-----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, GsIGdFxOrLZRfReVfSAmT3CkW2/dWkrYUz4c0+JR26K45zl/MymHdrdjcJzGZjvq EfmeBRYjJN0ueWqe3zp9Cg== 0000908737-97-000307.txt : 19970815 0000908737-97-000307.hdr.sgml : 19970815 ACCESSION NUMBER: 0000908737-97-000307 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTH & RETIREMENT PROPERTIES TRUST CENTRAL INDEX KEY: 0000803649 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 046558834 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09317 FILM NUMBER: 97663185 BUSINESS ADDRESS: STREET 1: 400 CENTRE ST CITY: NEWTON STATE: MA ZIP: 02158 BUSINESS PHONE: 6173323990 MAIL ADDRESS: STREET 1: 400 CENTRE STREET CITY: NEWTON STATE: MA ZIP: 02158 FORMER COMPANY: FORMER CONFORMED NAME: HEALTH & REHABILITATION PROPERTIES TRUST DATE OF NAME CHANGE: 19920703 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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, 1997 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 1-9317 HEALTH AND RETIREMENT PROPERTIES TRUST (Exact name of registrant as specified in its charter) Maryland 04-6558834 (State or other jurisdiction (IRS Employer of incorporation) Identification No.) 400 Centre Street, Newton, Massachusetts 02158 (Address of principal executive offices) (Zip Code) 617-332-3990 (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 [ ] Number of Common Shares outstanding at the latest practicable date August 8, 1997: 98,838,340 shares of beneficial interest, $.01 par value. FORM 10-Q JUNE 30, 1997 INDEX PART I Financial Information Page Item 1. Consolidated Financial Statements (Unaudited) Consolidated Balance Sheets - June 30, 1997 and December 31, 1996 1 Consolidated Statements of Income - Three and Six Months Ended June 30, 1997 and 1996 2 Consolidated Statements of Cash Flows - Six Months Ended June 30, 1997 and 1996 3 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II Other Information Item 2. Changes in Securities 10 Item 4. Submission of Matters to a Vote of Securities Holders 10 Item 5. Other Information 11 Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12 HEALTH AND RETIREMENT PROPERTIES TRUST
CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share amounts) (unaudited) June 30, December 31, 1997 1996 ------------ ------------ ASSETS Real estate properties, at cost (including properties leased to affiliates with a cost of $110,885 and $109,843, respectively): Land $ 183,449 $ 93,522 Buildings and improvements 1,413,774 912,217 ---------- ---------- 1,597,223 1,005,739 Less accumulated depreciation 92,284 76,921 ---------- ---------- 1,504,939 928,818 Real estate mortgages and notes, net (including note from an affiliate of $2,365) 144,588 150,205 Investment in Hospitality Properties Trust 102,707 103,062 Cash and cash equivalents 39,962 21,853 Interest and rents receivable 16,544 11,612 Deferred interest and finance costs, net, and other assets 13,191 13,972 ---------- ---------- $1,821,931 $1,229,522 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Bank notes payable $ 145,000 $ 140,000 Senior notes and bonds payable, net 124,508 124,385 Mortgage notes payable 27,106 -- Convertible subordinated debentures 211,650 227,790 Accounts payable and accrued expenses 30,404 10,711 Prepaid rents 7,113 7,608 Security deposits 4,428 8,387 Due to affiliates 2,253 2,593 Shareholders' equity: Preferred shares of beneficial interest, $.01 par value: 50,000,000 shares authorized, none issued -- -- Common shares of beneficial interest, $.01 par value: 125,000,000 shares and 100,000,000 shares authorized, respectively, and, 98,741,152 shares and 66,888,917 shares issued and outstanding, respectively 987 669 Additional paid-in capital 1,369,037 795,263 Cumulative net income 353,555 306,298 Dividends (454,110) (394,182) ----------- ----------- Total shareholders' equity 1,269,469 708,048 ----------- ----------- $ 1,821,931 $ 1,229,522 =========== ===========
See accompanying notes 1 HEALTH AND RETIREMENT PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share amounts) (unaudited) Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- 1997 1996 1997 1996 --------- --------- --------- --------- Revenues: Rental income $ 46,613 $ 24,137 $ 77,292 $ 47,819 Interest and other income 5,894 5,488 11,099 10,286 -------- -------- -------- -------- Total revenues 52,507 29,625 88,391 58,105 -------- -------- -------- -------- Expenses: Operating 6,689 798 8,756 1,542 Interest 7,898 5,285 15,746 10,246 Depreciation and amortization 9,283 5,319 16,238 10,501 General and administrative 2,968 1,600 4,839 3,073 -------- -------- -------- -------- Total expenses 26,838 13,002 45,579 25,362 -------- -------- -------- -------- Income before equity in earnings of Hospitality Properties Trust and extraordinary item 25,669 16,623 42,812 32,743 Equity in earnings of Hospitality Properties Trust 2,189 2,236 4,445 4,328 Gain on equity transaction of Hospitality Properties Trust -- 3,603 -- 3,603 -------- -------- -------- -------- Income before extraordinary item 27,858 22,462 47,257 40,674 Extraordinary item - early extinguishment of debt -- -- -- (2,443) -------- -------- -------- -------- Net income $ 27,858 $ 22,462 $ 47,257 $ 38,231 ======== ======== ======== ======== Weighted average shares outstanding 98,722 66,199 85,388 66,177 ======== ======== ======== ======== Per share amounts: Income before extraordinary item $ 0.28 $ 0.34 $ 0.55 $ 0.61 ======== ======== ======== ======== Net income $ 0.28 $ 0.34 $ 0.55 $ 0.58 ======== ======== ======== ========
