Universal Health (NYSE:UHS) Realty Income (NYSE:O) Trust (NYSE:UHT) has entered into an expanded credit agreement, boosting its financial flexibility. The real estate investment trust, specializing in healthcare and human service-related facilities, has increased its borrowing capacity under a new credit agreement dated September 30, 2024.
The amended agreement with Wells Fargo Bank and other lenders enhances the Trust's existing credit facility, raising the total commitments to $425 million. This sum includes a $300 million revolving loan commitment and a $125 million term loan that does not require amortization. Moreover, the maturity date for these loans has been extended to September 30, 2028.
The credit facility is guaranteed by most of Universal Health Realty's subsidiaries and is secured by equity interests in these entities. Interest rates on the borrowing will be determined by either SOFR or the Base Rate, with margins adjusted according to the Trust's debt-to-total capital ratio. The initial applicable margins are set at 1.20% for SOFR revolving loans and 0.20% for Base Rate revolving loans, with similar tiered margins for term loans.
The agreement also stipulates a quarterly facility fee ranging from 0.15% to 0.35%, dependent on the Trust's debt-to-asset ratio. The Trust is bound by customary covenants, which include limitations on additional debt, liens, and asset dispositions. It also sets forth financial covenants concerning debt-to-asset ratios, fixed charge coverage, and minimum net worth requirements.
InvestingPro Insights
Universal Health Realty Income Trust's expanded credit agreement aligns well with its strong financial position and growth strategy. According to InvestingPro data, the company boasts a market capitalization of $620.57 million and has demonstrated revenue growth of 5.39% over the last twelve months as of Q2 2024. This growth trajectory supports the company's decision to increase its borrowing capacity.
InvestingPro Tips highlight UHT's impressive track record of dividend payments. The company has raised its dividend for 37 consecutive years and maintained payments for 38 years, showcasing its commitment to shareholder returns. This consistency in dividend growth, coupled with a current dividend yield of 6.46%, may appeal to income-focused investors.
The company's financial health is further underscored by its liquid assets exceeding short-term obligations, providing a solid foundation for the expanded credit facility. With a gross profit margin of 94.58% in the last twelve months, UHT demonstrates strong operational efficiency, which could contribute to effective utilization of the new credit resources.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights, with 9 more tips available for UHT on the platform.
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