<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 27, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HEALTH CARE PROPERTY INVESTORS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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MARYLAND 33-0091377
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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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)
------------------------
KENNETH B. ROATH
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
4765 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)
COPY TO:
PAMELA B. KELLY, ESQ.
LATHAM & WATKINS
633 WEST FIFTH STREET, SUITE 4000
LOS ANGELES, CALIFORNIA 90071
(213) 485-1234
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this From are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an 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. [ ]
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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. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE AGGREGATE PRICE PER AGGREGATE OFFERING AMOUNT OF
TITLE OF SHARES TO BE REGISTERED REGISTERED SHARE(1) PRICE(2) REGISTRATION FEE
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Common Stock, par value $1.00 per
share and related rights......... 593,247 $25.78125 $15,294,649.22 $4,037.79
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(1) Based upon the average of the high and low prices of the shares of common
stock reported on the New York Stock Exchange on January 21, 2000, pursuant
to Rule 457(c) of the Securities Act.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 of the Securities Act.
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THIS REGISTRATION STATEMENT RELATES TO THE POSSIBLE ISSUANCE OF 593,247
SHARES OF COMMON STOCK OF HEALTH CARE PROPERTY INVESTORS, INC. TO THE HOLDERS OF
UNITS REPRESENTING NON-MANAGING MEMBER INTERESTS IN HCPI/UTAH, LLC AND THEIR
POSSIBLE RESALE OF THE SHARES OF COMMON STOCK BY THE SELLING HOLDERS NAMED IN
THE REGISTRATION STATEMENT.
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 OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
SUBJECT TO COMPLETION, DATED JANUARY 27, 2000
-------------------------
PROSPECTUS
HEALTH CARE PROPERTY INVESTORS, INC.
593,247 SHARES
COMMON STOCK
-------------------------
This prospectus relates to the possible issuance of up to 593,247 shares of
common stock, par value $1.00 per share, of Health Care Property Investors,
Inc., a Maryland corporation, from time to time, to the holders of non-managing
member units in HCPI/Utah, LLC and the possible resale of shares of our common
stock by these holders.
We will not receive any proceeds from the issuance of the shares of our
common stock to the selling holders except that we will acquire membership units
of HCPI/Utah, LLC currently held by the selling holders tendered in exchange for
shares of our common stock.
Our shares of common stock are traded on the New York Stock Exchange under
the symbol "HCP." On January 21, 2000, the last reported sales price of our
common stock on the New York Stock Exchange was $26 per share.
-------------------------
YOU SHOULD CONSIDER THE RISKS DISCUSSED IN "RISK FACTORS" BEGINNING ON PAGE
1 OF THIS PROSPECTUS BEFORE YOU INVEST IN OUR COMMON STOCK.
-------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is January , 2000
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TABLE OF CONTENTS
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PAGE
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Risk Factors................................................ 1
Where You Can Find More Information......................... 5
Cautionary Statement Concerning Forward-Looking
Statements................................................ 7
The Company................................................. 9
Use of Proceeds............................................. 10
Description of Capital Stock................................ 10
Relationship of the Parties................................. 23
Operating Agreement......................................... 25
Comparison of HCPI/Utah, LLC and HCPI....................... 34
Provisions of Maryland Law and HCPI's Charter and Bylaws.... 41
Material Federal Income Tax Consequences.................... 48
Selling Holders............................................. 63
Plan of Distribution........................................ 65
Legal Matters............................................... 66
Experts..................................................... 66
</TABLE>
All references in this prospectus to "HCPI" "we," "us" or "our" mean Health
Care Property Investors, Inc., its majority-owned subsidiaries and other
entities controlled by Health Care Property Investors, Inc. except where is
clear from the context that the term means only the issuer, Health Care Property
Investors, Inc.
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RISK FACTORS
Below are the risks that we believe are material to investors who purchase
or own our common stock. In addition to other information contained or
incorporated by reference in this prospectus, you should carefully consider the
following factors before acquiring the common stock offered by this prospectus.
HCPI MAY NOT REALIZE THE EXPECTED BENEFITS FROM ITS MERGER WITH AMERICAN HEALTH
PROPERTIES, SUCH AS COST SAVINGS, OPERATING EFFICIENCIES AND OTHER SYNERGIES DUE
TO INCREASED DEMANDS ON ITS MANAGEMENT'S RESOURCES
On November 4, 1999, American Health Properties, Inc. merged with and into
HCPI with HCPI being the surviving company. HCPI entered into the merger with
the expectation that the merger will result in a number of benefits to the
combined company, including cost savings, operating efficiencies and other
synergies. HCPI did not retain any of AHP's senior executive officers following
the merger. Many management duties within HCPI are presently the responsibility
of a fixed number of executives and employees, and following the merger,
management of the combined company will be the responsibility of those same
executives and employees. Unforeseen difficulties in managing the larger
combined company, coupled with the increased demands on management's time, may
cause the disruption of, or a loss of momentum in, the activities of the
combined company's business which could adversely affect the business, financial
condition and operating results of HCPI. HCPI intends to hire additional
personnel, some of which may be current employees of AHP, to address the
increased demands on management's time. HCPI cannot assure you, however, that it
will be successful in attracting, hiring, assimilating or retaining additional
personnel in the future.
THE HEALTH CARE INDUSTRY IS HEAVILY REGULATED BY THE GOVERNMENT, WHICH MAY
ADVERSELY AFFECT HCPI'S RENTAL AND DEBT PAYMENT REVENUE
The health care industry is heavily regulated by federal, state and local
laws. Government regulation of the health care industry will affect HCPI
because:
- the financial ability of lessees and mortgage payors to make rent and
debt payments to HCPI may be affected by government regulations such as
licensure, certification for participation in government programs, and
government reimbursement; and
- additional rents received by HCPI will be, in some cases, based on its
lessees' gross revenue from operations.
The ability of a facility to generate revenue and profit, among other
attributes, will determine the underlying value of that facility to HCPI. As
health insurers and governmental agencies attempt to limit the cost of hospital
and other healthcare services and to reduce the utilization of health care
facilities, a reduction in future revenue or slower revenue growth may occur.
Prospective Payment System. On July 1, 1998, the federal government began
to implement the congressionally mandated prospective payment system for
Medicare payments to long-term care facilities. Under the prospective payment
system, long-term care facilities are paid a case-mix adjusted federal per diem
rate for Medicare-covered services they provide. The per diem rate is calculated
to cover routine service costs, ancillary costs and capital-related costs. The
phased-in implementation of the prospective
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payment system for long-term care facilities began with the first cost-reporting
period beginning on or after July 1, 1998. The prospective payment system is
expected to be substantially implemented by the end of 2001.
Implementation of the prospective payment system will affect each long-term
care facility to a different degree depending upon the amount of revenue it
derives from Medicare patients.
Long-term care facilities may need to restructure their operations to
accommodate the new Medicare prospective payment system reimbursement. Due in
part to the potential negative effect of the prospective payment system on the
financial condition of long-term care facilities, including the ability of
long-term care operators to make interest and principal payments on outstanding
borrowings, Standard & Poor's placed many long-term care facility companies on a
"credit watch" in November 1998. In early March 1999, Standard & Poor's lowered
the ratings of several long-term care facility companies because of the impact
of the prospective payment system, particularly those companies with substantial
debt. The companies included Vencor, Inc., Genesis Health Ventures, Integrated
Health Services, Inc., Sun Healthcare Group and Mariner Post-Acute Network,
Inc., all of which are currently lessees of HCPI.
On May 1, 1998, Vencor completed a spin-off transaction. As a result, it
became two publicly held entities -- Ventas, Inc., a real estate company which
intends to qualify as a REIT, and Vencor, a health care company which at
September 30, 1999 leased 36 of HCPI's properties of which 14 are subleased to
other operators. On September 13, 1999, Vencor, Inc. filed for bankruptcy
protection. HCPI has recourse to Ventas, Inc. and Tenet Healthcare Corporation
for most of the rents payable by Vencor under its leases. All rents due to the
Company subsequent to the filing have been received.
In addition, a number of other nursing home operators have also been
adversely affected by the decrease in Medicare reimbursements following the
adoption of the Prospective Payment System. As discussed in our Annual Report on
Form 10-K for the year ended December 31, 1998, during the first quarter of 1999
certain of these operators were put on credit watch with negative implications.
Subsequently, three of our operators (other than Vencor discussed above) have
filed for bankruptcy protection: Texas Health Enterprises, Inc. filed on August
3, 1999; Sun Healthcare Group filed on October 14, 1999; and Lenox Healthcare,
Inc. filed on November 3, 1999. Collectively, these operators represented less
than 4.8% of our annualized revenues for the period ended September 30, 1999 and
no one of these operators represented more than 1.8% of annualized revenues for
that same period. Giving effect to our merger with American Health Properties,
these operators represented less than 3.0% of annualized revenue on a pro forma
basis for the period ended September 30, 1999. In addition, because facilities
operated by these operators are performing well, we believe the financial impact
to HCPI of the bankruptcies by these tenants will be minimal.
Fraud and Abuse. Various federal and state governments have considered or
passed laws and regulations that attempt to eliminate fraud and abuse of the
Medicare, Medicaid and other governmental payor programs by prohibiting, among
other things, payment arrangements that include compensation for patient
referrals. In addition, the Balanced Budget Act of 1997 strengthens the federal
anti-fraud and abuse laws to provide for stiffer penalties for fraud and abuse
violations. Violations of these laws may result in the imposition of criminal
and civil penalties, including possible exclusion from reimbursement programs.
Violations of these laws and regulations may jeopardize a lessee's ability to
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operate a facility or to make rent and debt payments, potentially resulting in
an adverse effect on the financial condition and operating results of the
combined company. HCPI's lease arrangements with lessees may also be subject to
these fraud and abuse laws.
Licensure Risks. Health care facilities generally must obtain licensure to
operate. Failure to obtain licensure or loss of licensure would prevent a
licensed facility from operating. These events could adversely affect the
facility operator's ability to make rent and debt payments. State and local laws
also may regulate expansion, including the addition of new beds or services or
acquisition of medical equipment, and occasionally the contraction of health
care facilities by requiring certificate of need or other similar approval
programs. In addition, health care facilities are subject to the Americans with
Disabilities Act and building and safety codes which govern access to and
physical design requirements and building standards for facilities.
Environmental Matters. A wide variety of federal, state and local
environmental and occupational health and safety laws and regulations affect
healthcare facility operations. Under various federal, state and local
environmental laws, ordinances and regulations, an owner of real property or a
secured lender may be liable for the costs of removal or remediation of
hazardous or toxic substances at, under or disposed of in connection with such
property, as well as other potential costs relating to hazardous or toxic
substances (including government fines and damages for injuries to persons and
adjacent property). These laws often impose liability without regard to whether
the owner or secured lender knew of, or was responsible for, the presence or
disposal of hazardous or toxic substances and may be imposed on the owner or
secured lender in connection with the activities of an operator of the property.
The cost of any required remediation, removal, fines or personal or property
damages and the owner's or secured lender's liability for these costs could
exceed the value of the property, or the assets of the owner or secured lender.
In addition, the presence of hazardous or toxic substances, or the failure to
properly dispose of or remediate these substances, may adversely affect HCPI's
ability to sell or rent a property or to borrow using a property as collateral
which, in turn, would reduce the combined company's revenue.
Although the mortgage loans that HCPI has provided and leases covering
HCPI's properties require borrowers and lessees to indemnify HCPI for some
environmental liabilities, the scope of these obligations may be limited. We
cannot assure you that any borrower or lessee would be able to fulfill its
indemnification obligations to HCPI.
Medicare and Medicaid Programs. Sources of revenue for lessees and mortgage
payors may include the federal Medicare program, state Medicaid programs,
private insurance carriers, health care service plans and health maintenance
organizations, among others. You should expect efforts to reduce costs by these
payors to continue, which may result in reduced or slower growth in
reimbursement for services provided by some of HCPI's lessees. In addition, the
failure of any of HCPI's lessees and mortgage payors to comply with various laws
and regulations could jeopardize their ability to continue participating in the
Medicare and Medicaid programs.
Cost Control. The health care industry has continually faced challenges,
including increased government and private payor pressure on health care
providers to control costs, the migration of patients from acute care facilities
into extended care and home care settings, from nursing homes into assisted
living facilities and the vertical and horizontal consolidation of health care
providers. The pressure to control health care costs intensified during 1994 and
1995 as a result of the national health care reform debate and continued
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into 1997 as Congress attempted to slow the rate of growth of federal health
care expenditures as part of its effort to balance the federal budget. In
addition to the reforms enacted and considered by Congress from time to time,
state legislatures periodically consider various health care reform proposals.
Changes in the law, new interpretations of existing laws, and changes in payment
methodology may have a dramatic effect on the definition of permissible or
impermissible activities, the relative costs associated with doing business and
the amount of reimbursement by both government and other third-party payors.
These changes may be applied retroactively. The ultimate timing or effect of
legislative efforts cannot be predicted and may affect HCPI in adverse ways.
IF HCPI OR AHP FAILS TO QUALIFY AS A REAL ESTATE INVESTMENT TRUST UNDER THE
INTERNAL REVENUE CODE, THAT FAILURE COULD RESULT IN A SIGNIFICANT TAX LIABILITY
FOR HCPI
HCPI believes that it has been organized and has operated in a manner which
would allow it to qualify as a real estate investment trust under the Internal
Revenue Code. HCPI believes AHP operated so as to qualify as a real estate
investment trust under the Internal Revenue Code through and including the
completion of the merger. It is possible, however, that either AHP or HCPI has
been organized or has operated in a manner which would not allow it to qualify
as a real estate investment trust. Qualification as a real estate investment
trust requires a company to satisfy numerous requirements (some on an annual and
others on a quarterly basis) established under highly technical and complex
Internal Revenue Code provisions for which there are only limited judicial and
administrative interpretations and involves the determination of various factual
matters and circumstances not entirely within a company's control. If a company
fails to qualify as a real estate investment trust in any taxable year, it will
be subject to federal income tax, including any applicable alternative minimum
tax, on its taxable income at regular corporate rates. Unless that company is
entitled to relief under applicable statutory provisions, it would be
disqualified from treatment as a real estate investment trust for the four
taxable years following the year during which it lost qualification. HCPI would
be required to pay any tax arising due to a failure of AHP or HCPI to qualify as
a real estate investment trust prior to the merger of HCPI and AHP, and this tax
could be material. In addition, a failure of AHP or HCPI to qualify as a real
estate investment trust prior to the merger could adversely affect HCPI's
ability to qualify as a real estate investment trust after the merger.
In connection with the merger, AHP's REIT counsel rendered an opinion to
the effect that, based on the facts, representations and assumptions stated
therein, commencing with its taxable year ended December 31, 1987, AHP was
organized in conformity with the requirements for qualification and taxation as
a real estate investment trust under the Internal Revenue Code, and its method
of operation through the effective time of the merger enabled it to meet the
requirements for qualification and taxation as a real estate investment trust
under the Internal Revenue Code. This opinion assumes, among other things, the
accuracy of an opinion rendered by AHP's corporate counsel with respect to the
characterization of AHP's psychiatric group preferred stock and dividends
thereon, which opinion is based on the facts, representations and assumptions
stated therein. In addition, HCPI's tax counsel will render an opinion with
respect to HCPI's tax status as a real estate investment trust, under the
circumstances described below. An opinion of counsel is not binding on the
Internal Revenue Service or any court, and no ruling has been or will be sought
from the Internal Revenue Service as to AHP's or HCPI's qualification as a real
estate investment trust under the Internal Revenue Code.
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Accordingly, there can be no assurance that the Internal Revenue Service will
not take a position contrary to one or more positions reflected in these
opinions or that these opinions will be upheld by the courts if challenged by
the Internal Revenue Service.
IF HCPI WERE TO LOSE ITS TAX STATUS AS A REAL ESTATE INVESTMENT TRUST IT WOULD
HAVE SIGNIFICANT ADVERSE CONSEQUENCES TO HCPI AND THE VALUE OF ITS STOCK
If HCPI fails to qualify as a real estate investment trust, the following
will occur:
- HCPI would not be allowed a deduction for distributions to stockholders
in computing its taxable income and would be subject to federal income
tax at regular corporate rates;
- HCPI also could be subject to the federal alternative minimum tax and
possibly increased state and local taxes; and
- Unless HCPI is entitled to relief under statutory provisions, it could
not elect to be subject to tax as a real estate investment trust for four
taxable years following the year during which it was disqualified.
As a result of all these factors, HCPI's failure to qualify as a real
estate investment trust could impair HCPI's ability to expand its business and
raise capital, could substantially reduce the funds available for distribution
to its stockholders and could adversely affect the value of HCPI's capital
stock.
In addition, if HCPI fails to qualify as a real estate investment trust,
all distributions to stockholders would be subject to tax as ordinary income to
the extent of its current and accumulated earnings and profits, HCPI would not
be required to make distributions to stockholders and corporate distributees
could be eligible for the dividends received deduction.
Although HCPI believes that it is organized and operates in a manner that
will allow it to qualify as a real estate investment trust, no assurance can be
given that HCPI will continue to be organized or be able to operate in a manner
so as to qualify or remain qualified as a real estate investment trust for tax
purposes.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information that we have filed at the SEC's public reference rooms. Please call
the SEC at 1-800-SEC-0330 for information on the public reference rooms or visit
the following locations of the SEC:
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Public Reference Room Northwest Regional Office Midwest Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. Our SEC filings are also available to the
public from commercial
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document retrieval services and at the web site maintained by the SEC at
http://www.sec.gov.
You may inspect information that we file with The New York Stock Exchange
at the offices of The New York Stock Exchange at 20 Broad Street, New York, New
York 10005.
This prospectus is part of a registration statement we filed with the SEC.
As allowed by SEC rules, this prospectus does not contain all the information
you can find in the registration statement or the exhibits to the registration
statement. For further information, we refer you to the registration statement,
including its exhibits and schedules. Statements contained in this prospectus
about the provisions or contents of any contract, agreement or any other
document referred to are not necessarily complete. For each of these contracts,
agreements or documents filed as an exhibit to the registration statement, we
refer you to the actual exhibit for a more complete description of the matters
involved. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of those documents.
The SEC allow us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. This prospectus
incorporates by reference the documents set forth below that we have previously
filed with the SEC. These documents contain important information about our
company and its finances.
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HCPI'S SEC FILINGS (FILE NO. 1-8895) DESCRIPTION OR PERIOD/AS OF DATE
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Annual Report on Form 10-K Year ended December 31, 1998
Current Report on Form 8-K dated Discloses information relating to
January 7, 1999 HCPI's property acquisitions from
November 6, 1998 through December 23,
1998
Amendment No. 1 to Current Report on Discloses information relating to
Form 8-K/A dated January 7, 1999 HCPI's property acquisitions from
November 6, 1998 through December 23,
1998
Current Report on Form 8-K, dated May Announces sale of common stock
3, 1999 pursuant to registration statement on
Form S-3
Current Report on Form 8-K, dated Discloses the entering into of the
August 4, 1999 merger agreement and related matters
Current Report on Form 8-K, dated Reports the completion of the merger
November 4, 1999 between American Health Properties and
HCPI
Amendment No. 1 to Current Report on Reports the completion of the merger
Form 8-K/A, dated November 4, 1999 between American Health Properties and
HCPI
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HCPI'S SEC FILINGS (FILE NO. 1-8895) DESCRIPTION OR PERIOD/AS OF DATE
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Amendment No. 2 to Current Report on Reports the completion of the merger
Form 8-K/A, dated November 4, 1999 between American Health Properties and
HCPI
Quarterly Reports on Form 10-Q Quarters ended March 31, 1999, June
30, 1999 and September 30, 1999
Registration Statement on Form 10, Description of our common stock
dated May 7, 1995, including
amendments dated May 20, 1985, May 23,
1985 and July 17, 1990
</TABLE>
We are also incorporating by reference additional documents that we may
file with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended, after the date of this prospectus and before
we stop offering the securities described in this prospectus. These documents
include periodic reports, such as annual reports on Form 10-K, quarterly reports
on Form 10-Q, and current reports on Form 8-K, as well as proxy statements.
The information incorporated by reference is automatically considered to be
a part of the prospectus. Any statement contained in a document incorporated or
deemed to be incorporated by reference in this prospectus will be deemed
modified, superseded or replaced for purposes of this prospectus to the extent
that a statement contained in this prospectus or in any subsequently filed
document that also is or is deemed to be incorporated by reference in this
prospectus modifies, supersedes or replaces that statement. Any statement so
modified or replaced will not be considered, except as so modified, superseded
or replaced, to be a part of this prospectus.
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us or the SEC.
Documents incorporated by reference are available from us without charge,
excluding all exhibits unless we have specifically incorporated by reference an
exhibit in this prospectus. Stockholders may obtain documents incorporated by
reference in this prospectus by requesting them in writing or by telephone from
the appropriate party of the following address:
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.
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this document that are subject
to risks and uncertainties. These statements may be made directly in this
document or may be "incorporated by reference" to other documents filed with the
SEC. Our forward looking statements in this prospectus or those documents
incorporated by reference include, among other things, statements regarding the
intent, belief or expectations of HCPI and can be
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identified by the use of words such as "may," "will," "expect," "believe,"
"intend," "plan," "estimate," "should" and other comparable terms. For those
statements, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
You should understand that the following important factors, in addition to
the risk factors set forth elsewhere in this document and in the documents which
are incorporated by reference, could affect the future results of HCPI, and
could cause actual results or other outcomes to differ materially from those
expressed in our forward-looking statements:
- legislative, regulatory, or other changes in the healthcare industry at
the local, state or federal level which increase the costs of or
otherwise affect the operations of our lessees;
- changes in the reimbursement available to our 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, such as those extensive changes to the Medicare and
Medicaid programs contained in the Balanced Budget Act of 1997 intended
to reduce significantly the projected amount of increase in Medicare
spending;
- effects of the recently implemented prospective payment system, which is
expected to decrease reimbursements to skilled nursing and other
healthcare facilities and may have an adverse effect on the operator
revenues at HCPI's rehabilitation and long-term acute care facilities;
- competition for lessees and mortgagors, including with respect to new
leases and mortgages and the renewal or rollover of existing leases;
- competition for the acquisition and financing of health care facilities;
- the ability of our lessees and mortgagors to operate our properties in a
manner sufficient to maintain or increase revenues and to generate
sufficient income to make rent and loan payments;
- changes in national or regional economic conditions, including changes in
interest rates and the availability and cost of capital to HCPI;
- the availability of financing for HCPI's proposed acquisitions;
- risks associated with multi-tenant medical office buildings, such as
lower than expected occupancy levels, a downturn in market lease rates
for medical office space or higher than expected costs associated with
the maintenance and operation of such facilities;
- potential liability under, and change in, environmental, zoning, tax and
other laws; and
- the general uncertainty inherent in the Year 2000 issue, particularly the
uncertainty of the Year 2000 readiness of third parties who are material
to our business or material to the businesses of our lessees or
borrowers.
