FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) (X)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
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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
333-47411
------------------------------
CNL Health Care Properties, Inc.
------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 59-3491443
------------------------------------------------- ----------------------------
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
450 South Orange Avenue
Orlando, Florida 32801
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number
(including area code) (407) 650-1000
--------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latestpracticable date.
907,876 shares of common stock, $.01 par value, outstanding as of July 31,
2000.
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
Part I Page
<S><C>
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Earnings 2
Condensed Consolidated Statements of Stockholders' Equity 3
Condensed Consolidated Statements of Cash Flows 4-5
Notes to Condensed Consolidated Financial Statements 6-14
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 15-21
Item 3. Quantitative and Qualitative Disclosures
about Market Risk 21
Part II
Other Information 22-24
</TABLE>
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
-------------- -------------
<S><C>
ASSETS
Land, building and equipment on operating lease, net $14,553,953 $ --
Cash 659,311 4,744,222
Receivables 3,631 --
Loan costs, less accumulated amortization of $2,206 53,711 --
Other assets 95,626 344,338
--------------- --------------
$15,366,232 $5,088,560
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Line of credit $6,800,000 $ --
Due to related parties 1,795,033 1,775,256
Accounts payable and accrued expenses 4,445 21,167
Interest payable 16,705 --
Security deposit 553,956 --
Deferred rental income 46,900 --
--------------- --------------
Total liabilities 9,217,039 1,796,423
--------------- --------------
Stockholders' equity:
Preferred stock, without par value.
Authorized and unissued 3,000,000 shares -- --
Excess shares, $.01 par value per share.
Authorized and unissued 103,000,000 shares -- --
Common stock, $.01 par value per share.
Authorized 100,000,000 shares, issued and
outstanding 872,153 and 540,028 shares, respectively 8,721 5,400
Capital in excess of par value 6,214,506 3,365,531
Accumulated deficit (74,034) (78,794)
--------------- --------------
Total stockholders' equity 6,149,193 3,292,137
--------------- --------------
$15,366,232 $5,088,560
=============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Quarter Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
------------- ------------ -------------- -- ---------
<S><C>
Revenues:
Rental income from operating lease $ 272,119 $ -- $ 272,119 $ --
FF&E Reserve income 3,616 -- 3,616 --
Interest income 19,887 -- 92,849 --
--------------- ------------- -------------- -------------
295,622 368,584
--------------- ------------- -------------- -------------
Expenses:
Interest 129,776 -- 129,776 --
General operating and administrative 95,473 -- 193,613 --
Asset management fees to related party 13,849 -- 13,849 --
Reimbursement of operating expenses
from related party (213,886 ) -- (213,886 ) --
Depreciation and amortization 87,947 -- 87,947 --
--------------- ------------- -------------- -------------
113,159 -- 211,299 --
--------------- ------------- -------------- -------------
Net Earnings $ 182,463 $ -- $ 157,285 $ --
=============== ============= ============== =============
Net Earnings Per Share of Common Stock
(Basic and Diluted) $ 0.25 $ -- $ 0.24 $ --
=============== ============= ============== =============
Weighted Average Number of Shares of
Common Stock Outstanding 730,041 -- 665,899 --
=============== ============= ============== =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Six Months Ended June 30, 2000 and Year Ended December 31, 1999
<TABLE>
<CAPTION>
Common stock Capital in
-------------------------------
Number Par excess of Accumulated
of Shares value par value deficit Total
-------------- ------------ ------------- ----------------- -------------
<S><C>
Balance at December 31, 1998 20,000 $ 200 $ 199,800 $ -- $ 200,000
Subscriptions received for common
stock through public offering
and distribution reinvestment plan 543,528 5,435 5,429,848 -- 5,435,283
Subscriptions held in escrow (23,500 ) (235 ) (234,765 ) -- (235,000 )
Stock issuance costs -- -- (2,029,352 ) -- (2,029,352 )
Net loss -- -- -- (28,390 ) (28,390 )
Distributions declared and paid
($.125 per share) -- -- -- (50,404 ) (50,404 )
--------------- ------------- -------------- --------------- --------------
Balance at December 31, 1999 540,028 5,400 3,365,531 (78,794 ) 3,292,137
Subscriptions received for common
stock through public offering and
distribution reinvestment plan 332,125 3,321 3,317,941 -- 3,321,262
Stock issuance costs -- -- (468,966 ) -- (468,966 )
Net earnings -- -- -- 157,285 157,285
Distributions declared and paid
($.229 per share) -- -- -- (152,525 ) (152,525 )
--------------- ------------- -------------- --------------- --------------
Balance at June 30, 2000 872,153 $ 8,721 $6,214,506 $ (74,034 ) $ 6,149,193
=============== ============= ============== =============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
------------- ----------------
<S><C>
Increase (Decrease) in Cash and Cash Equivalents:
Net Cash Provided by Operating Activities $ 657,668 $ --
--------------- ----------------
Net Cash Provided by Investing Activities:
Additions to land, building and
equipment on operating lease (13,848,900 ) --
Payment of acquisition costs (366,078 ) --
--------------- ----------------
Net cash used in investing activities (14,214,978 ) --
--------------- ----------------
Net Cash Provided by Financing Activities:
Repayment of offering and acquisition costs paid by
related party on behalf of the Company (223,302) --
Proceeds from line of credit 8,100,000 --
Payment of loan costs (55,917) --
Repayment of borrowings on line of cash (1,300,000) --
Subscriptions received from stockholders 3,321,262 --
Distributions to stockholders (152,525) --
Payment of stock issuance costs (217,119) --
--------------- ----------------
Net cash provided by financing activities 9,472,399 --
--------------- ----------------
Net Decrease in Cash and Cash
Equivalents (4,084,911 ) --
Cash and Cash Equivalents at Beginning
of Period 4,744,222 92
--------------- ----------------
Cash and Cash Equivalents at End of
Period $ 659,311 $ 92
=============== ================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
-------------- ----------------
<S><C>
Supplemental Schedule of Non-Cash
Investing and Financing Activities:
Amounts paid by related parties
on behalf of the Company and
its subsidiaries:
Acquisition costs $ 56,129 $ --
Deferred offering costs -- 235,071
Stock issuance costs 178,708 --
=============== ================
$ 234,837 $ 235,071
=============== ================
Costs incurred by the Company and unpaid at period end:
Acquisition costs $ 360,336 $ 110,915
Deferred offering costs -- 269,877
Stock issuance costs 67,956 --
--------------- ----------------
$ 428,292 $ 380,792
=============== ================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2000 and 1999
1. Organization and Nature of Business:
CNL Health Care Properties, Inc. was organized pursuant to the laws of the state
of Maryland on December 22, 1997. CNL Health Care GP Corp. and CNL Health Care
LP Corp. are wholly owned subsidiaries of CNL Health Care Properties, Inc., each
of which was organized pursuant to the laws of the state of Delaware in December
1999. CNL Health Care Partners, LP is a Delaware limited partnership formed in
December 1999. CNL Health Care GP Corp. and CNL Health Care LP Corp. are the
general and limited partner, respectively, of CNL Health Care Partners, LP. The
term "Company" includes, unless the context otherwise requires, CNL Health Care
Properties, Inc., CNL Health Care Partners, LP, CNL Health Care GP Corp. and CNL
Health Care LP Corp.
