-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, lmNxM7BMdhCQ8AyJujCWdDcXeFQNTTWDM3ruJZv8HJYhBpTgv0UIcDlyi9ZxO9sl yWiDvtXxgyVvG4P6Dk44Og== 0000766704-95-000011.txt : 19950728 0000766704-95-000011.hdr.sgml : 19950728 ACCESSION NUMBER: 0000766704-95-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950727 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTH CARE REIT INC /DE/ CENTRAL INDEX KEY: 0000766704 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 341096634 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08923 FILM NUMBER: 95556596 BUSINESS ADDRESS: STREET 1: ONE SEAGATE STE 1950 STREET 2: P O BOX 1475 CITY: TOLEDO STATE: OH ZIP: 43604 BUSINESS PHONE: 4192472800 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 (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, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to _______________ Health Care REIT, Inc. (Exact name of registrant as specified in its charter) Delaware 34-1096634 (State or jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One SeaGate, Suite 1950, Toledo, Ohio 43604 (Address of principal executive office) (Zip Code) (Registrant's telephone number, including area code) (419) 247-2800 ___________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) 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 ___. APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes _____. No _____. APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class: Shares of Common Stock, $1.00 par value Outstanding 11,695,832 shares HEALTH CARE REIT, INC. INDEX Page Part I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of June 30, 1995 and December 31, 1994. 3 Consolidated Statements of Income --- Three months ended June 30, 1995 and 1994; six months ended June 30, 1995 and 1994. 4 Consolidated Statements of Cash Flows --- Six months ended June 30, 1995 and 1994. 5 Consolidated Statements of Shareholders' Equity --- Six months ended June 30, 1995 and 1994. 6 Notes to Consolidated Financial Statements. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 8 Part II. OTHER INFORMATION Item 5. Other Information. 10 Item 6. Exhibits and Reports on Form 8-K. 10 SIGNATURES 11 PART I. FINANCIAL INFORMATION Item 1. Financial Statements CONSOLIDATED BALANCE SHEETS (Unaudited) HEALTH CARE REIT, INC. AND SUBSIDIARY December 31 June 30 1994 1995 (Note) ------------ ------------ ASSETS Real Estate Related Investments: Loans receivable: Mortgage loans $271,079,427 $230,781,805 Construction and other short-term loans 24,017,966 17,073,652 Working capital loans to related parties 6,662,331 7,068,254 ------------ ------------ 301,759,724 254,923,711 Investment in operating-lease properties 57,777,576 57,231,651 Investment in direct financing leases 11,332,340 11,427,721 ------------ ------------ 370,869,640 323,583,083 Less allowance for losses 5,150,000 5,150,000 ------------ ------------ NET REAL ESTATE RELATED INVESTMENTS 365,719,640 318,433,083 Other Assets: Deferred loan expenses 2,656,444 2,469,260 Investments 532,000 Cash and cash equivalents 658,717 935,449 Receivables and other assets 2,601,203 2,264,197 ------------ ------------ 6,448,364 5,668,906 ------------ ------------ $372,168,004 $324,101,989 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Borrowings under line of credit arrangements $119,100,000 $ 70,900,000 Other long-term obligations 57,050,699 57,372,790 Accrued expenses and other liabilities 7,329,543 6,649,424 ------------ ------------ TOTAL LIABILITIES 183,480,242 134,922,214 Shareholders' Equity: Preferred Stock, $1.00 par value: Authorized - 10,000,000 shares Issued and outstanding - none Common Stock, $1.00 par value: Authorized - 40,000,000 shares Issued and outstanding - 11,695,832 in 1995 and 11,595,115 in 1994 11,695,832 11,595,115 Capital in excess of par value 163,028,571 161,086,758 Undistributed net income 13,963,359 16,497,902 ------------ ------------ TOTAL SHAREHOLDERS' EQUITY 188,687,762 189,179,775 ------------ ------------ $372,168,004 $324,101,989 ============ ============
NOTE: The balance sheet at December 31, 1994 has been derived from the audited consolidated financial statements of that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See consolidated notes to financial statements CONSOLIDATED STATEMENTS OF INCOME (Unaudited) HEALTH CARE REIT, INC. AND SUBSIDIARY Three Months Ended Six Months Ended June 30 June 30 1995 1994 1995 1994 ------------------------- ------------------------- Gross Income: Interest and other income $ 7,510,558 $ 6,208,096 $15,036,808 $11,444,192 Operating leases: Rents 1,582,870 1,375,147 3,124,479 2,524,900 Gain on exercise of options 100,029 100,029 Direct financing leases: Lease income 382,164 1,330,081 764,328 3,015,823 Gain on exercise of options 3,429,493 3,621,768 Loan and commitment fees 201,934 287,869 376,904 465,242 ----------- ----------- ----------- ----------- 9,677,526 12,730,715 19,302,519 21,171,954 Expenses: Interest: Senior notes and other long-term obligations 1,301,758 1,600,887 2,757,734 3,146,096 Line of credit arrangements 1,855,710 897,361 3,524,083 1,426,315 Loan expenses 186,779 286,355 372,468 360,598 Management fees 615,076 948,574 1,260,734 1,591,628 Provision for depreciation 390,337 347,093 780,075 649,030 Provision for losses 250,000 250,000 Other operating expenses 690,676 600,588 1,105,270 964,180 ----------- ----------- ----------- ----------- 5,040,336 4,930,858 9,800,364 8,387,847 ----------- ----------- ----------- ----------- NET INCOME $ 4,637,190 $ 7,799,857 $ 9,502,155 $12,784,107 =========== =========== =========== =========== Average number of shares outstanding 11,673,998 11,504,848 11,646,843 11,486,049 Net income per share $ .40 $ .68 $ .82 $ 1.11 Dividends per share $ .52 $ .50 $ 1.035 $ .995