See accompanying notes 2 HEALTH AND RETIREMENT PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited) For the Six Months Ended June 30, 1997 1996 ----------- ------------ Cash flows from operating activities: Net income $ 47,257 $ 38,231 Adjustments to reconcile net income to cash provided by operating activities: Gain on equity transaction of Hospitality Properties Trust -- (3,603) Equity in earnings of Hospitality Properties Trust (4,445) (4,328) Dividends from Hospitality Properties Trust 4,800 4,640 Extraordinary item -- 2,443 Depreciation 15,363 10,198 Amortization 875 303 Amortization of deferred interest costs 645 856 Change in assets and liabilities: Decrease (increase) in interest and rents receivable and other assets 1,791 (6,346) (Decrease) increase in security deposits (3,959) 34 Increase (decrease) in accounts payable and accrued expenses 11,197 (652) (Decrease) increase in prepaid rents (495) 19 Increase (decrease) in due to affiliates 270 (1,175) --------- --------- Cash provided by operating activities 73,299 40,620 --------- --------- Cash flows from investing activities: Real estate acquisitions (179,482) (38,608) Acquisition of business, less cash acquired (307,989) -- Investments in mortgage loans (526) (15,782) Proceeds from repayment of notes and mortgage loans, net of discounts 6,043 6,997 Repayment and advance of loan to affiliate -- 200 --------- --------- Cash used for investing activities (481,954) (47,193) --------- --------- Cash flows from financing activities: Proceeds from issuance of common shares 483,153 6,995 Proceeds from borrowings 145,000 64,000 Payments on borrowings (140,482) (17,620) Deferred finance costs incurred (979) (711) Dividends paid (59,928) (46,328) --------- --------- Cash provided by financing activities 426,764 6,336 --------- --------- Increase (decrease) in cash and cash equivalents 18,109 (237) Cash and cash equivalents at beginning of period 21,853 18,640 --------- --------- Cash and cash equivalents at end of period $ 39,962 $ 18,403 ========= ========= Supplemental cash flow information: Interest paid $ 15,568 $ 10,176 ========= =========
See accompanying notes 3 HEALTH AND RETIREMENT PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited) For the Six Months Ended June 30, 1997 1996 ---------- ---------- Non-cash financing activities: Issuance of shares $ 16,375 $ -- Conversion of convertible subordinated debentures, net (15,765) -- Acquisition of business, less cash acquired: Real estate acquisitions $ 412,002 $ -- Working capital, other than cash (1,861) -- Liabilities assumed (27,588) -- Net cash used to acquire business (307,989) -- ---------- Issuance of shares $ 74,564 $ -- ========= ==========
See accompanying notes 4 HEALTH AND RETIREMENT PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share data) Note 1. Basis of Presentation The financial statements of Health and Retirement Properties Trust (the "Company") have been prepared in accordance with generally accepted accounting principals for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Certain prior year amounts have been reclassified to conform to the current year's presentation. The Financial Accounting Standards Board has issued Financial Accounting Standards Board Statement No. 128 "Earnings Per Share" ("FAS 128"). The statement is effective for interim and annual financial statements ending after December 15, 1997. The Company estimates that adoption of FAS 128 will have no impact on reported results. Note 2. Shareholders' Equity During the six months ended June 30, 1997, the Company issued 27,025,000 common shares in a public offering, raising net proceeds of approximately $483,153, issued 3,898,840 common shares in a private placement for the purchase of real estate, issued 895,549 common shares due to the conversion of $16,140 of its convertible subordinated debentures and issued 32,846 common shares to HRPT Advisors, Inc., (the "Advisor") an affiliate, as the incentive fee earned for the year ended December 31, 1996. On July 1, 1997, the Trustees declared a dividend on the Company's common shares with respect to the quarter ended June 30, 1997 of $.36, which will be distributed on or about August 22, 1997 to shareholders of record as of July 25, 1997. In July 1997, 9,500 shares were granted to officers of the Company and certain employees of the Advisor under the 1992 Incentive Share Award Plan. In June 1997, the three independent Trustees, as part of their annual fee, were also each granted 500 shares under such plan. The shares granted to the officers and certain employees of the Advisor vest over a three year period. The shares granted to the Trustees vest immediately. Note 3. Real Estate Properties During the six months ended June 30, 1997, the Company purchased two medical office buildings, one retirement community and 20 medical clinics for approximately $177,632. The medical office buildings are managed by M&P Partners Limited Partnership ("M&P"), an affiliate of the Company. During the first quarter of 1997, the Company entered into an agreement to acquire 30 office buildings (the "Government Properties"), leased to various agencies of the United States Government. At June 30, 1997, the Company had completed the purchase of 27 of the Government Properties for approximately $412,002. The acquisition of the Government Properties was funded, in part, with the proceeds from the issuance of the Company's common shares pursuant to a public offering, the issuance of 3,898,840 common shares of the Company in a private placement and the assumption of $27,588 of debt. The Government Properties are managed by M&P. At June 30, 1997, 17% of the Company's real estate properties, net, and mortgage receivables were in properties leased to Marriott International, Inc. ("Marriott"). The financial statements of Marriott have been filed as a part of Marriott's Quarterly Report on Form 10-Q, file number 1- 12188, for the quarter ended June 20, 1997. During the six months ended June 30, 1997, the Company provided $1,850 of improvement financing to existing tenants. At June 30 ,1997, the Company had total outstanding commitments aggregating approximately $38,532 to acquire three of the Government Properties, and to finance improvements to certain properties leased or mortgaged by the Company. Subsequent to June 30, 1997, the Company acquired one of those three Government Properties for approximately $10,500, paid for with cash and the issuance of 86,188 common shares of the Company. 