The Company intends to use the proceeds from its public offerings after
deducting offering expenses, primarily to acquire real estate properties (the
"Property" or "Properties") related to health care and seniors' housing
facilities (the "Health Care Facilities") located across the United States. The
Health Care Facilities may include congregate living, assisted living and
skilled nursing facilities, continuing care retirement communities and life care
communities, and medical office buildings and walk-in clinics. The Company may
provide mortgage financing (the "Mortgage Loans") to operators of Health Care
Facilities in the aggregate principal amount of approximately 5 to 10 percent of
the Company's total assets. The Company also may offer furniture, fixture and
equipment financing ("Secured Equipment Leases") to operators of Health Care
Facilities. Secured Equipment Leases will be funded from the proceeds of a loan
in an amount up to ten percent of the Company's total assets.
The Company was a development stage enterprise from December 22, 1997 through
July 13, 1999. Since operations had not begun, activities through July 13, 1999
were devoted to the organization of the Company.
The Company acquired its first Property, a Brighton Gardens(R) by Marriott(R),
on April 20, 2000. This Property is located in Orland Park, Illinois. In
connection with the purchase of the Property, the Company, as lessor, entered
into a long-term, triple-net lease agreement.
2. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not include all
of the information and note disclosures required by generally accepted
accounting principles. The condensed consolidated financial statements reflect
all adjustments, consisting of normal recurring adjustments, which are, in the
opinion of the management, necessary to a fair statement of the results for the
interim periods presented. Operating results for the quarter and six months
ended June 30, 2000 may not be indicative of the results that may be expected
for the year ending December 31, 2000. Amounts included in the financial
statements as of December 31, 1999 have been derived from audited financial
statements as of that date.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 2000 and 1999
2. Basis of Presentation - Continued:
These unaudited financial statements should be read in conjunction with the
financial statements and notes thereto included in the Form 10-K of CNL Health
Care Properties, Inc. and its subsidiaries for the year ended December 31, 1999.
The accompanying unaudited condensed consolidated financial statements include
the accounts of CNL Health Care Properties, Inc. and its wholly owned
subsidiaries, CNL Health Care GP Corp. and CNL Health Care LP Corp., as well as
the accounts of CNL Health Care Partners, LP. All significant intercompany
balances and transactions have been eliminated.
3. Public Offerings:
The Company has a currently effective registration statement on Form S-11 with
the Securities and Exchange Commission. A maximum of 15,500,000 shares
($155,000,000) may be sold (the "Initial Offering"), including 500,000 shares
($5,000,000) which are available only to stockholders who elect to participate
in the Company's reinvestment plan. The Company has adopted a reinvestment plan
pursuant to which stockholders may elect to have the full amount of their cash
distributions from the Company reinvested in additional shares of common stock
of the Company. In addition, the Company has registered 600,000 shares issuable
upon the exercise of warrants to be granted to the managing dealer of the
Initial Offering as Shares are sold. As of June 30, 2000, the Company had
received subscription proceeds of $8,521,527 (852,153 shares), including $50,427
(5,043 shares) through the distribution reinvestment plan.
On May 19, 2000, the Company filed a registration statement on Form S-11 with
the Securities and Exchange Commission in connection with the proposed sale by
the Company of up to 15,500,000 additional shares of common stock ($155,000,000)
(the "2000 Offering") in an offering expected to commence immediately following
the completion of the Company's Initial Offering. Of the 15,500,000 shares of
common stock to be offered, up to 500,000 will be available to stockholders
purchasing shares through the reinvestment plan. The price per share and other
terms of the 2000 Offering, including the percentage of gross proceeds payable
(i) to the managing dealer for selling commissions and expenses in connection
with the offering and (ii) to the Company's advisor for acquisition fees, are
substantially the same for the Company's Initial Offering. The Company expects
to use the net proceeds from the 2000 Offering to purchase additional Properties
and, to a lesser extent, make Mortgage Loans.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 2000 and 1999
4. Land, Building and Equipment on Operating Lease:
The Company leases its land, building and equipment to a health care facility
operator. The lease is accounted for under the provisions of Statement of
Financial Accounting Standards No. 13, "Accounting for Leases," and has been
classified as an operating lease. The lease is for 15 years, provides for
minimum and contingent rent and requires the tenant to pay executory costs. In
addition, the tenant pays all property taxes and assessments and carries
insurance coverage for public liability, property damage, fire and extended
coverage. The lease options allow the tenant to renew the lease for four
successive five-year periods subject to the same terms and conditions of the
initial lease. The lease also requires the establishment of a capital
expenditure reserve fund, which will be used for the replacement and renewal of
furniture, fixtures and equipment relating to the health care Property (the
"FF&E Reserve"). Funds in the FF&E Reserve have been earned, granted and
assigned to the Company as additional rent.
