<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 18, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HEALTH CARE PROPERTY INVESTORS, INC.
(FIRST NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 33-0091377
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR (IDENTIFICATION NO.)
ORGANIZATION)
4675 MACARTHUR COURT, 9TH FLOOR
NEWPORT BEACH, CALIFORNIA 92660
(949) 221-0600
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
INCLUDING AREA CODE OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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KENNETH B. ROATH
CHAIRMAN, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
4675 MACARTHUR COURT, 9TH FLOOR
NEWPORT BEACH, CALIFORNIA 92660
(949) 221-0600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES TO:
PAMELA B. KELLY, ESQ. PAUL C. PRINGLE, ESQ.
GARY OLSON, ESQ. BROWN & WOOD LLP
LATHAM & WATKINS 555 CALIFORNIA STREET
633 WEST FIFTH STREET, SUITE SAN FRANCISCO, CALIFORNIA 94104
4000 (415) 772-1200
LOS ANGELES, CALIFORNIA 90071-2007
(213) 485-1234
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined
by market conditions.
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If the only securities being registered on this Form are being offered
pursuant to a dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest investment plans, check the following
box. [X]
If this Form is filed to register additional securities for the offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED(1) REGISTERED PER UNIT OFFERING PRICE(2) FEE(3)
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<S> <C> <C> <C> <C>
Debt Securities, Preferred Stock, Common
Stock and Rights (4) (4) $600,000,000 $177,000
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</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
(1) This Registration Statement also covers delayed delivery contracts which
may be issued by the Registrant under which the counterparty may be
required to purchase Debt Securities, Preferred Stock or Common Stock.
Such contracts would be issued with the Debt Securities, Preferred Stock
and/or Common Stock.
(2) In no event will the aggregate maximum offering price of all securities
issued pursuant to this Registration Statement exceed $600,000,000.
(3) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act.
(4) Not applicable pursuant to General Instruction II.D. of Form S-3 under the
Securities Act.
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<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 18, 1998
PROSPECTUS
HEALTH CARE PROPERTY INVESTORS, INC.
SECURITIES
Health Care Property Investors, Inc. (the "Company") may offer from time to
time, in one or more series, its unsecured debt securities (the "Debt
Securities"), shares of its Preferred Stock, par value $1.00 per share (the
"Preferred Stock") and shares of its Common Stock, par value $1.00 per share
(the "Common Stock"). The Debt Securities, the Preferred Stock and the Common
Stock are collectively referred to herein as the "Securities." The Securities
will have an aggregate Offering price of $600,000,000 and will be offered on
terms to be determined at the time of the Offering.
In the case of Debt Securities, the specific title, the aggregate principal
amount, the purchase price, the maturity, the rate and time of payment of any
interest, any redemption or sinking fund provisions, any conversion provisions
and any other specific term of the Debt Securities will be set forth in the
accompanying supplement to this Prospectus (the "Prospectus Supplement") and/or
a related pricing supplement (the "Pricing Supplement"). In the case of
Preferred Stock, the specific number of shares, designation, stated value per
share, liquidation preference per share, issuance price, dividend rate (or
method of calculation), dividend payment dates, any redemption or sinking fund
provisions, any conversion rights and any other specific term of the series of
Preferred Stock will be set forth in the accompanying Prospectus Supplement. In
the case of Common Stock, the specific number of shares and issuance price per
share will be set forth in the accompanying Prospectus Supplement. The
Prospectus Supplement will also disclose whether the Securities will be listed
on a national securities exchange and if they are not to be listed, the
possible effects thereof on their marketability.
Securities may be sold directly, through agents from time to time or through
underwriters or dealers, which may include Merrill Lynch, Pierce, Fenner &
Smith Incorporated. If any agent of the Company or any underwriter is involved
in the sale of the Securities, the name of such agent or underwriter and any
applicable commission or discount will be set forth in the accompanying
Prospectus Supplement. See "Plan of Distribution." The net proceeds to the
Company from such sale also will be set forth in the applicable Prospectus
Supplement.
The Debt Securities, if issued, will rank on parity with all other unsecured
and unsubordinated indebtedness of the Company. See "Description of the Debt
Securities."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
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The date of this Prospectus is , 1998.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY STATE.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files, reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected and copied at Room 1024 of the offices of
the Commission, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and is available for inspection and copying at the regional offices of
the Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048, and Suite 1400, Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material can be obtained from the principal
offices of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a world
wide web site at http://www.sec.gov that contains reports, proxy and other
information regarding registrants that file electronically with the
Commission. Reports, proxy materials and other information concerning the
Company may also be inspected at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"). This Prospectus and any accompanying Prospectus Supplement do not
contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is made to
the Registration Statement, which may be examined without charge at the public
reference facilities maintained by the Commission at the Public Reference Room
of the Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies thereof may be obtained from the Commission
upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's (i) Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, (ii) proxy statement dated March 30, 1998, (iii) Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998, and (iv) the
description of the Common Stock contained in the Company's Registration
Statement on Form 10, dated May 7, 1985 (File No. 1-8895), including
amendments dated May 20, 1985, May 23, 1985 and July 17, 1990, in each case as
filed with the Commission pursuant to the Exchange Act, are hereby
incorporated by reference into this Prospectus and shall be deemed to be a
part hereof.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the Offering of the Securities offered hereby shall be deemed
to be incorporated by reference into this Prospectus and to be part hereof
from the date of filing such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document, as the case may be, which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered, upon written or oral request. Copies of this
Prospectus, as amended or supplemented from time to time, and any other
documents (or parts of documents) that constitute part of this Prospectus
under Section 10(a) of the Securities Act will also be provided without charge
to each such person, upon written or oral request. Requests for such copies
should be directed to James G. Reynolds, Executive Vice President and Chief
Financial Officer, Health Care Property Investors, Inc., 4675 MacArthur Court,
9th Floor, Newport Beach, California 92660, (949) 221-0600.
2
<PAGE>
CAUTIONARY LANGUAGE REGARDING FORWARD LOOKING STATEMENTS
Statements in this Prospectus that are not historical factual statements are
"forward looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. The Company intends such
forward looking statements to be covered by the safe harbor provisions for
forward looking statements contained in the Private Securities Litigation
Reform Act of 1995 and is including this statement for purposes of complying
with these safe harbor provisions. The statements include, among other things,
statements regarding the intent, belief or expectations of the Company and its
officers and can be identified by the use of terminology such as "may,"
"will," "expect," "believe," "intend," "plan," "estimate," "should" and other
comparable terms or the negative thereof. In addition, the Company, through
its senior management, from time to time makes forward looking oral and
written public statements concerning the Company's expected future operations
and other developments. Stockholders and other investors are cautioned that,
while forward looking statements reflect the Company's good faith beliefs and
best judgment based upon current information, they are not guarantees of
future performance and are subject to known and unknown risks and
uncertainties. Actual results may differ materially from the expectations
contained in the forward looking statements as a result of various factors.
Such factors include (i) legislative, regulatory, or other changes in the
health care industry at the local, state or federal level which increase the
costs of or otherwise affect the operations of the Company's Lessees (as
defined below); (ii) changes in the reimbursement available to the Company's
Lessees and mortgagors by governmental or private payors, including changes in
Medicare and Medicaid payment levels and the availability and cost of third
party insurance coverage; (iii) competition for Leasees and mortgagors,
including with respect to new leases and mortgages and the renewal or roll-
over of existing leases; (iv) competition for the acquisition and financing of
health care facilities; (v) the ability of the Company's Lessees and
mortgagors to operate the Company's properties in a manner sufficient to
maintain or increase revenues and to generate sufficient income to make rent
and loan payments; and, (vi) changes in national or regional economic
conditions, including changes in interest rates and the availability and cost
of capital to the Company.
THE COMPANY
Health Care Property Investors, Inc. (the "Company"), a Maryland
corporation, was organized in March 1985 to qualify as a real estate
investment trust (a "REIT"). The Company invests in health care related real
estate located throughout the United States, including long-term care
facilities, congregate care and assisted living facilities, acute care and
rehabilitation hospitals, medical office buildings, physician group practice
clinics and psychiatric facilities.
References herein to the Company include Health Care Property Investors,
Inc. and its wholly-owned subsidiaries, unless the context otherwise requires.
The Company's principal offices are located at 4675 MacArthur Court, 9th
Floor, Newport Beach, California 92660, and its telephone number is
(949) 221-0600.
3
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RATIO OF EARNINGS TO FIXED CHARGES
Set forth below is the ratio of earnings to fixed charges for the Company
for the periods indicated:
<TABLE>
<CAPTION>
THREE
MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------ MARCH 31,
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1)....... 3.06 3.35 3.67 3.16 3.03 3.13
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends(2)........... 3.06 3.35 3.67 3.16 2.92 2.75
</TABLE>
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(1) In computing the ratios of earnings to fixed charges: (a) earnings have
been based on consolidated income from operations before fixed charges
(exclusive of capitalized interest) and (b) fixed charges consist of
interest on debt including amounts capitalized and the pro rata share of
the partnerships' fixed charges.
(2) In computing the ratios of earnings to combined fixed charges and
preferred stock dividends, preferred stock dividends consist of dividends
on the Company's 7 7/8% Series A Cumulative Redeemable Preferred Stock
which was issued on September 26, 1997.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement which accompanies
this Prospectus, the net proceeds from the sale of the Securities offered from
time to time hereby will be used for general corporate purposes, including the
repayment of outstanding indebtedness, the acquisition of health care related
properties and the construction thereof.
4
<PAGE>
DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities are to be issued under an existing indenture (the
"Indenture") dated as of September 1, 1993 between the Company and The Bank of
New York, as Trustee (the "Trustee"), which has been filed with the Commission
and incorporated by reference in the Registration Statement of which this
Prospectus is a part. The following summaries of certain provisions of the
Indenture and the Debt Securities do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all of the
provisions of the Indenture to which reference is hereby made for a full
description of such provisions, including the definitions therein of certain
terms and for other information regarding the Debt Securities. Whenever
particular sections or defined terms of the Indenture are referred to, it is
intended that such sections or defined terms shall be incorporated herein by
reference. Copies of the Indenture are available for inspection during normal
business hours at the principal executive offices of the Company, 4675
MacArthur Court, 9th Floor, Newport Beach, California 92660.
The following sets forth certain general terms and provisions of the Debt
Securities offered by this Prospectus and the accompanying Prospectus
Supplement (the "Offered Debt Securities"). Further terms of the Offered Debt
Securities are set forth in the applicable Prospectus Supplement and/or an
applicable Pricing Supplement.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provides that the Debt
Securities may be issued from time to time in one or more series. All
securities issued under the Indenture will rank equally and ratably with all
other securities issued under the Indenture.
The Debt Securities will be unsecured and will rank on a parity with all
other unsecured and unsubordinated indebtedness of the Company. The Debt
Securities are not, by their terms, subordinate in right of payment to any
other indebtedness of the Company.
The Prospectus Supplement and any related Pricing Supplement will describe
certain terms of the Offered Debt Securities, including (a) the title of the
Offered Debt Securities; (b) any limit on the aggregate principal amount of
the Offered Debt Securities and their purchase price; (c) the date or dates on
which the Offered Debt Securities will mature; (d) the rate or rates per annum
(or manner in which interest is to be determined) at which the Offered Debt
Securities will bear interest, if any, and the date from which such interest,
if any, will accrue; (e) the dates on which such interest, if any, on the
Offered Debt Securities will be payable and the Regular Record Dates for such
Interest Payment Dates; (f) any mandatory or optional sinking fund or
analogous provisions; (g) additional provisions, if any, for the defeasance of
the Offered Debt Securities; (h) the date, if any, after which and the price
or prices at which the Offered Debt Securities may, pursuant to any optional
or mandatory redemption or repayment provisions, be redeemed and the other
detailed terms and provisions of any such optional or mandatory redemption or
repayment provisions; (i) whether the Offered Debt Securities are to be issued
in whole or in part in registered form represented by one or more registered
global securities (a "Registered Global Security") and, if so, the identity of
the depositary for such Registered Global Security or Securities; (j) any
applicable material United States federal income tax consequences; and (k) any
other specific terms of the Offered Debt Securities, including any additional
events of default or covenants provided for with respect to such Debt
Securities, and any terms that may be required by or advisable under
applicable laws or regulations.
