-----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, D6hmyTzS7iNcRXAmLfuVrSasMuzlf+iPLi6TCyHjaq/Tzb2sFD7xvysafye0wD3E G6E2e/arsI4/RGXWJbY10w== 0001017062-98-001807.txt : 19980814 0001017062-98-001807.hdr.sgml : 19980814 ACCESSION NUMBER: 0001017062-98-001807 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 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: 10-Q SEC ACT: SEC FILE NUMBER: 001-09028 FILM NUMBER: 98686206 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: 610 NEWPORT CENTER DR STREET 2: STE 1150 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 FORMER COMPANY: FORMER CONFORMED NAME: BEVERLY INVESTMENT PROPERTIES INC DATE OF NAME CHANGE: 19890515 10-Q 1 FORM 10-Q PERIOD ENDING 06/30/1998 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to _________________ Commission file number 1-9028 NATIONWIDE HEALTH PROPERTIES, INC. (Exact name of registrant as specified in its charter) Maryland 95-3997619 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 610 Newport Center Drive, Suite 1150 Newport Beach, California 92660 (Address of principal executive offices) (949) 718-4400 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Shares of registrant's common stock, $.10 par value, outstanding at July 31, 1998 - 44,705,013. ================================================================================ NATIONWIDE HEALTH PROPERTIES, INC. FORM 10-Q June 30, 1998 TABLE OF CONTENTS Part I--Financial Information Page ---- Item 1. Financial Statements Condensed Consolidated Balance Sheets........................ 2 Condensed Consolidated Statements of Operations.............. 3 Condensed Consolidated Statements of Cash Flows.............. 4 Notes to Condensed Consolidated Financial Statements......... 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................... 8 Part II--Other Information Item 4. Submission of Matters to a Vote of Security Holders.......... 11 Item 5. Other Information............................................ 11 Item 6. Exhibits and Reports on Form 8-K............................. 11 1 PART I NATIONWIDE HEALTH PROPERTIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS June 30, December 31, 1998 1997 ----------- ------------ (Unaudited) (Dollars in thousands) Investments in real estate Real estate properties: Land........................................ $ 143,378 $ 120,236 Buildings and improvements.................. 919,045 809,217 Construction in progress.................... 33,838 31,078 ---------- ---------- 1,096,261 960,531 Less accumulated depreciation............... (118,587) (107,077) ---------- ---------- 977,674 853,454 Mortgage loans receivable, net................. 196,472 199,819 ---------- ---------- 1,174,146 1,053,273 Cash and cash equivalents.......................... 13,914 10,192 Receivables........................................ 4,782 4,362 Other assets....................................... 14,210 9,567 ---------- ---------- $1,207,052 $1,077,394 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Bank borrowings.................................... $ 87,700 $ 19,600 Senior notes due 2000-2037......................... 375,000 355,000 Convertible debentures............................. 58,875 64,512 Notes and bonds payable............................ 65,234 58,297 Accounts payable and accrued liabilities........... 35,993 26,939 Stockholders' equity: Preferred stock $1.00 par value; 5,000,000 shares authorized; Issued and outstanding: 1998-1,000,000; 1997-1,000,000, stated at liquidation preference of $100 per share.... 100,000 100,000 Common stock $.10 par value; 100,000,000 shares authorized; Issued and outstanding: 1998-44,641,706; 1997-43,128,889............ 4,464 4,313 Capital in excess of par value................. 524,538 490,737 Cumulative net income.......................... 401,932 363,896 Cumulative dividends........................... (446,684) (405,900) ---------- ---------- Total stockholders' equity............... 584,250 553,046 ---------- ---------- $1,207,052 $1,077,394 ========== ==========
See accompanying notes. 2 NATIONWIDE HEALTH PROPERTIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands except per share amounts)
Three Months Ended Six Months Ended June 30, June 30, ------------------- ------------------- 1998 1997 1998 1997 -------- -------- -------- -------- Revenues: Minimum rent.......................................... $24,746 $18,469 $48,536 $36,747 Interest and other income............................. 5,703 5,372 11,396 10,095 Additional rent and additional interest............... 4,042 3,357 7,717 6,658 ------- ------- ------- ------- 34,491 27,198 67,649 53,500 Expenses: Interest and amortization of deferred financing costs. 8,584 6,665 16,836 12,767 Depreciation and non-cash charges..................... 6,658 4,694 12,803 9,252 General and administrative............................ 1,103 925 2,295 1,812 ------- ------- ------- ------- 16,345 12,284 31,934 23,831 ------- ------- ------- ------- Net income before gain on sale of properties........... 18,146 14,914 35,715 29,669 Gain on sale of properties............................. -- -- 2,321 -- ------- ------- ------- ------- Net income............................................. 18,146 14,914 38,036 29,669 Preferred stock dividends.............................. (1,919) -- (3,839) -- ------- ------- ------- ------- Net income available to common stockholders............ $16,227 $14,914 $34,197 $29,669 ======= ======= ======= ======= Per share amounts: Basic/diluted income from continuing operations available to common stockholders.................... $ .37 $ .36 $ .73 $ .71 ======= ======= ======= ======= Basic/diluted net income available to common stockholders........................................ $ .37 $ .36 $ .78 $ .71 ======= ======= ======= ======= Dividends paid per share.............................. $ .42 $ .39 $ .84 $ .78 ======= ======= ======= ======= Weighted average shares outstanding.................... 44,248 41,804 43,760 41,802 ======= ======= ======= =======
See accompanying notes. 3 NATIONWIDE HEALTH PROPERTIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Six Months Ended June 30, ----------------------- 1998 1997 ---------- ---------- Cash flow from operating activities: Net income......................................... $ 38,036 $ 29,669 Gain on sale of properties......................... (2,321) -- Depreciation and non-cash charges.................. 12,803 9,252 Amortization of deferred financing costs........... 442 370 Net decrease in other assets and liabilities....... 3,706 271 --------- --------- Net cash provided by operating activities....... 52,666 39,562 Cash flow from investing activities: Acquisition of real estate properties.............. (130,757) (73,213) Disposition of real estate properties.............. 5,496 -- Investment in mortgage loans receivable............ (2,399) (34,095) Principal payments on mortgage loans receivable.... 6,423 1,026 --------- --------- Net cash used in investing activities........... (121,237) (106,282) Cash flow from financing activities: Bank borrowings.................................... 144,300 126,000 Repayment of bank borrowings....................... (76,200) (112,000) Issuance of senior unsecured debt.................. 20,000 85,000 Issuance of common stock........................... 23,149 -- Dividends paid..................................... (40,784) (32,607) Issuance of notes and bonds........................ 2,402 -- Principal payments on notes and bonds.............. (204) (40) Other, net......................................... (370) (656) --------- --------- Net cash provided by financing activities....... 72,293 65,697 --------- --------- Increase (decrease) in cash and cash equivalents....... 3,722 (1,023) Cash and cash equivalents, beginning of period......... 10,192 11,709 --------- --------- Cash and cash equivalents, end of period............... $ 13,914 $ 10,686 ========= =========
See accompanying notes. 4 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 1998 (Unaudited) (i) The condensed consolidated financial statements included herein have been prepared by the Company, without audit, and include all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the three-month and six-month periods ended June 30, 1998 and 1997 pursuant to the rules and regulations of the Securities and Exchange Commission. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. Although the Company believes that the disclosures in such financial statements are adequate to make the information presented not misleading, these condensed consolidated financial statements should be read in conjunction with the Company's financial statements and the notes thereto included in the Company's 1997 Annual Report on Form 10-K filed with the Securities and Exchange Commission. The results of operations for the three-month and six-month periods ended June 30, 1998 and 1997 are not necessarily indicative of the results for a full year. (ii) The Company invests in health care related real estate and, as of June 30, 1998, had investments in 317 facilities located in 32 states. The facilities include 195 skilled nursing facilities, 90 assisted living facilities, 13 continuing care retirement communities, 14 residential care facilities for the elderly, 2 rehabilitation hospitals and 3 medical clinics. The Company's facilities are operated by 60 different operators, including the following publicly traded companies: Alternative Living Services, Inc., American Retirement Corporation, ARV Assisted Living, Inc., Beverly Enterprises, Inc., Harborside Healthcare Corporation, HEALTHSOUTH Corporation, Integrated Health Services, Inc., Lexington Healthcare Group, Inc., Mariner Post-Acute Network, Inc., NewCare Health Corporation, Res-Care, Inc. and Sun Healthcare Group, Inc. Of the operators of the facilities, only Alternative Living Services, Inc. and Beverly Enterprises, Inc. account for more than 10% of the Company's revenues. They accounted for 12% and 15% respectively of the Company's total revenues for the six months ended June 30, 1998. As of June 30, 1998, the Company had direct ownership of 152 skilled nursing facilities, 84 assisted living facilities, 8 continuing care retirement communities, 14 residential care facilities for the elderly, 2 rehabilitation hospitals and 3 medical clinics. All of the Company's owned facilities are leased under "net" leases (the "Leases"), which are accounted for as operating leases. 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 or as a percentage of the increase in the Consumer Price Index. Additional rents are generally calculated and payable monthly or quarterly. The base amounts, in most cases, are net patient revenues for the first year of the lease. Most leases contain provisions such that the total rent cannot decrease from one year to the next. 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 172 facilities are backed by irrevocable letters of credit or security deposits which cover 1 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 June 30, 1998, the Company held 32 mortgage loans secured by 43 skilled nursing facilities, 6 assisted living facilities and 5 continuing care retirement communities. As of June 30, 1998, the mortgage loans had a net book value of approximately $196,472,000 with individual outstanding balances ranging from approximately $601,000 to $21,400,000 and maturities ranging from 1998 to 2031. 5 (iii) Basic earnings per share is computed by dividing income available to common stockholders by the weighted average common shares outstanding. Income available to common stockholders is calculated by deducting dividends declared on preferred stock from income from continuing operations and net income. Diluted earnings per share includes the effect of the potential shares outstanding: dilutive stock options and dilutive convertible debentures. The effect of convertible debentures was not dilutive in 1998 and 1997.