5 HEALTH AND RETIREMENT PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share data) Note 4. Investment in Hospitality Properties Trust At June 30, 1997, the Company owned four million shares of the common stock of Hospitality Properties Trust ("HPT") with a carrying value of $102,707 and market value of $122,500. The Company's percentage ownership of HPT is 14.9%. Note 5. Real Estate Mortgages and Notes Receivable, net During the six months ended June 30, 1997, the Company provided improvement financing for existing properties totaling approximately $526. In addition, the Company received regularly scheduled principal payments and prepayments of mortgages secured by three nursing facilities totaling $6,733. Note 6. Indebtedness In March 1997, the Company extended and modified its $250,000 unsecured revolving bank credit facility. Subsequent to June 30, 1997, the Company expanded the credit facility to $450,000. The credit facility matures in 2001 and bears interest at LIBOR plus a premium. At June 30, 1997, $145,000 was outstanding under the credit facility. During July 1997, the Company issued Senior Unsecured Remarketed Reset Notes aggregating $200,000. The notes are due in 2007 and the initial interest rate is LIBOR plus a premium, reset quarterly. Subsequent to the first year, the interest rate and interest period on the notes may be fixed for the balance of the term at the Company's option and the notes are subject to remarketing. Proceeds from the issuance of the notes were used to prepay $125,000 of the Company's Floating Rate Senior Notes, Series B, due 1999 and $75,000 outstanding under the Company's bank credit facility. In connection with this refinancing, the Company will recognize a loss from the write-off of deferred finance fees of approximately $1,192. Note 7. Pro Forma Information The following pro forma summary presents the results of operations of the Company as if the Government Properties transaction had occurred at the beginning of January 1996. These pro forma results are not necessarily indicative of the expected results of operation of the Company for any future period. Differences could result from, but are not limited to, additional property investments, changes in interest rates and changes in the capital structure of the Company. Six Months ended June 30, --------------------------- 1997 1996 -------- -------- Revenues $104,300 $ 88,089 Expenses 54,321 40,450 -------- -------- 49,979 47,639 Equity in earnings of HPT 4,445 4,328 -------- -------- Net income $ 54,424 $ 51,967 ======== ======== Average shares outstanding 98,741 97,065 ======== ======== Net income per share $ .55 $ .54 ======== ======== 6 HEALTH AND RETIREMENT PROPERTIES TRUST MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS Quarter Ended June 30, 1997 Versus 1996 Total revenues for the quarter ended June 30, 1997, increased to $52.5 million, from $29.6 million for the quarter ended June 30, 1996. Rental income increased by $22.5 million and interest income increased by $406,000. Rental income increased because of new real estate investments subsequent to June 30, 1996 and partly as a result of the Company's increased investments in "gross leased" real estate assets during the 1997 period as compared to the 1996 period. As the Company's investment in such "gross leased " assets increases, the Company anticipates rental income and the corresponding operating expenses from such leases to increase during subsequent periods. Interest income increased slightly as a result of earnings on the Company's short term investments due to higher cash balances in the quarter ended June 30, 1997 compared to the quarter ended June 30, 1996, which was off-set, in part, by a decrease in mortgage interest income. Total expenses for the quarter ended June 30, 1997, increased to $26.8 million from $13 million for the quarter ended June 30, 1996. Operating expenses increased by $6 million as a result of the Company's increased investment in "gross leased" real estate assets during the 1997 quarter as compared to the 1996 period. Interest expense increased by $2.6 million due to higher borrowings outstanding during the 1997 quarter and the Company's issuance of convertible debentures in October 1996. Depreciation and amortization, and general and administrative expense increased by $4.0 million and $1.4 million, respectively, primarily as a result of new real estate investments subsequent to June 30, 1996. Net income for the quarter ended June 30, 1997, increased to $27.9 million or $.28 per share, from $22.5 million or $.34 per share, for the same quarter in 1996. This increase is primarily a result of new investments since June 30, 1996. On a per share basis net income decreased due to additional common shares issued by the Company subsequent to June 30, 1996. The Company bases its dividend primarily on Funds from Operations ("FFO"). The Company has adopted the National Association of Real Estate Investment Trust's ("NAREIT") definition of FFO, as income before equity in earnings of HPT, gain (loss) on sale of real estate and extraordinary items, plus depreciation and other non-cash charges, plus the Company's proportionate share of HPT's FFO. FFO for the 1997 quarter was $38.1 million, or $.39 per share, as compared to $24.8 million, or $.38 per share, for the 1996 quarter. Cash available for distribution may not necessarily equal FFO as the cash flow of the Company is affected by other factors not included in the FFO calculation. The dividends declared which relate to these quarters were $35.5 million, or $.36 per share, in 1997 and $23.2 million, or $.35 per share, in 1996. Six Months Ended June 30, 1997 Versus 1996 Total revenues for the six months ended June 30, 1997 increased to $88.4 million from $58.1 million for the six months ended June 30, 1996. Rental income increased by $29.5 million and interest income increased by $813,000. Rental income increased because of new real estate investments subsequent to June 30, 1996 and partly as a result of the Company's increased investments in "gross leased" real estate assets as compared to "net leased" assets subsequent to June 30, 1996. As the Company's investment in such "gross leased" assets increases, the Company anticipates rental income and the corresponding operating expenses from such leases to increase during subsequent periods. Interest income increased slightly as a result of earnings on the Company's short term investments due to higher cash balances in the 1997 period compared to the 1996 period, which was off-set, in part, by a decrease in mortgage interest income. Total expenses for the six months ended June 30, 1997 increased to $45.6 million from $25.4 million for the six months ended June 30, 1996. Operating expenses increased by $7.2 million as a result of the Company's increased investment in "gross leased" real estate assets during the 1997 period as compared to the 1996 period. Interest expense increased by $5.5 million due to higher borrowings outstanding during the 1997 period and the Company's issuance of convertible debentures in October 1996. Depreciation and amortization, and general and administrative expense increased by $5.7 million and $1.8 million, respectively, primarily as a result of new real estate investments subsequent to June 30, 1996. 