<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
November 5, 1998 (June 30, 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 June 30,1998 through October 30, 1998, Health Care
Property Investors, Inc. and its affiliates and subsidiaries (the
"Company") acquired from unrelated parties ten long-term care facilities
("LTCs"), six clinics ("CLNs"), four assisted living facilities ("ALFs")
and two medical office buildings ("MOBs") in 16 separate transactions at an
aggregate purchase price of approximately $108,200,000, comprised of
$103,800,000 of acquisitions, and $4,400,000 of equity investments. Four
of the LTC facilities are accounted for as equity investments in
unconsolidated joint ventures on the Company's books. The Company provided
the capital and 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 loans receivable. The ALF and LTC facilities and
two 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 MOBs and four clinics were leased to
multiple tenants on a gross or 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 $65 million on its revolving
bank lines of credit with the proceeds of a preferred stock offering during
September 1998.
<PAGE>
<TABLE>
<CAPTION>
Facility Acquisition Purchase
Facility Name City State Type Beds Units Date Price
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gulfcoast Manor Port Richey FL ALF 91 06/30/98 1,868,166
Westbrooke Manor Zephyrhills FL ALF 80 06/30/98 3,435,015
Eastbrooke Gardens Casselberry FL ALF 42 06/30/98 2,229,747
Rexburg Nursing Center Rexburg ID LTC 119 07/14/98 5,507,780
Washington Terrace Ogden UT LTC 120 07/14/98 4,934,640
Memphis Clinic Memphis TN CLN(1) 1 07/27/98 1,701,300
910 Medical Place Minneapolis MN MOB(1) 1 07/31/98 9,800,000
Franklin Nursing Home Franklin LA LTC(2) 152 08/03/98 1,311,000
St. Mary's Nursing Home Morgan City LA LTC(2) 88 08/03/98 760,000
Sunset Estates Shawnee OK LTC 92 08/13/98 2,936,800
Austin I - Clinic South Austin TX CLN(1) 1 08/14/98 2,294,460
Austin II - Clinic North Austin TX CLN(1) 1 08/14/98 5,846,880
Chancellor Lodi Lodi CA ALF 76 08/21/98 6,465,000
Balmoral Care Center Tucson AZ LTC(2) 112 09/01/98 1,190,000
Westhaven Nursing Home Stillwater OK LTC 125 09/01/98 2,250,000
Rosewood Nursing Home Stillwater OK LTC 104 09/01/98 2,080,000
Chesterfield Clinic Chesterfield VA CLN(1) 1 09/03/98 2,400,000
Medical Arts Convalescent Hospital Perris CA LTC(2) 109 10/02/98 1,157,000
Lake Ellenor Clinic Orlando FL CLN(1) 1 10/02/98 2,700,000
The Westchester Creek Bronx NY MOB(1) 1 10/15/98 20,100,000
Mercy Med Clinic Sacramento CA CLN(1) 1 10/21/98 25,000,000
Country Club Manor Amarillo TX LTC 102 10/30/98 2,225,000
------ --- -----------
1,123 297 108,192,788
====== === ===========
</TABLE>
- ----------------------------
(1) The clinics encompass approximately 209,500 square feet and the medical
office buildings encompass approximately 145,600 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 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/A.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Historical financial information, pursuant to Rule 3-14 of Regulation S-X, for
the health care operations of the acquired facilities is not presented because
the related operating information for such facilities generally would not be
meaningful. This is due to the nature of gross, 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 September 30, 1998
for the Company after giving effect to the acquisition of the
facilities.
- Unaudited pro forma statement of operations for the
Company after giving effect to the acquisition of the
facilities for the nine-month period ended
September 30, 1998.
- Unaudited 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 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 June 30, 1998 to October
30, 1998 as indicated in Item 2 of this Amendment No. 1 to Form 8-K/A
(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
Orange County, California
December 7, 1998
<PAGE>
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Franklin St. Mary's Balmoral Medical Arts
Nursing Home Nursing Home Care Center Convalescent Gulfcoast Westbrooke
(A) (A) (A) Hospital (A) Manor Manor
----------- ----------- ----------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Base Rental Income $ --- $ --- $ --- $ --- $ 174,860 $ 321,517
Interest and Other Income (1) 271,000 157,000 247,000 239,000 --- ---
--------- --------- --------- --------- --------- ---------
271,000 157,000 247,000 239,000 174,860 321,517
--------- --------- --------- --------- --------- ---------
Expenses:
Interest 262,380 151,920 238,800 231,420 112,090 206,101
Depreciation --- --- --- --- 54,805 105,572
Facility Operating Expenses --- --- --- --- --- ---
--------- --------- --------- --------- --------- ---------
262,380 151,920 238,800 231,420 166,895 311,673
--------- --------- --------- --------- --------- ---------
Net Income (Loss) $ 8,620 $ 5,080 $ 8,200 $ 7,580 $ 7,965 $ 9,844
========= ========= ========= ========= ========= =========
</TABLE>
See accompanying notes.