Three months ended June 30, 1998 1997 ----------------- ----------------- Income Shares Income Shares -------- ------ -------- ------ (in thousands) Income before gain on sale of properties $18,146 $14,914 Less: preferred stock dividends 1,919 -- ------- ------- Amounts used to calculate Basic EPS 16,227 44,248 14,914 41,804 Effect of dilutive securities: Stock options -- 18 -- 3 6.25% Convertible debentures -- -- -- -- ------- ------ ------- ------ Amounts used to calculate Diluted EPS $16,227 44,266 $14,914 41,807 ======= ====== ======= ======
Six months ended June 30, 1998 1997 ----------------- ----------------- Income Shares Income Shares -------- ------ -------- ------ (in thousands) Income before gain on sale of properties $35,715 $29,669 Less: preferred stock dividends 3,839 -- ------- ------- Amounts used to calculate Basic EPS 31,876 43,760 29,669 41,802 Effect of dilutive securities: Stock options -- 11 -- 3 6.25% Convertible debentures -- -- -- -- ------- ------ ------- ------ Amounts used to calculate Diluted EPS $31,876 43,771 $29,669 41,805 ======= ====== ======= ======
(iv) The Company qualifies as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. The Company intends to continue to qualify as such and therefore to distribute at least ninety-five percent (95%) of its taxable income to its stockholders. Accordingly, no provision has been made for federal income taxes. (v) During the six-month period ended June 30, 1998, the Company acquired ten skilled nursing facilities, six assisted living facilities, one continuing care retirement community and six residential care facilities for the elderly in eight separate transactions for an aggregate investment of approximately $61,479,000. Construction of six assisted living facilities, one continuing care retirement community and two clinics was also completed, in which the Company's total aggregate investment was $57,256,000, $21,936,000 of which was a current year investment included in the new construction financing amount below. Upon acquisition or completion of construction, as applicable, the facilities were concurrently leased under terms generally similar to the Company's existing leases. During the six-month period ended June 30, 1998, the Company provided new construction financing of approximately $68,122,000. The Company also funded approximately $8,780,000 in capital improvements in accordance with certain existing lease provisions. Such capital improvements will result in an increase in the minimum rents earned by the Company. 6 During the six months ended June 30, 1998, the Company funded an additional $2,399,000 on existing mortgage loans. Such additional amounts funded will result in an increase in interest income earned by the Company. During the six-month period ended June 30, 1998, the Company sold two skilled nursing facilities in two separate transactions for an aggregate price of approximately $5,512,000, less transaction costs, resulting in an aggregate gain of approximately $2,321,000. During the six months ended June 30, 1998, two of the Company's mortgage loans matured and were repaid in full in an aggregate principal amount of approximately $5,382,000. During the six-month period ended June 30, 1998, the Company issued $20,000,000 in aggregate principal amount of medium-term notes. The notes bear fixed interest at a weighted average rate of 6.68% and have a weighted average maturity of 9 years. (vi) On April 29, 1998, the Company issued 1,048,128 shares of common stock resulting in aggregate proceeds, net of the underwriter's fee, of approximately $23,214,000 before expenses related to the offering. (vii) The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 130 Reporting Comprehensive Income and SFAS No. 131 Disclosures about Segments of an Enterprise and Related Information which were issued in June 1997. The adoption of SFAS No. 130 and SFAS No. 131 is required in 1998. There are no differences between the Company's net income, as reported, and comprehensive income, as defined, for the periods presented. The Company believes it operates in only one business segment. ETIF Issue No. 97-11 Accounting for Internal Costs Relating to Real Estate Property Acquisitions released by the Emerging Issues Task Force of the Financial Accounting Standards Board which prohibits the capitalization of internal costs related to the acquisition of operating property was issued during the first quarter of 1998. The impact of this pronouncement is immaterial to the Company's financial statements. EITF Issue 98-9 Accounting for Contingent Rent in Interim Financial Periods released by the Emerging Issues Task Force of the Financial Accounting Standards Board requires lessors to defer recognition of contingent rental income in interim periods until the specific target that triggers the contingent rental income is achieved. Under most of the Company's Leases the specific targets that trigger contingent rental income are met either monthly or quarterly and, therefore, EITF Issue 98-9 would not impact the Company's quarterly accounting for those Leases. The impact of the deferral of rental income recognition related to the Company's Leases under which the specific targets are annual is not believed to be material. 7 NATIONWIDE HEALTH PROPERTIES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS June 30, 1998 Statement Regarding Forward Looking Disclosure Certain information contained in this report 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: the effect of economic and market conditions and changes in interest rates, government regulations, including changes in Medicare and Medicaid payment levels, changes in the health industry, the amount of any additional investments, access to capital markets and changes in the ratings of the Company's debt securities or preferred stock. Operating Results Six Months 1998 Compared to Six Months 1997 Revenues for the six months ended June 30, 1998 increased $14,149,000 or 26% over the same period in 1997. The increase is due to increased minimum rent and interest income resulting from additional investments in real estate properties and mortgage loans receivable during the last twelve months. The increase was also attributable to increased additional rent and additional interest earned under the Company's existing leases and mortgage loans receivable based on increases in the facility revenues and the Consumer Price Index. Total expenses for the six-month period ended June 30, 1998 increased $7,563,000 or 32% over the same period in 1997. The increase is due to increased interest expense as a result of the issuance of fixed rate medium-term notes during the last twelve months and to increased depreciation in connection with the acquisition of additional facilities during the last twelve months. In addition, during the six months ended June 30, 1998, the Company recognized a gain of approximately $2,321,000 from the sale of two skilled nursing facilities. Second Quarter 1998 Compared to Second Quarter 1997 Revenues for the three months ended June 30, 1998 increased $7,293,000 or 27% over the same period in 1997. The increase is due to increased minimum rent and interest income resulting from additional investments in real estate properties and mortgage loans receivable during the last twelve months, partially offset by the payoff of certain mortgage loans during the quarter. The increase was also attributable to increased additional rent and additional interest earned under the Company's existing leases and mortgage loans receivable based on increases in the facility revenues and the Consumer Price Index. Total expenses for the three-month period ended June 30, 1998 increased $4,061,000 or 33% over the same period in 1997. The increase is primarily due to increased interest expense as a result of the issuance of fixed rate medium- term notes during the last twelve months and to increased depreciation in connection with the acquisition of additional facilities during the last twelve months. The Company expects increased rental revenues and interest income due to the addition of facilities to its property base and mortgage loans receivable over the last twelve months. The Company also expects increased additional rent and additional interest because the Company's leases and mortgages generally contain provisions under which additional rents or interest income increase with increases in facility revenues and/or increases in the 8 Consumer Price Index. Historically, revenues at the Company's facilities and the Consumer Price Index generally have increased; although, there are no assurances that they will continue to increase in the future. Sales of facilities or repayments of mortgages would serve to offset the aforementioned revenue increases. Additional investments in health care facilities would also increase rental and/or interest income. As additional investments in facilities are made, depreciation and/or interest expense could also increase. Any such increases, however, are expected to be more than offset by rents or interest income associated with the