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THE COMPANY
HCPI is the second oldest real estate investment trust specializing in
health care real estate. HCPI, which is a self-administered real estate
investment trust, owns long-term care facilities, congregate care and assisted
living facilities, acute care and rehabilitation hospitals, medical office
buildings and physician group practice clinics. As of December 31, 1999, HCPI's
gross investment in its properties, including partnership and limited liability
company interests and mortgage loans, was approximately $2.6 billion. HCPI has
428 facilities in 43 states as of December 31, 1999. On November 4, 1999,
American Health Properties, Inc. merged with and into HCPI with HCPI being the
surviving company.
The market value of our common stock was approximately $1.2 billion as of
December 31, 1999. HCPI has paid regular quarterly dividends and has increased
the dividend paid on its common stock each quarter for the 57 consecutive
quarters since its initial public offering in May 1985. As a result, HCPI has
paid $667 million in dividends on its common stock since May 1985. According to
the 1999 edition of Moody's Handbook of Dividend Achievers, which includes
public companies that have increased annual dividends in each of the past 10
years, HCPI has had the highest percentage dividend growth over the past 10
years among real estate investment trusts. HCPI also believes that it has had an
excellent track record in attracting and retaining key employees. HCPI's five
executive officers have been with the company for 13 years on average.
HCPI is the largest health care oriented real estate investment trust in
the nation, with a total market capitalization of approximately $2.7 billion
based on the closing price of our common stock, the outstanding principal amount
of indebtedness and the liquidation preferences of our preferred stock on
December 31, 1999. On December 31, 1999, HCPI had an interest in approximately
428 facilities, with over 21 million square feet of operating facilities. HCPI
is managed by the HCPI management group in place prior to the merger with AHP.
Our executive offices are located at 4675 MacArthur Court, 9th Floor,
Newport Beach, California, 92660 and our telephone number is (949) 221-0600 or
(888) 604-1990.
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USE OF PROCEEDS
We are filing the registration statement of which this prospectus is a part
pursuant to our contractual obligation to the holders named in the section
entitled "Selling Holders." We will acquire non-managing member interests in
HCPI/Utah, LLC in exchange for any shares of common stock that we may issue to
the selling holders pursuant to this prospectus. We will not receive any
proceeds from the issuance of shares of common stock to the selling holders or
the resale of the shares by the selling holders other than the non-managing
member interests of HCPI/Utah, LLC. However, we will pay registration expenses
which we estimate to be approximately $63,038.
DESCRIPTION OF CAPITAL STOCK
GENERAL
HCPI's authorized stock 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 does not contain all the information that
might be important to you. Therefore you should read carefully the more detailed
provisions of our charter, bylaws and the Rights Agreement between HCPI and The
Bank of New York (successor to Chemical Trust Company of California), as rights
agent. The following summary does not give effect to provisions of statutory or
common law, the provisions of applicable law and our charter and the Rights
Agreement, copies of which are incorporated by reference as exhibits to the
registration statement of which this prospectus is a part.
COMMON STOCK
As of January 21, 2000, there were 51,400,285 shares of common stock
outstanding. All shares of common stock participate equally in dividends payable
to holders of common stock, when and as authorized by our board and declared by
HCPI, and in net assets available for distribution to holders of common stock on
our liquidation, dissolution, or winding up. Each outstanding share of common
stock entitles the holder to one vote on all matters submitted to a vote of HCPI
stockholders. Holders of our common stock 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 under this prospectus will be upon issuance, validly issued, fully paid
and nonassessable. Holders of our common stock do not have preference,
conversion, exchange or preemptive rights. Our common stock is listed on the New
York Stock Exchange (NYSE Symbol: HCP).
The transfer agent and registrar of our common stock is The Bank of New
York.
PREFERRED STOCK
Under our charter, our board is authorized without further stockholder
action to establish and issue, from time to time, up to 50,000,000 shares of
preferred stock of HCPI, 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,
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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 our board.
As of December 1, 1999, HCPI had outstanding 2,400,000 shares of 7 7/8% Series A
Cumulative Redeemable Preferred Stock with a liquidation preference of
$60,000,000, 5,385,000 shares of 8.70% Series B Cumulative Redeemable Preferred
Stock with a liquidation preference of $134,625,000 and 40,000 shares of 8.60%
Series C Cumulative Redeemable Preferred Stock with a per share liquidation
preference of $100,000,000. The material terms of our Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock are described below.
SERIES A PREFERRED STOCK
Voting Rights. Holders of the series A preferred stock generally do not
have any voting rights, except in limited circumstances.
The consent of the holders of series A preferred stock is not required for
the taking of any corporate action, including any merger or consolidation
involving HCPI or a sale of all or substantially all of the assets of HCPI,
regardless of the effect that such merger, consolidation or sale may have upon
the rights, preferences or voting power of the holders of the series A preferred
stock, except as expressly set forth in the articles supplementary relating to
the series A preferred stock.
Rank. With respect to dividend rights and rights upon liquidation,
dissolution or winding up of HCPI, the series A preferred stock ranks:
- senior to all classes or series of common stock of HCPI, and to all
equity securities issued by HCPI ranking junior to the series A preferred
stock with respect to dividend rights or rights upon liquidation,
dissolution or winding up of HCPI;
- on a parity with the series B preferred stock, series C preferred stock
and with all equity securities issued by HCPI the terms of which
specifically provide that such equity securities rank on a parity with
the series A preferred stock with respect to dividend rights or rights
upon liquidation, dissolution or winding up of HCPI; and
- junior to all equity securities issued by HCPI the terms of which
specifically provide that such equity securities rank senior to the
series A preferred stock with respect to dividend rights or rights upon
liquidation, dissolution or winding up of HCPI. See "-- Voting Rights"
below.
The term "equity securities" does not include convertible debt securities,
which rank senior to the series A preferred stock prior to conversion.
Dividends. Holders of shares of the series A preferred stock are entitled
to receive, when, as, and if declared by our board out of funds of HCPI legally
available for the payment of dividends, cumulative preferential annual cash
dividends at the rate of 7 7/8% of the liquidation preference (equivalent to
$1.96875 per annum per share).
Dividends on the series A preferred stock are cumulative from the date of
original issue and payable quarterly in arrears on or about the last day of each
March, June, September and December or, if not a business day, the next
succeeding business day.
No dividends may be declared by our board or paid or set apart for payment
on the series A preferred stock if the terms of any agreement of HCPI, including
any agreement
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relating to its indebtedness, prohibits such a declaration, payment or setting
apart for payment or provides that such declaration, payment or setting apart
for payment would constitute a breach of or default under such an agreement.
Likewise, no dividends may be declared by our board or paid or set apart for
payment if such declaration or payment is restricted or prohibited by law.
Dividends on the series A preferred stock accrue, however, whether or not
HCPI has earnings, whether or not there are funds legally available for the
payment of such dividends and whether or not such dividends are declared.
Accrued but unpaid dividends on the series A preferred stock do not bear
interest and holders of the series A preferred stock are not entitled to any
dividends in excess of full cumulative dividends described above. Any dividend
payment made on the series A preferred stock is first credited against the
earliest accrued but unpaid dividend due that remains payable.
No full dividends may be declared or paid or set apart for payment on any
class or series of preferred stock ranking, as to dividends, on a parity with or
junior to the series A preferred stock, other than a dividend in shares of any
class of stock ranking junior to the series A preferred stock as to dividends
and upon liquidation, for any period unless full cumulative dividends have been
or contemporaneously are declared and paid or declared and set apart for such
payment on the series A preferred stock for all past dividend periods and the
then current dividend period. When dividends are not paid in full, or full
payment is not so set apart, upon the series A preferred stock and the shares of
any other class or series of preferred stock ranking on a parity as to dividends
with the series A preferred stock -- including the series B preferred stock or
the series C preferred stock, all dividends declared upon the series A preferred
stock and any other class or series of preferred stock ranking on a parity as to
dividends with the series A preferred stock are declared pro rata so that the
amount of dividends declared per share of series A preferred stock and such
other class or series of preferred stock shall in all cases bear to each other
the same ratio that accrued dividends per share on the series A preferred stock
and such other class or series of preferred stock, which cannot include any
accrual in respect of unpaid dividends for prior dividend periods if such
preferred stock does not have a cumulative dividend, bear to each other.
Except as provided in the preceding paragraph, unless full cumulative
dividends on the series A preferred stock have been or contemporaneously are
declared and paid or declared and set apart for payment for all past dividend
periods and the then current dividend period, then, other than the payment of
dividends in shares of our common stock or other shares of capital stock ranking
junior to the series A preferred stock as to dividends and upon liquidation:
- no dividends may be declared or paid or set aside for payment upon our
common stock, or any other capital stock of HCPI ranking junior to or on
a parity with the series A preferred stock as to dividends or upon
liquidation;
- no other distribution may be declared or made upon our common stock, or
any other capital stock of HCPI ranking junior to or on a parity with the
series A preferred stock as to dividends or upon liquidation;
- no shares of our common stock, or any other shares of capital stock of
HCPI ranking junior to or on a parity with the series A preferred stock
as to dividends or upon liquidation may be redeemed, purchased or
otherwise acquired for any consideration by HCPI, except by conversion
into or exchange for other capital
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stock of HCPI ranking junior to the series A preferred stock as to
dividends and upon liquidation or for the purpose of preserving HCPI's
qualification as a real estate investment trust. See "-- Restrictions on
Ownership and Transfer."
Liquidation Preferences. Upon any liquidation, dissolution or winding up of
the affairs of HCPI the holders of series A preferred stock are entitled to be
paid out of the assets of HCPI legally available for distribution to its
stockholders a liquidation preference of $25 per share, plus an amount equal to
any accrued and unpaid dividends to the date of payment, before any distribution
of assets is made to holders of our common stock or any other class or series of
capital stock of HCPI that ranks junior to the series A preferred stock as to
liquidation rights.
In determining whether a distribution (other than upon voluntary or
involuntary liquidation) by dividend, redemption or other acquisition of shares
of stock of HCPI or otherwise is permitted under the Maryland General
Corporation Law, no effect is given to amounts that would be needed if HCPI
would be dissolved at the time of the distribution, to satisfy the preferential
rights upon distribution of holders of shares of stock of HCPI whose
preferential rights upon distribution are superior to those receiving the
distribution.
Maturity; Redemption. The series A preferred stock has no stated maturity,
is not subject to any sinking fund or mandatory redemption and is not
convertible into any other securities of HCPI. The series A preferred stock is
not redeemable prior to September 30, 2002. HCPI is entitled, however, pursuant
to the articles supplementary relating to the series A preferred stock, to
purchase shares of the series A preferred stock in order to preserve its status
as a real estate investment trust for federal or state income tax purposes at
any time. Following September 30, 2002, HCPI may, at its option, redeem the
series A preferred stock at $25 per share ($60,000,000 in the aggregate), plus
accrued and unpaid dividends.
Restrictions on Ownership and Transfer. See "-- Restrictions on Ownership
and Transfer Relating to Preferred Stock."
SERIES B PREFERRED STOCK
Voting Rights. Holders of the series B preferred stock generally do not
have any voting rights, except in limited circumstances.
The consent of the holders of series B preferred stock is not required for
the taking of any corporate action, including any merger or consolidation
involving HCPI or a sale of all or substantially all of the assets of HCPI,
regardless of the effect that such merger, consolidation or sale may have upon
the rights, preferences or voting power of the holders of the series B preferred
stock, except as expressly set forth in the articles supplementary relating to
the series B preferred stock.
Rank. With respect to dividend rights and rights upon liquidation,
dissolution or winding up of HCPI, the series B preferred stock ranks:
- senior to all classes or series of common stock of HCPI, and to all
equity securities issued by HCPI ranking junior to the series B preferred
stock with respect to dividend rights or rights upon liquidation,
dissolution or winding up of HCPI;
- on a parity with the series A preferred stock, series C preferred stock
and with all equity securities issued by HCPI the terms of which
specifically provide that such
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equity securities rank on a parity with the series B preferred stock with
respect to dividend rights or rights upon liquidation, dissolution or winding up
of HCPI; and
- junior to all equity securities issued by HCPI the terms of which
specifically provide that such equity securities rank senior to the
series B preferred stock with respect to dividend rights or rights upon
liquidation, dissolution or winding up of HCPI. See "-- Voting Rights"
below.
The term "equity securities" does not include convertible debt securities,
which rank senior to the series B preferred stock prior to conversion.
Dividends. Holders of the series B preferred stock are entitled to receive,
when, as, and if declared by our board, out of funds legally available for the
payment of dividends, cumulative preferential annual cash dividends at the rate
of 8.70% of the liquidation preference (equivalent to $2.175 per annum per
share).
Dividends on the series B preferred stock are cumulative from the date of
original issue and payable quarterly in arrears on or about the last day of each
March, June, September and December or, if not a business day, the next
succeeding business day. Any dividend payable on the series B preferred stock,
including dividends payable for any partial dividend period, are computed on the
basis of a 360-day year consisting of twelve 30-day months.
No dividends may be declared by our board or paid or set apart for payment
on the series B preferred stock if the terms of any agreement of HCPI, including
any agreement relating to its indebtedness, prohibits such a declaration,
payment or setting apart for payment or provides that such declaration, payment
or setting apart for payment would constitute a breach of or default under such
an agreement. Likewise, no dividends may be declared by our board or paid or set
apart for payment if such declaration or payment is restricted or prohibited by
law.
Dividends on the series B preferred stock accrue, however, whether or not
HCPI has earnings, whether or not there are funds legally available for the
payment of such dividends and whether or not such dividends are declared.
Accrued but unpaid dividends on the series B preferred stock do not bear
interest and holders of the series B preferred stock are not entitled to any
dividends in excess of full cumulative dividends described above. Any dividend
payment made on the series B preferred stock is first credited against the
earliest accrued but unpaid dividend due that remains payable.
No full dividends may be declared or paid or set apart for payment on any
class or series of preferred stock ranking, as to dividends, on a parity with or
junior to the series B preferred stock, other than a dividend in shares of any
class of stock ranking junior to the series B preferred stock as to dividends
and upon liquidation, for any period unless full cumulative dividends have been
or contemporaneously are declared and paid or declared and set apart for such
payment on the series B preferred stock for all past dividend periods and the
then current dividend period. When dividends are not paid in full (or full
payment is not so set apart) upon the series B preferred stock and the shares of
any other class or series of preferred stock ranking on a parity as to dividends
with the series B preferred stock -- including the series A preferred stock or
the series C preferred stock, all dividends declared upon the series B preferred
stock and any other class or series of preferred stock ranking on a parity as to
dividends with the series B preferred stock are declared pro rata so that the
amount of dividends declared per share of series B preferred stock and such
other class or series of preferred stock shall in all cases bear to each other
the same ratio
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that accrued dividends per share on the series B preferred stock and such other
class or series of preferred stock, which shall not include any accrual in
respect of unpaid dividends for prior dividend periods if such preferred stock
does not have a cumulative dividend, bear to each other.
Except as provided in the preceding paragraph, unless full cumulative
dividends on the series B preferred stock have been or contemporaneously are
declared and paid or declared and set apart for payment for all past dividend
periods and the then current dividend period, then, other than the payment of
dividends in shares of our common stock or other shares of capital stock ranking
junior to the series B preferred stock as to dividends and upon liquidation:
- no dividends may be declared or paid or set aside for payment upon our
common stock, or any other capital stock of HCPI ranking junior to or on
a parity with the series B preferred stock as to dividends or upon
liquidation;
- no other distribution may be declared or made upon our common stock, or
any other capital stock of HCPI ranking junior to or on a parity with the
series B preferred stock as to dividends or upon liquidation;
- no shares of our common stock, or any other shares of capital stock of
HCPI ranking junior to or on a parity with the series B preferred stock
as to dividends or upon liquidation may be redeemed, purchased or
otherwise acquired for any consideration by HCPI, except by conversion
into or exchange for other capital stock of HCPI ranking junior to the
series B preferred stock as to dividends and upon liquidation or for the
purpose of preserving HCPI's qualification as a real estate investment
trust. See "-- Restrictions on Ownership and Transfer."
Liquidation Preferences. Upon any liquidation, dissolution or winding up of
the affairs of HCPI the holders of series B preferred stock are entitled to be
paid out of the assets of HCPI legally available for distribution to its
stockholders a liquidation preference of $25 per share, plus an amount equal to
any accrued and unpaid dividends to the date of payment, before any distribution
of assets is made to holders of our common stock or any other class or series of
capital stock of HCPI that ranks junior to the series B preferred stock as to
liquidation rights.
In determining whether a distribution, other than upon voluntary or
involuntary liquidation, by dividend, redemption or other acquisition of shares
of stock of HCPI or otherwise is permitted under the Maryland General
Corporation Law, no effect is given to amounts that would be needed if HCPI
would be dissolved at the time of the distribution, to satisfy the preferential
rights upon distribution of holders of shares of stock of HCPI whose
preferential rights upon distribution are superior to those receiving the
distribution.
Maturity; Redemption. The series B preferred stock has no stated maturity,
is not subject to any sinking fund or mandatory redemption and is not
convertible into any other securities of HCPI. The series B preferred stock is
not redeemable prior to September 30, 2003. HCPI is entitled, however, pursuant
to the articles supplementary relating to the series B preferred stock, to
purchase shares of the series B preferred stock in order to preserve its status
as a real estate investment trust for federal or state income tax purposes at
any time. Following September 30, 2003, HCPI may, at its option, redeem the
series B preferred stock at $25 per share ($134,625,000 in the aggregate), plus
accrued and unpaid dividends.
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Restrictions on Ownership and Transfer. See "-- Restrictions on Ownership
and Transfer Relating to HCPI Preferred Stock."
DEPOSITARY SHARES FOR SERIES C PREFERRED STOCK
General. At the effective time of the merger, HCPI assumed the obligations
of AHP under the Deposit Agreement dated October 27, 1997 (the "Deposit
Agreement") among AHP, ChaseMellon Shareholder Services, L.L.C., as depositary
(the "Depositary"), located at 300 South Hope Street, Los Angeles, California,
90071 and the holders from time to time of the depositary receipts issued by the
Depositary under the Deposit Agreement. Following the merger, HCPI deposited the
series C preferred stock with the Depositary and instructed the Depositary to
treat the shares of series C preferred stock as new deposited securities under
the Deposit Agreement. In accordance with the terms of the Deposit Agreement,
the existing depositary receipts, formerly evidencing AHP depositary shares
automatically evidence depositary shares which will evidence an ownership
interest in series C preferred stock.
The following is a summary of material provisions of the Deposit Agreement.
This description does not purport to be complete and is qualified by reference
to the Deposit Agreement, the form of which has been incorporated by reference
into the registration statement on Form S-3 of which this prospectus forms a
part. See "Where You Can Find More Information" on page 5.
Each HCPI depositary share represents a one-one-hundredth interest in one
share of series C preferred stock. The depositary shares representing series C
preferred stock are listed on The New York Stock Exchange.
Subject to the terms of the Deposit Agreement, each owner of a share of
depositary share is entitled through the Depositary, in proportion to the
one-one-hundredth interest in a share of series C preferred stock underlying
such depositary share, to all rights and preferences, and subject to all
restrictions, of a share of series C preferred stock (including dividend,
voting, redemption and liquidation rights).
Since each share of series C preferred stock entitles the holder thereof to
one vote on matters on which the series C preferred stock is entitled to vote,
each depositary share, in effect, entitles the holder to one-one-hundredth of a
vote, rather than one full vote.
Dividends and Other Distributions. The Depositary will distribute all the
dividends or other cash distributions received in respect of the series C
preferred stock to the record holders of the depositary shares in proportion to
the numbers of such depositary shares owned by such holders on the relevant
record date.
Restrictions on Ownership and Transfer. For information regarding
provisions of HCPI's charter and bylaws, including restrictions on ownership
which are applicable to the series C preferred stock and the depositary shares,
see "-- Restrictions on Ownership and Transfer Relating to Preferred Stock."
SERIES C PREFERRED STOCK
Voting Rights. Holders of the series C preferred stock generally do not
have any voting rights, except in limited circumstances.
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Except as provided above the holders of series C preferred stock are not
entitled to vote on any merger or consolidation involving HCPI, on any share
exchange or on a sale of all or substantially all of the assets of HCPI.
Rank. With respect to dividend rights and rights upon liquidation,
dissolution or winding up of HCPI, the series C preferred stock ranks:
- senior to all classes or series of common stock of HCPI, and to all other
classes and series of equity securities issued by HCPI;
- on a parity with the series A preferred stock, series B preferred stock
and all equity securities issued by HCPI the terms of which specifically
provide that such equity securities rank on a parity with the series C
preferred stock with respect to dividend rights or rights upon
liquidation, dissolution or winding up of HCPI; and
- junior to all equity securities issued by HCPI ranking senior to the
series C preferred stock with respect to dividend rights or rights upon
liquidation, dissolution or winding up of HCPI.
The term "equity securities" does not include convertible debt securities,
which rank senior to the series C preferred stock prior to conversion. The
series C preferred stock is subject to the creation of equity securities that
are both junior and on parity to the series C preferred stock with respect to
dividend rights or rights upon liquidation, dissolution or winding up of HCPI.
Dividends. Holders of the series C preferred stock are entitled to receive,
when, as, and if declared by our board, out of funds legally available for the
payment of dividends, cumulative preferential annual cash dividends of 8.60% of
the liquidation preference (equivalent to $2,500.00 per annum per share, or
$25.00 per depositary share per annum).
Dividends on the series C preferred stock are cumulative from the last
payment date through which dividends have been paid on the shares of AHP series
B preferred stock in respect of which shares of series C preferred stock are
issued and are payable quarterly in arrears on or about the last calendar day of
March, June, September and December of each year and on November 30, 1999, or,
if not a business day, the next business day. The first dividend was paid on
November 30, 1999 and the second dividend was paid on December 31, 1999.
Dividends are payable to holders of record as they appear in the records of HCPI
at the close of business on the applicable record date, which is the 15th day of
the calendar month in which the dividend payment date falls or such other date
designated as such by our board that is not more than 50 nor less than 10 days
prior to such dividend payment date.
The amount of dividends payable per share for a full dividend period is
computed by dividing $2500.00 by four. Any dividend payable on the series C
preferred stock for other than a full dividend period is computed on the basis
of a 360-day year consisting of twelve 30-day months. All dividends on the
series C preferred stock accrue day by day and are cumulative.
