FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
(MARK ONE)
                |X|ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES AND EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2000
                                       OR
              | |TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934 For
                    the transition period from ___________ to
                                  _____________
                           Commission File No. 1-9321

                                UNIVERSAL HEALTH
                               REALTY INCOME TRUST
             (Exact name of registrant as specified in its charter)

           Maryland                                         23-6858580
 (State or other jurisdiction of                        (I.R.S. Employer
  incorporation or organization)                      Identification Number)

   Universal Corporate Center
      367 South Gulph Road
        P.O. Box 61558                                      19406-0958
  King of Prussia, Pennsylvania                             (Zip Code)
(Address of principal executive offices)

       Registrant's telephone number, including area code: (610) 265-0688

           Securities registered pursuant to Section 12(b) of the Act:
      Title of each Class             Name of each exchange on which registered
Shares of beneficial interest,
        $.01 par value                         New York Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark  whether the  registrant  (1) has filed all reports to be
filed by Section 13 or 15(d) of the  Securities  and 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   [x]               No   [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. | |

Aggregate market value of voting shares held by non-affiliates as of January 31,
2001: $178,992,766.
Number of shares of beneficial interest  outstanding of registrant as of January
31, 2001: 8,981,619

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  registrant's  definitive  proxy  statement  for its 2001 Annual
Meeting of  Shareholders,  which will be filed with the  Securities and Exchange
Commission  within 120 days after December 31, 2000  (incorporated  by reference
under Part III).
<PAGE>
25



                                     PART I

         Item 1.  BUSINESS

         General

         The Trust commenced operations on December 24, 1986. As of December 31,
         2000,  the Trust had  investments  in forty-one  facilities  located in
         fifteen states consisting of the following:

<TABLE>
<CAPTION>
     Facility Name                               Location           Type of Facility                   Guarantor
-----------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>  <C>                       <C>
Chalmette Medical Center                    (A)  Chalmette, LA      Acute Care                     Universal Health Services, Inc.
Virtue Street Pavilion                      (A)  Chalmette, LA      Rehabilitation                 Universal Health Services, Inc.
Inland Valley Regional Medical Ctr.         (A)  Wildomar, CA       Acute Care                     Universal Health Services, Inc.
McAllen Medical Center                      (A)  McAllen, TX        Acute Care                     Universal Health Services, Inc.
The Bridgeway                               (A)  N.Little Rock, AR  Behavioral Health              Universal Health Services, Inc.
Wellington Regional Medical Center          (A)  W.Palm Beach,FL    Acute Care                     Universal Health Services, Inc.
Vencor Hospital - Chicago                   (B)  Chicago, IL        Sub-Acute Care                 Vencor, Inc.
Tri-State Rehabilitation Hospital           (B)  Evansville, IN     Rehabilitation                 HEALTHSOUTH Corporation
Fresno Herndon Medical Plaza                (B)  Fresno, CA         Medical Office Bldg. ("MOB")                     ---
Family Doctor's Medical Office Bldg.        (B)  Shreveport, LA     MOB                            HCA-The Healthcare Company
Kelsey-Seybold Clinic at Kings Crossing     (B)  Kingwood, TX       MOB                            St. Lukes & Methodist Health Sys.
Professional Bldgs. at Kings Crossing       (B)  Kingwood, TX       MOB                                              ---
Chesterbrook Academy                        (B)  Audubon, PA        Preschool & Childcare          Nobel Learning Comm. & Subs.
Carefree Learning Center                    (B)  New Britain, PA    Preschool & Childcare          Nobel Learning Comm. & Subs.
Carefree Learning Center                    (B)  Newtown, PA        Preschool & Childcare          Nobel Learning Comm. & Subs.
Carefree Learning Center                    (B)  Uwchlan, PA        Preschool & Childcare          Nobel Learning Comm. & Subs.
Southern Crescent Center                    (B)  Riverdale, GA      MOB                                              ---
Desert Samaritan Hospital MOBs              (C)  Phoenix, AZ        MOB                                              ---
Suburban Medical Center MOBs                (D)  Louisville, KY     MOB                                              ---
Maryvale Samaritan Hospital MOBs            (E)  Phoenix, AZ        MOB                                              ---
Desert Valley Medical Center MOB            (F)  Phoenix, AZ        MOB                                              ---
Thunderbird Paseo Medical Plaza             (G)  Glendale, AZ       MOB                                              ---
Cypresswood Professional Center             (H)  Houston, TX        MOB                                              ---
Samaritan West Valley Medical Ctr.          (I)  Goodyear, AZ       MOB, Imaging Ctr.                                ---
Edwards Medical Plaza                       (F)  Phoenix, AZ        MOB                                              ---
Desert Springs Medical Plaza                (J)  Las Vegas, NV      MOB                            Quorum Health Group, Inc.
Pacifica Palms Medical Plaza                (F)  Torrance, CA       MOB                                              ---
St. Jude Heritage Health Complex            (K)  Fullerton, CA      MOB                                              ---
Rio Rancho Medical Center                   (L)  Rio Rancho, NM     MOB                                              ---
Orthopaedic Specialists of Nevada Building  (M)  Las Vegas, NV      MOB                                              ---
Santa Fe Professional Plaza                 (F)  Scottsdale, AZ     MOB                                              ---
East Mesa Medical Center                    (G)  Mesa, AZ           MOB                                              ---
Summerlin Hospital Medical Office Building  (N)  Las Vegas, NV      MOB                                              ---
Sheffield Medical Building                  (B)  Atlanta, GA        MOB                                              ---
Southern Crescent Center, II                (B)  Riverdale, GA      MOB                                              ---
Centinela Medical Building                  (O)  Inglewood, CA      MOB                                              ---
Summerlin Hospital Medical Office Bldg. II  (P)  Las Vegas, NV      MOB                                              ---
Skypark Medical Building                    (F)  Torrance, CA       MOB                                              ---
Medical Center of Western Connecticut       (B)  Danbury, CT        MOB                                              ---
Mid Coast Hospital Medical Office Building  (Q)  Brunswick, ME      MOB                                              ---
Thunderbird Paseo Medical Plaza II          (R)  Glendale, AZ       MOB                                              ---
<FN>
(A)  Leased to subsidiaries of Universal Health Services, Inc. ("UHS")
(B)  Real  estate  assets  owned by the  Trust  and  leased  to an  unaffiliated
     third-party or parties.
(C)  The Trust has a 61% equity interest in a limited  liability company ("LLC")
     which owns the real estate assets of this facility.
(D)  The Trust has a 33% equity  interest  in a LLC which  owns the real  estate
     assets of this facility.
(E)  The Trust has a 60% interest in a LLC which owns the real estate  assets of
     this facility.
(F)  The Trust has a 95% equity  interest  in a LLC which  owns the real  estate
     assets of this facility.


                                       1
<PAGE>

(G)  The Trust has a 75% equity  interest  in a LLC which  owns the real  estate
     assets of this facility.
(H)  The Trust has  provided  financing,  which  matures in August,  2002,  to a
     limited partnership in which the Trust owns a 77% controlling  interest. In
     connection with this investment,  the Trust made a capital  contribution of
     $343,000 to the limited partnership.
(I)  The Trust has a 89% equity  interest  in a LLC which  owns the real  estate
     assets of this facility.
(J)  The Trust has a 99% equity  interest  in a LLC which  owns the real  estate
     assets of this facility.  Tenants of this medical office building include a
     subsidiary of UHS.
(K)  The Trust has a 48% equity  interest  in a LLC which  owns the real  estate
     assets of this facility.
(L)  The Trust has a 80% equity  interest  in a LLC which  owns the real  estate
     assets of this facility.
(M)  Land leased from Valley Health Systems, LLC (a UHS subsidiary).
(N)  The Trust has a 98% equity  interest  in a LLC which  owns the real  estate
     assets of this facility.  The Tenants in this  multi-tenant  medical office
     building include a subsidiary of UHS.
(O)  The Trust has a 67% equity  interest  in a LLC which  owns the real  estate
     assets of this facility.
(P)  The Trust has a 98% equity  interest  in a LLC which  owns the real  estate
     assets of this  facility.  This  multi-tenant  medical  office  building is
     master-leased by a subsidiary of UHS.
(Q)  The Trust  has a 74%  equity  interest  in a LLC  which is  constructing  a
     medical office building  scheduled to be completed in the fourth quarter of
     2001.
(R)  The Trust  has a 75%  equity  interest  in a LLC  which is  constructing  a
     medical office building  scheduled to be completed in the second quarter of
     2001.
</FN>
</TABLE>

         In this  Annual  Report  on Form  10-K,  the term  "revenues"  does not
         include the revenues of the unconsolidated  limited liability companies
         in which the Trust has various non-controlling equity interests ranging
         from 33% to 99%. The Trust  accounts  for its share of the  income/loss
         from these investments by the equity method.

         Included  in the  Trust's  portfolio  is  ownership  of eight  hospital
         facilities  (aggregate  investment  of $130  million)  which contain an
         aggregate of 1,149  licensed  beds. The leases with respect to hospital
         facilities comprised 72% of the Trust's 2000 revenues, have fixed terms
         with an average of 3.6 years  remaining and provide for renewal options
         for up to six  five-year  terms.  During  the  second  quarter of 2000,
         Meridell  Achievement Center,  Inc., a wholly-owned  subsidiary of UHS,
         exercised  its  option  pursuant  to the lease to  purchase  the leased
         property  upon the December 31, 2000  expiration  of the initial  lease
         term.  Pursuant to the terms of the lease  agreement,  three appraisals
         were  obtained to  determine  the fair market value of the property and
         accordingly, the sale price was determined to be $5,450,000. This sale,
         which resulted in a gain of approximately  $1.9 million,  was completed
         during the fourth quarter of 2000.

         For the eight hospital  facilities  owned by the Trust  (excluding from
         all three years the facility  sold to a subsidiary  of UHS in December,
         2000),  the  combined  ratio  of  earnings  before   interest,   taxes,
         depreciation,  amortization  and lease and rental expense  (EBITDAR) to
         minimum   rent  plus   additional   rent   payable  to  the  Trust  was
         approximately  5.6, 5.3 and 5.4 for the years ended  December 31, 2000,
         1999 and 1998,  respectively  (see  "Relationship  to Universal  Health
         Services, Inc."). The coverage ratio for individual facilities varies.

         Pursuant to the terms of the leases with  subsidiaries  of UHS,  UHS is
         responsible  for  building  operations,   maintenance  and  renovations
         required at the six hospital  facilities leased from the Trust. For the
         Trust's multi-tenant medical office buildings,  cash reserves have been
         established  to fund required  building  maintenance  and  renovations.
         Lessees  are  required  to  maintain  all  risk,  replacement  cost and
         commercial  property insurance  policies on the leased properties.  The
         Trust is one of the named  insured and believes  the leased  properties
         are adequately insured.


                                       2
<PAGE>


         Relationship to Universal Health Services, Inc.

         Leases. As of December 31, 2000,  subsidiaries of UHS leased six of the
         eight  hospital  facilities  owned by the Trust with terms  expiring in
         2001 through 2006. The leases to the subsidiaries of UHS are guaranteed
         by UHS and are  cross-defaulted  with one  another.  Each of the leases
         contains renewal options of up to six five-year  periods.  These leases
         accounted  for 70% of the total revenue of the Trust for the five years
         ended  December 31, 2000 (63% for the year ended  December  31,  2000).
         Including 100% of the revenues generated at the unconsolidated  LLCs in
         which the Trust has various  non-controlling  equity interests  ranging
         from  33% to 99%,  the UHS  leases  accounted  for 45% of the  combined
         consolidated  and  unconsolidated  revenue  for the  five  years  ended
         December 31, 2000 (35% for the year ended December 31, 2000).

         For the six  hospital  facilities  owned by the  Trust  and  leased  to
         subsidiaries of UHS, the combined ratio of EBITDAR to minimum rent plus
         additional  rent payable to the Trust  (excluding  from all three years
         the  facility  sold  to a  subsidiary  of UHS in  December,  2000)  was
         approximately  5.7, 5.6 and 5.5 for the years ended  December 31, 2000,
         1999  and  1998,  respectively.   The  coverage  ratio  for  individual
         facilities  vary and range from 2.7 to 8.3 in 2000,  1.1 to 9.0 in 1999
         and 1.1 to 8.6 in 1998.  Management of the Trust cannot predict whether
         the leases with  subsidiaries  of UHS,  which have  renewal  options at
         existing  lease  rates,  or any of the Trust's  other  leases,  will be
         renewed at the end of their lease terms.  If the leases are not renewed
         at their  current  rates,  the Trust  would be  required  to find other
         operators  for  those  facilities  and/or  enter  into  leases on terms
         potentially less favorable to the Trust than the current leases.

         In recent years, an increasing  number of legislative  initiatives have
         been introduced or proposed in Congress and in state  legislatures that
         would effect major changes in the healthcare system,  either nationally
         or at the state level (see "Regulation").  In addition,  the healthcare
         industry   has  been   characterized   in  recent  years  by  increased
         competition  and  consolidation.  Management  of the Trust is unable to
         predict the effect,  if any,  these  industry  factors will have on the
         operating  results of its lessees,  including the facilities  leased to
         subsidiaries  of UHS,  or on their  ability to meet  their  obligations
         under the terms of their leases with the Trust.

         Pursuant to the terms of the leases with UHS,  the lessees  have rights
         of first  refusal to: (i) purchase  the  respective  leased  facilities
         during and for 180 days after the lease terms at the same price,  terms
         and conditions of any  third-party  offer,  or; (ii) renew the lease on
         the respective  leased  facility at the end of, and for 180 days after,
         the  lease  term at the  same  terms  and  conditions  pursuant  to any
         third-party   offer.   The  leases  also  grant  the  lessees  options,
         exercisable on at least six months  notice,  to purchase the respective
         leased  facilities  at the end of the lease term or any renewal term at
         the  facility's  then fair market  value.  The terms of the leases also
         provide  that in the event UHS  discontinues  operations  at the leased
         facility for more than one year, or elects to terminate its lease prior
         to the  expiration  of its term for prudent  business  reasons,  UHS is
         obligated  to offer a  substitution  property.  If the  Trust  does not
         accept the substitution  property offered, UHS is obligated to purchase
         the leased facility back from the Trust at a price equal to the greater
         of its then fair market  value or the original  purchase  price paid by
         the Trust. As noted below,  transactions with UHS must be approved by a
         majority  of  the   Trustees  who  are   unaffiliated   with  UHS  (the
         "Independent  Trustees").  The  purchase  options  and  rights of first
         refusal  granted to the  respective  lessees to  purchase  or lease the
         respective leased  facilities,  after the expiration of the lease term,
         may adversely  affect the Trust's  ability to sell or lease a facility,
         and may present a potential  conflict of interest between the Trust and
         UHS since the price and terms offered by a third-party are likely to be
         dependent,  in part,  upon the  financial  performance  of the facility
         during the final years of the lease term.


                                       3
<PAGE>


         Advisory  Agreement.   UHS  of  Delaware,   Inc.  (the  "Advisor"),   a
         wholly-owned subsidiary of UHS, serves as Advisor to the Trust under an
         Advisory  Agreement dated December 24, 1986 between the Advisor and the
         Trust (the "Advisory  Agreement").  Under the Advisory  Agreement,  the
         Advisor is obligated to present an investment  program to the Trust, to
         use its best  efforts to obtain  investments  suitable for such program
         (although  it is not  obligated  to present any  particular  investment
         opportunity to the Trust),  to provide  administrative  services to the
         Trust and to conduct the Trust's day-to-day  affairs. In performing its
         services  under  the  Advisory  Agreement,   the  Advisor  may  utilize
         independent  professional  services,  including  accounting,  legal and
         other  services,  for which the Advisor is  reimbursed  directly by the
         Trust.  The  Advisory  Agreement  expires on  December 31 of each year;
         however,  it is renewable by the Trust,  subject to a determination  by
         the  Independent  Trustees  that  the  Advisor's  performance  has been
         satisfactory.  The Advisory  Agreement may be terminated for any reason
         upon  sixty  days  written  notice  by the  Trust or the  Advisor.  The
         Advisory Agreement has been renewed for 2001. All transactions with UHS
         must be approved by the Independent  Trustees.  The Advisory  Agreement
         provides that the Advisor is entitled to receive an annual advisory fee
         equal to .60% of the average  invested real estate assets of the Trust,
         as derived from its  consolidated  balance  sheet from time to time. 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 the  Trust's  equity  as  shown on its  balance  sheet,
         determined in accordance with generally accepted accounting  principles
         without  reduction for return of capital  dividends.  No incentive fees
         were paid  during  2000,  1999 and 1998.  The  advisory  fee is payable
         quarterly,  subject  to  adjustment  at year  end  based  upon  audited
         financial statements of the Trust.