See consolidated notes to financial statements CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) HEALTH CARE REIT, INC. AND SUBSIDIARY Six Months Ended June 30 1995 1994 ---------------------------- OPERATING ACTIVITIES Net income $ 9,502,155 $ 12,784,107 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of loan and organization expenses 373,546 361,676 Provision for losses 250,000 Provision for depreciation 780,075 649,030 Loan and commitment fees earned less than cash received 649,041 327,677 Direct financing lease income less than cash received 95,381 634,178 Interest income (in excess of) less than cash received (104,670) 800,810 Increase in accrued expenses and other liabilities 31,078 402,202 Increase in other receivables and prepaid items (338,084) (793,562) ------------ ------------ NET CASH PROVIDED FROM OPERATING ACTIVITIES 10,988,522 15,416,118 INVESTING ACTIVITIES Proceeds from exercise of lease purchase options 26,879,323 Increase in investments (532,000) Investment in operating-lease properties (1,326,000) (10,541,786) Investment in loans receivable (51,227,784) (53,942,568) Investment in direct financing leases (1,300,000) Principal collected on loans 4,496,441 11,110,206 ------------ ------------ NET CASH USED IN INVESTING ACTIVITIES (48,589,343) (27,794,825) FINANCING ACTIVITIES Long-term borrowings under line of credit arrangements 112,900,000 97,800,000 Principal payments on long-term borrowings under line of credit arrangements (64,700,000) (77,500,000) Net proceeds from the issuance of shares 2,042,530 1,655,007 Principal payments on other long-term obligations (322,091) (2,755,696) (Increase) decrease in deferred loan expense (559,652) 19,714 Cash distributions to shareholders (12,036,698) (11,413,012) ------------ ------------ NET CASH PROVIDED FROM FINANCING ACTIVITIES 37,324,089 7,806,013 ------------ ------------ Decrease in cash and cash equivalents (276,732) (4,572,694) Cash and cash equivalents at beginning of period 935,449 4,896,314 ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 658,717 $ 323,620 ============ ============ Supplemental Cash Flow Information-- Interest Paid $ 6,439,192 $ 4,512,401 ============ ============
See consolidated notes to financial statements CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) HEALTH CARE REIT, INC. AND SUBSIDIARY Six Months Ended June 30 1995 1994 ---------------------------- Balances at beginning of period $189,179,775 $184,131,828 Net income 9,502,155 12,784,107 Proceeds from issuance of shares under the dividend reinvestment plan - 86,577 in 1995 and 70,988 in 1994 1,833,141 1,655,007 Proceeds from issuance of shares under the employee stock incentive plan - 14,140 in 1995 209,389 Cash dividend paid (12,036,698) (11,413,012) ------------ ------------ Balances at end of period $188,687,762 $187,157,930 ============ ============
( ) Denotes deduction See consolidated notes to financial statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HEALTH CARE REIT, INC. Note A - Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered for a fair presentation have been included. Operating results for the six months ended June 30, 1995 are not necessarily an indication of the results that may be expected for the year ended December 31, 1995. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1994. Net income per share has been computed by dividing net income by the average number of shares outstanding. Note B - Investments During the first quarter of 1995, the Company purchased common stock in a privately held company. This investment does not have a readily determinable fair value. Accordingly, this investment is recorded at the lower of cost or estimated net realizable value. Note C - Management Agreement The Company is continuing its efforts to consummate the merger of First Toledo Advisory Company with and into the Company. Through June 30, 1995, the Company has incurred $660,000 of costs which it will expense in the third quarter, along with any additional costs. Note D - Contingencies As disclosed in the financial statements for the year ended December 31, 1994, the Company was contingently liable for certain obligations amounting to approximately $20,175,000. No significant change in these contingencies has occurred as of June 30, 1995. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources During the first half of 1995, the Company financed five mortgage loans for a total of $30,468,000. These loans included two community hospitals and three nursing homes. In addition, the Company advanced approximately $18,843,000 for 14 construction loans, most of which are for new facilities. During the first half of 1995, two of the construction loans were converted to permanent financings. The above loan activity, plus changes in working capital loans and principal repayments, were the reasons net loans increased approximately $46,836,000. The Company's working capital loans, all to related parties, are expected to continue to slowly decline as the underlying projects continue to improve their financial performance and thereby pay down these loans. In the first quarter of 1995, the Company paid $532,000 for common stock in a privately held company with which the Company has