No full dividends may be declared or paid or set apart for payment on any
class or series of preferred stock ranking, as to dividends, on a parity with or
junior to the series C preferred stock for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared and
set apart for such payment on the series C preferred stock for all past dividend
periods and the then current dividend period. When dividends are not paid in
full (or full payment is not so set apart) upon the series C
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preferred stock and the shares of any other class or series of preferred stock
ranking on a parity as to dividends with the series C preferred stock (including
the series A preferred stock or the series B preferred stock), all dividends
declared upon the series C preferred stock and any other class or series of
preferred stock ranking on a parity as to dividends with the series C preferred
stock are declared pro rata so that the amount of dividends declared per share
of series C preferred stock and such other class or series of preferred stock
shall in all cases bear to each other the same ratio that accrued dividends per
share on the series C preferred stock and such other class or series of
preferred stock (which shall not include any accrual in respect of unpaid
dividends for prior dividend periods if such preferred stock does not have a
cumulative dividend) bear to each other.
Unless full cumulative dividends on the series C preferred stock have been
or contemporaneously are declared and paid or declared and set apart for payment
for all past dividend periods and the then current dividend period, then, other
than the payment of dividends in shares of our common stock or other shares of
capital stock ranking junior to the series C preferred stock as to dividends and
upon liquidation or options or rights to acquire the same:
- no cash dividend or other distribution may be declared or paid or set
aside for payment upon our common stock, or any other capital stock of
HCPI ranking junior to the series C preferred stock as to dividends or
upon liquidation;
- HCPI may not repurchase, redeem or otherwise acquire shares of our common
stock, or any other shares of capital stock of HCPI ranking junior to or
on a parity with the series C preferred stock as to dividends or upon
liquidation, or pay or make any amount available for a sinking fund or
redemption of such shares, except by conversion into or exchange for
other capital stock of HCPI ranking junior to the series C preferred
stock as to dividends and upon liquidation or for the purpose of
preserving HCPI's qualification as a real estate investment trust. See
"-- Restrictions on Ownership and Transfer." Notwithstanding the
foregoing, HCPI will be permitted to make a pro rata offer to purchase or
concurrently redeem all, or a pro rata portion, of the outstanding series
C preferred stock and any other equity securities that rank on parity
with the series C preferred stock with respect to dividend rights or
rights upon liquidation, dissolution or winding up of HCPI.
Accrued and unpaid dividends for any past dividend periods may be declared
and paid at any time and for such interim periods to holders of record on the
applicable record date. Any dividend payment made on the series C preferred
stock is first credited against the earliest accrued but unpaid dividend due
with respect to the series C preferred stock that remains payable.
No dividends will be authorized by our board or paid or set aside for
payment if any agreement of HCPI prohibits such authorization, payment or
setting apart for payment or provides that such authorization, payment or
setting aside of payment would constitute a breach thereof or a default
thereunder, or if such authorization or payment is restricted or prohibited by
law. Dividends on series C preferred stock accrue whether or not HCPI has
earnings, whether or not there are funds legally available for the payment of
such dividends and whether or not such dividends are declared. No interest, or
sum of money in lieu of interest, is payable in respect of any dividend payment
or payments on the series C preferred stock that may be in arrears. Holders of
series C preferred stock are not entitled to any dividends, whether payable in
cash, property or shares of stock, in excess of the full cumulative dividends,
as described herein, on the series C preferred stock. If, for any
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taxable year, HCPI elects to designate as "capital gain dividends" (as defined
in Section 857 of the Internal Revenue Code any portion (the "Capital Gains
Amount") of the dividends (within the meaning of the Internal Revenue Code) paid
or made available for the year to holders of all classes of capital stock (the
"Total Dividends"), then the portion of the Capital Gains Amount that will be
allocable to holders of series C preferred stock will be in the same portion
that the Total Dividends paid or made available to the holders of series C
preferred stock for the year bears to the Total Dividends.
Liquidation Preferences. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs HCPI, the holders of series C preferred
stock are entitled to receive out of assets of HCPI legally available for
distribution to stockholders a liquidation preference of $2,500.00 per share of
series C preferred stock ($25.00 per depositary share), plus an amount equal to
any accrued and unpaid dividends for prior dividend periods, before any
distribution of assets is made to holders of our common stock or any other class
or series of capital stock of HCPI that ranks junior to the series C preferred
stock as to liquidation rights.
In determining whether a distribution (other than upon voluntary or
involuntary liquidation) by dividend, redemption or other acquisition of shares
of stock of HCPI or otherwise is permitted under the Maryland General
Corporation Law, no effect is given to amounts that would be needed if HCPI
would be dissolved at the time of the distribution, to satisfy the preferential
rights upon distribution of holders of shares of stock of HCPI whose
preferential rights upon distribution are superior to those receiving the
distribution.
Maturity; Redemption. The series C preferred stock is not redeemable by
HCPI prior to October 27, 2002, other than a redemption by HCPI to preserve its
status as a real estate investment trust. On and after October 27, 2002, HCPI,
at its option, upon publication in a newspaper of general circulation in New
York, New York at least once a week for two successive weeks and written notice
to the holders of series C preferred stock, may redeem the series C preferred
stock, in whole or in part, at any time, for cash at a redemption price of
$2,500.00 per share of series C preferred stock ($25.00 per depositary share),
plus accumulated, accrued and unpaid dividends thereon to the date fixed for
redemption, without interest.
Restrictions on Ownership and Transfer. See "-- Restrictions on Ownership
and Transfer Relating to Preferred Stock."
TRANSFER RESTRICTIONS AND REDEMPTIONS RELATING TO OUR COMMON STOCK
Our charter contains restrictions on the ownership and transfer of voting
stock of HCPI which are intended to assist HCPI in complying with the
requirements to continue to qualify as a real estate investment trust. The
ownership limit relating to our common stock set forth in our charter provides
that, if our board shall, at any time and in good faith, be of the opinion that
direct or indirect beneficial 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, as defined in the Securities Exchange Act of 1934, as amended,
our board shall have the power (1) by lot or other means deemed equitable by it
to call for the purchase from any stockholder of HCPI a number of voting shares
sufficient, in the opinion of our board 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 HCPI's capital
stock, and (2) to refuse to transfer or issue voting shares of capital stock to
any person whose acquisition of such voting shares would, in the opinion
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of our board, result in the direct or indirect ownership by that person of more
than 9.9% of the outstanding voting shares of capital stock of HCPI. 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 of HCPI will be deemed void ab initio and the intended
transferee will be deemed never to have had an interest in those shares.
The purchase price for any voting shares of capital stock so redeemed will
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 HCPI, or, if no such closing
sales prices or quotations are available, then the purchase price shall be equal
to the net asset value of such stock as determined by our board in accordance
with the provisions of applicable law. From and after the date fixed for
purchase by our board, 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.
RESTRICTIONS ON OWNERSHIP AND TRANSFER RELATING TO PREFERRED STOCK
Each of the articles supplementary relating to the series A preferred
stock, the series B preferred stock and the series C preferred stock contain
restrictions on the ownership and transfer of preferred stock which are intended
to assist HCPI in complying with the requirements to maintain its status as a
real estate investment trust. Subject to limited exceptions, no person or entity
may own, or be deemed to own by virtue of the applicable constructive ownership
provisions of the Internal Revenue Code, more than 9.9% (by number or value,
whichever is more restrictive) of the outstanding shares of series A preferred
stock or series B preferred stock or, with regard to the series C preferred
stock, 9.8% (by value or number of shares, whichever is more restrictive) of the
outstanding shares of capital stock of HCPI, inclusive of the series C preferred
stock. Our Board may, but in no event is required to, waive the applicable
ownership limit with respect to a particular stockholder if it determines that
such ownership will not jeopardize HCPI's status as a real estate investment
trust and our board otherwise decides such action would be in the best interest
of HCPI.
STOCKHOLDER RIGHTS PLAN
On July 5, 1990, our board declared a dividend distribution of one common
stock purchase right (each, a "Right") for each outstanding share of our common
stock to stockholders of record at the close of business on July 30, 1990 and
with respect to each subsequently issued share. When exercisable, each Right
entitles the registered holder to purchase from HCPI one-half of a share of the
common stock at a price of $47.50 per share. The Rights are attached to all
outstanding shares of common stock, and no separate Rights certificates have
been distributed. Each share of common stock offered by this prospectus will
have upon issuance one Right attached. The Rights will become exercisable
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and will detach from our common stock upon a "Distribution Date" which will
occur upon the earlier of:
- the tenth day after the public announcement that any person or group has
acquired beneficial ownership of 15% or more the outstanding our common
stock, or
- 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 outstanding our common stock.
Following a Distribution Date and prior to the Expiration Date (as provided
in the Rights Agreement), HCPI will generally issue a Rights certificate with
each share of our common stock issued with respect to the exercise of stock
options or under an employee plan or arrangement or upon the exchange or
conversion of securities issued by HCPI or by a limited liability company of
which HCPI is the managing member.
If a person or group acquires beneficial ownership of 15% or more of our
common stock (except pursuant to cash tender offers for all outstanding common
stock approved by our board) or if HCPI is the surviving corporation in a merger
and our common stock is not changed or exchanged, each Right other than Rights
owned by an Acquiring Person (as defined in the HCPI Rights Agreement) and its
affiliates and associates will entitle the holder to purchase, at the Right's
then current exercise price, that number of shares of our common stock having a
market value equal to twice the exercise price. Similarly, if HCPI 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.
If HCPI is acquired in a merger or other business combination transaction
or 50% or more of its consolidated assets or earning power are sold after a
person or group has become an Acquiring Person, proper provision will be made so
that each holder of a Right, other than an Acquiring Person and the affiliates
and associates of such Acquiring Person, whose Rights will have become void,
will thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, the number of shares of common stock of the
acquiring company which at the time of such transaction will have a market value
equal to twice the exercise price of the Right. In the event that any person or
group of affiliated or associated persons becomes an Acquiring Person, proper
provision will be made so that each holder of a Right, other than the Rights
beneficially owned by the Acquiring Person or the affiliates and associates of
such Acquiring Persons, which will thereafter be void, will thereafter have the
right to receive upon exercise that number of shares of our common stock having
a market value of two times the purchase price of the Right.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
shares of our common stock, our board may exchange the Rights, other than any
Rights owned by such person or group and their respective affiliates and
associates which have become void, in whole or in part, for a number of shares
of our common stock having a value equal to the value of our common stock
issuable upon the exercise of the Rights over the purchase price.
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The Rights may be redeemed in whole, but not in part, at a price of $.005
per Right, subject to adjustment for stock splits and similar transactions by
our board at any time until ten days following the public announcement that a
person or group of affiliated or associated persons has acquired beneficial
ownership of 15% or more of the outstanding shares of our common stock. The
redemption of the Rights may be made effective at such time on such basis with
such conditions as our board, in its sole discretion, may establish, including
an extension of the period during which the Rights are redeemable or a
postponement of the Distribution Date. Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the redemption price. The Rights will
expire on July 30, 2000, unless such date is extended or the Rights are
exchanged or earlier redeemed.
BUSINESS COMBINATION PROVISIONS
Our charter requires that, except in some circumstances, "business
combinations" between HCPI and a beneficial holder of 10% or more of HCPI's
outstanding voting stock (a "Related Person") be approved by the affirmative
vote of at least 90% of the outstanding voting shares of HCPI. A "business
combination" is defined in our charter as:
- any merger or consolidation of HCPI with or into a Related Person;
- 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 HCPI, including
any voting securities of a subsidiary, to a Related Person;
- any merger or consolidation of a Related Person with or into HCPI,
- any sale, lease, exchange, transfer or other disposition of all or any
Substantial Part of the assets of a Related Person to HCPI;
- the issuance of any securities, other than by way of pro rata
distribution to all stockholders, of HCPI to a Related Person; and
- any agreement, contract or other arrangement providing for any of the
transactions described in the definition of business combination.
The term "Substantial Part" means more than 10% of the book value of the
total assets of HCPI as of the end of its most recent fiscal year ending prior
to the time the determination is being made.
The Rights and the foregoing provisions may have the effect of discouraging
unilateral tender offers or other takeover proposals which stockholders might
deem to be in their interests or in which they might receive a substantial
premium. Our board's 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 "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 our common stock, deprive stockholders of opportunities to sell at
a temporarily higher market price. Our board believes, however, that inclusion
of the business combination provisions in our
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charter and the Rights may help assure fair treatment of HCPI stockholders and
preserve HCPI's assets.
RELATIONSHIP OF THE PARTIES
On October 27, 1998, we formed HCPI/Utah, LLC and acquired the sole
managing member interest in HCPI/Utah, LLC. On January 25, 1999 we caused
HCPI/Utah, LLC to issue 576,011 managing member units to us in exchange for a
capital contribution of approximately $18.4 million. Also in connection with our
contribution, partnerships and limited liability companies affiliated with The
Boyer Company, L.C., a limited liability company unaffiliated with HCPI/Utah,
LLC or HCPI, made a capital contribution to HCPI/Utah, LLC of real property and
improvements with an equity value net of assumed debt of $19.0 million. These
partnerships and limited liability companies were:
- Boyer Castle Dale Medical Clinic, L.L.C.;
- Boyer Centerville Clinic Company, L.C.;
- Boyer Elko, L.C.;
- Boyer Desert Springs, L.C.;
- Boyer Grantsville Medical, L.C.;
- Boyer-Ogden Medical Associates, LTD.;
- Boyer Ogden Medical Associates No. 2, LTD.;
- Boyer Salt Lake Industrial Clinic Associates, LTD.;
- Boyer-St. Mark's Medical Associates, LTD.;
- Boyer McKay-Dee Associates, LTD.;
- Boyer St. Mark's Medical Associates #2, LTD.;
- Boyer Iomega, L.C.;
- Boyer Springville, L.C.; and
- Boyer Primary Care Clinic Associates, LTD. #2.
The above-referenced partnerships and limited liability companies are
referred to herein as the selling holders.
In exchange for these contributions, the partnerships and limited liability
companies received 593,247 non-managing member units. As result of these
contributions, these entities became the only non-managing members of HCPI/Utah,
LLC.
On January 25, 2000, 593,247 of the non-managing member units held by the
selling holders may be exchanged for our common stock or, at our option, for
cash. At the time of the selling holders' acquisition of the non-managing member
units, we agreed to provide registration rights with respect to the shares of
common stock for which the non-managing member units may be exchanged.
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On June 30, 1999, Boyer Providence Medical Associates, L.C., a limited
liability company affiliated with The Boyer Company, L.C., made a capital
contribution to HCPI/ Utah, LLC of real property and improvements with an equity
value net of assumed debt of $1.1 million in exchange for 35,872 non-managing
member units. Boyer Medical Associates, L.C. directed that the non-managing
member units deliverable to it be assigned to its members, Boyer-BPMA Holdings,
L.C. and Spring Creek Medical Building, L.L.C. Additionally, we caused
HCPI/Utah, LLC to issue 85,436 managing member units to us in exchange for a
capital contribution of approximately $2.7 million.
On November 12, 1999, Boyer Davis North Medical Associates, LTD., a
partnership affiliated with The Boyer Company, L.C., made a capital contribution
to HCPI/Utah of real property and improvements with an equity value net of
assumed debt of $0.4 million in exchange for 12,340 non-managing member units.
In connection with this transaction, we caused HCPI/Utah, LLC to issue 73,778
managing member units to us in exchange for a capital contribution of
approximately $2.4 million.
The non-managing member units issued to Boyer Providence Medical
Associates, L.C. and Boyer Davis North Medical Associates L.C. are exchangeable
for our common stock or, at our option, cash, beginning one year following the
date of the closing of the last contribution of property by any affiliate of The
Boyer Company, L.C. This registration statement does not relate to the common
stock issuable upon the exchange of non-managing member issued to Boyer
Providence Medical Associates, L.C. and Boyer Davis North Medical Associates,
L.C. A separate registration statement will be filed with respect to such shares
of common stock.
HCPI/Utah, LLC relied on the exemption provided by Section 4(2) of the
Securities Act in connection with the issuances and sales of the managing member
and non-managing member units.
As of January 21, 2000, HCPI/Utah, LLC has 1,391,228 units issued and
outstanding, which are held by the following:
- 749,769 managing member units by HCPI;
- 17,267 non-managing member units by Boyer Castle Dale Medical Clinic,
L.L.C.;
- 16,772 non-managing member units by Boyer Centerville Clinic Company,
L.C.;
- 26,012 non-managing member units by Boyer Elko, L.C.;
- 114,153 non-managing member units by Boyer Desert Springs, L.C.;
- 5,338 non-managing member units by Boyer Grantsville Medical, L.C.;
- 786 non-managing member units by Boyer-Ogden Medical Associates, LTD.;
- 36,595 non-managing member units by Boyer Ogden Medical Associates No. 2,
LTD.;
- 12,350 non-managing member units by Boyer Salt Lake Industrial Clinic
Associates, LTD.;
- 104,778 non-managing member units by Boyer-St. Mark's Medical Associates,
LTD.;
- 71,295 non-managing member units by Boyer McKay-Dee Associates, LTD.;
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- 47,530 non-managing member units by Boyer St. Mark's Medical Associates
#2, LTD.;
- 74,299 non-managing member units by Boyer Iomega, L.C.;
- 45,678 non-managing member units by Boyer Springville, L.C.;
- 20,394 non-managing member units by Boyer Primary Care Clinic Associates,
LTD. #2;
- 17,936 non-managing member units by Boyer-BPMA Holdings, L.C.;
- 17,036 non-managing member units by Spring Creek Medical Building,
L.L.C.; and
- 12,340 non-managing member units by Boyer Davis North Medical Associates,
LTD.
OPERATING AGREEMENT
The following summarizes the material provisions of the operating agreement
of HCPI/Utah, LLC. The summary is qualified in its entirety by reference to the
operating agreement of HCPI/Utah, LLC.
MANAGEMENT
HCPI/Utah, LLC was organized as a Delaware limited liability company under
the Delaware Limited Liability Company Act and the terms of its operating
agreement, the Amended and Restated Limited Liability Company Agreement of
HCPI/Utah, LLC. Our company is the sole managing member of HCPI/Utah, LLC.
Generally, pursuant to the operating agreement, we have exclusive and complete
responsibility and discretion in the management and control of HCPI/Utah, LLC,
including, subject to the restrictions discussed below, the ability to cause it
to enter into major transactions such as acquisitions, dispositions, financings,
refinancings, and to manage and operate its properties. We may not be removed as
the managing member of HCPI/Utah, LLC, with or without cause, unless we consent
to being removed. Non-managing members of HCPI/Utah, LLC have no authority to
transact business for HCPI/Utah, LLC or participate in its management
activities, except in limited circumstances described below and as required by
any non-waivable provision of applicable law.
As the managing member, we may not take any action in contravention of the
operating agreement, including:
- taking any action that would make it impossible to carry out the ordinary
business of HCPI/Utah, LLC;
- owning or assigning any rights in specific property owned by HCPI/Utah,
LLC, other than for an HCPI/Utah, LLC purpose;
- taking any action that would cause a non-managing member to be subject to
liability as a managing member, except those acts permitted by the
operating agreement or by law; or
- entering into any agreement that would have the effect of restricting a
member of HCPI/Utah, LLC from exercising its right to exchange its units
as provided in the
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operating agreement and discussed below under "Exchange Rights," unless
such member gives its prior written consent to such action.
- entering into any agreement that would have the effect of restricting
HCPI/Utah, LLC's ability to make distributions to its members, without
the written consent of each member affected by the restriction.
The consent of the holders of a majority of the outstanding non-managing
member units held by non-managing members is required before we will be
permitted to take the following extraordinary actions involving HCPI/Utah, LLC:
- the amendment, modification or termination of the operating agreement
other than to reflect the admission, substitution, termination or
withdrawal of members or in connection with a permitted dissolution or
termination of HCPI;
- approving the transfer of all or a portion of the membership interest
held by us, other than a transfer to HCPI/Utah, LLC;
- the admission of any additional or substitute managing members in
HCPI/Utah, LLC;
- making a general assignment for the benefit of HCPI/Utah, LLC's creditors
or instituting any proceeding for bankruptcy on behalf of HCPI/Utah, LLC;
or
- confessing a judgment against HCPI/Utah, LLC in excess of $50,000.
In addition to the above restrictions, we, as the managing member, may not
take the following actions unless we obtain the consent of any non-managing
member who would be adversely affected:
- convert a non-managing member's interest in HCPI/Utah, LLC into a
managing member interest;
- modify the limited liability of a member;
- alter the rights of a member to receive distributions or the allocation
of income and loss to a member; or
- alter the right of a member to exchange its non-managing member units for
our common stock.
As managing member, we may, however, amend the operating agreement without
non-managing member consent:
- to reflect the issuance of additional membership interests in exchange
for capital contributions of cash or property, or the admission,
substitution, termination or withdrawal of members;
- to reflect inconsequential changes, cure ambiguities and make other
changes not inconsistent with law or the provisions of the operating
agreement;
- to satisfy any requirements, conditions or guidelines contained in any
governmental order or required by law;
- to reflect changes that are reasonably necessary for us to maintain our
status as a real estate investment trust; and
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- to modify the manner in which capital accounts are computed.
Until such time as the initial non-managing members of HCPI/Utah, LLC, have
disposed, in taxable transactions, of 80% of the non-managing member units
issued to them in exchange for their contribution of property to HCPI/Utah, LLC,
the consent of the holders of a majority of the non-managing member units held
by non-managing members will be required before we may:
- cause HCPI/Utah, LLC to merge with another entity, sell all or
substantially all of HCPI/Utah, LLC's assets or reclassify the
outstanding equity interests of HCPI/Utah, LLC prior to January 22, 2019;
- sell some of HCPI/Utah, LLC's real properties prior to January 22, 2009
or sell HCPI/Utah, LLC's other real properties prior to January 22, 2019;
- prior to January 22, 2009:
- refinance specified nonrecourse indebtedness of HCPI/Utah, LLC, unless
such indebtedness is refinanced with nonrecourse indebtedness that does
not require principal payments greater than the existing indebtedness
and is secured solely by the property which secured the repayment of the
existing indebtedness;
- prepay the specified nonrecourse indebtedness; or
- convert the specified nonrecourse indebtedness to recourse indebtedness;
- fail to provide non-managing members the opportunity to guaranty debt of
HCPI/Utah, LLC up to an amount equal to $22 million less the amount of
nonrecourse debt of HCPI/Utah, LLC allocable to the non-managing
members.
The consent of the holders of a majority of the non-managing member units
held by non-managing members will be required to dissolve HCPI/Utah, LLC unless
the initial non-managing members have disposed of 90% of the non-managing member
units issued to them in exchange for their contribution of property to
HCPI/Utah, LLC prior to the third anniversary of the issuance of such
non-managing member units or 80% of such non-managing member units thereafter.