The company records the acquisition of land, building and equipment at cost,
including acquisition and closing costs. Building and equipment are depreciated
on the straight-line method over their estimated useful life of 40 and seven
years, respectively. Land, building and equipment on operating lease consisted
of the following at:
June 30, December 31,
2000 1999
------------- ------------------
Land $2,083,948 $ --
Building 11,530,358 --
Equipment 1,025,388 --
--------------- ------------------
14,639,694 --
Less accumulated depreciation (85,741) --
=============== ==================
$14,553,953 $ --
=============== ==================
The lease provides for an increase in the minimum annual rent at a predetermined
interval during the term of the lease. Such amount is recognized on a
straight-line basis over the term of the lease commencing on the date the
Property was placed in service. Deferred rental income represents the aggregate
amount of cash payments received in excess of rental revenue recognized on a
straight-line basis to date.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 2000 and 1999
4. Land, Building and Equipment on Operating Lease - Continued:
The lease requires that the tenant pay lease payments every four weeks in
advance. The following is a schedule of future minimum lease payments to be
received on the noncancellable operating lease at June 30, 2000:
2000 $ 675,134
2001 1,350,267
2002 1,373,391
2003 1,384,890
2004 1,384,890
Thereafter 14,223,932
================
$ 20,392,504
================
Since the lease is renewable at the option of the tenant, the above table only
presents future minimum lease payments due during the initial lease term. In
addition, this table does not include any amounts for future contingent rents,
which may be received on the lease based on a percentage of the tenant's gross
sales.
5. Other Assets:
Other assets as of June 30, 2000 and December 31, 1999 were $95,626 and
$344,338, respectively, which consisted of acquisition fees and acquisition
expenses which will be allocated to future Properties and miscellaneous prepaid
expenses.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 2000 and 1999
6. Line of Credit:
On April 20, 2000, the Company entered into a revolving line of credit and
security agreement with a bank to be used by the Company to acquire health care
Properties. The line of credit provides that the Company may receive advances of
up to $25,000,000 until April 19, 2005, with an annual review to be performed by
the bank to indicate that there has been no substantial deterioration, in the
bank's reasonable discretion, of the Company's credit quality. Interest expense
on each advance shall be payable monthly, with all unpaid interest and principal
due no later than five years from the date of the advance. Generally, advances
under the line of credit will bear interest at either (i) a rate per annum equal
to the London Interbank Offered Rate (LIBOR) plus the difference between LIBOR
and the bank's base rate at the time of the advance or (ii) a rate equal to the
bank's base rate, whichever the Company selects at the time advances are made.
The interest rate will be adjusted daily in accordance with fluctuations with
the bank's rate or the LIBOR rate, as applicable. Notwithstanding the above, the
interest rate on the first $9,700,000 drawn will be 8.75% through April 1, 2002,
and thereafter will bear interest at either (i) or (ii) above as of April 1,
2002. In addition, a fee of 0.5% per advance will be due and payable to the bank
on funds as advanced. Each advance made under the line of credit will be
collateralized by the assignment of rents and leases. In addition, the line of
credit provides that the Company will not be able to further encumber the
applicable Property during the term of the advance without the bank's consent.
The Company will be required, at each closing, to pay all costs, fees and
expenses arising in connection with the line of credit. The Company must also
pay the bank's attorney's fees, subject to a maximum cap, incurred in connection
with the line of credit and each advance.
The Company had obtained an advance of $8,100,000 relating to the line of credit
and had an outstanding balance of $6,800,000 as of June 30, 2000. In connection
with the line of credit, the Company incurred a commitment fee, legal fees and
closing costs of $55,917. The proceeds were used in connection with the purchase
of a health care Property.
7. Stock Issuance Costs:
The Company has incurred certain expenses of its offering, including
commissions, marketing support and due diligence expense reimbursement fees,
filing fees, legal, accounting, printing and escrow fees, which have been
deducted from the gross proceeds of the offering. Preliminary costs incurred
prior to raising capital were advanced by an affiliate of the Company, CNL
Health Care Corp. (the "Advisor") and its affiliates. The Advisor has agreed to
pay all offering expenses (excluding commissions and marketing support and due
diligence expense reimbursement fees) which exceed three percent of the gross
offering proceeds received from the sale of shares of the Company in connection
with the offerings.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 2000 and 1999
7. Stock Issuance Costs - Continued:
During the six months ended June 30, 2000 and 1999, the Company incurred
$468,966 and $504,200, respectively, in stock issuance costs, including $265,700
and $197,184, respectively, in commissions and marketing support and due
diligence expense reimbursement fees (see Note 9). These amounts have been
charged to stockholders' equity.
8. Distributions:
For the six months ended June 30, 2000, 100 percent of the distributions paid to
stockholders were considered ordinary income for federal income tax purposes. No
amounts distributed to the stockholders for the six months ended June 30, 2000
are required to be or have been treated by the Company as a return of capital
for purposes of calculating the stockholders' return on their invested capital.
The characterization for tax purposes of distributions declared for the six
months ended June 30, 2000 may not be indicative of the characterization of
distributions that may be expected for the year ending December 31, 2000.
9. Related Party Arrangements:
Certain directors and officers of the Company hold similar positions with the
Advisor and the managing dealer, CNL Securities Corp. These affiliates receive
fees and compensation in connection with the offerings, and the acquisition,
management and sale of the assets of the Company.
CNL Securities Corp. is entitled to receive commissions amounting to 7.5% of the
total amount raised from the sale of shares for services in connection with the
offering, a substantial portion of which has been or will be paid as commissions
to other broker-dealers. During the six months ended June 30, 2000, the Company
incurred $249,094 of such fees, of which $216,037 has been or will be paid by
CNL Securities Corp. as commissions to other broker-dealers.
In addition, CNL Securities Corp. is entitled to receive a marketing support and
due diligence expense reimbursement fee equal to 0.5% of the total amount raised
from the sale of shares, all or a portion of which may be reallowed to other
broker-dealers. During the six months ended June 30, 2000, the Company incurred
$16,606 of such fees, the majority of which was reallowed to other
broker-dealers and from which all bona fide due diligence expenses were or will
be paid.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 2000 and 1999
9. Related Party Arrangements - Continued:
In addition, in connection with the Initial Offering, the Company has agreed to
issue and sell soliciting dealer warrants ("Soliciting Dealer Warrants") to CNL
Securities Corp. The price for each warrant is $0.0008 and one warrant is issued
for every 25 shares sold by the managing dealer except where prohibited by
federal or state securities laws. All or a portion of the Soliciting Dealer
Warrants may be reallowed to soliciting dealers with prior written approval
from, and in the sole discretion of, the managing dealer, except where
prohibited by either federal or state securities laws. The holder of a
Soliciting Dealer Warrant will be entitled to purchase one share of common stock
from the Company at a price of $12.00 during the five-year period commencing
with the date the offering began. No Soliciting Dealer Warrant, however, will be
exercisable until one year from the date of issuance. During the six months
ended June 30, 2000, the Company issued approximately 24,000 Soliciting Dealer
Warrants. As of June 30, 2000, CNL Securities Corp. was entitled to receive
approximately 6,100 additional Soliciting Dealer Warrants for shares sold during
the quarter then ended.
