<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
June 17, 1998 (January 20, 1998)
- - --------------------------------------------------------------------------------
HEALTH CARE PROPERTY INVESTORS, INC.
(Exact name of registrant as specified in its charter)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Maryland 1-8895 33-0091377
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation of Organization) File Number) Identification No.)
</TABLE>
4675 MacArthur Court, 9th Floor
Newport Beach, CA 92660
(Address of principal executive offices)
(949) 221-0600
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. ACQUISITION OF ASSETS
During the period from January 1, 1998 through June 4, 1998, Health Care
Property Investors, Inc. and its affiliates and subsidiaries (the "Company")
acquired from unrelated parties nine long-term care ("LTC") facilities and 33
clinics ("CLNs") in 11 separate transactions at an aggregate purchase price of
approximately $99,800,000, comprised of $92,100,000 of acquisitions, and
$7,700,000 of equity investments. The LTC facilities are accounted for as equity
investments in unconsolidated joint ventures on the Company's books. The
Company provided the capital and mortgage loans to the foregoing joint ventures,
and has an 80% equity interest in the joint ventures, but does not have voting
rights or control over the management of the joint venture. The purchase price
on these facilities includes only the equity capital invested by the Company and
does not include the mortgage loans receivable. The LTC facilities and 18 of
the clinics were, concurrently with their acquisition, leased on a triple-net
basis to ten different operators under terms generally similar to the Company's
existing leases. The other 15 clinics were leased to five different operators
on a modified gross basis under which the Company may be responsible for
property taxes, repairs and maintenance and/or insurance on those properties.
Each transaction was initially funded by bank borrowings on the Company's
revolving bank lines of credit and by cash on hand. The Company repaid
approximately $23 million and $197 million on its revolving bank lines of credit
with the proceeds of a common stock offering during April 1998 and a long-term
debt offering during June 1998, respectively.
<TABLE>
<CAPTION>
Facility Acquisition Purchase
Facility Name City State Type Units (1) Date Price
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ponca City Nursing Home Ponca City OK LTC (2) 157 Jan 20, 1998 $1,117,000
Highland Nursing Home Ponca City OK LTC (2) 97 Jan 20, 1998 691,000
Central Oklahoma Christian Home Oklahoma OK LTC (2) 148 Feb 03, 1998 910,000
Parkview Nursing Home Shawnee OK LTC (2) 78 Mar 11, 1998 587,000
Seminole Pioneer Nursing Home Seminole OK LTC (2) 146 Mar 11, 1998 1,099,000
Shawnee Colonial Estates Shawnee OK LTC (2) 165 Mar 11, 1998 1,242,000
Okemah Pioneer Nursing Home Okemah OK LTC (2) 76 Apr 01, 1998 572,000
Premier Medical Group Clarksville TN CLN Apr 08, 1998 7,645,000
College Park Atlanta GA CLN May 01, 1998 4,155,800
Marietta Atlanta GA CLN May 01, 1998 1,656,250
Pleasantdale Atlanta GA CLN May 01, 1998 3,235,610
Triangle Cary NC CLN May 01, 1998 2,056,880
Abbey Place Charlotte NC CLN May 01, 1998 3,616,000
Pineville Charlotte NC CLN May 01, 1998 2,293,888
Park Meadows Littleton CO CLN May 01, 1998 3,100,000
Lane Avenue Jacksonville FL CLN May 01, 1998 1,269,270
Regency Square Jacksonville FL CLN May 01, 1998 1,763,970
San Jose Jacksonville FL CLN May 01, 1998 1,333,690
University Jacksonville FL CLN May 01, 1998 2,208,460
Raleigh Memphis TN CLN May 01, 1998 1,358,600
Edmond Oklahoma City OK CLN May 01, 1998 500,000
Midwest Oklahoma City OK CLN May 01, 1998 1,565,000
Norman Oklahoma City OK CLN May 01, 1998 1,350,000
South Hills Oklahoma City OK CLN May 01, 1998 1,709,000
Triangle Raleigh NC CLN May 01, 1998 2,058,250
Columbus Columbus OH CLN May 01, 1998 786,000
Premier Subacute and Rehab Center Statesboro GA LTC (2) 60 May 01, 1998 587,000
Kissimmee Orlando FL CLN May 11, 1998 2,630,975
Maitland Orlando FL CLN May 11, 1998 3,988,914
Quadrangle Orlando FL CLN May 11, 1998 3,507,936
Sandlake Orlando FL CLN May 11, 1998 3,452,325
Brandon Tampa FL CLN May 11, 1998 1,893,400
University Tampa FL CLN May 11, 1998 2,087,925
Medical Arts Buildings Minot ND CLN May 27, 1998 11,200,000