TRANSFERABILITY OF INTERESTS
The operating agreement provides that a non-managing member may transfer
its non-managing member units only after first offering those non-managing
member units to us and otherwise obtain our consent, except that a non-managing
member may without obtaining our consent, pledge its membership interest as
security for the repayment of debt and transfer such membership interest to the
lender upon the foreclosure of such debt if such transfer would not otherwise
violate the terms of the operating agreement. A non-managing member may also,
without our consent, transfer its membership interest in HCPI/Utah, LLC to a
partner in such non-managing member in liquidation of that partner's interest in
such non-managing member, to a family member of such non-managing member or to
an organization described in Sections 170(b)(1)(A), 170(c)(2) or 501(c)(3) of
the Internal Revenue Code. The operating agreement further imposes the following
restrictions on the transfer of the non-managing member units:
- the person to whom any non-managing member units are transferred must
assume all of the obligations of the transferor under the operating
agreement;
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- we will have the right to receive an opinion of counsel that the proposed
transfer may be effected without registration under the Securities Act
and will not otherwise violate any federal or state securities laws or
regulations;
- we may prohibit any transfer otherwise permitted under the operating
agreement if such transfer would require the filing of a registration
statement under the Securities Act by HCPI/Utah, LLC or would otherwise
violate any applicable federal or state securities laws or regulations;
- no transfer may be made to any person if, in the opinion of legal counsel
to HCPI/ Utah, LLC, such transfer could result in HCPI/Utah, LLC being
treated as an association taxable as a corporation or for state income or
franchise tax purposes, or such transfer could adversely affect our
ability to qualify as a real estate investment trust or subject us to
additional taxes under Sections 857 or 4981 of the Internal Revenue Code;
- no transfer may be made if such transfer is effected through an
"established securities market" or a "secondary market" within the
meaning of Section 7704 of the Internal Revenue Code;
- no transfer may be made to a lender of HCPI/Utah, LLC or any person
related to such a lender whose loan constitutes "nonrecourse liability"
within the meaning of the Internal Revenue Code, without our consent as
managing member;
- transfers may be made only as of the first day of a fiscal quarter of
HCPI/Utah, LLC, unless we otherwise consent; and
- no transfer may be made (1) to any person or entity who lacks the legal
right, power or capacity to own a membership interest; (2) in violation
of applicable law; (3) if such transfer would, in the opinion of legal
counsel to HCPI/Utah, LLC, cause an increased tax liability to any other
member as a result of the termination of HCPI/Utah, LLC; (4) if such
transfer would cause HCPI/Utah, LLC to become a reporting company under
the Exchange Act; (5) if such transfer would cause HCPI/Utah, LLC to
cease to be classified as a partnership or to be classified as a publicly
traded partnership or treated as a corporation; or (6) if such transfer
would cause HCPI/Utah, LLC to lose material tax benefits or become
subject to regulations not currently applicable to it.
CAPITAL CONTRIBUTIONS
The operating agreement provides that if HCPI/Utah, LLC requires additional
funds for its operation, we may fund those investments by making a capital
contribution to HCPI/Utah, LLC. In addition, we are required to make additional
capital contributions to the extent necessary to fund:
- capital additions, tenant improvements and leasing commissions relating
to HCPI/ Utah, LLC's real properties except those tenant improvement
costs not assumed by HCPI/Utah, LLC at the time the related property was
contributed to it;
- to repay any mortgage debt of HCPI/Utah, LLC that we elect to repay in
accordance with the terms of the operating agreement.
If we fund a capital contribution, we have the right to receive additional
managing member units. In the event we receive additional managing member units
in return for
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additional capital contributions, our membership interest in HCPI/Utah, LLC will
be increased. Non-managing members of HCPI/Utah, LLC do not have the right to
make additional capital contributions to HCPI/Utah, LLC unless permitted to do
so by us in our discretion. Accordingly, the membership interest of non-managing
members in HCPI/ Utah, LLC will be diluted to the extent we receive an
additional membership interest.
TAX MATTERS
Pursuant to the operating agreement, we are the tax matters partner of
HCPI/Utah, LLC. The tax matters partner serves as HCPI/Utah, LLC's
representative in most tax matters. For example, as the tax matters partner, we
have the authority to file tax returns and make elections for HCPI/Utah, LLC,
conduct audits, file refund claims on behalf of HCPI/Utah, LLC and settle
adjustments. In addition, as the tax matters partner, we will receive notices
and other information from the Internal Revenue Service. The designation of HCPI
as the tax matters partner of HCPI/Utah, LLC is not directly relevant to our tax
status as a real estate investment trust.
OPERATIONS
The sole purposes of HCPI/Utah, LLC are to manage, operate, maintain,
expand, redevelop, encumber or sell the real properties contributed to it by
affiliates of the selling holders, and any other properties acquired by it, and
to invest and ultimately distribute funds obtained from owning, operating or
disposing of such properties. The operating agreement provides, however, that
we, as managing member, may operate HCPI Utah, LLC in a manner that will enable
us to satisfy the requirements for being classified as a real estate investment
trust and avoid any federal income tax liability. Under the operating agreement,
HCPI/Utah, LLC assumes and pays when due, or reimburses us for payment of, all
costs and expenses that we incur for the benefit of or relating to its ownership
and operation.
DISTRIBUTIONS
Holders of non-managing member units are entitled to receive cumulative
preferential distributions from the date of issue of those non-managing member
units, payable on a quarterly basis. The right of holders of non-managing member
units to receive cumulative preferential distributions means that, unless and
until each of those quarterly distributions are paid in full, HCPI/Utah, LLC
cannot make any distributions to us. These preferred distributions are an amount
per unit equal to the amount payable with respect to each share of our common
stock for the corresponding quarter (subject to adjustment in the event we pay a
dividend or distribution on our common stock in shares of our common stock,
split or subdivide our common stock or effect a reverse stock split or other
combination of our common stock into a smaller number of shares). Following the
payment of the preferred distribution to holders of the non-managing member
units, HCPI/Utah, LLC is required to distribute the remaining cash available for
distribution to us until all distributions of cash, including prior
distributions, have been made to the members of HCPI/Utah, LLC pro rata on the
basis of the number of managing member or non-managing member units held by them
as compared to the total number of managing member and non-managing member units
then outstanding. Thereafter, the remaining cash available for distribution is
distributed to the unitholders in proportion to their Sharing Percentages. The
"Sharing Percentage" of a holder of non-managing member units is determined by
multiplying 1% by a fraction, the numerator of which is the
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<PAGE> 33
number of non-managing member units then outstanding and the denominator of
which is the number of non-managing member units issued to the initial
non-managing members and multiplying the result by a fraction, the numerator of
which is the number of non-managing member units held by such unitholder, and
the denominator of which is the total number of non-managing member units then
outstanding. Our "Sharing Percentage," as the managing member of HCPI/Utah, LLC
is equal to 100% minus the aggregate Sharing Percentage of the holders of
non-managing member units.
In the event of a taxable disposition of some of HCPI/Utah, LLC's real
property, we may elect to distribute all or a portion of the net proceeds of the
taxable disposition to the members. In this event, we must distribute these
proceeds as follows:
- first, to holders of non-managing member units to pay any previously
unpaid preferred distribution on the non-managing member units held by
them;
- second, to us until all distributions of cash, including prior
distributions, have been made to the members of HCPI/Utah, LLC pro rata
on the basis of the number of managing member or non-managing member
units held by them as compared to the total number of managing member and
non-managing member units then outstanding;
- third, to the holders of units in proportion to the number of units held
by them in redemption of those units, as discussed below, until all
non-managing member units have been redeemed; and
- finally, the remaining balance to us.
The distribution of the net proceeds from the taxable disposition of real
property will constitute a return of capital to the unitholders of HCPI/Utah,
LLC. As such, we will cause HCPI/Utah, LLC to reduce the number of units
outstanding at the time of such distributions.
Upon the refinancing of a property or the incurrence of additional debt,
the repayment of which is secured by a property owned by HCPI/Utah, LLC, we may
elect to distribute all or a portion of the refinancing or other debt proceeds
to the members. In this event, we must distribute such proceeds:
- first, to the holders of non-managing member units to pay any previously
unpaid preferred distribution on the non-managing member units held by
them; and
- second, the remaining balance to us.
ALLOCATION OF INCOME AND LOSS
The operating net income and net loss of HCPI/Utah, LLC is generally
allocated as follows:
- operating net loss for any fiscal year is allocated to the unitholders in
accordance with their Sharing Percentages;
- operating net income for any fiscal year is allocated as follows:
- first, to each unitholder to the extent necessary to offset any
operating net loss previously allocated to such unitholder;
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<PAGE> 34
- second, to each unitholder in an amount that will cause the current
allocation together with all previous allocations of operating net
income and net income resulting from the disposition of real property to
be pro rata to the cumulative distributions received by such unitholder
for the current and all prior fiscal years.
In the event HCPI/Utah, LLC sells or otherwise disposes of any of its real
properties, however, the net income or net loss attributable to such sale or
disposition is generally allocated as follows:
- net loss attributable to the sale or other disposition of real property
is allocated to the holders of units in proportion to their Sharing
Percentages;
- net income attributable to the sale or other disposition of real property
is allocated as follows:
- first, to each unitholder to the extent necessary to offset any net loss
previously allocated to such unitholder upon the sale or other
disposition of a property;
- second, to each unitholder in an amount that will cause the current
allocation together with all previous allocations of operating net
income and net income resulting from the disposition of a real property
to be pro rata to the cumulative distributions received by such
unitholder for the current and all prior fiscal years; and
- thereafter, to each unitholder in proportion to the number of units held
by them.
In the event HCPI/Utah, LLC liquidates, the net income or net loss for that
year is generally allocated as follows:
- first, to holders of nonmanaging member units in such amounts as will
cause their capital account per unit to be equal to the sum of: (a) the
holder's preferred return shortfall per unit (if any), (b) the value of a
share of our stock (subject to specified adjustments), and (c) their pro
rata share of a 1% (subject to adjustment) sharing amount; and
- thereafter to us.
Each of the allocation provisions described above is subject to special
allocations relating to depreciation deductions and to compliance with the
provisions of Sections 704(b) and 704(c) of the Internal Revenue Code and
related Treasury Regulations.
TERM
The operating agreement provides that HCPI/Utah, LLC will continue until
December 31, 2058 unless extended upon the mutual agreement of the members or
sooner dissolved by us in accordance with the provisions of the operating
agreement. HCPI/Utah, LLC also will dissolve if:
- we withdraw as the managing member and the non-managing members holding a
majority of the non-managing member units then outstanding do not appoint
a substitute managing member and elect in writing to continue the
business of HCPI/Utah, LLC within 90 days;
- we elect to dissolve it in accordance with the provisions of the
operating agreement;
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- it sells substantially all of its assets and properties;
- it is dissolved by judicial order;
- we become bankrupt, unless within 90 days the non-managing members
holding a majority of the outstanding non-managing member units elect in
writing to continue the business of HCPI/Utah, LLC and to the appointment
of a substitute managing member; or
- all of the non-managing member units held by non-managing members have
been exchanged for cash or our common stock.
INDEMNIFICATION
The operating agreement provides that HCPI/Utah, LLC will indemnify us, our
officers and directors and those other persons that we may designate. Our
liability to HCPI/Utah, LLC and its members is limited for losses sustained,
liabilities incurred or benefits not derived as a result of good faith errors,
mistakes of fact or law, or acts or omissions. See "Provisions of Maryland Law
and the Company's Charter and Bylaws -- Limitation of Liability and
Indemnification."
EXCHANGE RIGHTS
The non-managing member units held by the selling holders will become
exchangeable in whole or in part on January 25, 2000.
Accordingly, each non-managing member has the right to cause us to acquire
all or a portion of the non-managing member units held by it in exchange for, at
our election, cash or shares of our common stock. Upon exchange, the tendering
holder will receive either that number of exchange shares (the "Exchange
Shares") determined by multiplying the number of non-managing member units
tendered by an adjustment factor or, at our election an amount of cash equal to
the market value of such number of Exchange Shares. As of the date of this
prospectus, the adjustment factor is 1.0; however, the adjustment factor will be
adjusted to account for the economic effect of the payment of any dividends or
other distributions on our common stock in shares of common stock, any split or
subdivision in our outstanding common stock, and any reverse stock split or
other combination of our outstanding common stock into a smaller number of
shares. If we elect to deliver cash in lieu of all or any portion of the
Exchange Shares, the market value of those shares will be deemed to be the
average of the closing trading price of our common stock for the 10 trading days
ending on the second trading day immediately prior to the day on which the
tendering holder delivers a notice of exchange to us. Non-managing member units
that are acquired by us pursuant to the exercise of non-managing member's
exchange rights will be held by us as non-managing member units, with the same
rights and preferences of non-managing member units held by non-managing members
of HCPI/ Utah, LLC.
Our acquisition of the non-managing member units, whether they are acquired
for shares of common stock or cash, will be treated as a sale of the
non-managing member units to us for Federal income tax purposes. See "Material
Federal Income Tax Considerations -- Tax Consequences of the Exercise of
Exchange Rights."
A tendering holder effecting an exchange of all or a portion of the
non-managing member units held by him must deliver to us a notice of exchange as
required by the
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<PAGE> 36
operating agreement. A tendering holder shall have the right to receive the
Exchange Shares or cash, which is payable in connection with the exchange, on
the thirtieth day following our receipt of the notice of exchange. All Exchange
Shares delivered will be as duly authorized, validly issued, fully paid and
non-assessable shares, free of any pledge, lien, encumbrance or restriction,
other than those provided in our Articles of Restatement, our bylaws, the
Securities Act, relevant state securities or blue sky laws and any applicable
registration rights or other agreement with respect to the Exchange Shares that
the tendering holder has entered into. Notwithstanding any delay in delivery,
the tendering holder shall be deemed the owner of such shares and vested with
all rights of a stockholder as of the date on which the exchange occurs,
including the right to vote or consent, and the right to receive dividends.
Correspondingly, the tendering holder's right to receive distributions with
respect to the tendered non-managing member units will cease as of the date on
which the exchange occurs.
We will not be obligated to effect an exchange of tendered non-managing
member units if the issuance of Exchange Shares to the tendering holder would be
prohibited under the provisions of our Articles of Restatement, particularly
those which are intended to protect our qualification as an real estate
investment trust. We will not be obligated to effect an exchange of tendered
non-managing member units until the expiration or termination of the applicable
waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
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COMPARISON OF HCPI/UTAH, LLC AND HCPI
Generally, the nature of an investment in our common stock is similar in
several respects to an investment in non-managing member units. However, there
are also differences between ownership of non-managing member units and
ownership of common stock, some of which may be material to investors.
HCPI/Utah, LLC and HCPI are organized and incorporated in Delaware and
Maryland, respectively. Upon the exchange of non-managing member units for our
common stock, the rights of stockholders of HCPI will be governed by the
Maryland General Corporation Law and by our charter and bylaws.
The information below highlights the material differences between
HCPI/Utah, LLC and us, relating to, among other things, form of organization,
management control, voting rights, compensation and fees, investor rights,
liquidity and federal income tax considerations. These comparisons are intended
to assist holders of non-managing member units in understanding the ways in
which their investment will be materially changed if they exchange their
non-managing member units for shares of our common stock.
The following discussion is summary in nature and does not constitute a
complete discussion of these matters. The differences between the rights of
HCPI/Utah, LLC unitholders and HCPI stockholders may be determined in full by
reference to the Maryland General Corporation Law, the Delaware Limited
Liability Company Act, our charter and bylaws, the operating agreement of
HCPI/Utah, LLC, and the balance of this prospectus and the registration
statement of which this prospectus is a part.
<TABLE>
<CAPTION>
HCPI/ UTAH, LLC/ DELAWARE LAW HCPI/ MARYLAND LAW
<S> <C>
FORM OF ORGANIZATION AND ASSETS OWNED
HCPI/Utah, LLC is a Delaware limited liability We are a Maryland corporation. We have elected
company. HCPI/Utah, LLC currently owns fifteen to be taxed as a real estate investment trust
properties, and the sole membership interest in under the Internal Revenue Code, commencing with
HCPI Davis North I, LLC, a Delaware limited our taxable year ending December 31, 1985, and
liability company, which in turn owns one intend to maintain our qualification as a real
property. All of HCPI/Utah, LLC's assets were estate investment trust. As of December 31,
contributed to it by partnerships and limited 1999, our gross investment in our properties,
liability companies affiliated with the selling including partnership and limited liability
holders. HCPI/Utah, LLC also has the right to company interests and mortgage loans, was
acquire two additional properties. approximately $2.6 billion. As of December 31,
1999, our portfolio of 428 properties consisted
of:
- 176 long-term care facilities,
- 91 congregate care and assisted living
facilities,
- 22 acute care hospitals,
- Nine rehabilitation facilities,
- 82 medical office buildings,
- 46 physician group practice clinics and
- Two psychiatric care facilities.
PURPOSE
HCPI/Utah, LLC's purpose is to own, manage, Under our charter, we may engage in the
operate, maintain, expand, rede- ownership of real property and any other
</TABLE>
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<TABLE>
<CAPTION>
HCPI/ UTAH, LLC/ DELAWARE LAW HCPI/ MARYLAND LAW
<S> <C>
PURPOSE -- (CONTINUED)
velop, encumber or sell the properties owned by lawful act or activity for which corporations
it and any other properties acquired by it in may be organized under the Maryland law. Our
the future, and to invest and ultimately qualification and taxation as a real estate
distribute the funds obtained from its business. investment trust depends upon our ability to
meet the various qualification tests imposed
under the Internal Revenue Code relating to our
actual annual operating results, asset
diversification, distribution levels, and
diversity of stock ownership. See "Material
Federal Income Consequences -- Taxation of
Health Care Property Investors, Inc."
ADDITIONAL EQUITY
See "Operating Agreement -- Capital The board of directors may issue, in its
Contributions." discretion, additional shares of common stock or
preferred stock. However, the total number of
shares issued cannot exceed the authorized
number of shares of stock described in our
charter.
BORROWING POLICIES
The operating agreement provides that HCPI/Utah, We are not restricted under our charter or
LLC is permitted to incur or assume debt, bylaws from incurring debt.
including debt to us or our affiliates.
The operating agreement provides that for a
period of ten years from the date that a
property securing the repayment of specified
nonrecourse indebtedness was contributed to
HCPI/Utah, LLC, or until the initial non-
managing members have disposed, in taxable
transactions of 80% of the non-managing member
units issued to them, the consent of the holders
of a majority of the non-managing member units
held by non-managing members is required before
HCPI/Utah, LLC:
- - prepays such specified nonrecourse indebt-
edness;
- - refinances such specified nonrecourse
indebtedness, unless such indebtedness is
refinanced with nonrecourse indebtedness that
does not require principal payments greater
than the existing indebtedness and is secured
solely by the property which secured the
repayment of the existing indebtedness; or
- - converts such specified nonrecourse
indebtedness to recourse indebtedness.
MANAGEMENT CONTROL
All management powers over the business and Our board of directors has exclusive control
affairs of HCPI/Utah, LLC are vested in us as over our business affairs subject only to the
the managing member. No non-managing member has applicable provisions of the Maryland law and
any right to participate in or exercise control the provisions in our charter and bylaws.
or management
</TABLE>
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<TABLE>
<CAPTION>
HCPI/ UTAH, LLC/ DELAWARE LAW HCPI/ MARYLAND LAW
<S> <C>
MANAGEMENT CONTROL -- (CONTINUED)
power over the business and affairs of
HCPI/Utah, LLC, except for actions which require
the consent of the holders of a majority of the
non-managing member units held by non-managing
members. See "Operating Agreement -- Management"
and "-- Voting Rights."
DUTIES OF MANAGING MEMBERS AND DIRECTORS
Under Delaware law, we, as managing member of Under Maryland law, the board of directors must
HCPI/Utah, LLC, are accountable to HCPI/Utah, perform their duties in good faith, in a manner
LLC as a fiduciary and, consequently, are that they reasonably believe to be in our best
required to exercise good faith and integrity in interests and with the care of an ordinarily
all of our dealings with respect to HCPI/Utah, prudent person in a like position under similar
LLC's affairs. circumstances. Directors who act in such a
manner generally will not be liable by reason of
being a director. Under Maryland law, an act of
a director is presumed to satisfy such
standards.
MANAGEMENT LIABILITY AND INDEMNIFICATION
HCPI/Utah, LLC has agreed to indemnify us, our Our charter contains a provision which
director and officers and any other persons we eliminates the liability of directors and
designate from and against all claims and officers to us and our stockholders to the
expenses, judgments, and other amounts incurred fullest extent permitted by Maryland law.
in connection with any actions relating to the Neither the provisions of our charter nor
operation of HCPI/Utah, LLC in which these Maryland law limit the ability of us or our
indemnitees are involved, unless: shareholders to obtain other relief, such as
- - the act taken by an indemnitee was in bad injunction or recision. Our bylaws provide for
faith and was material to the action; indemnification of directors and officers to the
- - an indemnitee received an improper personal fullest extent permitted by Maryland law.
benefit; or
- - in the case of any criminal proceeding, an
indemnity had reasonable cause to believe the
act was unlawful.
HCPI/Utah, LLC is obligated to reimburse the
reasonable expenses incurred by an indemnitee in
advance of the final disposition of the
proceeding if such indemnitee provides
HCPI/Utah, LLC with an affirmation of its good
faith belief that the standard of conduct
necessary for indemnification has been met and
an undertaking to repay the amount of the
reimbursed expenses if it is determined that
such standard was not met. No member of
HCPI/Utah, LLC, including HCPI, is obligated to
make capital contributions to enable HCPI/Utah,
LLC to fund these indemnification obligations.
The operating agreement generally provides that
we will not incur liability to HCPI/Utah, LLC or
any non-managing member for losses sustained or
liabilities incurred as a result of errors in
judgment or of any act or omission if we acted
in good faith. In addition, we are not
responsible for
</TABLE>
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<TABLE>
<CAPTION>
HCPI/ UTAH, LLC/ DELAWARE LAW HCPI/ MARYLAND LAW
<S> <C>
MANAGEMENT LIABILITY AND INDEMNIFICATION -- (CONTINUED)
any misconduct or negligence on the part of our
officers, directors or other agents, provided we
appointed such agents in good faith. We may
consult with legal counsel, accountants,
appraisers, management consultants, investment
bankers and other consultants and advisors, and
any action we take or omit to take in reliance
upon their opinion, as to matters which we
reasonably believe to be within their
professional or expert competence, will be
conclusively presumed to have been done or
omitted in good faith and in accordance with
their opinion.