The Advisor is entitled to receive acquisition fees for services in identifying
Properties and structuring the terms of leases of the Properties and Mortgage
Loans equal to 4.5% of gross proceeds of the offering, loan proceeds from
permanent financing and amounts outstanding on the line of credit, if any, at
the time of listing the Company's shares of common stock on a national
securities exchange or over-the-counter market, but excluding that portion of
the permanent financing used to finance Secured Equipment Leases. During the six
months ended June 30, 2000, the Company incurred $149,456 of such fees. These
fees are included in land, building and equipment on operating lease and other
assets at June 30, 2000.
The Company incurs operating expenses which, in general, are those expenses
relating to administration of the Company on an ongoing basis. Pursuant to the
advisory agreement, the Advisor is required to reimburse the Company the amount
by which the total operating expenses paid or incurred by the Company exceed in
any four consecutive fiscal quarters (the "Expense Year") the greater of two
percent of average invested assets or 25 percent of net income (the "Expense
Cap"). During the four quarters ended June 30, 2000, the Company's operating
expenses exceeded the Expense Cap by $213,886; therefore, the Advisor will
reimburse the Company such amount in accordance with the advisory agreement. The
amount to be received from the Advisor has been treated as a reduction of the
amount due to related parties as of June 30, 2000.
The Company and the Advisor have entered into an advisory agreement pursuant to
which the Advisor will receive a monthly asset management fee of one-twelfth of
0.60% of the Company's real estate asset value and the outstanding principal
balance of any Mortgage Loan as of the end of the preceding month. During the
quarter ended June 30, 2000, the Company incurred $13,849 of such fees.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 2000 and 1999
9. Related Party Arrangements - Continued:
The Advisor and its affiliates provide various administrative services to the
Company, including services related to accounting; financial, tax and regulatory
compliance reporting; stockholder distributions and reporting; due diligence and
marketing; and investor relations (including administrative services in
connection with the offering), on a day-to-day basis. The expenses incurred for
these services were classified as follows for the six months ended June 30:
<TABLE>
<CAPTION>
2000 1999
-------------- --------------
<S><C>
Deferred offering costs $ -- $ 167,392
Stock issuance costs 25,687 --
Other assets 30,491 --
General operating and administrative expenses 120,106 --
-------------- --------------
$ 176,284 $ $ 167,392
============== ==============
Amounts due to related parties consisted of the following at:
June 30, December 31,
2000 1999
-------------- --------------
Due to (from) the Advisor:
Expenditures incurred for organizational and offering
expenses on behalf of the Company $ 1,570,983 $1,432,291
Accounting and administrative services due to
(reimbursable from) the Advisor (179,027) 6,739
Acquisition fees and expenses 358,238 336,226
-------------- ------------
1,750,194 1,775,256
-------------- ------------
Due to CNL Securities Corp.:
Commissions 42,027 --
Marketing support and due diligence
expense reimbursement fee 2,812 --
-------------- ------------
44,839 --
-------------- ------------
$ 1,795,033 $ 1,775,256
============== ============
</TABLE>
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 2000 and 1999
10. Concentration of Credit Risk:
All of the Company's rental income for the six months ended June 30, 2000 was
earned from one lessee, Brighton Gardens(R) Orland Park, LLC, which operates the
Property as a Brighton Gardens(R) by Marriott(R).
Although the company intends to acquire Properties located in various states and
regions and to carefully screen its tenants in order to reduce risks of default,
failure of any one health care chain or lessee that contributes more than ten
percent of the Company's rental income could significantly impact the result of
operations of the Company. However, management believes that the risk of such a
default is reduced due to the essential or important nature of this Property for
the ongoing operations of the lessee.
It is expected that the percentage of total rental income contributed by this
lessee will decrease as additional Properties are acquired and leased in 2000
and subsequent years.
11. Subsequent Events:
During the period July 1 through July 31, 2000, the Company received
subscription proceeds for an additional 35,723 shares ($357,230) of common
stock. As of July 31, 2000, the Company had received total subscription
proceeds of $8,878,760.
On July 1, 2000 the Company declared distributions totaling $50,847, or $0.058
per share of common stock, payable in September 2000,to stockholders of record
on July 1, 2000.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements generally are characterized by
the use of terms such as "believe," "expect" and "may." Although the Company
believes that the expectations reflected in such forward-looking statements are
based upon reasonable assumptions, the Company's actual results could differ
materially from those set forth in the forward-looking statements. Certain
factors that might cause such a difference include the following: changes in
general economic conditions, changes in real estate conditions, availability of
proceeds from the Company's offerings, the ability of the Company to obtain
permanent financing on satisfactory terms, the ability of the Company to
continue to locate suitable tenants for its properties and borrowers for its
mortgage loans and secured equipment leases, and the ability of tenants and
borrowers to make payments under their respective leases, mortgage loans or
secured equipment leases. Given these uncertainties, readers are cautioned not
to place undue reliance on such statements.
The Company
CNL Health Care Properties, Inc. is a Maryland corporation that was
organized December 22, 1997. CNL Health Care GP Corp. and CNL Health Care LP
Corp. are wholly owned subsidiaries of CNL Health Care Properties, Inc.,
organized in Delaware in December 1999. CNL Health Care Partners, LP is a
Delaware limited partnership formed in December 1999. CNL Health Care GP Corp.
and CNL Health Care LP Corp. are the general and limited partner, respectively,
of CNL Health Care Partners, LP. Assets acquired are expected to be held by CNL
Health Care Partners, LP and, as a result, owned by CNL Health Care Properties,
Inc. through the partnership. The term "Company" includes, unless the context
otherwise requires, CNL Health Care Properties, Inc., CNL Health Care Partners,
LP, CNL Health Care GP Corp. and CNL Health Care LP Corp.