River Oaks Care Center Ft. Worth TX LTC (2) 124 Jun 01, 1998 890,000
Intercontinental/Airport Building Houston TX CLN Jun 04, 1998 5,272,262
Harwin Houston TX CLN Jun 04, 1998 3,304,430
Louetta Houston TX CLN Jun 04, 1998 3,260,515
Windfern Houston TX CLN Jun 04, 1998 1,477,137
Kingwood Kingwood TX CLN Jun 04, 1998 1,961,341
Pasadena Pasadena TX CLN Jun 04, 1998 3,205,668
Stafford Stafford TX CLN Jun 04, 1998 1,205,801
----- ------------
1,051 $ 99,805,297
===== ============
</TABLE>
- - ----------------------------
(1) The clinics encompass approximately 730,500 square feet.
(2) These properties are owned by unconsolidated joint ventures. The amount
included in the purchase price represents HCPI's capital investment in the
joint venture and does not include any mortgage loans receivable from the
joint venture.
The Company believes these acquisitions are consistent with the Company's
historical business strategy of acquiring and concurrently leasing health care
facilities. In assessing the facilities, the Company considered the type,
location, age, design and physical condition of the facilities acquired, as well
as historical, if applicable, and projected operating results of the health care
operations conducted at the facilities. Additionally, the Company considers the
operating ability, financial condition and reputation of the operator to which
the acquired facilities are to be leased. The Company, after reasonable inquiry,
is not aware of any material factors that would cause the financial information
reported not to be necessarily indicative of future operating results, although
no assurance can be given by the Company regarding actual future operating
results. The Company intends to continue the current use of each property.
Although no single acquisition is considered a "significant acquisition"
pursuant to the rules governing the reporting of transactions on Form 8-K and
under Rule 3-14 of Regulation S-X, these acquisitions in the aggregate, may be
considered to be material in nature. Certain audited pro forma financial
information concerning these properties is provided in Item 7 of this Current
Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Historical financial information, pursuant to Rule 3-14 of Regulation S-X, for
the health care operations of the acquired facilities is not presented because
the related operating information for such facilities generally would not be
meaningful. This is due to the nature of modified gross and triple-net leased
real estate operations. Alternatively, the Company has presented audited pro
forma operating information for each of the acquired properties as if the
acquired properties had been owned by the Company since January 1, 1997.
(a)(3) - Audited pro forma statements of operations for the
acquired facilities for the year ended December 31, 1997.
(b)(1) - Unaudited pro forma balance sheet as of March 31, 1998
for the Company after giving effect to the acquisition of the
facilities.
- Pro forma statement of operations for the Company after
giving effect to the acquisition of the facilities for the three-month
period ended March 31, 1998.
- Pro forma statement of operations for the Company after
giving effect to the acquisition of the facilities for the year ended
December 31, 1997.
(c) Consent of Arthur Andersen LLP.
<PAGE>
REPORT OF THE INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Directors, Health Care Property Investors, Inc:
We have examined the pro forma adjustments reflecting the transactions described
in Note 1 and the application of those adjustments to the assembly of the
accompanying pro forma statements of operations of the properties acquired by
Health Care Property Investors, Inc. during the period January 1, 1998 to June
4, 1998 as indicated in Item 2 of this Form 8-K (collectively "the Acquired
Properties") for the year ended December 31, 1997. The historical statements of
operations are omitted since substantially all historical amounts are not
relevant on a pro forma basis. The pro forma adjustments are based upon
management's assumptions described in Note 2. Our examination was made in
accordance with standards established by the American Institute of Certified
Public Accountants and, accordingly, included such procedures as we considered
necessary in the circumstances.