7 HEALTH AND RETIREMENT PROPERTIES TRUST MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Six Months Ended June 30, 1997 Versus 1996 - continued Net income increased to $47.3 million, or $.55 per share, for the 1997 period from $38.2 million, or $.58 per share, for the 1996 period. The increase in net income is primarily a result of the new investments since June 30, 1996. On a per share basis, net income decreased due to additional common shares issued by the Company subsequent to June 30, 1996. Funds from operations for the six months ended June 30, 1997, were $65.1 million, or $.76 per share, and $49 million, or $.74 per share, for the 1996 period. The dividends declared which relate to the six months ended June 30, 1997 and 1996 were $71.1 million, or $.72 per share, and $46.3 million, or $.70 per share, respectively. LIQUIDITY AND CAPITAL RESOURCES Total assets of the Company increased to $1.8 billion at June 30, 1997, from $1.2 billion at December 31, 1996. The increase is primarily attributable to new real estate acquisitions since December 31, 1996. During the six months ended June 30, 1997, the Company purchased two medical office buildings, one retirement community and 20 medical clinics for approximately $177.6 million by borrowing on the Company's revolving credit facility and with cash on hand. In the first quarter of 1997, the Company entered into an agreement to acquire 30 office buildings ("Government Properties") leased to the United States Government. Through June 30, 1997, the Company had purchased 27 of the 30 Government Properties for approximately $412 million. The acquisition was funded, in part, with the proceeds from the issuance of the Company's common shares pursuant to a public offering, the issuance of 3,898,840 common shares of the Company in a private placement and the assumption of $27.6 million of debt. The acquisition of the remaining three properties are subject to various conditions customary in real estate transactions and are expected to be substantially completed by March 31, 1998; however, no assurances can be given if and when these transactions will be completed. During the six months ended June 30, 1997, the Company provided $2.4 million of improvement financing to existing facilities and received $6.7 million of principal payments on mortgages, including the repayment of three mortgage loans secured by three long-term care properties. In March, 1997, the Company issued 27,025,000 common shares in a public offering yielding net proceeds of approximately $483.2 million. Proceeds of the offering were used to repay the then outstanding balance on the Company's revolving credit facility of $140 million and to fund the acquisition of real estate. During the six months ended June 30, 1997, the Company issued 895,549 common shares due to the conversion of $16.1 million of its convertible subordinated debentures. At June 30, 1997, the Company had $40 million of cash and cash equivalents, and the ability to borrow $105 million under its revolving credit facility. Subsequent to June 30, 1997 the Company expanded the credit facility to $450 million. The credit facility matures in 2001 and bears interest at LIBOR plus a premium. At June 30, 1997, $145 million was outstanding under the credit facility. During July 1997, the Company issued Senior Unsecured Remarketed Reset Notes aggregating $200 million. The notes are due in 2007 and the initial interest rate is LIBOR plus a premium, reset quarterly. Subsequent to the first year, the interest rate and interest period on the notes may be fixed for the balance of the term at the Company's option and notes are subject to remarketing. Proceeds from the issuance of the notes were used to prepay $125 million of the Company's Floating Rate Senior Notes, Series B, due 1999 and $75 million outstanding under the Company's revolving credit facility. In connection with this refinancing, the Company will recognize a loss from the write-off of deferred finance fees of approximately $1.2 million. 8 HEALTH AND RETIREMENT PROPERTIES TRUST MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION LIQUIDITY AND CAPITAL RESOURCES - continued The effective interest rates on the Company's floating rate debt are generally capped by the use of interest rate cap agreements. The interest rate cap agreements provide for a maximum interest rate of 8% per annum on $100 million of its variable rate debt through 1997. At June 30, 1996, the Company had outstanding commitments to provide financing totaling approximately $38.5 million. The Company intends to fund these commitments with a combination of cash on hand, issuance of common shares of the Company, amounts available under its existing credit facilities and/or proceeds of mortgage prepayments, if any. Subsequent to June 30, 1997, the Company acquired one of the Government Properties for approximately $10.5 million, paid for with cash and the issuance of 86,188 common shares of the Company. The Company continues to seek new investments to expand and diversify its portfolio of leased and mortgaged real estate. The Company intends to balance the use of debt and equity in such a manner that the long term cost of funds used to acquire or mortgage finance facilities is appropriately matched, to the extent practicable, with the terms of the investments made with such funding. As of June 30, 1997, the Company's debt as a percentage of total market capitalization was approximately 22%. 9 HEALTH AND RETIREMENT PROPERTIES TRUST MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION CERTAIN IMPORTANT FACTORS The Company's Quarterly Report on Form 10-Q contains statements which constitute forward looking statements within the meaning of the Securities Exchange Act of 1934, as amended. Those statements appear in a number of places in this Form 10-Q and include statements regarding the intent, belief or expectations of the Company, its Trustees or its officers with respect to the declaration or payment of dividends, the consummation of additional acquisitions, policies and plans of the Company regarding investments, financings or other matters, the Company's qualification and continued qualification as a real estate investment trust or trends affecting the Company's or any property's financial condition or results of operations. Readers are cautioned that any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contained in the forward looking statements as a result of various factors. Such factors include without limitation changes in financing terms, the Company's ability or inability to complete acquisitions and financing