Liquidity and Capital Resources
Common Stock Offerings
Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933 effective September 18, 1998, the Company registered for sale an
aggregate of $155,000,000 of shares of common stock (the "Shares") (15,500,000
shares at $10 per Share), with 500,000 of such Shares available only to
stockholders who elect to participate in the Company's reinvestment plan (the
"Initial Offering"). In accordance with the Company's prospectus, the Company
has elected to extend the Initial Offering of Shares to a date no later than
September 18, 2000. The Board of Directors may determine to engage in future
offerings of common stock, up to the number of unissued authorized shares of
common stock.
<PAGE>
Liquidity and Capital Resources - Continued
On May 19, 2000, the Company filed a registration statement on Form
S-11 with the Securities and Exchange Commission in connection with the proposed
sale by the Company of up to an additional 15,500,000 Shares of common stock
($155,000,000) ("the 2000 Offering") in an offering expected to commence
immediately following the completion of the Initial Offering. Of the 15,500,000
Shares of common stock to be offered, up to 500,000 will be available to
stockholders purchasing Shares through the reinvestment plan. The price per
share and the other terms of the 2000 Offering, including the percentage of
gross proceeds payable (i) to the managing dealer for selling commissions and
expenses in connection with the offering and (ii) to the Company's advisor for
acquisition fees, are substantially the same as those for the Initial Offering.
The managing dealer of the offering of Shares of the Company is CNL
Securities Corp., an affiliate of CNL Health Care Corp. (the "Advisor").
As of July 13, 1999, the Company had received aggregate subscription
proceeds of $2,751,052 (275,105 Shares), which exceeded the minimum offering
amount of $2,500,000, and $2,526,052 of the funds were released from escrow. The
remaining subscription proceeds of $225,000 (representing funds received from
Pennsylvania investors) were held in escrow until the Company received aggregate
subscriptions which exceeded $7,775,000 on June 13, 2000.
As of June 30, 2000, the Company had received aggregate subscription
proceeds of $8,521,527 (852,153 Shares), including $50,427 (5,043 Shares)
through its reinvestment plan. As of June 30, 2000, the Company had
approximately $7,326,000 available to invest in properties and mortgage loans
following the deduction of selling commissions, marketing support and due
diligence expense reimbursement fees, organization and offering expenses of
approximately three percent, and acquisition fees.
The Company expects to use net offering proceeds from the sale of
Shares to purchase properties (the "Property" or "Properties") and to invest in
mortgage loans. In addition, the Company intends to borrow money to acquire
assets and to pay certain related fees. The Company intends to encumber assets
in connection with such borrowing. The Company has obtained a revolving
$25,000,000 initial line of credit. The Company also plans to obtain permanent
financing. The line of credit may be repaid with offering proceeds, working
capital or permanent financing. The aggregate amount of any permanent financing
shall not exceed 30% of the Company's total assets and the maximum amount the
Company may borrow is 300% of the Company's net assets.
<PAGE>
Liquidity and Capital Resources - Continued
Indebtedness
On April 20, 2000, the Company entered into a revolving line of credit
and security agreement with a bank to be used by the Company to acquire health
care Properties. The line of credit provides that the Company may receive
advances of up to $25,000,000 until April 19, 2005, with an annual review to be
performed by the bank to indicate that there has been no substantial
deterioration, in the bank's reasonable discretion, of the Company's credit
quality. Interest expense on each advance shall be payable monthly, with all
unpaid interest and principal due no later than five years from the date of the
advance. Generally, advances under the line of credit will bear interest at
either (i) a rate per annum equal to the London Interbank Offered Rate (LIBOR)
plus the difference between LIBOR and the bank's base rate at the time of the
advance or (ii) a rate equal to the bank's base rate, whichever the Company
selects at the time advances are made. The interest rate will be adjusted daily
in accordance with fluctuations with the bank's rate or the LIBOR rate, as
applicable. Notwithstanding the above, the interest rate on the first $9,700,000
drawn will be 8.75% through April 1, 2002, and thereafter will bear interest at
either (i) or (ii) above as of April 1, 2002. In addition, a fee of 0.5% per
advance will be due and payable to the bank on funds as advanced. Each advance
made under the line of credit will be collateralized by the assignment of rents
and leases. In addition, the line of credit provides that the Company will not
be able to further encumber the applicable Property during the term of the
advance without the bank's consent. The Company will be required, at each
closing, to pay all costs, fees and expenses arising in connection with the line
of credit. The Company must also pay the bank's attorney's fees, subject to a
maximum cap, incurred in connection with the line of credit and each advance.
During the six months ended June 30, 2000, the Company obtained an advance for
$8,100,000 and repaid $1,300,000 relating to the line of credit. In connection
with the line of credit, the Company incurred an origination fee, legal fees and
closing costs of $55,917. The proceeds were used in connection with the purchase
of a Property.
Property Acquisition and Investments
On April 20, 2000, the Company used offering proceeds of $5,748,900 and
obtained an advance under the line of credit of $8,100,000 to acquire a
private-pay assisted living community for a total cost of $13,848,900. The
Property is a Brighton Gardens(R) by Marriott(R) in Orland Park, Illinois. In
connection with the purchase of the Property, the Company, as lessor, entered
into a long-term, triple-net lease agreement.
<PAGE>
Liquidity and Capital Resources - Continued
Cash and Cash Equivalents
Until Properties are acquired, or mortgage loans are entered into, net
offering proceeds are held in short-term (defined as investments maturing in
less than 30 days), highly liquid investments which management believes to have
appropriate safety of principal. This investment strategy provides high
liquidity in order to facilitate the Company's use of these funds to acquire
Properties at such time as Properties suitable for acquisition are located or to
fund mortgage loans. At June 30, 2000, the Company had $659,311 invested in such
short-term investments as compared to $4,744,222 at December 31, 1999. The
decrease in the amount invested in short-term investments was primarily
attributable to the purchase of one Property and repayments on the line of
credit, partially offset by subscription proceeds received from the sale of
Shares during the six months ended June 30, 2000. The funds remaining at June
30, 2000, along with additional funds expected to be received from the sale of
Shares, will be used primarily to purchase Properties, to make mortgage loans,
to pay organizational and offering expenses and acquisition expenses, to pay
distributions to stockholders, to meet other Company expenses and, in
management's discretion, to create cash reserves.
