-----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, Iy/oaI8v4zhHZ3Invv4pSSlMArNkRxxxRbe90doi/DvQD9LTTnJYx8ueP+t7Sl2G hLayG3joK+LE5+t44BIZBg== 0000950152-99-006451.txt : 19990806 0000950152-99-006451.hdr.sgml : 19990806 ACCESSION NUMBER: 0000950152-99-006451 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990805 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: SEC FILE NUMBER: 001-08923 FILM NUMBER: 99678456 BUSINESS ADDRESS: STREET 1: ONE SEAGATE STE 1500 STREET 2: P O BOX 1475 CITY: TOLEDO STATE: OH ZIP: 43604 BUSINESS PHONE: 4192472800 10-Q 1 HEALTH CARE REIT, INC. 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, 1999 --------------------------------------------- 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 1-8923 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 1500, 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 August 4, 1999. Class: Shares of Common Stock, $1.00 par value Outstanding 28,376,566 shares 2 HEALTH CARE REIT, INC. INDEX
Page ---- Part I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets - June 30, 1999 and December 31, 1998 3 Consolidated Statements of Income - Three and six months ended June 30, 1999 and 1998 4 Consolidated Statements of Shareholders' Equity - Six months ended June 30, 1999 and 1998 5 Consolidated Statements of Cash Flows - Six months ended June 30, 1999 and 1998 6 Notes to Unaudited Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosure About Market Risk 13 Part II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 14 Item 5. Other Information 14 Item 6. Exhibits and Reports on Form 8-K 15 SIGNATURES 16 EXHIBIT INDEX 17
-2- 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS -------------------- CONSOLIDATED BALANCE SHEETS (UNAUDITED) HEALTH CARE REIT, INC. AND SUBSIDIARIES
JUNE 30 DECEMBER 31 1999 1998 (UNAUDITED) (NOTE) ----------- ----------- (IN THOUSANDS) ASSETS Real estate investments: Real property owned: Land $ 60,847 $ 44,722 Buildings & improvements 636,149 443,574 Construction in progress 100,794 151,317 ----------- ----------- 797,790 639,613 Less accumulated depreciation (27,505) (19,624) ----------- ----------- Total real property owned 770,285 619,989 Loans receivable 421,612 405,963 Direct financing leases 1,108 6,741 ----------- ----------- 1,193,005 1,032,693 Less allowance for loan losses (5,287) (4,987) ----------- ----------- Net real estate investments 1,187,718 1,027,706 Other Assets: Direct investments 27,654 26,180 Marketable securities 1,504 4,106 Cash and cash equivalents 907 1,269 Deferred loan expenses 3,575 2,389 Receivables and other assets 14,155 11,774 ----------- ----------- 47,795 45,718 ----------- ----------- TOTAL ASSETS $ 1,235,513 $ 1,073,424 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Borrowings under line of credit obligations $ 156,600 $ 171,550 Senior unsecured notes 290,000 240,000 Secured debt 57,386 7,429 Accrued expenses and other liabilities 24,175 20,686 ----------- ----------- TOTAL LIABILITIES 528,161 439,665 Shareholders' equity: Preferred Stock, $1.00 par value: Authorized - 10,000,000 shares Issued and outstanding - 6,000,000 in 1999 and 3,000,000 in 1998 150,000 75,000 Common Stock, $1.00 par value: Authorized - 75,000,000 shares Issued and outstanding - 28,378,791 in 1999 and 28,240,025 in 1998 28,379 28,240 Capital in excess of par value 521,362 520,692 Undistributed net income 10,621 10,434 Accumulated other comprehensive income 1,213 3,982 Unamortized restricted stock (4,223) (4,589) ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 707,352 633,759 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,235,513 $ 1,073,424 =========== ===========
NOTE: The balance sheet at December 31, 1998 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See notes to unaudited consolidated financial statements -3- 4 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) HEALTH CARE REIT, INC. AND SUBSIDIARIES
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 1999 1998 1999 1998 ----------------- ----------------- (IN THOUSANDS EXCEPT PER SHARE DATA) REVENUES: Rental income $18,180 $ 9,839 $32,420 $17,697 Interest income 12,142 11,831 23,937 23,947 Commitment fees and other income 1,672 1,489 3,618 2,741 Prepayment fees 475 0 658 0 ------- ------- ------- ------- Total revenue $32,469 $23,159 $60,633 $44,385 EXPENSES: Interest expense $ 6,680 $ 4,461 $10,949 $ 8,701 Loan expense 252 181 418 357 Provision for depreciation 4,451 2,292 8,006 4,162 Provision for losses 150 150 300 300 General and administrative expenses 1,872 1,336 3,546 2,717 ------- ------- ------- ------- Total expenses $13,405 $ 8,420 $23,219 $16,237 ------- ------- ------- ------- Net income before gain on sale of properties $19,064 $14,739 $37,414 $28,148 Gain on sale of properties 75 0 703 0 ------- ------- ------- ------- Net Income 19,139 14,739 38,117 28,148 Preferred stock dividends 3,352 832 6,111 832 ------- ------- ------- ------- Net Income Available to Common Shareholders $15,787 $13,907 $32,006 $27,316 ======= ======= ======= ======= Average number of common shares outstanding: Basic 28,145 25,272 28,111 25,768 Diluted 28,440 25,612 28,431 25,130 Net income per share: Basic $ 0.56 $ 0.55 $ 1.14 $ 1.10 Diluted 0.56 0.54 1.13 1.09 Dividends declared and paid per common share $ 0.565 $ 0.545 $ 1.125 $ 1.085
See notes to unaudited consolidated financial statements -4- 5 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) HEALTH CARE REIT, INC. AND SUBSIDIARIES
Six months ended June 30, 1999 ---------------------------------------------------------------------------------------- Capital In Unamortized Accum. Other Preferred Common Excess Of Restricted Undistributed Comprehensive In thousands Stock Stock Par Value Stock Net Income Income Total ---------------------------------------------------------------------------------------- Balance at beginning of period $ 75,000 28,240 $ 520,692 $ (4,589) $ 10,434 $ 3,982 $ 633,759 Comprehensive income: Net income 38,117 38,117 Unrealized gains on securities (2,602) (2,602) Foreign currency translation adjustment (167) (167) --------- Comprehensive income 37,950 --------- Proceeds from issuance of shares from dividend reinvestment plan and 139 3,125 (228) 3,036 stock incentive plans Proceeds from sale of Preferred Stock 75,000 (2,455) 72,545 Amortization of restricted stock grants 594 594 Cash dividends paid (37,930) (37,930) --------- -------- --------- -------- -------- ------- --------- Balance at end of period $ 150,000 $ 28,379 $ 521,362 $ (4,223) $ 10,621 $ 1,213 $ 707,352 ========= ======== ========= ======== ======== ======= =========
