-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SQx0iDgAYdp6HSUe4uLMvjqKXplSPz2Wsh05SVg7Bvet0vzDCMRSJo4l7YVGoLgP 2lvi8jOjWoMQcZQWVYuqRQ== 0000765880-98-000027.txt : 19980619 0000765880-98-000027.hdr.sgml : 19980618 ACCESSION NUMBER: 0000765880-98-000027 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980604 ITEM INFORMATION: FILED AS OF DATE: 19980617 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTH CARE PROPERTY INVESTORS INC CENTRAL INDEX KEY: 0000765880 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 330091377 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08895 FILM NUMBER: 98649983 BUSINESS ADDRESS: STREET 1: 4675 MACARTHUR COURT STREET 2: SUITE 900 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 9492210600 MAIL ADDRESS: STREET 1: 4675 MACARTHUR COURT STREET 2: SUITE 900 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 - -----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R59y0PXPm2YHKn6+Qxjss3BdIdqEmHyrEuW8tSm3yNTU/eNcO0JWKq9DlptXKXlD 1CXOtsg7q3a/rGHezMFQjg== 0000765880-98-000027.txt : 19980618 0000765880-98-000027.hdr.sgml : 19980618 ACCESSION NUMBER: 0000765880-98-000027 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980604 ITEM INFORMATION: FILED AS OF DATE: 19980617 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTH CARE PROPERTY INVESTORS INC CENTRAL INDEX KEY: 0000765880 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 330091377 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08895 FILM NUMBER: 98649983 BUSINESS ADDRESS: STREET 1: 4675 MACARTHUR COURT STREET 2: SUITE 900 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 9492210600 MAIL ADDRESS: STREET 1: 4675 MACARTHUR COURT STREET 2: SUITE 900 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) of the SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) June 17, 1998 (January 20, 1998) - - -------------------------------------------------------------------------------- HEALTH CARE PROPERTY INVESTORS, INC. (Exact name of registrant as specified in its charter) - - --------------------------------------------------------------------------------
Maryland 1-8895 33-0091377 (State or Other Jurisdiction of (Commission (I.R.S. Employer Incorporation of Organization) File Number) Identification No.)
4675 MacArthur Court, 9th Floor Newport Beach, CA 92660 (Address of principal executive offices) (949) 221-0600 (Registrant's telephone number, including area code) ITEM 2. ACQUISITION OF ASSETS During the period from January 1, 1998 through June 4, 1998, Health Care Property Investors, Inc. and its affiliates and subsidiaries (the "Company") acquired from unrelated parties nine long-term care ("LTC") facilities and 33 clinics ("CLNs") in 11 separate transactions at an aggregate purchase price of approximately $99,800,000, comprised of $92,100,000 of acquisitions, and $7,700,000 of equity investments. The LTC facilities are accounted for as equity investments in unconsolidated joint ventures on the Company's books. The Company provided the capital and mortgage loans to the foregoing joint ventures, and has an 80% equity interest in the joint ventures, but does not have voting rights or control over the management of the joint venture. The purchase price on these facilities includes only the equity capital invested by the Company and does not include the mortgage loans receivable. The LTC facilities and 18 of the clinics were, concurrently with their acquisition, leased on a triple-net basis to ten different operators under terms generally similar to the Company's existing leases. The other 15 clinics were leased to five different operators on a modified gross basis under which the Company may be responsible for property taxes, repairs and maintenance and/or insurance on those properties. Each transaction was initially funded by bank borrowings on the Company's revolving bank lines of credit and by cash on hand. The Company repaid approximately $23 million and $197 million on its revolving bank lines of credit with the proceeds of a common stock offering during April 1998 and a long-term debt offering during June 1998, respectively.
