-----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, IjuGc8jcFhPVeecO9Cf4TpUuMlfzS+TRX81szjy3UMyjlAFsC3+K+ui6YsxHI4iv 8EV2hiHvsAYyXyNBUW+6Vw== 0001017062-97-001755.txt : 19970929 0001017062-97-001755.hdr.sgml : 19970929 ACCESSION NUMBER: 0001017062-97-001755 CONFORMED SUBMISSION TYPE: 424B5 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19970926 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONWIDE HEALTH PROPERTIES INC CENTRAL INDEX KEY: 0000780053 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 953997619 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B5 SEC ACT: SEC FILE NUMBER: 333-17061 FILM NUMBER: 97685750 BUSINESS ADDRESS: STREET 1: 610 NEWPORT CENTER DR STREET 2: STE 1150 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 7142511211 MAIL ADDRESS: STREET 1: 4675 MACARTHUR COURT STREET 2: STE 1170 CITY: NEWSPORT BEACH STATE: CA ZIP: 92660 FORMER COMPANY: FORMER CONFORMED NAME: BEVERLY INVESTMENT PROPERTIES INC DATE OF NAME CHANGE: 19890515 424B5 1 PROSPECTUS SUPPLEMENT DATED SEPTEMBER 24, 1997 PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED JANUARY 6, 1997) FILED PURSUANT TO RULE 424(B)(5) REGISTRATION NO. 333-17061 1,000,000 SHARES [LOGO OF NATIONWIDE HEALTH PROPERTIES, INC.] 7.677% SERIES A CUMULATIVE PREFERRED STEP-UP REIT SECURITIES ("StREITs(SM)") (LIQUIDATION PREFERENCE $100.00 PER SHARE) ------------ Dividends on the 7.677% Series A Cumulative Preferred Step-Up REIT Securities, $1.00 par value per share (the "StREITs(SM)"), of Nationwide Health Properties, Inc., a Maryland corporation (the "Company"), will be cumulative from the date of original issue and will be payable quarterly in arrears on or about the last day of March, June, September and December of each year, commencing December 31, 1997, at the rate of 7.677% of the liquidation preference per annum (equivalent to $7.677 per annum per share) through September 30, 2012 and at a rate of 9.677% of the liquidation preference per annum (equivalent to $9.677 per annum per share) thereafter. See "Description of StREITs(SM)--Dividends." The StREITs(SM) are not redeemable prior to September 30, 2007. On and after September 30, 2007, the StREITs(SM) may be redeemed for cash at the option of the Company, in whole or in part, at a redemption price of $100.00 per share, plus accrued and unpaid dividends, if any, thereon. The redemption price (other than the portion thereof consisting of accrued and unpaid dividends) is payable solely out of the sale proceeds of other capital stock of the Company. The StREITs(SM) have no stated maturity and will not be subject to any sinking fund or mandatory redemption and will not be convertible into any other securities of the Company. See "Description of StREITs(SM)--Redemption." No person or persons acting as a group may beneficially own more than 9.9% of the value of the outstanding capital stock of the Company, including the StREITs(SM), with limited exceptions. See "Description of StREITs(SM)-- Restrictions on Ownership." ------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Underwriters have agreed to purchase the StREITs(SM) from the Company for $97.50 per share ($97,500,000 aggregate proceeds to the Company before deducting expenses payable by the Company estimated at $250,000), subject to the terms and conditions set forth in the Underwriting Agreement. The Underwriters propose to offer the StREITs(SM) from time to time for sale in one or more negotiated transactions, or otherwise, at a fixed offering price or at varying prices determined at the time of each sale. For further information with respect to the plan of distribution and any discounts, commissions or profits on resales of StREITs(SM) that may be deemed underwriting discounts or commissions, see "Underwriting." ------------ The StREITs(SM) are offered severally by the Underwriters, as specified herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. It is expected that certificates for the StREITs(SM) will be ready for delivery in New York, New York on or about September 29, 1997 in book entry form through the facilities of The Depository Trust Company against payment therefor in immediately available funds. ------------ SMITH BARNEY INC. MORGAN STANLEY DEAN WITTER September 24, 1997 - -------- (SM) Service Mark of Smith Barney Inc. CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT AFFECT THE PRICE OF THE StREITs(SM), INCLUDING OVERALLOTMENT, EFFECTING COVERING TRANSACTIONS AND IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING." CERTAIN INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS INCLUDES FORWARD-LOOKING STATEMENTS, WHICH CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY," "WILL," "EXPECT," "SHOULD" OR COMPARABLE TERMS OR THE NEGATIVE THEREOF. THESE STATEMENTS INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE STATEMENTS. THESE RISKS AND UNCERTAINTIES INCLUDE (WITHOUT LIMITATION) THE FOLLOWING: CHANGES IN THE HEALTH CARE INDUSTRY, GOVERNMENT REGULATIONS, INCLUDING CHANGES IN MEDICARE AND MEDICAID PAYMENT LEVELS, CHANGES IN THE RATINGS OF THE COMPANY'S SECURITIES, THE AMOUNT OF ANY ADDITIONAL INVESTMENTS MADE BY THE COMPANY, ACCESS TO CAPITAL MARKETS, THE EFFECT OF ECONOMIC AND MARKET CONDITIONS, CHANGES IN INTEREST RATES AND CHANGES IN THE BUSINESS ENTITIES OPERATING THE COMPANY PROPERTIES. PROSPECTUS SUPPLEMENT SUMMARY The following summary is qualified in its entirety by the detailed information appearing elsewhere in this Prospectus Supplement or the accompanying Prospectus or incorporated herein or therein by reference. Capitalized terms used in this Prospectus Supplement Summary have the meanings set forth elsewhere in the Prospectus Supplement or the accompanying Prospectus. The offering of the 7.677% Series A Cumulative Preferred Step-Up REIT Securities ("StREITs(SM)"), $1.00 par value per share, offered hereby is referred to as the "Offering." THE COMPANY Nationwide Health Properties, Inc., a Maryland corporation (the "Company"), is a real estate investment trust ("REIT") which invests primarily in health care related facilities and provides financing to health care providers. As of June 30, 1997, the Company had investments in 254 facilities located in 30 states. The facilities include 191 long-term health care facilities, 61 assisted living facilities and two rehabilitation hospitals. The facilities are operated by 59 different business entities. See "The Company" and "Recent Developments." THE OFFERING For a more complete description of the terms of the StREITs(SM), see "Description of StREITs(SM)." Securities Offered.......... 1,000,000 StREITs(SM). Ranking..................... With respect to the payment of dividends and amounts upon liquidation, the StREITs(SM) will rank senior to the Company's Common Stock and equivalent to any other shares of the Company's preferred stock which are not by their terms subordinated to the StREITs(SM) with respect to payment of dividends and amounts due upon liquidation, dissolution or winding up. See "Description of StREITs(SM)." S-2 Use of Proceeds............. The net proceeds to the Company from the Offering will be used for the repayment of outstanding debt under the Company's bank line of credit and for general corporate purposes, including the funding of additional investments. See "Use of Proceeds." Dividends................... Dividends on the StREITs(SM) will be cumulative from the date of original issue and are payable quarterly on or about the last day of March, June, September and December of each year, commencing December 31, 1997, at the rate of 7.677% of the liquidation preference per annum (equivalent to $7.677 per share per annum) through September 30, 2012 and at the rate of 9.677% of the liquidation preference per annum (equivalent to $9.677 per share per annum) thereafter. Dividends on the StREITs(SM) will accrue whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. If, for any taxable year, the Company elects to designate as "capital gain dividends" (as defined in Section 857 of the Internal Revenue Code of 1986, as amended (the "Code")) any portion (the "Capital Gains Amount") of the dividends (within the meaning of the Code) paid or made available for the year to holders of all classes of shares of capital stock, including preferred shares (the "Total Dividends"), then the portion of the Capital Gains Amount that will be allocable to the holders of StREITs(SM) will be the Capital Gains Amount multiplied by a fraction, the numerator of which will be the total dividends (within the meaning of the Code) paid or made available to the holders of the StREITs(SM) for the year and the denominator of which will be the Total Dividends. See "Description of StREITs(SM)-- Dividends." Liquidation Rights.......... The liquidation preference for each StREITs(SM) is $100.00, plus an amount equal to accrued and unpaid dividends. See "Description of StREITs(SM)--Liquidation Rights." Redemption.................. On and after September 30, 2007, the StREITs(SM) may be redeemed for cash at the option of the Company, in whole or in part, at a redemption price of $100.00 per share, plus accrued and unpaid dividends, if any, thereon. The redemption price (other than the portion thereof consisting of accrued and unpaid dividends) is payable solely out of the sale proceeds of other capital stock of the Company, which may include Common Stock, preferred stock, depositary shares, participation or other ownership interests in the Company, however designated, and any rights (other than debt securities convertible into or exchangeable for capital stock), warrants or options to purchase any thereof. See "Description of StREITs(SM)--Redemption." Certain StREITs(SM) may be redeemed by the Company in order to preserve the Company's status as a REIT for federal income tax purposes if an individual's beneficial ownership of the outstanding voting shares of the Company's capital stock exceeds 9.9%. See "Description of Common Stock--Redemption and Business Combination Provisions" in the accompanying Prospectus. S-3 Voting Rights............... Except as described herein and in the accompanying Prospectus, holders of StREITs(SM) will not have any voting rights. However, if six quarterly dividends (whether or not consecutive) payable on the StREITs(SM) or any Parity Shares are in arrears, whether or not earned or declared, the holders of such shares (voting together as a class with the holders of any other series of Parity Shares) will have the right to elect two additional directors to serve on the Company's Board of Directors until all dividends accumulated on such shares have been declared and paid or set aside for payment. In any matter in which the StREITs(SM) may vote (as expressly provided herein, or as may be required by law), each StREITs(SM) will be entitled to one vote. For further information regarding the voting rights of the holders of StREITs(SM), see "Description of StREITs(SM)--Voting Rights." Conversion.................. The StREITs(SM) are not convertible into or exchangeable for any other property or securities of the Company. Ownership Limits............ Ownership of more than 9.9% of the value of the outstanding voting shares of capital stock of the Company, including the StREITs(SM), is restricted in order to preserve the Company's status as a REIT for federal income tax purposes. See "Description of Common Stock--Redemption and Business Combination Provisions" in the accompanying Prospectus. Trading..................... Prior to this Offering of StREITs(SM), there has been no public market for the StREITs(SM) and there can be no assurance that an active trading market for the StREITs(SM) will develop following the Offering or, if developed, that any such market will be sustained. In the absence of a public trading market, an investor may be unable to liquidate its investment. S-4 THE COMPANY Nationwide Health Properties, Inc., a Maryland corporation organized in October 1985 (the "Company"), is a real estate investment trust ("REIT") which invests primarily in health care related facilities and provides financing to health care providers. As of June 30, 1997, the Company had investments in 254 facilities located in 30 states. The facilities include 191 long-term health care facilities, 61 assisted living facilities and two rehabilitation hospitals. The facilities are operated by 59 different business entities. As of June 30, 1997, the Company had direct ownership of 141 long-term health care facilities, 52 assisted living facilities and two rehabilitation hospitals. All of the Company's owned facilities are leased under "net" leases (the "Leases"), which are accounted for as operating leases, to 40 health care providers (the "Lessees"), including Beverly Enterprises, Inc. ("Beverly"), ARV Assisted Living, Inc., Alternative Living Services, Inc. ("ALS"), Sun Healthcare Group, Inc., Horizon/CMS Healthcare Corporation, American Retirement Corporation, Sterling House Corporation ("Sterling"), Living Centers of America, Inc., Retirement Care Associates, Inc., Newcare Health Corporation, Mariner Health Group, Integrated Health Services, Inc. and HEALTHSOUTH Corporation. Of the Lessees, only Beverly accounts for more than 10% of the Company's revenues. ALS and Sterling have announced a proposed merger between the two entities which they anticipate will close in the fourth quarter of 1997. If this merger were to occur, the Company believes the combined entity would account for more than 10% of the Company's revenues. The Leases have initial terms ranging from 10 to 19 years, and the Leases generally have two or more multiple-year renewal options. The Company earns fixed monthly minimum rents and may earn periodic additional rents. The additional rent payments are generally computed as a percentage of facility net patient revenues in excess of base amounts. The base amounts, in most cases, are net patient revenues for the first year of the lease. Most Leases contain cross collateralization and cross default provisions tied to other Leases with the same Lessee, as well as grouped lease renewals and grouped purchase options. Obligations under the Leases have corporate guarantees, and leases covering 114 facilities are backed by irrevocable letters of credit or security deposits which cover 2 to 14 months of monthly minimum rents. Under the terms of the Leases, the Lessee is responsible for all maintenance, repairs, taxes and insurance on the leased properties. As of June 30, 1997, the Company also held 33 mortgage loans secured by 50 long-term care facilities and nine assisted living facilities. Such loans had an aggregate outstanding principal balance of approximately $209,916,000 and a net book value of approximately $199,487,000 at June 30, 1997. The mortgage loans have individual outstanding principal balances ranging from approximately $690,000 to $19,650,000 and maturities ranging from 1998 to 2025. The Company anticipates providing lease or mortgage financing for health care facilities to qualified operators and acquiring additional health care related facilities, including long-term health care facilities, assisted living facilities, acute care hospitals and medical office buildings. Financing for such future investments may be provided by borrowings under the Company's bank line of credit, private placements or public offerings of debt or equity, and the assumption of secured indebtedness. The Company believes that it has operated in such a manner as to qualify for taxation as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), commencing with its taxable year ending December 31, 1985, and the Company intends to continue to operate in such a manner. If the Company qualifies for taxation as a REIT, it will generally not be subject to federal corporate income taxes on its net income that is currently distributed to stockholders. This treatment substantially eliminates the "double taxation" (e.g., at the corporate and stockholder levels) that generally results from investment in stock of a corporation. Among the requirements for taxation as a REIT, the Company is required to distribute substantially all of its taxable income (determined without regard to capital gains) each year. Failure to do so may cause the Company to fail to qualify for taxation as a REIT. S-5 RECENT DEVELOPMENTS Subsequent to June 30, 1997, the Company acquired six long-term health care facilities, eight assisted living facilities and one medical clinic in 12 separate transactions for an aggregate purchase price of approximately $55,896,000. The facilities were concurrently leased under terms generally similar to the Company's existing Leases. Additionally, the Company provided two mortgages on one long-term health care facility and one assisted living facility in the aggregate amount of $9,000,000. The acquisitions and mortgages were funded by bank borrowings on the Company's bank line of credit and by cash on hand. In August 1997, the Company sold one long-term health care facility to the lessee of such facility pursuant to a purchase option in the lease for a purchase price of approximately $4,829,000. The gain on such sale is approximately $827,000. The proceeds of the sale were used to repay bank borrowings on the Company's bank line of credit. In September 1997, the Company acquired the long-term care retirement housing assets of a privately held company located in Wisconsin at a purchase price of $96,000,000 (the "Wisconsin Transaction"). The purchase price consisted of $39,739,488 of debt assumption, $25,756,342 of cash and 1,315,686 shares of the Company's Common Stock. During the third quarter of 1997, the Company issued one of its Medium-Term Notes, Series B, in the principal amount of $25,000,000, which note bears interest at 6.65% and has a maturity of five years. The Company also issued the first of its Medium-Term Notes, Series C, in the principal amount of $55,000,000, which note bears interest at 6.90%, has a maturity of 40 years and is redeemable at the option of the holder at various intervals after October 1, 2004. The proceeds of both notes were used to repay borrowings on the Company's bank line of credit. USE OF PROCEEDS The Company intends to use the net proceeds received by it from this Offering (estimated at approximately $97,250,000) for the repayment of indebtedness outstanding under the Company's bank line of credit and for general corporate purposes, including the funding of additional investments. As of September 24, 1997, the aggregate amount of such indebtedness was approximately $70,700,000 having interest rates between 6.375% and 8.50% and a maturity date of March 31, 2000. Such indebtedness was incurred for general corporate purposes, including the acquisition of health care facilities and mortgage loans secured by health care facilities. S-6 SELECTED CONSOLIDATED FINANCIAL INFORMATION The following selected consolidated financial information of the Company, restated for the two-for-one stock split effective March 8, 1996, for each of the five years ended December 31, 1996 is derived from the Company's audited consolidated financial statements, which have been audited by Arthur Anderson LLP, independent accountants. The selected consolidated financial information for the six month periods ended June 30, 1997 and 1996 has been derived from the unaudited interim consolidated financial statements of the Company and includes, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the financial position and results of operations as of and for such periods. Such financial information has been derived from financial information included in the Company's Annual Reports on Form 10-K and the Company's Quarterly Reports on Form 10-Q. The selected consolidated financial information set forth below should be read in conjunction with the detailed information, consolidated financial statements and related notes and applicable "Management's Discussion and Analysis" included in the 1996, 1995, 1994, 1993 and 1992 Annual Reports on Form 10-K.