The objective of this pro forma financial information is to show what the
significant effects on the historical financial information might have been had
the transactions occurred at an earlier date. However, the pro forma statements
of operations are not necessarily indicative of the results of operations that
would have been attained had the above-mentioned transactions actually occurred
earlier.
In our opinion, management's assumptions provide a reasonable basis for
presenting the significant effects directly attributable to the above-mentioned
transactions described in Note 1, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma statements of
operations for the year ended December 31, 1997 reflect the proper application
of those adjustments to the historical statement of operations amounts.
Arthur Andersen LLP
Los Angeles, California
June 17, 1998
<PAGE>
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Central
Ponca City Highland Oklahoma Parkview Seminole Shawnee
(A) (A) (A) (A) (A) (A)
---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Base Rental Income $ --- $ --- $ --- $ --- $ --- $ ---
Interest and Other Income (1) 242,000 149,000 192,000 126,000 236,000 267,000
--------- --------- --------- --------- --------- ---------
242,000 149,000 192,000 126,000 236,000 267,000
--------- --------- --------- --------- --------- ---------
Expenses:
Interest 224,520 138,780 181,800 118,740 222,300 251,220
Depreciation --- --- --- --- --- ---
Other Operating Expenses --- --- --- --- --- ---
--------- --------- --------- --------- --------- ---------
224,520 138,780 181,800 118,740 222,300 251,220
--------- --------- --------- --------- --------- ---------
Net Income (Loss) $ 17,480 $ 10,220 $ 10,200 $ 7,260 $ 13,700 $ 15,780
========= ========= ========= ========= ========= =========
</TABLE>
See accompanying notes.
(1) Includes interest on mortgage loans receivable.
(A) These LTC facilities are owned by unconsolidated joint ventures. For
purposes of this pro forma it is assumed that the Company breaks even on
the equity investment in these joint ventures during the first year of
operation and makes a profit on the mortgage loans receivable.
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Premier
Okemah Subacute River Oaks
(A) (A) (A)
---------- --------- ---------
<S> <C> <C> <C>
Revenues:
Base Rental Income $ --- $ --- $ ---
Interest and Other Income (1) 123,000 123,000 185,000
--------- --------- --------
123,000 123,000 185,000
--------- --------- --------
Expenses:
Interest 115,740 117,360 177,600
Depreciation --- --- ---
Other Operating Expenses --- --- ---
--------- --------- ---------
115,740 117,360 177,600
--------- --------- ---------
Net Income (Loss) $ 7,260 $ 5,640 $ 7,400
========= ========= =========
</TABLE>
See Accompanying Notes
(1) Includes interest on mortgage loans receivable.
(A) These LTC facilities are owned by unconsolidated joint ventures. For
purposes of this pro forma it is assumed that the Company breaks even on
the equity investment in these joint ventures during the first year of
operation and makes a profit on the mortgage loans receivable.
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
College Triangle
Premier Park Marietta Pleasantdale Cary
--------- --------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Base Rental Income $ 738,180 $ 531,847 $ 188,922 $ 380,076 $ 258,129
Interest and Other Income (1) --- --- --- --- ---
--------- -------- --------- --------- ---------
738,180 531,847 188,922 380,076 258,129
--------- -------- --------- --------- ---------
Expenses:
Interest 458,700 249,348 99,375 194,137 123,413
Depreciation 184,286 101,594 27,321 69,589 33,054
Other Operating Expenses --- 49,820 18,657 35,111 ---
--------- --------- --------- --------- ---------
642,986 400,762 145,353 298,837 156,467
--------- --------- --------- --------- ---------
Net Income (Loss) $ 95,194 $ 131,085 $ 43,569 $ 81,239 $ 101,662
========= ========= ========= ========= =========
</TABLE>
See Accompanying Notes
(1) Includes interest on mortgage loans receivable.
