-----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, WQpGRjjU6RHinjkL+bfqb3IVD3o+prutK3bMIV3Q1T0ajqOopxMdVvbMWbnzLeVo mlpeSw3Xq3zmd10SqoQizg== 0000765880-96-000011.txt : 19960814 0000765880-96-000011.hdr.sgml : 19960814 ACCESSION NUMBER: 0000765880-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08895 FILM NUMBER: 96610192 BUSINESS ADDRESS: STREET 1: 10990 WILSHIRE BLVD STE 1200 CITY: LOS ANGELES STATE: CA ZIP: 90024 BUSINESS PHONE: 3104731990 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended June 30, 1996. 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 number 1-8895 - -------------------------------------------------------------------------------- HEALTH CARE PROPERTY INVESTORS, INC. (Exact name of registrant as specified in its charter) - -------------------------------------------------------------------------------- Maryland 33-0091377 (State or other jurisdiction of (I.R.S. Employer incorporation of organization) Identification No.) 10990 Wilshire Boulevard, Suite 1200 Los Angeles, California 90024 (Address of principal executive offices) (310) 473-1990 (Registrant's telephone number, including area code) ---------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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[ ] As of August 9, 1996 there were 28,668,914 shares of $1.00 par value common stock outstanding. HEALTH CARE PROPERTY INVESTORS, INC. INDEX PART I. FINANCIAL INFORMATION PAGE NO. -------- Item 1. Financial Statements: Consolidated Balance Sheets June 30, 1996 and December 31, 1995. . . . . . . . . . . . . . . Consolidated Statements of Income Six Months and Three Months Ended June 30, 1996 and 1995 . . . . Consolidated Statements of Cash Flows Six Months Ended June 30, 1996 and 1995. . . . . . . . . . . . . Notes to Consolidated Condensed Financial Statements . . . . . . Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . PART II. OTHER INFORMATION Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HEALTH CARE PROPERTY INVESTORS, INC. CONSOLIDATED BALANCE SHEETS (unaudited) (Dollar amounts in thousands)
June 30, December 31, 1996 1995 ---------- ----------- ASSETS Real Estate Properties Buildings and Improvements $ 658,349 $ 581,152 Accumulated Depreciation (134,906) (121,983) -------- -------- 523,443 459,169 Construction in Progress 12,991 7,508 Land 66,981 61,317 -------- -------- 603,415 527,994 Loans Receivable 115,764 120,959 Investments in and Advances to Partnerships 9,113 9,248 Other Assets 8,864 7,630 Cash and Cash Equivalents 14,972 2,000 -------- -------- TOTAL ASSETS $ 752,128 $ 667,831 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Bank Notes Payable $ --- $ 31,700 Senior Notes Due 1998 - 2015 153,995 153,994 Senior Notes Due 2006 113,392 --- Convertible Subordinated Notes Due 2000 100,000 100,000 Mortgage Notes Payable 12,722 13,390 Accounts Payable and Accrued Expenses 13,967 10,568 Minority Interests in Partnerships 18,353 18,719 Stockholders' Equity: Common Stock 28,665 28,574 Additional Paid-In Capital 355,482 353,166 Cumulative Net Income 349,521 319,329 Cumulative Dividends (393,969) (361,609) -------- -------- TOTAL STOCKHOLDERS' EQUITY 339,699 339,460 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 752,128 $ 667,831 ======== ========
See accompanying Notes to Consolidated Condensed Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations. HEALTH CARE PROPERTY INVESTORS, INC. CONSOLIDATED STATEMENTS OF INCOME (unaudited) (Amounts in thousands, except per share amounts)
Three Months Six Months Ended June 30, Ended June 30, ----------------------- ----------------------- 1996 1995 1996 1995 --------- --------- --------- --------- REVENUE Base Rental Income $ 20,707 $ 16,674 $ 40,891 $ 33,826 Additional Rental and Interest Income 5,768 4,839 10,550 9,703 Interest and Other Income 4,111 4,398 8,088 8,369 Facility Operating Revenues --- --- --- 741 --------- --------- --------- --------- 30,586 25,911 59,529 52,639 --------- --------- --------- --------- EXPENSE Interest Expenses 6,609 4,128 12,902 9,474 Depreciation/Noncash Charges 5,693 4,872 10,962 9,379 Other Expenses 1,802 1,630 3,538 3,047 Facility Operating Expenses --- --- --- 720 --------- --------- --------- --------- 14,104 10,630 27,402 22,620 --------- --------- --------- --------- INCOME FROM OPERATIONS 16,482 15,281 32,127 30,019 Minority Interests (891) (965) (1,935) (1,947) Gain on Sale of Real Estate Properties --- 23,550 --- 23,550 --------- --------- --------- --------- NET INCOME $ 15,591 $ 37,866 $ 30,192 $ 51,622 ========= ========= ========= ========= NET INCOME PER SHARE $ 0.54 $ 1.33 $ 1.05 $ 1.83 ========= ========= ========= ========= WEIGHTED AVERAGE SHARES OUTSTANDING 28,662 28,532 28,634 28,143 ========= ========= ========= =========