Principal of, premium, if any, and interest, if any, on the Debt Securities
will be payable at such place or places as are designated by the Company and
set forth in the applicable Prospectus Supplement. Interest, if any, on the
Debt Securities will be paid, unless otherwise provided in the applicable
Prospectus Supplement, by check mailed to the person in whose name the Debt
Securities are registered at the close of business on the record dates
designated in the applicable Prospectus Supplement at the address of the
related holder appearing on the register of Debt Securities. The Trustee will
maintain at an office in the Borough of Manhattan, The City of New York, a
register for the registration of transfers of Debt Securities, subject to any
restrictions set forth in the applicable Prospectus Supplement relating to the
Debt Securities.
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<PAGE>
Unless otherwise provided in the applicable Prospectus Supplement or Pricing
Supplement, the Debt Securities will be issued only in fully registered form
without coupons, and in denominations of $1,000 or any larger amount that is
an integral multiple of $1,000. Debt Securities may be presented for exchange
and transfer in the manner, at the places and subject to the restrictions set
forth in the Indenture, the Debt Securities and the Prospectus Supplement.
Such services will be provided without charge, other than any tax or other
governmental charge payable in connection therewith, but subject to the
limitations provided in the Indenture.
Debt Securities will bear interest at a fixed rate or a floating rate. The
Debt Securities may be issued at a price less than their stated redemption
price at maturity, resulting in such Debt Securities being treated as issued
with original issue discount for federal income tax purposes ("Original Issue
Discount Debt Securities"). Such Original Issue Discount Debt Securities may
currently pay no interest or interest at a rate which at the time of issuance
is below market rates. Special federal income tax and other considerations
applicable to any such discounted Notes will be described in the Prospectus
Supplement or Pricing Supplement relating thereto.
The Indenture provides that all Debt Securities of any one series need not
be issued at the same time and that the Company may, from time to time, issue
additional Debt Securities of a previously issued series. In addition, the
Indenture provides that the Company may issue Debt Securities with terms
different from those of any other series of Debt Securities and, within a
series of Debt Securities, certain terms (such as interest rate or manner in
which interest is calculated and maturity date) may differ.
CONVERSION RIGHTS
The terms, if any, on which Debt Securities of a series may be exchanged for
or converted into shares of Common Stock, Preferred Stock or Debt Securities
of another series will be set forth in the Prospectus Supplement relating
thereto. To protect the Company's status as a REIT, a holder may not convert
any Debt Security, and such Debt Security shall not be convertible by any
holder, if as a result of such conversion any person would then be deemed to
beneficially own, directly or indirectly, 9.9% or more of the Company's Common
Stock.
GLOBAL DEBT SECURITIES
The registered Debt Securities of a series may be issued in the form of one
or more fully registered global Securities (a "Registered Global Security")
that will be deposited with a depositary (a "Depositary") or with a nominee
for a Depositary identified in the Prospectus Supplement relating to such
series and registered in the name of the Depositary or a nominee thereof. In
such case, one or more Registered Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding registered Debt Securities of the series to be
represented by such Registered Global Security or Securities. Unless and until
it is exchanged in whole for Debt Securities in definitive registered form, a
Registered Global Security may not be transferred except as a whole by the
Depositary for such Registered Security to a nominee of such Depositary or by
a nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor of such
Depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Registered Global
Security will be described in the Prospectus Supplement relating to such
series. The Company anticipates that the following provisions will apply to
all depositary arrangements.
Ownership of beneficial interests in a Registered Global Security will be
limited to persons that have accounts with the Depositary for such Registered
Global Security ("participants") or persons that may hold interests through
participants. Upon the issuance of a Registered Global Security, the
Depositary for such Registered Global Security will credit, on its book-entry
registration and transfer system, the participants' accounts with the
respective principal amounts of the Debt Securities represented by such
Registered Global Security beneficially owned by such participants. The
accounts to be credited shall be designated by any dealers,
6
<PAGE>
underwriters or agents participating in the distribution of such Debt
Securities. Ownership of beneficial interests in such Registered Global
Security will be shown on, and the transfer of such ownership interests will
be effected only through, records maintained by the Depositary for such
Registered Global Security (with respect to interests of participants) and on
the records of participants (with respect to interests of persons holding
through participants). The laws of some states may require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to own,
transfer or pledge beneficial interests in Registered Global Securities.
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder
of the Debt Securities represented by such Registered Global Security for all
purposes under the Indenture. Except as set forth below, owners of beneficial
interests in a Registered Global Security will not be entitled to have the
Debt Securities represented by such Registered Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
such Debt Securities in definitive form and will not be considered the owners
or holders thereof under the Indenture. Accordingly, each person owning a
beneficial interest in a Registered Global Security must rely on the
procedures of the Depositary for such Registered Global Security and, if such
person is not a participant, on the procedures of the participant through
which such person owns its interest, to exercise any rights of a holder under
the Indenture. The Company understands that under existing industry practices,
if the Company requests any action of holders or if an owner of a beneficial
interest in a Registered Global Security desires to give or take any action
which a holder is entitled to give or take under the Indenture, the Depositary
for such Registered Global Security would authorize the participants holding
the relevant beneficial interests to give or take such action, and such
participants would authorize beneficial owners owning through such
participants to give or take such action or would otherwise act upon the
instructions of beneficial owners holding through them.
Principal, premium, if any, and interest payments of Debt Securities
represented by a Registered Global Security registered in the name of a
Depositary or its nominee will be made to such Depositary or its nominee, as
the case may be, as the registered owner of such Registered Global Security.
None of the Company, the Trustee or any other agent of the Company or agent of
the Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in such Registered Global Security or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.
The Company expects that the Depositary for any Debt Securities represented
by a Registered Global Security, upon receipt of any payment of principal,
premium or interest in respect of such Registered Global Security, will
immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in such Registered
Global Security as shown on the records of such Depositary. The Company also
expects that payments by participants to owners of beneficial interests in
such Registered Global Security held through such participants will be
governed by standing customer instructions and customary practices, as is now
the case with the securities held for the accounts of customers in bearer form
or registered in "street name," and will be responsibility of such
participants.
If the Depositary for any Debt Securities represented by a Registered Global
Security is at any time unwilling or unable to continue as Depositary or
ceases to be a clearing agency registered under the Exchange Act, and a
successor Depositary registered as a clearing agency under the Exchange Act is
not appointed by the Company within 90 days, the Company will issue such Debt
Securities in definitive form in exchange for such Registered Global Security.
In addition, the Company may at any time and in its sole discretion determine
not to have any of the Debt Securities of a series represented by one or more
Registered Global Securities and, in such event, will issue Debt Securities of
such series in definitive form in exchange for the Registered Global Security
or Securities representing such Debt Securities. Any Debt Securities issued in
definitive form in exchange for a Registered Global Security will be
registered in such name or names as the Depositary shall instruct the Trustee.
It is expected that such instructions will be based upon directions received
by the Depositary from participants with respect to ownership of beneficial
interests in such Registered Global Security.
7
<PAGE>
CERTAIN COVENANTS OF THE COMPANY
Limitation on Borrowing Money
The Company covenants in the Indenture that it will not create, assume,
incur, or otherwise become liable in respect of, any
(a) Senior Debt (as defined below) unless the aggregate principal amount
of Senior Debt outstanding of the Company will not, at the time of such
creation, assumption or incurrence and after giving effect thereto and to
any concurrent transactions, exceed the greater of (i) 300% of Capital Base
(as defined below), or (ii) 500% of Tangible Net Worth (as defined below);
and
(b) Non-Recourse Debt (as defined below) unless the aggregate principal
amount of Senior Debt and Non-Recourse Debt outstanding of the Company will
not, at the time of such creation, assumption or incurrence and after
giving effect thereto and to any concurrent transactions, exceed 500% of
Capital Base.
For the purpose of this limitation as to borrowing money, "Senior Debt"
shall mean all Debt other than Non-Recourse Debt and Subordinated Debt;
"Debt," with respect to any Person, shall mean (i) its indebtedness, secured
or unsecured, for borrowed money; (ii) Liabilities secured by any existing
lien on property owned by such Person; (iii) Capital Lease Obligations, and
the present value of all payments due under any arrangement for retention of
title (discounted at the implicit rate if known and at 9% otherwise) if such
arrangement is in substance an installment purchase or an arrangement for the
retention of title for security purposes; and (iv) guarantees of obligations
of the character specified in the foregoing clauses (i), (ii) and (iii), to
the full extent of the liability of the guarantor (discounted to present
value, as provided in the foregoing clause (iii), in the case of guarantees of
title retention arrangements); "Capital Lease" shall mean at any time any
lease of Property which, in accordance with generally accepted accounting
principles, would at such time be required to be capitalized on a balance
sheet of the lessee; "Capital Lease Obligation" shall mean at any time the
amount of the liability in respect of a Capital Lease which, in accordance
with generally accepted accounting principles, would at such time be so
required to be capitalized on a balance sheet of the lessee; "Property" shall
mean any interest in any kind of property or asset, whether real, personal or
mixed, or tangible or intangible; "Person" shall mean an individual,
partnership, joint venture, joint-stock company, association, corporation,
trust or unincorporated organization, or a government or agency or political
subdivision thereof; "Non-Recourse Debt" with respect to any Person, shall
mean any Debt secured by, and only by, property on or with respect to which
such Debt is incurred where the rights and remedies of the holder of such Debt
in the event of default do not extend to assets other than the property
constituting security therefor; "Subordinated Debt" shall mean any unsecured
Debt of the Company which is issued or assumed pursuant to, or evidenced by,
an indenture or other instrument which contains provisions for the
subordination of such other Debt (to which appropriate reference shall be made
in the instruments evidencing such other Debt if not contained therein) to the
Debt Securities (and, at the option of the Company, if so provided, to other
Debt of the Company, either generally or as specifically designated); "Capital
Base" shall mean, at any date, the sum of Tangible Net Worth and Subordinated
Debt; "Tangible Net Worth" shall mean, at any date, the net book value (after
deducting related depreciation, obsolescence, amortization, valuation, and
other proper reserves) of the Tangible Assets of the Company at such date,
minus the amount of its Liabilities at such date; "Tangible Assets" shall mean
all assets of the Company (including assets held subject to Capital Leases and
other arrangements pursuant to which title to the Property has been retained
by or vested in some other Person for security purposes) except: (i) deferred
assets other than prepaid insurance, prepaid taxes and deposits; (ii) patents,
copyrights, trademarks, trade names, franchises, goodwill, experimental
expense and other similar intangibles; and (iii) unamortized debt discount and
expense; and "Liabilities" shall mean any date the items shown as liabilities
on the balance sheet of the Company, except any items of deferred income,
including capital gains.
Consolidation, Merger and Sale of Assets
The Company shall not consolidate or merge with or into, or transfer or
lease its assets substantially as an entirety to any person unless the Company
shall be the continuing corporation, or the successor corporation or person to
which such assets are transferred or leased shall be organized under the laws
of the United States or
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any state thereof or the District of Columbia and shall expressly assume the
Company's obligations on the Debt Securities and under such Indenture, and
after giving effect to such transaction no Event of Default shall have
occurred and be continuing, and certain other conditions are met.
Additional Covenants
Any additional covenants of the Company with respect to a series of the Debt
Securities will be set forth in the Prospectus Supplement and/or Pricing
Supplement relating thereto.
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture with respect to
the Debt Securities of any series: (a) failure to pay principal of or any
premium on any Debt Security of such series when due; (b) failure to pay any
interest on any Debt Security of such series when due, continued for 30 days;
(c) failure to deposit any sinking fund payment when due in respect of any
Debt Security of such series; (d) failure to perform any other covenant or
warranty of the Company in the Indenture (other than a covenant or warranty
included in the Indenture solely for the benefit of one or more series of Debt
Securities other than that series), continued for 60 days after written notice
by the Trustee to the Company or by the holders of at least 25% in aggregate
principal amount of the Outstanding Debt Securities of such series to the
Company and the Trustee as provided in the Indenture; (e) certain events in
bankruptcy, insolvency, conservatorship, receivership or reorganization of the
Company; (f) an acceleration of any other indebtedness of the Company, in an
aggregate principal amount exceeding $20,000,000, not rescinded or annulled
within 10 days after written notice is given as provided in the Indenture; and
(g) the occurrence of any other Event of Default provided with respect to the
Debt Securities of that series.