investments. The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 130 Reporting Comprehensive Income and SFAS No. 131 Disclosures about Segments of an Enterprise and Related Information which were issued in June 1997. The adoption of SFAS No. 130 and SFAS No. 131 is required in 1998. There are no differences between the Company's net income, as reported, and comprehensive income, as defined, for the periods presented. The Company believes it operates in only one business segment. Issue No. 97-11 Accounting for Internal Costs Relating to Real Estate Property Acquisitions released by the Emerging Issues Task Force of the Financial Accounting Standards Board which prohibits the capitalization of internal costs related to the acquisition of operating property was issued during the first quarter of 1998. The impact of this pronouncement is immaterial to the Company's financial statements. EITF Issue 98-9 Accounting for Contingent Rent in Interim Financial Periods released by the Emerging Issues Task Force of the Financial Accounting Standards Board requires lessors to defer recognition of contingent rental income in interim periods until the specific target that triggers the contingent rental income is achieved. Under most of the Company's Leases the specific targets that trigger contingent rental income are met either monthly or quarterly and, therefore, EITF Issue 98-9 would not impact the Company's quarterly accounting for those Leases. The impact of the deferral of rental income recognition related to the Company's Leases under which the specific targets are annual is not believed to be material. Liquidity and Capital Resources During the six-month period ended June 30, 1998, the Company acquired ten skilled nursing facilities, six assisted living facilities, one continuing care retirement community and six residential care facilities for the elderly in eight separate transactions for an aggregate investment of approximately $61,479,000. Construction of six assisted living facilities, one continuing care retirement community and two clinics was also completed, in which the Company's total aggregate investment was $57,256,000, $21,936,000 of which was a current year investment included in the new construction financing amount below. Upon acquisition or completion of construction, as applicable, the facilities were concurrently leased under terms generally similar to the Company's existing leases. During the six-month period ended June 30, 1998, the Company provided new construction financing of approximately $68,122,000. The Company also funded approximately $8,780,000 in capital improvements in accordance with certain existing lease provisions. Such capital improvements will result in an increase in the minimum rents earned by the Company. The acquisitions, construction advances and capital improvement advances were funded by borrowings on the Company's bank line of credit and by cash on hand. During the six months ended June 30, 1998, the Company funded an additional $2,399,000 on existing mortgage loans. Such additional amounts funded will result in an increase in interest income earned by the Company. The additional amounts funded were financed by borrowings on the Company's bank line of credit and by cash on hand. During the six-month period ended June 30, 1998, the Company sold two skilled nursing facilities in two separate transactions for an aggregate price of approximately $5,512,000, less transaction costs, resulting in an aggregate gain of approximately $2,321,000. The proceeds of the sales were used to repay borrowings on the Company's bank line of credit. During the six months ended June 30, 1998, two of the Company's mortgage loans matured and were repaid in full in an aggregate principal amount of approximately $5,382,000. The proceeds were used to repay borrowings on the Company's bank line of credit. 9 During the six months ended June 30, 1998, the Company issued $20,000,000 in aggregate principal amount of medium-term notes. The notes bear fixed interest at a weighted average rate of 6.68% and have a weighted average maturity of 9 years. The proceeds were used to repay borrowings on the Company's bank line of credit. At June 30, 1998, the Company had $12,300,000 available under its $100,000,000 bank line of credit. The Company has shelf registrations on file with the Securities and Exchange Commission under which the Company may issue (a) up to $225,000,000 in aggregate principal amount of medium term notes and (b) up to approximately $208,622,000 of securities including debt, convertible debt, common and preferred stock. The Company anticipates issuing securities under such shelf registrations to repay borrowings under the Company's bank line of credit. On April 29, 1998, the Company issued 1,048,128 shares of common stock resulting in aggregate proceeds, net of the underwriter's fee, of approximately $23,214,000 before expenses related to the offering. The net proceeds were used to repay borrowings under the Company's bank line of credit. The Company anticipates making additional investments in health care related facilities. 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 it has sufficient liquidity and financing capability to finance future investments as well as repay borrowings at or prior to their maturity. 10 PART II OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The Annual Meeting of Stockholders was held on April 17, 1998 ("Annual Meeting"). At the Annual Meeting, John C. Argue was elected and David R. Banks and Milton J. Brock, Jr. were re-elected to serve for a three-year term until the 2001 Annual Meeting of Stockholders. The other directors whose term of office continued after the meeting are Sam A. Brooks, Jr., Jack D. Samuelson, R. Bruce Andrews and Charles D. Miller. Additionally, the selection of Arthur Andersen LLP as independent accountants for the year ended December 31, 1998 was ratified. Voting at the Annual Meeting was as follows:
Abstentions Votes Cast Votes Cast Broker Matter For Against non-Votes ------ ---------- ---------- ----------- Election of John C. Argue 38,611,097 652,495 - Election of David R. Banks 38,692,553 571,039 - Election of Milton J. Brock, Jr. 38,632,445 631,147 - Ratification of selection of Arthur Andersen LLP 38,971,551 56,901 235,140
Item 5. Other Information The Company hereby advises stockholders that January 25, 1999 is the date after which notice of a stockholder sponsored proposal submitted outside the processes of Rule 14a-8 under the Securities Exchange Act of 1934 (i.e., a proposal to be presented at the next annual meeting of stockholders but not submitted for inclusion in the Company's proxy statement) will be considered untimely under the SEC's proxy rules. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 10. Material Contracts 10.1 Amendment Number Seven and Restatement of Amendments One through Six to Credit Agreement dated as of April 6, 1997 between the Company and Wells Fargo Bank, National Association, The Bank of New York, Sanwa Bank California, the Sumitomo Bank Limited and BHF-Bank Aktiengesellschaft. 10.2 Assumption Agreement dated as of May 28, 1998 between the Company and Wells Fargo Bank, National Association, The Bank of New York, Sanwa Bank California and Nationsbank, N.A. 27. Financial Data Schedule (b) Reports on Form 8-K A Form 8-K dated April 23, 1998 was filed to include an exhibit related to the issue and sale of common stock by the Company. 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 13, 1998 NATIONWIDE HEALTH PROPERTIES, INC. By /s/ MARK L. DESMOND ------------------------------------- Mark L. Desmond Senior Vice President and Chief Financial Officer (Principal Financial Officer) 12 EX-10.1 2 AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.1 AMENDMENT NUMBER SEVEN AND RESTATEMENT OF ----------------------------------------- AMENDMENTS ONE THROUGH SIX TO CREDIT AGREEMENT ---------------------------------------------- This AMENDMENT NUMBER SEVEN AND RESTATEMENT OF AMENDMENTS ONE THROUGH SIX TO CREDIT AGREEMENT, dated as of April 6, 1997 (this "Amendment"), is entered into among NATIONWIDE HEALTH PROPERTIES, INC., a Maryland corporation (the "Borrower"), the financial institutions which are signatories to the Credit Agreement (each a "Bank" and, collectively, the "Banks"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as agent for the Banks thereunder (in such capacity, the "Agent"). WHEREAS, the Borrower has requested that the Banks amend certain provisions of the Credit Agreement to provide for, among other things, the extension of the Termination Date, the reduction of certain fees and interest rates, the revision of covenants in connection with the incurrence of indebtedness by the Borrower, and the revision of covenants in connection with the making of loans and instruments by the Borrower. WHEREAS, subject to the terms and conditions contained herein, the Banks are willing to amend such provisions of the Credit Agreement. NOW, THEREFORE, in consideration of the mutual covenants, conditions, and provisions hereinafter set forth, the parties hereto agree as follows: ARTICLE 