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31, ------------------- ---------------------------------------------------------- 1997 1996 1996 1995 1994 1993 1992 --------- -------- ------------ ------------ ------------ -------- -------- (IN THOUSANDS EXCEPT PER SHARE DATA) OPERATING DATA: Total revenues.......... $ 53,500 $ 46,231 $ 95,776 $ 81,039 $ 69,985 $ 60,385 $ 49,807 Income from operations.. 29,669 25,588 54,944 49,382 44,813 40,996 29,543 Gain on sale of facilities............. -- -- -- 989 -- -- 138 Extraordinary charge(1).............. -- -- -- -- -- (2,004) -- Net income.............. 29,669 25,588 54,944 50,371 44,813 38,992 29,681 Dividends paid.......... 32,607 28,662 59,581 53,182 47,751 42,883 33,349 PER SHARE DATA: Income from operations.. $ .71 $ .66 $ 1.36 $ 1.31 $ 1.23 $ 1.17 $ .99 Net income.............. .71 .66 1.36 1.33 1.23 1.11 1.00 Dividends paid.......... .78 .74 1.48 1.41 1.31 1.21 1.11 BALANCE SHEET DATA: Investments in real estate, net............ $ 820,596 $669,289 $ 722,506 $ 652,231 $ 501,862 $428,473 $380,539 Total assets............ 843,939 688,780 744,984 670,111 513,809 440,165 396,664 Total debt.............. 395,209 239,582 296,449 223,764 168,410 100,456 86,521 Stockholders' equity.... 426,064 430,001 428,588 371,822 336,106 332,927 301,895 OTHER DATA: Net cash provided by operating activities... $ 39,562 $ 37,526 $ 74,129 $ 66,972 $ 56,756 $ 49,725 $ 38,207 Net cash used in investing activities... (106,282) (24,348) (85,034) (151,476) (83,185) (56,261) (96,719) Net cash provided (used) by financing activities............. 65,697 (10,665) 14,677 88,699 26,544 1,882 56,837 Funds from operations(2).......... 38,921 33,844 71,667 63,267 57,057 51,111 38,762 Ratio of earnings/fixed charges(3)............. 3.32 3.36 3.64 4.57 5.52 7.63 4.64 Weighted average shares outstanding............ 41,802 38,948 40,373 37,808 36,356 35,188 29,734
- -------- (1) The Company incurred extraordinary charges representing the write-off of unamortized deferred financing costs and fees in connection with the prepayment of a substantial portion of the Company's secured debt. (2) Industry analysts generally consider funds from operations to be an alternative measure of the performance of an equity REIT. The Company therefore discloses funds from operations, although it is a measurement that is not defined by generally accepted accounting principles. The Company uses the NAREIT measure of funds from operations, which is generally defined as income before extraordinary items plus certain non- cash items, primarily real estate depreciation, less gains on sales of facilities. The NAREIT measure may not be comparable to similarly titled measures used by other REITs. Consequently, the Company's funds from operations may not provide a meaningful measure of the Company's performance as compared to that of other REITs. Funds from operations does not represent cash generated from operating activities as defined by generally accepted accounting principles (funds from operations does not include changes in operating assets and liabilities) and, therefore, should not be considered as an alternative to net income as the primary indicator of operating performance or to cash flow as a measure of liquidity. (3) Fixed charges consist of interest expense and the amortization of debt issuance costs. For purposes of calculating the ratio of earnings to fixed charges of the Company, "earnings" equals the sum of net income and fixed charges. S-7 CAPITALIZATION The following table sets forth the consolidated capitalization of the Company as of June 30, 1997 and as adjusted to give effect to the sale of the StREITs(SM) offered hereby and the application of the estimated net proceeds therefrom. The capitalization table should be read in conjunction with the Company's Consolidated Financial Statements and related Notes incorporated by reference in the accompanying Prospectus.
JUNE 30, 1997 --------------------- ACTUAL AS ADJUSTED -------- ----------- (IN THOUSANDS) Debt: Bank borrowings(1)..................................... $ 46,300 $ -- Senior notes due 2000-2015(2).......................... 275,000 275,000 Convertible debentures................................. 64,720 64,720 Notes and bonds payables(2)............................ 9,189 9,189 -------- -------- Total debt............................................. 395,209 348,909 -------- -------- Stockholders' equity: Preferred stock, $1.00 par value; 5,000,000 shares authorized; issued and outstanding: none actual; 1,000,000 7.677% Series A Cumulative Preferred Step-Up REIT Securities (Liquidation Preference $100.00 per share), as adjusted................................... -- 97,250 Common stock, $.10 par value; 100,000,000 shares authorized; issued and outstanding: 41,803,924 actual and as adjusted(2).................................... 4,181 4,181 Capital in excess of par value......................... 462,946 462,946 Cumulative net income.................................. 329,748 329,748 Cumulative dividends................................... (370,811) (370,811) -------- -------- Total stockholders' equity............................. 426,064 523,314 -------- -------- Total capitalization..................................... $843,939 $872,223 ======== ========
- -------- (1) As of September 24, 1997, the aggregate amount of such borrowings was approximately $70,700,000. (2) In the third quarter of 1997, the Company issued an aggregate of $80,000,000 in principal amount of its Medium-Term Notes for a total of $355,000,000 in senior notes. In connection with the Wisconsin Transaction, the Company issued 1,315,686 shares of the Company's Common Stock and assumed $39,739,488 of indebtedness. See "Recent Developments." S-8 MANAGEMENT The table below sets forth the name, position and age of each executive officer and director of the Company. Each executive officer of the Company is elected by the directors, serves at the pleasure of the Board and holds office until a successor is elected or until the earliest of death, resignation or removal. All information is given as of September 19, 1997.
NAME POSITION AGE - ---- -------- --- Milton J. Brock, Jr. ... Chairman of the Board and Director 82 R. Bruce Andrews........ President, Chief Executive Officer and Director 57 Mark L. Desmond......... Senior Vice President and Chief Financial Officer 39 T. Andrew Stokes........ Senior Vice President of Corporate Development 49 Gary E. Stark........... Vice President and General Counsel 41 John J. Sheehan, Jr. ... Vice President of Corporate Development 39 David R. Banks.......... Director 60 Sam A. Brooks, Jr. ..... Director 58 Charles D. Miller....... Director 69 Jack D. Samuelson....... Director 72
MILTON J. BROCK, JR. Chairman of the Board of the Company since September 1989 and a director of the Company since its inception. Mr. Brock served as President and Chief Executive Officer of the Company from June 1988 to September 1989. Mr. Brock began his career in 1940 with M.J. Brock & Sons, Inc., a real estate contractor and developer, and was elected President in 1959, Chairman and Chief Executive Officer in 1973 and Chairman Emeritus in 1985 upon his retirement. Mr. Brock was a director of Bank of America REIT (now BRE Properties, Inc.) from its inception until his retirement in 1985, and had served for 26 years as a director of Hollywood Presbyterian Medical Center. R. BRUCE ANDREWS. President and Chief Executive Officer of the Company since September 1989 and a director of the Company since October 1989. Mr. Andrews had previously served as a director of American Medical International, Inc., a hospital management company, and served as its Chief Financial Officer from 1970 to 1985 and its Chief Operating Officer in 1985 and 1986. From 1986 through 1989, Mr. Andrews was engaged in various private investments. Mr. Andrews is also a director of Alexander Haagen Properties, Inc. and ARV Assisted Living, Inc. MARK L. DESMOND. Senior Vice President and Chief Financial Officer since January 1996. Mr. Desmond was Vice President and Treasurer of the Company from May 1990 to January 1996 and Controller, Chief Accounting Officer and Assistant Treasurer of the Company from June 1988 to April 1990. From 1986 until joining the Company, Mr. Desmond held various accounting positions with Beverly, an operator of nursing facilities, pharmacies and pharmacy related outlets. T. ANDREW STOKES. Senior Vice President of Corporate Development since January 1996. Mr. Stokes was Vice President of Development of the Company from August 1992 to December 1995. From 1984 to 1988, Mr. Stokes served as Vice President, Corporate Development for American Medical International, Inc., a hospital management company. From 1989 until joining the Company, Mr. Stokes was Healthcare Group Director of Houlihan, Lokey, Howard & Zukin, a national financial advisory firm. GARY E. STARK. Vice President and General Counsel of the Company since January 1993. From January 1988 to December 1989, Mr. Stark held the position of General Counsel with Care Enterprises, Inc., an operator of nursing facilities, pharmacies and other ancillary health care services, and served as its Corporate Counsel from April 1985 through December 1987. From January 1990 through August 1991, Mr. Stark was S-9 engaged in the private practice of law. Mr. Stark served as Vice President of Legal Services of Life Care Centers of America, Inc., an operator and manager of nursing facilities and retirement centers, from July 1992 to December 1992, and served as General Counsel from September 1991 to July 1992. JOHN J. SHEEHAN, JR. Vice President of Corporate Development of the Company since February 1996. From September 1987 through April 1990, Mr. Sheehan served as Director of Asset Management for Southmark Corporation, a real estate syndication company. From April 1990 until joining the Company, Mr. Sheehan was Vice President, Mortgage Finance for Life Care Centers of America, an operator and manager of nursing facilities. DAVID R. BANKS. Director since 1985. Mr. Banks has served as Chairman and Chief Executive Officer of Beverly, an operator of nursing facilities, pharmacies and pharmacy related outlets, since October 1995. Mr. Banks joined Beverly as President and Chief Operating Officer in October 1979, was elected President and Chief Executive Officer in May 1989 and was elected Chairman, President and Chief Executive Officer in March 1990. He has been a director of Beverly since September 1979. Mr. Banks is also a director of Ralston Purina Company and Wellpoint Health Networks Inc. Mr. Banks was Chairman of the Board of the Company from its inception until June 1988. SAM A. BROOKS, JR. Director since 1985. Mr. Brooks has been President and Chief Executive Officer and director of Renal Care Group, Inc., an operator of outpatient dialysis clinics, since February 1996 and has been President of MedCare Investment Corporation, a health care investment company, since May 1991. Mr. Brooks is a director of Kinetic Concepts, Inc., PhyCor, Inc. and Quorum Health Group, Inc. Mr. Brooks was Chairman of the Board of the Company from June 1988 to September 1989. Mr. Brooks served as President and Chief Executive Officer of the Company from its inception until June 1988. Mr. Brooks was the Chief Financial Officer of Hospital Corporation of America, a hospital management company, from 1970 to 1985. CHARLES D. MILLER. Director since 1985. Mr. Miller has served as the Chairman and Chief Executive Officer of Avery Dennison Corporation, a manufacturer of self-adhesive materials, labels and office products, since 1983. Mr. Miller is also a director of Great Western Financial Corporation, Edison International and Pacific Mutual Life Insurance Company. JACK D. SAMUELSON. Director since 1994. Mr. Samuelson co-founded Samuelson Brothers, a real estate contractor and developer, in 1946 and has served as President and Chairman of the Board since 1957. Mr. Samuelson is also a director of Western Staff Services. S-10 DESCRIPTION OF StREITS(SM) The following summary sets forth the material terms and provisions of the StREITs(SM), and is qualified in its entirety by reference to the terms and provisions of the Articles Supplementary relating to the StREITs(SM) and the Company's Articles of Incorporation, as amended, which are incorporated by reference herein. The following description of the particular terms of the StREITs(SM) supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of the Preferred Stock set forth in the accompanying Prospectus, to which description reference is hereby made. GENERAL Under the Articles of Incorporation, the Board of Directors of the Company is authorized without further stockholder action to provide for the issuance of up to 5,000,000 shares of preferred stock of the Company, in one or more series, with such voting, dividend, conversion or liquidation rights, designations, preferences, powers and relative participating, optional or other special rights and qualifications, limitations or restrictions of shares of such series as shall be stated in the resolution providing for the issue of a series of such stock, adopted, at any time or from time to time, by the Board of Directors of the Company. The Company currently has no outstanding shares of preferred stock. The Board of Directors has authorized the Company to classify and issue the StREITs(SM). The StREITs(SM) will, when issued, be fully paid and nonassessable and will have no preemptive rights. The StREITs(SM) will not be subject to any sinking fund or other obligation of the Company to redeem or retire the StREITs(SM). The rights of the holders of the StREITs(SM) will be subordinate to those of the Company's general creditors. The transfer agent, registrar and distribution disbursing agent for the StREITs(SM) will be The Bank of New York. DIVIDENDS Holders of the StREITs(SM) shall be entitled to receive, when and as declared by the Board of Directors, out of funds legally available for the payment of dividends, cumulative preferential cash dividends at the rate of 7.677% of the liquidation preference per annum (equivalent to $7.677 per share per annum) through September 30, 2012 and at the rate of 9.677% of the liquidation preference per annum (equivalent to $9.677 per share per annum) thereafter. Such dividends shall be cumulative from the date of original issue and shall be payable quarterly in arrears on the last day of March, June, September and December or, if not a business day, the next succeeding business day (each, a "Dividend Payment Date"). The first dividend will be due on December 31, 1997. Such first dividend and any dividend distribution payable on the StREITs(SM) for any partial distribution period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be payable to holders of record as they appear in the records of the Company at the close of business on the applicable record date, which shall be on such date designated by the Board of Directors of the Company for the payment of dividends that is not more than 30 nor less than 10 days prior to such Dividend Payment Date (each, a "Dividend Record Date"). No dividends on the StREITs(SM) will be authorized by the Board of Directors of the Company or paid or set apart for payment by the Company at such time as the terms and provisions of any agreement of the Company, including any agreement relating to its indebtedness, prohibits such authorization, payment or setting apart for payment or provides that such authorization, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such authorization or payment shall be restricted or prohibited by law. Covenants in the Company's bank credit agreement provide generally that the Company may not pay dividends in excess of 95% of Cash Flow, as defined in the bank credit agreement, but such covenant permits the Company, upon certain circumstances, to pay distributions in an amount necessary to maintain its qualification as a REIT. The Company does not believe that this provision has had or will have any adverse impact on the Company's S-11 ability to pay dividends in respect of the StREITs(SM) or in the normal course of business to its stockholders in amounts necessary to maintain its qualification as a REIT. Notwithstanding the foregoing, dividends on the StREITs(SM) will accrue whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the StREITs(SM) which may be in arrears. Holders of the StREITs(SM) will not be entitled to any dividends in excess of the full cumulative dividends as described above. If, for any taxable year, the Company elects to designate as "capital gain dividends" (as defined in Section 857 of the Code) any portion (the "Capital Gains Amount") of the dividends (within the meaning of the Code) paid or made available for the year to holders of all classes of shares of capital stock, including preferred shares (the "Total Dividends"), then the portion of the Capital Gains Amount that will be allocable to the holders of StREITs(SM) will be the Capital Gains Amount multiplied by a fraction, the numerator of which will be the total dividends (within the meaning of the Code) paid or made available to the holders of the StREITs(SM) for the year and the denominator of which will be the Total Dividends. If any StREITs(SM) are outstanding and except if the Company determines it is necessary to maintain its status as a REIT, no dividends shall be declared or paid or set apart for payment on any series of capital stock of the Company ranking, as to dividends, on a parity with or junior to the StREITs(SM) for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payments on the StREITs(SM) for all past dividend periods and the then current dividend period. When dividends are not paid in full (or a sum sufficient for such full payment is not set apart) upon the StREITs(SM) and the shares of any other series of capital stock ranking on parity as to dividends with the StREITs(SM), all dividends declared upon the StREITs(SM) and any other series of capital stock ranking on a parity as to dividends with the StREITs(SM) shall be declared pro rata so that the amount of dividends declared per share on the StREITs(SM) and such other series of capital stock shall in all cases bear to each other the same ratio that accrued dividends per share on the StREITs(SM) and such other series of capital stock bear to each other. Except as provided in the immediately preceding paragraph or if the Company determines it is necessary to maintain its status as a REIT, unless full cumulative dividends on the StREITs(SM) have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no dividends (other than in Common Stock or other capital stock ranking junior to the StREITs(SM) as to dividends and upon liquidation) shall be declared or paid or set aside for payment or other dividend shall be declared or made upon the Common Stock or any other capital stock of the Company ranking junior to or on a parity with the StREITs(SM) as to dividends or amounts upon liquidation, nor shall any Common Stock or any other capital stock of the Company ranking junior to or on a parity with the StREITs(SM) as to dividends or amounts upon liquidation be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such stock) by the Company (except by conversion into or exchange for other capital stock of the Company ranking junior to the StREITs(SM) as to dividends and amounts upon liquidation). Any dividend payment made on the StREITs(SM) shall first be credited against the earliest accrued but unpaid dividend due with respect to the StREITs(SM) which remains payable. LIQUIDATION RIGHTS Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, then, before any distribution or payment shall be made to the holders of any Common Stock or any other class or series of capital stock of the Company ranking junior to the StREITs(SM) in the distribution of assets upon any liquidation, dissolution or winding up of the affairs of the Company, the holders of StREITs(SM) shall be entitled to receive out of assets of the Company legally available for distribution to stockholders, liquidation distributions in the amount of the liquidation preference of $100.00 per share, plus an amount equal to all distributions accrued S-12 and unpaid thereon. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of StREITs(SM) will have no right or claim to any of the remaining assets of the Company. In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, the available assets of the Company are insufficient to pay the amount of the liquidation distributions on all outstanding StREITs(SM) and the corresponding amounts payable on all shares of other classes or series of capital stock of the Company ranking on a parity with the StREITs(SM) in the distribution of assets upon any liquidation, dissolution or winding up of the affairs of the corporation ("Parity Stock"), then the holders of the StREITs(SM) and all other Parity Stock shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled. For such purposes, the consolidation or merger of the Company with or into any other entity, or the sale, lease or conveyance of all or substantially all of the property or business of the Company, shall not be deemed to constitute a liquidation, dissolution or winding up of the affairs of the Company. REDEMPTION The StREITs(SM) are not redeemable prior to September 30, 2007. On and after September 30, 2007, the Company at its option upon not less than 30 nor more than 60 days' written notice, may redeem the StREITs(SM), in whole or in part, at any time or from time to time, for cash at a redemption price of $100.00 per share, plus an amount equal to all dividends accrued and unpaid thereon to the date fixed for redemption, without interest. The redemption price of the StREITs(SM) (other than the portion thereof consisting of accrued and unpaid dividends) is payable solely out of proceeds from the sale of other capital stock of the Company, which may include Common Stock, preferred stock, depositary shares, participation or other ownership interests in the Company, however designated, and any rights (other than debt securities convertible into or exchangeable for capital stock), warrants or options to purchase any thereof. Holders of StREITs(SM) to be redeemed shall surrender such StREITs(SM) at the place designated in such notice and shall be entitled to the redemption price and any accrued and unpaid dividends payable upon such redemption following such surrender. If fewer than all of the outstanding StREITs(SM) are to be redeemed, the number of shares to be redeemed will be determined by the Company, and such shares may be redeemed pro rata from the holders of record of such shares in proportion to the number of such shares held by such holders (with adjustments to avoid redemption of fractional shares) or by lot in a manner determined by the Company. Unless full cumulative dividends on all StREITs(SM) and all Parity Stock shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no StREITs(SM) or Parity Shares shall be redeemed unless all outstanding StREITs(SM) and Parity Shares are simultaneously redeemed; provided, however, that the foregoing shall not prevent the purchase or acquisition of StREITs(SM) pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding StREITs(SM) or Parity Shares, as the case may be. Furthermore, unless full cumulative dividends on all outstanding StREITs(SM) and Parity Shares have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, the Company shall not purchase or otherwise acquire directly or indirectly any StREITs(SM) or Parity Shares (except by conversion into or exchange for shares of capital stock of the Company ranking junior to the StREITs(SM) and Parity Shares as to dividends and amounts upon liquidation). Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of record of StREITs(SM) at the address shown on the share transfer books of the Company. Each notice shall state: (i) the redemption date; (ii) the number of StREITs(SM) to be redeemed; (iii) the redemption price; (iv) the place or places where certificates for StREITs(SM) are to be surrendered for payment of the redemption price; and (v) that dividends on the StREITs(SM) will cease to accrue on such redemption date. If fewer than all StREITs(SM) are to be redeemed, the notice mailed to each such holder thereof shall also specify the number of StREITs(SM) to be redeemed from each such holder. If notice of redemption of any StREITs(SM) has been given and if the funds necessary for such redemption have been set aside by the Company in trust for the benefit of the holders of the StREITs(SM) so called for redemption, then from and after the redemption date, dividends S-13 will cease to accrue on the StREITs(SM), such StREITs(SM) shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price. The holders of StREITs(SM) at the close of business on a Dividend Record Date will be entitled to receive the dividends payable with respect to such StREITs(SM) on the corresponding Dividend Payment Date notwithstanding the redemption thereof between such Dividend Record Date and the corresponding Dividend Payment Date or the Company's default in the payment of the dividend due. Except as provided above, the Company will make no payment or allowance for unpaid dividends, whether or not in arrears, on StREITs(SM) which have been called for redemption. The StREITs(SM) will not be subject to any sinking fund or mandatory redemption. However, in order to preserve the Company's status as a REIT as defined in the Code, the StREITs(SM) may be subject to purchase by the Company as described in the accompanying Prospectus under "Description of Common Stock--Redemption and Business Combination Provisions." VOTING RIGHTS Except as indicated below, or except as otherwise from time to time required by applicable law, the holders of StREITs(SM) will have no voting rights. If six quarterly dividends (whether or not consecutive) payable on the StREITs(SM) or any Parity Shares are in arrears, whether or not earned or declared, the number of directors then constituting the Board of Directors of the Company will be increased by two, and the holders of StREITs(SM), voting together as a class with the holders of any other series of Parity Shares with like voting rights, will have the right to elect two additional directors to serve on the Company's Board of Directors at any annual meeting of stockholders or a properly called special meeting of the holders of StREITs(SM) and such other Parity Shares until all dividends accumulated on such StREITs(SM) and Parity Shares have been declared and paid or set aside for payment. The term of office of all directors so elected will terminate with the termination of such voting rights. The approval of two-thirds of the outstanding StREITs(SM), voting separately as a class, is required in order to (i) amend the Company's Articles Supplementary or Articles of Incorporation to affect materially and adversely the rights, preferences or voting power of the holders of the StREITs(SM), (ii) enter into a share exchange that affects the StREITs(SM), or consolidate with or merge the Company with or into any other corporation, unless in each such case each StREITs(SM) remains outstanding without a material adverse change to its terms and rights or is converted into or exchanged for preferred stock of the surviving entity having preferences and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms or conditions of redemption thereof identical to that of the StREITs(SM) or (iii) authorize, reclassify, create or increase the authorized amount of any class of capital stock having rights senior to the StREITs(SM) with respect to the payment of dividends or amounts upon liquidation, dissolution or winding up of the affairs of the Company. However, the Company may create additional classes of Parity Shares and shares ranking junior to the StREITs(SM) as to distributions or amounts upon liquidation, dissolution or winding up of the affairs of the Company ("Junior Shares"), increase the authorized number of Parity Shares and Junior Shares and issue additional series of Parity Shares and Junior Shares without the consent of any holder of StREITs(SM) or Parity Shares. Except as provided above and as required by law, the holders of StREITs(SM) are not entitled to vote on any merger or consolidation involving the Company or a sale of all or substantially all of the assets of the Company. CONVERSION The StREITs(SM) are not convertible into or exchangeable for any other property or securities of the Company at the option of the holder. RESTRICTIONS ON OWNERSHIP For information regarding restrictions on ownership of the StREITs(SM), see "Description of Common Stock--Redemption and Business Combination Provisions" in the accompanying Prospectus. S-14 CERTAIN FEDERAL INCOME TAX CONSIDERATIONS The following summary of certain federal income tax considerations is based on current law, is for general information only and is not tax advice. This discussion does not purport to deal with all aspects of taxation that may be relevant to particular stockholders in light of their personal investment or tax circumstances, or to certain types of stockholders (including insurance companies, tax-exempt organizations, financial institutions or broker dealers, foreign corporations, partnerships, trusts or estates for United States tax purposes and individuals who are not citizens or residents of the United States) subject to special treatment under the federal income tax laws. In addition, this section does not discuss foreign, state or local taxation. This Prospectus Supplement does not address the taxation of the Company or the impact on the Company of its election to be taxed as a REIT. Prospective investors should consult, and must depend on, their own tax advisors regarding the state, local, foreign and other tax consequences of holding and disposing of the StREITs(SM). Dividends and Other Distributions. As long as the Company qualifies as a REIT, distributions made to the Company's taxable domestic stockholders out of current or accumulated earnings and profits (and not designated as capital gain dividends) will be taken into account by them as ordinary income. Stockholders that are corporations will not be entitled to a dividends received deduction. For purposes of determining whether distributions are out of earnings and profits, the earnings and profits of the Company will be allocated first to the StREITs(SM) and then to the Company's Common Stock. Dividends that are designated as capital gain dividends will be taxed as a gain from the sale or exchange of a capital asset held for more than one year (to the extent such gain does not exceed the Company's actual net capital gain for the taxable year) without regard to the period for which the stockholder has held its stock. Corporate stockholders, however, may be required to treat up to 20% of certain capital gain dividends as ordinary income. To the extent the Company makes distributions in excess of current and accumulated earnings and profits, these distributions are treated first as a tax-free return of capital to the stockholder, reducing a stockholder's tax basis in its StREITs(SM) by the amount of such distribution (but not below zero), with distributions in excess of the stockholder's tax basis taxable as capital gains (provided the StREITs(SM) are held as capital assets). In addition, any dividend declared by the Company in October, November or December of any year and payable to a stockholder of record on a specific date in any such month shall be treated as both paid by the Company and received by the stockholder on December 31 of such year, provided that the dividend is actually paid by the Company during January of the following calendar year. Stockholders may not include in their individual tax returns any net operating losses or capital losses of the Company. Undistributed Capital Gains. Under the recently enacted Taxpayer Relief Act of 1997 and generally effective for tax years beginning after August 5, 1997, a REIT may elect to retain, rather than distribute, its net long-term capital gains and pay the tax on such gains. If such an election is made, the Company will specifically designate in respect of each stockholder's shares an amount of such undistributed capital gains, such amount shall not exceed the amount such stockholder would have received if the capital gains had been distributed as dividends. Stockholders must include, in computing their long-term capital gains for their tax year, the amount the Company designates as undistributed capital gains in respect of such stockholder's shares. Every stockholder shall be deemed to have paid the tax imposed on the Company for the stockholder's designated amount of undistributed capital gains. Such stockholders shall be allowed credit or refund, as the case may be, for the tax so deemed to have been paid by it. The stockholder's adjusted tax basis will be increased by the amount of its designated undistributed capital gains, if any, and reduced by the amount of tax deemed paid by the stockholder with respect to such gains. Backup Withholding. The Company will report to its domestic stockholders and to the Internal Revenue Service (the "Service") the amount of dividends during each calendar year, and the amount of tax withheld, if any, with respect thereto. Under the backup withholding rules, a stockholder may be subject to backup withholding at the rate of 31% with respect to reportable payments unless such stockholder (a) is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact, or (b) provides a taxpayer identification number; certifies, under penalty of perjury, that it is not subject to backup withholding; and otherwise complies with applicable requirements of the backup withholding rules. A stockholder that does S-15 not provide the Company with its correct taxpayer identification number may also be subject to penalties imposed by the Service. Any amount paid as backup withholding will be allowed as a credit against the stockholder's income tax liability. Sale or Exchange of StREITs(SM). Upon the sale or exchange of StREITs(SM) to a party other than the Company, a holder of StREITs(SM) will realize a capital gain or loss measured by the difference between the amount realized on the sale or other disposition and the holder's adjusted tax basis in the StREITs(SM) (provided the StREITs(SM) are held as capital assets). Such capital gain will generally be taxed at a maximum individual income tax rate of 20% if the holder's holding period with respect to the StREITs(SM) is more than eighteen months at the time of the sale or exchange and may qualify for a lower individual income tax rate for tax years beginning after December 31, 2000 in certain circumstances. Further, any capital loss on a sale of StREITs(SM) which were held by the holder for six months or less and with respect to which a capital gain dividend was received or designated as received will be treated as a long-term capital loss, up to the amount of the capital gain dividend received or deemed received with respect to such shares. Redemption of StREITs(SM). The treatment to be accorded to any redemption by the Company of StREITs(SM) can only be determined on the basis of particular facts as to each holder of StREITs(SM) at the time of redemption. In general, a holder of StREITs(SM) will recognize capital gain or loss measured by the difference between the amount realized by the holder upon the redemption and such holder's adjusted tax basis in the StREITs(SM) redeemed (provided the StREITs(SM) are held as capital assets) if such redemption (i) results in a "complete termination" of the holder's interest in all classes of shares of the Company under Code Section 302(b)(3), (ii) is "substantially disproportionate" with respect to the holder's interest in the Company under Code