See accompanying Notes to Consolidated Condensed Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations. HEALTH CARE PROPERTY INVESTORS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (Amounts in thousands)
Six Months Ended Ended June 15, ------------------------- 1996 1995 ----------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 30,192 $ 51,622 Real Estate Depreciation 9,760 8,088 Partnership Adjustments (318) (269) Gain on Sale of Real Estate Properties --- (23,550) ---------- ---------- FUNDS FROM OPERATIONS 39,634 35,891 Noncash Charges 1,202 1,291 Change in Other Assets/Liabilities 4,673 (5,295) ---------- ---------- 45,509 31,887 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of Real Estate, Net (88,344) (18,123) Proceeds from Sale of Real Estate Properties --- 8,387 Other Investments and Loans 6,782 256 ---------- ---------- (81,562) (9,480) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Net Increase in Bank Notes Payable (31,700) (1,100) Repayment of Senior Notes --- (75,000) Issuance of Senior Notes Due 1998-2015 113,329 36,715 Cash Proceeds from Issuing Common Stock 1,239 47,109 Increase in Minority Interests --- 64 Final Payments on Mortgages --- (637) Periodic Payments on Mortgages (728) (543) Dividends Paid (32,360) (29,053) Other Financing Activities (755) (435) ---------- ---------- 49,025 (22,880) ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 12,972 $ (473) ========== ==========
See accompanying Notes to Consolidated Condensed Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations. HEALTH CARE PROPERTY INVESTORS, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS June 30, 1996 (UNAUDITED) (1) SIGNIFICANT ACCOUNTING POLICIES The unaudited financial information furnished herein, in the opinion of management, reflects all adjustments that are necessary to state fairly the financial position, the results of operations, and cash flows of Health Care Property Investors, Inc. and its affiliates (the "Company"). The Company presumes that users of the interim financial information herein have read or have access to the audited financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations for the preceding fiscal year ended December 31, 1995 and that the adequacy of additional disclosures needed for a fair presentation, except in regard to material contingencies, may be determined in that context. Accordingly, footnotes and other disclosures that would substantially duplicate the disclosures contained in the Company's most recent annual report to security holders have been omitted. The interim financial information contained herein is not necessarily representative of a full year's operations for various reasons including acquisitions, changes in rents, interest rates and the timing of debt and equity financings. These same considerations apply to all year-to-year comparisons. Net Income Per Share Net income per share is calculated by dividing net income by the weighted average common shares outstanding during the period. There were 28,665,214 shares outstanding as of June 30, 1996. Funds From Operations Effective January 1, 1996, the Company adopted the new definition of Funds From Operations prescribed by the National Association of Real Estate Investment Trusts. Funds From Operations is now defined as net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from debt restructuring and sales of property, plus real estate depreciation, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect Funds From Operations on the same basis. Funds From Operations does not represent cash generated from operating activities in accordance with generally accepted accounting principles, is not necessarily indicative of cash available to fund cash needs and should not be considered as an alternative to net income. Funds From Operations for the periods ended June 30, 1995 have been restated for comparative purposes. (2) MAJOR OPERATORS Listed below are the Company's major operators and the percentage of current revenue from these operators. Percentage of Operators Revenue Total Revenue - --------- ------------- ------------- Vencor, Inc. ("Vencor") $12,018,000 20% Horizon/CMS Health Corporation 4,960,000 8 Beverly Enterprises, Inc. 4,982,000 8 Tenet Healthcare Corporation ("Tenet") 4,116,000 7 Columbia/HCA Healthcare Corp. 4,115,000 7 Emeritus Corporation 3,961,000 7 Healthsouth Corporation ("Healthsouth") 3,418,000 6 All of the leases with subsidiaries of Tenet, Vencor, and certain leases with Healthsouth are unconditionally guaranteed by Tenet. Those leases represent 32% of the Company's total revenue for the six months ended June 30, 1996. (3) STOCKHOLDERS' EQUITY The following tabulation is a summary of the activity for the Stockholders' Equity account for the six months ended June 30, 1996 (amounts in thousands):
