-----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, Gh5U7wrIIaqDw3Q7hQAljA20KM2WU/M6sVbfMpSDJzbydvDV3l2WtYP98imp0SKl Qkwj8XN0tFk4wJbMXj0INA== 0000765880-98-000048.txt : 19981214 0000765880-98-000048.hdr.sgml : 19981214 ACCESSION NUMBER: 0000765880-98-000048 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981105 ITEM INFORMATION: FILED AS OF DATE: 19981211 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/A SEC ACT: SEC FILE NUMBER: 001-08895 FILM NUMBER: 98768366 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/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________ FORM 8-K/A (Amendment No. 1) CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) of the SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) November 5, 1998 (June 30, 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 June 30,1998 through October 30, 1998, Health Care Property Investors, Inc. and its affiliates and subsidiaries (the "Company") acquired from unrelated parties ten long-term care facilities ("LTCs"), six clinics ("CLNs"), four assisted living facilities ("ALFs") and two medical office buildings ("MOBs") in 16 separate transactions at an aggregate purchase price of approximately $108,200,000, comprised of $103,800,000 of acquisitions, and $4,400,000 of equity investments. Four of the LTC facilities are accounted for as equity investments in unconsolidated joint ventures on the Company's books. The Company provided the capital and 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 loans receivable. The ALF and LTC facilities and two 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 MOBs and four clinics were leased to multiple tenants on a gross or 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 $65 million on its revolving bank lines of credit with the proceeds of a preferred stock offering during September 1998.
Facility Acquisition Purchase Facility Name City State Type Beds Units Date Price - --------------------------------------------------------------------------------------------------------------------- Gulfcoast Manor Port Richey FL ALF 91 06/30/98 1,868,166 Westbrooke Manor Zephyrhills FL ALF 80 06/30/98 3,435,015 Eastbrooke Gardens Casselberry FL ALF 42 06/30/98 2,229,747 Rexburg Nursing Center Rexburg ID LTC 119 07/14/98 5,507,780 Washington Terrace Ogden UT LTC 120 07/14/98 4,934,640 Memphis Clinic Memphis TN CLN(1) 1 07/27/98 1,701,300 910 Medical Place Minneapolis MN MOB(1) 1 07/31/98 9,800,000 Franklin Nursing Home Franklin LA LTC(2) 152 08/03/98 1,311,000 St. Mary's Nursing Home Morgan City LA LTC(2) 88 08/03/98 760,000 Sunset Estates Shawnee OK LTC 92 08/13/98 2,936,800 Austin I - Clinic South Austin TX CLN(1) 1 08/14/98 2,294,460 Austin II - Clinic North Austin TX CLN(1) 1 08/14/98 5,846,880 Chancellor Lodi Lodi CA ALF 76 08/21/98 6,465,000 Balmoral Care Center Tucson AZ LTC(2) 112 09/01/98 1,190,000 Westhaven Nursing Home Stillwater OK LTC 125 09/01/98 2,250,000 Rosewood Nursing Home Stillwater OK LTC 104 09/01/98 2,080,000 Chesterfield Clinic Chesterfield VA CLN(1) 1 09/03/98 2,400,000 Medical Arts Convalescent Hospital Perris CA LTC(2) 109 10/02/98 1,157,000 Lake Ellenor Clinic Orlando FL CLN(1) 1 10/02/98 2,700,000 The Westchester Creek Bronx NY MOB(1) 1 10/15/98 20,100,000 Mercy Med Clinic Sacramento CA CLN(1) 1 10/21/98 25,000,000 Country Club Manor Amarillo TX LTC 102 10/30/98 2,225,000 ------ --- ----------- 1,123 297 108,192,788 ====== === ===========
- ---------------------------- (1) The clinics encompass approximately 209,500 square feet and the medical office buildings encompass approximately 145,600 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 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/A. 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 gross, 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 September 30, 1998 for the Company after giving effect to the acquisition of the facilities. - Unaudited pro forma statement of operations for the Company after giving effect to the acquisition of the facilities for the nine-month period ended September 30, 1998. - Unaudited 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 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 June 30, 1998 to October 30, 1998 as indicated in Item 2 of this Amendment No. 1 to Form 8-K/A (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 Orange County, California December 7, 1998 PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