         Share  Purchase  Option.  UHS has the  option  to  purchase  shares  of
         beneficial  interest in the Trust at fair market value to maintain a 5%
         interest in the Trust.  As of December 31, 2000,  UHS owned 8.5% of the
         outstanding shares of beneficial interest.

         Competition

         The Trust  believes  that it is one of  thirteen  publicly  traded real
         estate investment  trusts ("REITs")  currently  investing  primarily in
         income-producing  real estate with an  emphasis on  healthcare  related
         facilities.  The  REITs  compete  with  one  another  in  that  each is
         continually seeking attractive  investment  opportunities in healthcare
         related facilities.

         The Trust may also  compete with banks and other  companies,  including
         UHS, in the  acquisition,  leasing and financing of healthcare  related
         facilities.  In most geographical areas in which the Trust's facilities
         operate,  there are other facilities which provide services  comparable
         to those offered by the Trust's facilities,  some of which are owned by
         governmental  agencies  and  supported by tax  revenues,  and others of
         which are owned by  nonprofit  corporations  and may be  supported to a
         large extent by endowments and charitable  contributions.  Such support
         is not  available  to the  Trust's  facilities.  In  addition,  certain
         hospitals  which  are  located  in the  areas  served  by  the  Trust's
         facilities are special service hospitals  providing  medical,  surgical
         and  behavioral  health  services that are not available at the Trust's
         hospitals or other general  hospitals.  The  competitive  position of a
         hospital is to a large degree  dependent upon the number and quality of
         staff physicians. Although a physician may at any time terminate his or
         her affiliation with a hospital,  the Trust's  hospitals seek to retain
         doctors of varied specializations on its hospital staffs and to attract
         other qualified  doctors by improving  facilities and maintaining  high
         ethical and professional standards.


                                       4
<PAGE>

         The Trust's hospital facilities continue to experience a shift in payor
         mix resulting in an increase in revenues  attributable  to managed care
         payors and unfavorable  general industry trends which include pressures
         to control healthcare costs.  Pressures to control healthcare costs and
         a shift away from  traditional  Medicare to Medicare managed care plans
         have resulted in an increase in the number of patients whose healthcare
         coverage is provided under managed care plans,  which  includes  health
         maintenance organizations ("HMOs") and preferred provider organizations
         ("PPOs"). In general, the operators of the Trust's facilities expect to
         continue  to  experience  an increase in  business  from  managed  care
         programs,  including HMOs and PPOs.  The  consequent  growth in managed
         care  networks  and the  resulting  impact  of  these  networks  on the
         operating  results of the Trust's  facilities vary among the markets in
         which the Trust's facilities operate.

         Outpatient  treatment and diagnostic  facilities,  outpatient  surgical
         centers and  freestanding  ambulatory  surgical centers also impact the
         healthcare  marketplace.  Many of the  Trust's  facilities  continue to
         experience  an increase in outpatient  revenues  which is primarily the
         result  of  advances  in  medical   technologies   and   pharmaceutical
         improvements, which allow more services to be provided on an outpatient
         basis, and increased pressure from Medicare,  Medicaid,  HMOs, PPOs and
         insurers to reduce hospital stays and provide services, where possible,
         on a less  expensive  outpatient  basis.  The hospital  industry in the
         United States, as well as the Trust's hospital facilities,  continue to
         have  significant   unused  capacity  which  has  created   substantial
         competition  for  patients.   Inpatient  utilization  continues  to  be
         negatively affected by payor-required,  pre-admission authorization and
         by payor  pressure to maximize  outpatient and  alternative  healthcare
         delivery services for less acutely ill patients.  The Trust expects its
         hospital facilities to continue to experience increased competition and
         admission constraints.

         A large  portion  of the  Trust's  non-hospital  properties  consist of
         medical  office  buildings  which are located either close to or on the
         campuses of hospital  facilities.  These properties are either directly
         or  indirectly  affected  by the  factors  discussed  above  as well as
         general  real  estate  factors  such as the supply and demand of office
         space and market rental rates.

         The  Trust  anticipates  investing  in  additional  healthcare  related
         facilities and leasing the facilities to qualified  operators,  perhaps
         including UHS and subsidiaries of UHS.

         Regulation

         The Medicare program  reimburses the operators of the Trust's hospitals
         primarily  based on  established  rates by a  diagnosis  related  group
         ("DRG")  for  acute  care  hospitals  and by cost  based  formulas  for
         behavioral health facilities. Historically, rates paid under Medicare's
         prospective   payment  system  ("PPS")  for  inpatient   services  have
         increased, however, these increases have been less than cost increases.
         Pursuant to the terms of The  Balanced  Budget Act of 1997  ("BBA-97"),
         there were no increases in the rates paid to  hospitals  for  inpatient
         care through  September 30, 1998 and reimbursement for bad debt expense
         and  capital  costs  as well as other  items  were  reduced.  Inpatient
         operating  payment  rates  increased  0.5% for the period of October 1,
         1998 through September 30, 1999, however,  the modest rate increase was
         less than inflation and was more than offset by the negative  impact of
         converting  reimbursement on skilled nursing  facility  patients from a
         cost based reimbursement to a prospective payment system and from lower
         DRG payments on certain patient transfers mandated by BBA-97. Inpatient
         operating  payment rates were  increased 1.1% for the period of October
         1, 1999 through  September 30, 2000,  however,  the modest increase was
         less than inflation and was more than offset by the negative  impact of
         increasing  the  qualification  threshold for  additional  payments for
         treating costly inpatient cases (i.e. outliers).  Payments for Medicare
         outpatient services



                                       5
<PAGE>

         historically  have  been  paid  based  on  costs,  subject  to  certain
         adjustments and limits. BBA-97 requires that payment for those services
         be converted to PPS, which was implemented on August 1, 2000.

         During  the  fourth  quarter of 2000,  Congress  passed  the  Medicare,
         Medicaid and SCHIP  Benefits  Improvement  and  Protection  Act of 2000
         ("BIPA")  which,  among other things,  increased  Medicare and Medicaid
         payments to health  care  providers  by $35  billion  over 5 years with
         approximately $12 billion of this amount targeted for hospitals and $11
         billion for managed  care payors.  These  increased  reimbursements  to
         hospitals  pursuant to the terms of BIPA will  commence in April,  2001
         and for the period of April 1, 2001 through  September  30,  2001,  the
         additional  reimbursements  will be remitted to  hospitals at twice the
         scheduled amounts. BBA-97 established the annual update for Medicare at
         market  basket  minus 1.1% in both fiscal  years 2001  (October 1, 2000
         through September 30, 2001) and 2002 and BIPA revised the update at the
         full market  basket in fiscal year 2001 and market basket minus .55% in
         fiscal years 2002 and 2003. Additionally,  BBA-97 reduced reimbursement
         to  hospitals  for  Medicare  bad debts to 55% and BIPA  increased  the
         reimbursement  to 70%, with an effective date for the Trust's  hospital
         facilities leased to subsidiaries of UHS of January 1, 2001.












                                       6
<PAGE>


                      Executive Officers of the Registrant

       Name                         Age      Position

      Alan B. Miller                63       Chairman of the Board and
                                             Chief Executive Officer

      Kirk E. Gorman                50       President, Chief Financial
                                             Officer, Secretary and Trustee

      Charles F. Boyle              41       Vice President
                                             and Controller

      Cheryl K. Ramagano            38       Vice President
                                             and Treasurer

      Timothy J. Fowler             45       Vice President, Acquisition
                                             and Development



         Mr. Alan B. Miller has been  Chairman of the Board and Chief  Executive
         Officer  of the  Trust  since  its  inception  in 1986.  He  served  as
         President of the Trust until March,  1990. Mr. Miller has been Chairman
         of the Board,  President and Chief  Executive  Officer of UHS since its
         inception in 1978.  Mr. Miller also serves as a director of Penn Mutual
         Life Insurance Company and Broadlane, Inc.

         Mr. Kirk E. Gorman has been  President and Chief  Financial  Officer of
         the Trust  since  March,  1990 and was elected to the Board of Trustees
         and Secretary in December,  1994. Mr. Gorman had  previously  served as
         Vice  President and Chief  Financial  Officer of the Trust since April,
         1987. Mr. Gorman was elected Senior Vice President, Treasurer and Chief
         Financial  Officer  of UHS in  1992  and  served  as  its  Senior  Vice
         President and Treasurer since 1989.

         Mr.  Charles F. Boyle was elected Vice  President and Controller of the
         Trust in June, 1991. Mr. Boyle was promoted to Assistant Vice President
         -  Corporate  Accounting  of UHS in 1994 and served as its  Director of
         Corporate Accounting since 1989.

         Ms. Cheryl K. Ramagano was elected Vice  President and Treasurer of the
         Trust in  September,  1992.  Ms.  Ramagano  was  promoted to  Assistant
         Treasurer  of UHS in 1994 and served as its  Director of Finance  since
         1990.

         Mr.  Timothy J.  Fowler was elected  Vice  President,  Acquisition  and
         Development of the Trust upon the  commencement  of his employment with
         UHS in October,  1993. Prior thereto,  he served as a Vice President of
         The Chase Manhattan Bank, N.A. since 1986.

         The Trust's  officers  are all  employees of UHS and as of December 31,
         2000, the Trust had no salaried employees.  In 1999, 2000 and 2001, the
         Trustees  awarded a $50,000  bonus to Mr.  Kirk E.  Gorman,  President,
         Chief Financial  Officer,  Secretary and Trustee of the Trust. Also, in
         1999, 2000 and 2001, UHS agreed to a $50,000  reduction in the advisory
         fee paid by the Trust.



                                       7
<PAGE>

Item 2. Properties

The following table shows the Trust's  investments in hospital facilities leased
to Universal Health Services,  Inc. and other non-related  parties. The table on
the next page provides  information  related to various  properties in which the
Trust has significant investments, some of which are accounted for by the equity
method.  The  capacity in terms of beds (for the  hospital  facilities)  and the
five-year occupancy levels are based on information provided by the lessees.

<TABLE>
<CAPTION>
                                            Number of
                                            available                                                  Lease Term
Hospital Facility               Type of      beds @         Average Occupancy (1)           Minimum   End of initial     Renewal
Name and Location              facility     12/31/00    2000   1999  1998   1997   1996       rent    or renewed term  term (years)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>                 <C>      <C>    <C>   <C>    <C>    <C>     <C>             <C>             <C>
Chalmette Medical Centers (2)
 Virtue Street Pavilion      Rehabilitation     57       56%    61%   63%    64%    61%    $1,261,000       2004            25
 Chalmette Medical Center      Acute Care      138       55%    65%   61%    64%    66%     1,229,000       2003            15
  Chalmette, Louisiana

Inland Valley Regional
 Medical Center                Acute Care       80       76%    68%   60%    52%    49%     1,857,000       2006            30
  Wildomar, California

McAllen Medical Center (3)     Acute Care      552       76%    69%   69%    76%    88%     5,485,000       2001            30
 McAllen, Texas

Wellington Regional
 Medical Center                Acute Care      120       45%    41%   37%    36%    36%     2,495,000       2006            30
  West Palm Beach, Florida

The Bridgeway              Behavioral Health    70       82%    78%   79%    68%    62%       683,000       2004            25
 North Little Rock, Arkansas

Tri-State Regional
 Rehabilitation Hospital     Rehabilitation     80       73%    74%   82%    74%    59%     1,206,000       2004            20
  Evansville, Indiana

Vencor Hospital - Chicago (4) Sub-Acute Care    87       50%    46%   42%    50%    45%     1,209,000       2001            25
 Chicago, Illinois
</TABLE>




                                       8
<PAGE>

Item 2. Properties (continued)


<TABLE>
<CAPTION>
                                                                                                     Lease Term
                                                                                       -------------------------------------------
Facility Name                    Type of                  Average Occupancy (1)          Minimum    End of initial      Renewal
and Location                     facility         2000  1999    1998   1997   1996         rent    or renewed term   term (years)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                  <C>   <C>    <C>    <C>    <C>       <C>         <C>   <C>
Fresno Herndon Medical Plaza     Medical           99%   100%   100%   100%   100%      $688,000    2002 -2007        various
 Fresno, California           Office Building

Kelsey-Seybold Clinic
 at King's Crossing              Medical          100%   100%   100%   100%   100%       270,000       2005             10
Professional Bldgs.
 at King's Crossing           Office Buildings     96%   100%   100%   100%    93%       245,000    2001 -2005        various
  Kingwood, Texas

Southern Crescent Center         Medical           77%   100%   100%   100%    89%       645,000    2003 -2006        various
 Riverdale, Georgia           Office Building

Cypresswood Professional
 Center                          Medical          100%   100%   100%    96%     -        569,000    2002 -2007        various
  Spring, Texas               Office Building

Desert Springs Medical
 Plaza                           Medical           99%    99%   100%     -      -      1,762,000    2001-2006         various
  Las Vegas, Nevada           Office Building

Orthopaedic Specialists
 of Nevada                       Medical          100%   100%     -      -      -        189,000    Bldg. 2009          20
  Las Vegas, Nevada           Office Building

Sheffield Medical Office
 Building                        Medical           95%    90%     -      -      -      1,447,000    2001-2012         various
  Atlanta, Georgia            Office Building

Southern Crescent
 Center II                       Medical           88%     -      -      -      -        843,000       2010             10
  Atlanta, Georgia            Office Building

Medical Center of
 Western Connecticut             Medical
  Danbury, Connecticut        Office Building     100%     -      -      -      -        885,000       2009           various


</TABLE>










                                       9
<PAGE>


         (1) Average occupancy rate for the hospital  facilities is based on the
         average number of available  beds occupied  during the five years ended
         December 31, 2000. Average occupancy rate for the multi-tenant  medical
         office  buildings  is  based on the  occupied  square  footage  of each
         building.  See  "Management's  Discussion  and  Analysis  of  Financial
         Condition and Results of Operations"  for effects of various  occupancy
         levels at the Trust's hospital  facilities.  Average  available beds is
         the number of beds which are  actually in service at any given time for
         immediate patient use with the necessary  equipment and staff available
         for patient  care.  A hospital may have  appropriate  licenses for more
         beds than are in service  for a number of  reasons,  including  lack of
         demand, incomplete construction and anticipation of future needs.

          (2) The operations of The Virtue Street Pavilion and Chalmette Medical
         Center,  two facilities which are separated by approximately  one mile,
         were combined at the end of 1989. Each facility is leased pursuant to a
         separate lease. No assurance can be given as to the effect, if any, the
         consolidation  of the two  facilities  as mentioned  above,  had on the
         underlying  value of the Virtue Street  Pavilion and Chalmette  Medical
         Center.  Rental commitments and the guarantee by UHS under the existing
         leases  continue  for the  remainder  of the  respective  terms  of the
         leases.

          (3) During 2000, UHS purchased a non-acute care facility that had been
         closed  located in McAllen,  Texas.  The license for this  facility was
         merged with the license for McAllen Medical Center and accordingly, the
         licensed  and  available  beds for  McAllen  Medical  Center  were each
         increased  by 80 beds to 570  licensed  beds  and 552  available  beds,
         respectively.

          (4) During  December of 1993,  UHS, the former  lessee and operator of
         Belmont  Community  Hospital,  sold the  operations  of the facility to
         THC-Chicago,  Inc.,  an indirect  wholly-owned  subsidiary of Community
         Psychiatric Centers ("CPC").  Concurrently, the Trust purchased certain
         related  real  property  from  UHS for $1  million  in cash  and a note
         payable  with a  carrying  value  of $1.4  million  (including  accrued
         interest) at December 31, 2000. The note payable has a face value of $1
         million and is due on December 31, 2001. The amount of interest payable
         on this  note is  contingent  upon the  financial  performance  of this
         leased  facility and its estimated fair value at the end of the initial
         lease term.  The Trust has estimated the total amount payable under the
         terms of this note and has discounted the payments to their net present
         value using a 6% rate.  Included in the Trust's 2000 financial  results
         is  approximately  $70,000 of interest expense related to this note. In
         connection  with  this  transaction,  UHS's  lease  with the  Trust was
         terminated  and the Trust  entered  into an eight year lease  agreement
         with THC-Chicago. In 1997, CPC was acquired by Vencor, Inc. who assumed
         their  obligations  under the lease and  renamed  the  facility  Vencor
         Hospital-Chicago.  The lease is guaranteed by Vencor, Inc. During 1999,
         Vencor,  Inc. filed for  bankruptcy and as a result,  the Trust did not
         receive or record approximately  one-half of a month of rental revenue.
         Management of Vencor,  Inc. has informed the Trust that pursuant to its
         petition for debt reorganization,  it intends on paying all rent due to
         the Trust pursuant to the terms of the lease.  Vencor, Inc. was granted
         a Motion for an Order  Pursuant to Section  365(d)(4) of the Bankruptcy
         Code Further  Extending  the Time Within  Which  Debtors Must Assume or
         Reject Unexpired Leases of Non-residential Property, extending the date
         to May 1, 2001.  Rental  payments on this  facility  have been received
         through March, 2001.