Liquidity Requirements
The Company expects to meet its short-term liquidity requirements,
other than for offering expenses, the acquisition and development of Properties
and the investment in mortgage loans and secured equipment leases, through cash
flow provided by operating activities. The Company believes that cash flow
provided by operating activities will be sufficient to fund normal recurring
operating expenses, regular debt service requirements and distributions to
stockholders. To the extent that the Company's cash flow provided by operating
activities is not sufficient to meet such short-term liquidity requirements as a
result, for example, of unforeseen expenses due to the tenant defaulting under
the terms of its lease agreement, the Company will use borrowings under its line
of credit.
Due to the fact that the Company leases its Property, and will lease
any Properties acquired in the future, on a triple-net basis, meaning that
tenants are required to pay all repairs and maintenance, property taxes,
insurance and utilities, management does not believe that working capital
reserves are necessary at this time. Management believes that the Property is
adequately covered by insurance. In addition, the Advisor has obtained
contingent liability and property coverage for the Company. This insurance
policy is intended to reduce the Company's exposure in the unlikely event a
tenant's insurance policy lapses or is insufficient to cover a claim relating to
the Property. The Company expects to meet its other short-term liquidity
requirements, including payment of offering expenses, property acquisitions and
development and investment in mortgage loans and secured equipment leases, with
additional advances under its line of credit and proceeds from its offerings.
The Company expects to meet its long-term liquidity requirements through short-
or long-term, unsecured or secured debt financing or equity financing.
<PAGE>
Liquidity and Capital Resources - Continued
Distributions
During the six months ended June 30, 2000, the Company generated cash
from operations of $657,668. Based on current and anticipated cash from
operations, the Company declared and paid distributions to its stockholders
totaling $152,525 during the six months ended June 30, 2000. On July 1, 2000,
the Company declared a distribution of $.058 per share of common stock, to
stockholders of record on July 1, 2000. This distribution is payable in
September 2000.
For the six months ended June 30, 2000, 100 percent of the
distributions received by stockholders were considered to be ordinary income for
federal income tax purposes. No amounts distributed or to be distributed to the
stockholders as of July 31, 2000 were required to be or have been treated by the
Company as a return of capital for purposes of calculating the stockholders'
return on their invested capital. The Company intends to continue to make
distributions of cash available for such purpose to the stockholders on a
monthly basis, payable quarterly.
Due to Related Parties
During the six months ended June 30, 2000 and 1999, affiliates incurred
on behalf of the Company $178,708 and $235,071, respectively, for certain
organizational and offering expenses and $56,129 and $0, respectively, for
certain acquisition expenses. In addition, during the six months ended June 30,
2000, affiliates incurred on behalf of the Company $93,920 for certain operating
expenses. As of June 30, 2000 and December 31, 1999, the Company owed affiliates
$1,795,033 and $1,775,256, respectively, for such amounts and unpaid fees and
administrative expenses. The Advisor of the Company has agreed to pay all
organizational and offering expenses (excluding selling commissions and
marketing support and due diligence expense reimbursement fees) in excess of
three percent of the gross offering proceeds. Pursuant to the advisory
agreement, the Advisor is required to reimburse the Company the amount by which
the total operating expenses paid or incurred by the Company exceed in any four
consecutive fiscal quarters (the "Expense Year") the greater of two percent of
average invested assets or 25 percent of net income (the "Expense Cap"). During
the four quarters ended June 30, 2000, the Company's operating expenses exceeded
the Expense Cap by $213,886; therefore, the Advisor will reimburse the Company
such amount in accordance with the advisory agreement. The amount to be received
from the Advisor has been treated as a reduction of the amount due to related
parties as of June 30, 2000.
Since the commencement of the Initial Offering through June 30, 2000,
approximately $681,722 has been incurred by the Company in selling commissions,
marketing support and due diligence reimbursement fees to related parties, a
majority of which was reallowed to other broker-dealer firms. In addition, since
the commencement of the Initial Offering through June 30, 2000, the Company has
reimbursed affiliates $198,472 for certain organizational and offering expenses
incurred on behalf of the Company and administrative services related to the
Initial Offering.
<PAGE>
Liquidity and Capital Resources - Continued
Other
As of June 30, 2000, the tenant of the Property owned by the Company,
has established a reserve fund which will be used for the replacement and
renewal of furniture, fixtures and equipment relating to the health care
Property (the "FF&E Reserve"). Funds in the FF&E Reserve have been paid, granted
and assigned to the Company. For the six months ended June 30, 2000, revenue
relating to the FF&E Reserve totalled $3,616. Due to the fact that the Property
is leased on a long-term, triple-net basis, management does not believe that
other working capital reserves are necessary at this time. Management has the
right to cause the Company to maintain additional reserves if, in their
discretion, they determine such reserves are required to meet the Company's
working capital needs.
Management is not aware of any material trends, favorable or
unfavorable, in either capital resources or the outlook for long-term cash
generation, nor does management expect any material changes in the availability
and relative cost of such capital resources. Management expects that the cash to
be generated from operations will be adequate to pay operating expenses and to
make distributions to stockholders.
Results of Operations
No operations commenced until the Company received the minimum offering
proceeds of $2,500,000 on July 13, 1999.
Revenues
As of June 30, 2000, the Company had acquired one Property consisting of
land, building and equipment, and had entered into a long-term, triple-net lease
agreement relating to this Property. The Property lease provides for minimum
base rental payments of $103,867 that are generally payable every four weeks.
The lease also provides that, after 24 months, the base rent required under the
terms of the lease will increase. In addition to annual base rent, the tenant
pays contingent rent computed as a percentage of gross sales of the Property.
The Company's lease also requires the establishment of an FF&E Reserve. The FF&E
Reserve is owned by the Company and has been recognized as additional rent. For
the quarter ended June 30, 2000, the company earned $272,119 in rental income
from this Property. The Company also earned $3,616 in FF&E Reserve income during
the quarter ended June 30, 2000. Because the Company has not yet acquired all of
its Properties, revenues for the six months ended June 30, 2000, represent only
a portion of revenues which the Company is expected to earn in future periods.
During the six months ended June 30, 2000, the Company also earned
$92,849 in interest income from investments in money market accounts. Interest
income is expected to increase as the Company invests subscription proceeds
received in the future in highly liquid investments pending investment in
Properties and mortgage loans. However, as net offering proceeds are invested in
Properties and used to make mortgage loans, the percentage of the Company's
total revenues earned from interest income from investments in money market
accounts or other short term, highly liquid investments is expected to decrease.