Franklin St. Mary's Balmoral Medical Arts Nursing Home Nursing Home Care Center Convalescent Gulfcoast Westbrooke (A) (A) (A) Hospital (A) Manor Manor ----------- ----------- ----------- ------------ --------- --------- Revenues: Base Rental Income $ --- $ --- $ --- $ --- $ 174,860 $ 321,517 Interest and Other Income (1) 271,000 157,000 247,000 239,000 --- --- --------- --------- --------- --------- --------- --------- 271,000 157,000 247,000 239,000 174,860 321,517 --------- --------- --------- --------- --------- --------- Expenses: Interest 262,380 151,920 238,800 231,420 112,090 206,101 Depreciation --- --- --- --- 54,805 105,572 Facility Operating Expenses --- --- --- --- --- --- --------- --------- --------- --------- --------- --------- 262,380 151,920 238,800 231,420 166,895 311,673 --------- --------- --------- --------- --------- --------- Net Income (Loss) $ 8,620 $ 5,080 $ 8,200 $ 7,580 $ 7,965 $ 9,844 ========= ========= ========= ========= ========= =========
See accompanying notes. (1) Includes interest on loans receivable and facility operating income. (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 operations and earns interest on the loans receivable. PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
Eastbrooke Rexburg Washington Memphis 910 Sunset Gardens Nursing Ctr Terrace Clinic Medical Estates ---------- ----------- --------- --------- ---------- --------- Revenues: Base Rental Income $ 208,704 $ 508,368 $ 455,467 $170,130 $ 900,924 $ 342,240 Interest and Other Income (1) --- --- --- --- 821,280 --- --------- --------- -------- --------- ---------- --------- 208,704 508,368 455,467 170,130 1,722,204 342,240 --------- --------- -------- --------- ---------- --------- Expenses: Interest 133,785 330,467 296,078 102,078 588,000 176,208 Depreciation 58,564 194,508 176,704 48,609 275,429 102,194 Other Operating Expenses --- --- --- --- 882,502 --- --------- --------- --------- --------- ---------- --------- 192,349 524,975 472,782 150,687 1,745,931 278,402 --------- --------- --------- --------- ---------- --------- Net Income (Loss) $ 16,355 $ (16,607) $ (17,315) $ 19,443 $ (23,727) $ 63,838 ========= ========= ========= ========= ========== =========
See Accompanying Notes (1) Includes interest on loans receivable and facility operating income. PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
Austin I Austin II Westhaven Rosewood Clinic Clinic Chancellor Nursing Nursing Chesterfield South North Lodi Home Home Clinic --------- --------- ---------- ---------- --------- ------------ Revenues: Base Rental Income $ 318,256 $ 821,104 $ 602,433 $ 270,000 $ 249,600 $ 251,100 Interest and Other Income (1) --- --- --- --- --- --- --------- -------- --------- --------- --------- --------- 318,256 821,104 602,433 270,000 249,600 251,100 --------- -------- --------- --------- --------- --------- Expenses: Interest 137,668 350,813 387,900 135,000 124,800 144,000 Depreciation 55,556 121,339 241,689 84,286 75,971 51,429 Other Operating Expenses 68,548 159,394 --- --- --- --- --------- --------- --------- --------- --------- --------- 261,773 631,546 629,589 219,286 200,771 195,429 --------- --------- --------- --------- --------- --------- Net Income (Loss) $ 56,483 $ 189,558 $ (27,156) $ 50,714 $ 48,829 $ 55,671 ========= ========= ========= ========= ========= =========
See Accompanying Notes (1) Includes interest on loans receivable and facility operating income. PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
Lake The Mercy County Ellenor Westchester Medical Club Clinic Creek Clinic Manor Total ---------- ---------- --------- --------- ---------- Revenues: Base Rental Income $ 165,792 $2,267,845 $2,844,388 $ 233,423 $ 11,106,151 Interest and Other Income (1) --- 285,923 176,938 --- 2,198,141 --------- --------- ---------- --------- ----------- 165,792 2,553,768 3,021,326 233,423 13,304,292 --------- --------- ---------- --------- ----------- Expenses: Interest 162,000 1,206,000 1,500,000 133,500 7,111,008 Depreciation 55,714 563,810 872,571 57,857 3,196,607 Other Operating Expenses 53,532 464,086 800,350 --- 2,428,412 --------- --------- ---------- --------- ----------- 271,246 2,233,896 3,172,921 191,357 12,736,027 --------- --------- ---------- --------- ----------- Net Income (Loss) $(105,454) $ 319,872 $ (151,595) $ 42,066 $ 568,265 ========= ========= ========= ========= ===========
