<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended June 30, 2000.
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from ..... to .......
Commission file number 1-8895
-------------------------------------------------------------------------------
HEALTH CARE PROPERTY INVESTORS, INC.
(Exact name of registrant as specified in its charter)
-------------------------------------------------------------------------------
Maryland 33-0091377
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
4675 MacArthur Court, Suite 900
Newport Beach, California 92660
(Address of principal executive offices)
(949) 221-0600
(Registrant's telephone number, including area code)
-------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes [X] No [ ]
As of August 8, 2000 there were 50,962,328 shares of $1.00 par value common
stock outstanding.
-------------------------------------------------------------------------------
<PAGE>
HEALTH CARE PROPERTY INVESTORS, INC.
INDEX
PART I. FINANCIAL INFORMATION
PAGE NO.
--------
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets
June 30, 2000 and December 31, 1999........................ 2
Condensed Consolidated Statements of Income
Six Months and Three Months Ended June 30, 2000 and 1999... 3
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2000 and 1999.................... 4
Notes to Condensed Consolidated Financial Statements....... 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.............. 12
PART II. OTHER INFORMATION
Signatures.......................................................... 23
-1-
<PAGE>
Health Care Property Investors, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------------- -------------------
<S> <C> <C>
Assets
Real Estate Investments:
Buildings and Improvements $2,164,116 $2,147,592
Accumulated Depreciation (261,737) (230,509)
------------------- -------------------
1,902,379 1,917,083
Construction in Progress 13,287 20,312
Land 255,316 255,593
------------------- -------------------
2,170,982 2,192,988
Loans Receivable 192,205 193,157
Investments in and Advances to Joint Ventures 42,168 47,642
Other Assets 21,075 27,907
Cash and Cash Equivalents 7,177 7,696
------------------- -------------------
Total Assets $2,433,607 $2,469,390
==================== ===================
Liabilities and Stockholders' Equity
Bank Notes Payable $ 220,800 $ 215,500
Senior Notes Payable 777,157 761,757
Convertible Subordinated Notes Payable Due 2000 86,320 100,000
Mortgage Notes Payable 96,622 102,250
Accounts Payable, Accrued Liabilities and Deferred Income 43,346 49,222
Minority Interests in Joint Ventures 15,140 16,564
Minority Interests Convertible into Common Stock 24,877 23,840
Stockholders' Equity:
Preferred Stock 274,526 275,041
Common Stock 50,962 51,421
Additional Paid-In Capital 929,569 940,471
Cumulative Net Income 695,811 628,151
Cumulative Dividends (781,523) (694,827)
------------------- -------------------
Total Stockholders' Equity 1,169,345 1,200,257
------------------- -------------------
Total Liabilities and Stockholders' Equity $2,433,607 $2,469,390
==================== ===================
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
-2-
<PAGE>
Health Care Property Investors, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
----------------------------------- -------------------------------------
2000 1999 2000 1999
------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenue
Rental Income, Triple Net Properties $ 56,568 $ 32,520 $113,116 $ 64,004
Rental Income, Managed Properties 19,695 12,934 39,809 25,053
Interest and Other Income 5,833 6,358 11,423 12,376
------------- --------------- --------------- ---------------
82,096 51,812 164,348 101,433
------------- --------------- --------------- ---------------
Expense
Interest Expense 21,535 13,578 42,749 26,129
Real Estate Depreciation and Amortization 17,447 10,101 34,593 19,487
Operating Expenses, Managed Properties 6,753 4,077 13,452 7,828
General and Administrative Expenses 3,220 2,988 6,739 6,102
------------- --------------- --------------- ---------------
48,955 30,744 97,533 59,546
------------- --------------- --------------- ---------------
Income From Operations 33,141 21,068 66,815 41,887