          Item 3.  LEGAL PROCEEDINGS

          Not applicable.




                                       10
<PAGE>



         Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not  applicable.  No matter was submitted  during the fourth quarter of
         the year ended December 31, 2000 to a vote of security holders.































                                       11
<PAGE>



                                     PART II

          Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                    STOCKHOLDER MATTERS

         The Trust's  shares of  beneficial  interest are listed on the New York
         Stock  Exchange.  The high and low closing  sales  prices for the Trust
         shares of  beneficial  interest for each quarter in the two years ended
         December 31, 2000 and 1999 are summarized below:


                                   2000                         1999
                          ------------------------    ------------------------
                          High Price    Low Price      High Price   Low Price
                          ------------------------    ------------------------
         First Quarter    $16 11/16     $14 5/16       $20 1/2      $19 1/4
         Second Quarter   $18 15/16     $15 1/4        $20 5/16     $19 5/16
         Third Quarter    $19 3/8       $17            $19 13/16    $17 1/16
         Fourth Quarter   $19 7/8       $17 1/8        $17 7/8      $14 5/8


         As of January 31, 2001,  there were  approximately  795 shareholders of
         record of the Trust's shares of beneficial interest.  It is the Trust's
         intention to declare  quarterly  dividends to the holders of its shares
         of beneficial  interest so as to comply with applicable sections of the
         Internal  Revenue  Code  governing  real  estate   investment   trusts.
         Covenants  relating to the revolving  credit facility limit the Trust's
         ability to increase  dividends in excess of 95% of cash  available  for
         distribution unless additional distributions are required to be made so
         as to comply with applicable  sections of the Internal Revenue Code and
         related regulations governing real estate investment trusts. In each of
         the past five years, dividends per share were declared as follows:


<TABLE>
<CAPTION>
                               2000                1999                 1998                1997                1996
                         ---------------- -------------------- ------------------- ------------------- --------------------
<S>                            <C>                   <C>                <C>                  <C>                 <C>
         First Quarter         $    .455             $   .450           $    .435            $   .425            $    .420
         Second Quarter             .460                 .450                .435                .425                 .425
         Third Quarter              .460                 .455                .440                .425                 .425
         Fourth Quarter             .465                 .455                .445                .430                 .425
                         ---------------- -------------------- ------------------- ------------------- --------------------
                               $   1.840            $   1.810           $   1.755            $  1.705            $   1.695
                         ================ ==================== =================== =================== ====================
</TABLE>


                                       12
<PAGE>


         Item 6.  SELECTED FINANCIAL DATA

         Financial  highlights  for the Trust for the five years ended  December
         31, 2000 were as follows:

<TABLE>
<CAPTION>
                                                         (000s except per share amounts)
                               ------------------------------------------------------------------------------------
                                   2000 (1)          1999 (1)          1998 (1)              1997             1996
         ----------------------------------------------------------------------------------------------------------
<S>                                 <C>               <C>               <C>               <C>               <C>
         Revenues                   $27,315           $23,865           $23,234           $22,764           $21,923

         Net income                 $16,256           $13,972           $14,337           $13,967           $14,158

         Funds from
         Operations (2)             $22,878           $21,772           $19,857           $18,809           $18,174

         Per Share Data:
         Net income-Basic             $1.81             $1.56             $1.60             $1.56             $1.58

         Net income-Diluted           $1.81             $1.56             $1.60             $1.56             $1.58

         Dividends                   $1.840            $1.810            $1.755            $1.705            $1.695
<FN>
         (1) See  "Management's  Discussion and Analysis of Financial  Condition
         and Results of Operations."

         (2) Funds from  operations  ("FFO") may not be  calculated  in the same
         manner for all companies,  and accordingly,  FFO as presented above may
         not be comparable to similarly titled measures by other companies.  FFO
         does not represent  cash flows from  operations as defined by generally
         accepted  accounting  principles  and  should not be  considered  as an
         alternative  to net income as an  indicator  of the  Trust's  operating
         performance or to cash flows as a measure of liquidity. FFO shown above
         is calculated as follows:
</FN>
</TABLE>


<TABLE>
<CAPTION>
                                                                            (000s)
    ---------------------------------------------------------------------------------------------------------------
                                                  2000         1999              1998          1997           1996
    ---------------------------------------------------------------------------------------------------------------
<S>                                             <C>          <C>              <C>            <C>            <C>
    Net income                                  $16,256      $13,972          $14,337        $13,967        $14,158
    Depreciation expense:
     Consolidated investments                     4,414        3,833            3,809          3,740          3,554
     Unconsolidated affiliates                    2,964        2,322            1,587            978            337
    Amortization of interest
     rate cap                                        --           62              124            124            125
    Provision for investment loss, net               --        1,583               --             --             --
    Equity in provision for investment
     loss of LLC                                  1,139           --               --             --             --
    Gain on sale of real property to UHS         (1,895)          --               --             --             --
                                           ------------------------------------------------------------------------
    Total                                       $22,878      $21,772          $19,857        $18,809        $18,174
                                           ========================================================================
</TABLE>

<TABLE>
<CAPTION>
    ------------------------------------------------------------------------------------------------------------------
    At End of Period                2000             1999              1998                1997              1996
    ------------------------------------------------------------------------------------------------------------------
<S>                          <C>                 <C>                <C>                 <C>               <C>
    Total Assets             $    183,658        $ 178,821          $ 169,406           $ 146,755         $ 148,566

    Debt                     $     82,031        $  76,889          $  66,016           $  42,347         $  43,082
    ------------------------------------------------------------------------------------------------------------------
</TABLE>



                                       13
<PAGE>

         Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS

         Forward Looking Statements

         The matters  discussed  in this  report,  as well as the news  releases
         issued  from  time to time by the  Trust,  include  certain  statements
         containing the words "believes",  "anticipates",  "intends",  "expects"
         and  words  of  similar  import,   which  constitute   "forward-looking
         statements" within the meaning of Private Securities  Litigation Reform
         Act of 1995. Such forward-looking  statements involve known and unknown
         risks,  uncertainties  and other  factors  that may  cause  the  actual
         results, performance or achievements of the Trust's or industry results
         to be materially  different  from any future  results,  performance  or
         achievements  expressed or implied by such forward-looking  statements.
         Such factors include,  among other things, the following: a substantial
         portion  of  the  Trust's  revenues  are  dependent  on  one  operator,
         Universal Health Services,  Inc., ("UHS"); a substantial portion of the
         Trust's  leases  are  involved  in the  healthcare  industry  which  is
         undergoing  substantial  changes and is subject to possible  changes in
         the  levels  and terms of  reimbursement  from  third-party  payors and
         government reimbursement programs, including Medicare and Medicaid; the
         Trust's ability to finance its growth on favorable terms; liability and
         other  claims  asserted  against the Trust or  operators of the Trust's
         facilities,  and other factors  referenced  herein.  Additionally,  the
         operators of the Trust's facilities, including UHS, are confronted with
         other issues such as: industry capacity;  demographic changes; existing
         laws and  government  regulations  and  changes in or failure to comply
         with laws and  governmental  regulations;  the  ability  to enter  into
         managed care provider agreements on acceptable terms; competition;  the
         loss  of  significant   customers;   technological  and  pharmaceutical
         improvements that increase the cost of providing,  or reduce the demand
         for  healthcare;  and the  ability  to  attract  and  retain  qualified
         personnel,  including physicians.  Management of the Trust is unable to
         predict the effect,  if any,  these  factors will have on the operating
         results of its lessees, including the facilities leased to subsidiaries
         of UHS. Given these uncertainties,  prospective investors are cautioned
         not to place undue  reliance on such  forward-looking  statements.  The
         Trust  disclaims  any  obligation  to  update  any such  factors  or to
         publicly   announce  the  result  of  any   revisions  to  any  of  the
         forward-looking statements contained herein to reflect future events or
         developments.

         Liquidity and Capital Resources

         General

         The Trust commenced operations on December 24, 1986. As of December 31,
         2000,  the Trust had  investments  in forty-one  facilities  located in
         fifteen states.

         It is the  Trust's  intention  to declare  quarterly  dividends  to the
         holders  of its  shares of  beneficial  interest  so as to comply  with
         applicable  sections of the Internal Revenue Code governing real estate
         investment trusts. Convenants relating to the revolving credit facility
         limit the  Trust's  ability to increase  dividends  in excess of 95% of
         cash available for distribution  unless  additional  distributions  are
         required to be made to comply with applicable  sections of the Internal
         Revenue Code and related  regulations  governing real estate investment
         trusts.  During 2000, dividends of $1.84 per share, or $16.5 million in
         the aggregate, were declared and paid.


                                       14
<PAGE>


         Net cash  generated by operating  activities was $20.0 million in 2000,
         $19.6  million in 1999 and $18.7  million  in 1998.  The  $400,000  net
         increase  in 2000 as  compared  to 1999  was due  primarily  to:  (i) a
         $487,000  increase in net income  plus the addback of non-cash  charges
         (depreciation, amortization, amortization of interest rate cap expense,
         gain on sale of real property,  equity in provision for investment loss
         of LLC and provision for investment loss); (ii) a $129,000  unfavorable
         change  in rent  receivable;  (iii) a  $149,000  unfavorable  change in
         accrued interest,  and; (iv) $179,000 favorable change in other working
         capital accounts. The $900,000 net increase in 1999 as compared to 1998
         was due  primarily  to: (i) a $1.1 million  increase in net income plus
         the addback of the non-cash charges (as defined above); (ii) a $113,000
         unfavorable change in rent receivable, and; (iii) a $96,000 unfavorable
         change in other net working capital accounts.

         During 2000,  the $20.0 million of cash flows  generated from operating
         activities,  the  $5.5  million  proceeds  received  from  the  sale of
         Meridell  Achievement  Center,  the $1.3 million of cash  distributions
         received in excess of income from the Trust's  investments  in LLCs and
         the $5.1 million of additional  borrowings  were used primarily to: (i)
         purchase a medical  office  building  located in  Danbury,  Connecticut
         ($6.4  million,  including  a  $4.5  million  third-party  non-recourse
         mortgage);  (ii) purchase a 95% equity interest in a limited  liability
         company that owns and operates  Skypark  Professional  Medical Building
         located in Torrance,  California  ($1.8 million);  (iii) purchase a 67%
         equity interest in a limited  liability  company that owns and operates
         the Centinela Medical Building Complex located in Inglewood, California
         ($2.0  million);  (iv)  finance  capital  expenditures,  including  the
         construction  of the Southern  Crescent  Center II, which was completed
         and  opened  during  the third  quarter of 2000,  ($3.4  million);  (v)
         purchase a 98% equity interest in a limited liability company that owns
         and operates the Summerlin  Hospital  Medical Office  Building II ($2.0
         million), and; (vi) pay dividends ($16.5 million).

         During 1999,  the $19.6 million of cash flows  generated from operating
         activities,  the $10 million of cash  received  for the  repayments  of
         three  short-term loans advanced to separate LLCs during 1998, the $1.2
         million of cash  distributions  received  in excess of income  from the
         Trust's investments in LLCs, the $10.8 million of additional borrowings
         and the  $998,000  of  proceeds  received  from the  sale of  Lakeshore
         Hospital were used primarily to: (i) purchase a 95% equity  interest in
         a limited liability  company that owns the Santa Fe Professional  Plaza
         located in  Scottsdale,  Arizona  ($1.2  million);  (ii) purchase a 98%
         equity interest in a limited  liability company that owns the Summerlin
         Hospital  Medical Office  Building  located in Las Vegas,  Nevada ($5.0
         million);  (iii) purchase a 75% equity interest in a limited  liability
         company that owns the East Mesa Medical Center located in Mesa, Arizona
         ($1.6 million);  (iv) invest additional  capital in existing LLCs ($1.0
         million);  (v) acquire a medical office  building in Las Vegas,  Nevada
         ($1.6  million);  (vi) acquire the Sheffield  Medical  Building  ($11.5
         million);  (vii) finance capital  expenditures  ($4.4 million);  (viii)
         purchase land ($307,000), and; (ix) pay dividends ($16.2 million).

         During 1998, the $18.7 million of cash flows generated from operations,
         the $23.6  million  of  additional  borrowings,  the  $900,000  of cash
         distributions received in excess of income from the Trust's investments
         in LLCs and the $600,000  reduction in cash were used primarily to: (i)
         pay dividends ($15.7 million); (ii) investments in and advances to five
         limited  liability  companies  ($27.9 million,  see Note 3), and; (iii)
         purchase real property and additions to land and buildings  ($200,000).
         Included in the $27.9 million invested in/advanced to limited liability
         companies  was $10.0  million of  short-term  loans  advanced  to three
         separate LLCs in which the Trust has ownership  interests  ranging from
         48% to 95%.  These  loans,  which  earned  interest at  variable  rates
         depending  upon the  length  of time the loan was  outstanding,  earned
         interest at an annual average rate of 9% for 1998. The loans were fully
         repaid  to the  Trust  during  1999  when the LLCs  secured  long-term,
         third-party financing.


                                       15
<PAGE>

         The Trust  has an  unsecured,  non-amortizing  $100  million  revolving
         credit agreement (the "Agreement"), which expires on June 24, 2003. The
         Agreement   provides  for  interest  at  the  Trust's  option,  at  the
         certificate of deposit rate plus .625% to 1.125%,  Eurodollar rate plus
         .50% to 1.125% or the prime  rate.  A fee of .175% to .375% is required
         on the  unused  portion  of  this  commitment.  The  margins  over  the
         certificate of deposit rate, Eurodollar rate and the commitment fee are
         based upon the Trust's  debt to total  capital  ratio as defined by the
         Agreement.  At  December  31,  2000,  the  applicable  margin  over the
         certificate  of  deposit  and  Eurodollar  rates  were 1.0% and  .875%,
         respectively,   and  the  commitment   fee  was  .25%.   There  are  no
         compensating balance  requirements.  The Agreement contains a provision
         whereby  the  commitments  will  be  reduced  by 50%  of  the  proceeds
         generated from any new equity offering. At December 31, 2000, the Trust
         had approximately $17 million of available borrowing capacity.

         Covenants  relating  to  the  revolving  credit  facility  require  the
         maintenance  of a minimum  tangible net worth and  specified  financial
         ratios,  limit the Trust's ability to incur  additional debt, limit the
         aggregate amount of mortgage  receivables and limit the Trust's ability
         to  increase   dividends  in  excess  of  95%  of  cash  available  for
         distribution,  unless  additional  distributions are required to comply
         with the  applicable  section of the Internal  Revenue Code and related
         regulations  governing real estate investment  trusts.  The Trust is in
         compliance with such convenants at December 31, 2000.

         The Trust has entered  into  interest  rate swap  agreements  which are
         designed  to reduce  the impact of  changes  in  interest  rates on its
         floating rate revolving  credit notes.  At December 31, 2000, the Trust
         had five outstanding swap agreements for notional  principal amounts of
         $35,580,000 which mature from May, 2001 through  November,  2006. These
         swap  agreements  effectively  fix the interest rate on  $35,580,000 of
         variable rate debt at 6.89% including the revolver spread of .875%. The
         interest  rate swap  agreements  were entered into in  anticipation  of
         certain borrowing transactions made by the Trust. The effective rate on
         the  Trust's  revolving  credit  notes  including  commitment  fees and
         interest  rate swap expense was 7.1%,  6.2% and 6.7% during 2000,  1999
         and 1998, respectively.  Additional interest  expense/(income) recorded
         as a result of the Trust's hedging  activity,  which is included in the
         effective  interest  rates shown above,  was  ($164,000),  $135,000 and
         $136,000 in 2000, 1999 and 1998, respectively.  The Trust is exposed to
         credit loss in the event of nonperformance by the counterparties to the
         interest rate swap agreements. These counterparties are major financial
         institutions  and the Trust does not anticipate  nonperformance  by the
         counterparties  which  are  rated  A or  better  by  Moody's  Investors
         Service.  Termination  of the interest  rate swaps at December 31, 2000
         would have resulted in payments to the  counterparties  to the Trust of
         approximately  $532,000.  The fair  value  of the  interest  rate  swap
         agreements at December 31, 2000 reflects the estimated amounts that the
         Trust would pay or receive to terminate  the contracts and are based on
         quotes from the counterparties.