See Accompanying Notes (1) Includes interest on loans receivable and facility operating income. FOOTNOTES TO PRO FORMA STATEMENTS OF OPERATIONS NOTE 1: Health Care Property Investors, Inc. and its affiliates and subsidiaries (the "Company") acquired ten long-term care ("LTC") facilities, six clinics, four assisted living facilities ("ALFs") and two medical office buildings ("MOBs") in 16 separate transactions at an aggregate purchase price of approximately $108,200,000, comprised of $103,800,000 of acquisitions and $4,400,000 of equity investments. Four of the LTC facilities are accounted for as equity investments in unconsolidated joint ventures on the Company's books. The Company provided the capital and 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 ventures. The purchase price on these facilities includes only the equity capital invested by the Company and does not include the loans receivable. The ALF and LTC facilities and two 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 and are accounted for as operating leases. The leases have initial terms of 2-38 years. The MOBs and the four remaining clinics were leased to multiple tenants on a gross or modified gross basis under which the Company may be responsible for the property tax and insurance payments and repairs and maintenance. The gross or modified gross 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 gross or modified gross leased properties, 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 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 buildings and improvements and depreciated over 35 years for buildings and five years for equipment. 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 $135,000,000 which expires on September 30, 2003 and one for $45,000,000 which expires September 30, 1999. 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 $65 million on the line of credit borrowings with the proceeds of a preferred stock offering during September 1998. 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 facilities under gross or 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 MOBs and 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 September 30, 1998 has been prepared to reflect the acquisition of five facilities during the period from October 1, 1998 to October 30, 1998 and the adjustments described in the accompanying notes. The following unaudited Pro Forma Statements of Operations for the nine months ended September 30, 1998 and for the year ended December 31, 1997 have been prepared to reflect the acquisition of 22 facilities during the period from June 30, 1998 through October 30, 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 September 30, 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 five facilities acquired after September 30, 1998 were purchased on September 30, 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 SEPTEMBER 30, 1998 (IN THOUSANDS)
Pro Forma September 30, September 30, 1998 Adjustments 1998 ---------- ----------- ----------- ASSETS Real Estate Investments Buildings and Improvements $ 983,284 $ 44,015 $ 1,027,299 Accumulated Depreciation (188,796) --- (188,796) ---------- --------- ---------- 794,488 44,015 838,503 Construction in Progress 19,517 --- 19,517 Land 131,112 6,010 137,122 ---------- --------- ---------- 945,117 50,025 995,142 Loans Receivable 145,471 2,700 148,171 Investments in and Advances to Partnerships 50,377 1,157 51,534 Other Assets 15,300 --- 15,300 Cash and Cash Equivalents 83,027 --- 83,027 ---------- --------- ---------- TOTAL ASSETS $1,239,292 $ 53,882 $1,293,174 ---------- --------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY Bank Notes Payable $ --- $ 53,882 $ 53,882 Senior Notes Payable 471,020 --- 471,020 Convertible Subordinated Notes Payable 100,000 --- 100,000 Mortgage Notes Payable 14,910 --- 14,910 Accounts Payable, Accrued Liabilities and Deferred Income 39,661 --- 39,661 Minority Interests in Partnerships 20,830 --- 20,830 Stockholders' Equity: Preferred Stock 187,847 --- 187,847 Common Stock 30,972 --- 30,972 Additional Paid-In Capital 432,972 --- 432,972 Cumulative Net Income 504,860 --- 504,860 Cumulative Dividends (563,780) --- (563,780) ---------- --------- ---------- TOTAL STOCKHOLDERS' EQUITY 592,871 --- 592,871 ---------- --------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,239,292 $ 53,882 $1,293,174 ========== ========= ==========