Minority Interests (1,664) (1,544) (3,077) (2,985)
Gain on Sale of Real Estate Properties 3,029 152 3,713 152
------------- --------------- --------------- ---------------
Income Before Extraordinary Item 34,506 19,676 67,451 39,054
Extraordinary Item- Gain on Extinguishment of Debt --- --- 209 ---
------------- --------------- --------------- ---------------
Net Income 34,506 19,676 67,660 39,054
Dividends to Preferred Stockholders (6,225) (4,110) (12,450) (8,219)
------------- --------------- --------------- ---------------
Net Income Applicable to Common Shares $ 28,281 $ 15,566 $ 55,210 $ 30,835
============= =============== =============== ===============
Basic and Diluted Earnings Per Common Share $ 0.55 $ 0.49 $ 1.08 $ 0.98
============= =============== =============== ===============
Weighted Average Shares Outstanding - Basic 51,069 31,680 51,177 31,353
============= =============== =============== ===============
Weighted Average Shares Outstanding - Diluted 51,093 31,791 51,201 31,467
============= =============== =============== ===============
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
-3-
<PAGE>
Health Care Property Investors, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
-------------------------
2000 1999
----------- -----------
<S> <C> C>
Cash Flows From Operating Activities:
Net Income $ 67,660 $ 39,054
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Real Estate Depreciation 34,593 19,487
Non Cash Charges 1,810 1,351
Joint Venture Adjustments 1,139 892
Gain on Sale of Real Estate Properties (3,713) (152)
Changes in:
Operating Assets 8,118 (384)
Operating Liabilities (8,223) 2,184
----------- -----------
Net Cash Provided By Operating Activities 101,384 62,432
=========== ===========
Cash Flows From Investing Activities:
Acquisition of Real Estate (12,618) (113,058)
Proceeds from the Sale of Real Estate Properties, Net 9,442 3,231
Other Investments and Loans (887) (23,122)
----------- -----------
Net Cash Used In Investing Activities (4,063) (132,949)
=========== ===========
Cash Flows From Financing Activities:
Net Change in Bank Notes Payable 5,300 29,700
Repayment of Senior Notes Payable (10,000) ---
Issuance of Senior Notes 24,865 51,944
Cash Proceeds from Issuing Common Stock 1,414 29,578
Increase / (Decrease) in Minority Interest (446) 16,751
Periodic Payments on Mortgages (1,695) (1,495)
Final Payment on Mortgages --- (239)
Repurchase of Common and Preferred Stock (15,283) ---
Repurchase of Convertible Subordinated Notes Payable (13,680) ---
Dividends Paid (86,696) (51,436)
Other Financing Activities (1,619) (3,374)
----------- -----------
Net Cash (Used In)/Provided By Financing Activities (97,840) 71,429
=========== ===========
Net Decrease In Cash And Cash Equivalents (519) 912
Cash And Cash Equivalents, Beginning Of Period 7,696 4,504
----------- -----------
Cash And Cash Equivalents, End Of Period $ 7,177 $ 5,416
=========== ===========
Capitalized Interest $ 523 $ 902
=========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
-4-
<PAGE>
HEALTH CARE PROPERTY INVESTORS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
(1) SIGNIFICANT ACCOUNTING POLICIES
We, the management of Health Care Property Investors, Inc., believe that
the unaudited financial information contained in this report reflects all
adjustments that are necessary to state fairly the financial position, the
results of operations, and the cash flows of the Company. Unless the context
otherwise indicates, the Company or HCPI means Health Care Property Investors,
Inc. and its affiliated subsidiaries and joint ventures. We presume that users
of this interim financial information have read or have access to the audited
financial statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations for the preceding fiscal year ended December
31, 1999. Therefore, notes to the financial statements and other disclosures
that would repeat the disclosures contained in our most recent annual report to
security holders have been omitted. This interim financial information does not
necessarily represent a full year's operations for various reasons, including
acquisitions and dispositions, changes in rents and interest rates, and the
timing of debt and equity financings.