ANTI-TAKEOVER PROVISIONS
Except in limited circumstances (See "-- Voting Our charter, bylaws and agreements to which we
Rights" below), we have exclusive management are a party contain a number of provisions that
power over the business and affairs of may delay or discourage an unsolicited proposal
HCPI/Utah, LLC. Accordingly, we may hinder the for the acquisition or the removal of incumbent
ability of HCPI/Utah, LLC to engage in a merger management. These provisions include:
transaction or other business combination. We (1) a staggered Board of Directors;
may not be removed as managing member by the (2) authorized capital stock that may be issued
other members with or without cause. We must as preferred stock in the discretion of the
obtain the consent of the holders of a majority board of directors, with voting or other
of the non-managing member units held by non- rights superior to the common stock;
managing members causing HCPI/Utah, LLC to enter (3) provisions designed to avoid concentration
into a merger transaction at any time prior to of share ownership in a manner that would
ten years from the date of the contribution of jeopardize our status as a real estate
properly to HCPI/Utah, LLC by the selling investment trust under the Internal Revenue
holders. These limitations may have the effect Code;
of hindering the ability of HCPI/Utah, LLC to (4) super-majority vote for business
enter into business combinations. combinations; and
A non-managing member generally may not transfer (5) a stockholder rights plan.
all or any portion of its membership interest in See "Description of Capital Stock." Maryland law
HCPI/Utah, LLC without first offering that also contains provisions which could delay,
membership interest to us and otherwise obtain defer or prevent a change of control or other
our consent. Accordingly, we may elect to transaction. See "Provisions of Maryland Law and
exercise our right of first refusal to prevent a Health Care Property Investors, Inc.'s Charter
membership interest from being transferred to a and Bylaws."
particular third party. Furthermore, upon the
transfer by a non-managing member of its
membership interest in HCPI/Utah, LLC, the
transferee may become a member of HCPI/Utah, LLC
only upon our approval, which we may give or
withhold in our sole and absolute discretion.
Until admitted to HCPI/Utah, LLC as a member, a
transferee of a membership interest is not
entitled to vote on any matter submitted to the
members for their approval.
The ability of a non-managing member to transfer
its membership interest in HCPI/Utah, LLC may be
further hindered
</TABLE>
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<TABLE>
<CAPTION>
HCPI/ UTAH, LLC/ DELAWARE LAW HCPI/ MARYLAND LAW
<S> <C>
ANTI-TAKEOVER PROVISIONS -- (CONTINUED)
by other factors. See "Operating Agree-
ment -- Transferability of Interests."
VOTING RIGHTS
Under the operating agreement, the non-managing The Board of Directors is classified into three
members have voting rights only as to classes of directors whose terms are staggered.
specified matters including: At each annual meeting of the stockholders, the
- - dissolving HCPI/Utah, LLC unless the initial stockholders elect the successors of the class
non-managing members have disposed of 90% of of directors whose three-year term has expired.
the non-managing member units issued to them Maryland law requires that major corporate
in exchange for their contribution of property transactions, including most amendments to our
to HCPI/Utah, LLC prior to the third anni- charter, must have stockholder approval as
versary of the issuance of such non-managing described below. All shares of common stock have
member units or 80% of such non-managing one vote per share. Our charter permit the board
member units thereafter; of directors to classify and issue preferred
- - amending the operating agreement, except in stock in one or more series having voting power
limited circumstances; which may differ from that of the common stock.
- - causing HCPI/Utah, LLC to refinance or replace See "Description of Capital Stock."
specified nonrecourse indebtedness or convert
such nonrecourse indebtedness into recourse
indebtedness for a period of ten years from
the date the property securing such existing
indebtedness was contributed to HCPI/Utah, LLC
as discussed above under "-- Borrowing Poli-
cies;" and
- - those other actions discussed above under
"Operating Agreement -- Management."
The non-managing members generally do not
otherwise have the right to vote on decisions
relating to the operation or management
HCPI/Utah, LLC.
</TABLE>
The following is a comparison of the voting rights of the non-managing
members of HCPI/Utah, LLC and of our stockholders as they relate to major
transactions:
<TABLE>
<S> <C>
A. AMENDMENT OF THE CHARTER DOCUMENTS
Amendments to the operating agreement may be Under Maryland law and our charter, most
proposed by us as managing member of amendments to our charter must be approved by
HCPI/Utah, LLC or by holders of a majority of the board of directors and by the affirmative
the non-managing member units held by vote of at least two-thirds of the votes
non-managing members. Such proposal, in order to entitled to be cast at a meeting of
be effective, must be approved by the holders of stockholders.
a majority of the outstanding managing member The affirmative vote of holders of at least 90%
units and non-managing member units voting of our voting stock is required to repeal or
together. In addition, amendments that would, amend the provisions of the charter relating to:
among other things: (1) business combinations,
- - convert a non-managing member's interest into (2) the classification, removal and setting of
a managing member interest; the minimum and maximum number of our
- - modify the limited liability of any non- directors and
managing member; (3) limitations on ownership of our voting
- - alter the interest of any non-managing member capital stock.
in profits, losses or distributions;
</TABLE>
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<TABLE>
<CAPTION>
HCPI/ UTAH, LLC/ DELAWARE LAW HCPI/ MARYLAND LAW
<S> <C>
A. AMENDMENT OF THE CHARTER DOCUMENTS -- (CONTINUED)
- - alter or modify the right of a non-managing See "Description of Capital Stock."
member to exchange its non-managing member
units for our common stock; or
- - cause the termination of HCPI/Utah, LLC at a
time inconsistent with the terms of the
operating agreement,
must be approved by each non-managing member
that would be adversely affected by any such
amendment. We may amend the operating agreement
without the consent of the non-managing members
if the purpose or the effect of such amendment
is to make administrative or inconsequential
changes, comply with any federal or state agency
rulings, guidelines or directives, or as are
necessary for us to maintain our status as a
real estate investment trust
B. VOTE REQUIRED TO DISSOLVE; VOTE REQUIRED TO SELL ASSETS OR MERGE
Dissolution. The consent of HCPI and the holders Under Maryland law, our board of directors and
of a majority of the non-managing members is holders of at least two-thirds of the
generally required to dissolve HCPI/Utah, LLC. outstanding common stock must approve our
See "-- Voting Rights." dissolution. Our charter require that "Busi-
Sale of Assets. Unless we first obtain the ness Combinations" between us and a beneficial
consent of the holders of a majority of the holder of 10% or more of our outstanding voting
non-managing member units held by non-managing stock be approved by the affirmative vote of at
members, we may not cause HCPI/Utah, LLC to least 90% of our outstanding voting shares,
dispose of any of eleven properties for a period unless approved in advance by our board or the
of ten years, to dispose of one property for a "Business Combination" is between us and a
period of thirteen years and to dispose of its wholly owned subsidiary. See the disclosure
remaining properties for a period of twenty under "Transfer Restrictions, Redemption and
years, with each time period measured from the Business Combination Provisions" in this
date such property was contributed to HCPI/Utah, prospectus. No approval of our stockholders is
LLC. These restrictions are removed, however, if required for any sale of less than all or
the initial non-managing members have disposed substantially all of our assets which is not a
of 80% of the non-managing member units issued business combination.
to them in taxable transactions.
Merger. See "-- Anti-Takeover Provisions."
COMPENSATION, FEES AND DISTRIBUTIONS
We do not receive any compensation for our Our officers and outside directors receive
services as managing member of HCPI/Utah, LLC. compensation for their services as more fully
HCPI/Utah, LLC will, however, reimburse HCPI described in the compensation information
for all expenses incurred relating to the incorporated by reference in our annual report
ongoing operation of HCPI/Utah, LLC and any on form 10-K, which is incorporated by reference
other offering of additional interests in into this prospectus.
HCPI/Utah, LLC.
LIABILITY OF INVESTORS
Under the operating agreement and applicable Under Maryland law, our stockholders are not
Delaware law, the liability of the non- personally liable for our debts or obligations.
managing members for the debts and obligations
of HCPI/Utah, LLC is generally limited to the
amount of their investment in
</TABLE>
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<TABLE>
<CAPTION>
HCPI/ UTAH, LLC/ DELAWARE LAW HCPI/ MARYLAND LAW
<S> <C>
LIABILITY OF INVESTORS -- (CONTINUED)
HCPI/Utah, LLC, together with their interest in
any undistributed income, if any.
LIQUIDITY
Except in limited circumstances, see "Oper- Shares of common stock issued pursuant to this
ating Agreement -- Transferability of Inter- prospectus will be freely transferable, subject
ests," a non-managing member may not transfer to prospectus delivery and other requirements of
all or any portion of its membership interest the Securities Act, and the transfer
in HCPI/Utah, LLC without first offering that restrictions in our charter.
membership interest to us and otherwise Our common stock is listed on the New York Stock
obtaining our consent. HCPI has the right to Exchange. The breadth and strength of this
receive an opinion of counsel in connection with secondary market will depend, among other
the transfer of a membership interest by a things, upon the number of shares outstanding,
non-managing member to the effect that the our financial results and prospects, the general
transfer may be effected without registration interest in our and other real estate
under the Securities Act and will not otherwise investments, and our dividend yield compared to
violate any applicable federal or state that of other debt and equity securities.
securities law.
A transferee of a non-managing member's interest
in HCPI/Utah, LLC may not become a member of
HCPI/Utah, LLC without our consent.
TAXES
HCPI/Utah, LLC itself is not subject to federal Distributions made by us to our taxable domestic
income taxes. Instead, each holder of units stockholders out of our current or accumulated
includes its allocable share of HCPI/Utah, LLC's earnings and profits will be taken into account
taxable income or loss in determining its by them as ordinary income. Distributions that
individual federal income tax liability. Cash we designate as capital gain dividends generally
distributions from HCPI/Utah, LLC are not will be taxed as gains from the sale or
taxable to a holder of non-managing member units disposition of a capital asset. Distributions in
except to the extent they exceed such holder's excess of our current or accumulated earnings
basis in its interest in HCPI/Utah, LLC (which and profits will be treated as a non-taxable
will include such holder's allocable share of return of basis to the extent of a stockholder's
HCPI/Utah, LLC's non-recourse debt). adjusted basis in its common stock, with the
Income and loss from HCPI/Utah, LLC generally excess taxed as capital gain. See "Material
are subject to the "passive activity" Federal Income Tax Consequences."
limitations. Under the "passive activity" Dividends paid by us will be treated as
limitations, income and loss from HCPI/Utah, LLC "portfolio" income and cannot be offset with
that is considered "passive income" generally losses from "passive activities."
can be offset against income and loss from other Stockholders who are individuals generally will
investments that constitute "passive not be required to file state income tax returns
activities." and/or pay state income taxes outside of their
Holders of non-managing member units are state of residence with respect to our
required, in some cases, to file state income operations and distributions. We may be required
tax returns and/or pay state income taxes in the to pay state income taxes in various states.
states in which HCPI/Utah, LLC owns property,
even if they are not residents of those states.
</TABLE>
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PROVISIONS OF MARYLAND LAW AND
HCPI'S CHARTER AND BYLAWS
The following paragraphs summarize provisions of Maryland law and describe
our charter and bylaws. This is a summary, and does not completely describe
Maryland law, our charter or our bylaws. For a complete description, we refer
you to the Maryland General Corporation Law, our charter and our bylaws.
CLASSIFICATION OF THE BOARD OF DIRECTORS
Under the bylaws, we have seven directors unless changed by the board of
directors or our stockholders. However, this number may not be fewer than the
minimum number required under Maryland law nor more than nine. Maryland law
requires a minimum of three directors under current circumstances. A vacancy
resulting from an increase in the number of directors may be filled by a
majority vote of the entire board of directors. Other vacancies may be filled,
at any regular meeting or at any special meeting called for that purpose, by a
majority of the remaining directors. Pursuant to the charter, the directors are
divided into three classes. Three directors hold office for a term which expires
at the annual meeting of stockholders to be held in the spring of 2000. Two
directors hold office for a term which expires at the annual meeting of
stockholders to be held in the spring of 2001. Two directors hold office for a
term which expires at the annual meeting of stockholders to be held in the
spring of 2002. As the term of each class expires, directors in that class will
be elected for a term of three years and until their successors are duly elected
and qualify. We believe that classification of the board of directors helps to
assure the continuity and stability of our business strategies and policies.
The classification of the Board may make the replacement of incumbent
directors more time-consuming and difficult. This could discourage a third party
from making a tender offer or otherwise attempting to obtain control of us, even
though such an attempt might be beneficial to us and our stockholders. A change
in a majority of the board of directors will generally require at least two
annual meetings of stockholders, instead of one. Thus, the classified board
provision could increase the likelihood that incumbent directors will retain
their positions. Holders of common stock have no right to cumulative voting for
the election of directors. Consequently, at each annual meeting of stockholders,
the holders of a majority of shares of common stock can elect all of the
successors of the class of directors whose term expires at that meeting and the
holders of the remaining shares of common stock cannot elect any directors.
REMOVAL OF DIRECTORS
Under the terms of our charter and Maryland law, a director of ours may be
removed only for cause and only by the affirmative vote of the holders of
two-thirds of the outstanding shares of our voting stock or by a unanimous vote
of all other directors. The Maryland General Corporation Law does not define the
term "cause." As a result, removal for "cause" is subject to Maryland common law
and to judicial interpretation and review in the context of the unique facts and
circumstances of any particular situation. Our stockholders may elect a
successor to fill any vacancy which results from the removal of a director.
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BUSINESS COMBINATIONS; OWNERSHIP RESTRICTIONS
Under Maryland law, "business combinations" between a Maryland corporation
and an interested stockholder or an affiliate of an interested stockholder are
prohibited for five years after the most recent date on which the interested
stockholder becomes an interested stockholder. These business combinations
include a merger, consolidation, share exchange, or, in circumstances specified
in the statute, an asset transfer or issuance or reclassification of equity
securities. An interested stockholder is defined as:
- any person who beneficially owns ten percent or more of the voting power
of the corporation's shares; or
- an affiliate of the corporation who, at any time within the two-year
period prior to the date in question, was the beneficial owner of ten
percent or more of the voting power of the then outstanding voting stock
of the corporation.
After the five-year prohibition, any business combination between the
Maryland corporation and an interested stockholder generally must be recommended
by the board of directors of the corporation and approved by the affirmative
vote of at least:
- 80% of the votes entitled to be cast by holders of outstanding shares of
voting stock of the corporation; and
- two-thirds of the votes entitled to be cast by holders of voting stock of
the corporation other than shares held by the interested stockholder with
whom or with whose affiliate the business combination is to be effected.
These super-majority vote requirements do not apply if the corporation's
common stockholders receive a minimum price, as defined under Maryland law, for
their shares in the form of cash or other consideration in the same form as
previously paid by the interested stockholder for its shares. None of these
provisions of the Maryland law will apply, however, to business combinations
that are approved or exempted by the board of directors of the corporation prior
to the time that the interested stockholder becomes an interested stockholder.
Because our board of directors believes it is essential for us to continue
to qualify as a real estate investment trust, our charter contain restrictions
on the ownership and transfer of our capital stock which are intended to assist
us in complying with these requirements.
The ownership limit relating to common stock described in the charter
provides that, 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:
(1) by lot or other means deemed equitable by it to call for the
purchase from any of our stockholders 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
our capital stock, and
(2) 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,
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result in the direct or indirect ownership by that person of more than 9.9%
of the outstanding voting shares of our capital stock.
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 in the
securities in question.
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 us; or
- if no losing sales prices or quotations are available, then the purchase
price shall be equal to the net asset value of stock as determined by the
board of directors under 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.
Our charter require that, except if the acquisition is unanimously approved
in advance by the Board or the transaction is with another corporation which we
own 100% of their voting stock, business combinations (as defined below) between
us and a beneficial holder of 10% or more of our outstanding voting stock (a
"related person") be approved by the affirmative vote of at least 90% of our
outstanding voting shares. A business combination is defined in the charter as:
(1) any merger or consolidation of us with or into a related person,
(2) any sale, lease, exchange, transfer or other disposition,
including without limitation a mortgage or any other security device, of
all or any substantial part of our assets, including, without limitation,
any voting securities of our subsidiaries to a related person,
(3) any merger or consolidation of a related person with or into us,
(4) any sale, lease, exchange, transfer or other disposition of all or
any substantial part of the assets of a related person to us,
(5) the issuance of any of our securities (other than by way of pro
rata distribution to all stockholders) to a related person, and
(6) any agreement, contract or other arrangement providing for any of
the transactions described in the definition of business combination. The
term "substantial
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part" is defined in the charter to mean more than 10% of the book value of
our total assets 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 may not be amended without the
affirmative vote of at least 90% of our outstanding voting shares.
The rights and the foregoing provisions may have the effect of discouraging
unilateral tender offers or other takeover proposals which 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. 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 and the rights may help assure fair
treatment of stockholders and preserve our assets.
CONTROL SHARE ACQUISITIONS
Maryland law provides that "control shares" of a Maryland corporation
acquired in a "control share acquisition" have no voting rights except to the
extent approved by a vote of two-thirds of the votes entitled to be cast on the
matter. Shares of stock owned by the acquiror, by officers or by directors who
are employees of the corporation are excluded from shares entitled to vote on
the matter. "Control shares" are voting shares of stock which, if aggregated
with all other shares of stock owned by the acquiror or shares of stock for
which the acquiror is able to exercise or direct the exercise of voting power
except solely by virtue of a revocable proxy, would entitle the acquiror to
exercise voting power in electing directors within one of the following ranges
of voting power:
- one-fifth or more but less than one-third;
- one-third or more but less than a majority; or
- a majority or more of all voting power.
Control shares do not include shares the acquiring person is then entitled
to vote as a result of having previously obtained stockholder approval. Except
as otherwise specified in the statute, a "control share acquisition" means the
acquisition of control shares.
Once a person who has made or proposes to make a control share acquisition
has undertaken to pay expenses and satisfied other conditions, the person may
compel the board of directors to call a special meeting of stockholders to be
held within 50 days of demand to consider the voting rights of the shares. If no
request for a meeting is made, the corporation may itself present the question
at any stockholders meeting.
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then
the corporation may be able to redeem any or all of the control shares for fair
value, except for control shares for which voting rights previously have been
approved. Fair value is determined without regard to the absence of voting
rights for control shares, as of the date of the last control
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share acquisition or of any meeting of stockholders at which the voting rights
of control shares are considered and not approved. If voting rights for control
shares are approved at a stockholders meeting and the acquiror becomes entitled
to vote a majority of the shares entitled to vote, all other stockholders may
exercise appraisal rights. The fair value of the shares as determined for
purposes of these appraisal rights may not be less than the highest price per
share paid in the control share acquisition. Some of the limitations and
restrictions otherwise applicable to the exercise of dissenters' rights do not
apply in the context of a control share acquisition.
The control share acquisition statute does not apply to shares acquired in
a merger, consolidation or share exchange if the corporation is a party to the
transaction or to acquisitions approved or exempted by the charter or bylaws of
the corporation. Our charter and bylaws do not provide for any such exemption.
AMENDMENTS TO THE CHARTER
Provisions of our charter on business combinations, the number of
directors, classification of the board of directors and ownership restrictions
may be amended only if approved by our board of directors by a majority vote and
by our shareholders by the affirmative vote of the holders of not less than 90%
of all of the votes entitled to be cast on the matter. Other amendments to our
charter require approval by our board of directors by a majority vote and
approval by our stockholders by the affirmative vote of holders of shares
entitled to cast a two-thirds of all the votes entitled to be cast on the
matter.
AMENDMENT TO THE BYLAWS
Provisions of our bylaws on the number of directors and the vote required
to amend the bylaws may be amended only by unanimous vote of the board of
directors or the affirmative vote of the holders of not less than 90% of all of
the votes entitled to be cast on the matter. Other amendments to our bylaws
require the affirmative vote of a majority of the entire board of directors or
the affirmative vote of the holders of not less than two-thirds of all of the
votes entitled to be cast on the matter.
DISSOLUTION OF HEALTH CARE PROPERTY INVESTORS, INC.
Our dissolution must be approved by our board of directors by a majority
vote of the entire board and by our stockholders by the affirmative vote of not
less than two-thirds of all votes entitled to be cast on the matter.
ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS; PROCEDURES OF SPECIAL
MEETINGS REQUESTED BY STOCKHOLDERS
Our bylaws provide that nominations of persons for election to the board of
directors and the proposal of business to be considered by stockholders at the
annual or special meeting of stockholders may be made only:
- pursuant to our notice of the meeting;
- by or at the direction of the board of directors; and
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- by a stockholder who is entitled to vote at the meeting and has complied
with the advance notice procedures, including the minimum time period,
described in the bylaws.
Our bylaws also provide that only the business specified in our notice of
meeting may be brought before a special meeting of stockholders.
ANTI-TAKEOVER EFFECT OF PROVISIONS OF MARYLAND LAW, OUR RIGHTS PLAN AND OF THE
CHARTER AND BYLAWS
The provisions in the charter on classification of the board of directors
and removal of directors and business combinations and bylaws do not contain
exemptions from the control share acquisition statutes, the business
combinations and control share acquisition provisions of Maryland law, the
advance notice provisions of our bylaws, the provisions of our bylaws relating
to stockholder-requested special meetings and our stockholder rights plan may
delay, defer or prevent a change of control or other transaction in which
holders of some, or a majority, of the common stock might receive a premium for
their common stock over the then prevailing market price or which such holders
might believe to be otherwise in their best interests.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Maryland law permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages. However, a Maryland
corporation may not limit liability resulting from actual receipt of an improper
benefit or profit in money, property or services. Also, liability resulting from
active and deliberate dishonesty may not be eliminated if a final judgment
establishes that the dishonesty is material to the cause of action. Our charter
contains a provision which limits liability of directors and officers to the
maximum extent permitted by Maryland law. This provision does not limit our
right or that of our stockholders to obtain equitable relief, such as an
injunction or rescission.
Our bylaws obligate us, to the maximum extent permitted by Maryland law, to
indemnify and to pay or reimburse reasonable expenses before final disposition
of a proceeding to:
- any present or former director or officer who is made a party to the
proceeding by reason of his service in that capacity; or
- any individual who, while one of our directors and at our request, serves
or has served another corporation, partnership, joint venture, trust,
employee benefit plan or any other enterprise as a director, officer,
partner or trustee of such corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise and who is made a party
to the proceeding by reason of his service in that capacity.
The bylaws authorize us, with the approval of our board of directors, to
provide indemnification and advancement of expenses to our agents and employees.
Unless a corporation's charter provides otherwise, Maryland law requires a
corporation to indemnify a director or officer who has been successful, on the
merits or otherwise, in the defense of any proceeding to which he is made a
party by reason of his service in that capacity. Our charter does not alter this
requirement.
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Maryland law permits a corporation to indemnify its present and former
directors and officers, among others, against:
- judgments;
- penalties;
- fines;
- settlements; and
- reasonable expenses actually incurred by them in connection with any
proceeding to which they may be made a party by reason of their service
in those or other capacities.