transactions, results of operations of the Company's properties and general changes in economic conditions not presently contemplated. The information contained in this Form 10-Q and the Company's Annual Report on Form 10-K for the year ended December 31, 1996, including the information under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations", identifies other important factors that could cause such differences. The Amended and Restated Declaration of Trust establishing the Company, dated July 1, 1994, a copy of which, together with all amendments thereto (the "Declaration"), is duly filed in the Office of the Department of Assessments and Taxation of the State of Maryland, provides that the name "Health and Retirement Properties Trust" refers to the trustees under the Declaration collectively as trustees, but not individually or personally, and that no trustee, officer, shareholder, employee or agent of the Company shall be held to any personal liability, jointly or severally, for any obligation of, or claim against, the Company. All persons dealing with the Company, in any way, shall look only to the assets of the Company for the payment of any sum or the performance of any obligation. Part II Other Information Item 2. Changes in Securities. On May 15, 1997, the Company issued an aggregate of 36,124 common shares of beneficial interest, par value $.01 per share ("Common Shares") in connection with a subsequent closing on a property which is part of the Company's previously disclosed acquisition of office properties leased to agencies of the United States Federal Government and in connection with certain post-closing adjustments, in both cases pursuant to the Merger Agreement dated February 17, 1997 between the Company and Government Properties Investors, Inc., as amended. The issuance of such Common Shares was made pursuant to the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. On May 13, 1997, pursuant to the Company's Incentive Share Award Plan, each of the Company's independent trustees received a grant of 500 Common Shares valued at $18.25 per share, the closing price of the Common Shares on the New York Stock Exchange on May 12, 1997. The grants were made pursuant to the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. Item 4. Submission of Matters to a Vote of Securities Holders. At the Company's Annual Shareholders Meeting on May 13, 1997, the Reverend Justinian Manning and Mr. Gerard M. Martin, were re-elected to serve as Trustees, each for a term of three years. There were 87,060,105 and 87,173,683 shares, respectively, voted in favor of, and 861,610 and 748,031 shares, respectively, withheld from voting for the re-election of Rev. Manning and Mr. Martin. Messrs. Ralph J. Watts and Barry M. Portnoy and Dr. Bruce M. Gans continued to serve as Trustees of the Company. 10 HEALTH AND RETIREMENT PROPERTIES TRUST MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Item 5. Other Information. The Company recently entered into the Third Amendment to its Amended and Restated Revolving Loan Agreement, dated as of March 15, 1996, among the Company, as Borrower, the Lenders named therein, Dresdner Kleinwort Benson North America LLC, as agent, Wells Fargo Bank, National Association, as administrative agent, and Fleet National Bank, as co-agent (as amended through and including the Third Amendment the "Loan Agreement"). Pursuant to the Third Amendment, the maximum aggregate funds available to the Company to fund acquisitions and mortgage loans under the Loan Agreement was permitted to be increased to $450 million. Under the terms of the Loan Agreement up to $112.5 million of such $450 million may also be used by the Company for general corporate purposes. The Company subsequently obtained commitments from lenders under the Loan Agreement for the entire $450 million amount. As of August 13, 1997, the Company had aggregate outstanding borrowings under the Loan Agreement of $70 million. Item 6. Exhibits and Reports on Form 8-K Exhibits: 10. Third Amendment dated as of July 30, 1997 to the Third Amended and Restated Revolving Loan Agreement by and among the Company, as borrower, the lenders named therein, Kleinwort Benson North America LLC (as successor to Kleinwort Benson Limited), as agent, Wells Fargo Bank, National Association, as administrative agent, and Fleet National Bank (as successor to NatWest Bank), as co-agent. 27. Financial Data Schedule (b) Reports on Form 8-K: 1. The Company filed a current report on Form 8-K dated June 23, 1997 relating to a supplemental consent of Ernst & Young LLP. 2. The Company filed a current report on Form 8-K dated June 26, 1997 (filed July 3, 1997) regarding (i) the Third Amendment to the Advisory Agreement by and between the Company and HRPT Advisors, Inc., (ii) certain pro forma and other information relating to the Company, and (iii) the Company's offering of its Remarketed Reset Notes due July 9, 2007. 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HEALTH AND RETIREMENT PROPERTIES TRUST By: /s/ David J. Hegarty David J. Hegarty President and Chief Operating Officer Dated: August 14, 1997 By: /s/ Ajay Saini Ajay Saini Treasurer and Chief Financial Officer Dated: August 14, 1997 12 EX-10 2 EXHIBIT 10 EXECUTION COPY U.S. $450,000,000 THIRD AMENDMENT TO THIRD AMENDED AND RESTATED REVOLVING LOAN AGREEMENT among HEALTH AND RETIREMENT PROPERTIES TRUST, as Borrower, THE LENDERS NAMED HEREIN, DRESDNER KLEINWORT BENSON NORTH AMERICA LLC, as Agent, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, FLEET NATIONAL BANK, as Co-Agent Dated as of July 30, 1997 HEALTH AND RETIREMENT PROPERTIES TRUST THIRD AMENDMENT TO THIRD AMENDED AND RESTATED REVOLVING LOAN AGREEMENT DATED AS OF JULY 30, 1997 This THIRD AMENDMENT (this "Amendment") is dated as of July 30, 1997 among HEALTH AND RETIREMENT PROPERTIES TRUST, a real estate investment trust formed under the laws of the State of Maryland ("Borrower"), the several lenders listed on the signature pages hereof (the "Lenders"), DRESDNER KLEINWORT BENSON NORTH AMERICA LLC (as successor to Kleinwort Benson Limited), a limited liability company organized under the laws of Delaware, as agent for itself and the other Lenders (in such capacity, together with any successor in such capacity in accordance with the terms of the Loan Agreement, as defined below, "Agent"), WELLS FARGO BANK, NATIONAL ASSOCIATION, a bank organized under the laws of the United States of America, as administrative agent (in such capacity, together