If an Event of Default with respect to the Outstanding Debt Securities of
any series occurs and is continuing, either the Trustee or the holders of at
least 25% in aggregate principal amount of the Outstanding Debt Securities of
that series may declare the principal amount of all the Outstanding Debt
Securities of that series to be due and payable immediately. At any time after
the declaration of acceleration with respect to the Debt Securities of any
series has been made, but before a judgment or decree based on acceleration
has been obtained, the holders of a majority in aggregate principal amount of
the Outstanding Debt Securities of that series may, under certain
circumstances, rescind and annul such acceleration.
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a default with respect to a series of Debt Securities, give to
the holders of the Outstanding Debt Securities of such series notice of all
uncured defaults known to it. Except in the case of default in the payment of
principal, premium, if any, or interest, if any, on any Debt Securities of a
series, the Trustee shall be protected in withholding such notice if the
Trustee in good faith determines that the withholding of such notice is in the
interest of the holders of Outstanding Debt Securities of such series.
The Indenture provides that, subject to the duty of the Trustee during the
continuance of an Event of Default to act with the required standard of care,
the Trustee will be under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any of the holders,
unless such holders shall have offered to the Trustee reasonable indemnity.
Subject to such provisions for the indemnification of the Trustee and subject
to certain other limitations, the holders of a majority in aggregate principal
amount of the Outstanding Debt Securities of any series will have the right to
direct the time, method and place of conducting any proceedings for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Debt Securities of that series.
The Company is required to furnish to the Trustee annually a statement as to
the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance.
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MODIFICATION, WAIVER AND AMENDMENT
The Indenture provides that modifications and amendments may be made by the
Company and the Trustee to the Indenture with the consent of the holders of
not less than 66 2/3% in aggregate principal amount of the Outstanding Debt
Securities of each series affected by such modification or amendment;
provided, however, that no such modification or amendment may, without the
consent of the holder of each Outstanding Debt Security affected thereby, (a)
change the Stated Maturity of the principal of, or any installment of
principal of, premium, if any, or interest, if any, on any Debt Security; (b)
reduce the principal amount of, premium, if any, or interest, if any, on any
Debt Security; (c) reduce the amount of principal of an Original Issue
Discount Debt Security payable upon acceleration of the Stated Maturity
thereof; (d) change the place or currency of payment of the principal of,
premium, if any, or interest, if any, on any Debt Security; (e) impair the
right to institute suit for the enforcement of any payment on or with respect
to any Debt Security; or (f) reduce the percentage in aggregate principal
amount of the Outstanding Debt Securities of any series, the consent of whose
holders is required for modification or amendment of the Indenture or for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults.
The holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of each series will be able, on behalf of all holders of the
Debt Securities of that series, to waive compliance by the Company with
certain restrictive provisions of the Indenture, or any past default under the
Indenture with respect to the Debt Securities of that series, except a default
in the payment of principal, premium, if any, or interest, if any, or in
respect of a provision of the Indenture which cannot be amended or modified
without the consent of the holder of each Outstanding Debt Security of the
series affected.
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture, with respect to any and all series of Debt Securities (except
for certain specified surviving obligations including, among other things, the
Company's obligation to pay the principal of, premium, if any, or interest, if
any, on any Debt Securities), will be discharged and cancelled upon the
satisfaction of certain conditions, including the payment in full of the
principal of, premium, if any, and interest, if any, on all of the Debt
Securities of such series or the deposit with the Trustee of an amount of cash
sufficient for such payment or redemption, in accordance with the Indenture.
DEFEASANCE
The Company will be able to terminate certain of its obligations under the
Indenture with respect to the Debt Securities of any series on the terms and
subject to the conditions contained in the Indenture, by depositing in trust
with the Trustee cash or U.S. government obligations (or combination thereof)
sufficient to pay the principal of, premium, if any, and interest, if any, on
the Debt Securities of such series to their maturity or redemption date in
accordance with the terms of the Indenture and such Debt Securities.
GOVERNING LAW AND CONSENT TO JURISDICTION
The Debt Securities and the Indenture will be governed by and construed in
accordance with the laws of the State of California.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage
in other transactions with the Company; provided, however, that if the Trustee
acquires any conflicting interest it must eliminate such conflict or resign or
otherwise comply with the Trust Indenture Act of 1939, as amended.
The Indenture provides that, in case an Event of Default should occur and be
continuing, the Trustee will be required to use the degree of care and skill
of a prudent person in the conduct of his or her own affairs in the exercise
of its powers.
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DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any Prospectus Supplement will be described in such
Prospectus Supplement. The description of certain provisions of the Preferred
Stock set forth below and in any Prospectus Supplement does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Articles of Restatement of the Company (the "Charter Documents"), and the
Board of Directors' resolution or articles supplementary (the "Articles
Supplementary") relating to each series of the Preferred Stock which will be
filed with the Commission and incorporated by reference to the Registration
Statement of which this Prospectus is a part at or prior to the time of the
issuance of such series of Preferred Stock.
GENERAL
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, $1.00 par value per share, and 50,000,000 shares of Preferred
Stock, $1.00 par value per share. See "Description of Common Stock."
Under the Charter Documents, the Board of Directors of the Company is
authorized without further stockholder action to establish and issue, from
time to time, up to 50,000,000 shares of preferred stock of the Company, in
one or more series, with such designations, preferences, powers and relative
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereon, including, but not limited to, dividend
rights, dividend rate or rates, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), the redemption price
or prices, and the liquidation preferences as shall be stated in the
resolution providing for the issue of a series of such stock, adopted, at any
time or from time to time, by the Board of Directors of the Company.
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference
is made to the Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (i) the
designation and stated value per share of such Preferred Stock and the number
of shares offered; (ii) the amount of liquidation preference per share; (iii)
the initial public offering price at which such Preferred Stock will be
issued; (iv) the dividend rate (or method of calculation), the dates on which
dividends shall be payable and the dates from which dividends shall commence
to cumulate, if any; (v) any redemption or sinking fund provisions; (vi) any
conversion rights; and (vii) any additional voting, dividend, liquidation,
redemption, sinking fund and other rights, preferences, privileges,
limitations and restrictions.
The Preferred Stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights. Unless otherwise stated in a Prospectus
Supplement relating to a particular series of the Preferred Stock, each series
of the Preferred Stock will rank on a parity as to dividends and distributions
of assets with each other series of the Preferred Stock. The rights of the
holders of each series of the Preferred Stock will be subordinate to those of
the Company's general creditors.
CERTAIN PROVISIONS OF THE CHARTER DOCUMENTS
See "Description of Common Stock--Redemption and Business Combination
Provisions" for a description of certain provisions of the Charter Documents,
including provisions relating to redemption rights and provisions which may
have certain anti-takeover effects.
DIVIDEND RIGHTS
Holders of shares of the Preferred Stock of each series will be entitled to
receive, when, as and if declared by the Board of Directors of the Company,
out of funds of the Company legally available therefor, cash
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dividends on such dates and at such rates as will be set forth in, or as are
determined by the method described in, the Prospectus Supplement relating to
such series of the Preferred Stock. Such rate may be fixed or variable or
both. Each such dividend will be payable to the holders of record as they
appear on the stock books of the Company on such record dates, fixed by the
Board of Directors of the Company, as specified in the Prospectus Supplement
relating to such series of Preferred Stock.
Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating to such series of Preferred Stock. If the Board
of Directors of the Company fails to declare a dividend payable on a dividend
payment date on any series of Preferred Stock for which dividends are
noncumulative, then the holders of such series of Preferred Stock will have no
right to receive a dividend in respect of the dividend period ending on such
dividend payment date, and the Company shall have no obligation to pay the
dividend accrued for such period, whether or not dividends on such series are
declared payable on any future dividend payment dates. Dividends on the shares
of each series of Preferred Stock for which dividends are cumulative will
accrue from the date on which the Company initially issues shares of such
series.
So long as the shares of any series of the Preferred Stock shall be
outstanding, unless (i) full dividends (including if such Preferred Stock is
cumulative, dividends for prior dividend periods) shall have been paid or
declared and set apart for payment on all outstanding shares of the Preferred
Stock of such series and all other series of preferred stock of the Company
(other than Junior Stock, as defined below) and (ii) the Company is not in
default or in arrears with respect to the mandatory or optional redemption or
mandatory repurchase or other mandatory retirement of, or with respect to any
sinking or other analogous fund for, any shares of Preferred Stock of such
series or any shares of any other preferred stock of the Company of any series
(other than Junior Stock), the Company may not declare any dividends on any
shares of Common Stock of the Company or any other stock of the Company
ranking as to dividends or distributions of assets junior to such series of
Preferred Stock (the Common Stock and any such other stock being herein
referred to as "Junior Stock"), or make any payment on account of, or set
apart money for, the purchase, redemption or other retirement of, or for a
sinking or other analogous fund for, any shares of Junior Stock or make any
distribution in respect thereof, whether in cash or property or in obligations
or stock of the Company, other than Junior Stock which is neither convertible
into, nor exchangeable or exercisable for, any securities of the Company other
than Junior Stock.
LIQUIDATION PREFERENCE
In the event of any liquidation, dissolution or winding up of the Company,
voluntary or involuntary, the holders of each series of the Preferred Stock
will be entitled to receive out of the assets of the Company available for
distribution to stockholders, before any distribution of assets or payment is
made to the holders of Common Stock or any other shares of stock of the
Company ranking junior as to such distribution or payment to such series of
Preferred Stock, the amount set forth in the Prospectus Supplement relating to
such series of the Preferred Stock. If, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the amounts payable
with respect to the Preferred Stock of any series and any other shares of
preferred stock of the Company (including any other series of the Preferred
Stock) ranking as to any such distribution on a parity with such series of the
Preferred Stock are not paid in full, the holders of the Preferred Stock of
such series and of such other shares of preferred stock of the Company will
share ratably in any such distribution of assets of the Company in proportion
to the full respective preferential amounts to which they are entitled. After
payment to the holders of the Preferred Stock of each series of the full
preferential amounts of the liquidating distribution to which they are
entitled, the holders of each such series of the Preferred Stock will be
entitled to no further participation in any distribution of assets by the
Company.
If such payment shall have been made in full to all holders of shares of
Preferred Stock, the remaining assets of the Company shall be distributed
among the holders of any other classes of stock ranking junior to the
Preferred Stock upon liquidation, dissolution or winding up, according to
their respective rights and preferences and in each case according to their
respective number of shares. For such purposes, the consolidation or merger of
the Company with or into any other corporation, or the sale, lease or
conveyance of all or substantially all of the property or business of the
Company, shall not be deemed to constitute a liquidation, dissolution or
winding up of the Company.
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REDEMPTION
A series of the Preferred Stock may be redeemable, in whole or from time to
time in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms,
at the times and at the redemption prices set forth in the Prospectus
Supplement relating to such series. Shares of the Preferred Stock redeemed by
the Company will be restored to the status of authorized but unissued shares
of preferred stock of the Company.
In the event that fewer than all of the outstanding shares of a series of
the Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or
pro rata (subject to rounding to avoid fractional shares) as may be determined
by the Company or by any other method as may be determined by the Company in
its sole discretion to be equitable. From and after the redemption date
(unless default shall be made by the Company in providing for the payment of
the redemption price plus accumulated and unpaid dividends, if any), dividends
shall cease to accumulate on the shares of the Preferred Stock called for
redemption and all rights of the holders thereof (except the right to receive
the redemption price plus accumulated and unpaid dividends, if any) shall
cease.
So long as any dividends on shares of any series of the Preferred Stock or
any other series of preferred stock of the Company ranking on a parity as to
dividends and distributions of assets with such series of the Preferred Stock
are in arrears, no shares of any such series of the Preferred Stock or such
other series of preferred stock of the Company will be redeemed (whether by
mandatory or optional redemption) unless all such shares are simultaneously
redeemed, and the Company will not purchase or otherwise acquire any such
shares; provided, however, that the foregoing will not prevent the purchase or
acquisition of such shares of Preferred Stock of such series or of shares of
such other series of preferred stock pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of Preferred Stock
of such series, and, unless the full cumulative dividends on all outstanding
shares of any cumulative Preferred Stock of such series and any other stock of
the Company ranking on a parity with such series as to dividends and upon
liquidation shall have been paid or contemporaneously are declared and paid
for all past dividend periods, the Company shall not purchase or otherwise
acquire directly or indirectly any shares of Preferred Stock of such series
(except by conversion into or exchange for stock of the Company) ranking
junior to the Preferred Stock of such series as to dividends and upon
liquidation.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of shares of
Preferred Stock to be redeemed at the address shown on the stock transfer
books of the Company. After the redemption date, dividends will cease to
accrue on the shares of Preferred Stock called for redemption and all rights
of the holders of such shares will terminate, except the right to receive the
redemption price without interest.