Facility Operations:
Since 1997, we have purchased ownership interests in 95 medical office
buildings ("MOBs") and physician group practice clinics that are managed by
independent property management companies. These facilities are leased to
multiple tenants under gross, modified gross or triple net leases. Rents and
operating income attributable to these properties is included in Rental Income,
Managed Properties in our financial statements. Expenses related to the
operation of these facilities are recorded as Operating Expenses, Managed
Properties.
Reclassifications:
We have made reclassifications, where necessary, for comparative financial
statement presentations.
(2) BUSINESS COMBINATION
On November 4, 1999, American Health Properties, Inc. ("AHE") merged with
and into HCPI (the Merger) in a stock-for-stock transaction, approved by the
stockholders of both companies, with HCPI being the surviving corporation. Under
the terms of the Merger agreement, each share of AHE common stock was converted
into the right to receive 0.78 share of HCPI's common stock and AHE 8.60% series
B cumulative redeemable preferred stock was converted into HCPI's 8.60% series C
cumulative redeemable preferred stock. The Merger resulted in the issuance of
approximately 19,430,115 shares of HCPI's common stock and 4,000,0000 depositary
shares of HCPI's series C cumulative redeemable preferred stock. In addition,
HCPI assumed $343,000,000 of AHE's debt upon consummation of the Merger. The
transaction was treated as a purchase for financial accounting purposes. The
operating results of AHE have been included in our consolidated financial
statements since November 4, 1999 and, accordingly, the results of operations
for the three and six months ended June 30, 1999 do not reflect the operations
of AHE.
-5-
<PAGE>
Pro Forma Financial Information (Unaudited):
The following unaudited pro forma consolidated statements of income
information present the results of HCPI's operations for the six months ended
June 30, 1999 as though the acquisition of AHE had occurred as of the beginning
of 1999:
<TABLE>
<CAPTION>
June 30,
1999
--------------
(Dollar amounts in 000s, except per share amounts)
<S> <C>
Total Revenues $157,024
Net Income Applicable to
Common Shares $105,818
Earnings Per Share
Basic $ 2.08
Diluted $ 2.03
</TABLE>
Pro Forma Net Income applicable to common shares and earnings per basic and
diluted share include $55,285,000 or $1.09 and $1.02 per share for Gain on the
Sale of Real Estate, respectively.
The pro forma results have been prepared for comparative purposes only and
are not necessarily indicative of the actual results of operations had the
acquisitions taken place at the beginning of 1999 or the results that may occur
in the future. The pro forma results include additional interest on borrowed
funds, increased depreciation and decreases in amortization expense associated
with changes in fair value of the AHE depreciable property and other intangible
assets and a reduction in general and administrative expenses.
(3) OPERATORS
Major Operators:
Listed below are our major operators and their respective percentage of
total annualized revenue for the six months ended June 30, 2000. All of these
operators are publicly traded companies and are subject to the informational
filing requirements of the Securities and Exchange Act of 1934, as amended, and
accordingly file periodic financial statements on Form 10-K and Form 10-Q with
the Securities and Exchange Commission.
<TABLE>
<CAPTION>
Revenue Percentage
---------------- -------------
(Dollar amounts in 000s)
<S> <C> <C>
Tenet Healthcare Corporation $55,549 18.7%
HealthSouth Corporation 16,481 5.5%
Columbia/HCA Healthcare Corporation 14,465 4.9%
Vencor, Inc. 13,583 4.6%
Emeritus Corporation 13,475 4.5%
Beverly Enterprises 12,337 4.2%
Centennial Healthcare Corporation 8,182 2.8%
</TABLE>
At June 30, 2000, we had approximately 100 health care operators and over
650 tenants in multi-tenant buildings.