several mortgage loans and operating-lease transactions. The investment was made as a result of warrants granted to the Company when it provided the mortgage loan and operating-lease financing. Since December 31, 1994, borrowings under line of credit arrangements increased $48,200,000 due to the investment activity discussed above. As of June 30, 1995, the Company had approximately $132,400,000 in unfunded commitments and total available funding sources of $60,900,000. The Company believes that funds provided from operating activities, together with funds from loan repayments and equity and debt issuances, will be sufficient to meet current operating requirements. During the first half of 1995, the Company received approximately $2,043,000 from the sale of its shares under the dividend reinvestment and incentive stock option plans. Results of Operations Gross income for the first half of 1995 was $19,302,519 or 8.8% less than the first half of 1994. Interest income on loans receivable and operating lease rents increased while direct financing lease income and gain on exercise of options declined. The increase in interest income on loans receivable and operating lease rents is attributable to the growth in the loan and operating-lease portfolios, a trend which the Company anticipates will continue. The decrease in direct financing lease income and gain on exercise of options is a reflection of other long-term trends which should also continue due to the greater market acceptance of mortgage loans and operating leases. In the first half of 1994, gross income included $3,721,797 in gains on exercise of options. However, there were no such gains for the comparable period in 1995. Future gains on exercise of options are anticipated to be modest since the Company has only six remaining direct financing lease investments which total approximately $11,332,000. Net income totalled $9,502,155 in the first half of 1995, versus $12,784,107 for the comparable period in 1994. The decrease in net income was reflected in the $.82 per share earned in the first half of 1995 versus $1.11 per share earned in the first half of 1994. Major contributing factors for the decrease were the absence of gains on exercise of options in 1995 (discussed above) and a tightening of the Company's net interest margin, as explained below. During the first six months of 1995, average earnings on assets increased 13 basis points versus the first half of 1994 excluding gains. However, in the second quarter, average earnings on assets declined 19 basis points versus the second quarter of 1994. The decline in average earnings on assets was caused by placing three loans on non-accrual status (discussed below) during the first quarter of 1995 and the general decline in interest rates during the last three quarters. During the same six-month periods, the Company experienced a 98 basis point increase in its average cost of borrowing. This was primarily due to new borrowings predominantly at the prime rate which has not declined as quickly as U.S. Treasury rates used for new investments. However, the Company's average cost of borrowing declined in the second quarter of 1995 over the first quarter of 1995, a trend that is expected to continue through 1995. These trends resulted in a tightening of its interest rate margin, both for the second quarter and on a year-to-date basis. The Company is increasing the use of its LIBOR interest rate pricing option, which is available on its primary line of credit. This interest rate pricing option has historically been less expensive than prime interest rate. Therefore, the greater utilization of LIBOR should favorably affect the average cost of debt. Lastly, the Company's net income was affected by the average quarter-end debt to equity ratio of .81 to 1 in 1995 versus .63 to 1 in the first half of 1994. The increase in debt had the effect of increasing the Company's interest related expense. The Company is continuing its efforts to consummate the merger of First Toledo Advisory Company with and into the Company. Through June 30, 1995, the Company has incurred $660,000 of costs which it will expense in the third quarter, along with any additional costs. In January 1995, the Company filed a lawsuit for collection of past due interest and principal of approximately $1,994,000 related to a nursing home in Detroit, Michigan. In March of 1995, the Company filed two lawsuits in Florida to collect past due interest and principal on a mortgage loan secured by two behavioral care facilities. In connection with the March filing, the Company presented for payment and received $1,125,000 on a letter of credit securing the Florida mortgage loan. After application of the letter of credit proceeds, the Company's carrying value of the Florida mortgage loan is approximately $13,468,000. Each of these loans was put on non-accrual status effective the beginning of the month the respective lawsuits were filed. Each of the debtors is in Chapter 11 bankruptcy. The Company is aggressively proceeding against the borrowers; however, bankruptcy proceedings proceed slowly. The Company has evaluated its allowance for losses and believes that the allowance is adequate, based on the information presently available. PART II. OTHER INFORMATION Item 5. Other Information On April 19, 1995, the Company issued a press release in which it announced, among other things, that the Board of Directors voted to pay a quarterly cash dividend of $.52 payable to shareholders of record on May 5, 1995, and that net income was $.42, a decrease of $.01 from the first quarter of 1994. On May 9, 1995, the Company issued a press release in which it announced, among other things, that the Board of Directors had approved revised terms of the acquisition of First Toledo Advisory Company, the manager of the Company. The transaction described herein is subject to definitive agreements, stockholder approval, other customary conditions and accounting for the acquisition under the pooling of interests method. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 4. Specimen of Note with Fifth Third Bank 4. Specimen of Note with Capital Bank 99. Press release dated April 19, 1995 99. Press release dated May 9, 1995 (b) Reports on Form 8-K A report on Form 8-K was filed on May 12, 1995, reporting on the revised terms of the acquisition of First Toledo Advisory Company by the Company. Pursuant to the requirement of the Securities and Exchange Act of 1934, the Registrant had duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HEALTH CARE REIT, INC. Date: July 27, 1995 By: BRUCE G. THOMPSON -------------------------- Bruce G. Thompson, Chairman and Chief Executive Officer Date: July 27, 1995 By: FREDERIC D. WOLFE ---------------------------- Frederic D. Wolfe, President Date: July 27, 1995 By: ROBERT J. PRUGER --------------------------- Robert J. Pruger, Chief Financial Officer Date: July 27, 1995 By: KATHLEEN S. PREPHAN ---------------------------- Kathleen S. Prephan, Chief Accounting Officer EXHIBIT INDEX The following documents are included in this Form 10-Q as Exhibits: Designation Number Under Exhibit Item 601 of Page Number Regulation S-K Exhibit Description Number - ------ -------------- -------------------------- ------ 1 4 Note with Fifth Third Bank 13 2 4 Note with Capital Bank 20 3 99 Press Release dated April 19, 1995 22 4 99 Press Release dated May 9, 1995 24 EX-27 2
5 6-MOS DEC-31-1995 JUN-30-1995 658,717 0 2,601,203 5,150,000 0 0 61,350,383 3,572,807 372,168,004 0 176,150,699 11,695,832 0 0 176,991,930 372,168,004 0 19,302,519 0 0 3,146,079 0 6,654,285 9,502,155 0 9,502,155 0 0 0 9,502,155 .82 .82
EX-4 3 OPEN-END DEMAND NOTE $8,500,000.00 June 3, 1994 Sylvania, Ohio FOR VALUE RECEIVED, the undersigned, HEALTH CARE REIT, INC. (the "Maker"), unconditionally promises to pay to the order of Capital Bank, N.A., a national banking association (the "Bank"), at 5520 Monroe Street, Sylvania, Ohio 43560, the principal sum of EIGHT MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($8,500,000.00) or so much as may have been advanced and is outstanding from time to time plus interest at the Prime rate in effect from time to time at Bank. All unpaid principal and interest shall be payable upon demand of Bank. Until Bank demands payment, the interest owing on the unpaid principal shall be paid quarterly commencing August 31, 1994. All payments shall be credited first to interest accrued but unpaid and then to the payment and reduction of principal. Late payments will be charged a fee of 10% of the payment amount. Interest shall be calculated by means of the 365/360 day method. Maker shall make all payments on this Note at the principal offices of Bank or at such other place as the holder hereof may designate. Maker may prepay all or part of the this Note at any time without penalty. This Note is issued under and entitled to the benefits of the provisions of a Line of Credit Agreement of even date herewith, incorporated hereunder by reference. In the event the Maker fails to make any payment when due or upon the occurrence of an event of default as defined in the Line of Credit Agreement of even date herewith, Bank at its election may declare any and all obligations or liabilities of Maker to Bank immediately due and payable without presentment, demand, protest or notice upon default and may proceed against any and all security and may enforce any and all of its remedies at law or equity. In such event, the entire principal balance and accrued interest then owing shall bear interest at a rate which is the greater of sixteen percent (16%) or four percent (4%) above the prime interest rate in effect from time to time at Bank until fully paid, provided, however, that in no event shall the amount of interest paid hereunder exceed the maximum rate of interest permitted by law. Maker agrees to pay all costs of collection hereof, including reasonable attorney's fees. This Note shall be construed under the laws of the State of Ohio. Bank's acceptance of one or more late or partial payments shall not be a course of dealing upon which the Maker may rely on future occasions or a waiver of Bank's right to prompt full payment when due under this Note. Bank's forbearance from exercising any right or remedy under this Note shall not be a waiver of such rights and remedies. Bank's forbearance from exercising any right or remedy under this Note on any one or more occasions shall not be a course of dealing or waiver on which the Maker may rely on any future occasions. Bank's exercise of any rights or remedies or a part of a right or remedy on one or more occasions shall not preclude Bank from exercising the right or remedy at any other time. Bank's rights and remedies under this Note and the law and equity are cumulative to, but independent of, each other. Maker represents and warrants that the loan evidenced by this Note is for business purposes and not primarily for personal, family, household or agricultural purposes. Maker