CONVERSION RIGHTS
The terms, if any, on which shares of Preferred Stock of any series may be
exchanged for or converted (mandatorily or otherwise) into shares of Common
Stock or another series of Preferred Stock will be set forth in the Prospectus
Supplement relating thereto. See "Description of Common Stock."
VOTING RIGHTS
Except as indicated below or in a Prospectus Supplement relating to a
particular series of the Preferred Stock, or except as required by applicable
law, the holders of the Preferred Stock will not be entitled to vote for any
purpose.
So long as any shares of Preferred Stock remain outstanding, the Company
shall not, without the consent or the affirmative vote of the holders of a
majority of the shares of each series of Preferred Stock outstanding at the
time given in person or by proxy, either in writing or at a meeting (such
series voting separately as a class) (i) authorize, create or issue, or
increase the authorized or issued amount of, any series of stock ranking prior
to
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such series of Preferred Stock with respect to payment of dividends, or the
distribution of assets on liquidation, dissolution or winding up or
reclassifying any authorized stock of the Company into any such shares, or
create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such shares and (ii) to repeal, amend or
otherwise change any of the provisions applicable to the Preferred Stock of
such series in any manner which materially and adversely affects the powers,
preferences, voting power or other rights or privileges of such series of the
Preferred Stock or the holders thereof; provided, however, that any increase
in the amount of the authorized preferred stock or the creation or issuance of
other series of preferred stock, or any increase in the amount of authorized
shares of such series or of any other series of Preferred Stock, in each case
ranking on a parity with or junior to the Preferred Stock of such series,
shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of the Preferred Stock shall have been
redeemed or called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.
RESTRICTIONS ON OWNERSHIP
For the Company to qualify as a real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code"), not more than 50% in
value of its outstanding capital stock may be owned, directly or indirectly,
by five or fewer individuals (as defined in the Code to include certain
entities) during the last half of a taxable year. To assist the Company in
meeting this requirement, the Company may take certain actions to limit the
beneficial ownership, directly or indirectly, by a single person of the
Company's outstanding equity securities, including any Preferred Stock of the
Company. The applicable Prospectus Supplement will specify any additional
ownership limitation relating to a series of Preferred Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent, dividend and redemption price disbursement agent and
registrar for shares of each series of the Preferred Stock will be set forth
in the Prospectus Supplement relating thereto.
DESCRIPTION OF COMMON STOCK
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, par value $1.00 per share, and 50,000,000 shares of Preferred
Stock, par value $1.00 per share. The following description is qualified in
all respects by reference to the Charter Documents of the Company, a copy of
which was filed as an exhibit to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, the Amended and Restated Bylaws of
the Company, a copy of which was filed as an exhibit to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, and the
Rights Agreement (the "Rights Agreement") between the Company and Bank of New
York (successor to Chemical Trust Company of California), as Rights Agent.
COMMON STOCK
All shares of Common Stock participate equally in dividends payable to
holders of Common Stock when and as declared by the Board of Directors and in
net assets available for distribution to holders of Common Stock on
liquidation, dissolution, or winding up of the Company, have one vote per
share on all matters submitted to a vote of the stockholders and do not have
cumulative voting rights in the election of directors. All issued and
outstanding shares of Common Stock are, and the Common Stock offered hereby
will be upon issuance, validly issued, fully paid and nonassessable. Holders
of the Common Stock do not have preference, conversion, exchange or preemptive
rights. The Common Stock is listed on the New York Stock Exchange (NYSE
Symbol: HCP).
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STOCKHOLDER RIGHTS PLAN
On July 5, 1990, the Board of Directors of the Company declared a dividend
distribution of one right (each, a "Right") for each outstanding share of
Common Stock of the Company to stockholders of record at the close of business
on July 30, 1990. When exercisable, each Right entitles the registered holder
to purchase from the Company one share of the Company's Common Stock at a
price of $47.50 per share, subject to adjustment. Initially, the Rights will
be attached to all outstanding shares of Common Stock, and no separate Rights
Certificates will be distributed. The Board also authorized the issuance of
one Right with respect to each share of Common Stock that shall become
outstanding between July 30, 1990 and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (all as defined in the
Rights Agreement). Each share of Common Stock offered hereby will have upon
issuance one Right attached.
The Rights will become exercisable and will detach from the Common Stock
upon the earlier of (i) the tenth day after the public announcement that any
person or group has acquired beneficial ownership of 15% or more of the
Company's Common Stock, or (ii) the tenth day after any person or group
commences, or announces an intention to commence, a tender or exchange offer
which, if consummated, would result in the beneficial ownership by a person or
group of 30% or more of the Company's Common Stock (the earlier of (i) and
(ii) being the "Distribution Date"). If such person or group acquires
beneficial ownership of 15% or more of the Company's Common Stock (except
pursuant to certain cash tender offers for all outstanding Common Stock
approved by the Board of Directors) or if the Company is the surviving
corporation in a merger and its Common Stock is not changed or exchanged, each
Right will entitle the holder to purchase, at the Right's then current
exercise price, that number of shares of the Company's Common Stock having a
market value equal to twice the exercise price. Similarly, if after the Rights
become exercisable, the Company merges or consolidates with, or sells 50% or
more of its assets or earning power to, another person, each Right will then
entitle the holder to purchase, at the Right's then current exercise price,
that number of shares of the stock of the acquiring company which at the time
of such transaction would have a market value equal to twice the exercise
price.
The Rights may be redeemed in whole, but not in part, at a price of $0.01
per Right by the Board of Directors at any time until ten days following the
public announcement that a person or group has acquired beneficial ownership
of 15% or more of the Company's outstanding Common Stock. The Board of
Directors may, under certain circumstances, extend the period during which the
Rights are redeemable or postpone the Distribution Date. The Rights will
expire on July 30, 2000, unless earlier redeemed.
TRANSFER RESTRICTIONS, REDEMPTION AND BUSINESS COMBINATION PROVISIONS
If the Board of Directors shall, at any time and in good faith, be of the
opinion that direct or indirect ownership of more than 9.9% or more of the
voting shares of capital stock has or may become concentrated in the hands of
one beneficial owner, the Board of Directors shall have the power (i) by lot
or other means deemed equitable by it to call for the purchase from any
stockholder of the Company a number of voting shares sufficient, in the
opinion of the Board of Directors, to maintain or bring the direct or indirect
ownership of voting shares of capital stock of such beneficial owner to a
level of no more than 9.9% of the outstanding voting shares of the Company's
capital stock, and (ii) to refuse to transfer or issue voting shares of
capital stock to any person whose acquisition of such voting shares would, in
the opinion of the Board of Directors, result in the direct or indirect
ownership by that person of more than 9.9% of the outstanding voting shares of
capital stock of the Company. Further, any transfer of shares, options,
warrants, or other securities convertible into voting shares that would create
a beneficial owner of more than 9.9% of the outstanding voting shares shall be
deemed void ab initio and the intended transferee shall be deemed never to
have had an interest therein. The purchase price for any voting shares of
capital stock so redeemed shall be equal to the fair market value of the
shares reflected in the closing sales price for the shares, if then listed on
a national securities exchange, or the average of the closing sales prices for
the shares if then listed on more than one national securities exchange, or if
the shares are not then listed on a national securities exchange, the latest
bid quotation for the shares if then traded over-the-counter, on the last
business day immediately preceding the day on which notices of such
acquisitions are sent by the Company, or, if no such closing sales prices or
quotations are available, then the purchase price shall be equal to
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the net asset value of such stock as determined by the Board of Directors in
accordance with the provisions of applicable law. From and after the date
fixed for purchase by the Board of Directors, the holder of any shares so
called for purchase shall cease to be entitled to distributions, voting rights
and other benefits with respect to such shares, except the right to payment of
the purchase price for the shares.
The Charter Documents require that, except in certain circumstances,
Business Combinations (as defined below) between the Company and a beneficial
holder of 10% or more of the Company's outstanding voting stock (a "Related
Person") be approved by the affirmative vote of at least 90% of the
outstanding voting shares of the Company.
A Business Combination is defined in the Charter Documents as (a) any merger
or consolidation of the Company with or into a Related Person, (b) any sale,
lease, exchange, transfer or other disposition, including without limitation a
mortgage or any other security device, of all or any "Substantial Part" (as
defined below) of the assets of the Company (including without limitation any
voting securities of a subsidiary) to a Related Person, (c) any merger or
consolidation of a Related Person with or into the Company, (d) any sale,
lease, exchange, transfer or other disposition of all or any Substantial Part
of the assets of a Related Person to the Company, (e) the issuance of any
securities (other than by way of pro rata distribution to all stockholders) of
the Company to a Related Person, and (f) any agreement, contract or other
arrangement providing for any of the transactions described in the definition
of Business Combination. The term "Substantial Part" shall mean more than 10%
of the book value of the total assets of the Company as of the end of its most
recent fiscal year ending prior to the time the determination is being made.
The foregoing provisions of the Charter Documents and certain other matters
may not be amended without the affirmative vote of at least 90% of the
outstanding voting shares of the Company.
The Rights and the foregoing provisions may have the effect of discouraging
unilateral tender offers or other takeover proposals which certain
stockholders might deem to be in their interests or in which they might
receive a substantial premium. The Board of Directors' authority to issue and
establish the terms of currently authorized Preferred Stock, without
stockholder approval, may also have the effect of discouraging takeover
attempts. See "Description of Preferred Stock." The Rights and the foregoing
provisions could also have the effect of insulating current management against
the possibility of removal and could, by possibly reducing temporary
fluctuations in market price caused by accumulations of shares of Common
Stock, deprive stockholders of opportunities to sell at a temporarily higher
market price. However, the Board of Directors believes that inclusion of the
Business Combination provisions in the Charter Documents and the Rights may
help assure fair treatment of stockholders and preserve the assets of the
Company.
The foregoing summary of certain provisions of the Rights and the Charter
Documents does not purport to be complete or to give effect to provisions of
statutory or common law. The foregoing summary is subject to, and qualified in
its entirety by reference to, the provisions of applicable law and, the
Charter Documents and the Rights Agreement, copies of which are incorporated
by reference as exhibits to the Registration Statement of which this
Prospectus is a part.
TRANSFER AGENT AND REGISTRAR
Bank of New York acts as transfer agent and registrar of the Common Stock.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS TO THE COMPANY
The following summary of certain federal income tax considerations to the
Company is based on current law, is for general information only, and is not
tax advice. The tax treatment of a holder of any of the Securities will vary
depending upon the terms of the specific Securities acquired by such holder,
as well as his particular situation, and this discussion does not attempt to
address any aspects of federal income taxation relating to holders of
Securities. Certain federal income tax considerations relevant to holders of
the Securities will be provided in the applicable Prospectus Supplement
relating thereto.
EACH INVESTOR IS ADVISED TO CONSULT THE APPLICABLE PROSPECTUS SUPPLEMENT, AS
WELL AS HIS OWN TAX ADVISOR, REGARDING THE TAX CONSEQUENCES TO HIM OF THE
ACQUISITION, OWNERSHIP AND SALE OF THE SECURITIES, INCLUDING THE FEDERAL,
STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH ACQUISITION,
OWNERSHIP AND SALE AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
TAXATION OF THE COMPANY AS A REIT
General. The Company has elected to be taxed as a REIT under Sections 856
through 860 of the Code, commencing with its taxable year ended December 31,
1985. The Company believes that, commencing with its taxable year ended
December 31, 1985, it has been organized and has operated in such a manner as
to qualify for taxation as a REIT under the Code, and the Company intends to
continue to operate in such a manner, but no assurance can be given that it
has operated or will continue to operate in such a manner so as to qualify or
remain qualified. Further, the anticipated income tax treatment described in
this Prospectus may be changed, perhaps retroactively, by legislative,
administrative or judicial action at any time. See "--Failure to Qualify."
