral health care hospitals, ~~sub-acute~~specialty facilities, ~~medical office buildings (“MOBs”),~~ free-standing emergency departments, childcare centers and ~~childcare centers.~~medical/office buildings. As of ~~October 31, 2017,~~May 1, 2023, we have ~~sixty-eight~~seventy-six real estate investments or commitments located in ~~twenty~~twenty-one states consisting of:

You should carefully review all of the information contained in this Quarterly Report, and should particularly consider any risk factors that we set forth in our Annual Report on Form 10-K for the year ended December 31, 2022, this Quarterly Report and in other reports or documents that we file from time to time with the Securities and Exchange Commission (the “SEC”). In this Quarterly Report, we state our beliefs of future events and of our future financial performance. ~~In some cases, you can identify those so-called~~This Quarterly Report contains “forward-looking statements” ~~by words~~that reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities. Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “appears,” “projects” and similar expressions, or the negative of those words and expressions, as well as statements in future ~~tense.~~tense, identify forward-looking statements. You should be aware that those statements are only our predictions. Actual events or results may differ materially. In evaluating those statements, you should specifically consider various factors, including the risks ~~outlined~~described elsewhere herein and in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2022 in Item 1A Risk Factors and in Item 77. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Forward Looking Statements. and in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Forward Looking Statements and Certain Risk Factors, as included herein. Those factors may cause our actual results to differ materially from any of our forward-looking statements.

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

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.

~~The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us~~There have been no significant changes 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~~or estimates from those ~~that require us to make significant judgments and estimates when we prepare~~disclosed in our ~~financial statements, including the following:~~2022 Annual Report on Form 10-K.

~~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.25

The minimum rent for our six hospital facilities, which is paid monthly, is fixed over the term of the respective leases which are scheduled to expire in 2019 (2 hospitals) or 2021 (4 hospitals). In addition, for the three hospital facilities leased to subsidiaries of UHS, bonus rents are paid on a quarterly basis, based upon a computation that compares the hospitals’ current quarter net revenues to the corresponding quarter in the base year. Rental income recorded by our other 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. Tenant reimbursements for operating expenses are accrued as revenue in the same period the related expenses are incurred.

~~Real Estate Investments:~~ Land, buildings and capital improvements are recorded at cost and stated at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to operations as incurred. Renovations or replacements, which improve or extend the life of an asset, are capitalized and depreciated over their estimated useful lives.

~~Purchase Accounting for Acquisition of Investments in Real Estate:~~ ~~Purchase accounting is applied to the assets and liabilities related to all real estate investments acquired from third parties. In accordance with current accounting guidance~~, the fair value of the real estate acquired is allocated to the acquired tangible assets, consisting primarily of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, and acquired ground leases, based in each case on their fair values. Loan premiums, in the case of above market rate loans, or loan discounts, in the case of below market loans, are recorded based on the fair value of any loans assumed in connection with acquiring the real estate.

The fair values of the tangible assets of an acquired property are determined based on comparable land sales for land and replacement costs adjusted for physical and market obsolescence for the improvements. The fair values of the tangible assets of an acquired property are also determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land, building and tenant improvements based on management’s determination of the relative fair values of these assets. Management determines the as-if-vacant fair value of a property based on assumptions that a market participant would use, which is similar to methods used by independent appraisers. In addition, there is intangible value related to having tenants leasing space in the purchased property, which is referred to as in-place lease value. Such value results primarily from the buyer of a leased property avoiding the costs associated with leasing the property and also avoiding rent losses and unreimbursed operating expenses during the hypothetical lease-up period. Factors considered by management in performing these analyses include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rental revenue during the expected lease-up periods based on current market demand. Management also estimates costs to execute similar leases including leasing commissions, tenant improvements, legal and other related costs. The value of in-place leases are amortized to expense over the remaining initial terms of the respective leases.

In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) estimated fair market lease rates from the perspective of a market participant for the corresponding in-place leases, measured, for above-market leases, over a period equal to the remaining non-cancelable term of the lease and, for below-market leases, over a period equal to the initial term plus any below market fixed rate renewal periods. The capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancelable terms of the respective leases. The capitalized below-market lease values, also referred to as acquired lease obligations, are amortized as an increase to rental income over the initial terms of the respective leases.

~~Asset Impairment:~~ We review each of our properties for indicators that its carrying amount may not be recoverable. Examples of such indicators may include a significant decrease in the market price of the property, a change in the expected holding period for the property, a significant adverse change in how the property is being used or expected to be used based on the underwriting at the time of acquisition, an accumulation of costs significantly in excess of the amount originally expected for the acquisition or development of the property, or a history of operating or cash flow losses of the property. When such impairment indicators exist, we review an estimate of the future undiscounted net cash flows (excluding interest charges) expected to result from the real estate investment’s use and eventual disposition and compare that estimate to the carrying value of the property. We consider factors such as future operating income, trends and prospects, as well as the effects of leasing demand, competition and other factors. If our future undiscounted net cash flow evaluation indicates that we are unable to recover the carrying value of a real estate investment, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property. These losses have a direct impact on our net income because recording an impairment loss results in an immediate negative adjustment to net income. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results in future periods. Since cash flows on properties considered to be long-lived assets to be held and used are considered on an undiscounted basis to determine whether the carrying value of a property is recoverable, our strategy of holding properties over the long-term directly decreases the likelihood of their carrying values not being recoverable and therefore requiring the recording of an impairment loss. If our strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized and such loss could be material. If we determine that the asset fails the recoverability test, the affected assets must be reduced to their fair value.

We generally estimate the fair value of rental properties utilizing a discounted cash flow analysis that includes projections of future revenues, expenses and capital improvement costs that a market participant would use based on the highest and best use of the asset, which is similar to the income approach that is commonly utilized by appraisers. In certain cases, we may supplement this analysis by obtaining outside broker opinions of value or third party appraisals.

In considering whether to classify a property as held for sale, we consider factors such as whether management has committed to a plan to sell the property, the property is available for immediate sale in its present condition for a price that is reasonable in relation to its current value, the sale of the property is probable, and actions required for management to complete the plan indicate that it is unlikely that any significant changes will made to the plan. If all the criteria are met, we classify the property as held for sale. Upon being classified as held for sale, depreciation and amortization related to the property ceases and it is recorded at the lower of its carrying amount or fair value less cost to sell. The assets and related liabilities of the property are classified separately on the consolidated balance sheets for the most recent reporting period. Only those assets held for sale that constitute a strategic shift or that will have a major effect on our operations are classified as discontinued operations.