with any successor in such capacity in accordance with the terms of the Loan Agreement, "Administrative Agent"), and FLEET NATIONAL BANK (as successor to Fleet Bank of Massachusetts) a bank organized under the laws of the United States of America, as co- agent (in such capacity, Co-Agent"), and is made with reference to the Third Amended and Restated Revolving Loan Agreement dated as of March 15, 1996, as amended by a first Amendment dated as of December 15, 1996 and a Second Amendment and Waiver dated as of March 19, 1997 (as amended to date and from time to time hereafter, the "Loan Agreement") among Borrower, the Lenders, Agent, Administrative Agent and Co-Agent and, in connection with Section 9 of the Loan Agreement and the guaranties given therein, HEALTH AND RETIREMENT PROPERTIES INTERNATIONAL, INC., a Delaware corporation and a direct wholly-owned Subsidiary of Borrower ("Retirement Properties"), CAUSEWAY HOLDINGS INC., a Massachusetts corporation and a direct wholly-owned Subsidiary of Borrower ("Causeway"), SJO CORPORATION, a Massachusetts corporation and a direct wholly-owned Subsidiary of Borrower ("SJO"), HUB PROPERTIES TRUST, HUB ACQUISITION TRUST, and HUB LA PROPERTIES TRUST, each a Maryland real estate investment trust and each a direct wholly-owned Subsidiary of Borrower (the "Trust Subsidiaries"), HUB REALTY FUNDING, INC., HUB MANAGEMENT, INC., HUB REALTY COLLEGE PARK, INC., HUB REALTY I, INC., HUB REALTY IV., INC. and HUB REALTY GOLDEN, INC., each a Delaware corporation and a wholly-owned Subsidiary of Borrower (the "Delaware Subsidiaries"), and HUB REALTY COLLEGE PARK I, LLC, a Maryland limited liability company and a wholly-owned Subsidiary of Borrower (the "LLC"). Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Loan Agreement. WHEREAS, Borrower has advised Lenders that it wishes to amend certain terms of the Loan Agreement; WHEREAS, subject to the terms set forth herein, Lenders have agreed to amend the Loan Agreement. NOW THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: 1. Amendments to Loan Agreement. (a) The first paragraph of the Loan Agreement is hereby amended by the addition of the words "or Section 2.1(c)" immediately following the words "additional lender or lenders pursuant to Section 10.4" thereof. (b) Section 2.1(b) of the Loan agreement is hereby amended by adding the following provisos at the end thereof: "; provided further that the Commitments may be increased up to an aggregate amount not to exceed $450,000,000 pursuant to this Section 2.1; and provided further that the Agent, during the process of increasing the aggregate amount of the Commitments from $250,000,000 to up to $450,000,000, may one time only accept a non pro rata reduction in the Commitment of any one or more Lenders and may reallocate an equivalent amount among additional lenders or existing Lenders, but in no event may the aggregate amount of the Commitments be reduced below $250,000,000 or increased above $450,000,000 thereby, and the effective date of such non pro rata reduction and reallocation will be the date agreed upon by the additional lenders or the existing Lenders whose Commitments are reduced or increased in connection therewith, and the Agent shall notify the Lenders and additional lenders of the reallocation in writing for information purposes only." (c) Section 2.1 is hereby amended by inserting therein after Section 2.1(b) the following new section: "(c) The foregoing notwithstanding, if at any time an additional lender satisfactory to Borrower and Agent shall execute and deliver to Borrower 2 and Agent on behalf of the parties hereto counterparts substantially in the form of this Agreement, with the amount of such additional lender's Commitment hereunder typed immediately below its signature on such counterpart, upon notification of such execution and delivery by Agent to the other parties hereto, such additional lender shall become a Lender and its Commitment shall be added to the aggregate Commitments for all purposes hereunder; and if an existing Lender shall notify Borrower and Agent of its agreement to increase its Commitment above its original Commitment and such agreement is accepted by Borrower and Agent, then upon notification thereof by Agent to the other parties hereto (or, if later, upon the effective date for such increase stated in such notification), such existing Lender's Commitment shall be increased as set forth in such notification; provided that no such additional lender shall become a Lender (and no such increase shall become effective) without the consent of Borrower and all Lenders if such additional lender's Commitment (or such increase) would make the aggregate Commitments exceed $450,000,000. The other terms of this Agreement notwithstanding, such additional lender or Lender increasing its Commitment shall, on the first day thereafter which is the last day of an Interest Period (or on such day if such day is the last day of an Interest Period), pay to Administrative Agent (i) its Pro Rata Share of the Loans then outstanding (if any) or, if less, the amount by which such Pro Rata Share exceeds its outstandings hereunder (if any), for distribution to the other Lenders that have funded such Loans, in accordance with their respective Commitments, and all rights of such other Lenders with respect to the Pro Rata Share being assumed by such additional lender or the increased portion thereof of an existing Lender shall be deemed assigned (without any further action or authorization being required) to such additional lender or increasing Lender without recourse, representation or warranty, and each Lender's share of the outstanding Loans shall be adjusted accordingly; and (ii) any other amounts due from it on such date as a Lender hereunder." (d) Section 2.1(c) and (d) are hereby renumbered as Sections 2.1(d) and (e), respectively. (e) Section 8.1(a) is hereby amended by replacing the word "Co-Agent" therein with the words "each Co-Agent". (f) Section 8.1 is hereby amended by inserting therein after Section 8.1(m) the following new section: 3 "(n) The Agent may from time to time at its discretion nominate one or more Lenders as Co-Agent, taking into consideration the magnitude of the Commitment offered or undertaken by such Lender." (g) In accordance with Section 8.1(j), Wells Fargo Bank, National Association hereby resigns as Administrative Agent. Pursuant to Section 8.1(j), the Majority Lenders hereby appoint Fleet National Bank as Administrative Agent (upon which appointment Fleet National Bank will cease to be Co-Agent). (h) Schedule 1 (Lenders' Commitments) is hereby amended by replacing the same with Schedule 1 hereto. 