Six months ended June 30, 1998 ---------------------------------------------------------------------------------------- Capital In Unamortized Accum. Other Preferred Common Excess Of Restricted Undistributed Comprehensive Stock Stock Par Value Stock Net Income Income Total ---------------------------------------------------------------------------------------- Balance at beginning of period $ $ 24,341 $ 435,603 $ (3,532) $ 8,841 $ 4,671 $ 469,924 Comprehensive income: Net income 28,148 28,148 Unrealized gains on securities (838) (838) Foreign currency translation adjustment (189) (189) Comprehensive income 27,121 --------- Proceeds from issuance of shares from dividend reinvestment plan and 203 4,766 (64) 4,905 stock incentive plans Proceeds from sale of shares 913 22,808 23,721 Proceeds from sale of Preferred Stock 75,000 (2,477) 72,523 Amortization of restricted stock grants 230 230 Cash dividends paid (27,817) (27,817) -------- -------- --------- -------- -------- ------- --------- Balance at end of period $ 75,000 $ 25,457 $ 460,700 $ (3,366) $ 9,172 $ 3,644 $ 570,607 ======== ======== ========= ======== ======== ======= =========
See notes to unaudited consolidated financial statements -5- 6 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) HEALTH CARE REIT, INC. AND SUBSIDIARIES
SIX MONTHS ENDED JUNE 30 1999 1998 ---------------------- (IN THOUSANDS) OPERATING ACTIVITIES Net income $ 38,117 $ 28,148 Adjustments to reconcile net income to net cash Provision for depreciation 8,107 4,198 Provision for losses 300 300 Amortization 1,012 588 Loan and commitment fees earned less than cash received 1,001 523 Direct financing lease income less than cash received 65 213 Rental income in excess of cash received (3,138) (569) Interest and other income in excess of cash received (138) (164) Increase in accrued expenses and other liabilities 2,487 3,459 Decrease in receivables and other assets 982 695 --------- --------- NET CASH PROVIDED FROM OPERATING ACTIVITIES 48,795 37,391 INVESTING ACTIVITIES Investment in real properties (158,558) (129,768) Investment in loans receivable (37,211) (62,980) Other investments (3,822) (16,856) Principal collected on loans 21,561 11,605 Proceeds from sale of properties 8,142 Other (325) (169) --------- --------- NET CASH USED IN INVESTING ACTIVITIES (170,213) (198,167) FINANCING ACTIVITIES Net payments under line of credit arrangements (14,950) (11,200) Principal payments on long-term obligations (43) (23,203) Net proceeds from the issuance of Common Stock 2,859 28,625 Net proceeds from the issuance of Preferred Stock 72,545 72,523 Proceeds from issuance of Senior Notes 50,000 100,000 Proceeds from issuance of Secured Debt 50,000 Increase in deferred loan expense (1,427) (663) Cash distributions to shareholders (37,928) (27,817) --------- --------- NET CASH PROVIDED FROM FINANCING ACTIVITIES 121,056 160,665 --------- --------- Decrease in cash and cash equivalents (362) (111) Cash and cash equivalents at beginning of period 1,269 1,381 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 907 $ 1,270 ========= ========= Supplemental Cash Flow Information -- Interest Paid $ 15,353 $ 10,155 ========= =========
See notes to unaudited consolidated financial statements -6- 7 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS HEALTH CARE REIT, INC. AND SUBSIDIARIES 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 three months ended June 30, 1999, are not necessarily an indication of the results that may be expected for the year ending December 31, 1999. 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, 1998. NOTE B - REAL ESTATE INVESTMENTS During the six months ended June 30, 1999, the Company invested $74,322,000 in real property, made construction advances of $107,623,000, provided permanent mortgage financings of $12,511,000, and funded $4,750,000 of equity related investments. During the six months ended June 30, 1999, the Company received principal payments on real estate mortgages of $21,561,000 and had net advances on working capital loans of $1,313,000. With respect to the above-mentioned construction advances, funding for construction in progress in connection with 50 properties owned directly by the Company totaled $84,236,000, and funding associated with 14 construction loans represented $23,387,000. During the six months ended June 30, 1999, 19 of the construction properties in progress completed the construction phase of the Company's investment process and were converted to permanent operating leases, with an aggregate investment balance of $134,759,000. Also, during the six months ended June 30, 1999, six of the construction loans completed the construction phase of the Company's investment process and were converted to investments in permanent mortgage loans, with an aggregate investment of $41,222,000. NOTE C - INDEBTEDNESS In February 1999, the Company entered into a $50,000,000 Secured Credit Agreement. The Credit Agreement bears interest at the lender's prime rate or LIBOR plus 2.0%, with a floor interest rate of 7.0%. At June 30, 1999, $50,000,000 was advanced under this Credit Agreement. In March 1999, the Company completed the sale of $50 million of 8.17% Senior Unsecured Notes due March 15, 2006. The Company has a total of $190,000,000 in unsecured credit facilities bearing interest at the lenders' prime rate or LIBOR plus 1.0%. A total of approximately $33,400,000 was available at June 30, 1999, subject to compliance with the terms and conditions of the unsecured credit facilities. -7- 8 NOTE D - SHAREHOLDERS' EQUITY In January 1999, the Company announced the sale of 3,000,000 shares of cumulative convertible preferred stock. These shares have a liquidation value of $25.00 per share and will pay dividends equivalent to the greater of (i) the annual dividend rate of $2.25 per share (a quarterly dividend rate of $0.5625 per share); or (ii) the quarterly dividend then payable per common share on an as converted basis. The preferred shares are convertible into common stock at a conversion price of $25.625 per share. The Company has the right to redeem the preferred shares after five years. In May 1998, the Company sold 3,000,000 shares of 8.875% Series B Cumulative Redeemable Preferred Stock with a liquidation preference of $25.00 per share. On and after May 1, 2003, the Preferred Stock may be redeemed for cash at the option of the Company, in whole or in part, at $25.00 per share, plus accrued and unpaid dividends thereon to the redemption date. NOTE E - DIRECT INVESTMENTS Management determines the appropriate classification of a direct investment at the time of acquisition and reevaluates such designation as of each balance sheet date. Debt securities which are classified as held to maturity are stated at historical cost. Equity investments are stated at historical cost. At June 30, 1999, direct investments included the preferred stock of