<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
December 5, 1997 (March 19, 1997)
- - --------------------------------------------------------------------------------
HEALTH CARE PROPERTY INVESTORS, INC.
(Exact name of registrant as specified in its charter)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Maryland 1-8895 33-0091377
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation of Organization) File Number) Identification No.)
</TABLE>
4675 MacArthur Court, 9th Floor
Newport Beach, CA 92660
(Address of principal executive offices)
(714) 221-0600
(Registrant's telephone number, including area code)
10990 Wilshire Boulevard, Suite 1200
Los Angeles, California 90024
(310) 473-1990
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OF ASSETS
During the period from January 1, 1997 through November 21, 1997, Health Care
Property Investors, Inc. (the "Company") acquired from unrelated parties, eight
assisted living facilities ("ALF"), one physician group practice clinic ("CLN"),
and a majority interest in a limited liability company which owns a group of
five multi-tenant medical office buildings ("MOB"), in seven separate
transactions at an aggregate purchase price of approximately $103,495,000. Not
included in the foregoing are construction projects being constructed by the
Company, or any mortgage loans extended by the Company. With the exception of
the MOBs, the facilities were, concurrently with their acquisition, leased on a
triple net basis to five different operators under terms generally similar to
the Company's existing leases. The MOBs are leased to multiple tenants under
gross leases. Each transaction was initially funded by bank borrowings on the
Company's bank revolving lines of credit and by cash on hand. During September
1997, the Company used funds raised through the issuance of preferred stock to
repay $57,810,000 in outstanding indebtedness under its revolving bank line of
credit.
<TABLE>
<CAPTION>
Facility Acquisition Purchase
Facility Name City State Type Units Date Price
- - --------------------------- --------------- --------- ------------ ---------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Brantley's Retirement Home Milledgeville GA ALF 40 3/19/97 $ 2,300,000
The Palisades El Paso TX ALF 157 4/1/97 8,293,172
Redwood Springs San Marcos TX ALF 88 4/1/97 3,669,209
Amber Oaks San Antonio TX ALF 162 4/1/97 9,147,619
Post House Glassboro NJ ALF 39 5/13/97 3,037,755
Baker House Vineland NJ ALF 39 5/13/97 3,073,722
Camino Medical Group Sunnyvale CA CLN (1) 5/16/97 20,600,000
Wildflower House Temple TX ALF 40 6/16/97 2,223,349
Ontario Residential Manor Ontario CA ALF 97 11/7/97 4,150,000
Frost Street Properties San Diego CA MOB (2) 11/21/97 47,000,000
------- -------------
662 $103,494,826
======= =============
</TABLE>
- - --------------------------
(1) Approximately 105,000 square feet.
(2) Approximately 213,500 square feet in five buildings.
The Company believes these acquisitions are consistent with the Company's
historical business strategy of acquiring and concurrently leasing health care
facilities. In assessing the facilities, the Company considered the type,
location, age, design and physical condition of the facilities acquired, as well
as historical, if applicable, and projected operating results of the health care
operations conducted at the facilities. Additionally, the Company considers the
operating ability, financial condition and reputation of the operator to which
the acquired facilities are to be leased. The Company, after reasonable inquiry,
is not aware of any material factors that would cause the financial information
reported not to be necessarily indicative of future operating results, although
no assurance can be given by the Company regarding actual future operating
results. The Company intends to continue the current use of each property.
Although no single acquisition is considered a "significant acquisition"
pursuant to the rules governing the reporting of transactions on Form 8-K, under
Rule 3-14 of Regulation S-X, these acquisitions in the aggregate, may be
considered to be material in nature. Certain audited pro forma financial
information concerning these properties is provided in Item 7 of this Current
Report on Form 8-K.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Historical financial information pursuant to Rule 3.14 of Regulation S-X, for
the health care operations of the acquired facilities is not presented because
the related operating information for such facilities generally would not be
meaningful. This is due to the nature of gross and triple-net leased real estate
operations. Alternatively, the Company has presented audited pro forma operating
information for each of the acquired properties as if the acquired properties
had been owned by the Company since January 1, 1996.