1 DEFINITIONS FOR THIS AMENDMENT; ------------------------------ AMENDMENT OF ARTICLE I OF THE CREDIT AGREEMENT ---------------------------------------------- 1.1 Definitions for this Amendment. Any and all initially capitalized terms ------------------------------ used herein shall have the meanings ascribed thereto in the Credit Agreement unless specifically defined herein. For purposes of this Amendment, the following initially capitalized terms shall have the following meanings: "Agent" shall have the meaning set forth in the introduction to this ----- Amendment. "Amendment" means this Amendment Number Seven and Restatement of Amendments --------- One through Six to Credit Agreement among the Borrower, the Banks, and the Agent. "Bank" and "Banks" shall have the respective meanings set forth in the ---- ----- introduction to this Amendment. "Borrower" shall have the meaning set forth in the introduction to this -------- Amendment. "Credit Agreement" means that certain Credit Agreement, dated as of May 20, ---------------- 1993, among the Borrower, the Banks, and the Agent, as amended by that certain Amendment Number One to Credit Agreement dated as of April 28, 1994, that certain Amendment Number Two to Credit Agreement dated as of July 11, 1995, that certain Amendment Number Three to Credit Agreement dated as of January 22, 1996, that certain Amendment Number Four and Waiver to Credit Agreement dated as of December 10, 1996, that certain Amendment Number Five to Credit Agreement dated as of April 1, 1997, and that certain Amendment Number Six and Waiver to Credit Agreement dated as of August 15, 1997. 1.2 Amendment of Section 1.1 of the Credit Agreement. Section 1.1 of the ------------------------------------------------ Credit Agreement is hereby amended by (a) deleting the following defined terms in their entireties: "Applicable Eurodollar Rate Margin," "Commitment," "Healthcare Property," "Majority Banks," and "Termination Date"; and (b) inserting the following defined terms: "1996 Indenture" means that certain Indenture, dated as of January 12, 1996, -------------- from the Borrower to The Bank of New York, as Trustee, providing for the issuance from time to time of unsecured and unsubordinated debentures, notes or other evidences of indebtedness of the Borrower. "1996 Indenture Indebtedness" means Indebtedness of the Borrower incurred --------------------------- under or pursuant to the 1996 Indenture. "1997 Indenture" means that certain Indenture, dated as of August 19, 1997, -------------- from the Borrower to The Bank of New York, as Trustee, providing for the issuance from time to time of unsecured and unsubordinated debentures, notes or other evidences of indebtedness of the Borrower. "1997 Indenture Indebtedness" means Indebtedness of the Borrower incurred --------------------------- under or pursuant to the 1997 Indenture. "Applicable Eurodollar Rate Margin" means, for each Eurodollar Rate Portion of --------------------------------- Loans outstanding prior to the Termination Date, (i) 1.00%, if Borrower has at least two of the following long- term senior debt ratings: (A) bal or less as determined by Moody's Investors Service ("Moody's"), (B) BB+ or less as determined by Standard and Poor's Corporation ("S&P"), and (C) BB+ or less as determined by Duff & Phelps Inc. ("Duff"); (ii) 0.625%, if Borrower has at least two of the following long- term senior debt ratings: (A) Baa3 or better as determined by Moody's, (B) BBB- or better as determined by S&P, and (C) BBB- or better as determined by Duff; (iii) 0.50%, if the Borrower has at least two of the following long-term senior debt ratings: (A) Baa2 or better as determined by Moody's, (B) BBB or better as determined by S&P, and (C) BBB or better as determined by Duff; (iv) 0.425%, if the Borrower has at least two of the following long-term senior debt ratings: (A) Baa1 or better as determined by Moody's, (B) BBB+ or better as determined by S&P, and (C) BBB+ or better as determined by Duff; or (v) 0.35%, if the Borrower has at least two of the following long-term senior debt ratings: (A) A3 or better as determined by Moody's, (B) A- or better as determined by S&P, and (C) A- or better as determined by Duff. In the event that the Borrower satisfies more than one of the ratings requirements clauses in the preceding sentence, the Applicable Eurodollar Rate Margin shall be the lowest applicable percentage amount. In the event that the Borrower does not satisfy any of the ratings requirements clauses in the preceding sentence (due to the unavailability of any such ratings or otherwise), the Applicable Eurodollar Rate Margin shall be 1.00%. Each change in the Applicable Eurodollar Rate Margin based on a change in such long-term senior debt rating shall be effective for each Interest Period of each Eurodollar Rate Portion of the Loans commencing on or after the second Business Day after the date that the Borrower provides written notice to the Agent of such rating change. "Applicable Facility Fee Rate" means, for each calendar quarter, ---------------------------- (i) 0.375% per annum, if Borrower has at least two of the following long-term senior debt ratings: (A) bal or less as determined by Moody's, (B) BB+ or less as determined by S&P, and (C) BB+ or less as determined by Duff; (ii) 0.25% per annum, if Borrower has at least two of the following long-term senior debt ratings: (A) Baa3 or better as determined by Moody's, (B) BBB- or better as determined by S&P, and (C) BBB- or better as determined by Duff; 2 (iii) 0.25% per annum, if the Borrower has at least two of the following long-term senior debt ratings: (A) Baa2 or better as determined by Moody's, (B) BBB or better as determined by S&P, and (C) BBB or better as determined by Duff; (iv) 0.20% per annum, if the Borrower has at least two of the following long-term senior debt ratings: (A) Baa1 or better as determined by Moody's, (B) BBB+ or better as determined by S&P, and (C) BBB+ or better as determined by Duff; or (v) 0.15% per annum, if the Borrower has at least two of the following long-term senior debt ratings: (A) A3 or better as determined by Moody's, (B) A- or better as determined by S&P, and (C) A- or better as determined by Duff. In the event that the Borrower satisfies more than one of the ratings requirements clauses in the preceding sentence, the Applicable Facility Fee Rate shall be the percentage amount applicable to the highest ratings requirement clause met by the Borrower. In the event that the Borrower does not satisfy any of the ratings requirements clauses in the preceding sentence (due to the unavailability of any such ratings or otherwise), the Applicable Facility Fee Rate shall be 0.375%. Each change in the Applicable Facility Fee Rate based on a change in such long-term senior debt rating shall be effective for the calendar quarter commencing on or after the date that the Borrower provides written notice to the Agent of such rating change. "Commitment" means, when used with reference to any Bank at the time any ---------- determination thereof is to be made, the amount set forth opposite the name of such Bank on the signature pages of the Restated Amendment, (and on the signature pages of any future amendment to the Credit Agreement adding a financial institution as a signatory to the Credit Agreement (an "Additional Bank"), to the extent of the amount set forth opposite the name of the Additional Bank on the signature pages of such future amendment, accepted by an Additional Bank as its obligation to make Loans up to such amount on the terms and conditions set forth in this Agreement; provided that the amount of the obligation of the Additional Bank shall not exceed the difference between $100,000,000 and the total of the Commitments set forth opposite the names of the Banks on the signature pages to the Restated Amendment, as from time to time reduced pursuant to Section 4.1, or, where the context so requires, the ----------- obligation of each such Bank to make Loans up to such amount on the terms and conditions set forth in this Agreement. "First Amendment" means that certain Amendment Number One to Credit Agreement, --------------- dated as of April 28, 1994, among the Borrower, the Banks, and the Agent. "Healthcare Property" means a property operating as a nursing home, an acute ------------------- care hospital, a rehabilitation hospital, an assisted living facility, an adult congregate living facility, a personal care facility, a medical office building, or any combination of the foregoing; provided that any of the foregoing may -------- also include independent living units as a part of any such property. "Majority Banks" means at any time at least two (2) of the Banks holding at -------------- least an aggregate 67% of the then aggregate unpaid principal amount of the Loans, or, if no such principal amount is then outstanding, at least two (2) of the Banks having at least 67% of the aggregate Commitments. "Net Real Estate Property Assets" means the Borrower's gross investment in ------------------------------- real estate properties (excluding