(1) Includes interest on loans receivable and facility operating income.
(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
operations and earns interest on the loans receivable.
<PAGE>
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Eastbrooke Rexburg Washington Memphis 910 Sunset
Gardens Nursing Ctr Terrace Clinic Medical Estates
---------- ----------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Base Rental Income $ 208,704 $ 508,368 $ 455,467 $170,130 $ 900,924 $ 342,240
Interest and Other Income (1) --- --- --- --- 821,280 ---
--------- --------- -------- --------- ---------- ---------
208,704 508,368 455,467 170,130 1,722,204 342,240
--------- --------- -------- --------- ---------- ---------
Expenses:
Interest 133,785 330,467 296,078 102,078 588,000 176,208
Depreciation 58,564 194,508 176,704 48,609 275,429 102,194
Other Operating Expenses --- --- --- --- 882,502 ---
--------- --------- --------- --------- ---------- ---------
192,349 524,975 472,782 150,687 1,745,931 278,402
--------- --------- --------- --------- ---------- ---------
Net Income (Loss) $ 16,355 $ (16,607) $ (17,315) $ 19,443 $ (23,727) $ 63,838
========= ========= ========= ========= ========== =========
</TABLE>
See Accompanying Notes
(1) Includes interest on loans receivable and facility operating income.
<PAGE>
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Austin I Austin II Westhaven Rosewood
Clinic Clinic Chancellor Nursing Nursing Chesterfield
South North Lodi Home Home Clinic
--------- --------- ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Base Rental Income $ 318,256 $ 821,104 $ 602,433 $ 270,000 $ 249,600 $ 251,100
Interest and Other Income (1) --- --- --- --- --- ---
--------- -------- --------- --------- --------- ---------
318,256 821,104 602,433 270,000 249,600 251,100
--------- -------- --------- --------- --------- ---------
Expenses:
Interest 137,668 350,813 387,900 135,000 124,800 144,000
Depreciation 55,556 121,339 241,689 84,286 75,971 51,429
Other Operating Expenses 68,548 159,394 --- --- --- ---
--------- --------- --------- --------- --------- ---------
261,773 631,546 629,589 219,286 200,771 195,429
--------- --------- --------- --------- --------- ---------
Net Income (Loss) $ 56,483 $ 189,558 $ (27,156) $ 50,714 $ 48,829 $ 55,671
========= ========= ========= ========= ========= =========
</TABLE>
See Accompanying Notes
(1) Includes interest on loans receivable and facility operating income.
<PAGE>
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Lake The Mercy County
Ellenor Westchester Medical Club
Clinic Creek Clinic Manor Total
---------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Revenues:
Base Rental Income $ 165,792 $2,267,845 $2,844,388 $ 233,423 $ 11,106,151
Interest and Other Income (1) --- 285,923 176,938 --- 2,198,141
--------- --------- ---------- --------- -----------
165,792 2,553,768 3,021,326 233,423 13,304,292
--------- --------- ---------- --------- -----------
Expenses:
Interest 162,000 1,206,000 1,500,000 133,500 7,111,008
Depreciation 55,714 563,810 872,571 57,857 3,196,607
Other Operating Expenses 53,532 464,086 800,350 --- 2,428,412
--------- --------- ---------- --------- -----------
271,246 2,233,896 3,172,921 191,357 12,736,027
--------- --------- ---------- --------- -----------
Net Income (Loss) $(105,454) $ 319,872 $ (151,595) $ 42,066 $ 568,265
========= ========= ========= ========= ===========
</TABLE>
See Accompanying Notes
(1) Includes interest on loans receivable and facility operating income.