2. Conditions to Effectiveness. Section 1 of this Amendment shall become effective immediately upon the prior or concurrent satisfaction of the conditions that Borrower shall (i) deliver to Agent for Lenders (with sufficient originally executed copies for each Lender) executed copies of this Amendment, executed by Borrower, Retirement Properties, Causeway, SJO, the Trust Subsidiaries, the Delaware Subsidiaries and the LLC, Agent, Co-Agent and the Majority Lenders and (ii) deliver to Agent (with sufficient counterparts for each Lender) a favorable opinion of Sullivan & Worcester, as counsel to Borrower and its Subsidiaries, addressed to Agent and the Lenders and dated the effective date of this Amendment, and in form and substance satisfactory to Agent. 3. Representations and Warranties. In order to induce Lenders and Agent to enter into this Amendment and to amend the Loan Agreement in the manner provided herein, Borrower represents and warrants to each Lender and Agent that the following statements are true, correct and complete: (a) Borrower has the power and authority to enter into this Amendment and to carry out the transactions contemplated by, and perform its obligations under, the Loan Agreement (as amended by this Amendment the "Amended Agreement"). (b) The execution and delivery of this Amendment and the performance of the Amended Agreement have been authorized by all necessary action on the part of the Borrower. (c) The execution and delivery by Borrower of this Amendment and the performance by Borrower of the Amended Agreement and the use of proceeds thereunder (i) do not violate any Requirement of Law or Contractual Obligation of Borrower, (ii) will not result in, or require, the creation of imposition of any Lien on any of its properties or revenues pursuant to 4 any Requirement of Law or Contractual Obligation of Borrower and (iii) do not require the consent of any third party. (d) This Amendment and the Amended Agreement have been duly executed and delivered by Borrower and are the legally valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally. (e) The representations and warranties contained in Section 3 of the Loan Agreement are and will be true, correct and complete in all material respects on and as of the effective date described in Section 2 to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date. (f) After giving effect to this Amendment, no event has occurred and is continuing or will result from the consummation of the transactions described in or otherwise contemplated by this Amendment that would constitute a Default or an Event of Default. (g) The Declaration of Trust, By-Laws and other organizational documents of Borrower have not been amended since May 14, 1997, and the copies thereof delivered to Lenders under the Loan Agreement are true, correct and complete copies thereof as in effect on the effective date described in Section 2. 4. Guarantors' Acknowledgement and Consent. Each of Retirement Properties, Causeway, SJO, the Trust Subsidiaries, the Delaware Subsidiaries and the LLC (each a "Subsidiary Guarantor") has guarantied the obligations of Borrower under Section 9 of the Loan Agreement. Each Subsidiary Guarantor hereby acknowledges that it has reviewed the terms and provisions of the Loan Agreement and this Amendment and consents to the amendment of the provisions of the Agreement effected pursuant to this Amendment. Each Subsidiary Guarantor hereby confirms that its guaranty under the Loan Agreement will continue to guaranty to the fullest extent possible the payment and performance of all obligations of Borrower now or hereafter existing under or in respect of the Amended Agreement and the Notes defined therein. Each Subsidiary Guarantor acknowledges and agrees that Section 9 of the Loan Agreement shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Amendment. 5 Each Subsidiary Guarantor acknowledges and agrees that (a) notwithstanding the conditions to effectiveness set forth in this Amendment, such Subsidiary Guarantor is not required by the terms of the Loan Agreement to consent to the amendments to the Loan Agreement effected pursuant to this Amendment and (b) nothing in the Loan Agreement or this Amendment shall be deemed to require the consent of such Subsidiary Guarantor to any future amendments or waivers to the Loan Agreement. 5. Reference to and Effect on the Loan Agreement and Other Loan Documents. Except as specifically amended hereby, the Loan Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed. 6. Fees and Expenses. Borrower agrees to pay to Agent on demand all reasonable costs, fees and expenses incurred by Agent (including, without llimitation, legal fees and expenses) with respect to this Amendment and the documents and transactions contemplated hereby. 7. Execution in Counterparts. This Amendment may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts taken together shall constitute but one and the same instrument. 8. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect. 9. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 10. Limitation of Amendment. Without limiting the generality of the provisions of Section 10.4 of the Loan Agreement, the amendments set forth above shall be limited precisely as written, and nothing in this Amendment shall be deemed to prejudice any right or remedy that any Lender may now have (except to the extent such right or remedy was based upon existing defaults that will not exist after giving effect to this Amendment) or may have in the future under or in connection with the Loan Agreement or any other instrument or agreement referred to therein. 11. Acknowledgment. Borrower acknowledges that there are no existing claims, defenses, personal or otherwise, or rights of set off whatsoever with respect to the Amended Agreement or any of the other Loan Documents. 