These sections of the Code and the corresponding Treasury Regulations, are
highly technical and complex. The following sets forth the material aspects of
the sections that govern the federal income tax treatment of a REIT. This
summary is qualified in its entirety by the applicable Code provisions, rules
and regulations promulgated thereunder, and administrative and judicial
interpretations thereof. Latham & Watkins has acted as tax counsel to the
Company in connection with this Prospectus and the Company's election to be
taxed as a REIT.
Latham & Watkins rendered an opinion to the Company as of June 18, 1998 to
the effect that, commencing with the Company's taxable year ended December 31,
1985, the Company was organized in conformity with the requirements for
qualification as a REIT, and its proposed method of operation would enable it
to continue to meet the requirements for qualification and taxation as a REIT
under the Code. It must be emphasized that this opinion was based on various
assumptions and was conditioned upon certain representations made by the
Company as to factual matters and that Latham & Watkins undertook no
obligation to update this opinion subsequent to such date. In addition, this
opinion was based upon the factual representations of the Company as set forth
in this Prospectus. Moreover, such qualification and taxation as a REIT
depends upon the Company's ability to meet (through actual annual operating
results, distribution levels and diversity of stock ownership) the various
qualification tests imposed under the Code discussed below, the results of
which have not been and will not be reviewed by Latham & Watkins. Accordingly,
no assurance can be given that the actual results of the Company's operation
in any particular taxable year will satisfy such requirements. See "--Failure
to Qualify."
If the Company qualifies for taxation as a REIT, it generally will not be
subject to federal corporate income taxes on its net income that is currently
distributed to stockholders. This treatment substantially eliminates the
"double taxation" (at the corporate and stockholder levels) that generally
results from investment in a regular corporation. However, the Company will be
subject to federal income tax as follows: First, the Company will be required
to pay tax at regular corporate rates on any undistributed "REIT taxable
income," including undistributed net capital gains. Second, under certain
circumstances, the Company may be subject to the "alternative minimum tax" on
its items of tax preference. Third, if the Company has (i) net income from the
sale or other disposition of "foreclosure property" (defined generally as
property acquired by the Company through foreclosure or otherwise after a
default on a loan secured by the property or a lease of the property)
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which is held primarily for sale to customers in the ordinary course of
business or (ii) other non-qualifying income from foreclosure property, it
will be subject to tax at the highest corporate rate on such income. Fourth,
if the Company has net income from prohibited transactions (which are, in
general, certain sales or other dispositions of property held primarily for
sale to customers in the ordinary course of business other than foreclosure
property), such income will be subject to a 100% tax. Fifth, if the Company
should fail to satisfy the 75% gross income test or the 95% gross income test
(as discussed below), but has nonetheless maintained its qualification as a
REIT because certain other requirements have been met, it will be subject to a
100% tax on an amount equal to (a) the gross income attributable to the
greater of the amount by which the Company fails the 75% or 95% test,
multiplied by (b) a fraction intended to reflect the Company's profitability.
Sixth, if the Company should fail to distribute during each calendar year at
least the sum of (i) 85% of its REIT ordinary income for such year, (ii) 95%
of its REIT capital gain net income for such year, and (iii) any undistributed
taxable income from prior periods, the Company would be subject to a 4% excise
tax on the excess of such required distribution over the amounts actually
distributed. Seventh, with respect to any asset (a "Built-In Gain Asset")
acquired by the Company from a corporation which is or has been a C
corporation (i.e., generally a corporation subject to full corporate-level
tax) in a transaction in which the basis of the Built-In Gain Asset in the
hands of the Company is determined by reference to the basis of the asset in
the hands of the C corporation, if the Company recognizes gain on the
disposition of such asset during the ten-year period (the "Recognition
Period") beginning on the date on which such asset was acquired by the
Company, then, to the extent of the Built-In Gain (i.e., the excess of (a) the
fair market value of such asset over (b) the Company's adjusted basis in such
asset, determined as of the beginning of the Recognition Period), such gain
will be subject to tax at the highest regular corporate rate pursuant to
Treasury Regulations that have not yet been promulgated. The results described
above with respect to the recognition of Built-In Gain assume that the Company
will make an election pursuant to Internal Revenue Service ("IRS") Notice 88-
19 and that the availability or nature of such election is not modified as
proposed in President Clinton's 1999 Federal Budget Proposal.
Requirements for Qualification. The Code defines a REIT as a corporation,
trust or association (1) which is managed by one or more trustees or
directors, (2) the beneficial ownership of which is evidenced by transferable
shares, or by transferable certificates of beneficial interest, (3) which
would be taxable as a domestic corporation, but for Sections 856 through 859
of the Code, (4) which is neither a financial institution nor an insurance
company subject to certain provisions of the Code, (5) the beneficial
ownership of which is held by 100 or more persons, (6) at any time during the
last half of each taxable year, not more than 50% in value of the outstanding
stock of which is owned, actually or constructively, by five or fewer
individuals (as defined in the Code to include certain entities) and (7) which
meets certain other tests, described below, regarding the nature of its income
and assets and the amount of its distributions. The Code provides that
conditions (1) to (4), inclusive, must be met during the entire taxable year
and that condition (5) must be met during at least 335 days of a taxable year
of 12 months, or during a proportionate part of a taxable year of less than 12
months. Conditions (5) and (6) do not apply until after the first taxable year
for which an election is made to be taxed as a REIT. For purposes of
conditions (5) and (6), pension funds and certain other tax-exempt entities
are treated as individuals, subject to a "look-through" exception in the case
of condition (6).
The Company believes that the conditions set forth in (1) through (4) above
have been satisfied. The Company also believes that it has issued sufficient
shares of common stock and preferred stock with sufficient diversity of
ownership to allow it to satisfy conditions (5) and (6). In addition, the
Company's Charter Documents provide for restrictions regarding transfer of the
Company's capital stock, which restrictions are intended to assist the Company
in continuing to satisfy the share ownership requirement described in (6)
above. Such transfer restrictions are described in "Transfer Restrictions,
Redemption and Business Combination Provisions." There can be no assurance,
however, that such transfer restrictions will, in all cases, prevent a
violation of the stock ownership provisions described in (6) above. The
ownership and transfer restrictions pertaining to a particular class or series
of capital stock will be described in the applicable Prospectus Supplement
pertaining to such class or series. If the Company fails to satisfy such share
ownership requirements, the Company's status as a REIT will terminate;
provided, however, beginning January 1, 1998, if the Company complies with the
rules contained in the applicable Treasury Regulations requiring the Company
to attempt to
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ascertain the actual ownership of its shares, and the Company does not know,
and would not have known through the exercise of reasonable diligence, whether
it failed to meet the requirement set forth in condition (6) above, the
Company will be treated as having met such requirement. See "--Failure to
Qualify." In addition, a corporation may not elect to become a REIT unless its
taxable year is the calendar year. The Company has a calendar taxable year.
The Company owns, directly or indirectly, interests in various partnerships
and limited liability companies (collectively, the "Partnerships"). In the
case of a REIT that is a partner in a partnership or member of a limited
liability company which is taxable as a partnership for federal income tax
purposes, Treasury Regulations provide that the REIT will be deemed to own its
proportionate share of the assets of the partnership or limited liability
company (as the case may be) and will be deemed to be entitled to the income
of the partnership or limited liability company (as the case may be)
attributable to such share. In addition, the character of the assets and gross
income of the partnership or limited liability company (as the case may be)
will retain the same character in the hands of the REIT for purposes of
Section 856 of the Code, including satisfying the gross income tests and the
asset tests. Thus, the Company's proportionate share of the assets,
liabilities and items of income of the partnerships and limited liability
companies in which the Company is a partner or member will be treated as
assets, liabilities and items of income of the Company for purposes of
applying the requirements described herein.
The Company owns and operates a number of properties through subsidiaries.
Code Section 856(i) provides that a corporation which is a "qualified REIT
subsidiary" shall not be treated as a separate corporation, and all assets,
liabilities, and items of income, deduction and credit of a "qualified REIT
subsidiary" shall be treated as assets, liabilities and such items (as the
case may be) of the REIT. Thus, in applying the requirements described herein,
the Company's "qualified REIT subsidiaries" will be ignored, and all assets,
liabilities and items of income, deduction and credit of such subsidiaries
will be treated as assets, liabilities and items of the Company. A qualified
REIT subsidiary will not be subject to federal income tax and the Company's
ownership of the voting stock of a qualified REIT subsidiary will not violate
the restrictions against ownership of securities of any one issuer which
constitutes more than 10% of such issuer's voting securities or more than 5%
of the value of the Company's total assets.
Income Tests. In order to maintain its qualification as a REIT, the Company
annually must satisfy certain gross income requirements. First, at least 75%
of the Company's gross income (excluding gross income from prohibited
transactions) for each taxable year must be derived directly or indirectly
from investments relating to real property or mortgages on real property
(including "rents from real property" and, in certain circumstances, interest)
or from certain types of temporary investments. Second, at least 95% of the
Company's gross income (excluding gross income from prohibited transactions)
for each taxable year must be derived from such real property investments,
dividends, interest and gain from the sale or disposition of stock or
securities (or from any combination of the foregoing). Third, for each taxable
year beginning on or prior to August 6, 1997, short-term gain from the sale or
other disposition of stock or securities, gain from prohibited transactions
and gain on the sale or other disposition of real property held for less than
four years (apart from involuntary conversions and sales of foreclosure
property) must represent less than 30% of the Company's gross income
(including gross income from prohibited transactions) for each taxable year.
Rents received by the Company will qualify as "rents from real property" in
satisfying the gross income requirements for a REIT described above only if
several conditions are met. First, the amount of rent must not be based in
whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "rents from
real property" solely by reason of being based on a fixed percentage or
percentages of receipts or sales. Second, the Code provides that rents
received from a tenant will not qualify as "rents from real property" in
satisfying the gross income tests if the REIT, or an actual or constructive
owner of 10% or more of the REIT, actually or constructively owns 10% or more
of such tenant (a "Related Party Tenant"). Third, if rent attributable to
personal property leased in connection with a lease of real property is
greater than 15% of the total rent received under the lease, then the portion
of rent attributable to such personal property will not qualify as "rents from
real property." Finally, for rents received to qualify as "rents from real
property," the REIT generally must not operate or manage the property or
furnish or render
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services to the tenants of such property (subject to a 1% de minimis exception
applicable to the Company for its taxable years beginning in 1998), other than
through an independent contractor from whom the REIT derives no revenue;
provided, however, the REIT may directly perform certain services that are
"usually or customarily rendered" in connection with the rental of space for
occupancy only and are not otherwise considered "rendered to the occupant" of
the property. The Company does not and will not (i) charge rent for any
property that is based in whole or in part on the income or profits of any
person (except by reason of being based on a percentage of receipts or sales,
as described above), (ii) rent any property to a Related Party Tenant, (iii)
derive rental income attributable to personal property (other than personal
property leased in connection with the lease of real property, the amount of
which is less than 15% of the total rent received under the lease), or (iv)
perform services considered to be rendered to the occupant of the property,
other than through an independent contractor from whom the Company derives no
revenue. Notwithstanding the foregoing, the Company may have taken and may
continue to take certain of the actions set forth in (i) through (iv) above to
the extent such actions will not, based on the advice of tax counsel to the
Company, jeopardize the Company's tax status as a REIT.
The term "interest" generally does not include any amount received or
accrued (directly or indirectly) if the determination of such amount depends
in whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "interest"
solely by reason of being based on a fixed percentage or percentages of
receipts or sales.
The Company expects to recognize income from the performance of certain
management and administrative services relating to the partnerships in which
it owns interests. At least a portion of this income will not be qualifying
income under the 95% and 75% gross income tests described above. The Company
believes that the aggregate amount of this service income (and any other non-
qualifying income) in any taxable year will not exceed the limits on non-
qualifying income under the gross income tests described above.