(a)(3) - Audited pro forma statements of operations for the acquired
facilities for the year ended December 31, 1996.
(b)(1) - Unaudited pro forma balance sheet as of September 30, 1997 for the
Company after giving effect to the acquisition of the facilities.
- Pro forma statement of operations for the Company after giving
effect to the acquisition of the facilities for the nine-month period
ended September 30, 1997.
- Pro forma statement of operations for the Company after giving effect
to the acquisition of the facilities for the year ended December 31,
1996.
(c) Consent of Arthur Andersen LLP.
<PAGE>
REPORT OF THE INDEPENDENT PUBLIC ACCOUNTANTS
To The Stockholders and Directors, Health Care Property Investors, Inc:
We have examined the pro forma adjustments reflecting the transactions described
in Note 1 and the application of those adjustments to the assembly of the
accompanying pro forma statements of operations of the properties acquired by
Health Care Property Investors, Inc. during the period January 1, 1997 to
November 21, 1997 as indicated in Item 2 of this Form 8-K (collectively "the
Acquired Properties") for the year ended December 31, 1996. The historical
statements of operations are omitted since substantially all historical amounts
are not relevant on a pro forma basis. The pro forma adjustments are based upon
management's assumptions described in Note 2. Our examination was made in
accordance with standards established by the American Institute of Certified
Public Accountants and, accordingly, included such procedures as we considered
necessary in the circumstances.
The objective of this pro forma financial information is to show what the
significant effects on the historical financial information might have been had
the transactions occurred at an earlier date. However, the pro forma statements
of operations are not necessarily indicative of the results of operations that
would have been attained had the above-mentioned transactions actually occurred
earlier.
In our opinion, management's assumptions provide a reasonable basis for
presenting the significant effects directly attributable to the above-mentioned
transactions described in Note 1, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma statements of
operations for the year ended December 31, 1996 reflect the proper application
of those adjustments to the historical statement of operations amounts.
Arthur Andersen LLP
Los Angeles, California
December 5, 1997
<PAGE>
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Brantley's
Retirement The Amber
Home Palisades Oaks
--------------- -------------- --------------
<S> <C> <C> <C>
Revenues
Base Rental Income $ 229,310 $ 800,316 $ 894,036
Expenses
Interest 135,700 489,297 539,710
Depreciation 85,429 317,805 353,932
Other Operating Expenses -- -- --
--------------- -------------- --------------
221,129 807,102 893,642
Minority Interests -- -- --
Net Income (Loss) $ 8,181 $ (6,786) $ 394
=============== ============== ==============
</TABLE>
See accompanying notes.
<PAGE>
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Camino
Redwood Medical Wildflower
Spring Post House Baker House Group House
----------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenues
Base Rental Income $ 479,976 $ 308,940 $ 312,597 $ 1,956,444 $ 223,669
Expenses
Interest 216,483 179,228 181,350 1,215,400 131,178
Depreciation 155,977 90,422 94,523 439,714 70,588
Other Operating Expenses -- -- -- -- --
----------- --------------- --------------- --------------- ---------------
372,460 269,650 275,873 1,655,114 201,766
Minority Interests -- -- -- -- --
Net Income (Loss) $ 107,516 $ 39,290 $ 36,724 $ 301,330 $ 21,903
=========== =============== =============== =============== ===============
</TABLE>
See accompanying notes.
<PAGE>
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Ontario
Residential Frost Street
Manor Properties
--------------- -------------------
Revenues
<S> <C> <C>
Base Rental Income $ 419,306 $ 6,556,755
Expenses
Interest 244,850 2,773,000
Depreciation 142,049 1,280,000
Other Operating Expenses -- 1,559,034
-------------- -------------------
386,899 5,612,034
Minority Interests -- (60,105)
Net Income (Loss) $ 32,407 $ 884,616
============== ===================
</TABLE>
See accompanying notes.