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Abbey Park Lane Regency
Place Pineville Meadows Avenue Square San Jose
---------- --------- --------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Base Rental Income $ 380,000 $ 253,840 $ 316,014 $ 221,991 $ 180,699 $ 136,517
Interest and Other Income (1) --- --- --- --- --- ---
--------- --------- -------- --------- --------- ---------
380,000 253,840 316,014 221,991 180,699 136,517
--------- --------- -------- --------- --------- ---------
Expenses:
Interest 216,960 137,633 186,000 76,156 105,838 80,021
Depreciation 66,171 34,111 67,143 36,265 34,685 23,820
Other Operating Expenses --- --- --- --- --- ---
--------- --------- --------- --------- --------- ---------
283,131 171,744 253,143 112,421 140,523 103,841
--------- --------- --------- --------- --------- ---------
Net Income (Loss) $ 96,869 $ 82,096 $ 62,871 $ 109,570 $ 40,176 $ 32,676
========= ========= ========= ========= ========= =========
</TABLE>
See Accompanying Notes
(1) Includes interest on mortgage loans receivable.
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
University South
Jacksonville Raleigh Edmond Midwest Norman Hills
---------- --------- --------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Base Rental Income $ 232,829 $ 181,323 $ 58,519 $ 177,582 $ 151,990 $ 194,993
Interest and Other Income (1) --- --- --- --- --- ---
--------- --------- -------- --------- --------- ---------
232,829 181,323 58,519 177,582 151,990 194,993
--------- --------- -------- --------- --------- ---------
Expenses:
Interest 132,508 81,516 30,000 93,900 81,000 102,540
Depreciation 45,956 27,389 11,429 34,714 30,000 28,829
Other Operating Expenses --- 19,649 9,725 27,038 27,045 38,903
--------- --------- --------- --------- --------- ---------
178,464 128,554 51,154 155,652 138,045 170,272
--------- --------- --------- --------- --------- ---------
Net Income (Loss) $ 54,365 $ 52,769 $ 7,365 $ 21,930 $ 13,945 $ 24,721
========= ========= ========= ========= ========= =========
</TABLE>
See Accompanying Notes
(1) Includes interest on mortgage loans receivable.
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Triangle
Raleigh Columbus(2) Kissimmee Maitland Quadrangle
---------- --------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Revenues:
Base Rental Income $ 247,804 $ --- $ 256,704 $ 394,381 $ 340,931
Interest and Other Income (1) --- --- --- --- ---
--------- --------- --------- --------- ---------
247,804 --- 256,704 394,381 340,931
--------- --------- --------- --------- ---------
Expenses:
Interest 123,495 47,160 157,859 239,335 210,476
Depreciation 37,379 16,743 68,028 42,540 71,655
Other Operating Expenses --- --- 27,020 56,384 46,554
--------- --------- --------- --------- ---------
160,874 63,903 252,907 338,259 328,685
--------- --------- --------- --------- ---------
Net Income (Loss) $ 86,930 $ (63,903) $ 3,797 $ 56,122 $ 12,246
========= ========= ========= ========= =========
</TABLE>
See Accompanying Notes
(1) Includes interest on mortgage loans receivable.
(2) This facility is currently vacant.
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
University Medical
Sandlake Brandon Tampa Arts
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Base Rental Income $ 364,772 $ 232,639 $ 250,614 $1,376,059
Interest and Other Income (1) --- --- --- ---
--------- --------- -------- ---------
364,772 232,639 250,614 1,376,059
--------- --------- -------- ---------
Expenses:
Interest 207,140 113,604 125,276 672,000
Depreciation 58,638 38,383 35,369 306,286
Other Operating Expenses 54,904 31,329 35,006 ---
--------- --------- --------- ---------
320,682 183,316 195,651 978,286
--------- --------- --------- ---------
Net Income (Loss) $ 44,090 $ 49,323 $ 54,963 $ 397,773
========= ========= ========= =========
</TABLE>
See Accompanying Notes
(1) Includes interest on mortgage loans receivable.