Section 302(b)(2) (which will not be the case if only StREITs(SM) are redeemed, since they generally do not have voting rights) or (iii) is "not essentially equivalent to a dividend" with respect to the holder of StREITs(SM) under Code Section 302(b)(1). In determining whether any of these tests have been met, shares considered to be owned by the holder by reason of certain constructive ownership rules set forth in the Code, as well as shares actually owned, must generally be taken into account. Because the determination as to whether any of the alternative tests of Section 302(b) of the Code will be satisfied with respect to any particular holder of StREITs(SM) depends upon the facts and circumstances at the time when the determination must be made, prospective investors are advised to consult their own tax advisors to determine such tax treatment. Section 305(c) of the Code and the regulations thereunder provide in certain cases for the continuing economic accrual of a "redemption premium" on preferred stock on a constant yield-to-maturity basis, and for the treatment of such accrual as a distribution with respect to such preferred stock. The term "redemption premium" is not defined in the Code or regulations. A "redemption premium" may include distributions payable at a rate other than a constant rate, although the law is not clear. If such distributions are treated as "redemption premiums," the annual taxable distributions to holders of an increasing rate preferred stock may in the early years be greater than the distributions actually received, due to the accrual on a constant-yield basis to amounts payable in later years. For such treatment to apply, a determination of a "maturity date" would be required, i.e., a date (occurring on or after September 30, 2012) at which it is considered, as of the issuance of the StREITs(SM), to be more likely than not that the Company will exercise its redemption option. Based upon certain representations of the Company, it cannot be determined at this time that any such date exists. Further, there appears to be an indication in the regulations that, all other things being equal, a redemption would more likely occur before rather than after an increase in the distribution rate. Based on the foregoing, the above-described treatment of increasing rate distributions as being taxable before received on an economic accrual basis should not apply to distributions made on the StREITs(SM). In addition, since the amount payable for a StREITs(SM) on redemption is equal to the amount for which such share will be issued, no "redemption premium" should arise by reason of the amount of the redemption price. S-16 UNDERWRITING Subject to the terms and conditions of the Underwriting Agreement, the Company has agreed to sell to Smith Barney Inc. and Morgan Stanley & Co. Incorporated (the "Underwriters"), and each of the Underwriters has severally agreed to purchase from the Company, 500,000 StREITs(SM). Under the terms and conditions of the Underwriting Agreement, the Underwriters are committed to take all of the StREITs(SM), if any are taken. The Underwriters propose to offer the StREITs(SM) from time to time for sale in one or more negotiated transactions or otherwise at a fixed offering price or at varying prices determined at the time of sale. The Underwriters may effect such transactions by selling the StREITs(SM) to or through dealers, and such dealers may receive compensation in the form of concessions or commissions not in excess of $1.50 per share from the Underwriters and/or the purchasers of the StREITs(SM) for whom they may act as agent in connection with the sales of the StREITs(SM). The Underwriters may allow, and such dealers may reallow, a concession not in excess of $1.25 per share to certain brokers and dealers. The Underwriters may be deemed to have received compensation from the Company in the form of underwriters' discounts, and the Underwriters may also receive commissions from purchasers of the StREITs(SM) for whom they may act as agent. The Underwriters and any dealers that participate with the Underwriters in the distribution of the StREITs(SM) may be deemed to be underwriters, and any discounts or commissions received by them and any profit on the resale of the StREITs(SM) by them may be deemed to be underwriters' discounts or commissions under the Securities Act of 1933. The StREITs(SM) are a new issue of securities with no established trading market. The Company has been advised by the Underwriters that they intend to make a market in the StREITs(SM) but are not obligated to do so and may discontinue market making at any time without notice. No assurance can be given as to the liquidity of the trading market for the StREITs(SM). In connection with this Offering and in compliance with applicable law, the Underwriters may over-allot (i.e., sell more StREITs(SM) than the total amount shown on the cover page of this Prospectus Supplement) and may effect transactions which otherwise affect the market price of the StREITs(SM). Such transactions may include placing bids for the StREITs(SM) or effecting purchases of the StREITs(SM) for the purpose of reducing a short position created in connection with the Offering. A short position may be covered by open market purchases. If an Underwriter purchases StREITs(SM) in the open market and the securities purchased can be traced to a particular member of the selling group, the Underwriters may require the selling group member in question to purchase the StREITs(SM) in question at the cost price to the Underwriters or may recover from (or decline to pay to) the selling group member in question the selling concession applicable to the securities in question. The Underwriters are not required to engage in any of these activities and any such activities, if commenced, may be discontinued at any time. The Company has agreed to indemnify the several Underwriters against certain liabilities, including liabilities under the Securities Act of 1933. LEGAL MATTERS The validity of the issuance of the StREITs(SM) offered hereby will be passed upon for the Company by O'Melveny & Myers LLP, Newport Beach, California, and for the Underwriters by Brown & Wood LLP, San Francisco, California. O'Melveny & Myers LLP and Brown & Wood LLP will rely upon Venable, Baetjer & Howard, LLP Baltimore, Maryland as to certain matters of Maryland law. Paul C. Pringle, a partner of Brown & Wood LLP, owns 5,000 shares of Common Stock of the Company. S-17 PROSPECTUS NATIONWIDE HEALTH PROPERTIES, INC. SECURITIES Nationwide Health Properties, Inc. (the "Company") may offer from time to time, in one or more series, its unsecured debt securities (the "Debt Securities"), warrants to purchase Debt Securities (the "Debt Securities Warrants"), shares of its Preferred Stock, par value $1.00 per share (the "Preferred Stock"), warrants to purchase Preferred Stock (the "Preferred Stock Warrants"), warrants to purchase Depositary Shares (as defined below) (the "Depositary Shares Warrants"), shares of its Common Stock, par value $0.10 per share (the "Common Stock") and warrants to purchase Common Stock (the "Common Stock Warrants," and with the Debt Securities Warrants, the Preferred Stock Warrants and the Depositary Shares Warrants, being collectively referred to herein as the "Securities Warrants"). The Debt Securities, the Preferred Stock, the Common Stock and the Securities Warrants are collectively referred to herein as the "Securities." The Securities will have an aggregate offering price of $300,000,000 and will be offered on terms to be determined at the time of offering. In the case of Debt Securities, the specific title, the aggregate principal amount, the purchase price, the maturity, the rate and time of payment of any interest, any redemption or sinking fund provisions, any conversion provisions and any other specific term of the Debt Securities will be set forth in the accompanying supplement to this Prospectus (the "Prospectus Supplement"). In the case of Preferred Stock, the specific number of shares, designation, stated value per share, liquidation preference per share, issuance price, dividend rate (or method of calculation), dividend payment dates, any redemption or sinking fund provisions, any conversion rights and other specific terms of the series of Preferred Stock will be set forth in the accompanying Prospectus Supplement. In addition, the Prospectus Supplement will describe whether interests in the Preferred Stock will be represented by depositary shares (the "Depositary Shares") evidenced by depositary receipts. In the case of Common Stock, the specific number of shares and issuance price per share will be set forth in the accompanying Prospectus Supplement. In the case of Securities Warrants, the duration, offering price, exercise price and detachability, if applicable, will be set forth in the accompanying Prospectus Supplement. The Prospectus Supplement will also disclose whether the Securities will be listed on a national securities exchange and if they are not to be listed, the possible effects thereof on their marketability. Securities may be sold directly, through agents from time to time or through underwriters or dealers. If any agent of the Company or any underwriter is involved in the sale of the Securities, the name of such agent or underwriter and any applicable commission or discount will be set forth in the accompanying Prospectus Supplement. See "Plan of Distribution." The net proceeds to the Company from such sale also will be set forth in the applicable Prospectus Supplement. The Debt Securities, if issued, may rank on parity with all other unsecured and unsubordinated indebtedness of the Company or may be subordinated to certain other indebtedness of the Company. See "Description of Debt Securities." ------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------ THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. ------------ This Prospectus may not be used to consummate sales of Securities unless accompanied by a Prospectus Supplement. ------------ The date of this Prospectus is January 6, 1997 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information can be inspected and copied at the Public Reference Room of the Commission, Room 1024, at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices at 7 World Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 at prescribed rates. In addition, such materials may also be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. The Company has filed with the Commission a Registration Statement on Form S-3 (together with all amendments and exhibits thereto, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus and any accompanying Prospectus Supplement do not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. For further information, reference is made to the Registration Statement, which may be examined without charge at the public reference facilities maintained by the Commission at the Public Reference Room of the Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies thereof may be obtained from the Commission upon payment of the prescribed fees. ------------ INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995 and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996 are incorporated in and made a part of this Prospectus. All documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Securities shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing such documents. A statement contained herein, in a Prospectus Supplement or in a document incorporated or deemed to be incorporated by reference herein, shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein, in a Prospectus Supplement or in any subsequently filed document which is incorporated by reference herein, modifies or supersedes such statement. Any such statements so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom this Prospectus is delivered, on the request of any such person, a copy of any or all the documents incorporated herein by reference (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into the documents that this Prospectus incorporates). Requests for such copies should be directed to Nationwide Health Properties, Inc., 610 Newport Center Drive, Suite 1150, Newport Beach, California 92660, Attention: Mark L. Desmond (telephone number (714) 718-4400). 2 THE COMPANY Nationwide Health Properties, Inc., a Maryland corporation organized in October 1985 (the "Company"), is a real estate investment trust ("REIT") which invests primarily in health care related facilities and provides financing to health care providers. As of September 30, 1996, the Company had investments in 224 facilities located in 30 states. The facilities include 182 long-term health care facilities, 40 assisted living facilities and two rehabilitation hospitals. As of September 30, 1996, the Company had direct ownership of 139 long-term health care facilities, 35 assisted living facilities and two rehabilitation hospitals. All of the Company's owned facilities are leased under "net" leases (the "Leases"), which are accounted for as operating leases, to 35 health care providers (the "Lessees") including Beverly Enterprises, Inc. ("Beverly"), ARV Assisted Living, Inc., Sun Healthcare Group, Inc., Horizon/CMS Healthcare Corporation, Living Centers of America, Inc., GranCare Inc., Integrated Health Services, Inc., HEALTHSOUTH Corporation, Alternative Living Services, Inc., Mariner Health Group, and Retirement Care Associates, Inc. Of the Lessees, only Beverly and ARV Assisted Living, Inc. account for more than 10% of the Company's revenue. The Leases have initial terms ranging from 10 to 19 years, and generally the Leases have two or more multi-year renewal options. The Company earns fixed monthly minimum rents and may earn periodic additional rents. The additional rent payments are generally computed as a percentage of facility net patient revenues in excess of base amounts. The base amounts, in most cases, are net patient revenues for the first year of the lease. Most Leases contain cross collateralization and cross default provisions tied to other Leases with the same Lessee, as well as grouped lease renewals and grouped purchase options. Obligations under the Leases have corporate guarantees, and Leases covering 94 facilities are backed by irrevocable letters of credit or security deposits which cover one to 12 months of monthly minimum rents. Under the terms of the Leases, the Lessee is responsible for all maintenance, repairs, taxes and insurance on the leased properties. As of September 30, 1996, the Company held 29 mortgage loans secured by 43 long-term health care facilities and 5 assisted living facilities. As of September 30, 1996, the mortgage loans had a net book value of approximately $155,507,000 with individual outstanding balances ranging from approximately $754,000 to $17,250,000 and maturities ranging from 1998 to 2031. As of September 30, 1996, 45 of the Company's 176 owned facilities were being leased to and operated by subsidiaries of Beverly. Beverly has guaranteed certain obligations of its subsidiaries and of certain parties unaffiliated with Beverly in connection with 24 properties operated by such parties. Rental and interest income from Beverly accounted for 40%, 34% and 27% of the Company's total revenues for the years ended December 31, 1993, 1994 and 1995, respectively, and for 23% of the Company's total revenues for the nine months ended September 30, 1996. The Company anticipates providing lease or mortgage financing for health care facilities to qualified operators and acquiring additional health care related facilities, including long-term health care facilities, assisted living facilities, acute care hospitals and medical office buildings. Financing for such future investment may be provided by borrowings under the Company's bank line of credit, private placements or public offerings of debt or equity, and the assumption of indebtedness. The Company operates so as to qualify as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"). As a REIT, the Company distributes to its stockholders substantially all of its cash flow from operations and, in any event, at least 95% of its taxable income. If the Company qualifies for taxation as a REIT, it will generally not be subject to federal corporate income taxes on its net income that is currently distributed to stockholders. This treatment substantially eliminates the "double taxation" (e.g., at the corporate and stockholder levels) that generally results from investment in stock of a corporation. The Company's principal executive offices are located at 610 Newport Center Drive, Suite 1150, Newport Beach, California 92660 and its telephone number is (714) 718-4400. 3 SELECTED CONSOLIDATED FINANCIAL INFORMATION The following selected consolidated financial information of the Company, restated for the two-for-one stock split effective March 8, 1996, for each of the five years ended December 31, 1995 is derived from the Company's audited consolidated financial statements, which have been audited by Arthur Andersen LLP, independent accountants. The selected consolidated financial information for the nine month periods ended September 30, 1996 and 1995 has been derived from the unaudited interim consolidated financial statements of the Company and includes, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial position and results of operations as of and for such periods. Such financial information has been derived from financial information included in the Company's Annual Reports on Form 10-K and the Company's Quarterly Reports on Form 10-Q. The selected consolidated financial information set forth below should be read in conjunction with the detailed information, consolidated financial statements and related notes and applicable "Management's Discussion and Analysis" included in the 1995, 1994, 1993, 1992 and 1991 Annual Reports on Form 10-K.