mortgage loan receivables) less the ---- accumulated depreciation on such gross investment. "Restated Amendment" means that certain Amendment Number Seven and Restatement ------------------ of Amendments One Through Six to Credit Agreement, dated as of April 6, 1998, among the Borrower, the Banks, and the Agent. "Termination Date" means, unless extended pursuant to Section 4.1(b), March ---------------- -------------- 31, 2001. ARTICLE 2 3 AMENDMENT OF CERTAIN PROVISIONS ------------------------------- OF THE CREDIT AGREEMENT ----------------------- 2.1 Amendment of Section 2.2(a) of the Credit Agreement. Section 2.2(a) --------------------------------------------------- of the Credit Agreement is amended by deleting clause (C) therefrom in its entirety and substituting therefor the following clause: (C) the aggregate amount of the Borrowing, which (1) in the case of the Base Rate Portions thereof shall be in the amount of $500,000 or a greater amount which is an integral multiple of $100,000, and (2) in the case of the Eurodollar Rate Portions thereof shall be in the amount of $2,000,000 or a greater amount which is an integral multiple of $100,000; 2.2 Amendment of Section 3.3 of the Credit Agreement. Section 3.3 of the ------------------------------------------------ Credit Agreement is amended by deleting subsection (a) therefrom in its entirety and substituting therefor the following subsection: (a) Facility Fee. The Borrower agrees to pay to the Agent for the ------------ account of each Bank a facility fee on such Bank's Commitment as in effect from time to time from the date that each Bank executes this Agreement (as set forth below such Bank's name on the signature pages hereof) until the Termination Date at the Applicable Facility Fee Rate, payable quarterly in arrears on the last Business Day of March, June, September and December in each year, commencing on the first such date after the date of this Agreement, and on the earlier of the date such Bank's Commitment is terminated hereunder or the Termination Date. 2.3 Amendment of Section 3.5(a) of the Credit Agreement. Section 3.5(a) --------------------------------------------------- of the Credit Agreement is amended by deleting clause (C) therefrom in its entirety and substituting therefor the following clause: (C) the aggregate amount of the Loans that are the subject of such continuation or conversion, which in the case of a conversion into or continuation of Eurodollar Rate Portions shall be in the amount of $2,000,000 or a greater amount which is an integral multiple of $100,000; and 2.4 Amendment of Section 4.1 of the Credit Agreement. Section 4.1 of the ------------------------------------------------ Credit Agreement is amended by deleting subsection (b) therefrom in its entirety and substituting therefor the following subsection: (b) Mandatory Termination --------------------- (i) The Commitments shall terminate on the Termination Date. (ii) Notwithstanding Section 4.1(b)(i), not later than January 31 ----------------- of each year, commencing January 31, 1996, the Borrower may (at its option) give written notice to the Agent and each Bank that it requests the Banks to extend the Termination Date then in effect for an additional one year period. Each of the Banks may grant or reject such request in its sole discretion and shall provide written notice of such grant or rejection to the Borrower and the Agent not later than the March 31 following such request; provided that failure of any Bank so to provide such written -------- notice to the Borrower and the Agent shall be deemed a rejection of such request. (iii) In the event that all of the Banks grant such request, the Termination Date then in effect shall be so extended. (iv) In the event that Banks having more than 25% of the aggregate Commitments reject such request, the Termination Date then in effect shall not be extended. (v) In the event that Banks having not more than 25% of the aggregate Commitments reject such request (each, a "Rejecting Bank"), the Borrower may (at its option) arrange to have one or more banks or other financial institutions (each, a "Successor Bank") succeed to all of the Rejecting Banks' rights and obligations hereunder and under the other Loan Documents on the basis and subject to the provisions set forth in Section ------- 12.9(b), and each Rejecting Bank agrees to make such an ------- 4 assignment to the Successor Bank(s); provided that each Successor Bank -------- shall have agreed to extend the Termination Date to the date requested by the Borrower; provided further that such assignment shall be consummated -------- ------- (if at all) prior to the January 31 following the rejection by the Rejecting Banks of the proposed extension. In the event that all of such rights and obligations of the Rejecting Banks are so assigned, the Termination Date then in effect shall be extended as requested by the Borrower. In the event that all of such rights and obligations of the Rejecting Banks are not so assigned, the Termination Date then in effect shall not be extended. In the event that such an assignment is effected on a date other than the last day of an Interest Period for any Eurodollar Rate Portion then outstanding, the Borrower shall compensate the Rejecting Bank for all losses, costs and expenses sustained by such Bank as a result thereof, in accordance with the provisions of Section 5.2. ----------- 2.5 Amendment of Section 4.3 of the Credit Agreement. Section 4.3 of the ------------------------------------------------ Credit Agreement is amended by deleting subsection (a) therefrom in its entirety and substituting therefor the following subsection: (a) Optional Prepayments. The Borrower may, upon at least one Business -------------------- Day's written notice to the Agent for Base Rate Portions and three Eurodollar Business Day's written notice to the Agent for Eurodollar Rate Portions, prepay the outstanding amount of the Loans in whole or ratably in part, without premium or penalty, subject to a Bank's right to make a request for compensation as provided in Section 5.2. Partial prepayments of Base Rate Portions shall be in an aggregate principal amount of at least $500,000 or a greater amount which is an integral multiple of $100,000, and partial prepayments of Eurodollar Rate Portions in each case shall be in an aggregate principal amount of at least $2,000,000 or a greater amount which is an integral multiple of $100,000. 2.6 Amendment of Section 4.3(b) of the Credit Agreement. Section 4.3(b) --------------------------------------------------- of the Credit Agreement is amended by deleting clause (i) therefrom in its entirety and substituting therefor the following clause: (i) If the Borrower shall create or incur Indenture Indebtedness, 1996 Indenture Indebtedness or 1997 Indenture Indebtedness or, with the prior written consent of the Majority Banks, shall create, incur or assume Indebtedness pursuant to Sections 9.4(a)(v) or 9.4(a)(vii), the Borrower --------------------------------- shall pay to the Agent as a prepayment in whole or ratably in part of the outstanding amount of the Loans, an amount equal to the Net Cash Proceeds received by the Borrower from such Indebtedness as created, incurred or assumed (to the extent of the amount of the Loans then outstanding). 2.7 Amendment of Section 8.1 of the Credit Agreement. Section 8.1 of the ------------------------------------------------ Credit Agreement is amended by inserting the following new subsection (u) immediately following subsection (t) thereof: (u) Compliance with Securities Laws. Each of the Borrower and ------------------------------- its Subsidiaries is in compliance in all material respects with all applicable federal and state securities laws, rules, regulations and orders of any Governmental Authority with respect to the 1997 Indenture and the Indebtedness issued and to be issued pursuant to the 1997 Indenture. 2.8 Amendment of Section 9.1(b) of the Credit Agreement. Section 9.1(b) --------------------------------------------------- of the Credit Agreement is amended by (a) deleting clause (xi) therefrom in its entirety and substituting therefor the following clause (xi), (b) renumbering clause (xii) thereof to be clause (xiv) and (c) by inserting the following new clauses (xii) and (xiii) immediately following new clause (xi): (xi) as soon as reasonably practical and, in any event, not less than two days prior to the consummation thereof, written notice of (A) the proposed incurrence or issuance of Indenture Indebtedness, 1996 Indenture Indebtedness or 1997 Indenture Indebtedness or (B) any proposed supplement or amendment to the Indenture, the 1996 Indenture or the 1997 Indenture; (xii) within five Business Days after any long-term senior debt rating change by Moody's, S&P or Duff with respect to the Borrower, written notice setting forth such rating change; (xiii) promptly after consummation of any purchase of a Healthcare Property for a purchase price (including the estimated costs of any renovations committed at the time of purchase) 5 greater than or equal to $15,000,000, a description of such transaction, in reasonable detail, together with copies of all materials presented to the Borrower's Board of Directors in connection with the approval of such transaction; and 2.9 Amendment of Section 9.2 of the Credit Agreement. Section 9.2 of the ------------------------------------------------ Credit Agreement is amended by deleting subsections (a) and (b) therefrom in their entireties and substituting therefor the following subsections. (a) Leverage Ratio. The Borrower will not permit the ratio of -------------- Consolidated Total Liabilities to Consolidated Tangible Net Worth to be greater than 1.3 to 1.0; and (b) Minimum Consolidated Tangible Net Worth. The Borrower will --------------------------------------- maintain Consolidated Tangible Net Worth of not less than $500,000,000. 