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 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 investment losses.

During the three-month period ended ~~September 30, 2017,~~March 31, 2023, net income ~~increased to $4.0~~was $4.5 million, as compared to ~~$3.8~~$5.4 million during the ~~third~~first quarter of ~~2016.~~2022. The ~~$142,000 increase~~$946,000 decrease was ~~primarily~~ attributable to:

~~During~~Revenues increased $1.1 million, or 4.7%, to $23.2 million during the ~~nine-month~~three-month period ended ~~September 30, 2017, net income increased to $39.6 million,~~March 31, 2023, as compared to ~~$12.8~~$22.2 million during the ~~first nine months of 2016.~~three-month period ended March 31, 2022. The ~~$26.8 million~~ increase ~~was primarily attributable to:~~

~~Included in our other operating expenses are expenses related to the consolidated medical office buildings, which totaled $4.4 million~~impact of acquisitions and $4.1 million for the three-month periods ended September 30, 2017 and 2016, respectively, and $13.0 million and $12.1 million for the nine-month periods ended September 30, 2017 and 2016, respectively. The increase in operating expenses during the three and nine-month periods ended September 30, 2017 as compared to the prior year periods is partially due to new acquisitions as discussed above. a newly constructed MOB.

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~~lease revenue in our condensed consolidated statements of income.

Included in our other operating expenses (excluding ground lease expenses) are expenses related to the consolidated medical office buildings and three vacant specialty facilities (one of which is in the process of being demolished) amounting to $6.4 million during the first quarter of 2023 (excluding $265,000 of demolition expenses incurred during the first quarter of 2023) and $6.0 million during the first quarter of 2022. The $385,000 increase in other operating expenses related to these facilities during the first quarter of 2023, as compared to the first quarter of 2022, was due to net increases experienced at various properties, including the impact of acquisitions and a newly constructed MOB.

Funds from operations (“FFO”) is a widely recognized measure of performance for ~~REITs.~~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. FFO adjusts for the effects of ~~gains,~~certain items, such as gains on transactions that occurred during the periods presented. ~~AFFO was also computed for~~To the ~~three~~extent a REIT recognizes a gain or loss with respect to the sale of incidental assets, the REIT has the option to exclude or include such gains and ~~nine-month periods ended September 30, 2017, as discussed herein, since we believe it is helpful~~losses in the calculation of FFO. We have opted to exclude gains and losses from sales of incidental assets in our ~~investors since it adjusts for the hurricane accounting impact on our financial statements.~~calculation of FFO. FFO ~~and AFFO do~~does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income determined in accordance with GAAP. In addition, FFO ~~and 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 the ~~three and nine-month~~three-month periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 (in thousands):

Our FFO decreased $1.0 million during the first quarter of 2023, as compared to the first quarter of 2022. The net decrease was primarily due to: (i) a decrease in net income of $946,000, as discussed above, and; (ii) a $93,000 decrease in depreciation and ~~AFFO~~amortization expense incurred on our consolidated and unconsolidated affiliates.

As reflected in the schedule below, interest expense was $3.7 million and $2.2 million during the three-month periods ended March 31, 2023 and 2022, respectively (amounts in thousands):

Interest expense increased by ~~$389,000, or $.03 per diluted share,~~$1.5 million during the three-month period ended ~~September 30, 2017, and $1.0 million, or $.04 per diluted share, during the nine-month period ended September 30, 2017,~~March 31, 2023, as compared to the comparable ~~periods~~period of ~~2016. The $389,000 and $1.0~~2022, due primarily to: (i) a $3.3 million ~~increases~~increase in ~~FFO and AFFO~~the interest expense on our revolving credit agreement primarily resulting from an increase in our average cost of borrowings (6.06% average effective rate during the first quarter of 2023, as compared to 1.76% average effective rate during the comparable quarter of 2022) as well as an increase in our average outstanding borrowings ($300.9 million during the three ~~and nine-month periods~~months ended ~~September 30, 2017, respectively,~~March 31, 2023 as compared to the three and nine-month periods ended September 30, 2016, were primarily attributable to: (i) a net increase in the income (before depreciation and amortization expense) generated at our properties, including the properties acquired at various times during 2016 and 2017; (ii) a decrease in transaction cost expense, as mentioned above, offset by; (iii) an unfavorable impact of approximately $140,000, or $.01 per diluted share, as a result of the temporary closure of the hurricane impacted properties, as discussed below.

on the estimated re-opening dates, it is expected that the buildings will be closed through the remainder of 2017 and into the first half of 2018. In the aggregate, these properties comprised approximately 2% of our consolidated revenues and funds from operations during the six months ended June 30, 2017.

At the time of the hurricane, we maintained insurance policies with a commercial insurance carrier providing for property damage coverage, subject to certain deductibles and other limitations, of up to $20$269.0 million in the ~~aggregate applicable~~comparable quarter of 2022), partially offset by; (ii) a $1.5 million favorable change in interest rate swap income/expense; (iii) a $173,000 decrease in mortgage interest expense; (iv) a $129,000 decrease due to an increase in capitalized interest on a major project, and; (v) a $37,000 decrease in other interest expense.

Please refer to Note 7 to the ~~impacted properties and up to $50 million~~consolidated financial statements -Lease Accounting, for additional information regarding certain of our vacant specialty hospital facilities consisting of Evansville, Indiana; Corpus Christi, Texas, and; Chicago, Illinois (which is in the aggregate for business interruption coverage pursuant to a shared limit policy. Additionally, we have insurance coverage under the National Flood Insurance Program providing for property damage coverageprocess of up to $500,000 per each of the 5 buildings, subject to certain deductibles and other limitations. When all property insurance coverage and deductibles applicable to the above-mentioned hurricane damaged buildings are considered, we believe we are entitled to recovery of substantially all hurricane related expenses and reconstruction costs, less an aggregate net deductible of $25,000. In addition, pursuant to the business interruption policy, we believe we are entitled to substantially all lost income at these properties resulting from the hurricane, less an aggregate deductible of $100,000. However, we can provide no assurance that we will ultimately collect, after satisfaction of the applicable deductibles, substantially all of the hurricane related expenses and reconstruction costs and the lost income resulting from the related interruption of business at the impacted properties.being demolished).