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Inter-
Continental Harwin Louetta Windfern Kingwood
--------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Base Rental Income $ 536,886 $ 339,456 $ 325,971 $ 236,670 $ 191,313
Interest and Other Income (1) --- --- --- --- ---
--------- -------- --------- --------- ---------
536,886 339,456 325,971 236,670 191,313
--------- -------- --------- --------- ---------
Expenses:
Interest 316,336 198,266 195,631 88,628 117,680
Depreciation 136,350 78,698 70,300 26,490 43,181
Other Operating Expenses --- --- --- --- ---
--------- --------- --------- --------- ---------
452,686 276,964 265,931 115,118 160,861
--------- --------- --------- --------- ---------
Net Income (Loss) $ 84,200 $ 62,492 $ 60,040 $ 121,552 $ 30,452
========= ========= ========= ========= =========
See Accompanying Notes
</TABLE>
(1) Includes interest on mortgage loans receivable.
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Pasadena Stafford Total
---------- --------- ------------
<S> <C> <C> <C>
Revenues:
Base Rental Income $ 323,890 $ 152,139 $10,153,680
Interest and Other Income (1) --- --- 1,643,000
--------- --------- -----------
323,890 152,139 11,796,680
--------- --------- -----------
Expenses:
Interest 192,340 72,348 7,074,679
Depreciation 80,162 25,880 1,992,438
Other Operating Expenses --- --- 477,145
--------- --------- -----------
272,502 98,228 9,544,262
--------- --------- -----------
Net Income (Loss) $ 51,388 $ 53,911 $ 2,252,418
========= ========= ===========
</TABLE>
See Accompanying Notes
(1) Includes interest on mortgage loans receivable.
FOOTNOTES TO PRO FORMA STATEMENTS OF OPERATIONS
NOTE 1: Health Care Property Investors, Inc. and its affiliates and subsidiaries
(the "Company") acquired nine long-term care ("LTC") facilities and 33 clinics
in 11 separate transactions at an aggregate purchase price of approximately
$99,800,000, comprised of $92,100,000 of acquisitions and $7,700,000 of equity
investments. The LTC facilities are accounted for as equity investments in
unconsolidated joint ventures on the Company's books. The Company provided the
capital and mortgage loans to the joint ventures , and has an 80% equity
interest in the joint ventures, but does not have voting rights or control over
the management of the joint venture. The purchase price on these facilities
includes only the equity capital invested by the Company and does not include
the mortgage loans receivable. The LTC facilities, as well as 18 of the clinics
were leased to 10 different operators under triple-net leases generally similar
to the Company's existing leases and are accounted for as operating leases. The
LTC leases have initial terms of 12-23 years. The remaining 15 clinics were
leased to five different operators on a modified gross basis under which the
Company may be responsible for the property tax and insurance payments and
repairs and maintenance. The clinic leases have initial terms of 1-10 years.
The Company earns fixed monthly base rental income and may earn periodic
additional rents. The additional payments are generally computed based upon
increases in the Consumer Price Index or as a percentage of facility net patient
revenues in excess of base amounts. Additional rents generally commence in the
second year of the leases. With the exception of the modified gross leased
clinics, under terms of the leases, the lessees are responsible for all
maintenance, repairs, taxes and insurance on the leased properties.
The pro forma statements of operations reflect the acquisitions of the
properties as if they had been owned since January 1, 1997.
NOTE 2: The pro forma base rental income is based upon the monthly minimum rents
specified in the leases. No additional rent amounts are assumed for purposes of
the pro forma statements of operations based upon the terms of the lease.
Pro forma interest and other income includes the first year of interest due on
mortgage loans receivable. This category would generally also include the
Company's share of income from the unconsolidated joint ventures. However, for
purposes of this pro forma, although the Company will receive preferential
distributions from these joint ventures during the year, it is assumed that
these joint ventures will break even. Therefore, there is no joint venture
income recognized in the pro forma statements of operations.
Pro forma depreciation is based upon the purchase prices of the facilities being
allocated to building and depreciated over 35 years.