Maryland law does not permit a corporation to indemnify its present and
former directors and officers if it is established that:
- the act or omission of the director or officer 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;
- the director or officer actually received an improper personal benefit in
money, property or services; or
- in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful.
Under Maryland law, a Maryland corporation generally may not indemnify for
an adverse judgment in a suit by or in the right of the corporation. Also, a
Maryland corporation generally may not indemnify for a judgment of liability on
the basis that personal benefit was improperly received. In either of these
cases, a Maryland corporation may indemnify for expenses only if a court so
orders.
Maryland law permits a corporation to advance reasonable expenses to a
director or officer. First, however, the corporation must receive a written
affirmation by the director or officer of his good faith belief that he has met
the standard of conduct necessary for indemnification by the corporation. The
corporation must also receive a written undertaking, either by the director or
officer or on his behalf, to repay the amount paid or reimbursed by the
corporation if it shall ultimately be determined that the standard of conduct
was not met. The termination of any proceeding by conviction, or upon a plea of
nolo contendere or its equivalent, or an entry of any order of probation prior
to judgment, creates a rebuttable presumption that the director or officer did
not meet the requisite standard of conduct required for indemnification to be
permitted.
The operating agreement also provides for indemnification of us, as
managing member, and our officers and directors generally to the same extent as
permitted by Maryland law for a corporation's officers and directors. The
operating agreement also limits our liability to HCPI/Utah, LLC and its partners
in the case of losses sustained, liabilities incurred or benefits not derived as
a result of errors in judgment or mistakes of fact or law or any act or omission
made in good faith.
It is the position of the Commission that indemnification of directors and
officers for liabilities arising under the Securities Act is against public
policy and is unenforceable pursuant to Section 14 of the Securities Act.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the federal income tax consequences
anticipated to be material to purchasers of our common stock. This summary is
based on current law, is for general information only and is not tax advice.
Your tax treatment will vary depending upon your particular situation, and this
discussion does not purport to deal with all aspects of taxation that may be
relevant to a stockholder in light of his or her personal investments or tax
circumstances, or to stockholders who receive special treatment under the
federal income tax law, or to holders of units, except to the extent discussed
under the headings "-- Taxation of Tax-Exempt Stockholders" on page 62,
"-- Taxation of Non-U.S. Stockholders" on page 63 and "-- Tax Consequences of
the Exercise of Exchange Rights" on page 49. Holders of units or common stock
receiving special treatment include, without limitation:
- insurance companies;
- financial institutions or broker-dealers;
- tax-exempt organizations;
- stockholders holding securities as part of a conversion transaction, or a
hedge or hedging transaction, or as a position in a straddle for tax
purposes; and
- foreign corporations or partnerships and persons who are not citizens or
residents of the United States.
In addition, the summary below does not consider the effect of any foreign,
state, local or other tax laws that may be applicable to you as a holder of the
units or our common stock.
The information in this section is based on:
- the Internal Revenue Code,
- current, temporary and proposed treasury regulations promulgated under
the Internal Revenue Code,
- the legislative history of the Internal Revenue Code,
- current administrative interpretations and practices of the Internal
Revenue Service, and
- court decisions,
all as of the date of this prospectus. Future legislation, treasury regulations,
administrative interpretations and practices and/or court decisions may
adversely affect, perhaps retroactively, the tax consequences contained in this
discussion. Any change could apply retroactively to transactions preceding the
date of the change. We have not requested, and do not plan to request, any
rulings from the Internal Revenue Service concerning our tax treatment and the
statements in this prospectus are not binding on the Internal Revenue Service or
a court. Thus, we can provide no assurance that the tax consequences contained
in this discussion will not be challenged by the Internal Revenue Service or
sustained by a court if challenged by the Internal Revenue Service.
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YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES TO YOU OF:
- THE DISPOSITION OF THE UNITS;
- THE ACQUISITION, OWNERSHIP AND SALE OR OTHER DISPOSITION OF OUR COMMON
STOCK, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES;
- OUR ELECTION TO BE TAXED AS A REAL ESTATE INVESTMENT TRUST FOR FEDERAL
INCOME TAX PURPOSES; AND
- POTENTIAL CHANGES IN THE TAX LAWS.
TAX CONSEQUENCES OF THE EXERCISE OF EXCHANGE RIGHTS
If you exchange the units for common stock, the transaction will be a fully
taxable transaction. In the exchange, you will generally recognize gain (or
loss) to the extent that the value of the common stock received pursuant to the
exchange, plus the amount of liabilities of HCPI/Utah, LLC that is allocated to
the units being exchanged, exceeds (is less than) your tax basis in the units.
As a result, the gain you recognize or even the amount of tax you are required
to pay, could exceed the value of the common stock you receive in the exchange.
Whether you can recognize a loss resulting from an exchange is subject to a
number of limitations set forth in the Internal Revenue Code. The character of
any such gain or loss as capital or ordinary will depend on what types of assets
HCPI/Utah, LLC holds at the time of the exchange.
TAXATION OF HEALTH CARE PROPERTY INVESTORS, INC.
General
We elected to be taxed as a real estate investment trust under Sections 856
through 860 of the Internal Revenue Code, commencing with our taxable year ended
December 31, 1985. We believe we have been organized and have operated in a
manner which allows us to qualify for taxation as a real estate investment trust
under the Internal Revenue Code commencing with our taxable year ended December
31, 1985. We intend to continue to operate in this manner. However, no assurance
can be given that we have operated or will continue to operate in a manner so as
to qualify or remain qualified as a real estate investment trust. See
"-- Failure to Qualify" on page 58.
The sections of the Internal Revenue Code that relate to the qualification
and operation as a real estate investment trust are highly technical and
complex. The following describes the material aspects of these sections of the
Internal Revenue Code that govern the federal income tax treatment of a real
estate investment trust and its stockholders. This summary is qualified in its
entirety by the Internal Revenue Code, relevant rules and treasury regulations
promulgated under the Internal Revenue Code, and administrative and judicial
interpretations of these materials.
Latham & Watkins, Los Angeles, California has acted as our tax counsel in
connection with this issuance and our election to be taxed as a real estate
investment trust. In the opinion of Latham & Watkins, commencing with our
taxable year ended December 31, 1985, we have been organized and have operated
in conformity with the requirements for qualification and taxation as a real
estate investment trust under the
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Internal Revenue Code, and our proposed method of operation will enable us to
continue to meet the requirements for qualification and taxation as a real
estate investment trust under the Internal Revenue Code. This opinion was
rendered as of January 25, 2000, and Latham & Watkins undertakes no obligation
to update its opinion subsequent to this date.
The opinion of Latham & Watkins is based on various assumptions and
representations made by us as to factual matters, including representations made
by us in this prospectus and a factual certificate provided by one of our
officers. Moreover, our qualification and taxation as a real estate investment
trust depends upon our ability to meet the various qualification tests imposed
under the Internal Revenue Code and discussed below, relating to our actual
annual operating results, asset diversification, distribution levels, and
diversity of stock ownership, 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 our operation for any particular taxable year will satisfy
such requirements. See "-- Failure to Qualify" on page 58.
For so long as we qualify for taxation as a real estate investment trust,
we generally will not be required to pay federal corporate income taxes on our
net income that is currently distributed to our stockholders. This treatment
substantially eliminates the "double taxation" that generally results from
investment in a corporation. Double taxation means taxation once at the
corporate level when income is earned and once again at the stockholder level
when such income is distributed. We will be required to pay federal income
taxes, however, as follows:
- We will be required to pay tax at regular corporate rates on any
undistributed "real estate investment trust taxable income," including
undistributed net capital gains.
- We may be required to pay the "alternative minimum tax" on our items of
tax preference.
- If we have (a) net income from the sale or other disposition of
"foreclosure property," which is held primarily for sale to customers in
the ordinary course of business or (b) other nonqualifying income from
foreclosure property, we will be required to pay tax at the highest
corporate rate on this income. Foreclosure property is generally defined
as property acquired through foreclosure or after a default on a loan
secured by the property or on a lease of the property. In addition,
beginning in 2001, the term "foreclosure property" will also include any
qualified health care property acquired by a real estate investment trust
as the result of the termination of a lease of such property, even if the
termination is not due to a default.
- We will be required to pay a 100% tax on any net income from prohibited
transactions. Prohibited transactions are, in general, sales or other
taxable dispositions of property, other than foreclosure property, held
primarily for sale to customers in the ordinary course of business.
- If we fail to satisfy the 75% or 95% gross income test, as described
below, but have maintained our qualification as a real estate investment
trust, we will be required to pay a 100% tax on an amount equal to (a)
the gross income attributable to the greater of the amount by which we
fail the 75% or 95% gross income test multiplied by (b) a fraction
intended to reflect our profitability.
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- We will be required to pay a 4% excise tax on the excess of the required
distribution over the amounts actually distributed if we fail to
distribute during each calendar year at least the sum of (a) 85% of our
ordinary income for the year, (b) 95% of our real estate investment trust
capital gain net income for the year, and (c) any undistributed taxable
income from prior periods.
- If we acquire any asset from a corporation which is or has been a C
corporation in a transaction in which the basis of the asset in our hands
is determined by reference to the basis of the asset in the hands of the
C corporation, and we subsequently recognize gain on the disposition of
the asset during the ten-year period beginning on the date on which we
acquired the asset, then under treasury regulations not yet promulgated
we will be required to pay tax at the highest regular corporate tax rate
on this gain to the extent of the excess of (a) the fair market value of
the asset over (b) our adjusted basis in the asset, in each case
determined as of the date on which we acquired the asset. A C corporation
is generally defined as a corporation required to pay full
corporate-level tax. The results described in this paragraph with respect
to the recognition of such gain assume that we will make an election
under Internal Revenue Service Notice 88-19.
Requirements for Qualification as a Real Estate Investment Trust
The Internal Revenue Code defines a real estate investment trust as a
corporation, trust or association:
(1) that is managed by one or more trustees or directors;
(2) that issues transferable shares or transferable certificates to
evidence beneficial ownership;
(3) that would be taxable as a domestic corporation, but for Sections
856 through 860 of the Internal Revenue Code;
(4) that is not a financial institution or an insurance company within
the meaning of the Internal Revenue Code;
(5) that is beneficially owned by 100 or more persons;
(6) not more than 50% in value of the outstanding stock of which is
owned, actually or constructively, by five or fewer individuals, including
specified entities, during the last half of each taxable year; and
(7) that meets other tests, described below, regarding the nature of
its income and assets and the amount of its distributions.
The Internal Revenue 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 twelve months, or during a
proportionate part of a taxable year of less than twelve 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 real estate investment trust. For purposes of condition
(6), pension funds and specified other tax-exempt entities generally are treated
as individuals, except a "look-through" exception applies with respect to
pension funds.
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We believe that we have satisfied conditions (1) through (7) inclusive. In
addition, our charter provides for restrictions regarding transfer and, in
certain cases, ownership of shares. These restrictions are intended to assist us
in continuing to satisfy the share ownership requirement described in (6) above.
These stock ownership and transfer restrictions are described in "Description of
Capital Stock" on page 10. These restrictions, however, may not ensure that we
will, in all cases, be able to satisfy the share ownership requirements
described in (5) and (6) above. If we fail to satisfy these share ownership
requirements, our status as a real estate investment trust will terminate. If,
however, we comply with the rules contained in the treasury regulations that
require us to ascertain the actual ownership of our shares and we do not know,
or would not have known through the exercise of reasonable diligence, that we
failed to meet the requirement described in condition (6) above, we will be
treated as having met this requirement. See "-- Failure to Qualify" on page 58.
In addition, a corporation may not elect to become a real estate investment
trust unless its taxable year is the calendar year. We have and will continue to
have a calendar taxable year.
Ownership of a Partnership Interest
We own, directly or indirectly, interests in various partnerships and
limited liability companies. Income tax regulations provide that if we are a
partner in a partnership or member of a limited liability company, we will be
deemed to own our proportionate share of the assets of the partnership or
limited liability company, as the case may be. Also, we will be deemed to be
entitled to our proportionate share of the income of the partnership or limited
liability company. The character of the assets and gross income of the
partnership or limited liability company, as the case may be, retains the same
character in our hands for purposes of Section 856 of the Internal Revenue Code,
including satisfying the gross income tests and the asset tests. Thus, our
proportionate share of the assets and items of income of the partnerships and
limited liability companies in which we own a direct or indirect interest are
treated as our assets and items of income for purposes of applying the
requirements described in this prospectus, including the income and asset tests
described below. We have included a brief summary of the rules governing the
federal income taxation of partnerships and their partners below in "-- Tax
Aspects of the Partnerships" on page 57.
Qualified Real Estate Investment Trust Subsidiaries
We own a number of properties through wholly-owned subsidiaries that we
believe will be treated as "qualified real estate investment trust subsidiaries"
under Internal Revenue Code Section 856(i). A qualified real estate investment
trust subsidiary will not be treated as a separate corporation, and all assets,
liabilities, and items of income, deduction and credit of a qualified real
estate investment trust subsidiary shall be treated as assets, liabilities and
such items, as the case may be, of the real estate investment trust. In applying
the real estate investment trust requirements described in this prospectus, our
qualified real estate investment trust subsidiaries will be ignored, and all
assets, liabilities and items of income, deduction and credit of such
subsidiaries will be treated as our assets, liabilities and such items. A
qualified real estate investment trust subsidiary will not be required to pay
federal income tax, and our ownership of the voting stock of a qualified real
estate investment trust will not violate the restrictions against ownership of
securities
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of any one issuer which constitutes more than 10% of such issuer's voting
securities or more than 5% of the value of our total assets.
Income Tests
We must satisfy two gross income requirements annually to maintain our
qualification as a real estate investment trust.
- First, each taxable year we must derive directly or indirectly at least
75% of our gross income, excluding gross income from prohibited
transactions, from (a) investments relating to real property or mortgages
on real property, including "rents from real property" and, in some
circumstances, interest, or (b) specified types of temporary investments.
- Second, each taxable year we must derive at least 95% of our gross
income, excluding gross income from prohibited transactions, from (a) the
real property investments described above, (b) dividends, interest and
gain from the sale or disposition of stock or securities, or (c) any
combination of the foregoing.
For these purposes, the term "interest" generally does not include any
amount received or accrued, directly or indirectly, if the determination of all
or some of the amount depends in any way on the income or profits of any person.
An amount received or accrued generally will not be excluded from the term
"interest," however, solely by reason of being based on a fixed percentage or
percentages of receipts or sales.
Rents we receive will qualify as "rents from real property" in satisfying
the gross income requirements for a real estate investment trust described above
only if the following conditions are met:
- the amount of rent must not be based in any way on the income or profits
of any person. An amount received or accrued generally will not be
excluded from the term "rents from real property," however, solely by
reason of being based on a fixed percentage or percentages of receipts or
sales;
- we, or an actual or constructive owner of 10% or more of our capital
stock, do not actually or constructively own 10% or more of the interests
in a tenant whose rents payable to us are to be included in "rents from
real property;"
- no rent is attributable to personal property, other than personal
property leased in connection with a lease of real property, and for
which the rent attributable to personal property is not greater than 15%
of the total rent received under the lease, (otherwise the portion of
rent attributable to personal property will not qualify as "rents from
real property"); and
- we generally do not operate or manage the property or furnish or render
services to the tenants of the property, subject to a 1% de minimis
exception, other than through an independent contractor from whom we
derive no revenue. We may, however, directly perform 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. Examples of permitted services include the
provision of light, heat, or other utilities, trash removal and general
maintenance of common areas. Under recently enacted legislation,
described below, beginning in 2001, if we own any taxable REIT
subsidiaries, the subsidiaries
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may provide both customary and noncustomary services to our tenants
(other than the management or operation of a health care facility).
We generally do not intend to receive rent which fails to qualify as "rents
from real property." We may, however, have failed to satisfy, and may continue
to fail to satisfy, some of the conditions described above to the extent these
actions will not, based on the advice of our tax counsel, jeopardize our status
as a real estate investment trust.
If we fail to satisfy one or both of the 75% or 95% gross income tests for
any taxable year, we may nevertheless qualify as a real estate investment trust
for the year if we are entitled to relief under the Internal Revenue Code.
Generally, we may avail ourselves of the relief provisions if:
- our failure to meet these tests was due to reasonable cause and not due
to willful neglect;
- we attach a schedule of the sources of our income to our 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 we would be
entitled to the benefit of these relief provisions. For example, if we fail to
satisfy the gross income tests because nonqualifying income that we
intentionally accrue or receive exceeds the limits on nonqualifying income, the
Internal Revenue Service could conclude that our failure to satisfy the tests
was not due to reasonable cause. If these relief provisions do not apply to a
particular set of circumstances, we will not qualify as a real estate investment
trust. As discussed above in "Taxation of Health Care Property Investors,
Inc. -- General" on page 49, even if these relief provisions apply, and we
retain our status as a real estate investment trust, a tax would be imposed with
respect to our non-qualifying income. We may not always be able to maintain
compliance with the gross income tests for real estate investment trust
qualification despite our periodic monitoring of our income.
Prohibited Transaction Income
Any gain realized by us on the sale of any property held as inventory or
other property held primarily for sale to customers in the ordinary course of
business will be treated as income from a prohibited transaction that is subject
to a 100% penalty tax. Our gain includes our share of any such gain realized by
any of the partnerships or limited liability companies in which we own an
interest. This prohibited transaction income may also adversely affect our
ability to satisfy the income tests for qualification as a real estate
investment trust. Under existing law, whether property is held as inventory or
primarily for sale to customers in the ordinary course of a trade or business
depends on all the facts and circumstances surrounding the particular
transaction. We intend to hold our properties for investment with a view to
long-term appreciation, to engage in the business of acquiring, developing and
owning our properties and other properties. We intend to make occasional sales
of our properties as are consistent with our investment objectives. The Internal
Revenue Service may contend, however, that one or more of these sales is subject
to the 100% penalty tax.
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Asset Tests
At the close of each quarter of our taxable year, we also must satisfy
three tests relating to the nature and diversification of our assets:
- First, at least 75% of the value of our total assets, including assets
held by our qualified real estate investment trust subsidiaries and our
allocable share of the assets held by the partnerships and limited
liability companies in which we own an interest, must be represented by
real estate assets, cash, cash items and government securities. For
purposes of this test, real estate assets include stock or debt
instruments, that are purchased with the proceeds of a stock offering or
a public debt offering with a term of at least five years, but only for
the one-year period commencing on the date of the offering.
- Second, not more than 25% of our total assets may be represented by
securities, other than those securities includable in the 75% asset test.
- Third, of the investments included in the 25% asset class, the value of
any one issuer's securities may not exceed 5% of the value of our total
assets and we 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, we
will not lose our status as a real estate investment trust for failure to
satisfy the asset tests at the end of a later quarter solely by reason of
changes in asset values. If we fail to satisfy the asset tests because we
acquire securities or other property during a quarter, we can cure this failure
by disposing of sufficient nonqualifying assets within 30 days after the close
of that quarter. For this purpose, an increase in our interests in a partnership
or limited liability company will be treated as an acquisition of a portion of
the securities or other property owned by the partnership or limited liability
company. We believe we have maintained and intend to continue to maintain
adequate records of the value of our assets to ensure compliance with the asset
tests. In addition, we intend to take such other actions within the 30 days
after the close of any quarter as may be required to cure any noncompliance. If
we fail to cure noncompliance with the asset tests within this time period, we
would cease to qualify as a real estate investment trust.
As discussed above, a real estate investment trust cannot currently own
more than 10% of the outstanding voting securities of any one issuer. Recently,
legislation was enacted that limits a real estate investment trust's ability to
own more than 10% by vote or value of the securities of another issuer. The
legislation would allow a real estate investment trust to own any percentage of
the voting securities and value of a corporation which jointly elects with the
real estate investment trust to be a taxable REIT subsidiary, provided all of a
real estate investment trust's taxable REIT subsidiaries do not represent more
than 20% of the real estate investment trust's total assets and at least 75% of
the real estate investment trust's total assets are real estate assets or other
qualifying assets. In addition, dividend income from a taxable REIT subsidiary
will be nonqualifying income under the 75% gross income test. A taxable REIT
subsidiary generally may engage in any business, including the provision of
customary or noncustomary services to tenants of its parent real estate
investment trust. However, a taxable REIT subsidiary may not manage or operate a
health care facility. Additionally, the legislation includes a provision that
would prevent a taxable REIT subsidiary from deducting interest on debt funded
directly or indirectly by a real estate investment trust if certain tests
regarding the taxable REIT subsidiary's debt to equity ratio and interest
expense were satisfied. Also, in some cases,
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the legislation imposes a 100% tax on a real estate investment trust if its
rental, service or other agreements with its taxable REIT subsidiary are not on
arm's-length terms. This legislation will require us to monitor our investments
in corporations, and possibly restructure these investments if we own more than
10% of the value of the securities of any of these corporations. The provisions
discussed above are generally effective for taxable years beginning after
December 31, 2000, and, assuming specified requirements are met, do not apply to
investments made prior to July 12, 1999. In addition, the legislation includes a
provision that allows qualifying corporations to convert into "taxable REIT
subsidiaries" tax-free.
Annual Distribution Requirements
To maintain our qualification as a real estate investment trust, we are
required to distribute dividends, other than capital gain dividends, to our
stockholders in an amount at least equal to the sum of:
- 95% of our "real estate investment trust taxable income"; and
- 95% of our after tax net income, if any, from foreclosure property; minus
- the excess of the sum of specified items of noncash income over 5% of
"real estate investment trust taxable income" as described above. Our
"real estate investment trust taxable income" is computed without regard
to the dividends paid deduction and our net capital gain. In addition,
for purposes of this test, non-cash income means income attributable to
leveled stepped rents, original issue discount on purchase money debt, or
a like-kind exchange that is later determined to be taxable.
In addition, if we dispose of any asset we acquired from a corporation
which is or has been a C corporation in a transaction in which our basis in the
asset is determined by reference to the basis of the asset in the hands of the C
corporation within the ten-year period following our acquisition of such asset,
we would be required, pursuant to treasury regulations not yet issued, to
distribute at least 95% of the after-tax gain, if any, recognized by us on the
disposition of the asset, to the extent such gain does not exceed the excess of
(a) the fair market value of the asset on the date we acquired the asset over
(b) our adjusted basis in the asset on the date we acquired the asset.