Net cash provided by operating activities was ~~$33.6~~$10.1 million during the ~~nine-month~~three-month period ended ~~September 30, 2017~~March 31, 2023 as compared to ~~$29.8~~$11.7 million during the comparable period of ~~2016.~~2022. The ~~$3.9~~$1.6 million net ~~increase~~decrease was attributable to:

~~Net cash provided by investing activities was $39.6 million during the nine months ended September 30, 2017 as compared to $64.2 million of net~~ cash used in investing activities

Net cash used in investing activities was $5.4 million during the ~~nine~~first three months ~~ended September 30, 2016.~~of 2023 as compared to $18.3 million during the first three months of 2022.

During the ~~nine-month~~three-month period ended ~~September 30, 2017,~~March 31, 2023 we funded: (i) ~~$532,000 in equity investments in various unconsolidated LLCs; (ii) $11.0~~$5.0 million in ~~capital~~ additions to real estate investments including construction costs ~~for~~related to the ~~Henderson~~Sierra Medical Plaza ~~MOB (this MOB opened~~I medical office building located in ~~April, 2017),~~Reno, Nevada, that was substantially completed during the first quarter of 2023, as well as tenant improvements at various MOBs; ~~(iii) $7.9 million paid to acquire the minority interest in a majority-owned LLC (Arlington Medical Properties, LLC), and; (iv) $9.0~~(ii) $3.9 million in ~~connection with the July and September, 2017 acquisitions of the Health Center of Hamburg and the Las Palmas FED, respectively, as discussed above.~~equity investments in

unconsolidated LLCs, and; (iii) $100,000 in deposits on real estate assets. In addition, during the ~~nine-month period~~three months ended ~~September 30, 2017,~~March 31, 2023, we received: (i) ~~$65.2 million~~$64,000 of ~~net~~ cash ~~proceeds generated in connection with the divestiture of St. Mary’s Professional Office Building, as discussed herein (net of closing costs~~); ~~(ii) $1.5 million in connection with partial hurricane insurance recoveries; (iii) $216,000 of installment repayments of member loan advanced to an LLC, and; (iv) $1.1 million of cash distributions~~ in excess of income ~~received~~ from ~~our unconsolidated LLCs.~~ T~~he $65.2~~LLCs, and; (ii) $3.5 million of ~~net cash proceeds generated in connection with the divestiture~~repayments of ~~St. Mary’s Professional Office Building includes repayment of a $21.4 million previously extended member loan that was~~an advance we provided ~~by us~~ to ~~Arlington Medical Properties,~~an unconsolidated LLC ~~when we held an 85% noncontrolling ownership interest in the LLC.~~during 2021.

During the ~~nine-month~~three-month period ended ~~September 30, 2016,~~March 31, 2022 we funded: (i) ~~$5.5~~$13.6 million, including transaction costs, on the acquisitions of the Beaumont Heart and Vascular Center in ~~equity investments~~March, 2022, and; the 140 Thomas Johnson Drive medical office building in ~~various unconsolidated LLCs, including $4.8 million~~ January, 2022, as discussed in Note 4to ~~purchase an additional 10% equity interest in~~ the ~~Arlington Medical Plaza LLC;~~consolidated financial statements–Acquisitions and Divestitures; (ii) ~~$7.1~~$3.5 million in ~~capital~~ additions to real estate investments ~~primarily~~including construction costs related to the Sierra Medical Plaza I medical office building located in Reno, Nevada, as well as tenant improvements at various MOBs, and; (iii) $1.3 million as ~~well as construction costs for~~part of the ~~Henderson Medical Plaza MOB, as discussed above; (iii) $420,000 consisting of a deposit on real estate assets, and; (iv) $52.2 million to acquire the real estate assets of three properties.~~asset purchase and sale agreement with UHS. In addition, during the ~~nine-month period~~three-months ended ~~September 30, 2016,~~March 31, 2022, we ~~received: (i) $634,000~~received $160,000 of ~~installment repayments of an outstanding member loan that was provided by us to Arlington Medical Properties, LLC, and; (ii) $318,000 of~~ cash ~~distributions~~ in excess of income ~~received~~ from ~~our unconsolidated~~ LLCs.

Net cash used in financing activities was ~~$73.2~~$4.2 million during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023, as compared to ~~$34.6~~$7.0 million of ~~net~~ cash ~~provided by~~used in financing activities during the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2022.

During the ~~nine-month~~three-month period ended ~~September 30, 2017,~~March 31, 2023, we paid: (i) ~~$24.8 million of net borrowings on our revolving credit agreement; (ii) $43.7~~$4.6 million on mortgage notes payable that are non-recourse to us, including ~~the~~a $4.2 million repayment of ~~an aggregate~~a fixed rate mortgage loan that matured during the first quarter of ~~$41.6 million related to previously outstanding mortgage notes payable on three properties that were funded utilizing borrowings under our revolving credit agreement; (iii) $290,000~~2023; (ii) $30,000 of financing costs related to the revolving credit agreement, ~~and new mortgage notes payable that are non-recourse to us,~~ and; ~~(iv) $26.9~~(iii) $9.9 million of dividends. Additionally, during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023, we received: (i) ~~$13.2~~$10.3 million of ~~proceeds from a new mortgage note payable that is non-recourse to us,~~net borrowings on our revolving credit agreement, and; (ii) ~~$9.3 million~~$39,000 of net cash from the issuance of shares of beneficial ~~interest, including $9.1~~interest.

During the three-month period ended March 31, 2022, we paid: (i) $536,000 on mortgage notes payable that are non-recourse to us; (ii) $26,000 of financing costs related to the revolving credit agreement, and; (iii) $9.7 million of ~~net cash proceeds received in connection with our ATM Program, as discussed below.~~

~~During~~dividends. Additionally, during the ~~nine-month period~~three months ended ~~September 30, 2016, we:~~March 31, 2022, we received: (i) ~~received $50.1~~$3.2 million of ~~additional~~ net borrowings on our revolving credit agreement, and; (ii) ~~received $13.4 million~~$55,000 of net cash from the issuance of shares of beneficial ~~interest, including cash proceeds generated pursuant to the ATM program. Additionally, during the nine months ended September 30, 2016,~~interest.

During 2020, we paid: (i) $2.4 million on mortgage notes payable that are non-recourse to us; (ii) $307,000 of financing costs paid related to the amendment of our revolving credit agreement, (iii) $26.2 million of dividends, and; (iv) $30,000 of partial settlements of dividend equivalent rights.