         Results of Operations

         Total  revenues  increased 14% or $3.5 million to $27.3 million in 2000
         as  compared  to 1999 and 3% or  $631,000  to $23.9  million in 1999 as
         compared to $23.2  million in 1998.  The $3.5 million  increase  during
         2000 over 1999 was due  primarily  to a $3.3  million  increase in base
         rentals from  non-related  parties  resulting  primarily  from revenues
         generated  from  the  Sheffield  Medical   Building,   the  Orthopaedic
         Specialists of Nevada Building,  the medical office building located in
         Danbury, Connecticut as well as the Southern Crescent II medical office
         building, all of which were acquired/opened during or subsequent to the
         fourth quarter of 1999. The $631,000 increase during 1999 over 1998 was
         due primarily to a $451,000  increase in base rentals from  non-related
         parties  and a $170,000  increase  in  interest  income.  The  $451,000
         increase in base rentals from non-related  parties  resulted  primarily
         from the revenues  generated from the Sheffield Medical


                                       16
<PAGE>

         Building, and the Orthopaedic  Specialists of Nevada Building,  both of
         which were acquired  during the fourth  quarter of 1999 and an increase
         in the base rentals of Tri-State Rehabilitation Hospital resulting from
         the June 1, 1999 lease  amendment  which increased the minimum rent and
         eliminated  the additional  rent  provision.  The $170,000  increase in
         interest  income is primarily due to the interest  earned on short-term
         loans advanced to three separate LLCs (in which the Trust has ownership
         interests), all of which were repaid to the Trust by June 30, 1999.

         Interest  expense  increased $2.1 million or 53% in 2000 as compared to
         1999 and  $514,000 or 15% in 1999 as compared to 1998 due  primarily to
         the additional borrowings used to finance additional investments during
         2000 and 1999. Also contributing to the increase in interest expense in
         2000 as compared to 1999 was an increase in the  effective  rate on the
         Trust's revolving credit facility which,  including commitment fees and
         interest  rate swap  expense,  increased to 7.1% in 2000 as compared to
         6.2% in 1999.

         Depreciation and amortization expense increased $604,000 or 16% in 2000
         as compared to 1999 and decreased slightly in 1999 as compared to 1998.
         The  increase  in 2000 as  compared  to 1999 was due  primarily  to the
         depreciation  expense related to various  acquisitions made in 2000 and
         1999.

         Other  operating  expenses  increased  $1.0  million  or 57% in 2000 as
         compared to 1999 primarily due to the expenses  related to acquisitions
         made in 2000 and 1999. Other operating  expenses  decreased $115,000 or
         6% in 1999 as compared  to 1998  primarily  due to a favorable  expense
         reserve adjustment  recorded in the third quarter of 1999,  relating to
         Lakeshore Hospital, which was sold during the third quarter of 1999 for
         net cash proceeds of $998,000.  Included in the Trust's other operating
         expenses  were expenses  related to the medical  office  buildings,  in
         which the Trust has a controlling ownership interest which totaled $2.1
         million in 2000 and $1.0  million  in both 1999 and 1998.  A portion of
         the expenses associated with the medical office buildings are passed on
         directly  to the  tenants  and are  included as revenues in the Trust's
         statements of income.

         During the third quarter of 1999, the Trust sold the real estate assets
         of Lakeshore Hospital for net cash proceeds of $998,000. Since the book
         value of this  facility  was reduced to zero in a prior  year,  the net
         cash proceeds  received were recorded as a gain and netted  against the
         provision for investment loss. Also during the third quarter of 1999, a
         provision for investment  loss of $2.6 million was recorded on Meridell
         Achievement  Center,   Inc.,  a  behavioral  health  services  facility
         operated by, and leased to, a wholly-owned  subsidiary of UHS, pursuant
         to the terms of a lease that  expired in December,  2000.  In measuring
         the provision for investment loss during the third quarter of 1999, the
         Trust estimated fair value by discounting  (using the Trust's  internal
         hurdle rate) expected future cash flows, consisting of estimated future
         rental payments and residual value.  During the second quarter of 2000,
         the wholly-owned subsidiary of UHS exercised its option pursuant to the
         lease to  purchase  the leased  property  upon the  December  31,  2000
         expiration  of the  initial  lease.  Pursuant to the terms of the lease
         agreement,  three  appraisal were obtained to determine the fair market
         value of the property and accordingly, the sale price was determined to
         be $5,450,000. This sale was completed in December, 2000 resulting in a
         gain of  approximately  $1.9  million  which is included in the Trust's
         2000 results of operations.  Additionally, during the fourth quarter of
         2000,  the Trust  recorded  a  provision  for  investment  loss of $1.1
         million to reflect its share of an asset impairment  charge recorded at
         a  limited   liability   company   (in  which  the  Trust  owns  a  60%
         non-controlling   interest)  resulting  from  recent  declines  in  the
         performance of a medical office complex located in Phoenix, Arizona. In
         measuring the provision for  investment  loss of the limited  liability
         company,  management of the Trust  concluded  that the  estimated  fair
         value of the real property  (calculated by discounting  expected future
         cash flows, consisting of


                                       17
<PAGE>

         estimated future rental payments and residual value) did not exceed the
         mortgage  held on the property by a  third-party  lending  institution.
         Accordingly,  the $1.1 million  charge was  recorded  during the fourth
         quarter  of 2000 to  reduce  the  Trust's  investment  in this  limited
         liability company to zero.

         Included in the  Trust's  financial  results was $2.9  million in 2000,
         $2.6 million in 1999 and $1.5 million in 1998, of income generated from
         the Trust's ownership in limited liability  companies which own medical
         office buildings in Arizona,  California,  Kentucky, New Mexico, Nevada
         and Maine (Note 8 of the financial statements).

         Net  income for 2000 was $16.3  million or $1.81 per basic and  diluted
         share compared to $14.0 million or $1.56 per basic and diluted share in
         1999 and $14.3 million or $1.60 per basic and diluted share in 1998.

         Funds from  operations  ("FFO"),  which is the sum of net  income  plus
         depreciation  expense for consolidated and unconsolidated  investments,
         amortization  of interest  rate cap expense and equity in provision for
         investment  loss of LLC  minus  gain on sale of real  property  totaled
         $22.9 million in 2000, $21.8 million in 1999 and $19.9 million in 1998.
         FFO may not be  calculated  in the same manner for all  companies,  and
         accordingly,  may not be  comparable  to similarly  titled  measures by
         other  companies.  FFO does not represent cash flows from operations as
         defined by generally accepted  accounting  principles and should not be
         considered  as an  alternative  to net  income as an  indicator  of the
         Trust's  operating  performance  or  to  cash  flows  as a  measure  of
         liquidity.

         General

         The  average  occupancy  rate of a hospital  is affected by a number of
         factors, including the number of physicians using the hospital, changes
         in the number of beds,  the  composition  and size of the population of
         the  community  in which the  hospital  is  located,  general and local
         economic conditions, variations in local medical and surgical practices
         and the degree of outpatient use of the hospital services.  The Trust's
         hospital  facilities  continue  to  experience  a shift  in  payor  mix
         resulting  in an  increase  in revenues  attributable  to managed  care
         payors and unfavorable  general industry trends which include pressures
         to control  healthcare costs. In general,  the operators of the Trust's
         facilities  expect to  continue to  experience  an increase in business
         from managed care programs,  including health maintenance organizations
         ("HMOs) and preferred provider  organizations  ("PPOs"). The consequent
         growth in  managed  care  networks  and the  resulting  impact of these
         networks on the operating results of the Trust's  facilities vary among
         the markets in which the Trust's facilities operate.

         Outpatient  treatment and diagnostic  facilities,  outpatient  surgical
         centers,  and freestanding  ambulatory surgical centers also impact the
         healthcare  marketplace.  Many of the  Trust's  facilities  continue to
         experience  an increase in outpatient  revenues  which is primarily the
         result  of  advances  in  medical   technologies   and   pharmaceutical
         improvements, which allow more services to be provided on an outpatient
         basis, and increased pressure from Medicare,  Medicaid,  HMOs, PPOs and
         insurers to reduce hospital stays and provide services, where possible,
         on a less  expensive  outpatient  basis.  The hospital  industry in the
         United States, as well as the Trust's hospital facilities,  continue to
         have  significant   unused  capacity  which  has  created   substantial
         competition  for  patients.   Inpatient  utilization  continues  to  be
         negatively affected by payor-required,  pre-admission authorization and
         by payor  pressure to maximize  outpatient and  alternative  healthcare
         delivery services for less acutely ill patients.  The Trust expects its
         hospital facilities to continue to experience increased competition and
         admission constraints.


                                       18
<PAGE>

         The Medicare program  reimburses the operators of the Trust's hospitals
         primarily based on established  rates by a diagnosis  related group for
         acute care  hospitals and by cost based formula for  behavioral  health
         facilities.  Historically,  rates  paid  under  Medicare's  prospective
         payment system ("PPS") for inpatient services have increased,  however,
         these  increases  have been less than cost  increases.  Pursuant to the
         terms of BBA-97, there were no increases in the rates paid to hospitals
         for inpatient care through September 30, 1998 and reimbursement for bad
         debt  expense  and capital  costs as well as other items were  reduced.
         During  the  fourth  quarter of 2000,  Congress  passed  the  Medicare,
         Medicaid and SCHIP  Benefits  Improvement  and  Protection  Act of 2000
         ("BIPA")  which,  among other things,  increased  Medicare and Medicaid
         payments to health  care  providers  by $35  billion  over 5 years with
         approximately $12 billion of this amount targeted for hospitals and $11
         billion for managed  care payors.  These  increased  reimbursements  to
         hospitals  pursuant to the terms of BIPA will  commence in April,  2001
         and for the period of April 1, 2001 through  September  30,  2001,  the
         additional  reimbursements  will be remitted to  hospitals at twice the
         scheduled amounts. BBA-97 established the annual update for Medicare at
         market  basket  minus 1.1% in both fiscal  years 2001  (October 1, 2000
         through September 30, 2001) and 2002 and BIPA revised the update at the
         full market  basket in fiscal year 2001 and market basket minus .55% in
         fiscal years 2002 and 2003. Additionally,  BBA-97 reduced reimbursement
         to  hospitals  for  Medicare  bad debts to 55% and BIPA  increased  the
         reimbursement  to 70%, with an effective date for the Trust's  hospital
         facilities leased to subsidiaries of UHS of January 1, 2001.

         A large  portion  of the  Trust's  non-hospital  properties  consist of
         medical  office  buildings  which are located either close to or on the
         campuses of hospital  facilities.  These properties are either directly
         or  indirectly  affected  by the  factors  discussed  above  as well as
         general  real  estate  factors  such as the supply and demand of office
         space and market rental rates.

         Market Risks Associated with Financial Instruments

         The Trust's  interest  expense is  sensitive  to changes in the general
         level  of  domestic   interest   rates.   To  mitigate  the  impact  of
         fluctuations in domestic  interest rates, a portion of the Trust's debt
         is  fixed  rate  accomplished  by  entering  into  interest  rate  swap
         agreements.  The  interest  rate swap  agreements  are  contracts  that
         require the Trust to pay a fixed and receive a floating  interest  rate
         over the life of the agreements.  The floating-rates are based on LIBOR
         and the  fixed-rates  are  determined  upon  consummation  of the  swap
         agreements.  The  interest  rate  swap  agreements  do  not  constitute
         positions independent of the underlying  exposures.  The Trust does not
         hold or issue derivative  instruments for trading purposes and is not a
         party to any instruments with leverage  features.  The Trust is exposed
         to credit losses in the event of  non-performance by the counterparties
         to its  financial  instruments.  The  counterparties  are  creditworthy
         financial institutions,  rated A or better by Moody's Investor Services
         and the Trust anticipates that the counterparties will be able to fully
         satisfy  their  obligations  under the  contracts.  For the years ended
         December 31, 2000, 1999 and 1998, the Trust received a weighted average
         rate of 6.8%,  6.09%  and  5.24%,  respectively,  and  paid a  weighted
         average rate on its interest rate swap  agreements of 6.02%,  6.02% and
         6.94%, respectively.

         The table  below  presents  information  about the  Trust's  derivative
         financial   instruments  and  other  financial   instruments  that  are
         sensitive to changes in interest rates,  including  interest rate swaps
         as of December  31,  2000.  For debt  obligations,  the table  presents
         principal  cash flows and related  weighted-average  interest  rates by
         contractual  maturity  dates.  For interest rate swap  agreements,  the
         table presents  notional amounts by expected maturity date and weighted
         average interest rates based on rates in effect at December 31, 2000.



                                       19
<PAGE>


<TABLE>
<CAPTION>
                                   Maturity Date, Fiscal Year Ending December 31
                                                                                                There-
   (Dollars in thousands)             2001        2002        2003        2004        2005       after           Total
                                      ----        ----        ----        ----        ----       -----           -----
<S>                                  <C>            <C>         <C>       <C>        <C>         <C>          <C>
   Long-term debt:
     Fixed rate                      $1,441         $89         $97       $105       $114        $3,985       $5,831

   Average interest rates               6.5%        8.3%        8.3%       8.3%       8.3%          8.3%

   Variable rate long-term debt                             $76,200                                          $76,200

   Interest rate swaps:
     Pay fixed/receive
       variable notional amounts     $1,580      $4,000          $0    $10,000(a)      $0       $20,000      $35,580
                                                                                                (b)
     Average pay rate                  6.80%     6.6025%                  5.65%                  6.02%
     Average receive rate           3 month     6 month                 3 month                3 month
                                     LIBOR       LIBOR                    LIBOR                 LIBOR

<FN>

(a)  The counterparty has the right to cancel this SWAP early on May 17, 2002.
(b)  The  counterparty has the right to cancel a $10 million SWAP on November 3,
     2003.
</FN>
</TABLE>


         Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Trust's  Balance  Sheets and its  Statements of Income,  Changes in
         Shareholders' Equity and Cash Flows, together with the report of Arthur
         Andersen LLP,  independent public  accountants,  are included elsewhere
         herein.  Reference  is made to the "Index to Financial  Statements  and
         Schedules."

         Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         Not applicable.


















                                       20
<PAGE>


                                    PART III

         Item 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         There is hereby  incorporated  by reference the  information  to appear
         under the caption  "Election  of  Trustees"  in the Trust's  definitive
         Proxy Statement to be filed with the Securities and Exchange Commission
         within 120 days after December 31, 2000. See also  "Executive  Officers
         of the Registrant" appearing in Part I hereof.

         Item 11.   EXECUTIVE COMPENSATION

         There is hereby  incorporated  by reference the  information  under the
         caption "Executive  Compensation" and "Compensation  Pursuant to Plans"
         in  the  Trust's  definitive  Proxy  Statement  to be  filed  with  the
         Securities and Exchange  Commission  within 120 days after December 31,
         2000.

         Item 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                    AND MANAGEMENT

         There is hereby  incorporated  by reference the  information  under the
         caption   "Security   Ownership  of  Certain   Beneficial   Owners  and
         Management" in the Trust's  definitive Proxy Statement to be filed with
         the Securities and Exchange  Commission  within 120 days after December
         31, 2000.

         Item 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         There is hereby  incorporated  by reference the  information  under the
         caption  "Transactions  With  Management  and  Others"  in the  Trust's
         definitive Proxy Statement to be filed with the Securities and Exchange
         Commission within 120 days after December 31, 2000.













                                       21
<PAGE>


                                     PART IV

         Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
                   FORM 8-K

               (a)  Financial Statements and Financial Statement Schedules:

                    1)  Report of Independent Public Accountants

                    2)  Financial Statements

                        Consolidated  Balance  Sheets -  December  31,  2000 and
                        December 31, 1999
                        Consolidated Statements of Income - Years Ended December
                        31, 2000, 1999 and 1998
                        Consolidated  Statements of Shareholders' Equity - Years
                        Ended December 31, 2000, 1999 and 1998
                        Consolidated  Statements  of Cash  Flows  - Years  Ended
                        December 31, 2000, 1999 and 1998
                        Notes to  Consolidated  Financial  Statements - December
                        31, 2000

                    (3) Schedules
                        Schedule II - Valuation and Qualifying  Accounts - Years
                        Ended December 31, 2000, 1999 and 1998
                        Schedule III - Real Estate and Accumulated  Depreciation
                        - December 31, 2000
                        Notes to Schedule III - December 31, 2000

               (b)  Reports on Form 8-K:
                       No reports on Form 8-K were filed during the last quarter
                       of the year ended December 31, 2000

               (c)  Exhibits:

                  3.1 Declaration of Trust, dated as of August 1986,  previously
         filed as Exhibit 3.1 Amendment No. 3 of the  Registration  Statement on
         Form S-11 and Form S-2 of Universal Health Services, Inc. and the Trust
         (Registration No. 33-7872), is incorporated herein by reference.