<PAGE>
FOOTNOTES TO PRO FORMA STATEMENTS OF OPERATIONS
NOTE 1: Health Care Property Investors, Inc. (the "Company") acquired eight
assisted living facilities, one physician group practice clinic, and a majority
interest in a limited liability company which owns a group of five multi-tenant
medical office buildings ("MOBs") in seven separate transactions at an aggregate
purchase price of approximately $103,495,000. The facilities, other than the
MOBs, were leased to five different operators under triple-net leases generally
similar to the Company's existing leases and are accounted for as operating
leases. The leases have initial terms of 12-15 years. The Company earns fixed
monthly base rental income and may earn periodic additional rents. The
additional payments are generally computed based upon increases in the Consumer
Price Index or as a percentage of facility net patient revenues in excess of
base amounts. Additional rents generally commence in the second year of the
leases. With the exception of the MOBs under terms of the leases, the lessees
are responsible for all maintenance, repairs, taxes and insurance on the leased
properties. The MOBs have gross leases.
The pro forma statements of operations reflect the acquisitions of the
properties as if they had been owned since January 15, 1996.
NOTE 2: For triple-net leases, pro forma base rental income is based upon the
monthly minimum rents specified in the leases. The MOBs are leased to multiple
tenants under gross leases. The pro forma amounts for the MOBs reflects current
expected rents. No additional rent amounts are assumed for purposes of the pro
forma statements of operations based upon the terms of the lease.
Pro forma depreciation is based upon the purchase prices of the facilities being
allocated to building, equipment and improvements and depreciated over 35, 5 and
7 years, respectively.
Pro forma interest expense is calculated using an interest rate of 5.90%, which
is the Company's weighted average borrowing rate for the year to date on short-
term borrowings, applied against the aggregate purchase prices. The Company has
two unsecured bank lines of credit, one for $100,000,000 which expires on
October 22, 2002 and one for $50,000,000 which expires on October 22, 1998. The
Company repaid approximately $58 million of the line of credit borrowings with
the proceeds of a preferred stock offering during September 1997. Accordingly,
the actual interest expense resulting from the acquisitions of the facilities
may vary.
No pro forma operating expenses are included other than for the MOBs because:
(1) such amounts are expected to be immaterial, and (2) the Company does not
expect to add additional staff as a result of the transactions described in Note
1 above. The pro forma amounts for the MOBs are based upon current actual and
estimated operating expenses.
NOTE 3: The preparation of financial statements requires management to make
estimates and assumptions that affect the revenues and expenses during the
reporting period. Actual results could differ from those estimates.
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following Pro Forma Balance Sheet as of September 30, 1997 has been prepared
to reflect the acquisition of six facilites during the period from October 1,
1997 to November 21, 1997 and the adjustments described in the accompanying
notes.
The following unaudited Pro Forma Statements of Operations for the nine months
ended September 30, 1997 and for the year ended December 31, 1996 have been
prepared to reflect the acquisition of 14 facilities during the period from
January 1, 1997 through November 21, 1997 (the "Acquired Facilities") and the
adjustments described in the accompanying notes.
The pro forma financial information is based on the historical financial
statements of Health Care Property Investors, Inc. in the Company's Form 10-Q
for the period ended September 30, 1997 and the other financial information in
the Company's 1996 Annual Report to Shareholders on Form 10-K, and should be
read in conjunction with those financial statements and the notes thereto.
The Pro Forma Balance Sheet was prepared as if the six facilities acquired after
September 30, 1997 were purchased on September 30, 1997. The Pro Forma
Statements of Operations were prepared as if the Acquired Facilities were
purchased as of January 1, 1996.
The combined pro forma financial information is not necessarily indicative of
the financial position or results of operations which actually would have
occurred if such transactions had been consummated on the dates described, nor
does it purport to represent the Company's future financial position or results
of operations.
<PAGE>
HEALTH CARE PROPERTY INVESTORS, INC.