~~During the third quarter of 2017, we issued new shares in connection with our~~commenced an at-the-market (“ATM”) equity issuance program, pursuant to the terms of which we may sell, from time-to-time, common shares of our beneficial interest up to an aggregate sales price of ~~approximately $23.3~~$100 million to or through ~~Merrill Lynch, Pierce, Fenner and Smith, Incorporated (“Merrill Lynch”), as sales~~our agent ~~and/or principal. The common~~banks. No shares were ~~offered~~issued pursuant to ~~the Registration Statement filed with the Securities and Exchange Commission, which became effective during the fourth quarter of 2015.~~

~~Pursuant to the~~this ATM ~~Program,~~equity program during the first ~~nine~~three months of ~~2017, there~~2023 and no shares were ~~127,499 shares~~ issued at an average price of $74.71 per share (all of which were issued during the third quarter of 2017), which generated approximately $9.1 million of cash net proceeds (net of approximately $400,000, consisting of compensation of $238,000 to Merrill Lynch, as well as $162,000 of other various fees and expenses). Since inception of this ATM program, including shares issued under a prior Registration Statement filed with the

Securities and Exchange Commission in November, 2012, we have issued 957,415 shares at an average price of $52.22 per share, which generated approximately $47.9 million of net proceeds (net of approximately $2.1 million, consisting of compensation of $1.25 million to Merrill Lynch as well as $840,000 of other various fees and expenses). During the first nine months of 2016, we issued 249,016 shares at an average price of $55.30 per share (all of which was issued during the second quarter of 2016) which generated approximately $13.2 million of net cash proceeds (net of approximately $558,000, consisting of compensation of approximately $344,000 to Merrill Lynch as well as $214,000 of other various fees and expenses). As of September 30, 2017, we have met our aggregate sales threshold of $23.3 million pursuant to this ~~program. We have used~~ATM equity program during the proceeds generated pursuant to the ATM program to reduce amounts outstanding under our revolving credit agreement. After such repayment of debt, we may re-borrow funds under our revolving credit agreement for general operating purposes, including working capital, capital expenditures, acquisitions, dividend payments and the refinance of third-party debt.year ended December 31, 2022.

Additional cash flow and dividends paid information for the ~~nine-month~~three-month periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016:~~2022:

As indicated on our condensed consolidated statement of cash flows, we generated net cash provided by operating activities of ~~$33.6~~$10.1 million and ~~$29.8~~$11.7 million during the ~~nine-month~~three-month periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, respectively. As also indicated on our statement of cash flows, ~~noncash~~non-cash expenses including depreciation and amortization expense, amortization related to above/below market leases, amortization of debt premium, amortization of deferred financing costs and stock-based compensation expense, ~~hurricane related expenses~~as well as changes in certain assets and ~~recoveries and the gain recorded during the first nine months of 2017~~liabilities, are the primary differences between our net income and net cash provided by operating activities during each period. ~~In addition, as reflected in the cash flows from investing activities section, we received $1.1~~

We declared and paid dividends of $9.9 million and ~~$318,000~~$9.7 million during the ~~nine-month~~three-month periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016, respectively,~~2022, respectively. During the first three months of ~~cash distributions in excess of income from various unconsolidated LLCs which represents our share of~~2023, the ~~net cash flow distributions from these entities. The cash distributions in excess of income represent operating cash flows net of capital expenditures and debt repayments made by the LLCs.~~

~~We therefore generated $34.7 million and $30.1~~$10.1 million of net cash ~~during the nine months ended September 30, 2017 and 2016, respectively, related to the~~provided by operating activities of our properties recorded on a consolidated and an unconsolidated basis. We paid dividends of $26.9 million and $26.2 million during the nine months ended September 30, 2017 and 2016, respectively. During the first nine months of 2017, the $34.7 million of net cash generated related to the operating activities of our properties was ~~approximately $7.8 million~~$217,000 greater than the ~~$26.9~~$9.9 million of dividends paid during the first ~~nine~~three months of ~~2017.~~2023. During the first ~~nine~~three months of ~~2016,~~2022, the ~~$30.1~~$11.7 million of net cash ~~generated related to the~~provided by operating activities ~~of our properties~~ was ~~$3.8~~approximately $2.0 million greater than the ~~$26.2~~$9.7 million of dividends paid during the first ~~nine~~three months of ~~2016.~~ 2022.

As indicated in the cash flows from investing activities and cash flows from financing activities sections of the statements of cash flows, there were various other sources and uses of cash during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016.~~2022. From time to time, various other sources and uses of cash may include items such as investments and advances made to/from LLCs, additions to real estate investments, acquisitions/divestiture of properties, net borrowings/repayments of debt, and proceeds generated from the issuance of equity. Therefore, in any given period, the funding source for our dividend payments is not wholly dependent on the operating cash flow generated by our properties. Rather, our dividends as well as our capital reinvestments into our existing properties, acquisitions of real property and other investments are funded based upon the aggregate net cash inflows or outflows from all sources and uses of cash from the properties we own either in whole or through LLCs, as outlined above.

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

We expect to finance all capital expenditures and acquisitions and pay dividends utilizing internally generated and additional funds. Additional funds may be obtained through: (i) borrowings under our ~~existing $250~~$375 million revolving credit agreement (which ~~has $71.8~~had $63.5 million of available borrowing capacity, net of outstanding borrowings and letters of credit as of ~~September 30, 2017)~~March 31, 2023); (ii) borrowings under or refinancing of existing third-party debt pursuant to mortgage loan agreements entered into by our consolidated and unconsolidated LLCs/LPs; (iii) the issuance of equity pursuant to our ATM program, and/or; (iv) the issuance of other long-term debt.

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

terms or within an acceptable time. Our inability to obtain financing on terms acceptable to us could have a material unfavorable impact on our results of operations, financial condition and liquidity.