If the Company fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a REIT for such
year if it is entitled to relief under certain provisions of the Code. These
relief provisions will generally be available if the Company's failure to meet
such tests was due to reasonable cause and not due to willful neglect, the
Company attaches a schedule of the sources of its income to its federal income
tax return, and any incorrect information on the schedule was not due to fraud
with intent to evade tax. It is not possible, however, to state whether in all
circumstances the Company would be entitled to the benefit of these relief
provisions. For example, if the Company fails to satisfy the gross income
tests because non-qualifying income that the Company intentionally incurs
exceeds the limits on such income, the IRS could conclude that the Company's
failure to satisfy the tests was not due to reasonable cause. If these relief
provisions are inapplicable to a particular set of circumstances involving the
Company, the Company would not qualify as a REIT. As discussed above in "--
Taxation of the Company-General," even if these relief provisions apply, a
100% tax would be imposed on an amount equal to (a) the gross income
attributable to the greater of the amount by which the Company failed the 75%
or 95% test multiplied by (b) a fraction intended to reflect the Company's
profitability. No similar mitigation provision provides relief if the Company
failed the 30% gross income test in years prior to 1998. In such case, the
Company would have ceased to qualify as a REIT.
Any gain realized by the Company on the sale of any property held as
inventory or other property held primarily for sale to customers in the
ordinary course of business (including the Company's share of any such gain
realized by any of the Partnerships) will be treated as income from a
prohibited transaction that is subject to a 100% penalty tax. Such prohibited
transaction income may also have an adverse effect upon the Company's ability
to satisfy the income tests for qualification as a REIT. Under existing law,
whether property is held as inventory or primarily for sale to customers in
the ordinary course of a trade or business is a question of fact that depends
on all the facts and circumstances with respect to the particular transaction.
The Company holds its properties for investment with a view to long-term
appreciation, engages in the business of acquiring, developing, owning, and
operating such properties (and other properties) and makes such occasional
sales of its properties as are consistent with the Company's investment
objectives. There can be no assurance, however, that the IRS might not contend
that one or more of such sales is subject to the 100% penalty tax.
Asset Tests. The Company, at the close of each quarter of its taxable year,
must also satisfy three tests relating to the nature of its assets. First, at
least 75% of the value of the Company's total assets (including assets
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held by the Company's qualified REIT subsidiaries and the Company's allocable
share of the assets held by the Partnerships) must be represented by real
estate assets, stock or debt instruments held for not more than one year
purchased with the proceeds of a stock offering or a long-term (at least five
years) public debt offering of the Company, cash, cash items and government
securities. Second, not more than 25% of the Company's total assets may be
represented by securities other than those in the 75% asset class. Third, of
the investments included in the 25% asset class, the value of any one issuer's
securities owned by the Company may not exceed 5% of the value of the
Company's total assets and the Company may not own more than 10% of any one
issuer's outstanding voting securities.
After initially meeting the asset tests at the close of any quarter, the
Company will not lose its status as a REIT for failure to satisfy the asset
tests at the end of a later quarter solely by reason of changes in asset
values. If the failure to satisfy the asset tests results from an acquisition
of securities or other property during a quarter (including as a result of the
Company increasing its interest in one or more of the Partnerships if the
applicable Partnership owns the non-qualifying asset), the failure can be
cured by the disposition of sufficient non-qualifying assets within 30 days
after the close of that quarter. The Company has maintained and intends to
continue to maintain adequate records of the value of its assets to ensure
compliance with the asset tests and to take such other actions within 30 days
after the close of any quarter as may be required to cure any noncompliance.
If the Company fails to cure noncompliance with the asset tests within such
time period, the Company would cease to qualify as a REIT.
Annual Distribution Requirements. The Company, in order to qualify as a
REIT, is required to distribute dividends (other than capital gain dividends)
to its stockholders in an amount at least equal to (A) the sum of (i) 95% of
the Company's "REIT taxable income" (computed without regard to the dividends
paid deduction and the Company's net capital gain) and (ii) 95% of the net
income (after tax), if any, from foreclosure property, minus (B) the sum of
certain items of non-cash income. In addition, if the Company disposes of any
Built-In Gain Asset during its Recognition Period, the Company would be
required, pursuant to Treasury Regulations which have not yet been
promulgated, to distribute at least 95% of the Built-In Gain (after tax), if
any, recognized on the disposition of such asset. Such distributions must be
paid in the taxable year to which they relate, or in the following taxable
year if declared before the Company timely files its tax return for such year
and if paid on or before the first regular dividend payment after such
declaration. The amount distributed must not be preferential -- i.e., each
holder of shares of the Company's common stock must receive the same
distribution per share, and each holder of shares of the Company's series A
preferred stock must receive the same distribution per share. To the extent
that the Company does not distribute all of its net capital gain or
distributes at least 95%, but less than 100%, of its "REIT taxable income," as
adjusted, it will be subject to tax thereon at regular ordinary and capital
gain corporate tax rates. The Company believes that it has made and intends to
continue to make timely distributions sufficient to satisfy these annual
distribution requirements.
The Company's REIT taxable income has been and is expected to continue to be
less than its cash flow due to the allowance of depreciation and other non-
cash charges in computing REIT taxable income. Accordingly, the Company
anticipates that it will generally have sufficient cash or liquid assets to
enable it to satisfy the distribution requirements described above. It is
possible, however, that the Company, from time to time, may not have
sufficient cash or other liquid assets to meet these distribution requirements
due to timing differences between (i) the actual receipt of income and actual
payment of deductible expenses and (ii) the inclusion of such income and
deduction of such expenses in arriving at taxable income of the Company. In
the event that such timing differences occur, in order to meet these
distribution requirements, the Company may find it necessary to arrange for
short-term, or possibly long-term, borrowings or to pay dividends in the form
of taxable stock dividends.
If the Company fails to meet the 95% distribution test due to certain
adjustments (e.g., an increase in the Company's income or a decrease in its
deduction for dividends paid) by reason of a judicial decision or by agreement
with the IRS, the Company may be able to pay a "deficiency dividend" to
shareholders of the Company in the taxable year of the adjustment, which
dividend would relate back to the year being adjusted. In such case, the
Company would also be required to pay interest to the IRS and would be subject
to any applicable penalty provisions.
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Furthermore, if the Company should fail to distribute during each calendar
year (or in the case of distributions with declaration and record dates
falling in the last three months of the calendar year, by the end of the
following January) at least the sum of (1) 85% of its REIT ordinary income for
such year, (ii) 95% of its REIT capital gain income for such year, and (iii)
any undistributed taxable income from prior periods, the Company would be
subject to a 4% excise tax on the excess of such required distribution over
the amounts actually distributed. Any REIT taxable income and net capital gain
on which this excise tax is imposed for any year is treated as an amount
distributed during that year for purposes of calculating such tax. The Company
intends to make timely distributions sufficient to satisfy the annual
distribution requirements set forth above.
TAX RISKS ASSOCIATED WITH THE PARTNERSHIPS
The ownership of an interest in a Partnership may involve special tax risks,
including the possible challenge by the IRS of (i) allocations of income and
expense items, which could affect the computation of taxable income of the
Company, and (ii) the status of a Partnership as a partnership (as opposed to
an association taxable as a corporation) for federal income tax purposes. If
any of the Partnerships were treated as an association taxable as a
corporation for federal income tax purposes, the Partnership would be treated
as a taxable entity. In addition, in such a situation, (i) if the Company
owned more than 10% of the outstanding voting securities of such Partnership,
or the value of such securities exceeded 5% of the value of the Company's
assets, the Company would fail to satisfy the asset tests described above and
would therefore fail to qualify as a REIT, (ii) distributions from any such
Partnership to the Company would be treated as dividends, which are not taken
into account in satisfying the 75% gross income test described above and
could, therefore, make it more difficult for the Company to satisfy such test,
(iii) the interest in any such Partnership held by the Company would not
qualify as a "real estate asset," which could make it more difficult for the
Company to meet the 75% asset test described above, and (iv) the Company would
not be able to deduct its share of any losses generated by the Partnership in
computing its taxable income. See "--Failure to Qualify" for a discussion of
the effect of the Company's failure to meet such tests for a taxable year. The
Company believes that each of the Partnerships will be treated for tax
purposes as a partnership (rather than an association taxable as a
corporation). No assurance can be given that the IRS will not successfully
challenge the federal income tax status of the Partnerships as partnerships.
FAILURE TO QUALIFY
If the Company fails to qualify for taxation as a REIT in any taxable year,
and the relief provisions do not apply, the Company will be subject to tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Such a failure to qualify for taxation as a REIT
would reduce the cash available for distribution by the Company to
stockholders and to pay debt service and could have an adverse effect on the
market value and marketability of the Securities. Distributions to
stockholders in any year in which the Company fails to qualify will not be
deductible by the Company nor will they be required to be made. In such event,
to the extent of the Company's current and accumulated earnings and profits,
all distributions to stockholders will be taxable as ordinary income and,
subject to certain limitations of the Code, corporate distributees may be
eligible for the dividends received deduction. Unless entitled to relief under
specific statutory provisions, the Company will also be disqualified from
taxation as a REIT for the four taxable years following the year during which
qualification was lost. It is not possible to state whether in all
circumstances the Company would be entitled to such statutory relief. In
addition, a recent federal budget proposal contains a provision which, if
enacted in its present form, would result in the immediate taxation of all
gain inherent in a C corporation's assets upon an election by the corporation
to become a REIT in taxable years beginning after January 1, 1999, and thus
could effectively preclude the Company from re-electing to be taxed as a REIT
following a loss of its REIT status.
STATE AND LOCAL TAXES
The Company may be subject to state or local taxes in other jurisdictions
such as those in which the Company may be deemed to be engaged in activities
or own property or other interests. The state and local tax treatment of the
Company may not conform to the federal income tax consequences discussed
above.
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PLAN OF DISTRIBUTION
The Company may sell the Securities being offered hereby directly or through
agents, underwriters or dealers, which may include Merrill Lynch, Pierce,
Fenner & Smith Incorporated.
Offers to purchase Securities may be solicited by agents designated by the
Company from time to time. Any such agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act, involved in the
offer or sale of the Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent set forth, in the Prospectus Supplement. Unless otherwise indicated in
the applicable Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment. The Company may also sell
Securities to an agent as principal. Agents may be entitled under agreements
which may be entered into with the Company to indemnification by the Company
against certain liabilities, including liabilities under the Securities Act,
and may be customers of, engage in transactions with or perform services for
the Company in the ordinary course of business.
If any underwriters are utilized in the sale of Securities in respect of
which this Prospectus is delivered, the Company will enter into an
underwriting agreement with such underwriters and the names of the
underwriters and the terms of the transaction will be set forth in the
applicable Prospectus Supplement, which will be used by the underwriters to
make resales of the Securities in respect of which this Prospectus is
delivered to the public. Underwriters may offer and sell the Securities at a
fixed price or prices, which may be changed, or from time to time at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. The underwriters may be entitled, under
the relevant underwriting agreement, to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act, and may
be customers of, engage in transactions with or perform services for the
Company in the ordinary course of business.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer, as principal. The dealer may then resell such Securities to the public
at varying prices to be determined by such dealer at the time of resale.
Dealers may be entitled to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act, and may be
customers of, engage in transactions with or perform services for the Company
in the ordinary course of business.
Securities may also be offered and sold, if so indicated in any Prospectus
Supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or
otherwise, by one or more firms ("remarketing firms"), acting as principals
for their own accounts or as agents for the Company. Any remarketing firm will
be identified and the terms of its agreement, if any, with the Company and its
compensation will be described in the applicable Prospectus Supplement.
Remarketing firms may be deemed to be underwriters in connection with the
Securities remarketed thereby. Remarketing firms may be entitled under
agreements which may be entered into with the Company to indemnification by
the Company against certain liabilities, including liabilities under the
Securities Act, and may be customers of, engage in transactions with or
perform services for the Company in the ordinary course of business.
If so indicated in any Prospectus Supplement, the Company will authorize
agents and underwriters or dealers to solicit offers by certain purchasers to
purchase Securities from the Company at the public offering price set forth in
the Prospectus Supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. Such contracts will be
subject to only those conditions set forth in the applicable Prospectus
Supplement, and such Prospectus Supplement will set forth the commission
payable for solicitation of such offers.
23
<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the Securities offered hereby will be
passed upon for the Company by Latham & Watkins, Los Angeles, California.
Brown & Wood LLP, Los Angeles, California, will act as counsel for any agents
or underwriters. Paul C. Pringle is a partner of Brown & Wood LLP and owns
3,000 shares of the Company's Common Stock. Certain legal matters relating to
Maryland law will be passed upon for the Company by Ballard Spahr Andrews &
Ingersoll, LLP, Baltimore, Maryland.