                  3.2 Amendment to  Declaration  of Trust,  dated as of June 23,
         1993,  previously  filed as Exhibit 3.2 to the Trust's Annual Report on
         Form 10-K for the year ended December 31, 1993, is incorporated  herein
         by reference.

                  3.3 Amended and restated bylaws,  filed as Exhibit 10.1 to the
         Trust's Form 10-Q for the quarter ended March 31, 1998, is incorporated
         herein by reference.

                  10.1  Advisory  Agreement,  dated  as of  December  24,  1986,
         between  UHS of  Delaware,  Inc.  and The  Trust,  previously  filed as
         Exhibit 10.2 to the Trust's  Current  Report on Form 8-K dated December
         24, 1986, is incorporated herein by reference.

                  10.2  Agreement  effective  January 8, 2001, to renew Advisory
         Agreement dated as of December 24, 1986 between Universal Health Realty
         Income Trust and UHS of Delaware, Inc.



                                       22
<PAGE>

                  10.3 Contract of Acquisition, dated as of August 1986, between
         the Trust and certain subsidiaries of Universal Health Services,  Inc.,
         previously filed as Exhibit 10.2 to Amendment No. 3 of the Registration
         Statement on Form S-11 and S-2 of Universal Health  Services,  Inc. and
         the  Trust  (Registration  No.  33-7872),  is  incorporated  herein  by
         reference.

                  10.4 Form of Leases,  including  Form of Master Lease Document
         Leases, between certain subsidiaries of Universal Health Services, Inc.
         and the Trust,  previously  filed as Exhibit 10.3 to Amendment No. 3 of
         the  Registration  Statement  on Form  S-11 and  Form S-2 of  Universal
         Health Services,  Inc. and the Trust  (Registration  No.  33-7872),  is
         incorporated herein by reference.

                  10.5 Share  Option  Agreement,  dated as of December 24, 1986,
         between the Trust and Universal Health Services, Inc., previously filed
         as  Exhibit  10.4 to the  Trust's  Current  Report  on Form  8-K  dated
         December 24, 1986, is incorporated herein by reference.

                  10.6  Corporate   Guaranty  of  Obligations  of   Subsidiaries
         Pursuant to Leases and Contract of  Acquisition,  dated  December 1986,
         issued  by  Universal  Health  Services,  Inc.  in favor of the  Trust,
         previously  filed as Exhibit 10.5 to the Trust's Current Report on Form
         8-K dated December 24, 1986, is incorporated herein by reference.

                  10.7 Key Employees' Restricted Share Purchase Plan approved by
         the Trustees on December 1, 1988 which authorized the issuance of up to
         50,000 common shares,  previously filed as Exhibit 10.11 to the Trust's
         Annual  Report on form 10-K for the year ended  December 31,  1988,  is
         incorporated herein by reference.

                  10.8 Share Compensation Plan for Outside Trustees,  previously
         filed as Exhibit  10.12 to the Trust's  Annual  Report on Form 10-K for
         the year ended December 31, 1991, is incorporated herein by reference.

                  10.9  1988  Non-Statutory   Stock  Option  Plan,  as  amended,
         previously  filed as Exhibit 10.13 to the Trust's Annual Report on Form
         10-K for the year ended  December 31, 1991, is  incorporated  herein by
         reference.

                  10.10 Lease dated December 22, 1993,  between Universal Health
         Realty Income Trust and THC-Chicago,  Inc. as lessee,  previously filed
         as Exhibit 10.14 to the Trust's Annual Report on Form 10-K for the year
         ended December 31, 1993, is incorporated herein by reference.

                  10.11  Universal  Health  Realty  Income Trust 1997  Incentive
         Plan, previously filed as Exhibit 10.1 to the Trust's Form 10-Q for the
         quarter ended September 30, 1997, is incorporated herein by reference.

                  10.12  Amendment  No. 1 to  Lease,  made as of July 31,  1998,
         between  Universal  Health Realty Income Trust,  a Maryland real estate
         investment trust ("Lessor"), and Inland Valley Regional Medical Center,
         Inc., a California Corporation ("Lessee"),  previously filed as Exhibit
         10.1 to the Trust's Form 10-Q for the quarter ended September 30, 1998,
         is incorporated herein by reference.

                  10.13  Amendment  No. 1 to  Lease,  made as of July 31,  1998,
         between  Universal  Health Realty Income Trust,  a Maryland real estate
         investment trust  ("Lessor"),  and McAllen Medical Center,  L.P. (f/k/a
         Universal   Health   Services  of  McAllen,   Inc.),  a  Texas  Limited
         Partnership


                                       23
<PAGE>

         ("Lessee"),  amends the lease,  made as of December 24,  1986,  between
         Lessor and Lessee, previously filed as Exhibit 10.2 to the Trust's Form
         10-Q for the quarter ended September 30, 1998, is  incorporated  herein
         by reference.

                  10.14 Amendment to REVOLVING  CREDIT AGREEMENT as of April 30,
         1999 among (i) UNIVERSAL  HEALTH  REALTY  INCOME  TRUST,  a real estate
         investment  trust organized under the laws of the State of Maryland and
         having its principal place of business at 367 South Gulph Road, King of
         Prussia,  Pennsylvania  19406, (ii) VARIOUS FINANCIAL  INSTITUTIONS and
         (iii) FIRST UNION NATIONAL BANK, as administrative agent for the Banks,
         previously  filed as  exhibit  10.1 to the  Trusts'  Form  10-Q for the
         quarter ended March 31, 1999, is incorporated herein by reference.

                  10.15 Dividend  Reinvestment and Share Purchase Plan is hereby
         incorporated  by  reference  from  Registration   Statement  Form  S-3,
         Registration No. 333-81763, as filed on June 28, 1999.

                  10.16 Sale agreement,  dated October 26, 1999, by and among FB
         Sheffield Partners,  LLC, a Georgia limited liability company having an
         office at 1827 Powers Ferry Road, Building 13, Atlanta,  Georgia 30339,
         Health America Realty Group,  LLC, a Georgia limited  liability company
         and Universal Health Realty Income Trust, having an office at 367 South
         Gulph Road, King of Prussia,  Pennsylvania  19406,  previously filed as
         exhibit  10.23 to  Trusts'  Form 10-K for the year ended  December  31,
         1999, is incorporated herein by reference.

                  23 Consent of Independent Public Accountants


















                                       24
<PAGE>



                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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.

         Date:  March 15, 2001
                                            UNIVERSAL HEALTH REALTY INCOME TRUST
                                                              (Registrant)





                           By:   /s/ Alan B. Miller
                              ---------------------------------------------
                                  Alan B. Miller, Chairman of the Board
                                  and Chief Executive Officer

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
         this report has been signed below by the following persons on behalf of
         the registrant and in the capacities and on the dates indicated.

               Date                   Signature and Title

                                      /s/ Alan B. Miller
                                      -----------------------------------------
           March 15, 2001             Alan B. Miller, Chairman of the Board
                                      and Chief Executive Officer

                                      /s/ Kirk E. Gorman
                                      -----------------------------------------
           March 15, 2001             Kirk E. Gorman, President, Chief
                                      Financial Officer, Secretary and Trustee

                                      /s/ James E. Dalton, Jr.
                                      -----------------------------------------
           March 16, 2001             James E. Dalton, Jr., Trustee

                                      /s/ Myles H. Tanenbaum
                                      -----------------------------------------
           March 19, 2001             Myles H. Tanenbaum, Trustee

                                      /s/ Daniel M. Cain
                                      -----------------------------------------
           March 15, 2001             Daniel M. Cain, Trustee

                                      /s/ Miles L. Berger
                                      -----------------------------------------
           March  15, 2001            Miles L. Berger, Trustee

                                      /s/ Elliot J. Sussman
                                      -----------------------------------------
           March 16, 2001             Elliot J. Sussman, M.D., M.B.A., Trustee



                                       25
<PAGE>


                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULES




                                                                          Page

   Report of Independent Public Accountants                                F-2

   Consolidated Balance Sheets - December 31, 2000 and December 31, 1999   F-3

   Consolidated Statements of Income - Years Ended December 31, 2000,
   1999 and 1998                                                           F-4

   Consolidated Statements of Shareholders' Equity - Years Ended
   December 31, 2000, 1999 and 1998                                        F-5

   Consolidated Statements of Cash Flows - Years Ended December 31,
   2000, 1999 and 1998                                                     F-6

   Notes to the Consolidated Financial Statements - December 31, 2000      F-7

   Schedule II - Valuation and Qualifying Accounts -
   Years Ended December 31, 2000, 1999 and 1998                            F-22

   Schedule III - Real Estate and Accumulated Depreciation -
   December 31, 2000                                                       F-23

   Notes to Schedule III - December 31, 2000                               F-24








                                      F-1
<PAGE>

                    Report of Independent Public Accountants

To The Shareholders and Board of Trustees of
Universal Health Realty Income Trust:

We have audited the accompanying consolidated balance sheets of Universal Health
Realty Income Trust and Subsidiaries (a Maryland real estate  investment  trust)
as of  December  31, 2000 and 1999 and the related  consolidated  statements  of
income,  shareholders'  equity and cash flows for each of the three years in the
period ended December 31, 2000. These consolidated  financial statements and the
schedules  referred to below are the  responsibility of the Trust's  management.
Our  responsibility  is to express an  opinion on these  consolidated  financial
statements and schedules based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Universal Health Realty Income Trust and  Subsidiaries,  as of December 31, 2000
and 1999 and the  consolidated  results of their operations and their cash flows
for each of the three years in the period ended December 31, 2000, in conformity
with accounting principles generally accepted in the United States.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
consolidated  financial statements taken as a whole. The schedules listed in the
Index to Financial  Statements  and  Schedules on Page F-1 are presented for the
purpose of complying with the Securities and Exchange Commission's rules and are
not a  required  part of the  basic  consolidated  financial  statements.  These
schedules have been subjected to the auditing procedures applied in our audit of
the basic consolidated financial statements and, in our opinion, fairly state in
all material  respects the  financial  data  required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.

                                            Arthur Andersen LLP

Philadelphia, Pennsylvania
     January 18, 2001


                                      F-2
<PAGE>
                      Universal Health Realty Income Trust
                           Consolidated Balance Sheets
                    (amounts in thousands, except share data)

<TABLE>
<CAPTION>
                                                                   December 31,       December 31,
Assets:                                                               2000               1999
                                                                   ---------           ---------
<S>                                                                <C>                 <C>
Real Estate Investments:
     Buildings & improvements                                      $ 159,243           $ 154,792
     Accumulated depreciation                                        (39,080)            (37,800)
                                                                   ---------           ---------
                                                                     120,163             116,992
     Land                                                             22,929              23,128
     Construction in progress                                             16               1,247
                                                                   ---------           ---------
          Net Real Estate Investments                                143,108             141,367
                                                                   ---------           ---------

Investments in limited liability companies ("LLCs")                   39,164              35,748

Other Assets:
     Cash                                                                294                 852
     Bonus rent receivable from UHS                                      796                 723
     Rent receivable from non-related parties                            208                  67
     Deferred charges and other assets, net                               88                  64
                                                                   ---------           ---------
                                                                   $ 183,658           $ 178,821
                                                                   =========           =========

Liabilities and Shareholders' Equity:

Liabilities:
     Bank borrowings                                               $  80,672           $  75,600
     Note payable to UHS                                               1,359               1,289
     Accrued interest                                                    392                 411
     Accrued expenses & other liabilities                              1,459               1,367
     Tenant reserves, escrows, deposits and prepaid rents                459                 404

     Minority interest                                                    60                  75

Shareholders' Equity:
     Preferred shares of beneficial interest,
         $.01 par value; 5,000,000 shares authorized;
         none outstanding                                               --                  --
     Common shares, $.01 par value;
         95,000,000 shares authorized; issued
         and outstanding: 2000 - 8,980,064
         1999 - 8,990,825                                                 90                  90
     Capital in excess of par value                                  129,110             129,255
     Cumulative net income                                           156,686             140,430
     Cumulative dividends                                           (186,629)           (170,100)
                                                                   ---------           ---------
          Total Shareholders' Equity                                  99,257              99,675
                                                                   ---------           ---------
                                                                   $ 183,658           $ 178,821
                                                                   =========           =========
</TABLE>

The accompanying notes are an integral part of these financial statements.



                                       F-3


<PAGE>
                      Universal Health Realty Income Trust
                        Consolidated Statements of Income
                (amounts in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                                                       Year ended December 31,
                                                                                 -----------------------------------
                                                                                   2000          1999         1998
                                                                                 --------      --------     --------
Revenues (Note 2):
<S>                                                                              <C>           <C>          <C>
     Base rental - UHS facilities                                                $ 14,082      $ 13,828     $ 13,764
     Base rental - Non-related parties                                             10,169         6,844        6,393
     Bonus rental                                                                   3,064         2,912        2,966
     Interest                                                                        --             281          111
                                                                                 --------      --------     --------
                                                                                   27,315        23,865       23,234
                                                                                 --------      --------     --------


Expenses:

     Depreciation & amortization                                                    4,461         3,857        3,879
     Interest expense                                                               6,114         4,004        3,490
     Advisory fees to UHS (Note 2)                                                  1,349         1,214        1,161
     Other operating expenses                                                       2,804         1,789        1,904
     Provision for investment loss, net                                              --           1,583         --
                                                                                 --------      --------     --------
                                                                                   14,728        12,447       10,434
                                                                                 --------      --------     --------

     Income before equity in LLCs and
        gain on sale of real property                                              12,587        11,418       12,800

     Equity in income of LLCs                                                       2,913         2,554        1,537
     Equity in provision for investment loss of LLC                                (1,139)         --           --
     Gain on sale of real property to UHS                                           1,895          --           --

                                                                                 --------      --------     --------
                                   Net Income                                    $ 16,256      $ 13,972     $ 14,337
                                                                                 ========      ========     ========


                          Net Income Per Share - Basic                           $   1.81      $   1.56     $   1.60
                                                                                 ========      ========     ========

                         Net Income Per Share - Diluted                          $   1.81      $   1.56     $   1.60
                                                                                 ========      ========     ========

     Weighted average number of shares outstanding - Basic                          8,981         8,956        8,952
     Weighted average number of share equivalents                                      22            21           22
                                                                                 --------      --------     --------
     Weighted average number of shares and equivalents outstanding - Diluted        9,003         8,977        8,974
                                                                                 ========      ========     ========
</TABLE>


The accompanying notes are an integral part of these financial statements.


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                                            Universal Health Realty Income Trust
                                       Consolidated Statements of Shareholders' Equity
                                    For the Years Ended December 31, 2000, 1999 and 1998
                                      (amounts in thousands, except per share amounts)


                                         Common Shares              Capital in
                                  -----------------------------
                                    Number                          excess of          Cumulative          Cumulative
                                   of Shares        Amount          par value          net income           dividends
                                  -------------  --------------  -----------------  ------------------ --------------------
<S>                                   <C>               <C>           <C>                 <C>                 <C>
January 1, 1998                          8,955             $90           $128,650            $112,121            ($138,169)

Net income                                  --              --                 --              14,337                   --

Issuance of shares of
beneficial interest                          1              --                 35                  --                   --

Dividends ($1.755/share)                    --              --                 --                  --              (15,716)


---------------------------------------------------------------------------------------------------------------------------

January 1, 1999                          8,956              90            128,685             126,458             (153,885)

Net income                                  --              --                 --              13,972                   --

Issuance of shares of
beneficial interest                         35              --                570                  --                   --

Dividends ($1.810/share)                    --              --                 --                  --              (16,215)

---------------------------------------------------------------------------------------------------------------------------

January 1, 2000                          8,991              90            129,255             140,430             (170,100)

Net income                                  --              --                 --              16,256                   --

Repurchase shares of beneficial
interest                                   (12)             --               (181)                 --                   --

Issuance of shares of
beneficial interest                          1              --                 36                  --                   --

Dividends ($1.840/share)                    --              --                 --                  --              (16,529)


---------------------------------------------------------------------------------------------------------------------------
           December 31, 2000             8,980             $90           $129,110            $156,686            ($186,629)
===========================================================================================================================
</TABLE>



The accompanying notes are an integral part of these financial statements.