<PAGE>
Results of Operations - Continued
Significant Tenants
During the six months ended June 30, 2000, the Company owned one
Property. The lessee, Brighton Gardens(R) Orland Park, LLC, contributed 100
percent of the Company's total rental income. In addition, the Property is
operated as a Marriott(R) brand chain. Although the Company intends to acquire
additional Properties located in various states and regions and to carefully
screen its tenants in order to reduce risks of default, failure of this lessee
or the Marriott(R) brand chain could significantly impact the results of
operations of the Company. However, management believes that the risk of such a
default is reduced due to the essential or important nature of this Property for
the ongoing operations of the lessee. It is expected that the percentage of
total rental income contributed by this lessee will decrease as additional
Properties are acquired and leased during 2000 and subsequent years.
Expenses
Operating expenses, including interest expense and depreciation and
amortization expense, were $425,185 for the six months ended June 30, 2000, of
which $327,045 was incurred for the quarter ended June 30, 2000. Operating
expenses represent only a portion of operating expenses which the Company is
expected to incur during a six month period in which the Company owns Properties
for the full six months. The dollar amount of operating expenses is expected to
increase as the Company acquires additional Properties and invests in mortgage
loans. However, general and administrative expenses as a percentage of total
revenues are expected to decrease as the Company acquires additional Properties
and invests in mortgage loans.
Pursuant to the advisory agreement, the Advisor is required to
reimburse the Company the amount by which the total operating expenses paid or
incurred by the Company exceed the Expense Cap in an Expense Year. During the
Expense Year ended June 30, 2000, the Company's operating expenses totaled
$287,084, exceeding the Expense Cap by $213,886; therefore, the Advisor will
reimburse the Company such amount in accordance with the advisory agreement.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
The Company is subject to interest rate risk through outstanding
balances on its variable rate line of credit. The Company may mitigate this risk
by paying down its line of credit from offering proceeds should interest rates
rise substantially.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities and Use of Proceeds.
(d) The information required by this item is set forth in
Part I. Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations and
is hereby incorporated by reference.
Item 3. Defaults upon Senior Securities. Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The regular annual meeting of stockholders of the
Company was held in Orlando, Florida on May 10, 2000
for the purposes of electing the board of directors
and voting on the proposal described below.
(b) Proxies for the meeting were solicited and there was
no solicitation in opposition to management's
solicitations. All of management's nominees for
director were elected.
(c) Two proposals were submitted to a vote of stock-
holders as follows:
(1) The stockholders approved the election of the
following persons as directors of the Company:
Name For Withheld
------------------------------- ------------ --------------
James M. Seneff, Jr. 484,802 0
Robert A. Bourne 484,802 0
David W. Dunbar 484,802 0
Timothy S. Smick 484,802 0
Edward A. Moses 484,802 0
(2) The stockholders approved, with 398,048
affirmative votes, 36,170 negative votes and
30,584 abstentions, the proposal to approve
amendments to the Company's Amended And
Restated Articles of Incorporation to expand
the class of borrowers to which the Company
may make loans.
Item 5. Other Information. Inapplicable.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
3.1 CNL Health Care Properties, Inc. Amended and Restated Articles of
Incorporation (Included as Exhibit 3.1 to the Registrant's 1998 Report on Form
10-K filed with the Securities and Exchange Commission on March 5, 1999 and
incorporated herein by reference.)
3.2 CNL Health Care Properties, Inc. Bylaws (Included as Exhibit 3.2 to the
Registrant's 1998 Report on Form 10-K filed with the Securities and Exchange
Commission on March 5, 1999 and incorporated herein by reference.)
3.3 CNL Health Care Properties, Inc. Articles of Amendments to Amended and
Restated Articles of Incorporation (Filed herewith.)
4.1 Reinvestment Plan (Included as Exhibit 4.4 to Registration Statement No.
333-47411 on Form S-11 and incorporated herein by reference.) 10.1 Advisory
Agreement, dated as of September 15, 1998, between CNL Health Care Properties,
Inc. and CNL Health Care Corp. (Included as Exhibit 10.1 to the Registrant's
1998 Report on Form 10-K filed with the Securities and Exchange Commission on
March 5, 1999 and incorporated herein by reference.)
10.2 Indemnification Agreement between CNL Health Care Properties, Inc. and
Thomas J. Hutchison III dated February 29, 2000. Each of the following directors
and/or officers has signed a substantially similar agreement as follows: James
M. Seneff, Jr., Robert A. Bourne, David W. Dunbar, Timothy S. Smick, Edward A.
Moses, Jeanne A. Wall and Lynn E. Rose dated September 15, 1998 and Phillip M.
Anderson, Jr. dated February 19, 1999 (Included as Exhibit 10.2 to the March 31,
2000 Form 10-Q filed with the Securities and Exchange Commission on May 3, 2000
and incorporated herein by reference.)
10.3 Agreement of Limited Partnership of CNL Health Care Partners, LP (included
as Exhibit 10.10 to Registration Statement No. 333-47411 on Form S-11 and
incorporated herein by reference.)
10.4 Purchase and Sale Agreement between CNL Health Care Partners, LP and
Marriott Senior Living Services, Inc., relating to the Brighton Gardens(R) by
Marriott(R) - Orland Park, Illinois (Included as Exhibit 10.4 to the March 31,
2000 Form 10-Q filed with the Securities and Exchange Commission on May 3, 2000
and incorporated herein by reference.)
10.5 Lease Agreement between CNL Health Care Partners, LP and BG Orland Park,
LLC dated April 20, 2000, relating to the Brighton Gardens(R) by Marriott(R) -
Orland Park, Illinois (Included as Exhibit 10.5 to the March 31, 2000 Form 10-Q
filed with the Securities and Exchange Commission on May 3, 2000 and
incorporated herein by reference.)
10.6 Revolving Line of Credit Agreement with CNL Health Care Properties, Inc.,
CNL Health Care Partners, LP and Colonial Bank, dated April 20, 2000 (Included
as Exhibit 10.6 to the March 31, 2000 Form 10-Q filed with the Securities and
Exchange Commission on May 3, 2000 and incorporated herein by reference.)
27. Financial Data Schedule (Filed herewith.)
(b) The Company filed one report on Form 8-K on May 1, 2000, in connection with
the acquisition of one property.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 31st day of July, 2000.