EXPERTS
The financial statements incorporated by reference in this Prospectus and
elsewhere in the Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
24
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses, other than underwriting discounts and commissions,
in connection with this offering are estimated as follows:
<TABLE>
<S> <C>
SEC Registration Fee............................................. $177,000
Blue Sky fees and expense........................................ 5,000
Printing and shipping expenses................................... 150,000
Legal fees and expenses.......................................... 150,000
Accounting fees and expenses..................................... 50,000
Transfer agent or trustee fees................................... 10,000
Listing Fees..................................................... 50,000
Miscellaneous.................................................... 28,000
--------
Total........................................................ $620,000
========
</TABLE>
ITEM 15. INDEMNIFICATIONS OF DIRECTORS AND OFFICERS.
The Company's Articles of Restatement (the "Charter Documents") limit the
liability of the Company's directors and officers to the Company and its
shareholders to the fullest extent permitted by the laws of the State of
Maryland. Maryland law presently permits the liability of directors and
officers to a corporation or its shareholders for money damages to be limited,
except (i) to the extent that it is proved that the director or officer
actually received an improper benefit or profit or (ii) if the judgment or
other final adjudication is entered in a proceeding based on a finding that
the directors or officers action, or failure to act, was a result of active or
deliberate dishonesty and was material to the cause of action adjudicated in
the proceeding. The provisions of the Charter Documents do not limit the
ability of the Company or its shareholders to obtain other relief, such as
injunction or recision.
The Charter Documents provide for indemnification of directors and officers
to the full extent permitted by the laws of the State of Maryland.
Article X of the Company's Amended and Restated By-Laws (the "By-Laws")
provides that the Company shall indemnify and hold harmless, in the manner and
to the fullest extent permitted by law, any person who is or was a party to,
or is threatened to be made a party to, any threatened, pending or completed
action, suit or proceeding, whether or not by or in the right of the Company,
and whether civil, criminal, administrative, investigative or otherwise, by
reason of the fact that such person is or was a director or officer of the
Company, or, as a director or officer of the Company, is or was serving at the
request of the Company as a director, officer, trustee, partner, member, agent
or employee of another corporation, partnership, limited liability company,
association, joint venture, trust, benefit plan or other enterprise.
Article X of the By-Laws further provides that the Company may, with the
approval of the Board of Directors, provide such indemnification and
advancement of expenses as set forth in the above paragraph to agents and
employees of the Company.
Section 2-418 of the Maryland General Corporation Law generally permits
indemnification of any director or officer made a party to any proceedings by
reason of service as a director or officer unless it is established that (i)
the act or omission of such person was material to the matter giving rise to
the proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty; or (ii) such person actually received an improper
personal benefit in money, property or services; or (iii) in the case of any
criminal proceeding, such person had reasonable cause to believe that the act
or omission was unlawful. The indemnity may include judgments, penalties,
fines, settlements and reasonable expenses actually incurred by the director
or officer in connection with the proceeding; provided, however, that if the
proceeding is one by, or in the right of the
II-1
<PAGE>
corporation, indemnification is not permitted with respect to any proceeding
in which the director or officer has been adjudged to be liable to the
corporation. In addition, a director or officer may not be indemnified with
respect to any proceeding charging improper personal benefit to the director
or officer adjudged to be liable on the basis that personal benefit was
improperly received. The termination of any proceeding by conviction or upon a
plea of nolo contendere or its equivalent creates a rebuttable presumption
that the director or officer did not meet the requisite standard of conduct
required for permitted indemnification. The termination of any proceeding by
judgment, order or settlement, however, does not create a presumption that the
director or officer failed to meet the requisite standard of conduct for
permitted indemnification.
The Company has provided for the benefit of its directors and officers, a
Directors and Officers Liability Policy.
ITEM 16. EXHIBITS.
See Exhibit Index.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act"):
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission (the "Commission") pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate
offering price set for the in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that the information required to be included in a post-
effective amendment by paragraphs (a)(1)(i) and (a)(1)(ii) above may be
contained in periodic reports filed by the Registrant pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes, that, for purposes of
determining any liability under the Securities Act, each filing the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
II-2
<PAGE>
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of section 310 of the Trust Indenture Act (the "TIA") in
accordance with the rules and regulations prescribed by the Commission
under section 305(b)(2) of the TIA.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF LOS
ANGELES, STATE OF CALIFORNIA, ON THE 17TH DAY OF JUNE, 1998.
HEALTH CARE PROPERTY INVESTORS, INC.
By: /s/ Kenneth B. Roath
__________________________________
Kenneth B. Roath
Chairman, President and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints Kenneth B. Roath and
James G. Reynolds, and both or either of them, as his true and lawful
attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement and any subsequent registration
statement thereto pursuant to Rule 462(b) of the Securities Act, and to file
the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the foregoing, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or either of them or their or his substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON
THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Kenneth B. Roath Chairman, President, Chief June 17, 1998
____________________________________ Executive Officer and
Kenneth B. Roath Director (Principal
Executive Officer)
/s/ James G. Reynolds Executive Vice President and June 17, 1998
____________________________________ Chief Financial Officer
James G. Reynolds (Principal Financial
Officer)
/s/ Devasis Ghose Senior Vice President and June 17, 1998
____________________________________ Treasurer (Principal
Devasis Ghose Accounting Officer)
/s/ Paul V. Colony Director June 17, 1998
____________________________________
Paul V. Colony
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Robert R. Fanning, Jr. Director June 17, 1998
____________________________________
Robert R. Fanning, Jr.
/s/ Michael D. McKee Director June 17, 1998
____________________________________
Michael D. McKee
/s/ Orville E. Melby Director June 17, 1998
____________________________________
Orville E. Melby
/s/ Harold M. Messmer, Jr. Director June 17, 1998
____________________________________
Harold M. Messmer, Jr.
/s/ Peter L. Rhein Director June 17, 1998
____________________________________
Peter L. Rhein
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
1.1 Form of Distribution Agreement for Medium Term Notes
(incorporated herein by reference to Exhibit 1.1 to the
Company's Registration Statement on Form S-3
(No. 333-29485) filed with the Commission on June 18,
1997).
1.2 Form of Purchase Agreement for Notes (incorporated
herein by reference to Exhibit 1.2 to the Company's
Registration Statement on Form S-3 (No. 333-29485)
filed with the Commission on June 18, 1997).
1.3 Form of Purchase Agreement for Common Stock
(incorporated herein by reference to Exhibit 1.3 to the
Company's Registration Statement on Form S-3 (No. 333-
29485) filed with the Commission on June 18, 1997).
1.4 Form of Purchase Agreement for Preferred Stock
(incorporated herein by reference to Exhibit 1.4 to the
Company's Registration Statement on Form S-3 (No. 333-
29485) filed with the Commission on June 18, 1997).
4.1 Articles of Restatement of the Company (incorporated
herein by reference to Exhibit 3.1 to the Company's
Annual Report on Form 10-K for the year ended December
31, 1994).
4.2 Amended and Restated Bylaws of the Company
(incorporated herein by reference to Exhibit 3(ii) of
the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 1995).
4.3 Rights Agreement, dated as of July 5, 1990, between the
Company and Manufacturers Hanover Trust Company of
California, as Rights Agent (incorporated herein by
reference to Exhibit 1 to the Company's Registration
Statement on Form 8-A filed with the Commission on July
17, 1990).
4.4 Indenture dated as of September 1, 1993 between the
Company and The Bank of New York, as Trustee
(incorporated herein by reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K dated September 9,
1993).
5.1 Opinion of Latham & Watkins as to the validity of the
Securities.
8.1 Opinion of Latham & Watkins re: tax matters.
12.1 Statement re: Computation of Ratio of Earnings to Fixed
Charges.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Latham & Watkins (included in Exhibit 5.1).
23.3 Consent of Latham & Watkins (included in Exhibit 8.1).
24.1 Power of Attorney (contained on page II-4).
25.1 Statement of Eligibility and Qualification on Form T-1.
</TABLE>
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF LATHAM & WATKINS]
June 18, 1998
Health Care Property Investors, Inc.
4675 MacArthur Court, 9th Floor
Newport Beach, California 92660
Re: $600,000,000 Aggregate Offering Price of Securities of Health
Care Property Investors, Inc. (File No. 333-______)
Ladies and Gentlemen:
At your request, we have examined the registration statement on Form S-3
(File No. 333-________) (the "Registration Statement") being filed by you with
the Securities and Exchange Commission in connection with the registration,
under the Securities Act of 1933, as amended, of up to $600,000,000 aggregate
offering price of securities (the "Securities"), consisting of one or more
series of debt securities (the "Debt Securities"), one or more series of shares
of preferred stock, par value $1.00 per share (the "Preferred Stock"), shares of
common stock, par value $1.00 per share (the "Common Stock") and rights to
purchase common stock (the "Rights"). We also have examined the existing
indenture (the "Indenture") dated as of September 1, 1993 between Health Care
Property Investors, Inc. (the "Company"), and The Bank of New York, as Trustee,
which has been filed with the Commission and incorporated by reference in the
Registration Statement, relating to the Debt Securities.
In our capacity as your counsel in connection with such registration, we are
familiar with the proceedings taken and proposed to be taken by the Company in
connection with the authorization and issuance of the Securities and for the
purposes of this opinion, have assumed such proceedings will be timely completed
in the manner presently proposed and that the terms of each issuance will
otherwise be in compliance with law. In addition, we have made such legal and
factual examinations and inquiries, including an examination of originals or
copies certified or otherwise identified to our satisfaction of such documents,
corporate records and instruments, as we have deemed necessary or appropriate
for purposes of this opinion.
We are opining herein as to the effect on the subject transaction only of the
internal laws of the State of California and we express no opinion with respect
to the applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or as to any matters of municipal law or the laws of any other
local agencies within any state. In rendering the opinions set forth in
paragraphs 1, 2 and 3 as they relate to the corporate laws of Maryland, we have
with your consent relied solely upon the opinion of Ballard Spahr Andrews &
Ingersoll, LLP, special Maryland corporate counsel for the Company, addressed to
us and dated the date hereof, and our opinion is subject to any assumptions,
exceptions, qualifications or limitations set forth in such opinion.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
to authentic original documents of all documents submitted to us as copies.
Subject to the foregoing and the other matters set forth herein, it is our
opinion that, as of the date hereof:
<PAGE>
Health Care Property Investors, Inc.
June 18, 1998
Page 2
1. Upon: (a) establishment by the Board of Directors of the Company (the
"Board of Directors") of the terms, conditions and provisions of any Debt
Securities; (b) due authorization by the Board of Directors of such Debt
Securities for issuance at a minimum price or value of consideration to be set
by the Board of Directors; and (c) reservation and due authorization by the
Board of Directors of any shares of Preferred Stock and/or any shares of Common
Stock and related Rights issuable upon conversion of the Debt Securities in
accordance with the procedures set forth in paragraphs 2 and 3 below at a
minimum price or value of consideration to be set by the Board of Directors, the
Debt Securities will have been duly authorized by the Company, and when the Debt
Securities have been duly established by the Indenture, duly authenticated by
the Trustee and duly executed and delivered on behalf of the Company against
payment therefor in accordance with the terms and provisions of the Indenture
and as contemplated by the Registration Statement, the Debt Securities will
constitute valid, binding and enforceable obligations of the Company.
2. Upon: (a) designation by the Board of Directors of one or more series of
Preferred Stock to distinguish each such series from any other outstanding
series of Preferred Stock; (b) setting by the Board of Directors of the number
of shares of Preferred Stock to be included in such series; (c) establishment by
the Board of Directors of the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption of such series of Preferred Stock; (d) filing by the
Company with the State Department of Assessments and Taxation of Maryland (the
"Department") of Articles Supplementary setting forth a description of such
series of Preferred Stock, including the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption as set by the Board of Directors and a
statement that such series of the Preferred Stock has been classified by the
Board of Directors under the authority contained in the Articles of Restatement
of the Company, the Amended and Restated Bylaws of the Company adopted on April
20, 1995 and certain resolutions adopted and actions taken by the Board of
Directors on or before the date hereof, and the acceptance for record by the
Department of such Articles Supplementary; (e) due authorization by the Board of
Directors of a designated number of shares of such series of Preferred Stock for
issuance at a minimum price or value of consideration to be set by the Board of
Directors, and (f) reservation and due authorization by the Board of Directors
of any shares of any other series of Preferred Stock and/or any shares of Common
Stock and related Rights issuable upon conversion of such series of Preferred
Stock in accordance with the procedures set forth in this paragraph and
paragraph 3 below, the Preferred Stock will have been duly authorized by the
Company, and when the Preferred Stock has been duly established in accordance
with the terms of the Company's Articles of Restatement and applicable law, and,
upon issuance, delivery and payment therefor in the manner contemplated by the
Registration Statement, the Preferred Stock will be validly issued, fully paid
and nonassessable.