one private corporation and subordinated debt in eight private corporations, and ownership representing a 31% interest in Atlantic Healthcare Finance L.P., a property investment group that specializes in the financing, through sale and leaseback transactions, of nursing homes located in the United Kingdom and continental Europe. NOTE F - MARKETABLE SECURITIES Marketable securities are stated at market value with unrealized gains and losses reported in a separate component of shareholders' equity. At June 30, 1999, marketable securities reflected the market value of the common stock of two publicly owned corporations, which were obtained by the Company at no cost, and the fair value of the common stock related to warrants in one publicly owned corporation in excess of the exercise price. NOTE G - CONTINGENT LIABILITIES As disclosed in the financial statements for the year ended December 31, 1998, the Company was contingently liable for certain obligations amounting to $9,365,000. At June 30, 1999, the contingent obligations totaled $8,925,000. NOTE H - DISTRIBUTIONS PAID TO COMMON SHAREHOLDERS On February 22, 1999, the Company paid a dividend of $0.56 per share to shareholders of record on February 2, 1999. This dividend related to the period from October 1, 1998 through December 31, 1998. On May 20, 1999, the Company paid a dividend of $0.565 per share to shareholders of record on May 4, 1999. This dividend related to the period from January 1, 1999 to March 31, 1999. -8- 9 NOTE I - EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):
Six months ended June 30 ------------------------ 1999 1998 ---------- ----------- Numerator for basic and diluted earnings per share-income available to common shareholders $ 32,006 $ 27,316 ======== ======== Denominator for basic earnings per share - weighted average shares 28,111 24,768 Effect of dilutive securities: Employee stock options 120 219 Nonvested restricted shares 200 143 -------- -------- Dilutive potential common shares 320 362 -------- -------- Denominator for diluted earnings per share - adjusted weighted average shares 28,431 25,130 ======== ======== Basic earnings per share $ 1.14 $ 1.10 Diluted earnings per share $ 1.13 $ 1.09
-9- 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS ----------------------------------- LIQUIDITY AND CAPITAL RESOURCES At June 30, 1999, the Company's net real estate investments totaled approximately $1,187,718,000 which included 166 assisted living facilities, 50 skilled nursing facilities, 15 retirement centers, six specialty care facilities and two behavioral care facilities. The Company anticipates making additional investments in health care related facilities. New investments are funded from temporary borrowings under the Company's line of credit arrangements. Permanent financing for future investments, which replaces funds drawn under the line of credit arrangements, is expected to be provided through a combination of private and public offerings of debt and equity securities, and the assumption of secured debt. The Company believes its liquidity and various sources of available capital are sufficient to fund operations, meet debt service and dividend requirements, and finance future investments. As of June 30, 1999, the Company had shareholders' equity of $707,352,000 and a total outstanding debt balance of $503,986,000 which represents a debt to equity ratio of .71 to 1.0. In January 1999, the Company announced the sale of 3,000,000 shares of cumulative convertible preferred stock. These shares have a liquidation value of $25.00 per share and will pay quarterly dividends equivalent to the greater of $0.5625 or the quarterly dividend then payable per common share on an as converted basis. The preferred shares are convertible into common stock at a conversion price of $25.625 per share. The Company has the right to redeem the preferred shares after five years. In February 1999, the Company entered into a $50,000,000 Secured Credit Facility. The Credit Facility bears interest at the lender's prime rate or LIBOR plus 2.0%, with a floor of 7.0%. At June 30, 1999, $50,000,000 was advanced under this Credit Agreement. In March 1999, the Company completed the sale of $50 million of 8.17% Senior Unsecured Notes due March 15, 2006. During the six months ended June 30, 1999, the proceeds derived from the Company's capital raising activities were used to invest in additional health care properties and reduce bank debt under the Company's revolving lines of credit arrangements. As of June 30, 1999, the Company has effective shelf registrations on file with the Securities and Exchange Commission under which the Company may issue up to $330,319,000 of securities including debt, convertible debt, common and preferred stock. The Company anticipates issuing securities under such shelf registrations to invest in additional health care facilities and to repay borrowings under the Company's line of credit arrangements. As of June 30, 1999, the Company had approximately $195,225,000 in unfunded commitments. Under the Company's line of credit arrangements, available funding totaled $33,400,000, subject to compliance with the terms and conditions of the line of credit arrangements. RESULTS OF OPERATIONS Revenues for the three months ended June 30, 1999, were $32,469,000 as compared with $23,159,000 for the three months ended June 30, 1998. Revenue growth was generated primarily by increased rental income of $8,341,000 as a result of additional real estate investments made during the past twelve months. Revenues for the six months ended June 30, 1999 were $60,633,000 as compared with $44,385,000 for the six months ended June 30, 1998, an increase of $16,248,000 or 37%. Revenue growth resulted primarily from increased operating lease income of $14,723,000, and increased loan commitment fees of $634,000 as a result of additional real estate investments made during the past twelve months. -10- 11 In addition, the Company recognized gains on sales of properties and prepayment fees of $550,000 and $1,361,000 for the three and six months ended June 30, 1999, respectively. There were no such gains on sales of properties or prepayment fees in the similar periods in 1998. Expenses for the three months ended June 30, 1999 totaled $13,405,000, an increase of $4,985,000 from expenses of $8,420,000 for the same period in 1998. Expenses for the six months ended June 30, 1999 totaled $23,219,000, an increase of $6,982,000 from expenses of $16,237,000 for the same period in 1998. The increases in total expenses for the three and six month periods ended June 30, 1999 were related to an increase in interest expense, an additional expense associated with the provision for depreciation and an increase in general