hereby authorizes any attorney in any court of record in the State of Ohio after this Note becomes due and payable to appear on its behalf; to waive the issuing and service of process and its constitutional rights to due process of law; to confess a judgment hereon against it in favor of any holder hereof for the amount then appearing due together with cost of suit; and thereupon to release all errors and waive all rights of appeal and stays of execution. Maker agrees that any exercise of the foregoing Power of Attorney shall not terminate the same but such power shall continue until the entire balance due on this Note including interest and costs of suit is fully paid. With full knowledge of constitutional rights, Maker voluntarily waives all rights to notice and hearing prior to judgment being so confessed. WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR, WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON ITS PART TO COMPLY WITH THIS AGREEMENT, OR ANY OTHER CAUSE. MAKER: HEALTH CARE REIT, INC. By: _________________________________________ Robert J. Pruger, Chief Financial Officer EX-4 4 REVOLVING COGNOVIT DEMAND NOTE $20,000,000.00 Toledo, Ohio May 31, 1995 ON DEMAND, FOR VALUE RECEIVED, HEALTH CARE REIT, INC., a Delaware corporation (the "Borrower"), having an address of One SeaGate, Toledo, Ohio, 43604, hereby promises to pay to the order of THE FIFTH THIRD BANK OF NORTHWESTERN OHIO, N.A., a national banking association ("Lender"), having an address of 606 Madison Avenue, Toledo, Ohio, 43604, the sum of Twenty Million Dollars ($20,000,000.00) or such lesser principal amount as may be advanced by Lender and outstanding hereunder from time to time, plus interest from this date until fully paid. 1. Interest. Borrower shall pay interest on the outstanding principal balance of this Revolving Cognovit Demand Note (the "Note") at the variable rate per annum equal to the rate of interest announced by the Lender as its prime rate of interest. The prime rate is not necessarily the lowest rate offered by the Lender and the interest rate will change as and when Lender's prime rate changes. Lender's decision as to the prime rate shall be final and binding. Borrower shall pay interest on any amounts not paid when due, and on any judgment on this Note, at the default rate of interest (the "Default Rate") equal to six percent (6%) per annum plus the rate of interest otherwise payable on this Note. Interest shall be calculated based on the actual number of days elapsed over a 360-day year (365/360 method). 2. Payments. Commencing June 30, 1995, and on the last day of each consecutive month thereafter, Borrower shall make monthly payments of interest until the earlier of (i) demand by Lender, or (ii) May 31, 1996, at which time all outstanding principal and accrued but unpaid interest shall be due and payable. Each payment shall be made in U.S. Dollars, in immediately available funds without set off or counterclaim. 3. Renewal. Provided that no event of default (as that term is defined in Section 11 infra.) has occurred, in the event that Lender determines that this Note will not be renewed at maturity, Lender shall provide Borrower with not less than thirty (30) days' prior written notice of non-renewal. Nothing in this Section 3 obligates Lender to renew or extend this Note or affects Lender's right to demand full payment of this Note at any time. 4. Place of Payment. Borrower shall make all payments on this Note at Lender's office at 606 Madison Avenue, Toledo, Ohio, 43604 or at such other place as the Lender may designate. 5. Purpose. Borrower shall use the proceeds of this Note for working capital purposes in the ordinary course of business. 6. Prepayment. Borrower may prepay this note in whole or in part without penalty, provided Borrower provides Lender with ten (10) days' prior written notice thereof. No partial prepayment will postpone the due date or affect the amount of the next scheduled payment due hereunder. 7. Late Charge. Borrower acknowledges that default in any payment due under this Note will result in loss and additional expense to Lender in handling such delinquent payments and meeting its other financial obligations, and to the extent such loss and additional expense is extremely difficult and impractical to ascertain, Borrower agrees that if any payment hereunder is not paid within ten (10) days of the due date, Borrower shall pay to Lender a late charge equal to five percent (5%) of the amount of the overdue payment. 8. Application of Payments. Unless Lender elects otherwise, all payments and other amounts received by Lender shall be credited first to any charges, costs, expenses and fees due hereunder or payable by Borrower in connection herewith; second, to interest on the foregoing amounts at the Default Rate from the due date or date of payment by Lender, as the case may be; third, to accrued but unpaid interest on this Note; fourth, to the principal amount outstanding; and the balance, if any, to Borrower. 