On ~~May 24, 2016,~~July 2, 2021, we entered into an amended ~~our~~and restated revolving credit agreement (“Credit Agreement”) to ~~among~~amend and restate the previously existing $350 million credit agreement, as amended and dated June 5, 2020 (“Prior Credit Agreement”). Among other things, ~~increase~~under the ~~borrowing capacity~~Credit Agreement, our aggregate revolving credit commitment was increased to ~~$250~~$375 million from ~~$185 million previously.~~$350 million. The ~~amended~~ Credit Agreement, which is scheduled to mature on July 2, 2025, provides for a revolving credit facility in ~~March, 2019, includes~~an aggregate principal amount of $375 million, including a $40 million ~~sub limit~~sublimit for letters of credit and a ~~$20~~$30 million ~~sub limit~~sublimit for swingline/short-term loans. ~~The~~Under the terms of the Credit Agreement, ~~also provides a one-time option to extend~~we may request that the ~~maturity date for an additional one year period, and an option to increase the total facility borrowing capacity~~revolving line of credit be increased by up to an additional $50 ~~million, subject to lender agreement.~~million. Borrowings under the ~~Credit Agreement~~new facility are guaranteed by certain subsidiaries of the Trust. In addition, borrowings under the ~~Credit Agreement~~new facility are secured by first priority security interests in and liens on all equity interests in most of the Trust’s wholly-owned subsidiaries.

Borrowings ~~made pursuant to~~under the Credit Agreement will bear interest annually at a rate equal to, at our option, at either LIBOR (for one, ~~two,~~ three, or six ~~month LIBOR plus an applicable margin ranging from 1.50% to 2.00%~~months) or at the Base Rate, plus anin either case, a specified margin depending on our ratio of debt to total capital, as determined by the formula set forth in the Credit Agreement. The applicable margin ~~ranging~~ranges from ~~0.50%~~1.10% to ~~1.00%.~~1.35% for LIBOR loans and 0.10% to 0.35% for Base Rate loans. The initial applicable margin is 1.25% for LIBOR loans and 0.25% for Base Rate loans. The Credit Agreement defines “Base Rate” as the greatest ~~of:~~of (a) the ~~administrative agent’s~~Administrative Agent’s prime ~~rate;~~rate, (b) the federal funds effective rate plus 1/2 of 1%~~, and;~~ and (c) one month LIBOR plus 1%. ~~A commitment~~The Trust will also pay a quarterly revolving facility fee ~~of 0.20%~~ranging from 0.15% to ~~0.40%~~0.35% (depending on ~~our total leverage ratio) will be charged~~the Trust’s ratio of debt to asset value) on the ~~average unused portion~~revolving committed amount of the ~~revolving credit commitments.~~ Credit Agreement. The Credit Agreement also provides for options to extend the maturity date and borrowing availability for two additional six-month periods.

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):

~~On June 1, 2017, upon its maturity,~~At March 31, 2023 and December 31, 2022, we had various mortgages, all of which were non-recourse to us, included in our condensed consolidated balance sheet. The mortgages are secured by the ~~$4.5~~real property of the buildings as well as property leases and rents. The mortgages outstanding as of March 31, 2023, had a combined carrying value of approximately $40.3 million and a combined fair value of approximately $38.6 million. The mortgages outstanding as of December 31, 2022, had a combined carrying value of approximately $45.0 million and a combined fair value of approximately $43.2 million.

Changes in market rates on our fixed rate ~~mortgage loan~~debt impacts the fair value of debt, but it has no impact on ~~the Medical Center of Western Connecticut was fully repaid utilizing borrowings under our Credit Agreement.~~interest incurred or cash flow.

~~On April 3, 2017, upon its maturity, the $20.2 million fixed rate mortgage loan on the Peace Health Medical Clinic was fully repaid utilizing borrowings under our Credit Agreement.~~

On March 31, 2017, upon its maturity, a $10.3 million floating rate mortgage loan on Summerlin Hospital Medical Office Building III was fully repaid. In April, 2017, we refinanced the property with a $13.2 million fixed rate mortgage, as shown above.

As of ~~September 30, 2017,~~March 31, 2023, we are party to certain off balance sheet arrangements consisting of standby letters of credit and equity and debt financing commitments. Our outstanding letters of credit at ~~September 30, 2017~~March 31, 2023 totaled ~~$1.5~~$3.1 million ~~and were~~ related to ~~Centennial Hills Medical Properties.~~Grayson Properties II. As of December 31, 2022, we had off balance sheet arrangements consisting of standby letters of credit and equity and debt financing commitments. Our outstanding letters of credit at December 31, 2022 totaled $3.1 million related to Grayson Properties II.

Please see Note 4 to the ~~condensed~~ consolidated financial ~~statements for completed transactions.~~statements.

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

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

At March 31, 2023, we had contracts that are indexed to LIBOR, such as our unsecured revolving credit facility and interest rate derivatives. We are monitoring and evaluating the related risks, which include interest on loans or amounts received and paid on derivative instruments. These risks arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur. The value of loans, securities, or derivative instruments tied to LIBOR could also be impacted if LIBOR is ~~made~~limited or discontinued. For some instruments, the method of transitioning to ~~Item 7A~~an alternative rate may be challenging, as they may require negotiation with the respective counterparty. Our unsecured revolving credit facility contains provisions specifying alternative interest rate calculations to be employed when LIBOR ceases to be available as a benchmark.

We currently expect the LIBOR-indexed rates included in our ~~Annual Report~~debt agreements to be available until June 30, 2023. We anticipate managing the transition to a preferred alternative rate using the language set out in our agreements, however, future market conditions may not allow immediate implementation of desired modifications and we may incur significant associated costs in doing so.

In March 2020, we entered into an interest rate swap agreement on ~~Form 10-K~~a total notional amount of $55 million with a fixed interest rate of 0.565% that we designated as a cash flow hedge. The interest rate swap became effective on March 25, 2020 and is scheduled to mature on March 25, 2027. If the one-month LIBOR is above 0.565%, the counterparty pays us, and if the one-month LIBOR is less than 0.565%, we pay the counterparty, the difference between the fixed rate of 0.565% and one-month LIBOR.