and administrative expenses. Interest expense for the three months ended June 30, 1999 was $6,680,000 as compared to $4,461,000 for the same period in 1998. For the six month period ended June 30, 1999, interest expense totaled $10,949,000 as compared to $8,701,000 for the same period in 1998. The increase in the 1999 period was primarily due to the issuance of $50,000,000 Senior Notes in March, 1999 and the issuance of $100,000,000 Senior Notes in March, 1998. The increases in the 1999 periods were offset by the amount of capitalized interest recorded during the first six months of 1999. The Company capitalizes certain interest costs associated with funds used to finance the construction of properties owned directly by the Company. The amount capitalized is based upon the borrowings outstanding during the construction period using the rate of interest which approximates the Company's cost of financing. The Company's interest expense is reduced by the amount capitalized. Capitalized interest for the three and six month periods in 1999 totaled $1,982,000, and $5,141,000, respectively, as compared with $1,617,000 and $2,843,000 for the same periods in 1998. The provision for depreciation for the three and six month periods ended June 30, 1999 totaled $4,451,000 and $8,006,000, respectively, increases of $2,159,000 and $3,844,000 over the comparable periods in 1998 as a result of additional investments in properties owned directly by the Company. General and administrative expenses for the three and six month periods ended June 30, 1999 totaled $1,872,000 and $3,546,000, respectively, as compared with $1,336,000 and $2,717,000 for the same periods in 1998. The expenses for the three and six month periods in 1999 were 5.75% and 5.78% of revenues as compared with 5.77% and 6.12% for the same periods in 1998. Dividend expense, associated with the Company's outstanding preferred stock, for the three and six month periods ended June 30, 1999 totaled $3,352,000 and $6,111,000, respectively, as compared with $832,000 for the same periods in 1998. As a result of the various factors mentioned above, net income available to common shareholders for the three and six month periods ended June 30, 1999 was $15,787,000, or $0.56 per diluted share, and $32,006,000, or $1.13 per diluted share, respectively, as compared with $13,907,000, or $0.54 per diluted share, and $27,316,000, or $1.09 per diluted share for the comparable periods in 1998. IMPACT OF INFLATION During the past three years, inflation has not significantly affected the earnings of the Company because of the moderate inflation rate. Additionally, earnings of the Company reflect long-term investments with fixed rents or interest rates. These investments are mainly financed with a combination of equity, senior notes and borrowings under the revolving lines of credit. During inflationary periods, which generally are accompanied by rising interest rates, the Company's ability to grow may be adversely affected because the yield on new investments may increase at a slower rate than new borrowing costs. Presuming the current inflation rate remains moderate and long-term interest rates do not increase significantly, the Company believes that equity and debt financing will continue to be available. -11- 12 YEAR 2000 COMPLIANCE The Year 2000 compliance issue concerns the inability of certain systems and devices to properly use or store dates beyond December 31, 1999. This could result in system failures, malfunctions, or miscalculations that disrupt normal operations. This issue affects most companies and organizations to large and small degrees, at least to the extent that potential exposures must be evaluated. The Company believes its own internal operations, technology infrastructure, information systems and software applications are Year 2000 compliant. The Company is reviewing the impact of outside vendors and tenants/borrowers. The Company initially focused this review on mission-critical operations, recognizing that other potential effects are expected to be less material. In those cases where there are external compliance issues, these are considered to be minor in nature. Expenditures for any remedies will not be material. With respect to the Company's tenants, borrowers and properties, the Company is assessing the tenants' and borrowers' compliance efforts, the possibility of any interface difficulties or electromechanical problems relating to compliance by material vendors, the effects of potential non-compliance, and remedies that may mitigate or obviate such effects. The Company plans to process information from tenant surveys and complete its assessment by September 30, 1999. Because the Company's evaluation of these issues has been conducted by its own personnel or by selected inquiries of its vendors and tenants in connection with their routine servicing operations, the Company believes that its expenditures for assessing Year 2000 issues, though difficult to quantify, have not been material. In addition, the Company is not aware of any issues that will require material expenditures by the Company in the future. Based upon current information, the Company believes that the risk posed by foreseeable Year 2000 related problems with its internal systems (including both information and non-information systems) is minimal. Year 2000 related problems with the Company's software applications and internal operational programs are unlikely to cause more than minor disruptions in the Company's operations. Year 2000 related problems at certain of its third-party service providers, such as its banks, payroll processor, and telecommunications provider is marginally greater. Based upon current information, the Company does not believe any such problems would have a material effect on its operations. For example, Year 2000 related problems at such third-party service providers could delay the processing of financial transactions and the Company's payroll and could disrupt the Company's internal and external communications. The Company believes that the risk posed by Year 2000 related problems at its properties or with its tenants is marginally greater. Year 2000 related problems at certain governmental agencies and third-party payers could delay the processing of tenant financial transactions. Based upon current information, the Company does not believe any such problems would have a material long-term effect on its operations. However, neither the Company nor its tenants and borrowers can be assured that the federal and state governments upon which they rely for Medicare and Medicaid revenue will be in compliance in a timely manner. Year 2000 related problems with the electromechanical systems at its properties are