9. Covenants, Etc. Run to Lender. All representations, warranties undertakings and covenants, both financial and non- financial, now or hereafter made, given, accepted or agreed upon by Borrower to or in favor of any lender (including, without limitation, those representations, warranties, undertakings and covenants set forth in the Amended and Restated Credit Agreement between Borrower and Seven Banks and National City Bank, As Agent, dated September 8, 1994, together with any extensions, renewals, amendments, restatements, modifications or refinancings thereof and further including, without limitation, those representations, warranties, undertakings and covenants set forth in the Note Purchase Agreement dated as of April 8, 1993 between Borrower and The Equitable Life Assurance Society of the United States, Equitable Variable Life Insurance Company, Allstate Life Insurance Company, The Life Insurance Company of Virginia, and Central Life Assurance Company, together with any extensions, renewals, amendments, restatements, modifications or refinancings thereof), are hereby incorporated herein by reference. Borrower intends and agrees that Lender shall enjoy the benefits of such representa- tions, warranties, undertakings and covenants as if made directly in favor of Lender by Borrower herein. Notwithstanding the foregoing, Borrower shall furnish Lender with only the statements, reports and information listed below at the times or intervals specified unless Lender requests from Borrower additional information, statements, reports, certifications, data or material in which event Borrower shall, from time to time, satisfy Lender's requests for such additional information, statements, certifica- tions, data or material: a. Within one hundred twenty (120) days after the close of each fiscal year, audited financial statements for the year ended prepared by independent outside accountants, satisfactory to Lender. b. Within one hundred twenty (120) days after the close of each fiscal year, a copy of its 10-K report filed with the Securities and Exchange Commission. c. Within forty-five (45) days after the close of each quarter, a copy of Borrower's financial statements certified by an officer of the Borrower as of the close of that period. d. Within forty-five (45) days after the close of each quarter, a copy of Borrower's Delinquency Report and Unfunded Commitment Report. e. Within forty-five (45) days after the close of each quarter, a statement, certified by an officer of the Borrower, to the effect that the Borrower is in compliance with its covenants with its lenders. 10. Furnish Copies. At all times during which (i) any amount is outstanding under this Note, or (ii) credit is available to Borrower under this Note, Borrower shall promptly furnish to Lender true, correct and complete copies of any and all loan agreements, credit agreements or other similar agreements as well as all notes, and any other documents as may be required by the Lender from time to time, together with all amendments and modifications to each of them (collectively, the "Loan Documents") pursuant to or in connection with which Borrower obtains or can obtain borrowed funds. 11. Default. The following shall constitute events of default ("Event of Default") under this Note: a. If Borrower or any subsidiary of Borrower shall fail to pay when due any amount owed to Lender of every nature or type. b. If Borrower or any subsidiary of Borrower shall fail to perform any obligation (other than payment obligations) to or in favor of Lender of every nature or type (i) which failure continues of a period of ten (10) calendar days following notice by Lender, or (ii) if, by reason of the nature of such failure, the same cannot be remedied within said ten (10) days, Borrower fails to proceed with diligence satisfactory to Bank after receipt of the notice to cure the same or, in any event, fails to cure such default within sixty (60) days after receipt of the notice. c. If Borrower or any subsidiary of Borrower shall fail to pay when due any material obligation to any third party and such third party accelerates the obligation or institutes legal proceedings with respect to such non-payment. d. If any representation, warranty or statement or material information now existing or hereafter made by Borrower in writing to Lender or to any other lender shall be false or erroneous in any material respect. e. If Borrower or any subsidiary of Borrower shall fail or omit to observe or perform any material covenant or agreement now or hereafter undertaken by Borrower in any credit agreement, note purchase agreement, loan agreement, note, mortgage, assignment, security agreement or other document pursuant to or in connection with which Borrower obtains or can obtain borrowed funds from any lender, note purchaser or the like. f. If an event of default under any Loan Document has occurred. g. If Borrower becomes insolvent or generally unable to meet its debt as they become due or fails, suspends or goes out of business. h. If there is a material adverse change in Borrower's business or financial condition. i. If a trustee, receiver or custodian is appointed over all or any part of Borrower's property. j. If Borrower or any subsidiary of Borrower shall commence or consent to any law relating to bankruptcy, insolvency, reorganization or relief of debtors. k. If there shall be a commenced against the Company or any subsidiary any proceeding under any law relating to bankruptcy, insolvency, reorganization or relief of debtors which is not dismissed within sixty (60) days of the commencement thereof. 12. Acceleration, Remedies. Upon the occurrence of any Event of Default, in addition to any and all other remedies at law or in equity, at the option of Lender the outstanding principal balance of this Note and all accrued and unpaid interest thereon and all other amounts payable by Borrower to Lender of every nature and type shall be immediately due and payable, and all such amounts shall bear interest at the Default Rate from the date of the Event of Default until paid. Lender may exercise any and all remedies without notice or demand of any kind which are hereby waived by Borrower. 