-6-
<PAGE>
Vencor:
On May 1, 1998, Vencor completed a spin-off transaction. As a result, it
became two publicly held entities -- Ventas, Inc. and Vencor, a healthcare
company which at June 30, 2000 leased 35 of our properties of which 9 are
subleased to other operators. On September 13, 1999, Vencor filed for
bankruptcy protection. We have recourse to Ventas, Inc. and Tenet Healthcare
Corporation (see discussion below) for most of the rents payable by Vencor under
the terms of the applicable leases. All rents due to us subsequent to the
bankruptcy filing have been received.
Under its filing for bankruptcy protection, Vencor has the right to assume or
reject its leases with us. If Vencor assumes a lease, it must do so pursuant to
the original contract terms, must cure all pre-petition and post-petition
defaults under the lease and provide adequate assurances of future performance.
If Vencor rejects a lease, we have the right to collect rent through the
rejection date and may lease the property to another operator. As of July 31,
2000, Vencor had made no proposals to reject any of their current leases with
us. We have received $735,000 of $1,008,000 of pre-petition rents and consider
the remaining balance to be fully collectible. However, we cannot assure you
that, as a result of Vencor's bankruptcy filing, we would be able to recover all
amounts due under our leases with Vencor, that we would be able to promptly
recover the premises or lease the property to another lessee or that the rent we
would receive from another lessee would equal amounts due under the Vencor
leases. We have recourse to Tenet for rents under all but four of the Vencor
leases, and on some leases we are receiving direct payment by sublessees of
Vencor, which may reduce the risk to us of not being able to collect on those
leases. However, some of Vencor's sublessees have also filed for bankruptcy
protection and although we are current on lease payments, we cannot assure you
that the bankruptcy filing of Vencor or certain of its sublessees would not have
a material adverse effect on our Net Income, Funds From Operations or the market
value of our common stock.
Based upon public reports, for the three months ended March 31, 2000,
Vencor had revenue of approximately $715 million and a net loss of approximately
$16 million. Based upon public reports, Ventas' revenue and net income for the
three months ended March 31, 2000, were approximately $59 million and $3
million, respectively. Approximately $57 million of Ventas' revenue resulted
from leases with Vencor. As of March 31, 2000, Ventas had total assets of $1
billion and a stockholders' equity of $12 million.
Tenet is one of the nation's largest healthcare services companies,
providing a broad range of services through the ownership and management of
healthcare facilities. Based upon public reports, Tenet's revenue and net
income for the year ended May 31, 2000 were $11.4 billion and $302 million,
respectively, and Tenet had total assets of $13.4 billion as of February 29,
2000. Tenet has historically guaranteed Vencor's leases. During 1997, we
reached an agreement with Tenet whereby Tenet agreed to forbear or waive some
renewal and purchase options and related rights of first refusal on facilities
leased to Vencor. Accordingly, we have recourse to Tenet on 30 Vencor leases,
all of which will expire during 2001.
Other Troubled Providers:
The financial condition of many long-term care providers has been eroded
during the past year, in part due to the implementation of the Medicare
Prospective Payment System. As a result, certain of our long-term care provider
lessees have filed for Chapter XI bankruptcy protection during the past several
months. Other than Vencor discussed above, lessees that have filed for
bankruptcy and their
-7-
<PAGE>
respective percentage of annualized revenue are Sun Healthcare, 1.2%; Integrated
Health Services, 1.0%; Genesis Health Ventures, 0.5%; Lenox Healthcare, 0.5%;
Mariner Post Acute Network, 0.4%; and Texas Health Enterprises, 0.2%.
The lessees in bankruptcy discussed in the previous paragraph were current
on all rents as of June 30, 2000, with the exception of certain pre-petition
rents in the amount of $432,000 which we believe will generally be payable once
the plans of reorganization are confirmed. However, we cannot assure you that
the bankruptcies of those lessees will not have a material adverse effect on our
Net Income, our Funds From Operations or the market value of our common stock.
Certain of our other operators of long-term care companies have recently
experienced working capital shortfalls and reorganizations resulting in lower
rental income or the possibility of lower future rents. While the vast majority
of these operators remain current, management believes that lower rents from
certain properties, higher interest expense and fewer acquisitions will reduce
our growth in earnings and FFO over the near term.