Facility Acquisition Purchase Facility Name City State Type Units (1) Date Price - - ---------------------------------------------------------------------------------------------------------------------------- Ponca City Nursing Home Ponca City OK LTC (2) 157 Jan 20, 1998 $1,117,000 Highland Nursing Home Ponca City OK LTC (2) 97 Jan 20, 1998 691,000 Central Oklahoma Christian Home Oklahoma OK LTC (2) 148 Feb 03, 1998 910,000 Parkview Nursing Home Shawnee OK LTC (2) 78 Mar 11, 1998 587,000 Seminole Pioneer Nursing Home Seminole OK LTC (2) 146 Mar 11, 1998 1,099,000 Shawnee Colonial Estates Shawnee OK LTC (2) 165 Mar 11, 1998 1,242,000 Okemah Pioneer Nursing Home Okemah OK LTC (2) 76 Apr 01, 1998 572,000 Premier Medical Group Clarksville TN CLN Apr 08, 1998 7,645,000 College Park Atlanta GA CLN May 01, 1998 4,155,800 Marietta Atlanta GA CLN May 01, 1998 1,656,250 Pleasantdale Atlanta GA CLN May 01, 1998 3,235,610 Triangle Cary NC CLN May 01, 1998 2,056,880 Abbey Place Charlotte NC CLN May 01, 1998 3,616,000 Pineville Charlotte NC CLN May 01, 1998 2,293,888 Park Meadows Littleton CO CLN May 01, 1998 3,100,000 Lane Avenue Jacksonville FL CLN May 01, 1998 1,269,270 Regency Square Jacksonville FL CLN May 01, 1998 1,763,970 San Jose Jacksonville FL CLN May 01, 1998 1,333,690 University Jacksonville FL CLN May 01, 1998 2,208,460 Raleigh Memphis TN CLN May 01, 1998 1,358,600 Edmond Oklahoma City OK CLN May 01, 1998 500,000 Midwest Oklahoma City OK CLN May 01, 1998 1,565,000 Norman Oklahoma City OK CLN May 01, 1998 1,350,000 South Hills Oklahoma City OK CLN May 01, 1998 1,709,000 Triangle Raleigh NC CLN May 01, 1998 2,058,250 Columbus Columbus OH CLN May 01, 1998 786,000 Premier Subacute and Rehab Center Statesboro GA LTC (2) 60 May 01, 1998 587,000 Kissimmee Orlando FL CLN May 11, 1998 2,630,975 Maitland Orlando FL CLN May 11, 1998 3,988,914 Quadrangle Orlando FL CLN May 11, 1998 3,507,936 Sandlake Orlando FL CLN May 11, 1998 3,452,325 Brandon Tampa FL CLN May 11, 1998 1,893,400 University Tampa FL CLN May 11, 1998 2,087,925 Medical Arts Buildings Minot ND CLN May 27, 1998 11,200,000 River Oaks Care Center Ft. Worth TX LTC (2) 124 Jun 01, 1998 890,000 Intercontinental/Airport Building Houston TX CLN Jun 04, 1998 5,272,262 Harwin Houston TX CLN Jun 04, 1998 3,304,430 Louetta Houston TX CLN Jun 04, 1998 3,260,515 Windfern Houston TX CLN Jun 04, 1998 1,477,137 Kingwood Kingwood TX CLN Jun 04, 1998 1,961,341 Pasadena Pasadena TX CLN Jun 04, 1998 3,205,668 Stafford Stafford TX CLN Jun 04, 1998 1,205,801 ----- ------------ 1,051 $ 99,805,297 ===== ============
- - ---------------------------- (1) The clinics encompass approximately 730,500 square feet. (2) These properties are owned by unconsolidated joint ventures. The amount included in the purchase price represents HCPI's capital investment in the joint venture and does not include any mortgage loans receivable from the joint venture. The Company believes these acquisitions are consistent with the Company's historical business strategy of acquiring and concurrently leasing health care facilities. In assessing the facilities, the Company considered the type, location, age, design and physical condition of the facilities acquired, as well as historical, if applicable, and projected operating results of the health care operations conducted at the facilities. Additionally, the Company considers the operating ability, financial condition and reputation of the operator to which the acquired facilities are to be leased. The Company, after reasonable inquiry, is not aware of any material factors that would cause the financial information reported not to be necessarily indicative of future operating results, although no assurance can be given by the Company regarding actual future operating results. The Company intends to continue the current use of each property. Although no single acquisition is considered a "significant acquisition" pursuant to the rules governing the reporting of transactions on Form 8-K and under Rule 3-14 of Regulation S-X, these acquisitions in the aggregate, may be considered to be material in nature. Certain audited pro forma financial information concerning these properties is provided in Item 7 of this Current Report on Form 8-K. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS Historical financial information, pursuant to Rule 3-14 of Regulation S-X, for the health care operations of the acquired facilities is not presented because the related operating information for such facilities generally would not be meaningful. This is due to the nature of modified gross and triple-net leased real estate operations. Alternatively, the Company has presented audited pro forma operating information for each of the acquired properties as if the acquired properties had been owned by the Company since January 1, 1997. (a)(3) - Audited pro forma statements of operations for the acquired facilities for the year ended December 31, 1997. (b)(1) - Unaudited pro forma balance sheet as of March 31, 1998 for the Company after giving effect to the acquisition of the facilities. - Pro forma statement of operations for the Company after giving effect to the acquisition of the facilities for the three-month period ended March 31, 1998. - Pro forma statement of operations for the Company after giving effect to the acquisition of the facilities for the year ended December 31, 1997. (c) Consent of Arthur Andersen LLP. REPORT OF THE INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders and Directors, Health Care Property Investors, Inc: We have examined the pro forma adjustments reflecting the transactions described in Note 1 and the application of those adjustments to the assembly of the accompanying pro forma statements of operations of the properties acquired by Health Care Property Investors, Inc. during the period January 1, 1998 to June 4, 1998 as indicated in Item 2 of this Form 8-K (collectively "the Acquired Properties") for the year ended December 31, 1997. The historical statements of operations are omitted since substantially all historical amounts are not relevant on a pro forma basis. The pro forma adjustments are based upon management's assumptions described in Note 2. Our examination was made in accordance with standards established by the American Institute of Certified Public Accountants and, accordingly, included such procedures as we considered necessary in the circumstances. The objective of this pro forma financial information is to show what the significant effects on the historical financial information might have been had the transactions occurred at an earlier date. However, the pro forma statements of operations are not necessarily indicative of the results of operations that would have been attained had the above-mentioned transactions actually occurred earlier. In our opinion, management's assumptions provide a reasonable basis for presenting the significant effects directly attributable to the above-mentioned transactions described in Note 1, the related pro forma adjustments give appropriate effect to those assumptions, and the pro forma statements of operations for the year ended December 31, 1997 reflect the proper application of those adjustments to the historical statement of operations amounts. Arthur Andersen LLP Los Angeles, California June 17, 1998 PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
Central Ponca City Highland Oklahoma Parkview Seminole Shawnee (A) (A) (A) (A) (A) (A) ---------- --------- --------- --------- --------- --------- Revenues: Base Rental Income $ --- $ --- $ --- $ --- $ --- $ --- Interest and Other Income (1) 242,000 149,000 192,000 126,000 236,000 267,000 --------- --------- --------- --------- --------- --------- 242,000 149,000 192,000 126,000 236,000 267,000 --------- --------- --------- --------- --------- --------- Expenses: Interest 224,520 138,780 181,800 118,740 222,300 251,220 Depreciation --- --- --- --- --- --- Other Operating Expenses --- --- --- --- --- --- --------- --------- --------- --------- --------- --------- 224,520 138,780 181,800 118,740 222,300 251,220 --------- --------- --------- --------- --------- --------- Net Income (Loss) $ 17,480 $ 10,220 $ 10,200 $ 7,260 $ 13,700 $ 15,780 ========= ========= ========= ========= ========= =========
See accompanying notes. (1) Includes interest on mortgage loans receivable. (A) These LTC facilities are owned by unconsolidated joint ventures. For purposes of this pro forma it is assumed that the Company breaks even on the equity investment in these joint ventures during the first year of operation and makes a profit on the mortgage loans receivable. PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
Premier Okemah Subacute River Oaks (A) (A) (A) ---------- --------- --------- Revenues: Base Rental Income $ --- $ --- $ --- Interest and Other Income (1) 123,000 123,000 185,000 --------- --------- -------- 123,000 123,000 185,000 --------- --------- -------- Expenses: Interest 115,740 117,360 177,600 Depreciation --- --- --- Other Operating Expenses --- --- --- --------- --------- --------- 115,740 117,360 177,600 --------- --------- --------- Net Income (Loss) $ 7,260 $ 5,640 $ 7,400 ========= ========= =========