Pro forma interest expense is calculated using an interest rate of 6.00%, which
is the Company's weighted average borrowing rate for the year to date on its
unsecured revolving lines of credit. The Company has two unsecured lines of
credit, one for $100,000,000 which expires on October 22, 2002 and one for
$50,000,000 which expires October 22, 1998. The Company also arranges for
additional borrowings on an as-needed basis with various banks. The Company
initially uses these short-term borrowings to fund purchases, but replaces
these borrowings with periodic long-term debt and equity offerings. The Company
repaid approximately $23 million and $197 million on the line of credit
borrowings with the proceeds of a common stock offering during April 1998 and a
long-term debt offering during June 1998, respectively. Accordingly, the actual
interest expense resulting from the acquisitions of the facilities may vary.
No pro forma operating expenses are included other than for the clinics under
modified gross leases because: (1) such amounts are expected to be immaterial,
and (2) the Company does not expect to add additional staff as a result of the
transactions described in Note 1 above. The pro forma amounts for the clinics
are based upon current actual and estimated operating expenses.
NOTE 3: The preparation of financial statements requires management to make
estimates and assumptions that affect the revenues and expenses during the
reporting period. Actual results could differ from those estimates.
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following Pro Forma Balance Sheet as of March 31, 1998 has been prepared to
reflect the acquisition of 36 facilities during the period from April 1, 1998 to
June 4, 1998 and the adjustments described in the accompanying notes.
The following unaudited Pro Forma Statements of Operations for the three months
ended March 31, 1998 and for the year ended December 31, 1997 have been prepared
to reflect the acquisition of 42 facilities during the period from January 1,
1998 through June 4, 1998 (the "Acquired Facilities") and the adjustments
described in the accompanying notes.
The pro forma financial information is based on the historical financial
statements of Health Care Property Investors, Inc. in the Company's Form 10-Q
for the period ended March 31, 1998 and the other financial information in the
Company's 1997 Annual Report to Shareholders on Form 10-K, and should be read in
conjunction with those financial statements and the notes thereto.
The Pro Forma Balance Sheet was prepared as if the 36 facilities acquired after
March 31, 1998 were purchased on March 31, 1998. The Pro Forma Statements of
Operations were prepared as if the Acquired Facilities were purchased as of
January 1, 1997.
The combined pro forma financial information is not necessarily indicative of
the financial position or results of operations which actually would have
occurred if such transactions had been consummated on the dates described, nor
does it purport to represent the Company's future financial position or results
of operations.
<PAGE>
HEALTH CARE PROPERTY INVESTORS, INC.
UNAUDITED PRO FORMA BALANCE SHEET
MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
March 31, March 31,
1998 Adjustments 1998
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Real Estate Investments
Buildings and Improvements $ 859,507 $ 69,735 $ 929,242
Accumulated Depreciation (177,196) --- (177,196)
--------- --------- ----------
682,311 69,735 752,046
Construction in Progress 7,998 --- 7,998
Land 100,942 22,375 123,317
--------- --------- ----------
791,251 92,110 883,361
Loans Receivable 127,003 4,796 131,799
Investments in and Advances to Partnerships 33,150 2,049 35,199
Other Assets 11,600 --- 11,600
Cash and Cash Equivalents 3,185 --- 3,185
--------- --------- ----------
TOTAL ASSETS $ 966,189 $ 98,955 $1,065,144
--------- --------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank Notes Payable $ 82,000 $ 98,955 $ 180,955
Senior Notes Payable 284,970 --- 284,970
Convertible Subordinated Notes Payable 100,000 --- 100,000
Mortgage Notes Payable 10,582 --- 10,582
Accounts Payable, Accrued Liabilities
and Deferred Income 26,751 --- 26,751
Minority Interests in Partnerships 21,479 --- 21,479
Stockholders' Equity:
Preferred Stock 57,810 --- 57,810
Common Stock 30,246 --- 30,246
Additional Paid-In Capital 410,093 --- 410,093
Cumulative Net Income 462,237 --- 462,237
Cumulative Dividends (519,979) --- (519,979)
--------- --------- ----------
TOTAL STOCKHOLDERS' EQUITY 440,407 --- 440,407
--------- --------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 966,189 $ 98,955 $1,065,144
========= ========= ==========
</TABLE>
See Accompanying Notes.