                                                            F-5
<PAGE>
                      Universal Health Realty Income Trust
                      Consolidated Statements of Cash Flows
                             (amounts in thousands)

<TABLE>
<CAPTION>
                                                                             Year ended December 31,
                                                                     ------------------------------------------
                                                                        2000             1999            1998
                                                                     --------         --------         --------
<S>                                                                  <C>              <C>              <C>
Cash flows from operating activities:
      Net income                                                     $ 16,256         $ 13,972         $ 14,337
     Adjustments to reconcile net income to net cash
       provided by operating activities:
       Depreciation & amortization                                      4,461            3,857            3,879
       Amortization of interest rate cap                                 --                 62              124
       Gain on sale of real property sold to UHS                       (1,895)            --               --
       Equity in provision for investment loss of LLC                   1,139             --               --
       Provision for investment loss, net                                --              1,583             --
    Changes in assets and liabilities:
       Rent receivable                                                   (214)             (85)              28
       Accrued expenses & other liabilities                               188              150              170
       Tenant escrows, deposits & prepaid rents                            55               30              106
       Accrued interest                                                   (19)             130               64
       Deferred charges & other                                            (1)            (120)             (53)
                                                                     --------         --------         --------
          Net cash provided by operating activities                    19,970           19,579           18,655
                                                                     --------         --------         --------

Cash flows from investing activities:
       Investments in LLCs                                             (5,888)          (8,713)         (17,912)
       Advances received from (made to) LLCs                             --              9,980           (9,980)
       Acquisitions and additions to land, buildings and CIP           (9,808)         (17,852)            (186)
       Proceeds received from sale of assets                            5,450              998             --
       Cash distributions in excess of income from LLCs                 1,333            1,150              863
                                                                     --------         --------         --------
          Net cash used in investing activities                        (8,913)         (14,437)         (27,215)
                                                                     --------         --------         --------

Cash flows from financing activities:
       Borrowings from mortgage notes payable                           4,539             --               --
       Net borrowings on line of credit                                   600           10,800           23,600
       Repayments of long-term debt                                       (67)            --               --
       Dividends paid                                                 (16,529)         (16,215)         (15,716)
       Repurchase shares of beneficial interest                          (181)            --               --
       Issuance of shares of beneficial interest                           23              553               10
                                                                     --------         --------         --------
          Net cash (used in) provided by financing activities         (11,615)          (4,862)           7,894
                                                                     --------         --------         --------

(Decrease) increase  in cash                                             (558)             280             (666)
Cash, beginning of period                                                 852              572            1,238
                                                                     --------         --------         --------
Cash, end of period                                                  $    294         $    852         $    572
                                                                     ========         ========         ========

Supplemental disclosures of cash flow information:
    Interest paid                                                    $  6,063         $  3,739         $  3,232
                                                                     ========         ========         ========



</TABLE>

The accompanying notes are an integral part of these financial statements.



                                      F-6
<PAGE>

                      Universal Health Realty Income Trust
                 Notes to the Consolidated Financial Statements
                                December 31, 2000

(1) Summary of Significant Accounting Policies

Nature of Operations

Universal Health Realty Income Trust and Subsidiaries (the "Trust") is organized
as a Maryland real estate  investment  trust.  As of December 31, 2000 the Trust
had  investments in forty  facilities  located in fifteen  states  consisting of
investments in healthcare and human service related  facilities  including acute
care hospitals,  behavioral  healthcare  facilities,  rehabilitation  hospitals,
sub-acute care facilities, surgery centers, childcare centers and medical office
buildings.  Six of the Trust's  hospital  facilities  and three  medical  office
buildings  are  leased to  subsidiaries  of  Universal  Health  Services,  Inc.,
("UHS").

Federal Income Taxes

No  provision  has been made for  federal  income tax  purposes  since the Trust
qualifies  as a real estate  investment  trust under  Sections 856 to 860 of the
Internal  Revenue Code of 1986,  and intends to continue to remain so qualified.
As such,  the Trust is exempt from  Federal  Income  Taxes and it is required to
distribute  at least 95% of its real  estate  investment  taxable  income to its
shareholders.

The Trust is subject to a federal  excise tax computed on a calendar year basis.
The excise tax equals 4% of the excess,  if any, of 85% of the Trust's  ordinary
income  plus 95% of any  capital  gain  income for the  calendar  year over 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 will  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.

Real Estate Properties

The Trust records acquired real estate at cost and uses the straight-line method
to calculate  depreciation  expense for  buildings and  improvements  over their
estimated useful lives of 25 to 45 years.

It is the Trust's policy to review the carrying  value of long-lived  assets for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying  value  of such  assets  may  not be  recoverable.  Measurement  of the
impairment  loss is  based  on the  fair  value  of the  asset.  Generally,  the
estimated fair value will be determined  using valuation  techniques such as the
present value of expected  future cash flows. In assessing the carrying value of
the Trust's real estate investments for possible impairment,  management reviews
estimates  of  future  cash  flows  expected  from  each of its  facilities  and
evaluates the  creditworthiness  of its lessees based on their current operating
performance and on current industry conditions.

                                      F-7
<PAGE>


The Trust invests primarily in healthcare related facilities which comprised 72%
of net revenues in 2000,  and  therefore,  is subject to certain  industry  risk
factors,  which directly impact the operating results of its lessees.  In recent
years, an increasing  number of legislative  initiatives have been introduced or
proposed in Congress and in state  legislatures  that would effect major changes
in the healthcare system,  either nationally or at the state level. In addition,
the  healthcare  industry  has been  characterized  in recent years by increased
competition and consolidation.

During the third  quarter  of 1999,  the Trust  sold the real  estate  assets of
Lakeshore  Hospital for net cash  proceeds of $998,000.  Since the book value of
this  facility  was  reduced  to zero in a prior  year,  the net  cash  proceeds
received were recorded as a gain and netted against the provision for investment
loss.  Also during the third quarter of 1999, a provision for investment loss of
$2.6 million was  recorded on Meridell  Achievement  Center,  Inc., a behavioral
health services facility  operated by, and leased to, a wholly-owned  subsidiary
of UHS,  pursuant to the terms of a lease that  expired in  December,  2000.  In
measuring the provision  for  investment  loss during the third quarter of 1999,
the Trust estimated fair value by discounting (using the Trust's internal hurdle
rate) expected future cash flows, consisting of estimated future rental payments
and  residual  value.  During  the  second  quarter  of 2000,  the  wholly-owned
subsidiary  of UHS  exercised  its option  pursuant to the lease to purchase the
leased  property  upon the December 31, 2000  expiration  of the initial  lease.
Pursuant to the terms of the lease agreement,  three appraisals were obtained to
determine the fair market value of the property and accordingly,  the sale price
was  determined  to be  $5,450,000.  This sale was  completed in December,  2000
resulting  in a gain of  approximately  $1.9  million  which is  included in the
Trust's 2000 results of operations.

Management  of the Trust is unable  to  predict  the  effect,  if any,  that the
industry  factors  discussed  above  will have on the  operating  results of its
lessees or on their ability to meet their  obligations  under the terms of their
leases with the Trust.  In  addition,  management  of the Trust  cannot  predict
whether any of the leases will be renewed on their current terms or at all. As a
result,  management's  estimate of future cash flows from its leased  properties
could be materially  affected in the near term, if certain of the leases are not
renewed at the end of their lease terms.

Investments in Limited Liability Companies ("LLCs")

The consolidated  financial  statements of the Trust include the accounts of its
controlled  investments.  In accordance with the American Institute of Certified
Public  Accountants'  Statement of Position 78-9  "Accounting for Investments in
Real Estate  Ventures" and Emerging  Issues Task Force Issue 96-16,  "Investor's
Accounting  for an  Investee  When the  Investor  Has a  Majority  of the Voting
Interest but the Minority  Shareholder or Shareholders  Have Certain Approval or
Veto Rights",  the Trust  accounts for its  investment in LLCs which it does not
control  using  the  equity  method  of  accounting.  These  investments,  which
represent 33% to 99% non-controlling ownership interests, are recorded initially
at the Trust's cost and subsequently  adjusted for the Trust's net equity in the
net income, cash contributions and distributions of the investments.

During the fourth quarter of 2000, the Trust recorded a provision for investment
loss of LLC of $1.1 million to reflect its share of an asset  impairment  charge
recorded at a LLC resulting from recent declines in the performance of a medical
office  complex  located in Phoenix,  Arizona.  In


                                      F-8
<PAGE>

measuring the provision for investment loss of the limited liability company (in
which the Trust owns a 60%  non-controlling  interest),  management of the Trust
concluded  that the  estimated  fair value of the real property  (calculated  by
discounting  expected future cash flows,  consisting of estimated  future rental
payments and residual value) did not exceed the mortgage held on the property by
a third-party  lending  institution.  Accordingly,  the $1.1 million  charge was
recorded  during the fourth quarter of 2000 to reduce the Trust's  investment in
this LLC to zero.

Earnings Per Share

Basic  earnings  per share are based on the  weighted  average  number of common
shares  outstanding during the year. Diluted earnings per share are based on the
weighted average number of common shares during the year adjusted to give effect
to common stock equivalents.

Stock-Based Compensation

Statement of Financial  Accounting  Standards ("SFAS") No. 123,  "Accounting for
Stock-Based Compensation" encourages a fair value based method of accounting for
employee stock options and similar equity  instruments,  which  generally  would
result in the  recording  of  additional  compensation  expense  in the  Trust's
financial statements. The Statement also allows the Trust to continue to account
for stock-based employee  compensation using the intrinsic value-based method of
accounting as prescribed by Accounting  Principals Board ("APB") Opinion No. 25,
"Accounting   for  Stock  Issued  to  Employees."  The  Trust  has  adopted  the
disclosure-only  provisions of SFAS No. 123.  Accordingly,  no compensation cost
has been  recognized  for the stock option plans in the  accompanying  financial
statements.

Statements of Cash Flows

For purposes of the  Consolidated  Statements of Cash Flows, the Trust considers
all highly  liquid  investment  instruments  with  original  maturities of three
months or less to be cash equivalents.

Interest Rate Protection Agreements

In managing interest rate exposure, the Trust at times enters into interest rate
swap  agreements and interest rate cap  agreements.  When interest rates change,
the  differential  to be paid or received  under the Trust's  interest rate swap
agreements is accrued as interest expense.  Premiums paid for purchased interest
rate cap  agreements  are  amortized  to interest  expense over the terms of the
caps.  Unamortized premiums are included in deferred charges in the accompanying
balance sheet.

Fair Value of Financial Instruments

The fair value of the Trust's  interest rate swap agreements and investments are
based on quoted  market  prices.  The carrying  amounts  reported in the balance
sheet for cash, accrued liabilities, and short-term borrowings approximate their
fair  values due to the  short-term  nature of these  instruments.  Accordingly,
these  items  have  been  excluded  from the  fair  value  disclosures  included
elsewhere in these notes to consolidated financial statements.



                                      F-9
<PAGE>



Comprehensive Income

Net income as reported by the Trust reflects total comprehensive  income for the
years ended December 31, 2000, 1999 and 1998.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

Accounting for Derivative Instruments and Hedging Activities

The Financial  Accounting  Standards Board issued SFAS No. 133,  "Accounting for
Derivative Instruments and Hedging Activities", which established accounting and
reporting  standards  requiring  that  every  derivative  instrument  (including
certain derivative  instruments  embedded in other contracts) be recorded in the
balance  sheet as either an asset or liability  measured at its fair value.  The
statement  requires  that changes in the  derivative's  fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allow a derivative's gains and losses to offset
related results on the hedged item in the income statement,  and requires that a
company must  formally  document,  designate,  and assess the  effectiveness  of
transactions that receive hedge accounting.

The Trust has adopted SFAS No. 133  effective  January 1, 2001.  The adoption of
this new standard will result in a cumulative  effect of an accounting change of
approximately  $532,000 in other comprehensive income to recognize at fair value
all derivatives that are designated as cash flow hedging instruments.

The Trust  believes  that its  hedges  are  highly  effective  with  changes  in
effectiveness  expected to be reported in other comprehensive income. Changes in
any ineffectiveness will be reported in current earnings.

(2) Related Party Transactions

UHS of Delaware, Inc. (the "Advisor"),  a wholly-owned subsidiary of UHS, serves
as Advisor to the Trust  under an Advisory  Agreement  dated  December  24, 1986
between the Advisor and the Trust (the "Advisory Agreement"). Under the Advisory
Agreement,  the Advisor is  obligated  to present an  investment  program to the
Trust, to use its best efforts to obtain  investments  suitable for such program
(although it is not obligated to present any particular  investment  opportunity
to the Trust),  to provide  administrative  services to the Trust and to conduct
the Trust's  day-to-day  affairs.  In performing its services under the Advisory
Agreement, the Advisor may utilize independent professional services,  including
accounting,  legal and other  services,  for which  the  Advisor  is  reimbursed
directly by the Trust.  The  Advisory  Agreement  expires on December 31 of each
year; however,  it is renewable by the Trust,  subject to a determination by the
Independent Trustees that the Advisor's  performance has been satisfactory.  The
Advisory


                                      F-10
<PAGE>

Agreement may be terminated for any reason upon sixty days written notice by the
Trust or the Advisor.  The  Advisory  Agreement  has been renewed for 2001.  All
transactions with UHS must be approved by the Independent Trustees.

The  Advisory  Agreement  provides  that the  Advisor is  entitled to receive an
annual advisory fee equal to .60% of the average  invested real estate assets of
the Trust, as derived from its consolidated  balance sheet from time to time. In
addition,  the  Advisor is  entitled  to an annual  incentive  fee of 20% of the
amount by which cash available for distribution to  shareholders,  as defined in
the Advisory Agreement, for each year exceeds 15% of the Trust's equity as shown
on its balance  sheet,  determined  in  accordance  with  accounting  principles
generally accepted in the United States, without reduction for return of capital
dividends.  No incentive fees were paid during 2000, 1999 and 1998. The advisory
fee is  payable  quarterly,  subject  to  adjustment  at year end based upon the
audited consolidated financial statements of the Trust.

Pursuant to the terms of the leases with UHS,  the lessees  have rights of first
refusal to: (i) purchase the  respective  leased  facilities  during and for 180
days  after the lease  terms at the same  price,  terms  and  conditions  of any
third-party offer, or; (ii) renew the lease on the respective leased facility at
the end of,  and for 180  days  after,  the  lease  term at the same  terms  and
conditions  pursuant to any third-party offer. The leases also grant the lessees
options,  exercisable on at least six months notice,  to purchase the respective
leased  facilities  at the  end of the  lease  term or any  renewal  term at the
facility's then fair market value.  The terms of the leases also provide that in
the event UHS  discontinues  operations at the leased facility for more than one
year, or elects to terminate  its lease prior to the  expiration of its term for
prudent business reasons, UHS is obligated to offer a substitution  property. If
the Trust does not accept the substitution property offered, UHS is obligated to
purchase the leased facility back from the Trust at a price equal to the greater
of its then fair market value or the original purchase price paid by the Trust.

For the  years  ended  December  31,  2000,  1999 and  1998,  63%,  70% and 71%,
respectively,  of the Trust's revenues were earned under the terms of the leases
with wholly-owned  subsidiaries of UHS. Including 100% of the revenues generated
at the unconsolidated LLCs in which the Trust has various non-controlling equity
interests ranging from 33% to 99%, the UHS leases accounted for 35% in 2000, 39%
in  1999  and  46% in  1998  of the  combined  consolidated  and  unconsolidated
revenues.  The  leases  to  subsidiaries  of  UHS  are  guaranteed  by  UHS  and
cross-defaulted with one another.

Revenues received from UHS and non-related parties were as follows:


                                                      (000s)
                                      -------------------------------------
                                              Year Ended December 31,
                                      -------------------------------------
                                        2000           1999           1998
                                      -------------------------------------
Base rental - UHS facilities          $14,082        $13,828        $13,764
Base rental - Non-related parties      10,169          6,844          6,393
                                      -------        -------        -------
  Total base rental                    24,251         20,672         20,157
                                      -------        -------        -------

Bonus rental - UHS facilities           3,064          2,817          2,737
Bonus rental - Non-related parties       --               95            229
                                      -------        -------        -------
  Total bonus rental                    3,064          2,912          2,966
                                      -------        -------        -------

Interest - Non-related parties           --              281            111
                                      -------        -------        -------
  Total revenues                      $27,315        $23,865        $23,234
                                      =======        =======        =======





                                      F-11
<PAGE>

At December 31, 2000,  approximately  8.5% of the Trust's  outstanding shares of
beneficial  interest  were held by UHS.  The Trust has granted UHS the option to
purchase  Trust  shares in the  future  at fair  market  value to enable  UHS to
maintain a 5% interest in the Trust.