These distributions must be paid in the taxable year to which they relate,
or in the following taxable year if they are declared before we timely file our
tax return for such year and if paid on or before the first regular dividend
payment after such declaration. Except as provided in "-- Taxation of Taxable
U.S. Stockholders" on page 65, these distributions are taxable to holders of our
stock, other than tax-exempt entities, as discussed below, in the year in which
paid. This is so even though these distributions relate to the prior year for
purposes of our 95% distribution requirement. The amount distributed must not be
preferential. To avoid this treatment, every stockholder of the class of stock
to which a distribution is made must be treated the same as every other
stockholder of that class, and no class of stock may be treated other than
according to its dividend rights as a class. To the extent that we do not
distribute all of our net capital gain or distribute at least 95%, but less than
100%, of our "real estate investment trust taxable income," as adjusted, we will
be required to pay tax on this income at regular ordinary and capital gain
corporate tax rates. We believe we have made and intend to continue to make
timely distributions sufficient to satisfy these annual distribution
requirements.
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We expect that our "real estate investment trust taxable income" will be
less than our cash flow due to the allowance for depreciation and other non-cash
charges in computing "real estate investment trust taxable income." Accordingly,
we anticipate that we will generally have sufficient cash or liquid assets to
enable us to satisfy the distribution requirements described above. However, it
is possible that we may not have sufficient cash or other liquid assets to meet
these distribution requirements due to timing differences between the actual
receipt of income and actual payment of deductible expenses, and the inclusion
of income and deduction of expenses in arriving at our taxable income. If these
timing differences occur, in order to meet the distribution requirements, we may
need to arrange for short-term, or possibly long-term, borrowings or need to pay
dividends in the form of taxable stock dividends. In addition, pursuant to
recently enacted legislation, the 95% distribution requirement discussed above
will be reduced to 90%, effective for taxable years beginning after December 31,
2000.
We may be able to rectify an inadvertent failure to meet the distribution
requirement for a year by paying "deficiency dividends" to stockholders in a
later year, which may be included in our deduction for dividends paid for the
earlier year. Thus, we may be able to avoid being subject to tax on amounts
distributed as deficiency dividends. We will be required, however, to pay
interest to the Internal Revenue Service based upon the amount of any deduction
claimed for deficiency dividends.
Furthermore, we would be required to pay a 4% excise tax on the excess of
the required distribution over the amount, if any, by which our actual annual
distributions during a calendar year are less than the sum of 85% of our
ordinary income for the year, 95% of our capital gain income for the year and
any undistributed taxable income from prior periods. Any 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.
Distributions with declaration and record dates falling in the last three
months of the calendar year, which are made by the end of January immediately
following such year, will be treated as made on December 31 of the prior year.
TAX ASPECTS OF THE PARTNERSHIPS
The ownership of an interest in a partnership or limited liability company
treated as a partnership for federal income tax purposes may involve special tax
risks, including the possible challenge by the Internal Revenue Service of:
- allocations of income and expense items, which could affect the
computation of our taxable income; and
- the status of the partnership or limited liability company as a
partnership, as opposed to an association taxable as a corporation, for
federal income tax purposes.
If any of our partnerships or limited liability companies were treated as
an association taxable as a corporation for federal income tax purposes, the
partnership or limited liability company would be treated as a taxable entity.
In addition, in such a situation, the following would occur:
- If we owned more than 10% of the outstanding voting securities (or after
2000, more than 10% in value of the outstanding securities) of such
partnership or limited liability company, or the value of such securities
exceeded 5% of the value of our
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assets, we would fail to satisfy the asset tests described above and
would therefore fail to qualify as a real estate investment trust.
- Distributions from any such partnership or limited liability company to
us 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 us to satisfy this test.
- The interest in the partnership or limited liability company held by us
would not qualify as a "real estate asset," which could make it more
difficult for us to meet the 75% asset test described above.
- We would not be able to deduct our share of any losses generated by the
partnership or limited liability company in computing our taxable income.
See "-- Failure to Qualify" below for a discussion of the effect of our
failure to meet such tests for a taxable year. We believe that each of the
partnerships and limited liability companies in which we own an interest will be
treated as a partnership, rather than an association taxable as a corporation.
No assurance can be given that the Internal Revenue Service will not
successfully challenge the Federal income tax status of the partnerships and
limited liability companies as partnerships.
FAILURE TO QUALIFY
If we fail to qualify for taxation as a real estate investment trust in any
taxable year, and the relief provisions of the Internal Revenue Code do not
apply, we will be required to pay tax, including any alternative minimum tax and
possibly increased state and local taxes, on our taxable income at regular
corporate rates. Distributions to stockholders in any year in which we fail to
qualify as a real estate investment trust will not be deductible by us and we
will not be required to distribute any amounts to our stockholders. As a result,
we anticipate that our failure to qualify as a real estate investment trust
would reduce the cash available for distribution by us to our stockholders. In
addition, if we fail to qualify as a real estate investment trust, stockholders
will be required to pay tax on all distributions to them at ordinary income
rates to the extent of our current and accumulated earnings and profits. In this
event, corporate distributees may be eligible for the dividends received
deduction. Unless entitled to relief under specific statutory provisions, we
will also be disqualified from taxation as a real estate investment trust for
the four taxable years following the year during which we lost our
qualification. It is not possible to state whether in all circumstances we would
be entitled to this statutory relief.
TAX LIABILITIES AND ATTRIBUTES INHERITED FROM AHP
On November 4, 1999, we acquired American Health Properties, Inc., or AHP,
in a merger. AHP had also made an election to be taxed as a real estate
investment trust. If AHP failed to qualify as a real estate investment trust for
any of its taxable years, it would be subject to federal income tax (including
any applicable alternative minimum tax) on its taxable income at regular
corporate rates. Unless statutory relief provisions apply, AHP would be
disqualified from treatment as a real estate investment trust for the four
taxable years following the year during which it lost qualification. We, as
successor-in-interest to AHP, would be required to pay this tax. The built-in
gain rules described under "-- Taxation of Health Care Property Investors,
Inc. -- General" above would apply with respect to any assets acquired by us
from AHP in connection with the merger if the
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merger qualified as a tax-free reorganization under the Internal Revenue Code
and if AHP failed to qualify as a real estate investment trust at any time
during its existence. In that case, if we were not to make an election under IRS
Notice 88-19, AHP would recognize taxable gain as a result of the merger under
the built-in gain rules, notwithstanding that the merger otherwise qualified as
a tax-free reorganization under Internal Revenue Code. The liability for any tax
due with respect to the gain described above would have been assumed by us in
the merger. We intend, however, to make a protective election under IRS Notice
88-19 with respect to the merger to prevent the recognition of this gain. Even
with this election, under these circumstances, if we disposed of any of the
assets acquired from AHP during a specified ten-year period, all or a portion of
the gain on this disposition would be subject to tax at the highest corporate
tax rate under the built-in gain rules. In addition, in connection with the
merger, we will succeed to various tax attributes of AHP if the merger were
treated as a tax-free reorganization under the Internal Revenue Code, including
any undistributed C corporation earnings and profits of AHP. If AHP qualified as
a real estate investment trust for all years prior to the merger and the merger
were treated as a tax-free reorganization under the Internal Revenue Code, then
AHP would not have any undistributed C corporation earnings and profits. If,
however, AHP failed to qualify as a real estate investment trust for any year,
then it is possible that we acquired undistributed C corporation earnings and
profits from AHP. If we did not distribute these C corporation earnings and
profits prior to the end of 1999, we would fail to qualify as a real estate
investment trust. Furthermore, after the merger, the asset and income tests
described in "-- Requirements for Qualification as a Real Estate Investment
Trust -- Income Tests" and "-- Asset Tests" will apply to all of our assets,
including the assets acquired from AHP, and to all of our income, including the
income derived from the assets we acquired from AHP. As a result, the nature of
the assets that we acquire from AHP and the income derived from those assets may
have an effect on our tax status as a real estate investment trust.
Qualification as a real estate investment trust required AHP to satisfy
numerous requirements, some on an annual and others on a quarterly basis,
established under highly technical and complex Internal Revenue Code provisions.
These include requirements relating to AHP's:
- actual annual operating results;
- asset diversification;
- distribution levels, including the effect, if any, of the
characterization of AHP's psychiatric group preferred stock on
distribution levels; and
- diversity of stock ownership.
There are only limited judicial and administrative interpretations of these
requirements and qualification as a real estate investment trust involves the
determination of various factual matters and circumstances which were not
entirely within AHP's control.
AHP's real estate investment trust counsel rendered an opinion to the
effect that, based on the facts, representations and assumptions stated therein,
commencing with its taxable year ended December 31, 1987, AHP was organized in
conformity with the requirements for qualification and taxation as a real estate
investment trust under the Internal Revenue Code, and its method of operation
enabled it to meet, through the effective time of the merger, the requirements
for qualification and taxation as a real estate investment trust under the
Internal Revenue Code. This opinion assumed, among other
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things, the accuracy of an opinion rendered by AHP's corporate counsel with
respect to the characterization of AHP's psychiatric group preferred stock and
dividends thereon, which corporate counsel's opinion was based on the facts,
representations and assumptions stated therein.
Because many of the properties formerly owned by AHP, and now owned by us,
have fair market values in excess of their tax bases, assuming the merger is
treated as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code, AHP's tax basis in the assets transferred in the merger carried
over to us. This lower tax basis will cause us to have lower depreciation
deductions and will result in higher gain on sale with respect to these
properties than would be the case if these properties had been acquired by us in
a taxable transaction.
TAXATION OF TAXABLE U.S. STOCKHOLDERS
When we use the term "U.S. stockholder," we mean a holder of shares of our
capital stock who is, for United States federal income tax purposes:
- a citizen or resident of the United States;
- a corporation, partnership, or other entity created or organized in or
under the laws of the United States or of any state or in the District of
Columbia, unless, in the case of a partnership, treasury regulations
provide otherwise;
- an estate which is required to pay United States federal income tax
regardless of the source of its income; or
- a trust whose administration is under the primary supervision of a United
States court and which has one or more United States persons who have the
authority to control all substantial decisions of the trust.
Notwithstanding the preceding sentence, to the extent provided in the treasury
regulations, some trusts in existence on August 20, 1996, and treated as United
States persons prior to this date that elect to continue to be treated as United
States persons, shall also be considered U.S. stockholders.
Distributions Generally
Distributions out of our current or accumulated earnings and profits, other
than capital gain dividends discussed below, will constitute dividends taxable
to our taxable U.S. stockholders as ordinary income. As long as we qualify as a
real estate investment trust, these distributions will not be eligible for the
dividends-received deduction in the case of U.S. stockholders that are
corporations . For purposes of determining whether distributions to holders of
common stock are out of current or accumulated earnings and profits, our
earnings and profits will be allocated first to the outstanding series A
preferred stock, series B preferred stock and series C preferred stock and then
to the common stock.
To the extent that we make distributions, other than capital gain dividends
discussed below, in excess of our current and accumulated earnings and profits,
these distributions will be treated first as a tax-free return of capital to
each U.S. stockholder. This treatment will reduce the adjusted tax basis which
each U.S. stockholder has in his shares of stock by the amount of the
distribution, but not below zero. Distributions in excess of a U.S.
stockholder's adjusted tax basis in his shares will be taxable as capital gain,
provided
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that the shares have been held as capital assets. Such gain will be taxable as
long-term capital gain if the shares have been held for more than one year.
Dividends we declare in October, November, or December of any year and payable
to a stockholder of record on a specified date in any of these months will be
treated as both paid by us and received by the stockholder on December 31 of
that year, provided we actually pay the dividend on or before January 31 of the
following year. Stockholders may not include in their own income tax returns any
of our net operating losses or capital losses.
Capital Gain Distributions
Distributions that we properly designate as capital gain dividends will be
taxable to our taxable U.S. stockholders as gain, to the extent that such gain
does not exceed our actual net capital gain for the taxable year, from the sale
or disposition of a capital asset. Depending on the characteristics of the
assets which produced these gains, and on specified designations, if any, which
we may make, these gains may be taxable to non-corporate U.S. stockholders at a
20% or 25% rate. U.S. stockholders that are corporations may, however, be
required to treat up to 20% of some capital gain dividends as ordinary income.
If we properly designate any portion of a dividend as a capital gain dividend,
your share of such capital gain dividend would be an amount which bears the same
ratio to the total amount of dividends, as determined for federal income tax
purposes, paid to you for the year as the aggregate amount designated as a
capital gain dividend bears to the aggregate amount of all dividends, as
determined for federal income tax purposes, paid on all classes of shares of our
capital stock for the year.
Passive Activity Losses and Investment Interest Limitations
Distributions we make and gain arising from the sale or exchange by a U.S.
stockholder of our shares will not be treated as passive activity income. As a
result, U.S. stockholders generally will not be able to apply any "passive
losses" against this income or gain. Distributions we make, to the extent they
do not constitute a return of capital, generally will be treated as investment
income for purposes of computing the investment interest limitation. Gain
arising from the sale or other disposition of our shares, however, may not be
treated as investment income depending upon your particular situation.
Retention of Net Long-Term Capital Gains
We may elect to retain, rather than distribute as a capital gain dividend,
our net long-term capital gains. If we make this election, we would pay tax on
our retained net long-term capital gains. In addition, to the extent we
designate, a U.S. stockholder generally would:
- include its proportionate share of our undistributed long-term capital
gains in computing its long-term capital gains in its return for its
taxable year in which the last day of our taxable year falls;
- be deemed to have paid the capital gains tax imposed on us on the
designated amounts included in the U.S. stockholder's long-term capital
gains;
- receive a credit or refund for the amount of tax deemed paid by it;
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- increase the adjusted basis of its common stock by the difference between
the amount of includable gains and the tax deemed to have been paid by
it; and
- in the case of a U.S. stockholder that is a corporation, appropriately
adjust its earnings and profits for the retained capital gains as
required by treasury regulations to be prescribed by the Internal Revenue
Service.
DISPOSITIONS OF COMMON STOCK
If you are a U.S. stockholder and you sell or dispose of your shares of
common stock, you will recognize gain or loss for federal income tax purposes in
an amount equal to the difference between the amount of cash and the fair market
value of any property you receive on the sale or other disposition and your
adjusted basis in the shares for tax purposes. This gain or loss will be capital
if you have held the common stock as a capital asset. This gain or loss, except
as provided below, will be long-term capital gain or loss if you have held the
common stock for more than one year. In general, if you are a U.S. stockholder
and you recognize loss upon the sale or other disposition of common stock that
you have held for six months or less, the loss you recognize will be treated as
a long-term capital loss to the extent you received distributions from us which
were required to be treated as long-term capital gains.
BACKUP WITHHOLDING
We report to our U.S. stockholders and the Internal Revenue Service the
amount of dividends paid during each calendar year and the amount of any tax
withheld. Under the backup withholding rules, a stockholder may be subject to
backup withholding at the rate of 31% with respect to dividends paid unless the
holder is a corporation or is otherwise exempt and, when required, demonstrates
this fact or provides a taxpayer identification number, certifies as to no loss
of exemption from backup withholding, and otherwise complies with the backup
withholding rules. A U.S. stockholder that does not provide us with his correct
taxpayer identification number may also be subject to penalties imposed by the
Internal Revenue Service. Backup withholding is not an additional tax. Any
amount paid as backup withholding will be creditable against the stockholder's
income tax liability. In addition, we may be required to withhold a portion of
capital gain distributions to any stockholders who fail to certify their
non-foreign status. See "-- Taxation of Non-U.S. Stockholders" on page 63.
TAXATION OF TAX-EXEMPT STOCKHOLDERS
The Internal Revenue Service has ruled that amounts distributed as
dividends by a qualified real estate investment trust do not constitute
unrelated business taxable income when received by a tax-exempt entity. Based on
that ruling, except as described below, dividend income from us and gain arising
upon your sale of shares generally will not be unrelated business taxable income
to a tax-exempt stockholder. This income or gain will be unrelated business
taxable income, however, if the tax-exempt stockholder holds its shares as "debt
financed property" within the meaning of the Internal Revenue Code or if the
shares are used in a trade or business of the tax-exempt stockholder. Generally,
debt financed property is property the acquisition or holding of which was
financed through a borrowing by the tax-exempt stockholder.
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<PAGE> 66
For tax-exempt stockholders which are social clubs, voluntary employee
benefit associations, supplemental unemployment benefit trusts, and qualified
group legal services plans exempt from federal income taxation under Sections
501(c)(7), (c)(9), (c)(17) and (c)(20) of the Internal Revenue Code,
respectively, income from an investment in our shares will constitute unrelated
business taxable income unless the organization is able to properly claim a
deduction for amounts set aside or placed in reserve for specific purposes so as
to offset the income generated by its investment in our shares. These
prospective investors should consult their tax advisors concerning these "set
aside" and reserve requirements.
Notwithstanding the above, however, a portion of the dividends paid by a
"pension held REIT" will be treated as unrelated business taxable income as to
some trusts that hold more than 10%, by value, of the interests of a real estate
investment trust. A real estate investment trust will not be a "pension held
REIT" if it is able to satisfy the "not closely held" requirement without
relying on the "look-through" exception with respect to certain trusts. As a
result of limitations on the transfer and ownership of stock contained in our
charter, we do not expect to be classified as a "pension-held REIT," and as a
result, the tax treatment described above should be inapplicable to our
stockholders.
TAXATION OF NON-U.S. STOCKHOLDERS
The preceding discussion does not address the rules governing United States
federal income taxation of the ownership and disposition of common stock by
persons that are non-U.S. stockholders. When we use the term "non-U.S.
stockholder" we mean stockholders who are not U.S. stockholders. In general,
non-U.S. stockholders may be subject to special tax withholding requirements on
distributions from us and with respect to their sale or other disposition of our
common stock, except to the extent reduced or eliminated by an income tax treaty
between the United States and the non-U.S. stockholder's country. A non-U.S.
stockholder who is a stockholder of record and is eligible for reduction or
elimination of withholding must file an appropriate form with us in order to
claim such treatment. Non-U.S. stockholders should consult their own tax
advisors concerning the federal income tax consequences to them of an
acquisition of shares of our common stock, including the federal income tax
treatment of dispositions of interests in and the receipt of distributions from
us.
OTHER TAX CONSEQUENCES
We may be required to pay state or local taxes in various state or local
jurisdictions, including those in which we transact business and our
stockholders may be required to pay state or local taxes in various state or
local jurisdictions, including those in which they reside. Our state and local
tax treatment may not conform to the federal income tax consequences summarized
above. In addition, your state and local tax treatment may not conform to the
federal income tax consequences summarized above. Consequently, you should
consult your tax advisor regarding the effect of state and local tax laws on a
disposition of the units and an investment in our shares.
SELLING HOLDERS
"Selling holders" are those persons who may receive shares of our common
stock registered pursuant to this registration statement upon exchange of
non-managing member
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<PAGE> 67
units. The following table provides the names of the selling holders, the number
of non-managing member units owned by the selling holders and the aggregate
number of shares of common stock that will be owned by the selling holders after
the exchange. The number of shares on the following table represents the number
of shares of common stock into which the non-managing member units held by the
person are currently exchangeable and assumes that no change in the adjustment
factor, which determines the number of shares of our common stock issuable upon
the exchange of an HCPI/Utah, LLC unit, will have occurred. A change in the
adjustment factor will occur if we declare a dividend on our common stock
payable in common stock, split or subdivide our common stock or effect a reverse
stock split or combine our common stock into a smaller number of shares.
Since the selling holders may sell all, some or none of their shares, we
cannot estimate the aggregate number of shares that the selling holders will
offer pursuant to this prospectus or that each selling holder will own upon
completion of the offering to which this prospectus relates. The selling
holders, prior to their exchange of non-managing member units, do not own any of
our common stock.
The selling holders named below may from time to time offer the shares of
common stock offered by this prospectus:
<TABLE>
<CAPTION>
NON-MANAGING COMMON STOCK OWNED FOLLOWING
MEMBER UNITS THE EXCHANGE(1)(2)
OWNED PRIOR TO THE -----------------------------
NAME EXCHANGE(1) SHARES PERCENT
- ----------------------------------- ------------------ ------------- -------------
<S> <C> <C> <C>
Boyer Castle Dale Medical Clinic,
L.L.C............................ 17,267 17,267 *
Boyer Centerville Clinic Company,
L.C. .............................. 16,772 16,722 *
Boyer Elko, L.C. .................. 26,012 26,012 *
Boyer Desert Springs, L.C. ........ 114,153 114,153 *
Boyer Grantsville Medical, L.C. ... 5,338 5,338 *
Boyer-Ogden Medical Associates,
LTD. ............................ 786 786 *
Boyer Ogden Medical Associates
No. 2, LTD. ..................... 36,595 36,595 *
Boyer Salt Lake Industrial Clinic
Associates, LTD. ................ 12,350 12,350 *
Boyer-St. Mark's Medical
Associates, LTD. ................ 104,778 104,778 *
Boyer McKay-Dee Associates,
LTD. ............................ 71,295 71,295 *
Boyer St. Mark's Medical Associates
#2, LTD. ........................ 47,530 47,530 *
Boyer Iomega, L.C. ................ 74,299 74,299 *
Boyer Springville, L.C. ........... 45,678 45,678 *
Boyer Primary Care Clinic
Associates, LTD. #2.............. 20,394 20,394 *
------- ------- ----
Total.................... 593,247 593,247 1.15%
======= ======= ====
</TABLE>
- -------------------------
* Represents less than 1% of the total outstanding shares of our common stock.
(1) Based on information available to us as of January 21, 2000.
(2) Assumes the selling holders exchange all of their non-managing member units
for shares of common stock. Also assumes that no transactions with respect
to common stock or non-managing member units occur other than the exchange.
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<PAGE> 68
The operating agreement provides that the selling holders may transfer
their non-managing member units. Such transferees of the non-managing members'
units may also be selling holders under this prospectus. We will file one or
more supplemental prospectuses pursuant to Rule 424 under the Securities Act to
describe the required information regarding any additional selling holder. We
will also file one or more supplemental prospectuses pursuant to Rule 424 under
the Securities Act to describe any material arrangements for the distribution of
the shares when such arrangements are entered into by the selling holders and
any broker-dealers that participate in the distribution of shares of our common
stock.
PLAN OF DISTRIBUTION
This prospectus relates to:
(1) the possible issuance by us of the shares of our common stock if,
and to the extent that, holders of non-managing member units tender such
non-managing member units for exchange; and
(2) the offer and sale from time to time of any shares that may be
issued to holders of such non-managing member units.
We have registered the shares for sale to provide the holders of
non-managing member units with freely tradable securities, but registration of
such shares does not necessarily mean that any of such shares will be offered or
sold by the holders of non-managing member units.
We will not receive any proceeds from the issuance of the shares of common
stock to the selling holders or from the sale of the shares by the selling
holders, but we have agreed to pay the following expenses, estimated to be
$63,038, of the registration of the shares:
- all registration and filing fees;
- fees and expenses for complying with securities or blue sky laws,
including reasonable fees and disbursements of counsel in connection with
blue sky qualifications; and
- the fees and expenses incurred in connection with listing our common
stock on each securities exchange on which our similar securities issued
are then listed.