(4) REAL ESTATE DISPOSITIONS
During the six months ended June 30, 2000, we sold three long-term care
facilities generating gross proceeds of $12,783,000.
(5) STOCKHOLDERS' EQUITY
The following table provides a summary of the activity for the
Stockholders' Equity account for the six months ended June 30, 2000 (amounts in
thousands):
<TABLE>
<CAPTION>
Preferred Stock Common Stock
------------------ --------------------------------
Number Number Par Additional Total
of of Value Paid In Cumulative Cumulative Stockholders'
Shares Amount Shares Amount Capital Net Income Dividends Equity
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1999 11,745 $275,041 51,421 $51,421 $940,471 $628,151 $(694,827) $1,200,257
Stock Options
Exercised......... 54 54 1,360 1,414
Stock Grants Issued 78 78 1,946 2,024
Stock Repurchase... (23) (515) (588) (588) (14,180) (15,283)
Cancelled Shares... (3) (3) (28) (31)
Net Income......... 67,660 67,660
Dividends Paid --
Preferred Shares.. (12,450) (12,450)
Dividends Paid --
Common Shares..... (74,246) (74,246)
=======================================================================================================================
Balance,
June 30, 2000... 11,722 $274,526 50,962 $50,962 $929,569 $695,811 $(781,523) $1,169,345
=========================================================================================================================
</TABLE>
On June 20, 2000 the Board of Directors adopted a Rights Plan and
declared a dividend distribution of one Preferred Share Purchase Right on each
outstanding share of HCPI common stock. Subject to limited exceptions, the
Rights will be exercisable if a person or group acquires 15% or more of HCPI's
common stock or announces a tender offer for 15% or more of the common stock.
Under certain circumstances, each Right will entitle shareholders to buy one
one-hundredth of a share of newly created Series D Junior Participating
Preferred Stock of the Company at an exercise price of $95.00. The Board of
Directors is entitled to redeem the Rights at $.01 per Right at any time before
a person has acquired 15% or more of the outstanding common stock. The Rights
Plan was adopted to replace HCPI's previous Rights Plan, which was enacted in
1990 and expired on July 30, 2000.
-8-
<PAGE>
(6) EARNINGS PER COMMON SHARE
We compute earnings per share in accordance with Statement of Financial
Accounting Standards No. 128, Earnings Per Share. Basic earnings per common
share is computed by dividing Net Income applicable to common shares by the
weighted average number of shares of common stock outstanding during the period.
Diluted earnings per common share is calculated including the effect, if any, of
dilutive securities. Options to purchase shares of common stock that had an
exercise price in excess of the average market price of the common stock during
the period are not included because they are not dilutive.
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
---------------------------------- ---------------------------------
Per Share Per Share
June 30, 2000 Income Shares Amount Income Shares Amount
--------------------------------------- ------- ------ --------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Basic Earnings Per Common Share:
Net Income Applicable to Common Shares $28,281 51,069 $0.55 $55,210 51,177 $1.08
===== =====
Dilutive Options --- 24 --- 24
Diluted Earnings Per Common Share:
Net Income Applicable to Common
Shares Plus Assumed Conversions $28,281 51,093 $0.55 $55,210 51,201 $1.08
===== =====
</TABLE>
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
--------------------------------- -----------------------------------
Per Share Per Share
June 30, 1999 Income Shares Amount Income Shares Amount
---------------------------------------- ------ ------ --------- ------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Basic Earnings Per Common Share:
Net Income Applicable to Common Shares $15,566 31,680 $0.49 $30,835 31,353 $0.98
===== =====
Dilutive Options --- 111 --- 114
Diluted Earnings Per Common Share:
Net Income Applicable to Common
Shares Plus Assumed Conversions $15,566 31,791 $0.49 $30,835 31,467 $0.98
===== =====
</TABLE>
(7) STOCK AND DEBT BUYBACK PROGRAM
In December 1999, our Board of Directors approved a stock and debt
repurchase program whereby our common and preferred stock, and our convertible
subordinated notes and senior debt may be repurchased on the open market.