unlikely to cause more than minor disruptions in the Company's operations. The Company intends to complete outstanding assessments, implement identified remedies, continue to monitor Year 2000 issues, and develop contingency plans if, and to the extent deemed, necessary. However, based upon current information and barring developments, the Company does not anticipate developing any substantive contingency plans with respect to Year 2000 issues. In addition, the Company has no plans to seek independent verification or review of its assessments. While the Company believes that it will be Year 2000 compliant by December 31, 1999, there can be no assurance that the Company will be successful in identifying and assessing all compliance issues, or that the Company's efforts to remedy all Year 2000 compliance issues will be effective such that they will not have a material adverse effect on the Company's business or results of operations. -12- 13 OTHER INFORMATION This document and supporting schedules may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in the future to differ materially from expected results. These risks and uncertainties include, among others, competition in the financing of health care facilities, the availability of capital, and regulatory and other changes in the health care sector, as described in the Company's filings with the Securities and Exchange Commission. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ---------------------------------------- ABOUT MARKET RISK ----------------- The Company is exposed to various market risks, including the potential loss arising from adverse changes in interest rates. The Company seeks to mitigate the effects of fluctuations in interest rates by matching the term of new investments with new long-term fixed rate borrowings to the extent possible. The market value of the Company's long-term fixed rate borrowings is subject to interest rate risk. Generally, the market value of fixed rate financial instruments will decrease as interest rates rise and increase as interest rates fall. The estimated fair value of the Company's total long-term borrowings at June 30, 1999, was $275 million. A 1% increase in interest rates would result in a decrease in fair value of long-term borrowings by approximately $12 million. The Company is subject to risks associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the terms of such refinancing may not be as favorable as the terms of current indebtedness. The majority of the Company's borrowings were completed pursuant to indentures or contractual agreements which limit the amount of indebtedness the Company may incur. Accordingly, in the event that the Company is unable to raise additional equity or borrow money because of these limitations, the Company's ability to acquire additional properties may be limited. At June 30, 1999, the Company's variable interest rate debt exceeded its variable interest rate assets, presenting an exposure to rising interest rates. The Company may or may not elect to use financial derivative instruments to hedge variable interest rate exposure. Such decisions are principally based on the Company's policy to match its variable rate investments with comparable borrowings, but is also based on the general trend in interest rates at the applicable dates and the Company's perception of future volatility of interest rate. -13- 14 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ---------------------------------------------------- The annual meeting of shareholders of Health Care REIT, Inc. was duly called and held on April 20, 1999 in Toledo, Ohio. Proxies for the meeting were solicited on behalf of the Company's management and Board of Directors pursuant to Regulation 14A of the General Rules and Regulations of the Commission. There was no solicitation in opposition to the management's nominees for election as directors as listed in the Proxy Statement, and all such nominees were elected. Votes were cast at the meeting upon the proposals described in the Proxy Statement for the meeting (filed with the Commission pursuant to Regulation 14A and incorporated herein by reference) as follows:
Proposal #1 - The election of three directors: Nominee For Withheld ------------------------------- ------------------------- ---------------------- Willliam C. Ballard, Jr. 28,832,528 216,877 Peter J. Grua 28,816,891 232,514 R. Scott Trumbull 28,773,760 275,645 Proposal #2 - The approval of an amendment to the Company's Stock Plan for Non-Employee Directors: For 27,416,299 Against 1,334,547 Abstain 298,559 Proposal #3 - The ratification of the appointment of Ernst & Young LLP as independent auditors for the fiscal year 1998: For 28,833,012 Against 92,724 Abstain 123,669
ITEM 5. OTHER INFORMATION ----------------- On April 13, 1999, the Company issued a press release in which it announced first quarter investment activity of $99,293,000. On April 20, 1999, the Company issued a press release in which it announced record first quarter 1999 results and increase in quarterly dividend. -14- 15 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -------------------------------- (a) Exhibits 27 Financial Data Schedule 99.1 Press release dated April 13, 1999 99.2 Press release dated April 20, 1999 (b) Reports on Form 8-K -15- 16 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: August 4, 1999 By: /S/ GEORGE L. CHAPMAN ------------------ --------------------------- George L. Chapman, Chairman, Chief Executive Officer, and President Date: August 4, 1999 By: /S/ EDWARD F. LANGE, JR. ------------------ ----------------------------- Edward F. Lange, Jr., Chief Financial Officer Date: August 4 , 1999 By: /S/ MICHAEL A. CRABTREE ------------------ --------------------------- Michael A. Crabtree, Chief Accounting Officer -16- 17 EXHIBIT INDEX ------------- The following documents are included in this Form 10-Q as Exhibits: DESIGNATION NUMBER UNDER ITEM 601 OF REGULATION S-K EXHIBIT DESCRIPTION -------------- ------------------------ 27 Financial Data Schedule 99.1 Press release dated April 13, 1999 99.2 Press release dated April 20, 1999 -17- EX-27 2 EXHIBIT 27
5 0000766704 HEALTH CARE REIT,INC. 1,000 6-MOS DEC-31-1999 JUN-30-1999 907 1,504 14,155 5,287 0 0 797,790 27,505 1,235,513 0 503,986 0 150,000 28,379 528,973 1,235,513 0 61,336 0 0 8,424 300 10,949 32,006 0 32,006 0 0 0 32,006 1.14 1.13