See Accompanying Notes. HEALTH CARE PROPERTY INVESTORS, INC. UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS SEPTEMBER 30, 1998 (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Pro Forma Nine Months Nine Months Ended Ended September 30, September 30, ------------ ------------- 1998 Adjustments 1998 ------------ ----------- ------------- REVENUE Base Rental Income $ 83,647 $ 7,516 $ 91,163 Additional Rental and Interest Income 16,339 --- 16,339 Interest and Other Income 16,462 1,556 18,018 -------- -------- -------- 116,448 9,072 125,520 -------- -------- -------- EXPENSE Interest Expense 26,727 4,716 31,443 Depreciation/Non Cash Charges 23,750 2,176 25,926 Facility Operating Expenses 3,211 1,808 5,019 Other Expenses 6,292 --- 6,292 -------- -------- -------- 59,980 8,700 68,680 -------- -------- -------- INCOME FROM OPERATIONS 56,468 372 56,840 Minority Interests (3,109) --- (3,109) Gain on Sale of Real Estate Properties 6,742 --- 6,742 -------- -------- -------- NET INCOME $ 60,101 $ 372 $ 60,473 DIVIDENDS TO PREFERRED STOCKHOLDERS 4,422 --- 4,422 -------- -------- -------- NET INCOME APPLICABLE TO COMMON SHARES $ 55,679 $ 372 $ 56,051 ======== ======== ======== BASIC EARNINGS PER COMMON SHARE $ 1.82 $ 1.83 ======== ======== DILUTED EARNINGS PER COMMON SHARE $ 1.81 $ 1.82 ======== ======== WEIGHTED AVERAGE SHARES - BASIC 30,666 30,666 ======== ======== WEIGHTED AVERAGE SHARES - DILUTED 33,601 33,601 ======== ========
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 $ 11,106 $ 103,236 Additional Rental and Interest Income 21,060 --- 21,060 Interest and Other Income 15,313 2,198 17,511 -------- -------- -------- 128,503 13,304 141,807 -------- -------- -------- EXPENSE Interest Expense 28,592 7,111 35,703 Depreciation/Non Cash Charges 25,889 3,197 29,086 Facility Operating Expenses 162 2,428 2,590 Other Expenses 7,414 --- 7,414 -------- -------- -------- 62,057 12,736 74,793 -------- -------- -------- INCOME FROM OPERATIONS 66,446 568 67,014 Minority Interests (3,704) --- (3,704) Gain on Sale of Real Estate Properties 2,047 --- 2,047 -------- -------- -------- NET INCOME $ 64,789 $ 568 $ 65,357 DIVIDENDS TO PREFERRED STOCKHOLDERS 1,247 --- 1,247 -------- -------- -------- NET INCOME APPLICABLE TO COMMON SHARES $ 63,542 $ 568 $ 64,110 ======== ======== ======== BASIC EARNINGS PER COMMON SHARE $ 2.21 $ 2.23 ======== ======== DILUTED EARNINGS PER COMMON SHARE $ 2.19 $ 2.21 ======== ======== 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 ten long-term care ("LTC") facilities, six clinics, four assisted living facilities ("ALFs") and two medical office buildings ("MOBs") in 16 separate transactions at an aggregate purchase price of approximately $108,200,000, comprised of $103,800,000 of acquisitions and $4,400,000 of equity investments. The ALF and LTC facilities and two 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 and are accounted for as operating leases. The leases have initial terms of 2-38 years. The MOBs and the four remaining clinics were leased to multiple tenants on a gross or modified gross basis under which the Company may be responsible for the property tax and insurance payments and repairs and maintenance. The gross or modified gross 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 gross or modified gross leased properties, 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 September 30, 1998. NOTE 2: The pro forma balance sheet adjustments reflect the allocation between land, building and improvements and other assets of the $53,882,000 of acquired properties purchased after September 30, 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 September 30, 1998. The loans made since September 30, 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 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 buildings and improvements and depreciated over 35 years for buildings and five years for equipment. 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 $135,000,000 which expires on September 30, 2003 and one for $45,000,000 which expires September 30, 1999. 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 $65 million on the line of credit borrowings with the proceeds of a preferred stock offering during September 1998. 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 facilities under gross or 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 MOBs and 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: December 11, 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-99 2 2 [DESCRIPTION] 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 December 7, 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/A) included in the Current Report on Form 8- K/A Amendment No. 1 dated December 7, 1998, filed with the Securities and Exchange Commission. ARTHUR ANDERSEN LLP Orange County, California December 7, 1998 -----END PRIVACY-ENHANCED MESSAGE-----