NINE MONTHS ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31, ------------------ ------------------------------------------------ 1996 1995 1995 1994 1993 1992 1991 -------- -------- -------- -------- -------- -------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) OPERATING DATA: Revenues: Minimum rent........... $ 49,431 $ 39,947 $ 54,504 $ 47,805 $ 40,758 $ 38,062 $ 31,439 Additional rent and additional interest... 8,862 8,909 11,776 9,767 8,417 6,241 4,063 Interest and other income................ 12,242 10,826 14,759 12,413 11,210 5,504 876 -------- -------- -------- -------- -------- -------- -------- 70,535 59,682 81,039 69,985 60,385 49,807 36,378 Expenses: Depreciation and non- cash charges.......... 12,454 10,246 13,885 12,244 10,115 9,219 7,585 Interest and amortization of deferred financing costs................. 15,539 10,525 14,628 9,921 6,186 8,162 4,849 General and administrative........ 2,499 2,356 3,144 3,007 3,088 2,883 2,403 -------- -------- -------- -------- -------- -------- -------- 30,492 23,127 31,657 25,172 19,389 20,264 14,837 -------- -------- -------- -------- -------- -------- -------- Income from operations.. 40,043 36,555 49,382 44,813 40,996 29,543 21,541 Gain on sale of facilities............. -- 989 989 -- -- 138 -- Extraordinary charge (1).................... -- -- -- -- (2,004) -- (3,460) -------- -------- -------- -------- -------- -------- -------- Net income.............. $ 40,043 $ 37,544 $ 50,371 $ 44,813 $ 38,992 $ 29,681 $ 18,081 ======== ======== ======== ======== ======== ======== ======== Dividends paid.......... $ 44,121 $ 39,145 $ 53,182 $ 47,751 $ 42,883 $ 33,349 $ 26,245 PER SHARE DATA: Income from operations.. $ 1.00 $ .97 $ 1.31 $ 1.23 $ 1.17 $ .99 $ .84 Net income.............. 1.00 1.00 1.33 1.23 1.11 1.00 .70 Dividends paid.......... 1.11 1.05 1.41 1.31 1.21 1.11 1.03 BALANCE SHEET DATA: Investments in real estate, net............ $700,490 $557,375 $652,231 $501,862 $428,473 $380,539 $289,761 Total assets............ 723,661 572,094 670,111 513,809 440,165 396,664 305,837 Senior unsecured notes due 2000-2015.......... 150,000 56,000 100,000 -- -- -- -- Bank borrowings......... 48,200 48,700 93,900 80,200 3,800 9,950 -- Convertible debentures.. 65,000 65,000 65,000 67,690 73,609 44,455 50,000 Notes and bonds payable................ 9,249 14,190 23,364 20,520 23,047 32,116 33,124 Stockholders' equity.... 428,963 372,903 371,822 336,106 332,927 301,895 218,772 OTHER DATA: Net cash provided by operating activities... $ 54,960 $ 51,066 $ 66,972 $ 56,756 $ 49,725 $ 38,207 $ 30,217 Net cash used in investing activities... (59,252) (62,820) (151,476) (83,185) (56,261) (96,719) (55,899) Net cash provided by financing activities... 6,429 14,051 88,699 26,544 1,882 56,837 32,365 Funds from operations (2).................... 52,497 46,801 63,267 57,057 51,111 38,762 29,126 Weighted average shares outstanding............ 39,899 37,500 37,808 36,356 35,188 29,734 25,674
- ------- (1) The Company incurred extraordinary charges representing the write-off of unamortized deferred financing costs and fees in connection with the prepayment of substantial portions of the Company's secured debt. (2) Industry analysts generally consider funds from operations to be an alternative measure of the performance of an equity REIT. The Company therefore discloses funds from operations, although it is a measurement that is not defined by generally accepted accounting principles. The Company uses the NAREIT measure of funds from operations, which is generally defined as income before extraordinary items plus certain non- cash items, primarily depreciation, less gains on sales of facilities. The NAREIT measure may not be comparable to similarly titled measures used by other REITs. Consequently, the Company's funds from operations may not provide a meaningful measure of the Company's performance as compared to that of other REITs. Funds from operations does not represent cash generated from operating activities as defined by generally accepted accounting principles (funds from operations does not include changes in operating assets and liabilities) and, therefore, should not be considered as an alternative to net income as the primary indicator of operating performance or to cash flow as a measure of liquidity. 4 RATIO OF EARNINGS TO FIXED CHARGES
NINE MONTHS YEAR ENDED DECEMBER 31, ENDED ------------------------ SEPTEMBER 30, 1991 1992 1993 1994 1995 1996 ---- ---- ---- ---- ---- ------------- Ratio.................................... 5.44 4.64 7.63 5.52 4.57 3.58
USE OF PROCEEDS Unless otherwise specified in the Prospectus Supplement which accompanies this Prospectus, the net proceeds from the sale of the Securities offered from time to time hereby will be used for general corporate purposes, including the repayment of bank lines of credit and investments in health care related properties. The Company uses its existing revolving bank credit facility primarily to provide financing for the acquisitions of health care related facilities. To the extent that the Company has amounts outstanding under the credit facility at the time it issues Securities, it is currently required to use the proceeds of such issuance to repay amounts outstanding under the credit facility. DESCRIPTION OF DEBT SECURITIES Debt Securities may be issued from time to time in series under an Indenture (the "Indenture") to be entered into between the Company and The Bank of New York, as Trustee (the "Trustee"). As used under this caption, unless the context otherwise requires, Offered Debt Securities shall mean the Debt Securities offered by this Prospectus and the accompanying Prospectus Supplement. The statements under this caption are brief summaries of certain provisions contained in the Indenture, do not purport to be complete and are qualified in their entirety by reference to the Indenture, including the definition therein of certain terms, a copy of which is filed as an exhibit to the Registration Statement of which this Prospectus is a part. The following sets forth certain general terms and provisions of the Debt Securities. Further terms of the Offered Debt Securities will be set forth in the Prospectus Supplement. GENERAL The Indenture provides for the issuance of Debt Securities in series, and does not limit the principal amount of Debt Securities which may be issued thereunder. Reference is made to the Prospectus Supplement for the following terms of the Offered Debt Securities: (1) the specific title of the Offered Debt Securities; (2) the aggregate principal amount of the Offered Debt Securities; (3) the percentage of their principal amount at which the Offered Debt Securities will be issued; (4) the date on which the Offered Debt Securities will mature; (5) the rate or rates per annum or the method for determining such rate or rates, if any, at which the Offered Debt Securities will bear interest; (6) the times at which any such interest will be payable; (7) any provisions relating to optional or mandatory redemption of the Offered Debt Securities at the option of the Company or pursuant to sinking fund or analogous provisions; (8) the denominations in which the Offered Debt Securities are authorized to be issued; (9) any provisions relating to the conversion or exchange of the Offered Debt Securities into Common Stock, Preferred Stock or into Debt Securities of another series; (10) whether the Offered Debt Securities are to be issued in fully registered form without coupons or in bearer form with interest coupons or both; (11) the place or places at which the Company will make payments of principal (and premium, if any) and interest, if any, and the method of payment; (12) whether the Offered Debt Securities will be issued in whole or in part in global form; (13) any additional covenants and Events of Default and the remedies with respect thereto not currently set forth in the Indenture; (13) whether the Offered Debt Securities will be subordinated to other indebtedness of the Company; and (14) any other specific terms of the Offered Debt Securities. 5 One or more series of the Debt Securities may be issued as discounted Debt Securities (bearing no interest or bearing interest at a rate which at the time of issuance is below market rates) to be sold at a substantial discount below their stated principal amount. Tax and other special considerations applicable to any such discounted Debt Securities will be described in the Prospectus Supplement relating thereto. STATUS OF DEBT SECURITIES The Debt Securities will be unsecured obligations of the Company and may be ranking on a parity with all other unsecured and unsubordinated indebtedness or may be subordinated to certain other indebtedness of the Company. CONVERSION RIGHTS The terms, if any, on which Debt Securities of a series may be exchanged for or converted into shares of Common Stock, Preferred Stock or Debt Securities of another series will be set forth in the Prospectus Supplement relating thereto. To protect the Company's status as a REIT, a Holder may not convert any Debt Security, and such Debt Security shall not be convertible by any Holder, if as a result of such conversion any person would then be deemed to beneficially own, directly or indirectly, 9.9% or more of the Company's shares of Common Stock. ABSENCE OF RESTRICTIVE COVENANTS Except as noted below under "Dividends, Distributions and Acquisitions of Capital Stock," the Company is not restricted by the Indenture from paying dividends or from incurring, assuming or becoming liable for any type of debt or other obligations or from creating liens on its property for any purpose. The Indenture does not require the maintenance of any financial ratios or specified levels of net worth or liquidity. Except as may be set forth in the Prospectus Supplement, there are no provisions of the Indenture which afford holders of the Debt Securities protection in the event of a highly leveraged transaction involving the Company. OPTIONAL REDEMPTION The Debt Securities will be subject to redemption, in whole or from time to time in part, at any time for certain reasons intended to protect the Company's status as a REIT, at the option of the Company in the manner specified in the Indenture at a redemption price equal to 100% of the principal amount, plus interest accrued to the date of redemption. The Indenture does not contain any provision requiring the Company to repurchase the Debt Securities at the option of the Holders thereof in the event of a leveraged buyout, recapitalization or similar restructuring of the Company, even though the Company's creditworthiness and the market value of the Debt Securities may decline significantly as a result of such transaction. The Indenture does not protect Holders of the Debt Securities against any decline in credit quality, whether resulting from any such transaction or from any other cause. DIVIDENDS, DISTRIBUTIONS AND ACQUISITIONS OF CAPITAL STOCK The Indenture provides that the Company will not (i) declare or pay any dividend or make any distribution on its capital stock or to holders of its capital stock (other than dividends or distributions payable in its capital stock or other than as the Company determines is necessary to maintain its status as a REIT) or (ii) purchase, redeem or otherwise acquire or retire for value any of its capital stock, or any warrants, rights or options or other securities to purchase or acquire any shares of its capital stock (other than the Debt Securities) or permit any subsidiary to do so, if at the time of such action an Event of Default (as defined in the Indenture) has occurred and is continuing or would exist immediately after giving effect to such action. EVENTS OF DEFAULT An Event of Default with respect to Debt Securities of any series is defined in the Indenture as being: (a) failure to pay principal of or any premium on any Debt Security of that series when due; (b) failure to pay 6 any interest on any Debt Security of that series when due, continued for 30 days; (c) failure to deposit any sinking fund payment when due, in respect of any Debt Security of that series; (d) failure to perform any other covenant of the Company in the Indenture (other than a covenant included in the Indenture solely for the benefit of one or more series of Debt Securities other than that series), continued for 60 days after written notice as provided in the Indenture; (e) certain events of bankruptcy, insolvency, conservatorship, receivership or reorganization; (f) a default under any mortgage, indenture or instrument evidencing any indebtedness for borrowed money by the Company (including the Indenture) resulting in an aggregate principal amount exceeding $10,000,000 becoming or being declared due and payable prior to its maturity date or constituting a failure to pay at maturity an aggregate principal amount exceeding $10,000,000, unless such acceleration has been rescinded or annulled or such indebtedness has been discharged within 10 days after written notice to the Company by the Trustee or Holders of at least 25% in aggregate principal amount of the outstanding Debt Securities declaring a default or the Company is contesting the validity of such default in good faith by appropriate proceedings; and (g) any other Event of Default provided with respect to the Debt Securities of that series. If an Event of Default with respect to the outstanding Debt Securities of any series occurs and is continuing, either the Trustee or the Holders of at least 25% in aggregate principal amount of the outstanding Debt Securities of that series may declare the principal amount (or, if the Debt Securities of that series are original issue discount Debt Securities, such portion of the principal amount as may be specified in the terms of that series) of all the outstanding Debt Securities of that series to be due and payable immediately. At any time after the declaration of acceleration with respect to the Debt Securities of any series has been made, but before a judgment or decree based on acceleration has been obtained, the Holders of a majority in aggregate principal amount of the outstanding Debt Securities of that series may, under certain circumstances, rescind and annul such acceleration. The Indenture provides that, subject to the duty of the Trustee during default to act with the required standard of care, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable indemnity. Subject to such provisions for the indemnification of the Trustee and subject to certain limitations, the Holders of a majority in aggregate principal amount of the outstanding Debt Securities of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Debt Securities of that series. The Company is required to furnish to the Trustee annually a statement as to the performance by the Company of certain of its obligations under the Indenture and as to any default in such performance. MODIFICATION AND WAIVER Modifications and amendments of the Indenture may be made by the Company and the Trustee without the consent of any Holders to, among other things, (a) evidence the succession of another corporation to the Company, (b) add to the covenants of the Company or surrender any right or power conferred upon the Company, (c) cure any ambiguity, correct or supplement any provision which may be defective or inconsistent or make any other provisions with respect to matters or questions arising under the Indenture, provided that such action does not adversely affect the interests of the Holders of Debt Securities of any series in any material respect, or (d) evidence and provide for a successor Trustee. Modifications and amendments of the Indenture may be made by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the outstanding Debt Securities of each series affected by such modification or amendment; provided, however, that no such modification or amendment may, without the consent of the Holder of each outstanding Debt Security affected thereby, (a) change the stated maturity date of the principal of, or any installment of principal of or interest, if any, on any Debt Security, (b) reduce the principal amount of, or premium or interest if any, on any Debt Security, (c) reduce the amount of principal of an original issue discount Debt Security payable upon acceleration of the maturity thereof, (d) change the currency of payment of the principal of, or premium or interest, if any, on any Debt Security, (e) impair the 7 right to institute suit for the enforcement of any payment on or with respect to any Debt Security, (f) modify the conversion provisions, if any, of any Debt Security in a manner adverse to the Holder of that Debt Security, or (g) reduce the percentage in principal amount of the outstanding Debt Security of any series, the consent of whose Holders is required for modification or amendment of that Indenture or for waiver of compliance with certain provisions of that Indenture or for waiver of certain defaults. The Holders of a majority in aggregate principal amount of the outstanding Debt Securities of each series may, on behalf of all Holders of the Debt Securities of that series, waive, insofar as that series is concerned, compliance by the Company with certain restrictive provisions of the Indenture. The Holders of a majority in aggregate principal amount of the outstanding Debt Securities of each series may, on behalf of all Holders of the Debt Securities of that series, waive any past default under the Indenture with respect to the Debt Securities of that series, except a default in the payment of principal or premium or interest, if any, or a default in respect of a covenant or provision which under the terms of the Indenture cannot be modified or amended without the consent of the Holder of each outstanding Debt Security of the series affected. CONSOLIDATION, MERGER AND SALE OF ASSETS The Indenture provides that the Company, without the consent of the Holders of any of the Debt Securities, may consolidate or merge with or into, or transfer its assets substantially as an entirety to, any corporation organized under the laws of the United States or any state, provided that the successor corporation assumes the Company's obligations under the Indenture, that after giving effect to the transaction no Event of Default, and no event which, after notice or lapse of time, would become an Event of Default, shall have occurred and be continuing, and that certain other conditions are met. GLOBAL SECURITIES The Debt Securities of a series may be issued in whole or in part in global form (the "Global Securities"). The Global Securities will be deposited with a depositary (the "Depositary"), or with a nominee for a Depositary, identified in the Prospectus Supplement. In such case, one or more Global Securities will be issued in a denomination or aggregate denominations equal to the portion of the aggregate principal amount of outstanding Debt Securities of the series to be represented by such Global Security or Securities. Unless and until it is exchanged in whole or in part for Debt Securities in definitive form, a Global Security may not be transferred except as a whole by the Depositary for such Global Security to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor of such Depositary or a nominee of such successor. The specific material terms of the depositary arrangement with respect to any portion of a series of Debt Securities to be represented by a Global Security will be described in the Prospectus Supplement. The Company anticipates that the following provisions will apply to all depositary arrangements. Upon the issuance of a Global Security, the Depositary for such Global Security will credit, on its book-entry registration and transfer system, the respective principal amounts of the Debt Securities represented by such Global Security to the accounts of persons that have accounts with such Depositary ("participants"). The accounts to be credited shall be designated by any underwriters or agents participating in the distribution of such Debt Securities. Ownership of beneficial interests in a