13. Demand Feature Unconditional. Notwithstanding the Events of Default set forth in Section 11 above, Lender's right to demand full payment of this Note by Borrower at any time is unconditional and does not require the existence of an Event of Default. 14. Representations. Borrower hereby represents and warrants to Lender that (i) Borrower is a duly organized and validly existing Delaware corporation in good standing; (ii) Borrower has requisite corporate power and authority to execute and deliver this Note and to incur the indebtedness reflected thereby; (iii) the execution and deliver of this Note and the consummation of the transactions contemplated hereby shall not result in a breach by Borrower under any note, mortgage, loan agreement, security agreement or other contract to which Borrower is a party or signatory; and (iv) the officer of Borrower executing and delivering this Note on Borrower's behalf has been duly authorized to do so. 15. Certification of No Default. At all times during which (i) any amount is outstanding under this Note, or (ii) credit is available to Borrower under this Note, Borrower shall furnish to Lender, within forty-five (45) days after each quarter end, a certificate signed by its chief executive or chief financial officer, to the effect that no default has occurred under any Loan Document or, if a default has occurred, that a default has occurred together with a description of such default. 16. Compensating Balance. At all times during which (i) any amount is outstanding under this Note, or (ii) credit is available to Borrower under this Note, Borrower shall maintain with Lender a non-interest bearing deposit account with a minimum balance of $200,000.00. 17. Time is of the Essence. Time is of the essence in the payment of this Note. 18. Waivers. None of the following shall constitute a course of dealing, estoppel, waiver or the like upon which Borrower may rely: (a) Lender's acceptance of one or more late or partial payments; (b) Lender's forbearance from exercising any right or remedy under this Note; or (c) Lender's forbearance from exercising any right or remedy under this Note on any one or more occasions. Lender's exercise of any rights or remedies or a part of a right or remedy on one or more occasions shall not preclude Lender from exercising the right or remedy at any other time. Lender's rights and remedies under this Note and the law and equity are cumulative to, but independent of, each other. 19. Jury Trial Waiver. The Borrower hereby waives any right to a trial by jury in any action to enforce or defend any matter arising from or related to the Note, or any other document or agreement evidencing or relating to the loan. 20. Notices. All notices, demands, requests and consents (hereinafter "notices") given or made pursuant to this Note shall be in writing, shall be addressed to the addresses set forth in the introductory paragraph hereof or such other address as either party may designate for itself by a notice complying with this Section, and shall be served by: (a) personal delivery; (b) United States mail, postage prepaid; or (c) nationally recognized overnight courier service. All notices shall be deemed to be given upon the earlier of actual receipt, three (3) days after mailing or one (1) business day after deposit with the overnight courier. Any notices meeting the requirements of this Section shall be effective, regardless of whether or not actually received. 21. Representation and Warranty Regarding Business Purpose. Borrower represents and warrants that the loan evidenced by this Note is for business purposes and not for personal, family, household, or agricultural purposes. 22. Security. This Note is unsecured. 23. Waiver of Demands. Borrower hereby waives presentment, dishonor, notice of dishonor, protest, noting for protest, notice of default all other notices, and all demands. 24. Attorneys' Fees and Expenses. After an Event of Default has occurred or has been declared, Borrower shall pay to Lender all reasonable costs and expenses incurred by Lender in enforcing or preserving Lender's rights under this Note (regardless of whether such Event of Default is subsequently cured) including but not limited to, (a) attorneys' and paralegals' fees and disbursements; (b) the fees and expenses of any litigation, administrative, bankruptcy, insolvency, receivership and any other similar proceeding; (c) court costs; (d) the expenses of Lender, its employees, agents, attorneys and witnesses in preparing for litigation, administrative, bankruptcy, insolvency and other proceedings and for lodging, travel, and attendance at meetings, hearings, depositions, and trials; and (e) consulting and witness fees incurred by Lender in connection with any litigation or other proceeding. 25. Governing Law. This Note shall be construed under the laws of the State of Ohio. 26. Severability. If any clause, provision, section or article of this Note is ruled invalid by any court of competent jurisdiction, the invalidity of such clause, provision, section or article shall not affect any of the remaining provisions hereof. 