See Accompanying Notes (1) Includes interest on mortgage loans receivable. (A) These LTC facilities are owned by unconsolidated joint ventures. For purposes of this pro forma it is assumed that the Company breaks even on the equity investment in these joint ventures during the first year of operation and makes a profit on the mortgage loans receivable. PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
College Triangle Premier Park Marietta Pleasantdale Cary --------- --------- --------- ------------ --------- Revenues: Base Rental Income $ 738,180 $ 531,847 $ 188,922 $ 380,076 $ 258,129 Interest and Other Income (1) --- --- --- --- --- --------- -------- --------- --------- --------- 738,180 531,847 188,922 380,076 258,129 --------- -------- --------- --------- --------- Expenses: Interest 458,700 249,348 99,375 194,137 123,413 Depreciation 184,286 101,594 27,321 69,589 33,054 Other Operating Expenses --- 49,820 18,657 35,111 --- --------- --------- --------- --------- --------- 642,986 400,762 145,353 298,837 156,467 --------- --------- --------- --------- --------- Net Income (Loss) $ 95,194 $ 131,085 $ 43,569 $ 81,239 $ 101,662 ========= ========= ========= ========= =========
See Accompanying Notes (1) Includes interest on mortgage loans receivable. PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
Abbey Park Lane Regency Place Pineville Meadows Avenue Square San Jose ---------- --------- --------- -------- ----------- --------- Revenues: Base Rental Income $ 380,000 $ 253,840 $ 316,014 $ 221,991 $ 180,699 $ 136,517 Interest and Other Income (1) --- --- --- --- --- --- --------- --------- -------- --------- --------- --------- 380,000 253,840 316,014 221,991 180,699 136,517 --------- --------- -------- --------- --------- --------- Expenses: Interest 216,960 137,633 186,000 76,156 105,838 80,021 Depreciation 66,171 34,111 67,143 36,265 34,685 23,820 Other Operating Expenses --- --- --- --- --- --- --------- --------- --------- --------- --------- --------- 283,131 171,744 253,143 112,421 140,523 103,841 --------- --------- --------- --------- --------- --------- Net Income (Loss) $ 96,869 $ 82,096 $ 62,871 $ 109,570 $ 40,176 $ 32,676 ========= ========= ========= ========= ========= =========
See Accompanying Notes (1) Includes interest on mortgage loans receivable. PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
University South Jacksonville Raleigh Edmond Midwest Norman Hills ---------- --------- --------- -------- ----------- --------- Revenues: Base Rental Income $ 232,829 $ 181,323 $ 58,519 $ 177,582 $ 151,990 $ 194,993 Interest and Other Income (1) --- --- --- --- --- --- --------- --------- -------- --------- --------- --------- 232,829 181,323 58,519 177,582 151,990 194,993 --------- --------- -------- --------- --------- --------- Expenses: Interest 132,508 81,516 30,000 93,900 81,000 102,540 Depreciation 45,956 27,389 11,429 34,714 30,000 28,829 Other Operating Expenses --- 19,649 9,725 27,038 27,045 38,903 --------- --------- --------- --------- --------- --------- 178,464 128,554 51,154 155,652 138,045 170,272 --------- --------- --------- --------- --------- --------- Net Income (Loss) $ 54,365 $ 52,769 $ 7,365 $ 21,930 $ 13,945 $ 24,721 ========= ========= ========= ========= ========= =========
See Accompanying Notes (1) Includes interest on mortgage loans receivable. PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
Triangle Raleigh Columbus(2) Kissimmee Maitland Quadrangle ---------- --------- --------- -------- ---------- Revenues: Base Rental Income $ 247,804 $ --- $ 256,704 $ 394,381 $ 340,931 Interest and Other Income (1) --- --- --- --- --- --------- --------- --------- --------- --------- 247,804 --- 256,704 394,381 340,931 --------- --------- --------- --------- --------- Expenses: Interest 123,495 47,160 157,859 239,335 210,476 Depreciation 37,379 16,743 68,028 42,540 71,655 Other Operating Expenses --- --- 27,020 56,384 46,554 --------- --------- --------- --------- --------- 160,874 63,903 252,907 338,259 328,685 --------- --------- --------- --------- --------- Net Income (Loss) $ 86,930 $ (63,903) $ 3,797 $ 56,122 $ 12,246 ========= ========= ========= ========= =========
See Accompanying Notes (1) Includes interest on mortgage loans receivable. (2) This facility is currently vacant. PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