Through August 8, 2000, we had repurchased 63,400 shares of preferred stock for
$947,000; 646,686 shares of common stock for $16,308,000 and had repurchased
$25,145,000 principal amount of convertible debt.
(8) FUNDS FROM OPERATIONS
We believe that Funds From Operations (FFO) is the most important
supplemental measure of operating performance for a real estate investment
trust. Because the historical cost accounting convention used for real estate
assets requires straight-line depreciation (except on land), such accounting
presentation implies that the value of real estate assets diminishes predictably
over time. Since real estate values instead have historically risen and fallen
with market conditions, presentations of operating results for a real estate
investment trust that uses historical cost accounting for depreciation
-9-
<PAGE>
could be less informative. The term FFO was designed by the real estate
investment trust industry to address this problem.
We adopted the definition of FFO prescribed by the National Association of
Real Estate Investment Trusts (NAREIT). FFO is defined as Net Income applicable
to common shares (computed in accordance with generally accepted accounting
principles), excluding gains (or losses) from sales of property, plus real
estate depreciation and real estate related amortization, and after adjustments
for unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures are calculated to reflect FFO on
the same basis.
FFO does not represent cash generated from operating activities in
accordance with generally accepted accounting principles, is not necessarily
indicative of cash available to fund cash needs and should not be considered as
an alternative to net income. FFO, as we define it, may not be comparable to
similarly entitled items reported by other real estate investment trusts that do
not define it exactly as the NAREIT definition.
Below are summaries of the calculation of FFO (all amounts in thousands):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------ -----------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Income Applicable to Common Shares $28,281 $15,566 $55,210 $30,835
Real Estate Depreciation and Amortization 17,447 10,101 34,593 19,487
Joint Venture Adjustments 652 556 1,139 892
Extraordinary Item/Gain on Extinguishment
of Debt --- --- (209) ---
Gain on Sale of Real Estate Properties (3,029) (152) (3,713) (152)
------- ------- ------- -------
Funds From Operations $43,351 $26,071 $87,020 $51,062
======= ======= ======= =======
</TABLE>
HCPI is required to report information about operations on the basis that
it uses internally to measure performances under Statement of Financial
Accounting Standards No. 131, Disclosures about Segments of an Enterprise and
Related Information, effective beginning in 1998.
(9) COMMITMENTS
We have acquired real estate properties and have outstanding commitments to
fund the development of facilities on those properties of approximately
$6,380,000, and are committed to acquire an additional $6,100,000 of existing
healthcare real estate.
(10) SUBSEQUENT EVENTS
On July 20, 2000, the Board of Directors declared a quarterly dividend of
$0.74 per common share payable on August 18, 2000, to shareholders of record on
the close of business on August 3, 2000.
The Board of Directors also declared a cash dividend of $0.492188 per share
on its series A cumulative preferred stock, $0.54375 per share on its series B
cumulative preferred stock and $0.5375 per share on its series C cumulative
preferred stock depositary shares. These dividends will be paid on September 29,
2000 to shareholders of record as of the close of business on September 15,
2000.
-10-
<PAGE>
On July 20, 2000, we completed a secured debt transaction in the amount of
$42 million on a portfolio of six medical office buildings with an investment
value of approximately $68 million. This secured financing bears interest at
8.25% (8.5% effective rate after including related costs) with interest only
payable over the first three years and interest plus principal payments based
upon a 30 year amortization thereafter until the final due date of July 20,
2010. These proceeds will initially be invested in reducing borrowings under the
Company's revolving lines of credit and, in due course, to redeem the remaining
amount of our convertible subordinated notes due November 8, 2000.