2.10 Amendment of Section 9.3 of the Credit Agreement. Section 9.3 of the ------------------------------------------------ Credit Agreement is amended by deleting subsection (j) therefor in its entirety and substituting therefor the following subsection: (j) Use of Proceeds. The Borrower will use the proceeds of the Loans --------------- solely for (i) the acquisition of Healthcare Properties, (ii) the investment in a mortgage loans on Healthcare Properties, (iii) payment of quarterly dividends to holders of the Borrower's common stock, and (iv) general corporate purposes; provided that no proceeds of the Loans shall be -------- used in connection with any hostile acquisition. 2.11 Further Amendment of Section 9.3 of the Credit Agreement. Section 9.3 -------------------------------------------------------- of the Credit Agreement is hereby amended to add the following as a new subsection (l) thereunder: (l) Year 2000 Complaint. Borrower shall perform such acts as may be ------------------- reasonably necessary to reasonably ensure that Borrower and any business in which Borrower owns a substantial interest become Year 2000 Compliant within a reasonable time. Such acts shall include, without limitation, Borrower's performance of a reasonable review and assessment of its material systems. With respect to Borrower's customers, suppliers and vendors that are material to Borrower's business, Borrower shall make a reasonable effort to (i) assess the risks posed to Borrower's business by the failure of any such entity that is material to Borrower's business to become Year 2000 Compliant within a reasonable time, (ii) make reasonable inquiries or other reasonable assessment of such entities as to whether they will become Year 2000 Compliant within a reasonable time, and (iii) develop a reasonable plan for dealing with such entities which do not become Year 2000 Compliant within a reasonable time. As used in this paragraph, "Year 2000 Compliant" shall mean, in regard to any entity, that all software, hardware, firmware, equipment, goods or systems material to the business operations or financial condition of such entity will properly perform date sensitive functions before, during, and after the year 2000. Borrower shall, within 30 days of written request by Agent, provide to Agent a written report summarizing in reasonable detail Borrower's actions to comply with this covenant and the results of such actions; provided, -------- however, that Borrower shall not be obligated to respond to more than one ------- such request per six month period. 2.12 Amendment of Section 9.4(a) of the Credit Agreement. Section 9.4(a) --------------------------------------------------- of the Credit Agreement is amended by deleting clause (ix) thereof in its entirety and substituting therefor the following clause (ix): (ix) Indebtedness in connection with the acquisition of any Healthcare Property permitted pursuant to Section 9.4(f)(iii) which is secured by a Lien permitted pursuant to Section 9.4(b)(iii) upon such Healthcare Property, whether or not the Borrower has assumed or become liable for payment of such Indebtedness; and 2.13 Further Amendment of Section 9.4(a) of the Credit Agreement. Section ----------------------------------------------------------- 9.4(a) of the Credit Agreement is amended by deleting the "." at the end of clause (x) thereof and inserting in place thereof ";" and by inserting immediately thereafter the following new clauses (xi) and (xii); (xi) 1996 Indenture Indebtedness; provided, however, that: (a) the -------- ------- maximum aggregate principal amount of 1996 Indenture Indebtedness at any time outstanding shall not exceed $200,000,000; (b) 6 without the prior written consent of the Majority Banks, no regularly scheduled principal payment on any 1996 Indenture Indebtedness shall be required prior to the fifth (5th) anniversary of the issuance of the debenture, note or other evidence of indebtedness evidencing such 1996 Indenture Indebtedness (without regard to the effect of the acceleration provisions set forth in Section 502 of the 1996 Indenture); (c) all 1996 Indenture Indebtedness shall be unsecured; (d) in connection with the incurrence or issuance of any 1996 Indenture Indebtedness, no covenant (financial or otherwise) shall be imposed upon, or agreed to by, the Borrower that is more restrictive (in the judgment of the Majority Banks) than the covenants set forth in this Agreement; and (e) prior to the effectiveness thereof, the Majority Banks shall have approved, in their sole discretion, each supplement or amendment to the 1996 Indenture; and (xii) 1997 Indenture Indebtedness; provided, however, that: -------- ------- (a) the maximum aggregate principal amount of 1997 Indenture Indebtedness at any time outstanding shall not exceed $300,000,000; (b) without the prior written consent of the Majority Banks, no regularly scheduled principal payment on any 1997 Indenture Indebtedness shall be required prior to the fifth (5th) anniversary of the issuance of the debenture, note or other evidence of indebtedness evidencing such 1997 Indenture Indebtedness (without regard to the effect of the acceleration provisions set forth in Section 502 of the 1997 Indenture); (c) all 1997 Indenture Indebtedness shall be unsecured; (d) in connection with the incurrence or issuance of any 1997 Indenture Indebtedness, no covenant (financial or otherwise) shall be imposed upon, or agreed to by, the Borrower that is more restrictive (in the judgment of the Majority Banks) than the covenants set forth in this Agreement; and (e) prior to the effectiveness thereof, the Majority Banks shall have approved, in their sole discretion, each supplement or amendment to the 1997 Indenture. 2.14 Amendment of Section 9.4(b) of the Credit Agreement. Section 9.4(b) --------------------------------------------------- of the Credit Agreement is amended by deleting the "and" at the end of clause (i) thereof, and the "." at the end of clause (ii) thereof and inserting in place thereof "; and" and by inserting thereafter the following new clause (iii): (iii) Liens securing Indebtedness that is incurred pursuant to Section 9.4(a)(ix) hereof in an aggregate principal amount outstanding ---------- not to exceed a principal amount equal to seven and one-half percent (7.5%) of Consolidated Total Assets at any time of determination. 2.15 Amendment of Section 9.4(f) of the Credit Agreement. Section 9.4(f) --------------------------------------------------- of the Credit Agreement is amended by deleting clauses (iii) and (v) therefrom in their entireties and substituting therefor the following clauses: (iii) additional purchases of Healthcare Properties of other Persons and any renovation of the subject Healthcare Properties committed at the time of purchase, the consideration (whether in cash or in kind) for which together with the estimated costs of any such committed renovation or expansion (exclusive of expenditures permitted under subsection (g)) does not exceed (A) $30,000,000 individually and (B) $275,000,000 in aggregate in any fiscal year (or such greater amounts as shall be approved by the prior written consent of the Majority Banks); provided that, after giving -------- effect to such purchase, no Default shall have occurred and be continuing; (iv) Investments in mortgage loans secured by Healthcare Properties in an aggregate amount not to exceed thirty percent (30%) of the aggregate amount (before depreciation and amortization) then invested by the Borrower in fixed or capital assets of Healthcare Properties; or (v) investments in development or construction projects (including new construction and renovations); provided that the aggregate -------- amount thereof, as of the end of any fiscal quarter of the Borrower, shall not exceed seven and one-half percent (7.5%) of Consolidated Total Assets. 