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

We measure our interest rate swaps at fair value on a recurring basis. The fair value of our interest rate swaps is based on quotes from third parties. We consider those inputs to be “level 2” in the fair value hierarchy as outlined in the authoritative guidance for disclosures in connection with derivative instruments and hedging activities. At March 31, 2023, the fair value of our interest rate swaps was a net asset of $10.3 million which is included in deferred charges and other assets on the accompanying condensed consolidated balance sheet. During the first quarter of 2023, we received approximately $1.2 million from the counterparty, adjusted for the ~~year ended December~~previous quarter accrual, pursuant to the terms of the swaps. During the first quarter of 2022, we paid or accrued approximately $289,000 to the counterparty, adjusted for the previous quarter accrual, pursuant to the terms of the swaps. From inception of the swap agreements through March 31, ~~2016. There have been no material~~2023 we paid or accrued approximately $2.5 million to the counterparty by us, offset by approximately $2.8 million in receipts from the counterparty, adjusted for accruals, pursuant to the terms of the swap. Cash flow hedges are accounted for by recording the fair value of the derivative instrument on the balance sheet as either an asset or a liability, with a corresponding amount recorded in accumulated other comprehensive income (“AOCI”) within shareholders’ equity. Amounts are reclassified from AOCI to the income statement in the period or periods the hedged transaction affects earnings. We do not expect any gains or losses on our interest rate swaps to be reclassified to earnings in the next twelve months.

The sensitivity analysis related to our fixed and variable rate debt assumes current market rates with all other variables held constant. As of March 31, 2023, the fair value and carrying value of our debt is approximately $347.0 million and $348.7 million, respectively. As of that date, the carrying value exceeds the fair value by approximately $1.7 million.

The table below presents information about our financial instruments that are sensitive to changes in interest rates. The interest rate swaps include the ~~quantitative and qualitative disclosures~~$50 million swap agreement entered into during the ~~first nine months~~third quarter of ~~2017.~~2019, the $35 million swap agreement entered

into in January, 2020 and the $55 million swap agreement entered into in March, 2020. For debt obligations, the amounts of which are as of March 31, 2023, the table presents principal cash flows and related weighted average interest rates by contractual maturity dates.

As calculated based upon our variable rate debt outstanding as of March 31, 2023 that is subject to interest rate fluctuations, and giving effect to the above-mentioned interest rate swap, each 1% change in interest rates would impact our net income by approximately $1.7 million.

As of ~~September 30, 2017,~~March 31, 2023, under the supervision and with the participation of our management, including the Trust’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we performed an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “1934 Act”).

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

There have been no changes in our internal control over financial reporting or in other factors during the first ~~nine months~~quarter of ~~2017~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2022 includes a listing of risk factors to be considered by investors in our securities. There have been no material changes in our risk factors from those set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


~~MARYLAND~~Maryland		23-6858580
(State or other jurisdiction of incorporation or organization)		(I. R. S. Employer Identification No.)

UNIVERSAL CORPORATE CENTER 367 SOUTH GULPH ROAD KING OF PRUSSIA ~~PENNSYLVANIA~~, Pennsylvania		~~19406~~19406-0958
(Address of principal executive offices)		(Zip Code)


		PAGE NO.
PART I. FINANCIAL INFORMATION (unaudited)
Item 1.	Financial Statements
	Condensed Consolidated Statements of Income—Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022	3
	Condensed Consolidated Statements of Comprehensive Income—Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022	4
	Condensed Consolidated Balance Sheets—~~September 30, 2017~~March 31, 2023 and December 31, ~~2016~~2022	5
	Condensed Consolidated Statements of Changes in Equity—Three Months Ended March 31, 2023 and 2022	6 through 7
	Condensed Consolidated Statements of Cash Flows—~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022	68
	Notes to Condensed Consolidated Financial Statements	79 through 1720
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1821 through 30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30 through 32
Item 4.	Controls and Procedures	3032
PART II. OTHER INFORMATION		33
Item 6.1A.	~~Exhibits~~Risk Factors	3133
Item 6.	Exhibits	33

~~EXHIBIT INDEX~~SIGNATURES		3234

~~Signatures~~			33


	Three Months Ended
	March 31,
	2023			2022
Revenues:
Lease revenue - UHS facilities (a.)	$	7,787		$	7,426
Lease revenue - Non-related parties		13,361			12,895
Other revenue - UHS facilities		231			229
Other revenue - Non-related parties		481			255
Interest income on financing leases - UHS facilities		1,366			1,370
		23,226			22,175
Expenses:
Depreciation and amortization		6,618			6,709
Advisory fees to UHS		1,302			1,224
Other operating expenses		7,521			6,867
		15,441			14,800
Income before equity in income of unconsolidated limited liability companies ("LLCs") and interest expense		7,785			7,375
Equity in income of unconsolidated LLCs		371			252
Interest expense, net		(3,697	)		(2,222	)
Net income	$	4,459		$	5,405
Basic earnings per share	$	0.32		$	0.39
Diluted earnings per share	$	0.32		$	0.39

Weighted average number of shares outstanding - Basic		13,778			13,764
Weighted average number of shares outstanding - Diluted		13,803			13,785


	Three Months Ended
	March 31,
	2023			2022
Net income	$	4,459		$	5,405
Other comprehensive (loss)/gain:
Unrealized derivative (loss)/gain on cash flow hedges		(1,747	)		5,684
Total other comprehensive (loss)/gain:		(1,747	)		5,684
Total comprehensive income	$	2,712		$	11,089


	March 31,			December 31,
	2023			2022
Assets:
Real Estate Investments:
Buildings and improvements and construction in progress	$	645,509		$	641,338
Accumulated depreciation		(254,590	)		(248,772	)
		390,919			392,566
Land		56,631			56,631
Net Real Estate Investments		447,550			449,197
Financing receivable from UHS		83,525			83,603
Net Real Estate Investments and Financing receivable		531,075			532,800
Investments in and advances to limited liability companies ("LLCs")		9,599			9,282
Other Assets:
Cash and cash equivalents		8,120			7,614
Lease and other receivables from UHS		5,755			5,388
Lease receivable - other		8,611			8,445
Intangible assets (net of accumulated amortization of $14.1 million and $15.4 million, respectively)		8,877			9,447
Right-of-use land assets, net		11,836			11,457
Deferred charges and other assets, net		20,439			23,107
Total Assets	$	604,312		$	607,540
Liabilities:
Line of credit borrowings	$	308,400		$	298,100
Mortgage notes payable, non-recourse to us, net		40,119			44,725
Accrued interest		337			373
Accrued expenses and other liabilities		10,360			12,873
Ground lease liabilities, net		11,836			11,457
Tenant reserves, deposits and deferred and prepaid rents		11,090			10,911
Total Liabilities		382,142			378,439
Equity:
Preferred shares of beneficial interest, $.01 par value; 5,000,000 shares authorized; none issued and outstanding		-			-
Common shares, $.01 par value; 95,000,000 shares authorized; issued and outstanding: 2023 - 13,804,142; 2022 - 13,803,335		138			138
Capital in excess of par value		269,698			269,472
Cumulative net income		815,120			810,661
Cumulative dividends		(873,050	)		(863,181	)
Accumulated other comprehensive income		10,264			12,011
Total Equity		222,170			229,101
Total Liabilities and Equity	$	604,312		$	607,540