During the third  quarter  of 1999,  a  provision  for  investment  loss of $2.6
million was recorded on Meridell  Achievement Center,  Inc., a behavioral health
services facility operated by, and leased to, a wholly-owned  subsidiary of UHS,
pursuant to the terms of a lease that  expired in December,  2000.  In measuring
the provision for  investment  loss during the third quarter of 1999,  the Trust
estimated fair value by  discounting  (using the Trust's  internal  hurdle rate)
expected future cash flows,  consisting of estimated  future rental payments and
residual value.  During the second quarter of 2000, the wholly-owned  subsidiary
of UHS  exercised  its  option  pursuant  to the lease to  purchase  the  leased
property upon the December 31, 2000 expiration of the initial lease. Pursuant to
the terms of the lease agreement, three appraisal were obtained to determine the
fair market value of the property and accordingly, the sale price was determined
to be $5,450,000.  This sale was completed in December, 2000 resulting in a gain
of  approximately  $1.9 million which is included in the Trust's 2000 results of
operations.

Also during 2000, the Trust invested $2.0 million to acquire a 98% interest in a
LLC that purchased the Summerlin  Hospital  Medical Office  Building II which is
connected to the Summerlin  Hospital Medical Center in Las Vegas,  Nevada.  This
medical  office  building  was  purchased  from a LLC in which  UHS  holds a 72%
ownership  interest.  The  purchase  price  paid  for  the  property  to the UHS
majority-owned  LLC was $10.5 million.  The Trust made a cash investment of $2.0
million,  and the LLC,  which is  majority-owned  by the Trust,  obtained a $9.8
million third-party,  non-recourse  mortgage to fund the balance of the purchase
price and finance tenant improvements.

During 1999, the Trust paid $5.0 million to acquire a 98% interest in a LLC that
purchased the Summerlin Hospital Medical Office Building,  which is connected to
the Summerlin Hospital Medical Center in Las Vegas,  Nevada. This medical office
building was purchased  from a LLC in which UHS holds a 72% ownership  interest.
The total purchase price paid for the property to the UHS majority-owned LLC was
$13.0  million  consisting  of the $5.0 of cash invested by the Trust and a $8.0
million  third-party,  non-recourse  mortgage  obtained  by  the  LLC  which  is
majority-owned by the Trust.

Also during 1999,  the Trust  acquired  the  Orthopaedic  Specialists  of Nevada
Building in Las Vegas, Nevada for $1.6 million. The ground lease on this medical
office building is based upon an agreement between Valley Health Systems, LLC (a
UHS 72% owned subsidiary) and the Trust.

During the third  quarter of 1998,  wholly-owned  subsidiaries  of UHS exercised
five-year  renewal  options  on four  hospitals  owned by the Trust  which  were
scheduled to expire in 1999 through 2001 (Virtue Street Pavilion, The Bridgeway,
Inland Valley Regional  Medical Center and Wellington  Regional Medical Center).
The leases on these facilities were renewed at the same lease rates and terms as
the initial leases. As part of the renewal  agreement,  the Trust also agreed to
grant additional fixed rate renewal options to a wholly-owned  subsidiary of UHS
commencing in 2022 on the real property of McAllen Medical Center. Management of
the Trust can not predict  whether the leases with  subsidiaries  of UHS,  which
have  renewal  options at existing  lease  rates,  or any of the  Trust's  other
leases,  will be renewed  at the end of their  initial  term or first  five-year
renewal term.


                                      F-12
<PAGE>


During  December  of 1993,  UHS,  the  former  lessee  and  operator  of Belmont
Community Hospital, sold the operations of the facility to THC-Chicago, Inc., an
indirect  wholly-owned  subsidiary  of Community  Psychiatric  Centers  ("CPC").
Concurrently,  the Trust purchased certain related real property from UHS for $1
million  in cash  and a note  payable  with a  carrying  value  of $1.4  million
(including  accrued  interest) at December 31, 2000. The note payable has a face
value of $1 million  and is due on  December  31,  2001.  The amount of interest
payable on this note is contingent upon the financial performance of this leased
facility and its estimated  fair value at the end of the initial lease term. The
Trust has  estimated  the total amount  payable under the terms of this note and
has discounted the payments to their net present value using a 6% rate.

The Trust's  officers are all employees of UHS and as of December 31, 2000,  the
Trust had no salaried  employees.  In 1999, 2000 and 2001 the Trustees awarded a
$50,000  bonus  to Mr.  Kirk E.  Gorman,  President,  Chief  Financial  Officer,
Secretary and Trustee of the Trust. Also, in 1999, 2000 and 2001 UHS agreed to a
$50,000 reduction in the advisory fee paid by the Trust.

(3)       Acquisitions and Dispositions

2000 - During  2000,  the Trust  added  four new  investments  to its  portfolio
consisting  of the  following:  (i) the  purchase of a medical  office  building
located in Danbury,  Connecticut  ($1.9 million of cash invested by the Trust in
addition to a $4.5 million  third-party,  non-recourse  mortgage obtained by the
Trust);  (ii) the  purchase  of a 95%  equity  interest  in a LLC that  owns and
operates Skypark Professional  Medical Building located in Torrance,  California
($1.8  million of cash  invested  by the Trust in the LLC which also  obtained a
$4.3 million third-party,  non-recourse  mortgage);  (iii) the purchase of a 98%
equity interest in a LLC that owns and operates the Centinela  Medical  Building
Complex located in Inglewood,  California  ($2.0 million of cash invested by the
Trust in the LLC which also  obtained a $7.5 million  third-party,  non-recourse
mortgage),  and;  (iv) the purchase of a 98% equity  interest in a LLC that owns
and operates the Summerlin  Hospital Medical Office Building II ($2.0 million of
cash  invested  by the  Trust in the LLC  which  also  obtained  a $9.8  million
third-party, non-recourse mortgage).

Additionally,  during  2000,  the Trust  committed  to invest  $1.9  million  in
exchange  for a 74% equity  interest  in a LLC that will  construct  and own the
Mid-Coast Hospital Medical Office Building located in Brunswick,  Maine (the LLC
will  obtain  a  $8.9  million  third-party,  non-recourse  mortgage)  and  also
committed to invest $1.9 million in exchange for a 75% equity  interest in a LLC
that will  construct and own the  Thunderbird  Paseo Medical Plaza II located in
Glendale, Arizona (the LLC will obtain a $3.4 million third-party,  non-recourse
mortgage).

Additionally,  during 2000, Meridell  Achievement Center,  Inc., a subsidiary of
UHS, exercised its option pursuant to the lease to purchase the leased property.
This sale was  completed in 2000,  resulting in a gain of $1.9 million  which is
included in the Trust's 2000 results of operations.



                                      F-13
<PAGE>



1999 - During  1999,  the Trust  added  five new  investments  to its  portfolio
consisting of the following:  (i) the purchase of a 95% equity interest in a LLC
that owns the Santa Fe Professional  Plaza located in Scottsdale,  Arizona ($1.2
million  of cash  invested  by the Trust in the LLC which  also  obtained a $1.9
million third-party,  non-recourse mortgage);  (ii) the purchase of a 98% equity
interest  in a LLC that owns the  Summerlin  Hospital  Medical  Office  Building
located in Las Vegas,  Nevada ($5.0 million of cash invested by the Trust in the
LLC which also  obtained a $8.3  million  third-party,  non-recourse  mortgage);
(iii) the  purchase  of a 75% equity  interest  in a LLC that owns the East Mesa
Medical  Center  located in Mesa,  Arizona ($1.6 million of cash invested by the
Trust in the LLC which also  obtained a $4.2 million  third-party,  non-recourse
mortgage); (iv) the purchase of the single-tenant the Orthopaedic Specialists of
Nevada  Building  ($1.6  million of cash  invested by the Trust),  and;  (v) the
purchase of a multi-tenant  medical office building located in Atlanta,  Georgia
($11.5 million of cash invested by the Trust).

1998 - During  1998,  the Trust  added  five new  investments  to its  portfolio
consisting of the following:  (i) the purchase of a 99% equity interest in a LLC
that owns Desert  Springs  Medical  Plaza  located in Las Vegas,  Nevada  ($10.1
million  of  cash  invested  by the  LLC  which  also  obtained  a $6.0  million
third-party,  non-recourse mortgage); (ii) the purchase of a 95% equity interest
in a LLC that owns the Edwards  Medical Plaza located in Phoenix,  Arizona ($3.8
million  of cash  invested  by the Trust in the LLC which  also  obtained a $7.6
million third-party,  non-recourse mortgage); (iii) the purchase of a 95% equity
interest  in a LLC  that  owns the  Pacifica  Palms  Medical  Plaza  located  in
Torrance,  California ($1.7 million of cash invested by the Trust in a LLC which
also  obtained a $3.0  million  third-party,  non-recourse  mortgage);  (iv) the
purchase  of a 48%  equity  interest  in a LLC that owns the St.  Jude  Heritage
Health Complex located in Fullerton,  California  ($1.4 million of cash invested
by the  Trust  in the  LLC  which  also  obtained  a $4.9  million  third-party,
non-recourse mortgage), and; (v) the purchase of an 80% equity interest in a LLC
that owns the Rio Rancho Medical Center,  a medical office  building  located in
Rio Rancho,  New Mexico ($900,000 of cash invested by the Trust in the LLC which
also obtained a $2.0 million third-party,  non-recourse mortgage). In connection
with the purchase of equity interest in LLCs that own the Pacifica Palms Medical
Plaza,  the St. Jude Heritage  Health Complex and the Rio Rancho Medical Center,
the  Trust  advanced  a total of $10.0  million  of  short  term  loans to three
separate LLCs.  The loans,  which earned  interest at a weighted  average annual
rate of 9% during 1998, were fully repaid to the Trust during 1999.

(4)  Leases

All of the Trust's leases are classified as operating  leases with initial terms
ranging from 5 to 15 years with up to six five-year  renewal options.  Under the
terms of the  leases,  the Trust  earns  fixed  monthly  base rents and may earn
periodic  additional  rents  (see Note 2).  The  additional  rent  payments  are
generally  computed as a percentage  of the  facility's  net patient  revenue or
Consumer Price Index  increase in excess of a base amount.  The base year amount
is typically net patient revenue for the first full year of the lease. The Trust
records these  additional rents on a pro rata basis over the annual lease period
if the  achievement  of the  specific  net  patient  revenue  target  amounts is
probable.





                                      F-14
<PAGE>



Minimum future base rents on non-cancelable leases are as follows (000s):

             2001                                       $ 21,991
             2002                                         14,961
             2003                                         14,028
             2004                                         12,329
             2005                                          8,355
             Later Years                                  18,070
                                                  ---------------
             Total Minimum Base Rents                   $ 89,734
                                                  ===============

Under the terms of the  hospital  leases,  the lessees  are  required to pay all
operating costs of the properties  including  property insurance and real estate
taxes.  Tenants of the medical  office  buildings  generally are required to pay
their  pro-rata  share of the  property's  operating  costs  above a  stipulated
amount.

(5)  Debt

The  Trust  has an  unsecured,  non-amortizing  $100  million  revolving  credit
agreement  (the  "Agreement"),  which  expires on June 24, 2003.  The  Agreement
provides for interest at the Trust's option,  at the certificate of deposit rate
plus .625% to 1.125%, the Eurodollar rate plus .50% to 1.125% or the prime rate.
A fee of .175% to .375% is paid on the unused  portion of this  commitment.  The
margins over the certificate of deposit rate, Eurodollar rate and the commitment
fee are based upon the  Trust's  debt to total  capital  ratio as defined by the
Agreement.  At December 31, 2000 the applicable  margin over the  certificate of
deposit  and  Eurodollar  rates  were  1.0%  and  .875%,  respectively,  and the
commitment fee was .25%.  There are no compensating  balance  requirements.  The
Agreement contains a provision whereby the commitments will be reduced by 50% of
the proceeds generated from any new equity offering.  The Trust had $6.5 million
of letters of credit  outstanding  against the Agreement.  At December 31, 2000,
the Trust had approximately  $17 million of available  borrowing  capacity.  The
book value of the amounts borrowed approximate fair market value.

Covenants relating to the revolving credit facility require the maintenance of a
minimum  tangible net worth and specified  financial  ratios,  limit the Trust's
ability  to incur  additional  debt,  limit the  aggregate  amount  of  mortgage
receivables and limit the Trust's ability to increase dividends in excess of 95%
of cash available for distribution, unless additional distributions are required
to comply with the applicable  section of the Internal  Revenue Code and related
regulations   governing  real  estate  investment  trusts.  The  Company  is  in
compliance with all their covenants at December 31, 2000.

The Trust has one mortgage with an outstanding balance of $4,472,000 at December
31,  2000.  The  mortgage  is  non-recourse  to the Trust and is  secured by the
Medical Center of Western  Connecticut.  The rate on the mortgage is 8.3% and it
matures on February 1, 2010.

The Trust has entered into interest rate swap  agreements  which are designed to
reduce the impact of changes in interest  rates on its floating  rate  revolving
credit  notes.  At  December  31,  2000,  the  Trust had five  outstanding  swap
agreements for notional  principal amounts of $35,580,000 which mature from May,
2001 through November,  2006. These swap agreements effectively fix the interest
rate on $35,580,000 of variable rate debt at 6.89% including the revolver spread
of



                                      F-15
<PAGE>

 .875%.  The interest rate swap  agreements  were entered into in anticipation of
certain  borrowing  transactions  made by the Trust.  The effective  rate on the
Trust's revolving credit notes including  commitment fees and interest rate swap
expense  was 7.10%,  6.2% and 6.7%  during  2000,  1999 and 1998,  respectively.
Additional interest expense/(income) recorded as a result of the Trust's hedging
activity,  which is included in the effective  interest  rates shown above,  was
($164,000),  $135,000 and  $136,000 in 2000,  1999 and 1998,  respectively.  The
Trust  is  exposed  to  credit  loss  in  the  event  of  nonperformance  by the
counterparties to the interest rate swap agreements.  These  counterparties  are
major financial institutions and the Trust does not anticipate nonperformance by
the  counterparties  which are rated A or better by Moody's  Investors  Service.
Termination  of the interest rate swaps at December 31, 2000 would have resulted
in payments from the counterparties to the Trust of approximately  $532,000. The
fair value of the interest  rate swap  agreements  at December 31, 2000 reflects
the  estimated  amounts  that the Trust  would pay or receive to  terminate  the
contracts and are based on quotes from the counterparties.

(6)  Dividends

Dividends of $1.84 per share were declared and paid in 2000, of which $1.694 per
share  was  ordinary  income  and  $.146  per  share  was a  return  of  capital
distribution.  Dividends of $1.81 per share were  declared and paid in 1999,  of
which $1.4664 per share was ordinary income and $.3436 per share was a return of
capital  distribution.  Dividends of $1.755 per share were  declared and paid in
1998,  of which $1.682 per share was  ordinary  income and $.073 per share was a
return of capital distribution.

(7)  Incentive Plans

In 1991,  the Trustees  adopted a share  compensation  plan for Trustees who are
neither  employees nor officers of the Trust ("Outside  Trustees").  Pursuant to
the plan, each Outside Trustee may elect to receive, in lieu of all or a portion
of the  quarterly  cash  compensation  for services as a Trustee,  shares of the
Trust based on the closing  price of the shares on the date of  issuance.  As of
December 31, 2000 no shares have been issued under the terms of this plan.

During  1992  and  1993,  the  Trust  granted  options   pursuant  to  the  1988
Non-Statutory  Stock  Option  Plan.  Pursuant  to the terms of this plan,  which
expired in December of 1998,  the granted  options  vested  ratably 25% per year
beginning  one year after the date of grant and expired ten years from the grant
date. As of December 31, 2000,  58,024 options were  outstanding and exercisable
at an aggregate purchase price of $973,137 or $16.77 per share.

During 1997, the Trust's Board of Trustees  approved the Universal Health Realty
Income Trust 1997  Incentive  Plan ("The Plan"),  which is a newly created stock
option  and  dividend  equivalents  rights  plan  for  employees  of the  Trust,
including officers and directors. There are 400,000 shares reserved for issuance
under The Plan.  All stock options were granted with an exercise  price equal to
the fair market value on the date of the grant. The options granted vest ratably
at 25% per year  beginning  one year after the date of grant,  and expire in ten
years.  Dividend  equivalent  rights  reduce  the  exercise  price  of the  1997
Incentive  Plan  options  by an  amount  equal to the  cash or  stock  dividends
distributed  subsequent to the date of grant.  Since inception  through December
31, 2000, there have been 105,000 stock options with dividend  equivalent rights
granted to officers  and  trustees  of the Trust.  The Trust  recorded  expenses
relating to the dividend equivalent rights of $184,000 in 2000, $132,000 in 1999
and  $123,000  in 1998.  As of December  31,  2000,  there were  53,750  options
exercisable  under The Plan with an


                                      F-16
<PAGE>

average  exercise  price,  adjusted  to give effect to the  dividend  equivalent
rights, of $12.62 per share.