EX-99.1 3 EXHIBIT 99.1 1 EXHIBIT 99.1 F O R I M M E D I A T E R E L E A S E April 13, 1999 For more information contact: Erin Ibele - (419) 247-2800 Ed Lange - (419) 247-2800 HEALTH CARE REIT, INC. ANNOUNCES FIRST QUARTER INVESTMENTS OF $99 MILLION Toledo, Ohio, April 13, 1999..... HEALTH CARE REIT, INC. (NYSE/HCN) announced today that investment activity for the first quarter of 1999 totalled $99,293,000. The 1999 investment activity contributed to an eight percent increase in total assets which totalled $1,160,045,000 at March 31, 1999, as compared with $1,073,424,000 at December 31, 1998. First quarter investment activity included real property investments of $84,830,000, mortgage loans of $12,581,000 and equity related investments of $1,882,000. Facility-based investments, inclusive of construction advances, were comprised of $79,469,000 for 57 assisted living facilities, $9,797,000 for seven nursing homes and $8,145,000 for eight retirement centers. The company funded equity related investments in five privately held health care related companies. Aggregate funding was provided to 22 operators in 21 states. During the first quarter period, 18 construction projects completed the construction phase of the company's investment process. Fourteen facilities were converted to permanent real property investments, with an aggregate investment of $119,887,000. Four facilities were converted to permanent mortgage loans with an aggregate investment balance of $28,909,000. Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust, which invests in health care facilities, primarily nursing homes, assisted living facilities and retirement centers. At March 31, 1999, the company had investments in 232 health care facilities in 34 states and had total assets of approximately $1.2 billion. For more information on Health Care REIT, Inc., via facsimile at no cost, dial 1-800-PRO-INFO and enter the company code -- HCN. ##### -18- EX-99.2 4 EXHIBIT 99.2 1 EXHIBIT 99.2 F O R I M M E D I A T E R E L E A S E APRIL 20, 1999 FOR MORE INFORMATION CONTACT: ERIN IBELE - (419) 247-2800 ED LANGE - (419) 247-2800 HEALTH CARE REIT, INC. ANNOUNCES RECORD FIRST QUARTER RESULTS AND INCREASE IN QUARTERLY DIVIDEND FIRST QUARTER RESULTS FIRST QUARTER HIGHLIGHTS --------------------- ------------------------ - $1.2 billion total assets - $99 million new investments - $29 million gross income - 39% asset growth - $0.67 per diluted share FFO - 8% per share FFO growth - $0.56 per share dividends - 84% FFO payout ratio Toledo, Ohio, April 20, 1999........HEALTH CARE REIT, INC. (NYSE/HCN) today reported record operating results for the first quarter of 1999. Funds from operations (FFO), the generally accepted measure of operating performance for the real estate investment trust industry, achieved a record level of $18,963,000, or $0.67 per diluted share, for the three months ended March 31, 1999, an 8 percent per share increase from $15,279,000, or $0.62 per diluted share, in the prior year. In addition, the company announced that upon a review of its operating results and financial condition, the Board of Directors voted to declare a dividend for the quarter ended March 31, 1999, of $0.565 per share as compared with $0.545 per share for the same period in 1998. The dividend is a one-half cent increase from the dividend paid for the fourth quarter of 1998 and represents the 112th consecutive dividend payment. The dividend will be payable May 20, 1999, to shareholders of record on May 4, 1999. "We are pleased with the company's first quarter operating results. The level of earnings and investment activity were consistent with management's expectations and represent a great start for 1999," commented George L. Chapman, chairman and chief executive officer. "During 1998 the company demonstrated its ability to maximize yield opportunities and raise capital effectively. The continued availability of high yielding investments combined with our careful capital management program have produced outstanding net spreads for the company's investments. We expect continued success throughout the balance of 1999." Net income available to common shareholders for the first quarter of 1999 totaled $16,219,000 or $0.57 per diluted share, on revenue of $28,792,000, as compared with net income available to common shareholders of $13,409,000, or $0.54 per diluted share, on revenue of $21,226,000 for the three months ended March 31, 1998. Revenue growth was generated primarily by new investment activity in 1998 and the first quarter of 1999, which totaled $397,500,000 and $99,293,000, respectively. Investment activity contributed to a 39 percent increase in total assets, which at March 31, 1999, totaled $1,160,045,000 as compared with total assets of $836,006,000 at March 31, 1998. -19- 2 APRIL 20, 1999 HEALTH CARE REIT, INC. PAGE 2 - -------------------------------------------------------------------------------- Dividend payments to common shareholders for the three months ended March 31, 1999, totaled $15,819,000, or $0.56 per share, as compared with dividend payments of $13,148,000, or $0.54 per share for the same period in 1998. Correspondingly, the FFO payout ratio for the first quarter of 1999 was 84 percent as compared with a FFO payout ratio of 87 percent for the first three months of 1998, evidence of the company's commitment to reduce its FFO payout ratio to a level below 80 percent during the next 12 months. In January 1999, the company announced the private placement of three million shares of convertible preferred stock, providing net proceeds of $73 million. In February 1999, the company closed a $50 million secured credit facility with Bank United. The credit facility has a five-year term, may be prepaid at any time at par and bears interest at the lender's prime rate or LIBOR plus 2 percent, with a floor rate of 7 percent. The credit facility is secured primarily by assets that are in the development phase of the company's investment process. At March 31, 1999, $44 million was advanced under the credit facility. In March 1999, the company announced the sale of $50 million of 8.17 percent senior unsecured notes due March 15, 2006. The notes are rated "Ba1" by Moody's Investor Service, "BBB-" by Standard & Poor's Corporation and "BBB-" by Duff & Phelps Credit Rating Co. The net proceeds derived from the company's capital formation activities were used to repay borrowings under the company's revolving line of credit arrangements and invest in additional health care properties. In other developments, the company announced today that R. Scott Trumbull has been elected a Class I director. Mr. Trumbull's term will continue through April 2002. Mr. Trumbull is Executive Vice President International Operations & Corporate Development of Owens-Illinois, Inc. Mr. Trumbull is a member of the Board of Franklin Electric Company. "Scott brings to the Health Care REIT Board a wealth of public company operational and managerial expertise," commented George L. Chapman. "We look forward to Scott's long-term association with our company." Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust which invests in health care facilities, primarily nursing homes, assisted living facilities and retirement centers. At March 31, 1999, the company had investments in 232 health care facilities in 34 states and had total assets of approximately $1.2 billion. This document and supporting schedules may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the company's actual results in the future to differ materially from expected results. These risks and uncertainties include, among others, competition in the financing of health care facilities, the availability of capital, and regulatory and other changes in the health care sector, as described in the company's filings with the Securities and Exchange Commission. FINANCIAL SCHEDULES FOLLOW For more information on Health Care REIT, Inc., via facsimile at no cost, dial 1-800-PRO-INFO and enter the company code - HCN ##### -20- 3 HEALTH CARE REIT, INC. FINANCIAL SUPPLEMENT CONSOLIDATED BALANCE SHEETS (UNAUDITED) (AMOUNTS IN THOUSANDS)