<PAGE>
FOOTNOTES TO PRO FORMA STATEMENTS OF OPERATIONS
NOTE 1: Health Care Property Investors, Inc. and its affiliates and subsidiaries
(the "Company") acquired ten long-term care ("LTC") facilities, six clinics,
four assisted living facilities ("ALFs") and two medical office buildings
("MOBs") in 16 separate transactions at an aggregate purchase price of
approximately $108,200,000, comprised of $103,800,000 of acquisitions and
$4,400,000 of equity investments. Four of the LTC facilities are accounted for
as equity investments in unconsolidated joint ventures on the Company's books.
The Company provided the capital and 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 ventures. The purchase price
on these facilities includes only the equity capital invested by the Company and
does not include the loans receivable. The ALF and LTC facilities and two 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 and are accounted for as operating leases. The leases have
initial terms of 2-38 years. The MOBs and the four remaining clinics were
leased to multiple tenants on a gross or modified gross basis under which the
Company may be responsible for the property tax and insurance payments and
repairs and maintenance. The gross or modified gross 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 gross or modified
gross leased properties, 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
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 buildings and improvements and depreciated over 35 years for
buildings and five years for equipment.
<PAGE>
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 $135,000,000 which expires on September 30, 2003 and one for
$45,000,000 which expires September 30, 1999. 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 $65 million on the line of credit borrowings with the
proceeds of a preferred stock offering during September 1998. 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 facilities under
gross or 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 MOBs and 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 September 30, 1998 has been prepared
to reflect the acquisition of five facilities during the period from October 1,
1998 to October 30, 1998 and the adjustments described in the accompanying
notes.
The following unaudited Pro Forma Statements of Operations for the nine months
ended September 30, 1998 and for the year ended December 31, 1997 have been
prepared to reflect the acquisition of 22 facilities during the period from June
30, 1998 through October 30, 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 September 30, 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 five facilities acquired
after September 30, 1998 were purchased on September 30, 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
SEPTEMBER 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
September 30, September 30,
1998 Adjustments 1998
---------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Real Estate Investments
Buildings and Improvements $ 983,284 $ 44,015 $ 1,027,299
Accumulated Depreciation (188,796) --- (188,796)
---------- --------- ----------
794,488 44,015 838,503
Construction in Progress 19,517 --- 19,517
Land 131,112 6,010 137,122
---------- --------- ----------
945,117 50,025 995,142
Loans Receivable 145,471 2,700 148,171
Investments in and Advances to Partnerships 50,377 1,157 51,534
Other Assets 15,300 --- 15,300
Cash and Cash Equivalents 83,027 --- 83,027
---------- --------- ----------
TOTAL ASSETS $1,239,292 $ 53,882 $1,293,174
---------- --------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank Notes Payable $ --- $ 53,882 $ 53,882
Senior Notes Payable 471,020 --- 471,020
Convertible Subordinated Notes Payable 100,000 --- 100,000
Mortgage Notes Payable 14,910 --- 14,910
Accounts Payable, Accrued Liabilities
and Deferred Income 39,661 --- 39,661
Minority Interests in Partnerships 20,830 --- 20,830
Stockholders' Equity:
Preferred Stock 187,847 --- 187,847
Common Stock 30,972 --- 30,972
Additional Paid-In Capital 432,972 --- 432,972
Cumulative Net Income 504,860 --- 504,860
Cumulative Dividends (563,780) --- (563,780)
---------- --------- ----------
TOTAL STOCKHOLDERS' EQUITY 592,871 --- 592,871
---------- --------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,239,292 $ 53,882 $1,293,174
========== ========= ==========
</TABLE>
See Accompanying Notes.