SFAS No. 123 requires the Trust to disclose  pro-forma  net income and pro-forma
earnings  per share as if  compensation  expense  were  recognized  for  options
granted  beginning in 1995. Using this approach,  the Trust's net income and net
income per share would have been the pro forma amounts indicated below:

                                        (000s except per share amounts)
                              ---------------------------------------------
Year Ended December 31,              2000           1999             1998
---------------------------------------------------------------------------

Net Income:
  As Reported                      $16,256         $13,972         $14,337
  Pro Forma                        $16,077         $13,833         $14,201

Earnings Per Share:
  As Reported:
    Basic                           $ 1.81          $ 1.56          $ 1.60
    Diluted                         $ 1.81          $ 1.56          $ 1.60

  Pro Forma:
    Basic                           $ 1.79          $ 1.54          $ 1.59
    Diluted                         $ 1.79          $ 1.54          $ 1.58


The fair value of each option grant was estimated on the date of grant using the
Black-Scholes  option-pricing model with the following range of assumptions used
for the four option grants that  occurred  during 2000 and 1998. No options were
granted during 1999, therefore the following table is not applicable ("N/A") for
the year ended December 31, 1999:

   Year Ended December 31,       2000            1999          1998
------------------------------------------------------------------------------

Volatility                     14%-15%            N/A          15%
Interest rate                   5%-7%             N/A        5% - 6%
Expected life (years)            8.0              N/A          7.9
Forfeiture rate                   2%              N/A           2%

------------------------------------------------------------------------------

Stock-based  compensation  costs on a pro forma  basis  would have  reduced  net
income by $179,000 in 2000,  $139,000 in 1999 and $136,000 in 1998.  Because the
SFAS No. 123 method of accounting has not been applied to options  granted prior
to  January  1,  1995,   the  resulting  pro  forma   disclosures   may  not  be
representative of that to be expected in future years.




                                      F-17
<PAGE>



Stock  options to purchase  shares of  beneficial  interest have been granted to
officers  and  directors  of the Trust under  various  plans.  Information  with
respect to these options is summarized as follows:

<TABLE>
<CAPTION>
                                               Number of            Average Option              Range
         Outstanding Options                      Shares                Price                ( High-Low)
--------------------------------------- ----------------- ------ --------------------- ------------------------------
<S>                                             <C>                   <C>                <C>     <C>
     Balance, January 1, 1998                    128,024               $17.79                $18.625/$16.125
      Granted                                     10,000               $19.45                $21.4375/$18.375
      Exercised                                    (625)               $18.625                   $18.625
      Cancelled                                  (4,375)               $18.625                   $18.625

--------------------------------------- ----------------- ------ --------------------- ------------------------------
     Balance, January 1, 1999                    133,024               $17.88                $21.4375/$16.125
      Granted                                          0                 N/A                        N/A
      Exercised                                        0                 N/A                        N/A
      Cancelled                                        0                 N/A                        N/A

--------------------------------------- ----------------- ------ --------------------- ------------------------------
     Balance, January 1, 2000                    133,024               $17.88               $21.4375/$16.1250
      Granted                                     25,000               $14.75                    $14.75
      Exercised                                        0                 N/A                        N/A
      Cancelled                                        0                 N/A                        N/A

--------------------------------------- ----------------- ------ --------------------- ------------------------------
     Balance, December 31, 2000                  158,024               $17.38               $21.4375/$14.75
--------------------------------------- ----------------- ------ --------------------- ------------------------------
</TABLE>







                                      F-18
<PAGE>


(8)  Summarized Financial Information of Equity Affiliates

The following table represents summarized unaudited financial information of the
limited liability companies ("LLCs") accounted for by the equity method. Amounts
presented include investments in the following LLCs as of December 31, 2000:

Name of LLC                        Property Owned by LLC
------------------------------     -----------------------------------

DSMB Properties                    Desert Samaritan Hospital MOBs
DVMC Properties                    Desert Valley Medical Center MOBs
Parkvale Properties                Maryvale Samaritan Hospital MOBs
Suburban Properties                Suburban Medical Center MOBs
Litchvan Investments               Samaritan West Valley Medical Center
Paseo Medical Properties II        Thunderbird Paseo Medical Plaza
Willetta Medical Properties        Edwards Medical Plaza
DesMed                             Desert Springs Medical Plaza
PacPal Investments                 Pacifica Palms Medical Plaza
RioMed Investments                 Rio Rancho Medical Center
West Highland Holdings             St. Jude Heritage Health Complex
Santa Fe Scottsdale                Santa Fe Professional Plaza
Bayway Properties                  East Mesa Medical Center
653 Town Center Drive              Summerlin Hospital Medical Office Building
575 Hardy Investors                Centinela Medical Building Complex
653 Town Center Phase II           Summerlin Hospital Medical Office Building II
23560 Madison                      Skypark Professional Medical Building
Brunswick Associates (a.)          Mid Coast Hospital Medical Office Building
Paseo Medical Properties II (b.)   Thunderbird Paseo Medical Plaza II

(a.) As of December 31,  2000,  the Trust has not yet invested any funds in this
     project,  however,  the  Trust has  committed  to invest  $1.9  million  in
     exchange for a 74%  non-controlling  interest in a LLC that will  construct
     and own a medical office building in Brunswick, Maine.

(b.) As of December 31,  2000,  the Trust has not yet invested any funds in this
     project,  however,  the  Trust has  committed  to invest  $1.9  million  in
     exchange for a 75%  non-controlling  interest in a LLC that will  construct
     and own a medical office building in Glendale, Arizona.







                                      F-19
<PAGE>



                                                    December 31,
                                       ---------------------------------
                                              2000                 1999
                                       ---------------------------------
                                              (amounts in thousands)
   Net property                            $141,120             $116,599
   Other assets                              13,095                6,701
   Liabilities and third-party debt         105,732               82,456
   Equity                                    45,721               40,844
   UHT's share of equity                     39,164               35,748


<TABLE>
<CAPTION>
                                                   For the Year Ended December 31,
                                           -------------------------------------------------
                                              2000                1999               1998
                                           -------------------------------------------------
                                                         (amounts in thousands)
<S>                                             <C>              <C>              <C>
   Revenues                                     $22,227          $18,387          $12,942
   Operating expenses                             7,976            6,772            4,677
   Depreciation & amortization                    4,155            3,385            2,450
   Interest, net                                  6,797            5,436            4,133
   Net income                                     3,299            2,794            1,682
   UHT's share of net income before
   investment loss of LLC                         2,913            2,554            1,537
   Provision for investment loss of LLC          (1,139)              --               --
   UHT's share of net income after
   investment loss of LLC                         1,774            2,554            1,537
</TABLE>


As of December  31,  2000,  these LLCs had $98.8  million of  non-recourse  debt
payable  to   third-party   lending   institutions.   Aggregate   maturities  of
non-recourse debt payable to third-parties is as follows (000s):


                                          2001            $2,266
                                          2002             2,343
                                          2003             4,853
                                          2004            14,088
                                          2005             9,181
                                         Later            66,066
                                                -----------------
                                         Total           $98,797
                                                =================






                                      F-20
<PAGE>



(9)  Quarterly  Results  (unaudited  - amounts  in  thousands,  except per share
     amounts)

<TABLE>
<CAPTION>
                                                     2000
-------------------------------------------------------------------------------------------------------------------
                                           First           Second          Third           Fourth
                                          Quarter         Quarter         Quarter         Quarter           Total
-------------------------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>             <C>             <C>              <C>
Revenues                                  $6,685          $6,728          $6,901          $7,001           $27,315

Net Income                                $3,916          $3,800          $3,866          $4,674           $16,256

Earnings Per Share-Basic                   $0.44           $0.42           $0.43           $0.52             $1.81

Earnings Per Share-Diluted                 $0.44           $0.42           $0.43           $0.52             $1.81
</TABLE>


A wholly-owned  subsidiary of UHS exercised its option  pursuant to the lease to
purchase  the leased  property of a  behavioral  health care  facility  upon the
December 31, 2000  expiration of the initial  lease.  This sale was completed in
December,  2000 for cash proceeds to the Trust of $5,450,000 resulting in a gain
of  approximately  $1.9 million,  or $.21 per basic and diluted share,  which is
included  in  the  Trust's   fourth  quarter  of  2000  results  of  operations.
Additionally,  during the fourth quarter of 2000, the Trust recorded a provision
for investment  loss of $1.1 million,  or $.13 per basic and diluted  share,  to
reflect its share of an asset  impairment  charge recorded at a LLC which owns a
medical office complex located in Phoenix, Arizona.



<TABLE>
<CAPTION>
                                                         1999
-------------------------------------------------------------------------------------------------------------------
                                           First           Second          Third           Fourth
                                          Quarter         Quarter         Quarter         Quarter           Total
-------------------------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>             <C>             <C>              <C>
Revenues                                  $6,056          $5,885          $5,782          $6,142           $23,865

Net Income                                $3,928          $3,811          $2,266          $3,967           $13,972

Earnings Per Share-Basic                   $0.44           $0.43           $0.25           $0.44             $1.56

Earnings Per Share-Diluted                 $0.44           $0.42           $0.25           $0.44             $1.56
</TABLE>

During  the third  quarter  of 1999,  the Trust  recorded  a net  provision  for
investment loss of $1.6 million or $.18 per share, (basic and diluted). Included
in the provision for investment loss was a non-cash asset  impairment  charge of
$2.6  million to reduce  the  carrying-value  of a  behavioral  health  services
facility  which was sold to UHS during the fourth  quarter of 2000, as mentioned
above.  The provision for investment loss was partially offset by a $1.0 million
cash gain realized on the sale of Lakeshore Hospital.







                                      F-21


<PAGE>
<TABLE>
<CAPTION>
                                             Universal Health Realty Income Trust
                                       Schedule II - Valuation and Qualifying Accounts
                                       -----------------------------------------------
                                                    (amounts in thousands)




                                                  Balance at         Charged to                                    Balance
                                                  beginning           costs and                                    at end
                  Description                     of period           expenses               Other                of period
                  -----------                   ---------------    ----------------     -----------------      ----------------
<S>                                                        <C>               <C>                  <C>            <C>

Reserve for Investment Losses:

    Year ended December 31, 2000                          -                   -                    -                  -
                                                ===============    ================     =================      ================

    Year ended December 31, 1999                          $116              $1,583   (b)         ($1,699)   (a)       -
                                                ===============    ================     =================      ================

    Year ended December 31, 1998                           $89                $300                 ($273)   (a)           $116
                                                ===============    ================     =================      ================








(a)  Amounts charged against the reserve.

(b) Consists of the following:
                Provision for investment loss recorded on Behavioral Health Services facility                           $2,581
                Cash proceeds generated from sale of Lake Shore Hospital                                                  (998)
                                                                                                               ----------------
                                                                                                                        $1,583
                                                                                                               ================


</TABLE>




                                      F-22




<PAGE>


<TABLE>
<CAPTION>
                                                            Schedule III
                                                Universal Health Realty Income Trust
                                    Real Estate and Accumulated Depreciation - December 31, 2000
                                                       (amounts in thousands)

                                                Net
                          Initial Cost to       Cost
                          Universal Health   capitalized/        Gross amount                          Date of
                         Realty Income Trust   divested           at which                           construction
                                              subsequent       carried at close                         or most
                                            to acquisition       of period                              recent
                                                                                        Accumulated    significant          Average
                                                                                        Depreciation   expansion             Deprec-
                                   Building    Land &              Building &              as of          or       Date      iable
Description                Land    & Improv.   Improv.     Land     Improv.     Total  Dec. 31, 2000  renovation  Acquired   Life
<S>                       <C>        <C>       <C>       <C>        <C>       <C>         <C>            <C>      <C>      <C>
Virtue Street Pavilion    $1,825     $9,445          -    $1,770     $9,445    $11,215     $3,784         1975     1986    35 Years
Chalmette Medical Center   2,000      7,473     $3,148     2,000     10,621     12,621      2,917         1999     1988    34 Years
   Chalmette, Louisiana

Inland Valley Regional
 Medical Center
   Wildomar, California    2,050     10,701      2,868     2,050     13,569     15,619      3,785         1986     1986    43 Years

McAllen Medical Center
   McAllen, Texas          4,720     31,442     10,188     6,281     40,069     46,350     11,153         1994     1986    42 Years

Wellington Regional
 Medical Center
   West Palm Beach,
   Florida                 1,190     14,652      4,822     1,663     19,001     20,664      5,249         1986     1986    42 Years

The Bridgeway
   North Little Rock,
   Arkansas                  150      5,395        499       150      5,894      6,044      2,342         1983     1986    35 Years


Tri-State Rehabilitation
 Hospital
   Evansville, Indiana       500      6,945      1,062       500      8,007      8,507      2,225         1993     1989    40 Years

Vencor Hospital - Chicago
   Chicago, Illinois         158      6,404      1,837       158      8,241      8,399      4,218         1993     1986    25 Years

Fresno-Herndon
 Medical Plaza
   Fresno, California      1,073      5,266         24     1,073      5,290      6,363        716         1992     1994    45 Years

Family Doctor's Medical
 Office Building
   Shreveport, Louisiana      54      1,526        494        54      2,020      2,074        236         1991     1995    45 Years

Kelsey-Seybold Clinic
 at King's Crossing          439      1,618          6       439      1,624      2,063        189         1995     1995    45 Years
Professional Center
 at King's Crossing          439      1,837         43       439      1,880      2,319        212         1995     1995    45 Years
   Kingwood, Texas

Chesterbrook Academy
   Audubon, Pennsylvania     307        996          -       307        996      1,303        103         1996     1996    45 Years

Carefree Learning Center
   New Britain,
   Pennsylvania              250        744          -       250        744        994         77         1991     1996    45 Years

Carefree Learning Center
   Uwchlan, Pennsylvania     180        815          -       180        815        995         84         1992     1996    45 Years

Carefree Learning Center
   Newtown, Pennsylvania     195        749          -       195        749        944         78         1992     1996    45 Years

The Southern Crescent
   Center                  1,130      5,092         21     1,130      5,113      6,243        514         1994     1996    45 Years
The Southern Crescent
   Center II                   -         -       5,218       806      4,412      5,218         80         1998     1998    35 Years
   Riverdale, Georgia

The Cypresswood
  Professional Center
   Spring, Texas             573      3,842        187       573      4,029      4,602        404         1997     1997    35 Years

Orthopaedic Specialists
 of Nevada Building
   Las Vegas, Nevada           -      1,579          -         -      1,579      1,579         79         1999     1999    25 Years

Sheffield Medical
  Building
   Atlanta, Georgia        1,760      9,766       $159     1,760      9,925     11,685        461         1999     1999    25 Years

Medical Center of Western
 Connecticut -
 Building 73
   Danbury, Connecticut    1,151      5,176        $44     1,151      5,220      6,371        174         2000     2000    30 Years
                         -------   --------    -------   -------   --------   --------    -------
                TOTALS   $20,144   $131,463    $30,620   $22,929   $159,243   $182,172    $39,080
                         =======   ========    =======   =======   ========   ========    =======
</TABLE>



                                      F-23


<PAGE>
                      Universal Health Realty Income Trust
                              Notes to Schedule III
                                December 31, 2000
                                -----------------
                              (amount in thousands)



(1) Reconciliation of Real Estate Properties


The following table  reconciles the Real Estate  Properties from January 1, 1998
to December 31, 2000:



<TABLE>
<CAPTION>
                                                                    2000                    1999                     1998
                                                              -----------------       ------------------       -----------------
<S>                                                                 <C>                      <C>                     <C>
       Balance at January 1                                           $177,920                 $163,932                $163,855
       Additions and acquisitions                                        9,702                   16,639                     158
       SFAS 121 asset write-down                                            --                   (2,581)                     --
       Reclasses from construction in progress                           1,240                       --                      --
       Dispositions                                                     (6,690)                     (70)                    (81)
                                                              -----------------       ------------------       -----------------
       Balance at December 31                                         $182,172                 $177,920                $163,932
                                                              =================       ==================       =================



(2)  Reconciliation of Accumulated Depreciation


The following table reconciles the Accumulated Depreciation from January 1, 1998
to December 31, 2000:



                                                                    2000                    1999                     1998
                                                              -----------------       ------------------       -----------------
       Balance at January 1                                            $37,800                  $34,006                 $30,280
       Current year depreciation expense                                 4,414                    3,832                   3,807
       Dispositions                                                     (3,134)                     (38)                    (81)
                                                              -----------------       ------------------       -----------------
       Balance at December 31                                          $39,080                  $37,800                 $34,006
                                                              =================       ==================       =================
</TABLE>








The aggregate cost basis and net book value of the properties for Federal income
tax  purposes  at  December  31,  2000  are   approximately   $167,000,000   and
$128,000,000, respectively.



                                      F-24