Common Stock ------------------------ Par Additional Total Number of Value Paid In Cumulative Cumulative Stockholders' Shares Amount Capital Net Income Dividends Equity - --------------------------------------------------------------------------------------------------- Balance, December 31, 1995 28,574 $28,574 $353,166 $319,329 $(361,609) $339,460 Issuance of Stock, Net 33 33 1,135 1,168 Exercise of Stock Options 58 58 1,181 1,239 Net Income 30,192 30,192 Dividends Paid (32,360) (32,360) - --------------------------------------------------------------------------------------------------- Balance, June 30, 1996 28,665 $28,665 $355,482 $349,521 $(393,969) $339,699 ===================================================================================================
(4) COMMITMENTS The Company has outstanding commitments on closed development transactions of approximately $36,000,000 and on to-be-closed development transactions of approximately $68,000,000. The Company is also committed to acquire approximately $53,000,000 of existing health care facilities. The Company expects that a significant portion of these commitments will be funded; however, experience suggests that some committed transactions will not close. Transactions do not close for various reasons including unsatisfied pre-closing conditions, competitive financing sources, final negotiation differences, and the operators' inability to obtain required internal or governmental approvals. (5) SUBSEQUENT EVENTS On July 18, 1996 the Board of Directors declared a quarterly dividend of $0.58 per share payable on August 20, 1996, to stockholders of record on the close of business on August 2, 1996. HEALTH CARE PROPERTY INVESTORS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company is in the business of acquiring health care facilities that it leases on a long term basis to health care providers. On a more limited basis, the Company has provided mortgage financing on health care facilities. As of June 30, 1996, the Company's portfolio of properties, including equity investments, consisted of 208 facilities located in 37 states. These facilities are comprised of 136 long term care facilities, 45 congregate care and assisted living facilities, 12 medical office buildings, six acute care hospitals, six rehabilitation facilities, two physician group practice clinics and one psychiatric care facility. The gross acquisition price of the properties, which includes partnership acquisitions, was approximately $884,388,000 at June 30, 1996. As of June 30, 1996, the Company had commitments to purchase and construct health care facilities totaling approximately $157,000,000 for funding during 1996 and 1997. The Company expects that a significant portion of these commitments will be funded and a portion will not be funded. (See (4) "Commitments.") LIQUIDITY AND CAPITAL RESOURCES The Company has financed acquisitions through the sale of common stock, the issuance of long term debt, the assumption of mortgage debt, the use of short- term bank lines and through internally generated cash flow. Facilities under construction are generally financed by means of cash on hand or short term borrowings under the Company's existing bank lines. In the future, the Company may use its Medium-Term Note ("MTN") program to finance a portion of the costs of construction. At the completion of construction and commencement of the lease, short term borrowings used in the construction phase are generally refinanced with new long term debt or equity offerings. On February 15, 1996, the Company issued $115,000,000 in Unsecured Senior Notes due 2006 bearing a coupon of 6.5%. The majority of the proceeds from this debt issuance was used to fund acquisitions made during the second half of 1995 and for the first and second quarter of 1996 with the balance invested temporarily in short term investments pending deployment in long term asset acquisitions. At June 30, 1996, stockholders' equity in the Company totaled $339,699,000 and the debt to equity ratio was 1.12 to 1. For the six months ended June 30, 1996, Funds From Operations covered interest expense 4.1 to 1. LIQUIDITY AND CAPITAL RESOURCES (continued) At June 30, 1996, the Company had approximately $50,975,000 available under its Medium Term Note Program registered pursuant to a shelf registration statement for future issuance of MTNs from time to time based on Company needs and then existing market conditions. In September 1995, the Company registered $200,000,000 of debt and equity securities under a shelf registration statement filed with the Securities and Exchange Commission of which $85,000,000 in debt or equity securities remains available to be offered by the Company. As of June 30, 1996, the Company had $100,000,000 available on its revolving line of credit. This line of credit with a group of seven domestic and international banks expires on March 31, 1999. The Company's Senior and Convertible