MARCH 31 -------------------------- 1999 1998 -------------------------- ASSETS Real estate investments: Real property owned: Land $ 57,763 $ 27,654 Buildings & improvements 588,713 300,451 Construction in progress 80,285 62,676 ----------- ----------- 726,761 390,781 Less accumulated depreciation (23,179) (13,638) ----------- ----------- Total real property owned 703,582 377,143 Loans receivable 412,368 429,686 Direct financing leases 1,139 7,825 ----------- ----------- 1,117,089 814,654 Less allowance for losses on loans receivable (5,137) (4,537) ----------- ----------- Net real estate investments 1,111,952 810,117 Other assets: Direct investments 25,888 8,680 Marketable securities 2,233 5,009 Deferred loan expenses 3,440 2,584 Cash and cash equivalents 1,231 1,689 Receivables and other assets 15,301 7,927 ----------- ----------- 48,093 25,889 ----------- ----------- TOTAL ASSETS $ 1,160,045 $ 836,006 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Borrowings under line of credit obligations $ 89,200 $ 49,000 Senior unsecured notes 290,000 262,000 Secured debt 51,408 8,650 Accrued expenses and other liabilities 22,743 19,255 ----------- ----------- Total liabilities $ 453,351 $ 338,905 Shareholders' equity: Preferred Stock, $1.00 par value: Authorized - 10,000,000 shares Issued and outstanding - 6,000,000 in 1999 150,000 Common Stock, $1.00 par value: Authorized - 40,000,000 shares Issued and outstanding - 28,317,475 in 1999 and 25,367,997 in 1998 28,317 25,368 Capital in excess of par value 519,982 461,102 Undistributed net income 10,834 9,104 Accumulated other comprehensive income 2,109 5,008 Unamortized restricted stock (4,548) (3,481) ----------- ----------- TOTAL SHAREHOLDERS' EQUITY $ 706,694 $ 497,101 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,160,045 $ 836,006 =========== ===========
-21- 4 HEALTH CARE REIT, INC. FINANCIAL SUPPLEMENT CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
THREE MONTHS ENDED MARCH 31 ------------------ 1999 1998 -------- -------- Revenues: Operating lease rents $ 14,140 $ 7,644 Interest income 11,795 12,116 Direct financing lease income 100 214 Loan and commitment fees 1,701 1,226 Other income 245 26 Prepayment fees 183 0 Gain on sale of properties 628 0 -------- -------- $ 28,792 $ 21,226 Expenses: Interest expense $ 4,269 $ 4,240 Provision for depreciation 3,555 1,870 General and administrative 1,674 1,381 Loan expense 166 176 Provision for losses 150 150 -------- -------- 9,814 7,817 -------- -------- Net Income 18,978 13,409 Preferred stock dividends 2,759 0 -------- -------- Net Income Available to Common Shareholders $ 16,219 $ 13,409 ======== ======== Average number of common shares outstanding: Basic 28,077 24,259 Diluted 28,393 24,642 Net income per share: Basic $ 0.58 $ 0.55 Diluted 0.57 0.54 Funds from operations $ 18,963 $ 15,279 Funds from operations per share: Basic $ 0.68 $ 0.63 Diluted 0.67 0.62 Dividends per share $ 0.560 $ 0.540
-22- 5 FINANCIAL SUPPLEMENT - MARCH 31, 1999 - -------------------------------------------------------------------------------- PORTFOLIO COMPOSITION ($000'S) EXHIBIT 1 - ------------------------------
BALANCE SHEET DATA # Properties # Beds/Units Balance (1) % Balance -------------------- ------------------- -------------------- ----------------- Real Property 154 12,623 $ 703,582 62% Loans Receivable & Other 78 7,820 413,507 36% Direct Investments -na- -na- 25,888 2% -------------------- ------------------ --------------------- ----------------- Total Investments 232 20,443 $ 1,142,977 100% INVESTMENT DATA # Properties # Beds/Units Investment (2) % Investment -------------------- ------------------ --------------------- ----------------- Assisted Living Facilities 154 10,621 $ 663,778 59% Nursing Homes 53 7,349 291,054 26% Retirement Centers 17 1,466 69,149 6% Specialty Care Facilities 6 713 91,837 8% Behavioral Care 2 294 10,636 1% -------------------- ------------------ --------------------- ----------------- Real Estate Investments 232 20,443 $ 1,126,454 100% INVESTMENT BY OWNER TYPE # Properties # Beds/Units Investment (2) % Investment -------------------- ------------------ --------------------- ----------------- Publicly Traded 79 5,717 $ 319,949 28% Key Private 104 10,208 619,672 55% Privately Held 49 4,518 186,833 17% -------------------- ------------------ --------------------- ----------------- Real Estate Investments 232 20,443 $ 1,126,454 100%
NOTES: (1) TOTAL INVESTMENTS INCLUDE GROSS REAL ESTATE INVESTMENTS AND DIRECT INVESTMENTS WHICH AMOUNTED TO $1,117,089,000 AND $25,888,000, RESPECTIVELY. (2) REAL ESTATE INVESTMENTS INCLUDE GROSS REAL ESTATE INVESTMENTS AND CREDIT ENHANCEMENTS WHICH AMOUNTED TO $1,117,089,000 AND $9,365,000, RESPECTIVELY. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- REVENUE COMPOSITION ($000'S) EXHIBIT 2 - ----------------------------
Three Months Ended March 31, 1999 Year-to-Date ------------------------------ ----------------------- REVENUE BY INVESTMENT TYPE Mortg. Loans & Other $ 12,212 43% Real Property 15,912 55% (Not Applicable) Direct Investments 668 2% ------------------------------ ----------------------- Total $ 28,792 100% REVENUE BY FACILITY TYPE Assisted Living Facilities $ 15,093 53% Nursing Homes 9,329 32% Specialty Care Facilities 3,015 10% Retirement Centers 1,355 5% Behavioral Care 0 0% ------------------------------ ----------------------- Total $ 28,792 100% REVENUE BY OWNER TYPE Publicly Traded $ 7,622 26% Key Private 16,019 56% Privately Held 5,151 18% ------------------------------ ----------------------- Total $ 28,792 100%
- -------------------------------------------------------------------------------- -23- 6 - -------------------------------------------------------------------------------- REVENUE COMPOSITION (CONTINUED) ($000'S) EXHIBIT 3 - ----------------------------------------