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


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


Large accelerated filer	☒	Accelerated Filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Revenues:
Base rental - UHS facilities	$	4,242		$	4,066		$	12,625		$	12,226
Base rental - Non-related parties		10,167			9,273			30,253			27,118
Bonus rental - UHS facilities		1,126			1,118			3,656			3,557
Tenant reimbursements and other - Non-related parties		2,440			2,168			6,872			5,984
Tenant reimbursements and other - UHS facilities		219			176			683			603
		18,194			16,801			54,089			49,488
Expenses:
Depreciation and amortization		6,321			5,893			18,761			16,872
Advisory fees to UHS		908			832			2,648			2,380
Other operating expenses		4,877			4,663			14,505			13,603
Transaction costs		(19	)		331			107			477
Hurricane related expenses		3,398			-			3,398			-
Hurricane insurance recoveries		(3,398	)		-			(3,398	)		-
		12,087			11,719			36,021			33,332
Income before equity in income of unconsolidated limited liability companies ("LLCs"), interest expense and gain		6,107			5,082			18,068			16,156
Equity in income of unconsolidated LLCs		384			1,110			1,959			3,396
Gain on Arlington transaction		-			-			27,196			-
Interest expense, net		(2,531	)		(2,374	)		(7,668	)		(6,783	)
Net income	$	3,960		$	3,818		$	39,555		$	12,769
Basic earnings per share	$	0.29		$	0.28		$	2.91		$	0.95
Diluted earnings per share	$	0.29		$	0.28		$	2.91		$	0.95

Weighted average number of shares outstanding - Basic		13,621			13,575			13,595			13,426
Weighted average number of share equivalents		-			-			-			5
Weighted average number of shares and equivalents outstanding - Diluted		13,621			13,575			13,595			13,431

	Nine months ended September 30,
	2017			2016
Cash flows from operating activities:
Net income	$	39,555		$	12,769
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		18,804			16,920
Amortization of debt premium		(126	)		(166	)
Stock-based compensation expense		390			354
Hurricane related expenses		3,398			—
Hurricane insurance recoveries		(3,398	)		—
Gain on Arlington transaction		(27,196	)		—
Changes in assets and liabilities:
Rent receivable		(913	)		(497	)
Accrued expenses and other liabilities		89			203
Tenant reserves, deposits and deferred and prepaid rents		3,527			604
Accrued interest		(6	)		47
Leasing costs paid		(475	)		(452	)
Other, net		(22	)		(30	)
Net cash provided by operating activities		33,627			29,752
Cash flows from investing activities:
Investments in LLCs		(532	)		(5,454	)
Repayments of advances made to LLC		216			634
Cash distributions in excess of income from LLCs		1,060			318
Additions to real estate investments, net		(10,983	)		(7,104	)
Cash proceeds received from divestiture of property, net		65,220			—
Hurricane insurance recoveries for damaged real estate property		1,500			—
Deposit on real estate assets		—			(420	)
Net cash paid for acquisition of properties		(9,040	)		(52,193	)
Cash paid to acquire minority interests in majority-owned LLCs		(7,890	)		—
Net cash provided by/(used in) investing activities		39,551			(64,219	)
Cash flows from financing activities:
Net (repayments)/borrowings on line of credit		(24,800	)		50,100
Repayments of mortgage notes payable		(43,656	)		(2,407	)
Proceeds from mortgage notes payable		13,200			—
Financing costs paid		(290	)		(307	)
Dividends paid		(26,921	)		(26,231	)
Partial settlement of dividend equivalent rights		—			(30	)
Issuance of shares of beneficial interest, net		9,307			13,430
Net cash (used in)/provided by financing activities		(73,160	)		34,555
Increase in cash and cash equivalents		18			88
Cash and cash equivalents, beginning of period		3,930			3,894
Cash and cash equivalents, end of period	$	3,948		$	3,982
Supplemental disclosures of cash flow information:
Interest paid	$	7,359		$	6,491



	Common Shares				Capital in							Accumulated other
	Number				excess of		Cumulative		Cumulative			comprehensive			Total
	of Shares		Amount		par value		net income		dividends			income/(loss)			Equity
January 1, 2023		13,803	$	138	$	269,472	$	810,661	$	(863,181	)	$	12,011		$	229,101
Shares of Beneficial Interest:
Issued		1		—		38		—		—			—			38
Restricted stock-based compensation expense		—		—		188		—		—			—			188
Dividends ($.715/share)		—		—		—		—		(9,869	)		—			(9,869	)
Comprehensive income:
Net income		—		—		—		4,459		—			—			4,459
Unrealized net gain/(loss) on cash flow hedges		—		—		—		—		—			(1,747	)		(1,747	)
Subtotal - comprehensive income								4,459					(1,747	)		2,712
March 31, 2023		13,804	$	138	$	269,698	$	815,120	$	(873,050	)	$	10,264		$	222,170


	Three months ended March 31,
	2023			2022
Cash flows from operating activities:
Net income	$	4,459		$	5,405
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,618			6,709
Amortization related to above/below market leases, net		(39	)		(39	)
Amortization of debt premium		(12	)		(12	)
Amortization of deferred financing costs		171			176
Stock-based compensation expense		188			223
Changes in assets and liabilities:
Lease receivable		(533	)		(410	)
Accrued expenses and other liabilities		(1,610	)		(613	)
Tenant reserves, deposits and deferred and prepaid rents		179			93
Accrued interest		(36	)		(3	)
Leasing costs paid		(200	)		(482	)
Other, net		883			657
Net cash provided by operating activities		10,068			11,704
Cash flows from investing activities:
Investments in LLCs		(3,869	)		-
Cash distributions from LLCs		64			160
Advance received from LLC		3,500			-
Additions to real estate investments, net		(5,003	)		(3,527	)
Deposit on real estate assets		(100	)		-
Cash paid for acquisition of properties		-			(13,605	)
Net cash paid as part of asset exchange transaction		-			(1,346	)
Net cash used in investing activities		(5,408	)		(18,318	)
Cash flows from financing activities:
Net borrowings on the line of credit		10,300			3,200
Repayments of mortgage notes payable		(4,612	)		(536	)
Financing costs paid		(30	)		(26	)
Dividends paid		(9,851	)		(9,704	)
Issuance of shares of beneficial interest, net		39			55
Net cash used in financing activities		(4,154	)		(7,011	)
Increase/(decrease) in cash and cash equivalents		506			(13,625	)
Cash and cash equivalents, beginning of period		7,614			22,504
Cash and cash equivalents, end of period	$	8,120		$	8,879
Supplemental disclosures of cash flow information:
Interest paid	$	3,723		$	2,080
Invoices accrued for construction and improvements	$	832		$	1,932