27. Assignment. Borrower shall neither assign its rights or delegate its obligation under this Note. 28. Warrant of Attorney. With full knowledge of all constitutional rights, Borrower hereby authorizes any attorney-at- law to appear on Borrower's behalf in any court of record in the State of Ohio after this Note becomes due and payable, whether by demand, acceleration or otherwise; to waive the issuing and service of process and all other constitutional rights to due process of law; to confess a judgment against Borrower in favor of Lender for the amount then appearing due together with the costs of suit; to release all errors; and to waive all rights of appeal and stays of execution. With full knowledge of all constitutional rights, Borrower hereby voluntarily and knowingly waives all rights to notice and hearing prior to judgment being so confessed against Borrower. WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR, WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON ITS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE. HEALTH CARE REIT, INC. By:_____________________________ Robert J. Pruger Its: Chief Financial Officer EX-99 5 F O R I M M E D I A T E R E L E A S E PRESS RELEASE April 19, 1995 For more information contact: Erin Ibele (419) 247-2800 Robert Pruger (419) 247-2800 HEALTH CARE REIT, INC. ANNOUNCES FIRST QUARTER RESULTS AND DECLARES DIVIDEND Toledo, Ohio, April 19, 1995....The Directors of Health Care REIT, Inc. (NYSE/HCN) voted to pay a quarterly dividend at the rate of $.52 per share, an increase of $.005 per share from the previous dividend. The dividend will be payable May 19, 1995 to shareholders of record on May 5, 1995. This will be the REIT's 93rd consecutive dividend distribution. Cash flows from operating activities available for distribution for the three months ended March 31, 1995 was $5,694,981 ($.49 per share) compared with $6,292,422 ($.55 per share) for the three months ended March 31, 1994. Recently, the National Association of Real Estate Investment Trusts (NAREIT) issued a paper which redefined the components of "funds from operations." Accordingly, what the Company previously reported as "funds from operations" is now reported as "cash flows from operating activities available for distribution." For the quarter ended March 31, 1995, net income per share of $.42 was down $.01 or 2.3% from the first quarter of 1994. Gross income for the three months ended March 31, 1995 was up 14.0% from the first quarter of 1994. Total assets of $331 million at March 31, 1995 reflect a 4.8% increase from a year ago. The following chart presents the information highlighted above. Three Months Ended March 31 (Unaudited) ------------------------------ 1995 1994 ------------ ------------ Gross income $ 9,624,993 $ 8,441,239 Net income $ 4,864,965 $ 4,984,250 Net income per share $ .42 $ .43 Cash flows from operating activities available for distribution $ 5,694,981 $ 6,292,422 Cash flows from operating activities available for distribution per share $ .49 $ .55 Average number of shares outstanding 11,619,386 11,467,040 Total assets as of March 31 $331,098,644 $315,882,574
Health Care REIT, Inc. is a real estate investment trust which invests in health care facilities, primarily nursing homes. The Company also invests in assisted living and retirement facilities, behavioral care facilities, specialty care hospitals, and primary care facilities. EX-99 6 F O R I M M E D I A T E R E L E A S E PRESS RELEASE May 9, 1995 For more information contact: Erin Ibele (419) 247-2800 Robert Pruger (419) 247-2800 Toledo, Ohio, May 9, 1995 (NYSE/HCN)....Health Care REIT, Inc. (the "Company") announced today that its Board of Directors, acting on a recommendation of a special committee thereof, had approved revised terms of the acquisition of First Toledo Advisory Company ("FTAC"). FTAC currently serves as the manager of the Company and is owned by Bruce G. Thompson, Chairman and Chief Executive Officer, and Frederic D. Wolfe, President of the Company. On February 6, 1995, the Company announced that its Board of Directors approved in principle the acquisition of FTAC. Since that time, the Company and FTAC have revised the terms of the agreement in principle to eliminate the previously proposed stock purchase and loan arrangement and to decrease the overall number of shares issuable in connection with the transaction from 383,536 shares to 282,407 shares. Such shares would be issued in consideration of the acquisition. Under the revised agreement, the Company intends to account for the acquisition under the pooling of interests method of accounting. As previously announced, each of Messrs. Thompson and Wolfe would enter into five-year service agreements whereby Mr. Thompson would continue for two years as Chief Executive Officer for the Company and as a consultant for three years thereafter, and Mr. Wolfe would serve as a consultant for five years. Each of Messrs. Thompson and Wolfe would also enter into five-year non- compete agreements with the Company. The transactions described above are subject to definitive agreements, stockholder approval and other customary conditions. The transactions are also subject to the accounting of the acquisition under the pooling of interests method. It is anticipated that the revised transaction will now occur in the third quarter of 1995. Health Care REIT, Inc. is a real estate investment trust which invests in health care facilities, primarily nursing homes. The Company also invests in assisted living and retirement facilities, behavioral care facilities, specialty care hospitals, and primary care facilities. -----END PRIVACY-ENHANCED MESSAGE-----