Global Security will be limited to participants or persons that may hold interests through participants. Ownership of beneficial interests in such Global Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the Depositary for such Global Security (with respect to interests of participants) or by participants or persons that hold through participants (with respect to interests of persons other than participants). So long as the Depositary for a Global Security, or its nominee, is the registered owner of such Global Security, such Depositary or such nominee, as the case may be, will be considered the sole owner or Holder of the Debt Securities represented by such Global Security for all purposes under the Indenture; provided, however, that for purposes of obtaining any consents or directions required to be given by the Holders of the Debt Securities, the Company, the Trustee and 8 its agents will treat a person as the holder of such principal amount of Debt Securities as specified in a written statement of the Depositary. Except as set forth herein or otherwise provided in the Prospectus Supplement, owners of beneficial interests in a Global Security will not be entitled to have the Debt Securities represented by such Global Security registered in their names, will not receive physical delivery of such Debt Securities in definitive form and will not be considered the owners or Holders thereof under the Indenture. Principal, premium, if any, and interest payments on Debt Securities represented by a Global Security registered in the name of a Depositary or its nominee will be made to such Depositary or its nominee, as the case may be, as the registered owner of such Global Security. None of the Company, the Trustee or any Paying Agent for such Debt Securities will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in such Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Company expects that the Depositary for any Debt Securities represented by a Global Security, upon receipt of any payment of principal, premium, if any, or interest will immediately credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Security as shown on the records of such Depositary. The Company also expects that payments by participants will be governed by standing instructions and customary practices, as is now the case with the securities held for the accounts of customers registered in "street names" and will be the responsibility of such participants. If the Depositary for any Debt Securities represented by a Global Security is at any time unwilling or unable to continue as Depositary and a successor Depositary is not appointed by the Company within 90 days, the Company will issue such Debt Securities in definitive form in exchange for such Global Security. In addition, the Company may at any time and in its sole discretion determine not to have any of the Debt Securities of a series represented by one or more Global Securities and, in such event, will issue Debt Securities of such series in definitive form in exchange for all of the Global Security or Securities representing such Debt Securities. The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such laws may impair the ability to transfer beneficial interests in Debt Securities represented by Global Securities. GOVERNING LAW The Indenture and the Debt Securities will be governed by and construed in accordance with the laws of the State of New York. 9 DESCRIPTION OF PREFERRED STOCK The following description of the terms of the Preferred Stock sets forth certain general terms and provisions of the Preferred Stock to which any Prospectus Supplement may relate. Certain other terms of any series of the Preferred Stock offered by any Prospectus Supplement will be described in such Prospectus Supplement. The description of certain provisions of the Preferred Stock set forth below and in any Prospectus Supplement does not purport to be complete and is subject to and qualified in its entirety by reference to the Company's Amended and Restated Articles of Incorporation (the "Articles of Incorporation"), and the articles supplementary (the "Articles Supplementary") relating to each series of the Preferred Stock which will be filed with the Commission and incorporated by reference as an exhibit to the Registration Statement of which this Prospectus is a part at or prior to the time of the issuance of such series of the Preferred Stock. GENERAL The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock, $0.10 par value per share, and 5,000,000 shares of preferred stock, $1.00 par value per share ("preferred stock of the Company," which term, as used herein, includes the Preferred Stock offered hereby). See "Description of Common Stock." Under the Articles of Incorporation, the Board of Directors of the Company is authorized without further stockholder action to provide for the issuance of up to 5,000,000 shares of preferred stock of the Company, in one or more series, with such voting, dividend, conversion or liquidation rights, designations, preferences, powers and relative participating, optional or other special rights and qualifications, limitations or restrictions of shares of such series as shall be stated in the resolution providing for the issue of a series of such stock, adopted, at any time or from time to time, by the Board of Directors of the Company. As described under "Description of Depositary Shares," the Company may, at its option, elect to offer Depositary Shares evidenced by depositary receipts (the "Depositary Receipts"), each representing a fraction (to be specified in the Prospectus Supplement relating to the particular series of the Preferred Stock) of a share of the particular series of the Preferred Stock issued and deposited with a depositary, in lieu of offering full shares of such series of the Preferred Stock. The Preferred Stock shall have the dividend, liquidation, redemption and voting rights set forth below unless otherwise provided in a Prospectus Supplement relating to a particular series of the Preferred Stock. Reference is made to the Prospectus Supplement relating to the particular series of the Preferred Stock offered thereby for specific terms, including: (i) the designation and stated value per share of such Preferred Stock and the number of shares offered; (ii) the amount of liquidation preference per share; (iii) the initial public offering price at which such Preferred Stock will be issued; (iv) the dividend rate (or method of calculation), the dates on which dividends shall be payable and the dates from which dividends shall commence to cumulate, if any; (v) any redemption or sinking fund provisions; (vi) any conversion rights; (vii) whether the Company has elected to offer Depositary Shares as described below under "Description of Depositary Shares;" and (viii) any additional voting, dividend, liquidation, redemption, sinking fund and other rights, preferences, privileges, limitations and restrictions. The Preferred Stock will, when issued, be fully paid and nonassessable and will have no preemptive rights. Unless otherwise stated in a Prospectus Supplement relating to a particular series of the Preferred Stock, each series of the Preferred Stock will rank on a parity as to dividends and distributions of assets with each other series of the Preferred Stock. The rights of the holders of each series of the Preferred Stock will be subordinate to those of the Company's general creditors. CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION See "Description of Common Stock--Redemption and Business Combination Provisions" for a description of certain provisions of the Articles of Incorporation, including provisions relating to redemption rights and provisions which may have certain anti-takeover effects. 10 DIVIDEND RIGHTS Holders of the Preferred Stock of each series will be entitled to receive, when, as and if declared by the Board of Directors of the Company, out of funds of the Company legally available therefor, cash dividends on such dates and at such rates as are set forth in, or as are determined by the method described in, the Prospectus Supplement relating to such series of the Preferred Stock. Such rate may be fixed or variable or both. Each such dividend will be payable to the holders of record as they appear on the stock books of the Company (or, if applicable, the records of the Depositary (as hereinafter defined) referred to under "Description of Depositary Shares") on such record dates, fixed by the Board of Directors of the Company, as specified in the Prospectus Supplement relating to such series of Preferred Stock. Such dividends may be cumulative or noncumulative, as provided in the Prospectus Supplement relating to such series of Preferred Stock. If the Board of Directors of the Company fails to declare a dividend payable on a dividend payment date on any series of Preferred Stock for which dividends are noncumulative, then the right to receive a dividend in respect of the dividend period ending on such dividend payment date will be lost, and the Company shall have no obligation to pay the dividend accrued for such period, whether or not dividends on such series are declared payable on any future dividend payment dates. Dividends on the shares of each series of Preferred Stock for which dividends are cumulative will accrue from the date on which the Company initially issues shares of such series. So long as the shares of any series of the Preferred Stock shall be outstanding, unless (i) full dividends (including if such Preferred Stock is cumulative, dividends for prior dividend periods) shall have been paid or declared and set apart for payment on all outstanding shares of the Preferred Stock of such series and all other classes and series of preferred stock of the Company (other than Junior Stock, as defined below) and (ii) the Company is not in default or in arrears with respect to the mandatory or optional redemption or mandatory repurchase or other mandatory retirement of, or with respect to any sinking or other analogous fund for, any shares of Preferred Stock of such series or any shares of any other preferred stock of the Company of any class or series (other than Junior Stock), the Company may not, other than as the Company determines is necessary to maintain its status as a REIT, declare any dividends on any shares of Common Stock of the Company or any other stock of the Company ranking as to dividends or distributions of assets junior to such series of Preferred Stock (the Common Stock and any such other stock ranking junior to such series of Preferred Stock being herein referred to as "Junior Stock"), or make any payment on account of, or set apart money for, the purchase, redemption or other retirement of, or for a sinking or other analogous fund for, any shares of Junior Stock or make any distribution in respect thereof, whether in cash or property or in obligations or stock of the Company, other than Junior Stock which is neither convertible into, nor exchangeable or exercisable for, any securities of the Company other than Junior Stock. LIQUIDATION PREFERENCE In the event of any liquidation, dissolution or winding up of the Company, voluntary or involuntary, the holders of each series of the Preferred Stock will be entitled to receive out of the assets of the Company available for distribution to stockholders, before any distribution of assets is made to the holders of Common Stock or any other shares of stock of the Company ranking junior as to such distribution to such series of Preferred Stock, the amount set forth in the Prospectus Supplement relating to such series of the Preferred Stock. If, upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, the amounts payable with respect to the Preferred Stock of any series and any other shares of preferred stock of the Company (including any other series of the Preferred Stock) ranking as to any such distribution on a parity with such series of the Preferred Stock are not paid in full, the holders of the Preferred Stock of such series and of such other shares of preferred stock of the Company will share ratably in any such distribution of assets of the Company in proportion to the full respective preferential amounts to which they are entitled. After payment to the holders of the Preferred Stock of each series of the full preferential amounts of the liquidating distribution to which they are entitled, the holders of each such series of the Preferred Stock will be entitled to no further participation in any distribution of assets by the Company. 11 REDEMPTION A series of the Preferred Stock may be redeemable, in whole or from time to time in part, at the option of the Company, and may be subject to mandatory redemption pursuant to a sinking fund or otherwise, in each case upon terms, at the times and at the redemption prices set forth in the Prospectus Supplement relating to such series. Shares of the Preferred Stock redeemed by the Company will be restored to the status of authorized but unissued shares of preferred stock of the Company. In the event that fewer than all of the outstanding shares of a series of the Preferred Stock are to be redeemed, whether by mandatory or optional redemption, the number of shares to be redeemed will be determined by lot or pro rata (subject to rounding to avoid fractional shares) as may be determined by the Company or by any other method as may be determined by the Company in its sole discretion to be equitable. From and after the redemption date (unless default shall be made by the Company in providing for the payment of the redemption price plus accumulated and unpaid dividends, if any), dividends shall cease to accumulate on the shares of the Preferred Stock called for redemption and all rights of the holders thereof (except the right to receive the redemption price plus accumulated and unpaid dividends, if any) shall cease. So long as any dividends on shares of any series of the Preferred Stock or any other series of preferred stock of the Company ranking on a parity as to dividends and distribution of assets with such series of the Preferred Stock are in arrears, no shares of any such series of the Preferred Stock or such other series of preferred stock of the Company will be redeemed (whether by mandatory or optional redemption) unless all such shares are simultaneously redeemed, and the Company will not purchase or otherwise acquire any such shares; provided, however, that the foregoing will not prevent the purchase or acquisition of such shares pursuant to a purchase or exchange offer made on the same terms to holders of all such shares outstanding. CONVERSION RIGHTS The terms, if any, on which shares of Preferred Stock of any series may be exchanged for or converted (mandatorily or otherwise) into shares of Common Stock or another series of Preferred Stock will be set forth in the Prospectus Supplement relating thereto. See "Description of Common Stock." VOTING RIGHTS Except as indicated below or in a Prospectus Supplement relating to a particular series of the Preferred Stock, or except as required by applicable law, the holders of the Preferred Stock will not be entitled to vote for any purpose. So long as any shares of the Preferred Stock of a series remain outstanding, the consent or the affirmative vote of the holders of at least 66-2/3% of the votes entitled to be cast with respect to the then outstanding shares of such series of the Preferred Stock together with any Other Preferred Stock (as defined below), voting as one class, either expressed in writing or at a meeting called for that purpose, will be necessary (i) to permit, effect or validate the authorization, or any increase in the authorized amount, of any class or series of shares of the Company ranking prior to the Preferred Stock of such series as to dividends, voting or upon distribution of assets and (ii) to repeal, amend or otherwise change any of the provisions applicable to the Preferred Stock of such series in any manner which adversely affects the powers, preferences, voting power or other rights or privileges qualifications, limitations and other characteristics of such series of the Preferred Stock. In case any series of the Preferred Stock would be so affected by any such action referred to in clause (ii) above in a different manner than one or more series of the Other Preferred Stock then outstanding, the holders of shares of the Preferred Stock of such series, together with any series of the Other Preferred Stock which will be similarly affected, will be entitled to vote as a class, and the Company will not take such action without the consent or affirmative vote, as above provided, of at least 66-2/3% of the total number of votes entitled to be cast with respect to each such series of the Preferred Stock and the Other Preferred Stock similarly affected, then outstanding, in lieu of the consent or affirmative vote hereinabove otherwise required. 12 With respect to any matter as to which the Preferred Stock of any series is entitled to vote, holders of the Preferred Stock of such series and any other series of preferred stock of the Company ranking on a parity with such series of the Preferred Stock as to dividends and distributions of assets and which by its terms provides for similar voting rights (the "Other Preferred Stock") will be entitled to cast the number of votes set forth in the Prospectus Supplement with respect to that series of Preferred Stock. As a result of the provisions described in the preceding paragraph requiring the holders of shares of a series of the Preferred Stock to vote together as a class with the holders of shares of one or more series of Other Preferred Stock, it is possible that the holders of such shares of Other Preferred Stock could approve action that would adversely affect such series of Preferred Stock, including the creation of a class of capital stock ranking prior to such series of Preferred Stock as to dividends, voting or distributions of assets. As more fully described below under "Description of Depositary Shares," if the Company elects to issue Depositary Shares, each representing a fraction of a share of a series of the Preferred Stock, each such Depositary Share will, in effect, be entitled to such fraction of a vote per Depositary Share. TRANSFER AGENT AND REGISTRAR Unless otherwise indicated in a Prospectus Supplement relating thereto, ChaseMellon Shareholder Services LLC will be the transfer agent, dividend and redemption price disbursement agent and registrar for shares of each series of the Preferred Stock. 