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


~~Land~~	~~$6,891~~
~~Buildings and improvements~~	~~39,647~~
~~Intangible assets~~	~~7,094~~
~~Below-market intangibles~~	~~(1,289)~~
~~Deposit~~	~~(150)~~

~~Net cash paid~~	~~$52,193~~

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(amounts in thousands)				(amounts in thousands)
Revenues	$	2,426	$	3,776	$	8,419	$	11,437
Operating expenses		933		1,329		3,122		4,025
Depreciation and amortization		483		646		1,547		1,910
Interest, net		342		636		1,241		1,928
Net income	$	668	$	1,165	$	2,509	$	3,574
Our share of net income (a.)	$	384	$	1,110	$	1,959	$	3,396

	September 30, 2017			December 31, 2016
	(amounts in thousands)
Net property, including CIP	$	33,123		$	60,970
Other assets		3,672			4,598
Total assets	$	36,795		$	65,568

Liabilities	$	2,686		$	3,334
Mortgage notes payable, non-recourse to us		27,979			28,367
Advances payable to us		-			21,638
Equity		6,130			12,229
Total liabilities and equity	$	36,795		$	65,568

Our share of equity in and advances to LLCs reflected as:
Investments in LLCs	$	4,695		$	13,955
Advances to LLCs		-			21,638
Investments in and advances to LLCs before
amounts included in accrued expenses and other liabilities		4,695			35,593
Amounts included in accrued expenses and other liabilities		(1,790	)		(1,862	)
Our share of equity in and advances to LLCs, net	$	2,905		$	33,731

	Mortgage Loan Balance (a.)
Name of LLC/LP	9/30/2017		12/31/2016		Maturity Date
FTX MOB Phase II	$	5,234	$	5,301	October, 2017 (b.)
Grayson Properties		14,252		14,438	September, 2021
Brunswick Associates		8,493		8,628	December, 2024
	$	27,979	$	28,367

Facility Name	Outstanding Balance (in thousands)(a)			Interest Rate			Maturity Date
Summerlin Hospital Medical Office Building II fixed rate mortgage loan (b.)	$	10,834			5.50	%	October, 2017
Phoenix Children’s East Valley Care Center fixed rate mortgage loan (c.)		6,087			5.88	%	December, 2017
Centennial Hills Medical Office Building floating rate mortgage loan (d.)		9,830			4.48	%	January, 2018
Sparks Medical Building/Vista Medical Terrace floating rate mortgage loan (d.)		4,153			4.48	%	February, 2018
Rosenberg Children’s Medical Plaza fixed rate mortgage loan (d.)		8,013			4.85	%	May, 2018
Vibra Hospital-Corpus Christi fixed rate mortgage loan		2,650			6.50	%	July, 2019
700 Shadow Lane and Goldring MOBs fixed rate mortgage loan		6,107			4.54	%	June, 2022
BRB Medical Office Building fixed rate mortgage loan		6,174			4.27	%	December, 2022
Desert Valley Medical Center fixed rate mortgage loan		4,980			3.62	%	January, 2023
2704 North Tenaya Way fixed rate mortgage loan		7,040			4.95	%	November, 2023
Summerlin Hospital Medical Office Building III fixed rate mortgage loan		13,199			4.03	%	April, 2024
Tuscan Professional Building fixed rate mortgage loan		4,640			5.56	%	June, 2025
Total, excluding net debt premium and net financing fees		83,707
Less net financing fees		(553	)
Plus net debt premium		310
Total mortgages notes payable, non-recourse to us, net	$	83,464



	Three Months Ended March 31, 2023			Three Months Ended March 31, 2022
Revolving credit agreement	$	4,495		$	1,168
Mortgage interest		438			612
Interest rate swaps (income)/expense, net (a.)		(1,227	)		287
Amortization of financing fees		171			178
Amortization of fair value of debt		(12	)		(13	)
Capitalized interest on major projects		(149	)		(21	)
Other interest		(19	)		11
Interest expense, net	$	3,697		$	2,222


	Maturity Date, Year Ending December 31
(Dollars in thousands)	2023			2024			2025			2026			2027			Thereafter			Total
Long-term debt:
Fixed rate:
Debt(a)	$	7,300		$	13,529		$	939		$	600		$	626		$	17,347		$	40,341
Average interest rates		4.40	%		4.40	%		4.30	%		4.20	%		4.20	%		4.30	%		4.40	%
Variable rate:
Debt(b)	$	—		$	—		$	308,400		$	—		$	—		$	—		$	308,400
Average interest rates	—			—				5.99	%	—			—			—				5.99	%
Interest rate swaps:
Notional amount(c)	$	—		$	85,000		$	—		$	—		$	55,000		$	—		$	140,000
Interest rates	—				1.320	%	—			—				0.565	%	—				1.070	%


~~31.1~~

31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/~~15(d)-14(a)~~15d-14(a) under the Securities Exchange Act of 1934, as amended.

31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/~~15(d)-14(a)~~15d-14(a) under the Securities Exchange Act of 1934, as amended.

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

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

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data file because iXBRL tags are embedded within the Inline XBRL document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

~~Exhibit~~ ~~No.~~		~~Description~~

~~31.1~~ 104		~~Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934,~~Cover Page Interactive Data file (formatted as ~~amended.~~

~~31.2~~		~~Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as amended.~~

~~32.1~~		~~Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~32.2~~		~~Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~101.INS~~		Inline XBRL ~~Instance Document~~

~~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~~and contained in Exhibit 101)


Date: ~~November 8, 2017~~May 9, 2023		UNIVERSAL HEALTH REALTY INCOME TRUST (Registrant)

		/s/ Alan B. Miller
		Alan B. Miller,
		Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)

		/s/ Charles F. Boyle
		Charles F. Boyle, Senior Vice President and Chief Financial Officer (Principal Financial Officer)