2.16 Amendment of Section 9.4(g) of the Credit Agreement. Section 9.4 of --------------------------------------------------- the Credit Agreement is amended by deleting subsection (g) therefrom in its entirety and substituting therefor the following subsection: (g) Capital Expenditures. Without the prior written consent of the -------------------- Majority Banks, the Borrower will not, and will not permit any of its Subsidiaries to, make any expenditures (exclusive of 7 investments permitted under clauses (iii) and (v) of subsection (f)) for fixed or capital assets, including obligations under Capital Leases, in an aggregate amount in excess of $5,000,000 in any fiscal year. 2.17 Amendment of Section 9.4(o) of the Credit Agreement. Section 9.4 of --------------------------------------------------- the Credit Agreement is amended by deleting subsection (o) therefrom in its entirety and substituting therefor the following subsection: (o) Lease of Premises. The Borrower will not, and will not ----------------- permit any of its Subsidiaries to, lease or enter into any agreement to lease any Premises now or hereafter owned by it to any lessee unless such lessee (A) has a long-term senior debt rating of Baa3 or better as determined by Moody's Investors Service, BBB- or better as determined by Standard and Poor's Corporation, or BBB- or better as determined by Duff & Phelps Inc.; or (B) provides to Borrower or such Subsidiary an irrevocable standby letter of credit or deposit in an amount not less than six months base rent under the subject lease as security for the lessee's obligations under such lease; or (C) has credit quality acceptable to the Majority Banks in their sole discretion. The provisions of the preceding sentence shall not apply to any lessee with regard to any lease in effect as of May 20, 1993 between such lessee and the Borrower or any such Subsidiary. In addition, the provisions of the first sentence of this subparagraph shall not apply to any lessee so long as the Borrower has a long-term senior debt rating of Baa3 or better as determined by Moody's Investors Service, or BBB- or better as determined by Standard and Poor's Corporation, or BBB- or better as determined by Duff & Phelps Inc. (each an "Investment Grade Rating"), or to any lessee with regard to any lease entered into between such lessee and the Borrower or any such Subsidiary as of a date when the Borrower held such an Investment Grade Rating. ARTICLE 3 MISCELLANEOUS ------------- 3.1 Amendment Fee. The Borrower agrees to pay to the Agent for the account ------------- of each Bank an amendment fee in an amount equal to one-tenth of one percent (0.10%) of such Bank's Commitment as set forth on the signature pages hereto. 3.2 Loan Documents. This Amendment shall be one of the Loan Documents. -------------- 3.3 Execution. This Amendment may be executed in any number of counterparts, --------- each of which when so executed and delivered shall be deemed an original. All of such counterparts shall constitute but one and the same instrument. Delivery of an executed counterpart of the signature pages of this Amendment by telecopier shall be equally effective as delivery of a manually executed counterpart. Any party delivering an executed counterpart of the signature pages of this Amendment by telecopier shall thereafter also promptly deliver a manually executed counterpart, but the failure to deliver such manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment. 3.4 Effectiveness. This Amendment shall be effective as of the date first ------------- written above, when one or more counterparts hereof shall have been executed by the Borrower, the Banks, and the Agent and shall have been delivered to the Agent. 3.5 No Other Amendment. Except as expressly amended hereby, the Credit ------------------ Agreement shall remain unchanged and in full force and effect. To the extent any terms or provisions of this Amendment conflict with those of the Credit Agreement, the terms and provisions of this Amendment shall control. This Amendment shall be deemed a part of and is hereby incorporated in the Credit Agreement. 3.6 Governing Law. This Amendment shall be governed by, and construed and ------------- enforced in accordance with, the laws of the State of California. 8 IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered as of the date first above written. Commitment: WELLS FARGO BANK, NATIONAL ASSOCIATION, in its - ---------- individual capacity and as Agent $42,000,000 By ------------------------------------------ Title: Vice President $19,000,000 SANWA BANK CALIFORNIA By ------------------------------------------ Title: ------------------------------------- $15,000,000 THE BANK OF NEW YORK By ------------------------------------------ Title -------------------------------------- NATIONWIDE HEALTH PROPERTIES, INC. By ------------------------------------------ Title -------------------------------------- EX-10.2 3 ASSUMPTION AGREEMENT EXHIBIT 10.2 ASSUMPTION AGREEMENT -------------------- THIS ASSUMPTION AGREEMENT (this "Agreement") is dated as of May 28, 1998 among NATIONSBANK, N.A. ("NB"), WELLS FARGO BANK, NATIONAL ASSOCIATION, ("WFB"), THE BANK OF NEW YORK ("BNY") and SANWA BANK CALIFORNIA ("SBC", and together with WFB and BNY, each a "Continuing Bank," and collectively, the "Continuing Banks"), WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent for the Banks under the Credit Agreement, as hereinafter defined (in such capacity, the "Agent"), and NATIONWIDE HEALTH PROPERTIES, INC. ("Borrower"). WHEREAS, pursuant to that certain Withdrawal Agreement dated as of April 6, 1998, among BHF-Bank Aktiengesellschaft ("BHF"), Sumitomo Bank, Limited ("Sumitomo" and together with BHF, each a "Withdrawing Bank" and collectively, the "Withdrawing Banks"), the Continuing Banks, Borrower and Agent (the "Withdrawal Agreement"), the Withdrawing Banks withdrew from the credit facility established by that certain Credit Agreement dated as of May 20, 1993 (as amended, supplemented or restated from time to time, the "Credit Agreement") among the Banks, Borrower, and Agent. Capitalized terms used but not defined in this Agreement shall have the meanings as set forth in the Withdrawal Agreement or in the Credit Agreement (in the event of a conflict between the Credit Agreement and the Withdrawal Agreement, the Withdrawal Agreement shall control). The Credit Agreement and all other agreements, documents and instruments referred therein or delivered pursuant thereto are collectively called "Credit Documents". WHEREAS, after giving effect to the Withdrawal Agreement, the Total Commitment under the Credit Agreement remained at $100,000,000; the amount of the Total Commitment funded by the Continuing Banks was $76,000,000; and the Unfunded Commitments Amount was the balance of the Total Commitment of $24,000,000. WHEREAS, NB desires to become a party to the Credit Agreement and to assume a $24,000,000 portion of the Total Commitment, being the entire Unfunded Commitment Amount. WHEREAS, the Borrower, the Agent and the Continuing Banks desire to permit the assumption by NB of a $24,000,000 Commitment under the Credit Agreement pursuant to the terms and conditions hereof. NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows: 1. Assignment. ---------- Effective on the Assignment Effective Date (as defined in Section 3 below), --------- NB hereby assumes, without recourse, and without representation or warranty (except as expressly provided in Section 6 below), the Assigned Share (as --------- defined below), including without limitation those relating to the Commitment and the Loans. The Assigned Share of all such rights, title, interest and obligations is referred to collectively herein as the "Assigned Rights and Obligations". The "Assigned Share" means (a) a $24,000,000 portion of the aggregate Total Commitment of $100,000,000 on the Assignment Effective Date under the Credit Agreement, and (b) the aggregate amount of all Loans advanced by the Continuing Banks and outstanding under the Credit Agreement on the Assignment Effective Date to equalize on a pro rata basis the Loans among NB and the Continuing Banks -------- (24.000000% being the Assigned Share of $24,000,000 divided by the total of the funded Commitment of the Continuing Banks of $76,000,000 plus the Assigned Share ---- of $24,000,000). The percentage of the aggregate Total Commitment represented by the Assigned Shares shall equal the quotient of the above portion divided by the aggregate Total Commitment on the Assignment Effective Date, expressed as a percentage rounded to eight decimal places. 2. Assumption. ---------- Effective on the Assignment Effective Date, NB hereby accepts the foregoing assignment of, and hereby assumes, the Assigned Rights and Obligations. 3. Effectiveness. ------------- This Agreement shall become effective on the funding date of May 29, 1998 (the "Assignment Effective Date"). 4. Payments on Assignment Effective Date. ------------------------------------- In consideration of the assignment effected hereby to and the assumption by NB of the Assigned Rights and Obligations, on the Assignment Effective Date: (a) NB shall pay to the Agent for payment to each Continuing Bank the principal amount of all Loans made by each Continuing Bank pursuant to the Credit Agreement that are attributable to the Assigned Share and outstanding on the Assignment Effective Date in the amounts set forth in column (7) below, and (b) Agent shall pay to NB a commitment fee of $24,000.