6 12. NONLIABILITY OF TRUSTEES. (a) THE DECLARATION OF TRUST ESTABLISHING BORROWER, DATED OCTOBER 9, 1986, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HEALTH AND RETIREMENT PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF BORROWER SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, BORROWER. ALL PERSONS DEALING WITH BORROWER, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF BORROWER FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION. (b) THE DECLARATIONS OF TRUST ESTABLISHING HUB PROPERTIES TRUST DATED SEPTEMBER 12, 1996, HUB ACQUISITION TRUST DATED MARCH 14, 1997 AND HUB LA PROPERTIES TRUST DATED MAY 12, 1997, A COPY OF EACH OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "TRUST SUBSIDIARIES DECLARATIONS"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAMES "HUB PROPERTIES TRUST", "HUB ACQUISITION TRUST" AND "HUB LA PROPERTIES TRUST" REFER TO THE RESPECTIVE TRUSTEES UNDER THE RESPECTIVE TRUST SUBSIDIARIES DECLARATIONS COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF ANY OF THE TRUST SUBSIDIARIES SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, SUCH TRUST SUBSIDIARY. ALL PERSONS DEALING WITH EACH TRUST SUBSIDIARY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF SUCH TRUST SUBSIDIARY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION. [Remainder of page intentionally left blank] 7 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. HEALTH AND RETIREMENT PROPERTIES TRUST By: /s/ DAVID J. HEGARTY Name: DAVID J. HEGARTY Title: PRESIDENT DRESDNER KLEINWORT BENSON NORTH AMERICA LLC (successor to Kleinwort Benson Limited), as Agent By: /s/ PETER KETTLE Name: PETER KETTLE Title: SENIOR VICE PRESIDENT By: /s/ T. D. LEIGH Name: T.D. LEIGH Title: EXECUTIVE VICE PRESIDENT WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent and as a Lender By: /s/ EDITH R. LIM Name: EDITH R. LIM Title: VICE PRESIDENT By: /s/ MARK HABERECHT Name: MARK HABERECHT Title: ASSOCIATE VICE PRESIDENT S-1 FLEET NATIONAL BANK (successor to Fleet Bank of Massachusetts), as Co-Agent and as a Lender By: /s/ G. STOLZENTHALER Name: G. STOLZENTHALER Title: SENIOR VICE PRESIDENT THE SUMITOMO BANK, LIMITED, Chicago Branch, as a Lender By: /s/ DAN EASTMAN Name: DAN EASTMAN Title:VICE PRESIDENT AND MANAGER By: /s/ ALFRED DE GEMMIS Name: ALFRED DE GEMMIS Title: VICE PRESIDENT MITSU LEASING (USA) INC., as a Lender By: /s/ YUICHI KAMIZAWA Name: YUICHI KAMIZAWA Title: VICE PRESIDENT DRESDNER BANK AG, New York Branch and Grand Cayman Branch, as a Lender By: /s/ NEIL J. CRAWFORD Name: NEIL J. CRAWFORD Title: VICE PRESIDENT By: /s/ FELIX K. CAMACHO Name: FELIX K. CAMACHO Title: ASSISTANT TREASURER S-2 CREDIT LYONNAIS, Cayman Island Branch, as a Lender By: /s/ FARBOUD TAVANGAR Name: FARBOUD TAVANGAR Title: AUTHORISED SIGNATURE BANK OF MONTREAL, as a Lender By: /s/ JEFF FORSYTHE Name: JEFF FORSYTHE Title: DIRECTOR RIGGS BANK N.A., as a Lender By: /s/ CRAIG HAVARD Name: CRAIG HAVARD Title: VICE PRESIDENT VIA BANQUE, as a Lender By: /s/ C PROT Name: C PROT Title: SALES DIRECTOR By: /s/ P ARNOULT Name: P ARNOULT Title: DIRECTOR DG BANK, Deutsche Genossenschafts Bank, as a Lender By: /s/ LINDA J. O'CONNELL Name: LINDA J. O'CONNELL Title: VICE PRESIDENT S-3 By: /s/ PAUL DOLAN Name: PAUL DOLAN Title: ASSISTANT VICE PRESIDENT KEY CORPORATE CAPITAL INC. (formerly Keybank National Association), as a Lender By: /s/ CAROLYN BRINER Name: CAROLYN BRINER Title: ASSOCIATE VICE PRESIDENT For the purposes of Section 9: HEALTH AND RETIREMENT PROPERTIES INTERNATIONAL, INC. By: /s/ DAVID J. HEGARTY Name: DAVID J. HEGARTY Title: PRESIDENT CAUSEWAY HOLDINGS INC. By: /s/ DAVID J. HEGARTY Name: DAVID J. HEGARTY Title: PRESIDENT SJO CORPORATION By: /s/ DAVID J. HEGARTY Name: DAVID J. HEGARTY Title: PRESIDENT S-4 HUB PROPERTIES TRUST By: /s/ DAVID J. HEGARTY Name: DAVID J. HEGARTY Title: PRESIDENT HUB ACQUISITION TRUST By: /s/ DAVID J. HEGARTY Name: DAVID J. HEGARTY Title: PRESIDENT HUB LA PROPERTIES TRUST By: /s/ DAVID J. HEGARTY Name: DAVID J. HEGARTY Title: PRESIDENT HUB REALTY FUNDINGS, INC. By: /s/ DAVID J. HEGARTY Name: DAVID J. HEGARTY Title: PRESIDENT HUB MANAGEMENT, INC. By: /s/ DAVID J. HEGARTY Name: DAVID J. HEGARTY Title: PRESIDENT S-5 HUB REALTY COLLEGE PARK, INC. By: /s/ DAVID J. HEGARTY Name: DAVID J. HEGARTY Title: PRESIDENT HUB REALTY I, INC. By: /s/ DAVID J. HEGARTY Name: DAVID J. HEGARTY Title: PRESIDENT HUB REALTY IV, INC. By: /s/ DAVID J. HEGARTY Name: DAVID J. HEGARTY Title: PRESIDENT HUB REALTY GOLDEN, INC. By: /s/ DAVID J. HEGARTY Name: DAVID J. HEGARTY Title: PRESIDENT HUB REALTY COLLEGE PARK I, LLC By: /s/ DAVID J. HEGARTY Name: DAVID J. HEGARTY Title: PRESIDENT S-6 SCHEDULE 1 LENDERS' COMMITMENTS LENDER COMMITMENT - ------ ---------- Wells Fargo Bank, National Association $ 20,000,000 The Sumitomo Bank, Limited, Chicago Branch $ 20,000,000 Dresdner Bank AG, New York Branch and Grand Cayman Branch $ 47,500,000 Credit Lyonnais Cayman Island Branch $ 20,000,000 Mitsui Leasing (USA) Inc. $ 12,500,000 Bank of Montreal $ 20,000,000 Riggs National Bank $ 15,000,000 Via Banque $ 20,000,000 DG Bank $ 15,000,000 Key Corporate Capital Inc. $ 15,000,000 Fleet National Bank $ 45,000,000 Total $250,000,000 S1-1 CERTAIN LENDING OFFICES Wells Fargo Bank, National Association Corporate Banking 420 Montgomery Street San Francisco, California 94163 Tel: (415)396-4065 Fax: (415) 421-1352 Attn: Brian O'Melveny The Sumitomo Bank, Limited, Chicago Branch (USCBD) 233 S. Wacker Drive Suite 5400 Chicago, Illinois 60606 Tel: (312) 993-6210 Fax: (312) 876-1995 Attn: VP + Manager - Operations Fleet National Bank 75 State Street Boston, Massachusetts 02109 Tel: (617) 346-1647 Fax: (617) 346-1634 Attn: Ginger Stolzenthaler Mitsui Leasing (U.S.A.) Inc. 200 Park Avenue, Suite 3214 New York, New York 10166 Tel: (212) 557-0455 Fax: (212) 490-1684 Attn: Jeff Fishman S1-2 Dresdner Bank, New York Branch and Grand Cayman Branch 75 Wall Street New York, New York 10005-2889 Tel: (212) 429-2201 Fax: (212) 429-2129 Attn: Andrew Nesi Credit Lyonnais Cayman Island Branch 1301 Avenue of the Americas, 20th Floor New York, New York 10019 Tel: (212) 261-7748 Fax: (212) 261-3440 Attn: Francoise Giacalone Bank of Montreal 115 S. La Salle Street, 12 West Chicago, IL 60603 Tel: (312) 750-3874 Fax: (312) 750-4352 Attn: Jeff Forsythe Riggs National Bank 808 17th Street, N.W. 10th Floor Washington, DC 20006 Tel: (202) 835-5105 Fax: (202) 835-5977 Attn: Dave Olson S1-3 Via Banque 10 Rue Volney 75002 Paris, France Tel: 011-331-4926-2913 Fax: 011-331-4926-2993 Attn: Christel Prot Key Corporate Capital Inc. 127 Public Square, 6th Floor Cleveland, OH 44114-1306 Tel: (216) 689-3247 Fax: (216) 689-5970 Attn: Angela Mago S1-4 EX-27 3
5 1,000 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 39,962 0 144,588 0 0 0 1,597,223 92,284 1,821,931 0 508,264 0 0 987 1,268,482 1,821,931 0 88,391 0 45,579 0 0 15,746 47,257 0 47,257 0 0 0 47,257 .55 .55
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