Subordinated Notes have been rated investment grade by debt rating agencies since 1986. Current ratings are as follows: Moody's Standard & Poor's Duff & Phelps ------------- ------------------ ----------------- Senior Notes Baa1 BBB+ A- Convertible Subordinated Notes Baa2 BBB BBB+ Since inception in May 1985, the Company has recorded approximately $469,888,000 in cumulative Funds From Operations. Of this amount, a total of $393,969,000 has been distributed to stockholders as dividends. The balance of $75,919,000 has been retained, and is an additional source of capital for the Company. At June 30, 1996, the Company had approximately $30,700,000 in irrevocable letters of credit from commercial banks to secure the obligations of many lessees' lease and borrowers' loan obligations. The Company may draw upon the letters of credit if there are any defaults under the leases and/or loans. Amounts available under letters of credit change from time to time; such changes may be material. The second quarter 1996 dividend of $0.57 per share or $16,339,000 in the aggregate was paid on May 20, 1996. Total dividends paid during the three months ended June 30,1996 as a percentage of Funds From Operations for the corresponding period was 80.0%. The Company declared a third quarter dividend of $0.58 per share or $16,626,000 in the aggregate, to be paid on August 20, 1996. One of the Company's lessees, a major provider of health care services, has closed the Company's Dallas rehabilitation hospital in breach of its lease agreement. Rent on the Dallas facility is current and aggregates approximately $3.1 million annually. The lease obligations extend through June 1999 and are guaranteed both by the provider and a significant third party. Management of the Company is discussing possible remedies with the provider and anticipates a future diminution in the rent payment stream or other economics of the Dallas property prior to the end of the lease term. The Company invested approximately $18 million in the facility when it was purchased in 1985. Management believes that the Company's liquidity and sources of capital are adequate to finance its operations as well as its future investments in additional facilities. RESULTS OF OPERATIONS Net Income for the three months ended June 30, 1996 totaled $15,591,000 or $0.54 per share, on revenues of $30,586,000 compared to Net Income of $37,866,000 or $1.33 per share, on revenues of $25,911,000 for the corresponding quarter in 1995. The 1995 quarter included a gain on sale of real estate properties of $23,550,000 or $0.83 per share. Funds From Operations for the six months ended June 30, 1996, increased to $39,634,000, compared with $35,891,000 for the corresponding period in the prior year. Earnings and Funds From Operations were significantly higher than a year ago due to increases in base rents and lower relative financing costs. Base rents for the three months ended June 30, 1996, increased by $4,033,000 over the corresponding period in 1995 from $16,674,000 to $20,707,000. The majority of the increase in base rents came from new long term investments made in 1995 and the first half of 1996 of $102,000,000 and $87,000,000, respectively. Interest expense was higher due to the increase in average borrowings as a result of the issuance of Senior Notes mentioned above. PART II. OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its annual stockholders meeting on April 25, 1996. The following matters were voted upon at the meeting:
1. Election of Directors ------------------------- Votes Cast ---------------- Against or Name of Director Elected For Withheld ------------------------------- ---------- ----------- Kenneth B. Roath 24,721,271 169,537 Orville E. Melby 24,721,370 169,438 Name of Each other Director Whose Term of Office as Director Continued after the meeting -------------------------------- Paul V. Colony Robert R. Fanning, Jr. Michael D. McKee Harold M. Messmer, Jr. Peter L. Rhein Against or 2. Ratification of Arthur Andersen LLP For Withheld As the Company's Independent ---------- ----------- Accountants for the Fiscal Year 24,600,717 290,091 Ending December 31,1996 ----------------------------------- There were no broker nonvotes with regard to the matters voted upon at the meeting.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: EX-27 Financial Data Schedule b) Reports on Form 8-K: None 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: August 9, 1996 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-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000765880 HEALTH CARE PROPERTY INVESTORS, INC. 1,000 6-MOS DEC-31-1996 JUN-30-1996 14,972 0 0 0 0 0 738,321 134,906 752,128 0 380,109 0 0 28,665 311,034 752,128 0 59,529 0 12,897 3,538 0 12,902 30,192 0 30,192 0 0 0 30,192 1.05 1.05
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