13 DESCRIPTION OF DEPOSITARY SHARES The description set forth below and in the Prospectus Supplement of certain provisions of the Deposit Agreement (as defined below) and of the Depositary Shares and Depositary Receipts do not purport to be complete and are subject to and qualified in their entirety by reference to the Deposit Agreement and Depositary Receipts relating to each series of the Preferred Stock which will be filed with the Commission and incorporated by reference as an exhibit to the Registration Statement of which this Prospectus is a part at or prior to the time of the issuance of such series of the Preferred Stock. The forms of Deposit Agreement and Depositary Receipt are filed as exhibits to the Registration Statement of which this Prospectus is a part. GENERAL The Company may, at its option, elect to offer fractional shares of Preferred Stock rather than full shares of Preferred Stock. In the event such option is exercised, the Company will issue to the public receipts for Depositary Shares, each of which will represent a fraction (to be set forth in the Prospectus Supplement relating to a particular series of the Preferred Stock) of a share of a particular series of the Preferred Stock as described below. The shares of any series of the Preferred Stock represented by Depositary Shares will be deposited under a separate deposit agreement (the "Deposit Agreement") among the Company, a bank or trust company selected by the Company (the "Depositary") and the holders from time to time of the Depositary Receipts. Subject to the terms of the Deposit Agreement, each owner of a Depositary Share will in general be entitled, in proportion to the applicable fraction of a share of Preferred Stock represented by such Depositary Share, to all the rights and preferences of the Preferred Stock represented thereby (including dividend, voting, redemption and liquidation rights). The Depositary Shares relating to any series of the Preferred Stock will be evidenced by Depositary Receipts issued pursuant to the related Deposit Agreement. Depositary Receipts will be distributed to those persons purchasing such Depositary Shares in accordance with the terms of the offering made by the related Prospectus Supplement. Upon surrender of Depositary Receipts at the office of the Depositary equal to one or more whole Depositary Shares and upon payment of the charges provided in the Deposit Agreement and subject to the terms thereof, a holder of Depositary Receipts is entitled to have the Depositary deliver to such holder certificates representing the whole shares of Preferred Stock underlying the Depositary Shares evidenced by the surrendered Depositary Receipts. DIVIDENDS AND OTHER DISTRIBUTIONS The Depositary will distribute all cash dividends or other cash distributions received in respect of the Preferred Stock to the record holders of Depositary Receipts relating to such Preferred Stock in proportion, insofar as practicable, to the respective numbers of Depositary Shares evidenced by such Depositary Receipts held by such holders on the relevant record date. The Depositary shall distribute only such amount, however, as can be distributed without attributing to any holder of Depositary Receipts a fraction of one cent, and any balance not so distributed shall be added to and treated as part of the next sum received by the Depositary (without liability for the interest thereon), for distribution to record holders of Depositary Receipts then outstanding. In the event of a distribution other than in cash, the Depositary will distribute such amounts of the securities or property received by it as are, as nearly as practicable, in proportion to the respective numbers of Depositary Shares evidenced by the Depositary Receipts held by such holders on the relevant record date, unless the Depositary determines that it is not feasible to make such distribution, in which case the Depositary may, with the approval of the Company, adopt such method as it deems equitable and practicable for the purpose of effecting such distribution, including the sale of such securities or property. 14 The Deposit Agreement will also contain provisions relating to the manner in which any subscription or similar rights offered by the Company to holders of the Preferred Stock shall be made available to holders of Depositary Receipts. The amount distributed in all of the foregoing cases will be reduced by any amounts required to be withheld by the Company or the Depositary on account of taxes and governmental charges. REDEMPTION OF DEPOSITARY SHARES If a series of the Preferred Stock represented by Depositary Shares is subject to redemption, the Depositary Shares will be redeemed from the proceeds received by the Depositary resulting from the redemption, in whole or in part, of such series of the Preferred Stock held by the Depositary. The Depositary shall mail notice of redemption not less than 30 and not more than 60 days prior to the date fixed for redemption to the record holders of the Depositary Receipts evidencing the Depositary Shares to be so redeemed at their respective addresses appearing in the Depositary's books. The redemption price per Depositary Share will be equal to the applicable fraction of the redemption price per share payable with respect to such series of the Preferred Stock plus all money and other property, if any, payable with respect to such Depositary Share, including all amounts payable by the Company in respect of any accumulated but unpaid dividends; provided, however, the Depositary may deduct such fees and charges as are expressly provided in the Deposit Agreement for the account of the holders of Depositary Receipts. Whenever the Company redeems shares of Preferred Stock held by the Depositary, the Depositary will redeem as of the same redemption date the number of Depositary Shares representing shares of Preferred Stock so redeemed. If less than all the Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will be selected by lot or pro rata (subject to rounding to avoid fractions of Depositary Shares) as may be determined by the Depositary. After the date fixed for redemption, the Depositary Shares so called for redemption will no longer be deemed to be outstanding and all rights of the holders of Depositary Receipts evidencing such Depositary Shares will cease, except the right to receive without interest the moneys payable upon such redemption and any money or other property to which such holders were entitled upon such redemption upon surrender to the Depositary of the Depositary Receipts evidencing such Depositary Shares. VOTING THE PREFERRED STOCK Upon receipt of notice of any meeting or action to be taken by written consent at or as to which the holders of the Preferred Stock are entitled to vote or consent, the Depositary will mail the information contained in such notice of meeting or action to the record holders of the Depositary Receipts evidencing the Depositary Shares relating to such Preferred Stock. Each record holder of such Depositary Receipts on the record date (which will be the same date as the record date for the Preferred Stock) will be entitled to instruct the Depositary as to the exercise of the voting rights or the giving or refusal of consent, as the case may be, pertaining to the number of shares of the Preferred Stock represented by the Depositary Shares evidenced by such holder's Depositary Receipts. The Depositary will endeavor, insofar as practicable, to vote, or give or withhold consent with respect to, the maximum number of whole shares of the Preferred Stock represented by all Depositary Shares as to which any particular voting or consent instructions are received, and the Company will agree to take all action which may be deemed necessary by the Depositary in order to enable the Depositary to do so. The Depositary will abstain from voting, or giving consents with respect to, shares of the Preferred Stock to the extent it does not receive specific instructions from the holders of Depositary Receipts evidencing Depositary Shares representing such Preferred Stock. AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT The form of Depositary Receipt evidencing the Depositary Shares relating to any series of Preferred Stock and any provision of the related Deposit Agreement may at any time and from time to time be amended by agreement between the Company and the Depositary in any respect which they may deem necessary or desirable. However, any amendment which imposes or increases any fees, taxes or charges upon holders of Depositary 15 Shares or Depositary Receipts relating to any series of Preferred Stock or which materially and adversely alters the existing rights of such holders will not be effective unless such amendment has been approved by the record holders of Depositary Receipts evidencing at least a majority of such Depositary Shares then outstanding. Notwithstanding the foregoing, no such amendment may impair the right of any holder of Depositary Shares or Depositary Receipts to receive any moneys or other property to which such holder may be entitled under the terms of such Depositary Receipts or the Deposit Agreement at the times and in the manner and amount provided for therein. A Deposit Agreement may be terminated by the Company or the Depositary only after (i) all outstanding Depositary Shares relating thereto have been redeemed and any accumulated and unpaid dividends on the Preferred Stock represented by the Depositary Shares, together with all other moneys and property, if any, to which holders of the related Depositary Receipts are entitled under the terms of such Depositary Receipts or the related Deposit Agreement, have been paid or distributed as provided in the Deposit Agreement or provision therefor has been duly made, (ii) there has been a final distribution in respect of the Preferred Stock of the relevant series in connection with any liquidation, dissolution or winding up of the Company and such distribution has been distributed to the holders of the related Depositary Receipts, or (iii) in the event the Depositary Shares relate to a series of Preferred Stock which is convertible into shares of Common Stock, all outstanding Depositary Shares have been converted into shares of Common Stock; provided, however, that resignation and removal of the Depositary, and appointment of a successor Depositary shall not constitute a termination of a Deposit Agreement. MISCELLANEOUS The Depositary will forward to record holders of Depositary Receipts, at their respective addresses appearing in the Depositary's books, all reports and communications from the Company which are delivered to the Depositary and which the Company is required to furnish to the holders of the Preferred Stock or Depositary Receipts. The Company will pay all transfer and other taxes and governmental charges arising solely from the existence of the depositary arrangements. The Company will pay charges of the Depositary in connection with the initial deposit of the Preferred Stock and the initial issuance of the Depositary Receipts evidencing the Depositary Shares, any redemption of the Preferred Stock and any withdrawals of Preferred Stock by the holders of Depositary Shares. Holders of Depositary Shares will pay other transfer and other taxes and governmental charges and such other charges as are expressly provided in the Deposit Agreement to be for their accounts which may be deducted from payments otherwise due to such holders with respect to their Depositary Receipts. The Deposit Agreement will contain provisions relating to adjustments in the fraction of a share of Preferred Stock represented by a Depositary Share in the event of a change in par or stated value, split-up, combination or other reclassification of the Preferred Stock or upon any recapitalization, merger or sale of substantially all of the assets of the Company. Neither the Depositary nor any of its agents nor any registrar nor the Company will be (i) liable if it is prevented or delayed by law or any circumstance beyond its control in performing its obligations under the Deposit Agreement, (ii) subject to any liability under the Deposit Agreement to holders of Depositary Receipts other than for the relevant party's gross negligence or willful misconduct or (iii) obligated to prosecute or defend any legal proceeding in respect of any Depositary Receipts, Depositary Shares or the Preferred Stock unless satisfactory indemnity is furnished. They may rely upon written advice of counsel or accountants, or information provided by holders of Depositary Receipts or other persons in good faith believed to be competent and on documents reasonably believed to be genuine. RESIGNATION OR REMOVAL OF DEPOSITARY The Depositary may resign at any time by delivering to the Company notice of its election to do so, and the Company may at any time remove the Depositary, any such resignation or removal to take effect upon the appointment of a successor Depositary and its acceptance of such appointment. Such successor Depositary must be appointed within 60 days after delivery of the notice of resignation or removal. 16 DESCRIPTION OF COMMON STOCK COMMON STOCK All shares of Common Stock participate equally in dividends payable to stockholders of Common Stock when and as declared by the Board of Directors and in net assets available for distribution to stockholders of Common Stock on liquidation or dissolution, have one vote per share on all matters submitted to a vote of the stockholders and do not have cumulative voting rights in the election of directors. All issued and outstanding shares of Common Stock are, and the Common Stock offered hereby will be upon issuance, validly issued, fully paid and nonassessable. Holders of the Common Stock do not have preference, conversion, exchange or preemptive rights. The Common Stock is listed on the New York Stock Exchange (NYSE Symbol: NHP). REDEMPTION AND BUSINESS COMBINATION PROVISIONS If the Board of Directors shall, at any time and in good faith, be of the opinion that direct or indirect ownership of at least 9.9% or more of the voting shares of capital stock has or may become concentrated in the hands of one beneficial owner, the Board of Directors shall have the power (i) by lot or other means deemed equitable by it to call for the purchase from any stockholder of the Company a number of voting shares sufficient, in the opinion of the Board of Directors, to maintain or bring the direct or indirect ownership of voting shares of capital stock of such beneficial owner to a level of no more than 9.9% of the outstanding voting shares of the Company's capital stock, and (ii) to refuse to transfer or issue voting shares of capital stock to any person whose acquisition of such voting shares would, in the opinion of the Board of Directors, result in the direct or indirect ownership by that person of more than 9.9% of the outstanding voting shares of capital stock of the Company. Further, any transfer of shares, options, warrants or other securities convertible into voting shares that would create a beneficial owner of more than 9.9% of the outstanding voting shares shall be deemed void ab initio and the intended transferee shall be deemed never to have had an interest therein. The purchase price for any voting shares of capital stock so redeemed shall be equal to the fair market value of the shares reflected in the closing sales price for the shares, if then listed on a national securities exchange, or the average of the closing sales prices for the shares if then listed on more than one national securities exchange, or if the shares are not then listed on a national securities exchange, the latest bid quotation for the shares if then traded over-the-counter, on the last business day immediately preceding the day on which notices of such acquisitions are sent by the Company, or, if no such closing sales prices or quotations are available, then the purchase price shall be equal to the net asset value of such stock as determined by the Board of Directors in accordance with the provisions of applicable law. From and after the date fixed for purchase by the Board of Directors, the holder of any shares so called for purchase shall cease to be entitled to distributions, voting rights and other benefits with respect to such shares, except the right to payment of the purchase price for the shares. The Articles of Incorporation require that, except in certain circumstances, Business Combinations (as defined) between the Company and a beneficial holder of 10% or more of the Company's outstanding voting stock (a "Related Person") be approved by the affirmative vote of at least 90% of the outstanding voting shares of the Company. A Business Combination is defined in the Articles of Incorporation as (a) any merger or consolidation of the Company with or into a Related Person, (b) any sale, lease, exchange, transfer or other disposition, including without limitation a mortgage or any other security device, of all or any "Substantial Part" (as defined below) of the assets of the Company (including without limitation any voting securities of a subsidiary) to a Related Person, (c) any merger or consolidation of a Related Person with or into the Company, (d) any sale, lease, exchange, transfer or other disposition of all or any Substantial Part of the assets of a Related Person to the Company, (e) the issuance of any securities (other than by way of pro rata distribution to all stockholders) of the Company to a Related Person, and (f) any agreement, contract or other arrangement providing for any of the transactions described in the definition of Business Combination. The term "Substantial Part" shall mean more than 10% of the book value of the total assets of the Company as of the end of its most recent fiscal year ending prior to the time the determination is being made. 17 Pursuant to the Articles of Incorporation, the Company's Board of Directors is classified into three classes. Each class of directors serves for a term of three years, with one class being elected each year. As of the date of this Prospectus, there are six directors, divided into three classes consisting of one, two and three directors, respectively. The foregoing provisions of the Articles of Incorporation and certain other matters may not be amended without the affirmative vote of at least 90% of the outstanding voting shares of the Company. The foregoing provisions may have the effect of discouraging unilateral tender offers or other takeover proposals which certain stockholders might deem in their interests or in which they might receive a substantial premium. The Board of Directors' authority to issue and establish the terms of currently authorized Preferred Stock, without stockholder approval, may also have the effect of discouraging takeover attempts. See "Description of Preferred Stock." The provisions could also have the effect of insulating current management against the possibility of removal and could, by possibly reducing temporary fluctuations in market price caused by accumulations of shares, deprive stockholders of opportunities to sell at a temporarily higher market price. However, the Board of Directors believes that inclusion of the Business Combination provisions in the Articles of Incorporation may help assure fair treatment of stockholders and preserve the assets of the Company. The foregoing summary of certain provisions of the Articles of Incorporation does not purport to be complete or to give effect to provisions of statutory or common law. The foregoing summary is subject to, and qualified in its entirety by reference to, the provisions of applicable law and the Articles of Incorporation, a copy of which is incorporated by reference as an exhibit to the Registration Statement of which this Prospectus is a part. TRANSFER AGENT AND REGISTRAR ChaseMellon Shareholder Services LLC is the transfer agent and registrar of the Common Stock. 