University Medical Sandlake Brandon Tampa Arts ---------- --------- --------- --------- Revenues: Base Rental Income $ 364,772 $ 232,639 $ 250,614 $1,376,059 Interest and Other Income (1) --- --- --- --- --------- --------- -------- --------- 364,772 232,639 250,614 1,376,059 --------- --------- -------- --------- Expenses: Interest 207,140 113,604 125,276 672,000 Depreciation 58,638 38,383 35,369 306,286 Other Operating Expenses 54,904 31,329 35,006 --- --------- --------- --------- --------- 320,682 183,316 195,651 978,286 --------- --------- --------- --------- Net Income (Loss) $ 44,090 $ 49,323 $ 54,963 $ 397,773 ========= ========= ========= =========
See Accompanying Notes (1) Includes interest on mortgage loans receivable. PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
Inter- Continental Harwin Louetta Windfern Kingwood --------- --------- --------- ---------- --------- Revenues: Base Rental Income $ 536,886 $ 339,456 $ 325,971 $ 236,670 $ 191,313 Interest and Other Income (1) --- --- --- --- --- --------- -------- --------- --------- --------- 536,886 339,456 325,971 236,670 191,313 --------- -------- --------- --------- --------- Expenses: Interest 316,336 198,266 195,631 88,628 117,680 Depreciation 136,350 78,698 70,300 26,490 43,181 Other Operating Expenses --- --- --- --- --- --------- --------- --------- --------- --------- 452,686 276,964 265,931 115,118 160,861 --------- --------- --------- --------- --------- Net Income (Loss) $ 84,200 $ 62,492 $ 60,040 $ 121,552 $ 30,452 ========= ========= ========= ========= ========= See Accompanying Notes
(1) Includes interest on mortgage loans receivable. PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
Pasadena Stafford Total ---------- --------- ------------ Revenues: Base Rental Income $ 323,890 $ 152,139 $10,153,680 Interest and Other Income (1) --- --- 1,643,000 --------- --------- ----------- 323,890 152,139 11,796,680 --------- --------- ----------- Expenses: Interest 192,340 72,348 7,074,679 Depreciation 80,162 25,880 1,992,438 Other Operating Expenses --- --- 477,145 --------- --------- ----------- 272,502 98,228 9,544,262 --------- --------- ----------- Net Income (Loss) $ 51,388 $ 53,911 $ 2,252,418 ========= ========= ===========
See Accompanying Notes (1) Includes interest on mortgage loans receivable. FOOTNOTES TO PRO FORMA STATEMENTS OF OPERATIONS NOTE 1: Health Care Property Investors, Inc. and its affiliates and subsidiaries (the "Company") acquired nine long-term care ("LTC") facilities and 33 clinics in 11 separate transactions at an aggregate purchase price of approximately $99,800,000, comprised of $92,100,000 of acquisitions and $7,700,000 of equity investments. The LTC facilities are accounted for as equity investments in unconsolidated joint ventures on the Company's books. The Company provided the capital and mortgage loans to the joint ventures , and has an 80% equity interest in the joint ventures, but does not have voting rights or control over the management of the joint venture. The purchase price on these facilities includes only the equity capital invested by the Company and does not include the mortgage loans receivable. The LTC facilities, as well as 18 of the clinics were leased to 10 different operators under triple-net leases generally similar to the Company's existing leases and are accounted for as operating leases. The LTC leases have initial terms of 12-23 years. The remaining 15 clinics were leased to five different operators on a modified gross basis under which the Company may be responsible for the property tax and insurance payments and repairs and maintenance. The clinic leases have initial terms of 1-10 years. The Company earns fixed monthly base rental income and may earn periodic additional rents. The additional payments are generally computed based upon increases in the Consumer Price Index or as a percentage of facility net patient revenues in excess of base amounts. Additional rents generally commence in the second year of the leases. With the exception of the modified gross leased clinics, under terms of the leases, the lessees are responsible for all maintenance, repairs, taxes and insurance on the leased properties. The pro forma statements of operations reflect the acquisitions of the properties as if they had been owned since January 1, 1997. NOTE 2: The pro forma base rental income is based upon the monthly minimum rents specified in the leases. No additional rent amounts are assumed for purposes of the pro forma statements of operations based upon the terms of the lease. Pro forma interest and