Universal Health Realty Income Trust (NYSE: UHT) announced today that for the quarter ended March 31, 2011, net income was $4.1 million, or $.33 per diluted share, as compared to $4.5 million, or $.37 per diluted share, during the same quarter in the prior year.
Funds from operations ("FFO") were $8.3 million, or $.66 per diluted share, during the first quarter of 2011 as compared to $8.5 million, or $.70 per diluted share, during the comparable quarter of the prior year.
The first quarter dividend of $.605 per share was paid on March 31, 2011. At March 31, 2011, our shareholders' equity was $142.0 million and our liabilities for borrowed funds were $76.9 million, including mortgage and other debt of consolidated entities, which is non-recourse to us, totaling $14.9 million.
During the first quarter of 2011, as compared to the first quarter of 2010, our net income decreased approximately $400,000, or $.04 per diluted share. This decrease consisted primarily of: (i) a decrease of $282,000, or $.02 per diluted share, from the previously disclosed expiration of a master lease agreement on a medical office building ("MOB") located in Georgia (expired in June, 2010), and; (ii) a net decrease of approximately $160,000, or $.01 per diluted share, from the operating losses sustained at a vacant, single-tenant MOB located in Las Vegas, Nevada and the low occupancy at a MOB located in Phoenix, Arizona, which was acquired in March of 2010 by an unconsolidated LLC in which we hold a majority, non-controlling ownership interest. We continue to actively market the available space in the above-mentioned MOBs located in Georgia, Nevada and Arizona. In addition, the new shares issued pursuant to our at-the-market equity issuance program ("ATM Program"), as discussed below, had a dilutive effect of approximately $.01 on net income per diluted share during the first quarter of 2011 as compared to the comparable quarter of the prior year.
Our FFO decreased $211,000, or $.04 per diluted share, during the first quarter of 2011 as compared to the comparable quarter of 2010, resulting primarily from: (i) the unfavorable impact of operating items mentioned above; (ii) the dilutive effect of $.02 per diluted share resulting from the new shares issued pursuant to our ATM Program, partially offset by; (iii) the favorable effect of adding back increased depreciation and amortization expense incurred by us and our unconsolidated affiliates amounting to $188,000, or $.01 per diluted share. This increased depreciation and amortization expense is related to newly constructed and recently opened MOBs as well as capital expenditures at various properties.
During the fourth quarter of 2009, we commenced our ATM 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 $50 million to or through Merrill Lynch, Pierce, Fenner and Smith Incorporated ("Merrill Lynch"), as sales agent and/or principal. There were no shares issued pursuant to our ATM Program during the first quarter of 2011. Since inception of the ATM Program, we have issued 733,500 shares at an average price of $32.90 per share, which generated approximately $22.9 million of net cash proceeds (net of compensation to Merrill Lynch and other various fees and expenses).
The master lease arrangement on the Summerlin Medical Office Building II, with a majority-owned subsidiary of UHS (Summerlin Hospital Medical Center), expired in October, 2010. Summerlin Medical Office Building II is owned by an LLC in which we hold a majority, non-controlling ownership interest. As a result of this master lease agreement, the LLC was considered a variable interest entity. Since we were the primary beneficiary, the financial results of this MOB were included in our financial statements on a consolidated basis prior to October 1, 2010. Effective with the expiration of the master lease, this MOB is accounted for as an unconsolidated LLC under the equity method beginning on October 1, 2010. During the three-month period ended March 31, 2010, this property generated $641,000 of revenue, $240,000 of other operating expenses and $288,000 of combined interest and depreciation and amortization expense. There was no material impact on our net income as a result of the deconsolidation of this LLC.