OPERATING LEASE EXPIRATIONS & LOAN MATURITIES Current Lease Current Interest Interest and Year Revenue (1) Revenue (1) Lease Revenue % of Total - --------------------------------------------------------------------------------------------- 1999 $ 1,260 $ 61 $ 1,321 1% 2000 0 1,730 1,730 1% 2001 0 1,772 1,772 2% 2002 873 676 1,549 1% 2003 3,408 2,852 6,260 5% Thereafter 72,964 37,195 110,159 90% ---------------------------------------------------------------------------- Total $ 78,505 $ 44,286 $ 122,791 100%
NOTES: (1) REVENUE IMPACT BY YEAR, ANNUALIZED - -------------------------------------------------------------------------------- COMMITTED INVESTMENT BALANCES EXHIBIT 4 - ----------------------------- ($000'S EXCEPT INVESTMENT PER BED/UNIT)
Committed Investment per # Properties # Beds/Units Balance (1) Bed/Unit --------------------------------------------------------------------- Assisted Living Facilities 154 10,621 $ 779,300 $ 73,373 Nursing Homes 53 7,349 320,137 43,562 Retirement Centers 17 1,466 80,399 54,843 Specialty Care Facilities 6 713 91,837 128,804 Behavioral Care 2 294 10,636 36,176 --------------------------------------------------------------------- Total 232 20,443 $ 1,282,309 n/a
NOTES: (1) COMMITTED BALANCE INCLUDES REAL ESTATE INVESTMENTS, CREDIT ENHANCEMENTS AND UNFUNDED COMMITMENTS FOR WHICH INITIAL FUNDING HAD COMMENCED. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OPERATOR CONCENTRATION ($000'S) EXHIBIT 5 - -------------------------------
CONCENTRATION BY INVESTMENT # Properties Investment % Investment ------------------------------------------------------ CareMatrix Corp. 9 $ 100,623 9% Atria Senior Quarters 11 93,792 8% Life Care Centers of America, Inc. 14 84,012 7% Olympus Healthcare Group, Inc. 12 78,544 7% Torch Health Care 15 56,825 5% Remaining Operators 171 712,658 64% ------------------------------------------------------ Total 232 $ 1,126,454 100% CONCENTRATION BY REVENUE # Properties Revenue (1) % Revenue ------------------------------------------------------ Atria Senior Quarters 11 $ 2,471 9% Olympus Healthcare Group, Inc. 12 2,398 8% Life Care Centers of America, Inc. 14 1,932 7% Doctors Corporation of America 3 1,559 5% Torch Health Care 15 1,493 5% Remaining Operators 177 18,939 66% ------------------------------------------------------ Total 232 $ 28,792 100%
NOTES: (1) THREE MONTHS ENDED MARCH 31, 1999 - -------------------------------------------------------------------------------- -24- 7 - -------------------------------------------------------------------------------- SELECTED FACILITY DATA EXHIBIT 6 - ----------------------
% Private Pay Coverage Before Coverage After Occupancy and Medicare Mgt. Fees Mgt. Fees --------------------------------------------------------------------- Nursing Homes 83% 39% 1.92x 1.40x Assisted Living Facilities 89% 100% 1.33x 1.14x Retirement Centers 94% 100% 1.90x 1.64x Specialty Care Facilities 52% 58% 3.55x 3.01x Behavioral Care n/a 86% 3.00x 1.58x ------------------------------------ 1.97x 1.56x
NOTES: (1) FACILITY DATA LTM AS OF DEC. 31, 1998 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITY DEPOSITS & OTHER CREDIT SUPPORT ($000'S) EXHIBIT 7 - -------------------------------------------------
Balance % Investment --------------------------------- Cross Defaulted $ 1,018,166 90% of gross real estate investments Cross Collateralized 379,726 92% of mortgage loans Bank Letters of Credit & Cash 45,801 4% of committed balance
CURRENT CAPITALIZATION ($000'S) Balance % Balance LEVERAGE & PERFORMANCE RATIOS ------------------------------- ---------------------------------------- Borrowings Under Bank Lines $ 89,200 7% Debt/Total Mkt. Cap 36% Long-Term Debt Obligations 341,408 29% Debt/Mkt. Cap 57% Equity Market Capitalization 758,816 64% Interest Coverage 4.06x 1st Qtr. ------------------------------- Total Market Capitalization $ 1,189,424 100% 3.88x LTM FFO Payout Ratio 84% 1st Qtr. 84% LTM
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DEBT MATURITIES AND PRINCIPAL PAYMENTS ($000'S) EXHIBIT 8 - -----------------------------------------------
Year Bank Lines of Credit Senior Notes Secured Debt Total - -------------------------------------------------------------------------------------- 1999 $ 0 $ 0 $ 69 $ 69 2000 15,000 35,000 99 50,099 2001 175,000 10,000 109 185,109 2002 0 20,000 121 20,121 2003 0 35,000 133 35,133 2004 0 40,000 44,186 84,186 2005 0 0 549 549 Thereafter 0 150,000 6,142 156,142 --------------------------------------------------------------------- Total $ 190,000 $ 290,000 $ 51,408 $ 531,408
- -------------------------------------------------------------------------------- -25- 8 - -------------------------------------------------------------------------------- INVESTMENT ACTIVITY ($000'S) EXHIBIT 9 ----------------------------
Three Months Ended March 31, 1999 Year-to-Date ----------------------------- ---------------------- FUNDING BY INVESTMENT TYPE Real Property $ 35,974 36% Mortgage & Other Loans 1,220 1% (Not Applicable) Construction Advances 60,217 61% Direct Investments 1,882 2% ----------------------------- ---------------------- Total $ 99,293 100% REAL ESTATE INVESTMENTS Assisted Living Facilities $ 79,977 80% Nursing Homes 9,797 10% Retirement Centers 9,519 10% Behavioral Care 0 0% Specialty Care Facilities 0 0% ----------------------------- ---------------------- Total $ 99,293 100%
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- GEOGRAPHIC CONCENTRATION ($000'S) EXHIBIT 10 - ---------------------------------
CONCENTRATION BY REGION # Properties Investment % Investment ---------------------------------------------------------- South 138 $ 585,945 52% Northeast 38 277,805 25% West 26 147,160 13% Midwest 30 115,544 10% ---------------------------------------------------------- Total 232 $ 1,126,454 100% CONCENTRATION BY STATE # Properties Investment % Investment ---------------------------------------------------------- Texas 47 $ 189,274 17% Florida 30 138,743 12% Massachusetts 14 93,825 8% North Carolina 18 79,618 7% Pennsylvania 13 71,248 7% Remaining States 110 553,746 49% ---------------------------------------------------------- Total 232 $ 1,126,454 100% REVENUE BY STATE # Properties Revenue (1) % Revenue ---------------------------------------------------------- Texas 47 $ 4,939 17% Massachusetts 14 2,816 10% Pennsylvania 13 1,902 7% Florida 30 2,488 9% New York 7 2,077 7% Remaining States 121 14,570 50% ---------------------------------------------------------- Total 232 $ 28,792 100%
NOTES: (1) THREE MONTHS ENDED MARCH 31, 1999 - -------------------------------------------------------------------------------- -26- -----END PRIVACY-ENHANCED MESSAGE-----