other income includes the first year of interest due on mortgage loans receivable. This category would generally also include the Company's share of income from the unconsolidated joint ventures. However, for purposes of this pro forma, although the Company will receive preferential distributions from these joint ventures during the year, it is assumed that these joint ventures will break even. Therefore, there is no joint venture income recognized in the pro forma statements of operations. Pro forma depreciation is based upon the purchase prices of the facilities being allocated to building and depreciated over 35 years. Pro forma interest expense is calculated using an interest rate of 6.00%, which is the Company's weighted average borrowing rate for the year to date on its unsecured revolving lines of credit. The Company has two unsecured lines of credit, one for $100,000,000 which expires on October 22, 2002 and one for $50,000,000 which expires October 22, 1998. The Company also arranges for additional borrowings on an as-needed basis with various banks. The Company initially uses these short-term borrowings to fund purchases, but replaces these borrowings with periodic long-term debt and equity offerings. The Company repaid approximately $23 million and $197 million on the line of credit borrowings with the proceeds of a common stock offering during April 1998 and a long-term debt offering during June 1998, respectively. Accordingly, the actual interest expense resulting from the acquisitions of the facilities may vary. No pro forma operating expenses are included other than for the clinics under modified gross leases because: (1) such amounts are expected to be immaterial, and (2) the Company does not expect to add additional staff as a result of the transactions described in Note 1 above. The pro forma amounts for the clinics are based upon current actual and estimated operating expenses. NOTE 3: The preparation of financial statements requires management to make estimates and assumptions that affect the revenues and expenses during the reporting period. Actual results could differ from those estimates. PRO FORMA FINANCIAL INFORMATION The following Pro Forma Balance Sheet as of March 31, 1998 has been prepared to reflect the acquisition of 36 facilities during the period from April 1, 1998 to June 4, 1998 and the adjustments described in the accompanying notes. The following unaudited Pro Forma Statements of Operations for the three months ended March 31, 1998 and for the year ended December 31, 1997 have been prepared to reflect the acquisition of 42 facilities during the period from January 1, 1998 through June 4, 1998 (the "Acquired Facilities") and the adjustments described in the accompanying notes. The pro forma financial information is based on the historical financial statements of Health Care Property Investors, Inc. in the Company's Form 10-Q for the period ended March 31, 1998 and the other financial information in the Company's 1997 Annual Report to Shareholders on Form 10-K, and should be read in conjunction with those financial statements and the notes thereto. The Pro Forma Balance Sheet was prepared as if the 36 facilities acquired after March 31, 1998 were purchased on March 31, 1998. The Pro Forma Statements of Operations were prepared as if the Acquired Facilities were purchased as of January 1, 1997. The combined pro forma financial information is not necessarily indicative of the financial position or results of operations which actually would have occurred if such transactions had been consummated on the dates described, nor does it purport to represent the Company's future financial position or results of operations. HEALTH CARE PROPERTY INVESTORS, INC. UNAUDITED PRO FORMA BALANCE SHEET MARCH 31, 1998 (IN THOUSANDS)
Pro Forma March 31, March 31, 1998 Adjustments 1998 ---------- ----------- --------- ASSETS Real Estate Investments Buildings and Improvements $ 859,507 $ 69,735 $ 929,242 Accumulated Depreciation (177,196) --- (177,196) --------- --------- ---------- 682,311 69,735 752,046 Construction in Progress 7,998 --- 7,998 Land 100,942 22,375 123,317 --------- --------- ---------- 791,251 92,110 883,361 Loans Receivable 127,003 4,796 131,799 Investments in and Advances to Partnerships 33,150 2,049 35,199 Other Assets 11,600 --- 11,600 Cash and Cash Equivalents 3,185 --- 3,185 --------- --------- ---------- TOTAL ASSETS $ 966,189 $ 98,955 $1,065,144 --------- --------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY Bank Notes Payable $ 