We have no obligation to pay any underwriting fees, discounts or
commissions attributable to the sale of our common stock. We also have no
obligation to pay any out-of-pocket expenses of the selling holders, or the
agents who manage their accounts, or any transfer taxes relating to the
registration or sale of the common stock.
Shares of our common stock may be sold from time to time to purchasers
directly by the selling holders. Alternatively, the selling holders may from
time to time offer the shares through dealers or agents, who may receive
compensation in the form of commissions from the selling holders and the
purchasers of shares for whom they may act as agent. The sale of the shares by
the selling holders may be effected from time to time in one or more negotiated
transactions at negotiated prices or in transactions on any exchange or
automated quotation system on which the securities may be listed or quoted. The
selling holders and any dealers or agents that participate in the distribution
of shares of our common stock may be deemed to be underwriters within the
meaning of the
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<PAGE> 69
Securities Act and any profit on the sale of shares of our common stock by them
and any commissions received by any such dealers or agents might be deemed to be
underwriting commissions under the Securities Act.
In connection with distribution of the shares of common stock covered by
this prospectus:
- the selling holders may enter into hedging transactions with
broker-dealers,
- the broker-dealers may engage in short sales of the common stock in the
course of hedging the position they assume with the selling holders,
- the selling holders may sell the common stock short and deliver the
common stock to close out these short positions,
- the selling holders may enter into option or other transactions with
broker-dealers that involve the delivery of the shares to the
broker-dealers, who may then resell or otherwise transfer the shares,
- the selling holders may also loan or pledge the shares to a broker-dealer
and the broker-dealer may sell the shares so loaned or upon a default may
sell or otherwise transfer the pledged shares.
Persons participating in the distribution of the shares of our common stock
offered by this prospectus may engage in transactions that stabilize the price
of our common stock. The anti-manipulation rules of Regulation M under the
Exchange Act may apply to sales of common stock in the market and to the
activities of the selling holders.
In order to comply with the securities laws of various states, the shares
of our common stock will not be sold in a particular state unless the shares
have been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
LEGAL MATTERS
Ballard, Spahr, Andrews & Ingersoll, LLP, Baltimore, Maryland, will issue
an opinion to us regarding matters of Maryland law. Latham & Watkins will issue
an opinion to us regarding tax matters described under "Material Federal Income
Tax Consequences."
EXPERTS
The consolidated financial statements of Health Care Property Investors,
Inc. and American Health Properties, Inc. as of December 31, 1998, 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 included herein in
reliance upon the authority of said firm as experts in accounting and auditing.
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<PAGE> 70
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
593,247 SHARES
HEALTH CARE PROPERTY INVESTORS, INC.
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR IN
DOCUMENTS THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE
YOU WITH INFORMATION THAT IS DIFFERENT.
THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED. THIS PROSPECTUS
IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES TO ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS CORRECT ON ANY DATE AFTER THE DATE ON THE PROSPECTUS, EVEN THOUGH
THIS PROSPECTUS IS DELIVERED OR SHARES ARE SOLD PURSUANT TO THIS PROSPECTUS ON A
LATER DATE.
JANUARY 26, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 71
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14.
The estimated expenses, in connection with this offering are estimated as
follows:
<TABLE>
<S> <C>
SEC Registration Fee........................................ 4,038.00
Blue Sky fees and expense................................... 5,000.00
Printing and shipping expenses.............................. 10,000.00
Legal fees and expenses..................................... 35,000.00
Accounting fees and expenses................................ 2,000.00
Transfer agent or trustee fees.............................. 1,000.00
Listing Fees................................................ 1,000.00
Miscellaneous............................................... 5,000.00
---------
Total..................................................... 63,038.00
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our charter (the "Charter") limits the liability of HCPI's directors and
officers to HCPI and its stockholders to the fullest extent permitted by the
laws of the State of Maryland. Maryland General Corporation Law presently
permits the liability of directors and officers to a corporation or its
shareholders for money damages to be limited, except (1) to the extent that it
is proved that the director or officer actually received an improper benefit or
profit or (2) 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 do
not limit the ability of us or our stockholders to obtain other relief, such as
injunction or recision.
Article X of our Second Amended and Restated Bylaws (the "Bylaws") provides
that HCPI 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 HCPI, and whether civil,
criminal, administrative, investigative or otherwise, by reason of the fact that
such person is or was a director or officer of HCPI, or, as a director or
officer of HCPI, is or was serving at the request of us 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 Bylaws further provides that HCPI may, with the approval
of the Board of Directors, provide such indemnification and advancement of
expenses as described in the above paragraph to agents and employees of HCPI.
Section 2-418 of the Maryland 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 (1) 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 (2) such person actually received an improper personal
benefit in money, property or services; or (3) in the case of any criminal
proceeding, such person had reasonable cause to believe that the act or omission
was
II-1
<PAGE> 72
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 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.
<TABLE>
<C> <S>
2.1 Agreement and Plan of Merger, dated as of August 4, 1999,
between Health Care Property Investors, Inc. and American
Health Properties, Inc. (incorporated herein by reference to
exhibit 2.1 to Health Care Property Investors, Inc.'s
current report on form 8-K (file no. 001-08895) dated August
4, 1999).
3.1 Articles of restatement of Health Care Property Investors,
Inc. (incorporated herein by reference to exhibit 3.1 to our
annual report on form 10-K for the year ending December 31,
1994).
3.2 Second amended and restated bylaws of Health Care Property
Investors, Inc. (incorporated herein by reference to Exhibit
3.2 of our quarterly report on form 10-Q (File No.
001-08895) for the period ended March 31, 1999).
4.1 Rights agreement, dated as of July 5, 1990, between Health
Care Property Investors, Inc. and Manufacturers Hanover
Trust Company of California, as rights agent (incorporated
herein by reference to exhibit 1 to our registration
statement on form 8-A (File No. 001-08895), filed with the
Commission on July 17, 1990).
4.2 Articles supplementary establishing the terms of the 7 7/8%
Series A Cumulative Redeemable Preferred Stock (incorporated
herein by reference from HCPI's form 8-A (File No.
001-08895) filed with the SEC on September 25, 1997).
4.3 Articles supplementary establishing and fixing the rights
and preferences of the 8.7% Series B Cumulative Preferred
Stock (incorporated herein by reference to Exhibit 3.3 of
HCPI's form 8-A (File No. 001-08895), dated September 2,
1998).
4.4 Articles supplementary establishing and fixing the rights
and preferences of the 8.60% Series C Cumulative Redeemable
Preferred Stock (incorporated herein by reference to exhibit
2.1 to our current report on form 8-K (file no. 001-08895),
dated August 4, 1999).
4.5 Form of Deposit Agreement (including form of Depositary
Receipt with respect to the Depositary Shares, each
representing one-one hundredth of a share of Health Care
Property Investors, Inc. 8.60% Cumulative Redeemable
Preferred Stock, Series C) dated as of November , 1999 by
and among Health Care Property Investors, Inc., ChaseMellon
Shareholder Services, L.L.C. and the holders from time to
time of the Depositary Shares described therein
(incorporated herein by reference to exhibit 4 to our form
8-A (file no. 001-08895) filed with the Commission on
November 4, 1999).
</TABLE>
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<PAGE> 73
<TABLE>
<C> <S>
4.6 First Amendment to Rights Agreement dated as of January 28,
1999 between Health Care Property Investors, Inc. and The
Bank of New York (incorporated herein by reference to
Exhibit 4.7 to Health Care Property Investors, Inc.'s annual
report on form 10-K (file no. 001-08895) for the year ended
December 31, 1998).
4.7 Registration Rights Agreement dated January 20, 1999 between
Health Care Property Investors, Inc. and Boyer Castle Dale
Medical Clinic, L.L.C. (incorporated herein by reference to
Exhibit 4.9 to Health Care Property Investors, Inc.'s annual
report on form 10-K (file no. 001-08895) for the year ended
December 31, 1998).*
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP as to the
validity of the common stock being registered.
8.1 Opinion of Latham & Watkins regarding tax matters.
10.1 Amended and Restated Limited Liability Company Agreement of
HCPI/Utah, LLC, a Delaware limited liability company dated
January 20, 1999 (incorporated herein by reference to
Exhibit 10.16 to Health Care Property Investors, Inc.'s
Annual Report on Form 10-K for the year ended December 31,
1998).
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included
in exhibit 5.1).
23.4 Consent of Latham & Watkins (included in exhibit 8.1).
24.1 Power of Attorney (contained on page II-5).
</TABLE>
- -------------------------
* This exhibit is identical in all material respects to 13 other documents
except for the parties thereto. The parties to these other documents, other
than Health Care Property Investors, Inc., were Boyer Centerville Clinic
Company, L.C., Boyer Elko, L.C., Boyer Desert Springs, L.C., Boyer Grantsville
Medical, L.C., Boyer-Ogden Medical Associates, LTD., Boyer Ogden Medical
Associates No. 2, LTD., Boyer Salt Lake Industrial Clinic Associates, LTD.,
Boyer-St. Mark's Medical Associates, LTD., Boyer McKay-Dee Associates, LTD.,
Boyer St. Mark's Medical Associates #2, LTD., Boyer Iomega, L.C., Boyer
Springville, L.C. and Boyer Primary Care Clinic Associates, LTD. #2.
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:
(A) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act"):
(B) 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 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 "SEC") pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent no more
than a 20 percent change in the maximum aggregate offering price set for
the in the "Calculation of Registration Fee" table in the effective
registration statement.
II-3
<PAGE> 74
(C) 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)(A) and (a)(1)(B) 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 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.
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<PAGE> 75
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Newport
Beach, State of California, on the 27th day of January, 2000.
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 January 27, 2000
- ----------------------------- Executive Officer and
Kenneth B. Roath Director (Principal Executive
Officer)
/s/ JAMES G. REYNOLDS Chief Financial Officer January 27, 2000
- ----------------------------- (Principal Financial Officer)
James G. Reynolds
/s/ DEVASIS GHOSE Senior Vice President and January 27, 2000
- ----------------------------- Treasurer (Principal
Devasis Ghose Accounting Officer)
</TABLE>
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<PAGE> 76
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ PAUL V. COLONY Director January 27, 2000
- -----------------------------
Paul V. Colony
/s/ ROBERT R. FANNING, JR. Director January 27, 2000
- -----------------------------
Robert R. Fanning, Jr.
/s/ MICHAEL D. MCKEE Director January 27, 2000
- -----------------------------
Michael D. McKee
/s/ ORVILLE E. MELBY Director January 27, 2000
- -----------------------------
Orville E. Melby
/s/ HAROLD M. MESSMER, JR. Director January 27, 2000
- -----------------------------
Harold M. Messmer, Jr.
/s/ PETER L. RHEIN Director January 27, 2000
- -----------------------------
Peter L. Rhein
</TABLE>
II-6
<PAGE> 77
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of August 4, 1999,
between Health Care Property Investors, Inc. and American
Health Properties, Inc. (incorporated herein by reference to
exhibit 2.1 to Health Care Property Investors, Inc.'s
current report on form 8-K (file no. 001-08895) dated August
4, 1999).
3.1 Articles of restatement of Health Care Property Investors,
Inc. (incorporated herein by reference to exhibit 3.1 to our
annual report on form 10-K for the year ending December 31,
1994).
3.2 Second amended and restated bylaws of Health Care Property
Investors, Inc. (incorporated herein by reference to Exhibit
3.2 of our quarterly report on form 10-Q (File No.
001-08895) for the period ended March 31, 1999).
4.1 Rights agreement, dated as of July 5, 1990, between Health
Care Property Investors, Inc. and Manufacturers Hanover
Trust Company of California, as rights agent (incorporated
herein by reference to exhibit 1 to our registration
statement on form 8-A (File No. 001-08895), filed with the
Commission on July 17, 1990).
4.2 Articles supplementary establishing the terms of the 7 7/8%
Series A Cumulative Redeemable Preferred Stock (incorporated
herein by reference from HCPI's form 8-A (File No.
001-08895) filed with the SEC on September 25, 1997).
4.3 Articles supplementary establishing and fixing the rights
and preferences of the 8.7% Series B Cumulative Preferred
Stock (incorporated herein by reference to Exhibit 3.3 of
HCPI's form 8-A (File No. 001-08895), dated September 2,
1998).
4.4 Articles supplementary establishing and fixing the rights
and preferences of the 8.60% Series C Cumulative Redeemable
Preferred Stock (incorporated herein by reference to exhibit
2.1 to our current report on form 8-K (file no. 001-08895),
dated August 4, 1999).
4.5 Form of Deposit Agreement (including form of Depositary
Receipt with respect to the Depositary Shares, each
representing one-one hundredth of a share of Health Care
Property Investors, Inc. 8.60% Cumulative Redeemable
Preferred Stock, Series C) dated as of November , 1999 by
and among Health Care Property Investors, Inc., ChaseMellon
Shareholder Services, L.L.C. and the holders from time to
time of the Depositary Shares described therein
(incorporated herein by reference to exhibit 4 to our form
8-A (file no. 001-08895) filed with the Commission on
November 4, 1999).
4.6 First Amendment to Rights Agreement dated as of January 28,
1999 between Health Care Property Investors, Inc. and The
Bank of New York (incorporated herein by reference to
Exhibit 4.7 to Health Care Property Investors, Inc.'s annual
report on form 10-K (file no. 001-08895) for the year ended
December 31, 1998).
4.7 Registration Rights Agreement dated January 20, 1999 between
Health Care Property Investors, Inc. and Boyer Castle Dale
Medical Clinic, L.L.C. (incorporated herein by reference to
Exhibit 4.9 to Health Care Property Investors, Inc.'s annual
report on form 10-K (file no. 001-08895) for the year ended
December 31, 1998).*
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP as to the
validity of the common stock being registered.
</TABLE>
<PAGE> 78
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
8.1 Opinion of Latham & Watkins regarding tax matters.
10.1 Amended and Restated Limited Liability Company Agreement of
HCPI/Utah, LLC, a Delaware limited liability company dated
January 20, 1999 (incorporated herein by reference to
Exhibit 10.16 to Health Care Property Investors, Inc.'s
Annual Report on Form 10-K for the year ended December 31,
1998).
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included
in exhibit 5.1).
23.4 Consent of Latham & Watkins (included in exhibit 8.1).
24.1 Power of Attorney (contained on page II-5).
</TABLE>
- -------------------------
* This exhibit is identical in all material respects to 13 other documents
except for the parties thereto. The parties to these other documents, other
than Health Care Property Investors, Inc., were Boyer Centerville Clinic
Company, L.C., Boyer Elko, L.C., Boyer Desert Springs, L.C., Boyer Grantsville
Medical, L.C., Boyer-Ogden Medical Associates, LTD., Boyer Ogden Medical
Associates No. 2, LTD., Boyer Salt Lake Industrial Clinic Associates, LTD.,
Boyer-St. Mark's Medical Associates, LTD., Boyer McKay-Dee Associates, LTD.,
Boyer St. Mark's Medical Associates #2, LTD., Boyer Iomega, L.C., Boyer
Springville, L.C. and Boyer Primary Care Clinic Associates, LTD. #2.
<PAGE> 1
EXHIBIT 5.1
January 27, 2000
Health Care Property Investors, Inc.
4675 MacArthur Court
Suite 900
Newport Beach, California 92660
Re: Health Care Property Investors, Inc., a Maryland corporation (the
"Company") - Registration Statement on Form S-3, pertaining to
Five Hundred Ninety Three Thousand Two Hundred Forty-Seven
(593,247) shares (the "Shares") of common stock of the Company,
par value one dollar ($1.00) per share ("Common Stock"), to be
issued to certain holders (the "Selling Unit Holders") of non-
managing member units (the "Units") in HCPI/Utah, LLC, a
Delaware limited liability company (the "LLC"), upon exchange of
such Units
Ladies and Gentlemen:
In connection with the registration of the Shares under the Securities
Act of 1933, as amended (the "Act"), by the Company on Form S-3, filed or to be
filed with the Securities and Exchange Commission (the "Commission") on or about
January 27, 2000 and any amendments thereto, if any are to be filed with the
Commission subsequent to the date hereof (the "Registration Statement"), you
have requested our opinion with respect to the matters set forth below.
We have acted as special Maryland corporate counsel for the Company in
connection with the matters described herein. In our capacity as special
Maryland corporate counsel to the Company, we have reviewed and are familiar
with proceedings taken and proposed to be taken by the Company in connection
with the authorization, issuance and delivery of the Shares, and for purposes of
this opinion have assumed such proceedings will be timely completed in the
manner presently proposed. In addition, we have relied upon certificates and
advice from the officers of the Company upon which we believe we are justified
in relying and on various certificates from, and documents recorded with, the
State Department of Assessments and Taxation of Maryland (the "SDAT"), including
the charter of the Company (the "Charter"), consisting of Articles of
Restatement filed with the SDAT on April 27, 1992, Articles Supplementary filed
with the SDAT on September 25, 1997, September 3, 1998 and September 24, 1999
and Articles of Merger filed with the SDAT on November 4, 1999. We have also
examined the Second Amended and
1
<PAGE> 2
BALLARD SPAHR ANDREWS & INGERSOLL, LLP
Health Care Property Investors, Inc.
January 27, 2000
Page 2
Restated Bylaws of the Company, resolutions of the Board of Directors of the
Company, or a committee thereof, adopted on or before the date hereof and in
full force and effect on the date hereof (collectively, the "Directors'
Resolutions"), the Amended and Restated Limited Liability Company Agreement of
the LLC (the "LLC Agreement"), the Registration Statement, and such other laws,
records, documents, certificates, opinions and instruments as we have deemed
necessary to render this opinion.
We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals and the conformity to the originals
of all documents submitted to us as certified, photostatic or conformed copies.
In addition, we have assumed that each person executing any instrument, document
or certificate referred to herein on behalf of any party is duly authorized to
do so. We have also assumed that none of the Shares will be issued or
transferred to an Interested Stockholder of the Company or an Affiliate thereof,
all as defined in Subtitle 6 of Title 3 of the Maryland General Corporation Law,
or in violation of the provisions of Section 4 of Article V of the Charter
entitled "Provisions for Defining, Limiting and Regulating Certain Powers of the
Corporation and the Board of Directors and Stockholders".
Based on the foregoing, and subject to the assumptions and
qualifications set forth herein, it is our opinion that, as of the date of this
letter, the Shares have been duly reserved and authorized for issuance by all
necessary corporate action on the part of the Company, and when such Shares are
issued and delivered by the Company to the Selling Unit Holders in exchange for
Units of the LLC, upon and subject to the terms and conditions set forth in the
LLC Agreement and the Directors' Resolutions, such Shares will be duly
authorized, validly issued, fully paid and non-assessable.
We consent to your filing this opinion as an exhibit to the Registration
Statement, and further consent to the filing of this opinion as an exhibit to
the applications to securities commissioners for the various states of the
United States for registration of the Shares. We also consent to the
identification of our firm as Maryland counsel to the Company in the section of
the Prospectus (which is part of the Registration Statement) entitled "Legal
Matters".
The opinions expressed herein are limited to the laws of the State of
Maryland and we express no opinion concerning any laws other than the laws of
the State of Maryland. Furthermore, the opinions presented in this letter are
limited to the matters specifically set forth herein and no other opinion shall
be inferred beyond the matters expressly stated.
<PAGE> 3
BALLARD SPAHR ANDREWS & INGERSOLL, LLP
Health Care Property Investors, Inc.
January 27, 2000
Page 3
Very truly yours,
/s/ BALLARD SPAHR ANDREWS & INGERSOLL, LLP
<PAGE> 1
EXHIBIT 8.1
January 27, 2000
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 (Registration No. 333-______) filed by the
Company with the Securities and Exchange Commission (the "Commission") on
January 27, 2000, in connection with the registration, under the Securities Act
of 1933, as amended, of 593,247 shares of the Company's common stock, par value
$1.00 per share (the "Common Stock")(together with all amendments and exhibits
thereto and documents incorporated by reference therein, the "Registration
Statement").
You have requested our opinion concerning the material federal
income tax consequences to the Company and the purchasers of the securities
described above in connection with the registration described above. This
opinion is based on various facts and assumptions, including the facts set forth
in the Registration Statement concerning the business, properties and governing
documents of the Company and its subsidiaries. We have also been furnished with,
and with your consent have relied upon, certain representations made by the
Company with respect to certain factual matters through a certificate of an
officer of the Company (the "Officer's Certificate").
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.
<PAGE> 2
Based upon such facts, assumptions and representations, including
the facts set forth in the Registration Statement and the Officer's Certificate,
it is our opinion that:
1. The information in the Registration Statement set forth under
the caption "Material Federal Income Tax Consequences," to the extent that it
constitutes matters of law, summaries of legal matters, documents or
proceedings, or legal conclusions, is an accurate summary of the federal income
tax consequences anticipated to be material to purchasers of Common Stock; and
2. Commencing with the Company's taxable year ending December 31,
1985, the Company has been organized and has operated in conformity with the
requirements for qualification as a "real estate investment trust" under the
Internal Revenue Code of 1986, as amended (the "Code"), and its proposed method
of operation, as described in the representations of the Company referred to
above, will enable the Company to continue to meet the requirements for
qualification and taxation as such a real estate investment trust.
No opinion is expressed as to any matter not discussed herein.
This opinion is 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 representations described
above, including in the Registration Statement or the Officer's Certificate, may
affect the conclusions stated herein. Moreover, the Company's qualification and
taxation as a real estate investment trust depends upon the Company's ability to
meet (through actual annual operating results, asset diversification,
distribution levels and diversity of stock ownership) the various qualification
tests imposed under the Code, 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 for any one taxable year will satisfy
such requirements.
This opinion is rendered to you and is for your benefit and the
benefit of your stockholders in connection with the filing of the Registration
Statement with the Commission. This opinion may not be relied upon by you or
your stockholders 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. We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of the name of our firm therein
under the headings "Material Federal Income Tax Consequences" and "Legal
Matters." In giving this consent, we do not hereby admit that we are within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933 or the rules or regulations of the Commission promulgated
thereunder.
Very truly yours,
/s/ LATHAM & WATKINS
<PAGE> 1
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, 1999 included in Health Care Property Investors, Inc.'s Form 10-K
for the year ended December 31, 1998 and to all references to our Firm included
in this registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Orange County, California
January 21, 2000
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to use of our
report dated January 22, 1999 for American Health Properties, Inc. incorporated
by reference in this registration statement. It should be noted that we have not
audited any financial statements of the Company subsequent to December 31, 1998
or performed any audit procedures subsequent to the date of our report.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Denver, Colorado
January 21, 2000