(11) NEW PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities. The Statement establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. The Statement
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Statement 133 is
effective for fiscal years beginning after June 15, 2000, although earlier
implementation is allowed.
We have not yet quantified the impact of adopting Statement 133 on our
financial statements and have not determined the timing or method of our
adoption of Statement 133. However, the effect is not expected to be material.
-11-
<PAGE>
HEALTH CARE PROPERTY INVESTORS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
We are in the business of acquiring health care facilities that we lease on
a long-term basis to health care providers. On a more limited basis, we have
provided mortgage financing on health care facilities. As of June 30, 2000, our
portfolio of properties, including equity investments, consisted of 424
facilities located in 43 states. These facilities are comprised of 173 long-
term care facilities, 92 congregate care and assisted living facilities, 46
physician group practice clinics, 82 medical office buildings, 22 acute care
hospitals, and nine freestanding rehabilitation facilities. The gross
investment in the properties, which includes joint venture acquisitions, was
approximately $2.6 billion at June 30, 2000.
We have commitments to purchase and construct health care facilities
totaling approximately $12 million which are expected to fund during 2000. The
Company expects that a significant portion of these commitments will be funded;
however, experience suggests that some committed transactions may not close for
various reasons including unsatisfied pre-closing conditions, competitive
financing sources, final negotiation differences or operator's ability to obtain
required internal or governmental approvals.
RESULTS OF OPERATIONS
Net Income applicable to common shares for the three and six months ended
June 30, 2000 totaled $28,281,000 and $55,210,000 or $0.55 and $1.08 of basic
earnings per share on revenue of $82,096,000 and $164,348,000, respectively.
This compares to $15,566,000 and $30,835,000 or $0.49 and $0.98 of basic
earnings per share on revenue of $51,812,000 and $101,433,000 for the same
period in 1999. Net Income applicable to common shares for the three months
ended June 30, 2000 and June 30, 1999 included a $3,029,000 or $0.06 per share
and $152,000 or $0.005 per share gain on the sale of real estate properties,
respectively. Net Income applicable to common shares for the six months ended
June 30, 2000 and June 30, 1999 included a $3,713,000 or $0.07 per share and
$152,000 or $0.005 per share gain on the sale of real estate properties,
respectively.
Rental Income, Triple Net Properties for the three and six months ended
June 30, 2000 increased $24,048,000 and $49,112,000 to $56,568,000 and
$113,116,000, respectively, as compared to the same period in the prior year.
Rental Income, Managed Properties for the three and six months ended June 30,
2000 increased by $6,761,000 and $14,756,000 to $19,695,000 and $39,809,000,
respectively as compared to the same period in the prior year with a related
increase in Operating Expenses, Managed Properties of $2,676,000 and $5,624,000
to $6,753,000 and $13,452,000, respectively. These increases were generated
primarily from the 1999 acquisition activity, most of which is attributable to
the acquisition of American Health Properties' portfolio through the merger.
Interest and Other Income for the three and six months ended June 30, 2000
decreased $525,000 and $953,000 to $5,833,000 and $11,423,000, respectively,
primarily from the divestiture in the third quarter of 1999 of certain
partnership interests from which we were receiving income during the first six
months of 1999.
Interest Expense for the three and six months ended June 30, 2000 increased
$7,957,000 and $16,620,000, respectively. The increase is primarily the result
of an increase in borrowings used to fund the acquisitions made during 1999 and
interest related to the debt assumed in the merger with American
-12-
<PAGE>
Health Properties. The increase in Depreciation for the three and six months
ended June 30, 2000 of $7,346,000 and $15,106,000 to $17,447,000 and
$34,593,000, respectively, is the direct result of the new investments made
during 1999 including the merger with American Health Properties.
We believe that FFO is an important supplemental measure of operating
performance. FFO for the three months ended June 30, 2000 increased $17,280,000
to $43,351,000 as compared to the same period in the prior year. The increase
is attributable to increases in Rental Income on the Triple Net and Managed
Properties as offset by increases in Interest Expense and Operating Expenses
Managed Properties, which are discussed above.