82,000 $ 98,955 $ 180,955 Senior Notes Payable 284,970 --- 284,970 Convertible Subordinated Notes Payable 100,000 --- 100,000 Mortgage Notes Payable 10,582 --- 10,582 Accounts Payable, Accrued Liabilities and Deferred Income 26,751 --- 26,751 Minority Interests in Partnerships 21,479 --- 21,479 Stockholders' Equity: Preferred Stock 57,810 --- 57,810 Common Stock 30,246 --- 30,246 Additional Paid-In Capital 410,093 --- 410,093 Cumulative Net Income 462,237 --- 462,237 Cumulative Dividends (519,979) --- (519,979) --------- --------- ---------- TOTAL STOCKHOLDERS' EQUITY 440,407 --- 440,407 --------- --------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 966,189 $ 98,955 $1,065,144 ========= ========= ==========
See Accompanying Notes. HEALTH CARE PROPERTY INVESTORS, INC. UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS MARCH 31, 1998 (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Pro Forma Three Months Three Months Ended Ended March 31, March 31, ---------- --------- 1998 Adjustments 1998 ---------- ----------- --------- REVENUE Base Rental Income $ 26,078 $ 2,538 $ 28,616 Additional Rental and Interest Income 5,411 --- 5,411 Interest and Other Income 4,845 265 5,110 -------- -------- -------- 36,334 2,803 39,137 -------- -------- -------- EXPENSE Interest Expense 7,617 1,637 9,254 Depreciation/Non Cash Charges 7,422 498 7,920 Facility Operating Expenses 797 119 916 Other Expenses 1,872 --- 1,872 -------- -------- -------- 17,708 2,254 19,962 -------- -------- -------- INCOME FROM OPERATIONS 18,626 549 19,175 Minority Interests (1,148) --- (1,148) Gain on Sale of Real Estate Properties --- --- --- -------- -------- -------- NET INCOME $ 17,478 $ 549 $ 18,027 DIVIDENDS TO PREFERRED STOCKHOLDERS 1,181 --- 1,181 -------- -------- -------- NET INCOME APPLICABLE TO COMMON SHARES 16,297 549 16,846 ======== ======== ======== BASIC EARNINGS PER COMMON SHARE $ 0.54 $ 0.56 ======== ======== DILUTED EARNINGS PER COMMON SHARE $ 0.54 $ 0.55 ======== ======== WEIGHTED AVERAGE SHARES - BASIC 30,237 30,237 ======== ======== WEIGHTED AVERAGE SHARES - DILUTED 30,576 30,576 ======== ========
See Accompanying Notes. HEALTH CARE PROPERTY INVESTORS, INC. UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS DECEMBER 31, 1997 (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Pro Forma Year Ended Year Ended December 31, December 31, ------------ ----------- 1997 Adjustments 1997 ---------- ----------- --------- REVENUE Base Rental Income $ 92,130 $ 10,154 $ 102,284 Additional Rental and Interest Income 21,060 --- 21,060 Interest and Other Income 15,313 1,643 16,956 -------- -------- -------- 128,503 11,797 140,300 -------- -------- -------- EXPENSE Interest Expense 28,592 7,075 35,667 Depreciation/Non Cash Charges 25,889 1,992 27,881 Facility Operating Expenses 162 477 639 Other Expenses 7,414 --- 7,414 -------- -------- -------- 62,057 9,544 71,601 -------- -------- -------- INCOME FROM OPERATIONS 66,446 2,253 68,699 Minority Interests (3,704) --- (3,704) Gain on Sale of Real Estate Properties 2,047 --- 2,047 -------- -------- -------- NET INCOME $ 64,789 $ 2,253 $ 67,042 DIVIDENDS TO PREFERRED STOCKHOLDERS 1,247 --- 1,247 -------- -------- -------- NET INCOME APPLICABLE TO COMMON SHARES $ 63,542 $ 2,253 $ 65,795 ======== ======== ======== BASIC EARNINGS PER COMMON SHARE $ 2.21 $ 2.29 ======== ======== DILUTED EARNINGS PER COMMON SHARE $ 2.19 $ 2.27 ======== ======== WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 28,782 28,782 ======== ======== WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 28,994 28,994 ======== ========
See Accompanying Notes. FOOTNOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS NOTE 1: Health Care Property Investors, Inc. and its affiliates and subsidiaries (the "Company") acquired nine long-term care ("LTC") facilities and 33 clinics in 11 separate transactions at an aggregate purchase price of approximately $99,800,000, comprised of $92,100,000 of acquisitions and $7,700,000 of equity investments. The LTC facilities and 18 clinics were leased to 10 different operators under triple-net leases generally similar to the Company's existing leases and are accounted for as operating leases. The other 15 clinics were leased under modified gross leases to five different operators. The LTC leases have initial terms of 12-23 years. The clinic leases range from 1-10 years. The Company earns fixed monthly base rental income and may earn periodic additional rents. The additional payments are generally computed based upon increases in the Consumer