18 DESCRIPTION OF SECURITIES WARRANTS The Company may issue Securities Warrants for the purchase of Debt Securities, Preferred Stock, Depositary Shares or Common Stock. Securities Warrants may be issued independently or together with Debt Securities, Preferred Stock, Depositary Shares or Common Stock offered by any Prospectus Supplement and may be attached to or separate from such Debt Securities, Preferred Stock, Depositary Shares or Common Stock. Each series of Securities Warrants will be issued under a separate warrant agreement (a "Securities Warrant Agreement") to be entered into between the Company and a bank or trust company, as Securities Warrant agent, all as set forth in the Prospectus Supplement relating to the particular issue of offered Securities Warrants. The Securities Warrant agent will act solely as an agent of the Company in connection with the Securities Warrant certificates relating to the Securities Warrants and will not assume any obligation or relationship of agency or trust for or with any holders of Securities Warrant certificates or beneficial owners of Securities Warrants. The following summaries of certain provisions of the Securities Warrant Agreement and Securities Warrants do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the Securities Warrant Agreement and the Securities Warrant certificates relating to each series of Security Warrants which will be filed with the Commission and incorporated by reference as an exhibit to the Registration Statement of which this Prospectus is a part at or prior to the time of the issuance of such series of Securities Warrants. If Securities Warrants are offered, the applicable Prospectus Supplement will describe the terms of such Securities Warrants, including, in the case of Securities Warrants for the purchase of Debt Securities, the following where applicable: (i) the offering price; (ii) the denominations and terms of the series of Debt Securities purchasable upon exercise of such Securities Warrants; (iii) the designation and terms of any series of Debt Securities, Preferred Stock or Depositary Shares with which such Securities Warrants are being offered and the number of such Securities Warrants being offered with each such Debt Security, Preferred Stock or Depositary Share; (iv) the date, if any, on and after which such Securities Warrants and the related series of Debt Securities, Preferred Stock or Depositary Shares will be transferable separately; (v) the principal amount of the series of Debt Securities purchasable upon exercise of each such Securities Warrant and the price at which such principal amount of Debt Securities of such series may be purchased upon such exercise; (vi) the date on which the right to exercise such Securities Warrants shall commence and the date (the "Expiration Date") on which such right shall expire; (vii) whether the Securities Warrants will be issued in registered or bearer form; (viii) any special United States Federal income tax consequences; (ix) the terms, if any, on which the Company may accelerate the date by which the Securities Warrants must be exercised; and (x) any other terms of such Securities Warrants. In the case of Securities Warrants for the purchase of Preferred Stock, Depositary Shares or Common Stock, the applicable Prospectus Supplement will describe the terms of such Securities Warrants, including the following where applicable: (i) the offering price; (ii) the aggregate number of shares purchasable upon exercise of such Securities Warrants, the exercise price, and in the case of Securities Warrants for Preferred Stock or Depositary Shares, the designation, aggregate number and terms of the series of Preferred Stock purchasable upon exercise of such Securities Warrants or underlying the Depositary Shares purchasable upon exercise of such Securities Warrants; (iii) the designation and terms of the series of Debt Securities, Preferred Stock or Depositary Shares with which such Securities Warrants are being offered and the number of such Securities Warrants being offered with each such Debt Security, Preferred Stock or Depositary Share; (iv) the date, if any, on and after which such Securities Warrants and the related series of Debt Securities, Preferred Stock, Depositary Shares or Common Stock will be transferable separately; (v) the date on which the right to exercise such Securities Warrants shall commence and the Expiration Date; (vi) any special United States Federal income tax consequences; and (vii) any other terms of such Securities Warrants. Securities Warrant certificates may be exchanged for new Securities Warrant certificates of different denominations, may (if in registered form) be presented for registration of transfer, and may be exercised at the corporate trust office of the Securities Warrant agent or any other office indicated in the applicable Prospectus 19 Supplement. Prior to the exercise of any Securities Warrant to purchase Debt Securities, holders of such Securities Warrants will not have any of the rights of holders of the Debt Securities purchasable upon such exercise, including the right to receive payments of principal of, premium, if any, or interest, if any, on such Debt Securities or to enforce covenants in the applicable indenture. Prior to the exercise of any Securities Warrants to purchase Preferred Stock, Depositary Shares or Common Stock, holders of such Securities Warrants will not have any rights of holders of such Preferred Stock, Depositary Shares or Common Stock, including the right to receive payments of dividends, if any, on such Preferred Stock or Common Stock, or to exercise any applicable right to vote. CERTAIN RISK CONSIDERATIONS Any Securities Warrants issued by the Company will involve a certain degree of risk, including risks arising from fluctuations in the price of the underlying securities and general risks applicable to the stock market (or markets) on which the underlying securities are traded. Prospective purchasers of the Securities Warrants should recognize that the Securities Warrants may expire worthless and, thus, purchasers should be prepared to sustain a total loss of the purchase price of their Securities Warrants. This risk reflects the nature of a Securities Warrant as an asset which, other factors held constant, tends to decline in value over time and which may, depending on the price of the underlying securities, become worthless when it expires. The trading price of a Securities Warrant at any time is expected to increase if the price, or, if applicable, dividend rate on the underlying securities, increases. Conversely, the trading price of a Securities Warrant is expected to decrease as the time remaining to expiration of the Securities Warrant decreases and as the price or, if applicable, dividend rate on the underlying securities, decreases. Assuming all other factors are held constant, the more a Securities Warrant is "out-of-the-money" (i.e., the more the exercise price exceeds the price of the underlying securities and the shorter its remaining term to expiration), the greater the risk that a purchaser of the Securities Warrant will lose all or part of his or her investment. If the price of the underlying securities does not rise before the Securities Warrant expires to an extent sufficient to cover a purchaser's cost of the Securities Warrant, the purchaser will lose all or part of his or her investment in such Securities Warrant upon expiration. In addition, prospective purchasers of the Securities Warrants should be experienced with respect to options and option transactions and understand the risks associated with options and should reach an investment decision only after careful consideration, with their financial advisers, of the suitability of the Securities Warrants in light of their particular financial circumstances and the information discussed herein and, if applicable, the Prospectus Supplement. Before purchasing, exercising or selling any Securities Warrants, prospective purchasers and holders of Securities Warrants should carefully consider, among other things, (i) the trading price of the Securities Warrants, (ii) the price of the underlying securities at such time, (iii) the time remaining to expiration and (iv) any related transaction costs. Some of the factors referred to above are in turn influenced by various political, economic and other factors that can affect the trading price of the underlying securities and should be carefully considered prior to making any investment decisions. Purchasers of the Securities Warrants should further consider that the initial offering price of the Securities Warrants may be in excess of the price that a purchaser of options might pay for a comparable option in a private, less liquid transaction. In addition, it is not possible to predict the price at which the Securities Warrants will trade in the secondary market or whether any such market will be liquid. The Company may, but is not obligated to, file an application to list any Securities Warrants issued on a United States national securities exchange. To the extent that any Securities Warrants are exercised, the number of Securities Warrants outstanding will decrease, which may result in a lessening of the liquidity of the Securities Warrants. Finally, the Securities Warrants will constitute direct, unconditional and unsecured obligations of the Company and as such will be subject to any changes in the perceived creditworthiness of the Company. 20 EXERCISE OF SECURITIES WARRANTS Each Securities Warrant will entitle the holder thereof to purchase such principal amount of Debt Securities or number of shares of Preferred Stock, Depositary Shares or Common Stock, as the case may be, at such exercise price as shall in each case be set forth in, or calculable from, the Prospectus Supplement relating to the offered Securities Warrants. After the close of business on the Expiration Date (or such later date to which such Expiration Date may be extended by the Company), unexercised Securities Warrants will become void. Securities Warrants may be exercised by delivering to the Securities Warrant agent payment as provided in the applicable Prospectus Supplement of the amount required to purchase the Debt Securities, Preferred Stock, Depositary Shares or Common Stock, as the case may be, purchasable upon such exercise together with certain information set forth on the reverse side of the Securities Warrant certificate. Securities Warrants will be deemed to have been exercised upon receipt of payment of the exercise price, subject to the receipt within five (5) business days, of the Securities Warrant certificate evidencing such Securities Warrants. Upon receipt of such payment and the Securities Warrant certificate properly completed and duly executed at the corporate trust office of the Securities Warrant agent or any other office indicated in the applicable Prospectus Supplement, the Company will, as soon as practicable, issue and deliver the Debt Securities, Preferred Stock, Depositary Shares or Common Stock, as the case may be, purchasable upon such exercise. If fewer than all of the Securities Warrants represented by such Securities Warrant certificate are exercised, a new Securities Warrant certificate will be issued for the remaining amount of Securities Warrants. AMENDMENTS AND SUPPLEMENTS TO SECURITIES WARRANT AGREEMENT The Securities Warrant Agreements may be amended or supplemented without the consent of the holders of the Securities Warrants issued thereunder to effect changes that are not inconsistent with the provisions of the Securities Warrants and that do not adversely affect the interests of the holders of the Securities Warrants. COMMON STOCK WARRANT ADJUSTMENTS Unless otherwise indicated in the applicable Prospectus Supplement, the exercise price of, and the number of shares of Common Stock covered by, a Common Stock Warrant are subject to adjustment in certain events, including (i) payment of a dividend on the Common Stock payable in capital stock and stock splits, combinations or reclassifications of the Common Stock, (ii) issuance to all holders of Common Stock of rights or warrants to subscribe for or purchase shares of Common Stock at less than their current market price (as defined in the Securities Warrant Agreement for such series of Common Stock Warrants), and (iii) certain distributions of evidences of indebtedness or assets (including securities but excluding cash dividends or distributions paid out of consolidated earnings or retained earnings or dividends payable in Common Stock) or of subscription rights and warrants (excluding those referred to above). No adjustment in the exercise price of, and the number of shares of Common Stock covered by, a Common Stock Warrant will be made for regular quarterly or other periodic or recurring cash dividends or distributions or for cash dividends or distributions to the extent paid from consolidated earnings or retained earnings. No adjustment will be required unless such adjustment would require a change of at least 1% in the exercise price then in effect. Except as stated above, the exercise price of, and the number of shares of Common Stock covered by, a Common Stock Warrant will not be adjusted for the issuance of Common Stock or any securities convertible into or exchangeable for Common Stock, or carrying the right or option to purchase or otherwise acquire the foregoing, in exchange for cash, other property or services. In the event of any (i) consolidation or merger of the Company with or into any entity (other than a consolidation or a merger that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock), (ii) sale, transfer, lease or conveyance of all or substantially all of the assets of the Company or (iii) reclassification, capital reorganization or change of the Common Stock (other than solely a change in par value or from par value to no par value), then any holder of a Common Stock Warrant 21 will be entitled, on or after the occurrence of any such event, to receive on exercise of such Common Stock Warrant the kind and amount of shares of stock or other securities, cash or other property (or any combination thereof) that the holder would have received had such holder exercised such holder's Common Stock Warrant immediately prior to the occurrence of such event. If the consideration to be received upon exercise of the Common Stock Warrant following any such event consists of common stock of the surviving entity, then from and after the occurrence of such event, the exercise price of such Common Stock Warrant will be subject to the same anti-dilution and other adjustments described in the second preceding paragraph, applied as if such common stock were Common Stock. PLAN OF DISTRIBUTION The Company may sell the Securities to one or more underwriters for public offering and sale by them or may sell the Securities to investors directory or through agents. Any such underwriter or agent involved in the offer and sale of Securities will be named in the applicable Prospectus Supplement. The Company has reserved the right to sell Securities directly to investors on its own behalf in those jurisdictions where and in such manner as it is authorized to do so. Underwriters may offer and sell Securities at a fixed price or prices, which may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Company also may offer and sell Securities in exchange for one or more of its outstanding issues of the Securities or other securities. The Company also may, from time to time, authorize dealers, acting as the Company's agents, to offer and sell Securities upon the terms and conditions as are set forth in the applicable Prospectus Supplement. In connection with the sale of Securities, underwriters may receive compensation from the Company in the form of underwriting discounts or commissions and may also receive commissions from purchasers of the Securities for whom they may act as agent. Underwriters may sell Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agent. Any underwriting compensation paid by the Company to underwriters or agents in connection with the offering of Securities, and any discounts, concessions or commissions allowed by underwriters to participating dealers, will be set forth in the applicable Prospectus Supplement. Dealers and agents participating in the distribution of Securities may be deemed to be underwriters, and any discounts and commissions received by them and any profit realized by them on resale of the Securities may be deemed to be underwriting discounts and commissions. Underwriters, dealers and agents may be entitled, under agreements entered into with the Company, to indemnification against and contribution toward certain civil liabilities. If so indicated in the Prospectus Supplement, the Company will authorize dealers acting as the Company's agents to solicit offers by certain institutions to purchase the Securities from the Company at the public offering price set forth in the applicable Prospectus Supplement pursuant to delayed delivery contracts ("Contracts") providing for payment and delivery on the date or dates stated in such Prospectus Supplement. Each Contract will be for an amount not less than, and the aggregate principal amount of the Securities sold pursuant to Contracts shall be not less nor more than, the respective amounts stated in the applicable Prospectus Supplement. Institutions with whom Contracts, when authorized, may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions, and other institutions but will in all cases be subject to the approval of the Company. Contracts will not be subject to any conditions except (i) the purchase by an institution of the Securities covered by its Contracts shall not at the time of delivery be prohibited under the laws of any jurisdiction in the United States to which such institution is subject, and (ii) if the Securities are being sold to underwriters, the Company shall have sold to such underwriters the total principal amount of such Securities less the principal amount thereof covered by Contracts. The net proceeds to the Company from the sale of the Securities will be the purchase price of the Securities less any such discounts or commissions and the other attributable expenses of issuance and distribution. 22 LEGAL MATTERS The validity of the Securities offered hereby will be passed upon for the Company by O'Melveny & Myers LLP. In addition, O'Melveny & Myers LLP has passed upon certain federal income tax matters relating to the Company. EXPERTS The consolidated balance sheets of the Company as of December 31, 1995, 1994, 1993, 1992, and 1991 and the consolidated statements of operations, stockholders' equity and cash flows for each of the five years in the period ended December 31, 1995, incorporated by reference in this Prospectus and elsewhere in the Registration Statement, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are incorporated by reference herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. 23 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR- MATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRE- SENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. NEITHER THE DELIVERY OF THIS PROSPECTUS SUP- PLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UN- DER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. ----------- TABLE OF CONTENTS
PAGE ---- PROSPECTUS SUPPLEMENT Prospectus Supplement Summary.............................................. S-2 The Company................................................................ S-5 Recent Developments........................................................ S-6 Use of Proceeds............................................................ S-6 Selected Consolidated Financial Information................................ S-7 Capitalization............................................................. S-8 Management................................................................. S-9 Description of StREITsSM................................................... S-11 Certain Federal Income Tax Considerations.................................. S-15 Underwriting............................................................... S-17 Legal Matters.............................................................. S-17 PROSPECTUS Available Information...................................................... 2 Incorporation of Certain Documents by Reference............................ 2 The Company................................................................ 3 Selected Consolidated Financial Information................................ 4 Ratio of Earnings to Fixed Charges......................................... 5 Use of Proceeds............................................................ 5 Description of Debt Securities............................................. 5 Description of Preferred Stock............................................. 10 Description of Depositary Shares........................................... 14 Description of Common Stock................................................ 17 Description of Securities Warrants......................................... 19 Plan of Distribution....................................................... 22 Legal Matters.............................................................. 23 Experts.................................................................... 23
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1,000,000 SHARES [LOGO OF NATIONWIDE HEALTH PROPERTIES, INC.] 7.677% SERIES A CUMULATIVE PREFERRED STEP-UP REIT SECURITIES (LIQUIDATION PREFERENCE $100.00 PER SHARE) ----------- PROSPECTUS SUPPLEMENT SEPTEMBER 24, 1997 ----------- SMITH BARNEY INC. MORGAN STANLEY DEAN WITTER - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----