UNAUDITED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
September 30, September 30,
1997 Adjustments 1997
------------------ ----------------- ----------------
ASSETS
<S> <C> <C> <C>
Real Estate Investments
Buildings and Improvements $ 762,285 $ 36,176 $ 798,461
Accumulated Depreciation (165,329) --- (165,329)
------------- -------------- -------------
596,956 36,176 633,132
Construction in Progress 17,471 --- 17,471
Land 82,399 15,174 97,573
------------- -------------- -------------
696,826 51,350 748,176
Loans Receivable 112,422 --- 112,422
Investments in and Advances to Partnerships 6,429 --- 6,429
Other Assets 8,392 --- 8,392
Cash and Cash Equivalents 3,020 (200) 2,820
------------- -------------- -------------
TOTAL ASSETS $ 827,089 $ 51,150 $ 878,239
============= =============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank Notes Payable $ 7,400 $ 45,650 $ 53,050
Senior Notes Payable 274,978 --- 274,978
Convertible Subordinated Notes Payable 100,000 --- 100,000
Mortgage Notes Payable 11,249 --- 11,249
Accounts Payable, Accrued Liabilities and Deferred Income 24,751 --- 24,751
Minority Interests in Partnerships 17,040 5,500 22,540
Stockholders' Equity:
Preferred Stock 57,810 --- 57,810
Common Stock 28,727 --- 28,727
Additional Paid-In Capital 357,160 --- 357,160
Cumulative Net Income 428,102 --- 428,102
Cumulative Dividends (480,128) --- (480,128)
------------- -------------- -------------
TOTAL STOCKHOLDERS' EQUITY 391,671 --- 391,671
------------- -------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 827,089 $ 51,150 $ 878,239
============= =============== ==============
</TABLE>
See Accompanying Notes.
<PAGE>
HEALTH CARE PROPERTY INVESTORS, INC.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
SEPTEMBER 30, 1997
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Pro Forma
Nine Months Nine Months
Ended Ended
September 30, September 30,
----------------- ----------------
1997 Adjustments 1997
----------------- --------------- ----------------
REVENUE
<S> <C> <C> <C>
Base Rental Income $ 68,337 $ 6,884 $ 75,221
Additional Rental and Interest Income 15,821 --- 15,821
Interest and Other Income 10,767 --- 10,767
---------- --------- -----------
94,925 6,884 101,809
---------- --------- -----------
EXPENSE
Interest Expense 21,407 3,254 24,661
Depreciation/Non Cash Charges 19,056 1,610 20,666
Other Expenses 5,511 1,169 6,680
---------- --------- -----------
45,974 6,033 52,007
---------- --------- -----------
INCOME FROM OPERATIONS 48,951 851 49,802
Minority Interests (2,866) (45) (2,911)
Gain on Sale of Real Estate Properties 2,047 --- 2,047
---------- --------- -----------
NET INCOME 48,132 806 48,938
---------- --------- -----------
DIVIDENDS TO PREFERRED STOCKHOLDERS 66 --- 66
---------- --------- -----------
NET INCOME APPLICABLE TO COMMON SHARES $ 48,066 $ 806 $ 48,872
========== ========= ===========
NET INCOME PER COMMON SHARE $ 1.67 $ 1.70
========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 28,711 28,711
========== ===========
</TABLE>
See Accompanying Notes.
<PAGE>
HEALTH CARE PROPERTY INVESTORS, INC.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
DECEMBER 31, 1996
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Pro Forma
Year Ended Year Ended
December 31, December 31,
----------------- -----------------
1996 Adjustments 1996
----------------- ---------------- -----------------
REVENUE
<S> <C> <C> <C>
Base Rental Income $ 83,702 $ 12,181 $ 95,883
Additional Rental and Interest Income 20,925 --- 20,925
Interest and Other Income 15,766 --- 15,766
---------- ---------- ----------
120,393 12,181 132,574
---------- ---------- ----------
EXPENSES
Interest Expense 26,401 6,106 32,507
Depreciation/Non Cash Charges 23,149 3,030 26,179
Other Operating Expenses 6,826 1,559 8,385
---------- ---------- ----------
56,376 10,695 67,071
---------- ---------- ----------
INCOME FROM OPERATIONS 64,017 1,486 65,503
Minority Interests (3,376) (60) (3,436)
---------- ---------- ----------
NET INCOME $ 60,641 $ 1,426 $ 62,067
========== ========== ==========
NET INCOME PER SHARE $ 2.12 $ 2.17
========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 28,652 28,652
========== ==========
</TABLE>
See Accompanying Notes.