Loans Advanced Loans Advanced Request by NB % of Prior to after giving to Continuing Total % of Funded Effectiveness of Effect to this Bank Bank Commitment Commitment Commitment this Agreement Agreement (5)-(6)=(7) (1) (2) (3) (4) (5) (6) (7) - ------------ ------------ --------- ----------- ---------------- --------------- ------------- WFB $ 42,000,000 42.0% 42.000000% $ 9,505,263.18 $ 7,224,000.00 $2,281,263.17 BNY $ 15,000,000 15.0% 15.000000% $ 3,394,736.82 $ 2,580,000.00 $ 814,736.83 SBC $ 19,000,000 19.0% 19.000000% $ 4,300,000.00 $ 3,268,000.00 $1,032,000.00 NB $ 24,000,000 24.0% 24.000000% -0- $ 4,128,000.00 $4,128,000.00 ------------ ----- --------- -------------- -------------- ------------- $100,000,000 100.0% 100% $17,200,000.00 $17,200,000.00 $8,256,000.00
5. Allocation and Payment of Interest and Fees. ------------------------------------------- Agent shall pay to NB all interest, commitment fees and other amounts not constituting principal that are paid by or on behalf of Borrower pursuant to the Credit Documents and are attributable to the Assigned Rights and Obligations ("Borrower Amounts"), that accrue on and after the Assignment Effective Date. If any Continuing Bank receives or collects any such Borrower Amounts, such Continuing Bank shall promptly pay them to NB. 6. Representations and Warranties. ------------------------------ (a) NB, each Continuing Bank, Agent and Borrower represents and warrants to the other as follows: (i) It has full power and authority, and has taken all action necessary, to execute and deliver this Agreement and to fulfill its obligations under, and to consummate the transactions contemplated by, this Agreement; (ii) The making and performance of this Agreement and all documents required to be executed and delivered by it hereunder do not and will not violate any law or regulation applicable to it; (iii) This Agreement has been duly executed and delivered by it and constitutes its legal, valid and binding obligation enforceable in accordance with its terms; and (iv) All approvals, authorizations or other actions by, or filings with, any governmental authority necessary for the validity or enforceability of its obligations under this Agreement have been made or obtained. (v) Agent agrees to forward to NB within 30 day of the Assignment Effective Date a full set of the closing binders of the Credit Documents and all amendments thereto. (b) NB represents and warrants to Agent and the Continuing Banks as follows: (i) NB has made and shall continue to make its own independent investigation of the financial condition, affairs and creditworthiness of Borrower and any other person or entity obligated under the Credit Documents (collectively, "Credit Parties"), and the value of any collateral now or hereafter securing any of the obligations, indebtedness, liabilities or understandings under the Credit Documents ("Collateral"), in connection with its assumption of the Assigned Rights and Obligations; and (ii) NB has received a copy of the Credit Documents and such other documents, financial statements and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement. 7. No Assignor Responsibility. -------------------------- The Agent and the Continuing Banks make no representation or warranty and assume no responsibility to NB for: (a) the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency of the Credit Documents or for any representations, warranties, recitals or statements made in the Credit Documents or in any financial or other written or oral statement, instrument, report, certificate or any other document made or furnished or made available to NB by or on behalf of any Credit Party in connection with the Credit Documents and the transactions contemplated thereby; (b) the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Credit Documents or as to the existence or possible existence of any default or event of default under the Credit Documents; or (c) the accuracy or completeness of any information provided to NB, whether by a Continuing Bank or Agent, or by or on behalf of the Borrower. Neither Agent not any Continuing Bank shall have any initial or continuing duty or responsibility to make any investigation of the financial condition, affairs or creditworthiness of the Borrower, or the value of any Collateral, in connection with the assignment of the Assigned Rights and Obligations or to provide NB with any credit or other information with respect thereto, whether coming into its possession before the date hereof or at any time or times thereafter except to the extent required under the Credit Documents. 8. NB Bound By Credit Agreement. ---------------------------- Effective on the Assignment Effective Date, NB: (a) shall be deemed to be a party to the Credit Agreement, (b) agrees to be bound by the Credit Agreement as it would have been if it had been an original Bank party thereto, and (c) agrees to perform in accordance with their terms all of the obligations which are required under the Credit Documents to be performed by it as a Bank. NB appoints and authorizes Agent to take such actions as agent on its behalf and to exercise such powers under the Credit Documents as are delegated to Agent by the terms thereof, together with such powers as are reasonably incidental thereto. 9. New Note. -------- On or promptly after the Assignment Effective Date, Borrower, Agent and NB shall make appropriate arrangements so that a new Note executed by Borrower, dated the Assignment Effective Date and in the amount of the Commitment of NB, after giving effect to this Agreement, is issued to NB. 10. General. ------- (a) This Agreement constitutes the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior and current understandings and agreements, whether written or oral (other than with respect to any fees payable as provided in Section 4 hereof). --------- (b) No term or provision of this Agreement may be amended, waived or terminated orally, but only by an instrument signed by the parties hereto. (c) This Agreement may be executed in one or more counterparts. Each set of executed counterparts shall be an original. Executed counterparts may be delivered by facsimile transmission. (d) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. NB may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Agent except as provided in the Credit Documents. (e) All payments to the Continuing Banks, Agent or NB hereunder shall, unless otherwise specified by the party entitled thereto, be made in Dollars, in immediately available funds, and to the address or account specified on the signature pages of this Agreement. The address of NB for notice purposes under the Credit Agreement shall be as specified on the signature pages of this Agreement. (f) If any provision of this Agreement is held invalid, illegal or unenforceable, the remaining provisions hereof will not be affected or impaired in any way. (g) Each party shall bear its own expenses in connection with the preparation and execution of this Agreement. (h) This Agreement shall be governed by and construed in accordance with the laws of the State of California. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. NB: NATIONSBANK, N.A. By: ------------------------------------------ Printed Name: Forrest Scott Singhoff Title: Senior Vice President NB's Notice Instructions: ------------------------- Mr. Scott Singhoff 700 Louisiana Street Houston, Texas 77002 Telephone: (713) 247-6961 Facsimile: (713) 247-6719 Mr. Matthew Mentz 101 North Tryon Street Charlotte, North Carolina 28255 Telephone: (704) 388-6505 Facsimile: (704) 386-8694 NB's Payment Instructions: -------------------------- NationsBank, N.A. Charlotte ABA No.053-000-196 Account No 136621-22506 Attention: Corporate Credit Services Reference: Nationwide Health Properties Telephone: ( )_____________________________ Facsimile: ( )_____________________________ ACKNOWLEDGED AND AGREED: - ------------------------ BORROWER: NATIONWIDE HEALTH PROPERTIES, INC. By: ------------------------------------------ Printed Name: -------------------------------- Title: --------------------------------------- AGENT: WELLS FARGO BANK, N.A. By: ------------------------------------------ Printed Name: Richard LaPoint Title: Vice President REMAINING BANKS: ---------------- WELLS FARGO BANK, NATIONAL ASSOCIATION By: ------------------------------------------ Printed Name: Richard LaPoint Title: Vice President THE BANK OF NEW YORK By: ------------------------------------------ Printed Name: -------------------------------- Title: --------------------------------------- SANWA BANK CALIFORNIA By: ------------------------------------------ Printed Name: -------------------------------- Title: --------------------------------------- EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 13,914 0 4,782 0 0 32,906 1,096,261 118,587 1,207,052 35,993 586,809 0 100,000 4,464 479,786 1,207,052 0 67,649 0 15,098 0 0 16,836 35,715 0 35,715 0 2,321 0 38,036 .78 .78
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