<PAGE>
HEALTH CARE PROPERTY INVESTORS, INC.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
MARCH 31, 1998
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Pro Forma
Three Months Three Months
Ended Ended
March 31, March 31,
---------- ---------
1998 Adjustments 1998
---------- ----------- ---------
<S> <C> <C> <C>
REVENUE
Base Rental Income $ 26,078 $ 2,538 $ 28,616
Additional Rental and Interest Income 5,411 --- 5,411
Interest and Other Income 4,845 265 5,110
-------- -------- --------
36,334 2,803 39,137
-------- -------- --------
EXPENSE
Interest Expense 7,617 1,637 9,254
Depreciation/Non Cash Charges 7,422 498 7,920
Facility Operating Expenses 797 119 916
Other Expenses 1,872 --- 1,872
-------- -------- --------
17,708 2,254 19,962
-------- -------- --------
INCOME FROM OPERATIONS 18,626 549 19,175
Minority Interests (1,148) --- (1,148)
Gain on Sale of Real Estate Properties --- --- ---
-------- -------- --------
NET INCOME $ 17,478 $ 549 $ 18,027
DIVIDENDS TO PREFERRED STOCKHOLDERS 1,181 --- 1,181
-------- -------- --------
NET INCOME APPLICABLE TO COMMON SHARES 16,297 549 16,846
======== ======== ========
BASIC EARNINGS PER COMMON SHARE $ 0.54 $ 0.56
======== ========
DILUTED EARNINGS PER COMMON SHARE $ 0.54 $ 0.55
======== ========
WEIGHTED AVERAGE SHARES - BASIC 30,237 30,237
======== ========
WEIGHTED AVERAGE SHARES - DILUTED 30,576 30,576
======== ========
</TABLE>
See Accompanying Notes.
<PAGE>
HEALTH CARE PROPERTY INVESTORS, INC.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
DECEMBER 31, 1997
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Pro Forma
Year Ended Year Ended
December 31, December 31,
------------ -----------
1997 Adjustments 1997
---------- ----------- ---------
<S> <C> <C> <C>
REVENUE
Base Rental Income $ 92,130 $ 10,154 $ 102,284
Additional Rental and Interest Income 21,060 --- 21,060
Interest and Other Income 15,313 1,643 16,956
-------- -------- --------
128,503 11,797 140,300
-------- -------- --------
EXPENSE
Interest Expense 28,592 7,075 35,667
Depreciation/Non Cash Charges 25,889 1,992 27,881
Facility Operating Expenses 162 477 639
Other Expenses 7,414 --- 7,414
-------- -------- --------
62,057 9,544 71,601
-------- -------- --------
INCOME FROM OPERATIONS 66,446 2,253 68,699
Minority Interests (3,704) --- (3,704)
Gain on Sale of Real Estate Properties 2,047 --- 2,047
-------- -------- --------
NET INCOME $ 64,789 $ 2,253 $ 67,042
DIVIDENDS TO PREFERRED STOCKHOLDERS 1,247 --- 1,247
-------- -------- --------
NET INCOME APPLICABLE TO COMMON SHARES $ 63,542 $ 2,253 $ 65,795
======== ======== ========
BASIC EARNINGS PER COMMON SHARE $ 2.21 $ 2.29
======== ========
DILUTED EARNINGS PER COMMON SHARE $ 2.19 $ 2.27
======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 28,782 28,782
======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 28,994 28,994
======== ========
</TABLE>
See Accompanying Notes.
FOOTNOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
NOTE 1: Health Care Property Investors, Inc. and its affiliates and subsidiaries
(the "Company") acquired nine long-term care ("LTC") facilities and 33 clinics
in 11 separate transactions at an aggregate purchase price of approximately
$99,800,000, comprised of $92,100,000 of acquisitions and $7,700,000 of equity
investments. The LTC facilities and 18 clinics were leased to 10 different
operators under triple-net leases generally similar to the Company's existing
leases and are accounted for as operating leases. The other 15 clinics were
leased under modified gross leases to five different operators. The LTC leases
have initial terms of 12-23 years. The clinic leases range from 1-10 years.
The Company earns fixed monthly base rental income and may earn periodic
additional rents. The additional payments are generally computed based upon
increases in the Consumer Price Index or as a percentage of facility net patient
revenues in excess of base amounts. Additional rents generally commence in the
second year of the leases. With the exception of the clinics leased on a
modified gross basis, under terms of the leases, the lessees are responsible for
all maintenance, repairs, taxes and insurance on the leased properties.
The pro forma statements of operations reflect the acquisitions of the
properties as if they had been owned since January 1, 1997, and the pro forma
balance sheet reflects the acquisition of the properties as if all such
properties had been owned on March 31, 1998.
NOTE 2: The pro forma balance sheet adjustments reflect the allocation between
land and building and improvements of the $94,159,000 of acquired properties
purchased after March 31, 1998, and the increase in bank notes payable used to
fund the purchases. No adjustment has been made to accumulated depreciation for
those properties acquired after March 31, 1998. The mortgage loans made since
March 31, 1998 to the unconsolidated joint ventures are also included in the pro
forma balance sheet.
NOTE 3: The pro forma base rental income is based upon the monthly minimum rents
specified in the leases. No additional rent amounts are assumed for purposes of
the pro forma statements of operations based upon the terms of the lease.
Pro forma interest and other income includes the first year of interest due on
mortgage loans receivable. This category would generally also include the
Company's share of income from the unconsolidated joint ventures. However, for
purposes of this pro forma, although the Company will receive preferential
distributions from these joint ventures during the year, it is assumed that
these joint ventures will break even. Therefore, there is no joint venture
income recognized in the pro forma statements of operations.
Pro forma depreciation is based upon the purchase prices of the facilities being
allocated to building and depreciated over 35 years.
Pro forma interest expense is calculated using an interest rate of 6.00%, which
is the Company's weighted average borrowing rate for the year to date on its
unsecured revolving lines of credit. The Company has two unsecured lines of
credit, one for $100,000,000 which expires on October 22, 2002 and one for
$50,000,000 which expires October 22, 1998. The Company also arranges for
additional borrowings on an as-needed basis with various banks. The Company
initially uses these short-term borrowings to fund purchases, but replaces
these borrowings with periodic long-term debt and equity offerings. The Company
repaid approximately $23 million and $197 million on the line of credit
borrowings with the proceeds of a common stock offering during April 1998 and a
long-term debt offering during June 1998, respectively. Accordingly, the actual
interest expense resulting from the acquisitions of the facilities may vary.
No pro forma operating expenses are included other than for the clinics under
modified gross leases because: (1) such amounts are expected to be immaterial,
and (2) the Company does not expect to add additional staff as a result of the
transactions described in Note 1 above. The pro forma amounts for the clinics
are based upon current actual and estimated operating expenses.
NOTE 4: The preparation of financial statements requires management to make
estimates and assumptions that affect the revenues and expenses during the
reporting period. Actual results could differ from those estimates.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: June 16, 1998 HEALTH CARE PROPERTY INVESTORS, INC.
(REGISTRANT)
/s/ James G. Reynolds
-----------------------------
James G. Reynolds
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ Devasis Ghose
-----------------------------
Devasis Ghose
Senior Vice President-Finance and Treasurer
(Principal Accounting Officer)
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the previously filed
Registration Statement No. 333-29485 of Health Care Property Investors, Inc. of
our report dated June 17, 1998, with respect to the Pro Forma Statements of
Operations of the Acquired Properties (as listed in Item 2 of the Current Report
on Form 8-K) included in the Current Report on Form 8-K dated June 17, 1998,
filed with the Securities and Exchange Commission.
ARTHUR ANDERSEN LLP
Los Angeles, California
June 17, 1998