<PAGE>
FOOTNOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
NOTE 1: Health Care Property Investors, Inc. (the "Company") acquired eight
assisted living facilities, one physician group practice clinic, and a majority
interest in a limited liability company which owns a group of five multi-tenant
medical office buildings ("MOBs"), in seven separate transactions at an
aggregate purchase price of approximately $103,495,000. The facilities other
than the MOBs, were leased to five different operators under triple-net leases
generally similar to the Company's existing leases and are accounted for as
operating leases. The leases have initial terms of 12-15 years. The Company
earns fixed monthly base rental income and may earn periodic additional rents.
The additional payments are generally computed based upon increases in the
Consumer Price Index or as a percentage of facility net patient revenues in
excess of base amounts. Additional rents generally commence in the second year
of the leases. With the exception of the MOBs, under terms of the leases, the
lessees are responsible for all maintenance, repairs, taxes and insurance on the
leased properties. The MOBs have gross leases.
The pro forma statements of operations reflect the acquisitions of the
properties as if they had been owned since January 1, 1996, and the pro forma
balance sheet reflects the acquisition of the properties as if all such
properties had been owned on September 30, 1997.
NOTE 2: The pro forma balance sheet adjustments reflect the allocation between
land and building and improvements of the $51,150,000 of acquired properties
purchased after September 30, 1997, the increase in bank borrowings used to fund
the purchases, and a reduction in cash to reflect payment of miscellaneous
closing costs. No adjustment has been made to accumulated depreciation for those
properties acquired prior to September 30, 1997.
NOTE 3: For triple-net leases, the pro forma base rental income adjustment is
based upon the monthly minimum rents specified in the leases. No additional rent
amounts are assumed for purposes of the pro forma statements of income based
upon the terms of the lease. The MOBs are leased to multiple tenants under gross
leases. The pro forma amounts for the MOBs reflect current expected rents. No
additional rent amounts are assumed for purposes of the pro forma statements of
operations based upon the lease terms.
The pro forma depreciation adjustment is based upon the purchase prices of the
facilities being allocated to building, equipment and improvements and
depreciated over 35, 5 and 7 years, respectively.
Pro forma interest expense adjustment is calculated using 5.90%, which is the
Company's weighted average borrowing rate for the year to date short term
borrowings applied against the aggregate purchase prices. The Company has two
unsecured lines of credit, one for $100,000,000 which expires on October 22,
2002 and one for $50,000,000 which expires on October 22, 1998. The Company
repaid approximately $58 million of the line of credit borrowings with the
proceeds of a preferred stock offering during September 1997. Accordingly, the
actual interest expense resulting from the acquisitions of the facilities may
vary.
No pro forma operating expense adjustments are included other than for the
MOBs because: (1) such amounts are expected to be immaterial, and (2) the
Company does not expect to add additional staff as a result of the transactions
described in Note 1 above. The pro forma operating expense adjustment for the
MOBs is based upon current actual and estimated operating expenses.
NOTE 4: The preparation of financial statements requires management to make
estimates and assumptions that affect the revenues and expenses during the
reporting period. Actual results could differ from those estimates.
<PAGE>
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.
Date: December 4, 1997 HEALTH CARE PROPERTY INVESTORS, INC.
(REGISTRANT)
/s/ James G. Reynolds
-----------------------------
James G. Reynolds
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ Devasis Ghose
-----------------------------
Devasis Ghose
Senior Vice President-Finance and Treasurer
(Principal Accounting Officer)
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the previously filed
Registration Statement No. 333-29485 of Health Care Property Investors, Inc. of
our report dated December 5, 1997, with respect to the Pro Forma Statements of
Operations of the Acquired Properties (as listed in Item 2 of the Current Report
on Form 8-K) included in the Current Report on Form 8-K dated December 5, 1997,
filed with the Securities and Exchange Commission.
ARTHUR ANDERSEN LLP
Los Angeles, California
December 5, 1997