3. Upon due authorization by the Board of Directors of a designated number
of shares of Common Stock and related Rights for issuance at a minimum price or
value of consideration to be set by the Board of Directors, the Common Stock,
including any Common Stock that may be issuable pursuant to the conversion of
any Debt Securities or Preferred Stock, will have been duly authorized, and upon
issuance, delivery and payment therefor in the manner contemplated by the
Registration Statement, will be validly issued, fully paid and nonassessable.
The opinion rendered in clause 1 above is subject to the following
exceptions, limitations and qualifications: (i) the effect of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
<PAGE>
Health Care Property Investors, Inc.
June 18, 1998
Page 3
laws or equitable principles relating to or affecting the rights and remedies of
creditors; (ii) the effect of general principles of equity, including without
limitation concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance or injunctive relief
(regardless of whether enforcement is sought in a proceeding in equity or at
law); (iii) we advise you that a California court may not strictly enforce
certain covenants contained in the Indenture or allow acceleration of the
maturity of the indebtedness evidenced by the Debt Securities if it concludes
that such enforcement or acceleration would be unreasonable under the then
existing circumstances; (iv) certain rights, remedies and waivers contained in
the Indenture may be limited or rendered ineffective by applicable California
laws or judicial decisions governing such provisions, but such laws or judicial
decisions do not render the Indenture invalid as a whole; (v) applicable
California laws or judicial decisions may require that a judgment for money
damages rendered in the United States be expressed in United States dollars; and
(vi) we express no opinion with respect to whether acceleration of Debt
Securities may affect the collectibility of any portion of the stated principal
amount thereof which might be determined to constitute unearned interest
thereon.
To the extent that the obligations of the Company under the Indenture may be
dependent upon such matters, we assume for purposes of this opinion that the
Trustee has complied with any applicable requirement to file returns and pay
taxes under the laws of the State of California; that the Trustee is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization; that the Trustee is duly qualified to engage in
the activities contemplated by the Indenture; that the Indenture has been duly
authorized, executed and delivered by the Trustee and constitutes the legally
valid, binding and enforceable obligation of the Trustee enforceable against the
Trustee in accordance with its terms; that the Trustee is in compliance,
generally with respect to acting as a trustee under the Indenture, with all
applicable laws and regulations, and will be duly qualified under the Trust
Indenture Act; and that the Trustee has the requisite organizational and legal
power and authority to perform its obligations under the Indenture.
We consent to your filing this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Matters" in
the prospectus included therein.
Very truly yours,
/s/ LATHAM & WATKINS
<PAGE>
EXHIBIT 8.1
[Letterhead of Latham & Watkins]
June 18, 1998
Health Care Property Investors, Inc.
4675 MacArthur Court, 9th Floor
Newport Beach, California 92660
Re: Health Care Property Investors, Inc.
Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Health Care Property Investors, Inc., a
Maryland corporation (the "Company"), in connection with the registration
statement on Form S-3 being filed by the Company with the Securities and
Exchange Commission in connection with the registration, under the Securities
Act of 1933, as amended, of up to $600,000,000 aggregate offering price of
securities, consisting of one or more series of debt securities, one or more
series of shares of preferred stock, par value $1.00 per share, shares of common
stock, par value $1.00 per share and rights to purchase common stock of the
Company (together with all exhibits thereto and documents incorporated by
reference therein, the "Registration Statement").
This opinion is based on various assumptions and is conditioned upon certain
representations made by the Company as to factual matters through a certificate
of an officer of the Company (the "Officer's Certificate") and certain facts set
forth in the Registration Statement.
<PAGE>
Health Care Property Investors, Inc.
June 18, 1998
Page 2
In our capacity as such counsel, we have made such legal and factual
examinations and inquiries, including an examination of originals or copies
certified or otherwise identified to our satisfaction of such documents,
corporate records and other instruments, as we have deemed necessary or
appropriate for purposes of this opinion. In our examination, we have assumed
the authenticity of all documents submitted to us as originals, the genuineness
of all signatures thereon, the legal capacity of natural persons executing such
documents and the conformity to authentic original documents of all documents
submitted to us as copies.
We are opining herein as to the effect on the subject transaction only of the
federal income tax laws of the United States and we express no opinion with
respect to the applicability thereto, or the effect thereon, of other federal
laws, the laws of any state or other jurisdiction or as to any matters of
municipal law or the laws of any other local agencies with any state.
Based upon the facts set forth in the Registration Statement and Officer's
Certificate, it is our opinion that:
1. Commencing with the Company's taxable year ending December 31, 1985, the
Company was organized in conformity with the requirements for
qualification as a real estate investment trust, and its proposed method
of operation will enable it to meet the requirements for qualification
and taxation as a real estate investment trust under the Internal Revenue
Code of 1986, as amended.
2. The information in the Registration Statement set forth under the caption
"Certain Federal Income Tax Considerations to the Company," to the extent
that it constitutes matters of law, summaries of legal matters, documents
or proceedings, or legal conclusions, has been reviewed by us and is
correct in all material respects.
No opinion is expressed as to any matter not discussed herein.
This opinion is only being rendered to you as of the date of this letter, and
we undertake no obligation to update this opinion subsequent to the date hereof.
This opinion is based on various statutory provisions, regulations promulgated
thereunder and interpretations thereof by the Internal Revenue Service and the
courts having jurisdiction over such matters, all of which are subject to change
either prospectively or retroactively. Also, any variation or difference in the
facts from those set forth in the Registration Statement or Officer's
Certificate may affect the conclusions stated herein.
This opinion is rendered only to you and is solely for your benefit in
connection with the Registration Statement. We hereby consent to the filing of
this opinion as an exhibit to the
<PAGE>
Health Care Property Investors, Inc.
June 18, 1998
Page 3
Registration Statement. This opinion may not be relied upon by you for any
other purpose, or furnished to, quoted to or relied upon by any other person,
firm or corporation for any purpose, without our prior written consent.
Very truly yours,
/s/ Latham & Watkins
<PAGE>
EXHIBIT 12.1
HEALTH CARE PROPERTY INVESTORS, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Amounts in thousands, except ratios)
<TABLE>
<CAPTION>
Three Months
Year Ended December 31, Ended
------------------------------------------------------------------------ March
1993 1994 1995 1996 1997 1998
-------------- ------------ ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges:
Interest Expense........................ 19,728 20,133 19,339 26,401 28,592 7,617
Capitalized Interest.................... 932 332 594 1,017 1,469 450
Pro-Rata Share of Unconsolidated
Partnerships' Fixed Charges............ 1,207 1,404 1,442 737 850 209
Amortization of debt expense, debt
discounts and interest factor in rental
expense................................ 771 767 985 949 1,033 248
------------- ------------- ----------- --------------- ------------ ------------
Total................................... 22,638 22,636 22,360 29,104 31,944 8,524
============= ============= =========== =============== ============ ============
Earnings:
Income from Operations.................. 47,506 53,562 60,395 64,017 66,446 18,626
Add Back Fixed Charges.................. 22,638 22,636 22,360 29,104 31,944 8,524
Less Capitalized Interest............... (932) (332) (594) (1,017) (1,469) (450)
------------- ------------- ----------- --------------- ------------ ------------
Total................................... 69,212 75,866 82,161 92,104 96,921 26,700
============= ============= =========== =============== ============ ============
Ratio of Earnings to Fixed Charges........ 3.06 3.35 3.67 3.16 3.03 3.13
============= ============= =========== =============== ============ ============
</TABLE>
<TABLE>
<CAPTION>
Three Months
Year Ended December 31, Ended
------------------------------------------------------------------------ March
1993 1994 1995 1996 1997 1998
-------------- ------------ ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges:
Interest Expense......................... 19,728 20,133 19,339 26,401 28,592 7,617
Capitalized Interest..................... 932 332 594 1,017 1,469 450
Pro-Rata Share of Unconsolidated
Partnerships' Fixed Charges............. 1,207 1,404 1,442 737 850 209
Preferred Stock Dividend*................ 1,247 1,181
Amortization of debt expense, debt
discounts and interest factor in rental
expense................................. 771 767 985 949 1,033 248
------------- ------------- ----------- --------------- ------------ ------------
Total.................................... 22,638 22,636 22,360 29,104 33,191 9,705
============= ============= =========== =============== ============ ============
Earnings:
Income from Operations................... 47,506 53,562 60,395 64,017 66,446 18,626
Add Back Fixed Charges, Excluding
Preferred Stock Dividend................ 22,638 22,636 22,360 29,104 31,944 8,524
Less Capitalized Interest................ (932) (332) (594) (1,017) (1,469) (450)
------------- ------------- ----------- --------------- ------------ ------------
Total.................................... 69,212 75,866 82,161 92,104 96,921 26,700
============= ============= =========== =============== ============ ============
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends............. 3.06 3.35 3.67 3.16 2.92 2.75
============= ============= =========== =============== ============ ============
</TABLE>
* 7.875% Preferred Stock issued 9/26/97.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 19, 1998
included in Health Care Property Investors, Inc. Form 10-K for the year ended
December 31, 1997 and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Orange County, California
June 18, 1998
<PAGE>
Exhibit 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
HEALTH CARE PROPERTY INVESTORS, INC.
(Exact name of obligor as specified in its charter)
Maryland 33-0091377
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
4675 MacArthur Court, 9th Floor
Newport Beach, California 92660
(Address of principal executive offices) (Zip code)
______________________
Debt Securities
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29
UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with
Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published pursuant
to law or to the requirements of its supervising or examining authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a
corporation organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 11th day of June, 1998.
THE BANK OF NEW YORK
By: /s/WALTER N. GITLIN
---------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
---------
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin..................... $ 5,742,986
Interest-bearing balances.............. 1,342,769
Securities:
Held-to-maturity securities............ 1,099,736
Available-for-sale securities.......... 3,882,686
Federal funds sold and Securities pur-
chased under agreements to resell...... 2,568,530
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................35,019,608
LESS: Allowance for loan and
lease losses ..............627,350
LESS: Allocated transfer risk
reserve..........................0
Loans and leases, net of unearned
income, allowance, and reserve....... 34,392,258
Assets held in trading accounts.......... 2,521,451
Premises and fixed assets (including
capitalized leases).................... 659,209
Other real estate owned.................. 11,992
Investments in unconsolidated
subsidiaries and associated
companies.............................. 226,263
Customers' liability to this bank on
acceptances outstanding................ 1,187,449
Intangible assets........................ 781,684
Other assets............................. 1,736,574
-----------
Total assets............................. $56,153,587
===========
LIABILITIES
Deposits:
In domestic offices.................... $27,031,362
Noninterest-bearing ......11,899,507
Interest-bearing .........15,131,855
In foreign offices, Edge and
Agreement subsidiaries, and IBFs....... 13,794,449
Noninterest-bearing .........590,999
Interest-bearing .........13,203,450
Federal funds purchased and Securities
sold under agreements to repurchase.... 2,338,881
Demand notes issued to the U.S.
Treasury............................... 173,851
Trading liabilities...................... 1,695,216
Other borrowed money:
With remaining maturity of one year
or less.............................. 1,905,330
With remaining maturity of more than
one year through three years......... 0
With remaining maturity of more than
three years.......................... 25,664
Bank's liability on acceptances exe-
cuted and outstanding.................. 1,195,923
Subordinated notes and debentures........ 1,012,940
Other liabilities........................ 2,018,960
-----------
Total liabilities........................ 51,192,576
-----------
EQUITY CAPITAL
Common stock............................. 1,135,284
Surplus.................................. 731,319
Undivided profits and capital
reserves............................... 3,093,726
Net unrealized holding gains
(losses) on available-for-sale
securities............................. 36,866
Cumulative foreign currency transla-
tion adjustments....................... (36,184)
-----------
Total equity capital..................... 4,961,011
-----------
Total liabilities and equity capital..... $56,153,587
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi |
Alan R. Griffith | Directors
J. Carter Bacot |
- --------------------------------------------------------------------------------