<PAGE>
HEALTH CARE PROPERTY INVESTORS, INC.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
SEPTEMBER 30, 1998
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Pro Forma
Nine Months Nine Months
Ended Ended
September 30, September 30,
------------ -------------
1998 Adjustments 1998
------------ ----------- -------------
<S> <C> <C> <C>
REVENUE
Base Rental Income $ 83,647 $ 7,516 $ 91,163
Additional Rental and Interest Income 16,339 --- 16,339
Interest and Other Income 16,462 1,556 18,018
-------- -------- --------
116,448 9,072 125,520
-------- -------- --------
EXPENSE
Interest Expense 26,727 4,716 31,443
Depreciation/Non Cash Charges 23,750 2,176 25,926
Facility Operating Expenses 3,211 1,808 5,019
Other Expenses 6,292 --- 6,292
-------- -------- --------
59,980 8,700 68,680
-------- -------- --------
INCOME FROM OPERATIONS 56,468 372 56,840
Minority Interests (3,109) --- (3,109)
Gain on Sale of Real Estate Properties 6,742 --- 6,742
-------- -------- --------
NET INCOME $ 60,101 $ 372 $ 60,473
DIVIDENDS TO PREFERRED STOCKHOLDERS 4,422 --- 4,422
-------- -------- --------
NET INCOME APPLICABLE TO COMMON SHARES $ 55,679 $ 372 $ 56,051
======== ======== ========
BASIC EARNINGS PER COMMON SHARE $ 1.82 $ 1.83
======== ========
DILUTED EARNINGS PER COMMON SHARE $ 1.81 $ 1.82
======== ========
WEIGHTED AVERAGE SHARES - BASIC 30,666 30,666
======== ========
WEIGHTED AVERAGE SHARES - DILUTED 33,601 33,601
======== ========
</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 $ 11,106 $ 103,236
Additional Rental and Interest Income 21,060 --- 21,060
Interest and Other Income 15,313 2,198 17,511
-------- -------- --------
128,503 13,304 141,807
-------- -------- --------
EXPENSE
Interest Expense 28,592 7,111 35,703
Depreciation/Non Cash Charges 25,889 3,197 29,086
Facility Operating Expenses 162 2,428 2,590
Other Expenses 7,414 --- 7,414
-------- -------- --------
62,057 12,736 74,793
-------- -------- --------
INCOME FROM OPERATIONS 66,446 568 67,014
Minority Interests (3,704) --- (3,704)
Gain on Sale of Real Estate Properties 2,047 --- 2,047
-------- -------- --------
NET INCOME $ 64,789 $ 568 $ 65,357
DIVIDENDS TO PREFERRED STOCKHOLDERS 1,247 --- 1,247
-------- -------- --------
NET INCOME APPLICABLE TO COMMON SHARES $ 63,542 $ 568 $ 64,110
======== ======== ========
BASIC EARNINGS PER COMMON SHARE $ 2.21 $ 2.23
======== ========
DILUTED EARNINGS PER COMMON SHARE $ 2.19 $ 2.21
======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 28,782 28,782
======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 28,994 28,994
======== ========
</TABLE>
See Accompanying Notes.
<PAGE>
FOOTNOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
NOTE 1: Health Care Property Investors, Inc. and its affiliates and
subsidiaries (the "Company") acquired ten long-term care ("LTC")
facilities, six clinics, four assisted living facilities ("ALFs") and two
medical office buildings ("MOBs") in 16 separate transactions at an
aggregate purchase price of approximately $108,200,000, comprised of
$103,800,000 of acquisitions and $4,400,000 of equity investments. The ALF
and LTC facilities and two 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 and are accounted
for as operating leases. The leases have initial terms of 2-38 years. The
MOBs and the four remaining clinics were leased to multiple tenants on a
gross or modified gross basis under which the Company may be responsible
for the property tax and insurance payments and repairs and maintenance.
The gross or modified gross 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 gross
or modified gross leased properties, 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 September 30, 1998.
NOTE 2: The pro forma balance sheet adjustments reflect the allocation
between land, building and improvements and other assets of the
$53,882,000 of acquired properties purchased after September 30, 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 September 30, 1998. The loans made since September 30, 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.
<PAGE>
Pro forma interest and other income includes the first year of interest due
on 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 buildings and improvements and depreciated over 35 years
for buildings and five years for equipment.
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 $135,000,000 which expires on September 30, 2003
and one for $45,000,000 which expires September 30, 1999. 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 $65 million on the line
of credit borrowings with the proceeds of a preferred stock offering during
September 1998. 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 facilities
under gross or 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 MOBs and 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: December 11, 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)
<SEQUENCE> 2
[DESCRIPTION] CONSENT OF INDEPENDENT ACCOUNTANTS
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the previously filed
Registration Statement No. 333-29485 of Health Care Property Investors,
Inc. of our report dated December 7, 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/A) included in the Current Report on Form 8-
K/A Amendment No. 1 dated December 7, 1998, filed with the Securities and
Exchange Commission.
ARTHUR ANDERSEN LLP
Orange County, California
December 7, 1998