Price Index or as a percentage of facility net patient revenues in excess of base amounts. Additional rents generally commence in the second year of the leases. With the exception of the clinics leased on a modified gross basis, under terms of the leases, the lessees are responsible for all maintenance, repairs, taxes and insurance on the leased properties. The pro forma statements of operations reflect the acquisitions of the properties as if they had been owned since January 1, 1997, and the pro forma balance sheet reflects the acquisition of the properties as if all such properties had been owned on March 31, 1998. NOTE 2: The pro forma balance sheet adjustments reflect the allocation between land and building and improvements of the $94,159,000 of acquired properties purchased after March 31, 1998, and the increase in bank notes payable used to fund the purchases. No adjustment has been made to accumulated depreciation for those properties acquired after March 31, 1998. The mortgage loans made since March 31, 1998 to the unconsolidated joint ventures are also included in the pro forma balance sheet. NOTE 3: The pro forma base rental income is based upon the monthly minimum rents specified in the leases. No additional rent amounts are assumed for purposes of the pro forma statements of operations based upon the terms of the lease. Pro forma interest and other income includes the first year of interest due on mortgage loans receivable. This category would generally also include the Company's share of income from the unconsolidated joint ventures. However, for purposes of this pro forma, although the Company will receive preferential distributions from these joint ventures during the year, it is assumed that these joint ventures will break even. Therefore, there is no joint venture income recognized in the pro forma statements of operations. Pro forma depreciation is based upon the purchase prices of the facilities being allocated to building and depreciated over 35 years. Pro forma interest expense is calculated using an interest rate of 6.00%, which is the Company's weighted average borrowing rate for the year to date on its unsecured revolving lines of credit. The Company has two unsecured lines of credit, one for $100,000,000 which expires on October 22, 2002 and one for $50,000,000 which expires October 22, 1998. The Company also arranges for additional borrowings on an as-needed basis with various banks. The Company initially uses these short-term borrowings to fund purchases, but replaces these borrowings with periodic long-term debt and equity offerings. The Company repaid approximately $23 million and $197 million on the line of credit borrowings with the proceeds of a common stock offering during April 1998 and a long-term debt offering during June 1998, respectively. Accordingly, the actual interest expense resulting from the acquisitions of the facilities may vary. No pro forma operating expenses are included other than for the clinics under modified gross leases because: (1) such amounts are expected to be immaterial, and (2) the Company does not expect to add additional staff as a result of the transactions described in Note 1 above. The pro forma amounts for the clinics are based upon current actual and estimated operating expenses. NOTE 4: The preparation of financial statements requires management to make estimates and assumptions that affect the revenues and expenses during the reporting period. Actual results could differ from those estimates. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: June 16, 1998 HEALTH CARE PROPERTY INVESTORS, INC. (REGISTRANT) /s/ James G. Reynolds ----------------------------- James G. Reynolds Executive Vice President and Chief Financial Officer (Principal Financial Officer) /s/ Devasis Ghose ----------------------------- Devasis Ghose Senior Vice President-Finance and Treasurer (Principal Accounting Officer) EX-23.1 2 CONSENT OF INDEPENDENT ACCOUNTANTS EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the previously filed Registration Statement No. 333-29485 of Health Care Property Investors, Inc. of our report dated June 17, 1998, with respect to the Pro Forma Statements of Operations of the Acquired Properties (as listed in Item 2 of the Current Report on Form 8-K) included in the Current Report on Form 8-K dated June 17, 1998, filed with the Securities and Exchange Commission. ARTHUR ANDERSEN LLP Los Angeles, California June 17, 1998 - -----END PRIVACY-ENHANCED MESSAGE----- -----END PRIVACY-ENHANCED MESSAGE-----