CNL HEALTH CARE PROPERTIES, INC.
By: /s/ James M. Seneff, Jr.
JAMES M. SENEFF, JR.
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Robert A. Bourne
ROBERT A. BOURNE
Director and President
(Principal Financial and
Accounting Officer)
<PAGE>
EXHIBITS
<PAGE>
EXHIBIT INDEX
<PAGE>
Exhibit Number
3.1 CNL Health Care Properties, Inc. Amended and Restated Articles of
Incorporation (Included as Exhibit 3.1 to the Registrant's 1998 Report
on Form 10-K filed with the Securities and Exchange Commission on March
5, 1999 and incorporated herein by reference.)
3.2 CNL Health Care Properties, Inc. Bylaws (Included as Exhibit 3.2 to the
Registrant's 1998 Report on Form 10-K filed with the Securities and
Exchange Commission on March 5, 1999 and incorporated herein by
reference.)
3.3 CNL Health Care Properties, Inc. Articles of Amendments to Amended and
Restated Articles of Incorporation (Filed herewith.)
4.1 Reinvestment Plan (Included as Exhibit 4.4 to Registration Statement
No. 333-47411 on Form S-11 and incorporated herein by reference.)
10.1 Advisory Agreement, dated as of September 15, 1998, between CNL Health
Care Properties, Inc. and CNL Health Care Corp. (Included as Exhibit
10.1 to the Registrant's 1998 Report on Form 10-K filed with the
Securities and Exchange Commission on March 5, 1999 and incorporated
herein by reference.)
10.2 Indemnification Agreement between CNL Health Care Properties, Inc. and
Thomas J. Hutchison III dated February 29, 2000. Each of the following
directors and/or officers has signed a substantially similar agreement
as follows: James M. Seneff, Jr., Robert A. Bourne, David W. Dunbar,
Timothy S. Smick, Edward A. Moses, Jeanne A. Wall and Lynn E. Rose
dated September 15, 1998 and Phillip M. Anderson, Jr. dated February
19, 1999 (Included as Exhibit 10.2 to the March 31, 2000 Form 10-Q
filed with the Securities and Exchange Commission on May 3, 2000 and
incorporated herein by reference.)
10.3 Agreement of Limited Partnership of CNL Health Care Partners, LP
(included as Exhibit 10.10 to Registration Statement No. 333-47411
on Form S-11 and incorporated herein by reference.)
10.4 Purchase and Sale Agreement between CNL Health Care Partners, LP and
Marriott Senior Living Services, Inc., relating to the Brighton
Gardens(R) by Marriott(R) - Orland Park, Illinois (Included as Exhibit
10.4 to the March 31, 2000 Form 10-Q filed with the Securities and
Exchange Commission on May 3, 2000 and incorporated herein by
reference.)
10.5 Lease Agreement between CNL Health Care Partners, LP and BG Orland
Park, LLC dated April 20, 2000, relating to the Brighton Gardens(R) by
Marriot(R) - Orland Park, Illinois (Included as Exhibit 10.5 to the
March 31, 2000 Form 10-Q filed with the Securities and Exchange
Commission on May 3, 2000 and incorporated herein by reference.)
10.6 Revolving Line of Credit Agreement with CNL Health Care Properties,
Inc., CNL Health Care Partners, LP and Colonial Bank, dated April 20,
2000 (Included as Exhibit 10.6 to the March 31, 2000 Form 10-Q filed
with the Securities and Exchange Commission on May 3, 2000 and
incorporated herein by reference.)
27. Financial Data Schedule (Filed herewith.)
<PAGE>
EXHIBIT 3.3
CNL Health Care Properties, Inc.
Articles of Amendments to
Amended and Restated Articles of Incorporation
ARTICLES OF AMENDMENT
TO
THE AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
CNL HEALTH CARE PROPERTIES, INC.
CNL Health Care Properties, Inc., a Maryland corporation
having its principal office in Maryland in Baltimore City, Maryland (hereinafter
called the "corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The Amended and Restated Articles of Incorporation
(the "Articles of Incorporation") are hereby amended by striking out ARTICLE
5, SECTION 5.4(xvii)
The Company shall not make loans to the Advisor or its
Affiliates.
and inserting in lieu thereof the following:
The Company shall not make loans to the Advisor or its
Affiliates, except as provided under Section 6.4(ii).
SECOND: The Articles of Incorporation are hereby amended by
striking out ARTICLE 6, SECTION 6.4(ii)
The Company will not make any loans to Affiliates. Any loans
to the Company by the Advisor or its Affiliates must be approved by a majority
of the Directors (including a majority of Independent Directors) not otherwise
interested in such transaction as fair, competitive, and commercially
reasonable, and no less favorable to the Company than comparable loans between
unaffiliated parties.
and inserting in lieu thereof the following:
The Company shall not make loans to the Sponsor, Advisor,
Directors or any Affiliates thereof, except (A) as provided under Section
5.4(iii), or (B) to wholly owned subsidiaries of the Company. Any loans to the
Company by the Advisor or its Affiliates must be approved by a majority of the
Directors (including a majority of Independent Directors) not otherwise
interested in such transaction as fair, competitive, and commercially
reasonable, and no less favorable to the Company than comparable loans between
unaffiliated parties.
THIRD: The amendment of the Articles of Incorporation of the
corporation as hereinabove set forth has been duly advised by the board of
directors and approved by the stockholders of the corporation.
IN WITNESS WHEREOF: CNL Health Care Properties, Inc., has
caused these presents to be signed in its name and on its behalf by its
President and attested by its Secretary on June 27, 2000.
THE UNDERSIGNED, President of CNL Health Care Properties,
Inc., who executed on behalf of said corporation, the foregoing Articles of
Amendment, of which this certificate is made a part, hereby acknowledges, in the
name and on behalf of said corporation, the foregoing Articles of Amendment to
be the corporate act of said corporation and further certifies that, to the best
of his of her knowledge, information, and belief, the matters and facts set
forth therein with respect to the approval thereof are true in all material
respects, under the penalties of perjury.
ATTEST: CNL Health Care Properties, Inc.
/s/ Lynn E. Rose /s/ Robert A. Bourne
---------------------------------- ---------------------------------------
Lynn E. Rose, Secretary Robert A. Bourne, President