FFO does not represent cash generated from operating activities in
accordance with generally accepted accounting principles, is not necessarily
indicative of cash available to fund cash needs and should not be considered as
an alternative to Net Income. FFO, as we define it, may not be comparable to
similarly entitled items reported by other real estate investment trusts that do
not use the NAREIT definition.
LIQUIDITY AND CAPITAL RESOURCES
We have financed investments through the issuance of common and preferred
stock, issuance of long-term debt, assumption of mortgage debt, use of short-
term bank lines and use of internally generated cash flows. Facilities under
construction are generally financed by means of cash on hand or short-term
borrowings under our existing bank lines. Management believes that our
liquidity and sources of capital are adequate to finance our operations. Future
investments in additional facilities will be dependent on availability of cost
effective sources of capital.
Medium-Term Note Financings
The following table summarizes the Medium-Term Note financing activities
since January 1999:
<TABLE>
<CAPTION>
Amount
Date Maturity Coupon Rate Issued/(Redeemed)
----------------------- ----------------- -------------------- ----------------------
<S> <C> <C> <C>
February 1999 5 years 6.92% 25,000,000
April 1999 5 years 7.00% - 7.48% 37,000,000
May 1999 --- 10.55%-10.57% (10,000,000)
November 1999 --- 8.81% (5,000,000)
February 2000 --- 8.87% (10,000,000)
February 2000 4 years 9.00% 25,000,000
</TABLE>
Other Senior Debt
On November 4, 1999, in connection with the merger with American Health
Properties we assumed two series of outstanding senior notes of American Health
Properties, consisting of $100,000,000 principal amount of 7.05% senior notes
due 2002 and $120,000,000 principal amount of 7.50% senior notes (8.16%
effective rate) due 2007. Additionally, we assumed $56,000,000 of American
Health Properties' mortgage debt with interest rates ranging from 7.00% to 8.52%
due 2003 to 2011.
-13-
<PAGE>
Equity Offerings
In May 1999, we completed an equity offering of 1,000,000 shares of our
common stock which raised $31,400,000 of equity with net proceeds of
$29,600,000. We used the net proceeds from the equity offering to pay down or
pay off short-term borrowings under our revolving lines of credit. We invested
any excess funds in short-term investments until they were needed for
acquisitions or development.
On November 4, 1999, in connection with the merger with American Health
Properties we issued 19,430,115 shares of our common stock and 4,000,000
depositary shares of 8.60% series C cumulative redeemable preferred stock. (See
Note 2 to the Consolidated Financial Statements.)
In January and February 2000, we registered 89,452 and 593,247 shares of
common stock for issuance, from time to time, to the holders of non-managing
member units in two consolidated subsidiaries, HCPI/Indiana, LLC and HCPI/Utah,
LLC, respectively. The non-managing member units are convertible from time to
time by the non-managing members' into shares of our common stock, or at our
option into the right to receive cash.
At June 30, 2000, stockholders' equity totaled $1,169,345,000 and the debt
to equity ratio was 1.01 to 1.00. For the six months ended June 30, 2000, FFO
(before interest expense) covered Interest Expense at a ratio of 3.04 to 1.00.
Stock and Debt Buyback Program
In December 1999, our Board of Directors approved a stock and debt
repurchase program. Through August 8, 2000, we had repurchased 63,400 shares of
preferred stock for $947,000, 646,686 shares of common stock for $16,308,000 and
had repurchased $25,145,000 principal amount of convertible debt.
Available Financing Sources
As of June 30, 2000, we had $372,000,000 available for future financing of
debt and equity securities under a shelf registration statement filed with the
Securities and Exchange Commission. Of that amount, we have approximately
$85,000,000 available under Medium-Term Note senior debt programs. These amounts
may be issued from time to time in the future based on our needs and then
existing market conditions.
We have two revolving lines of credit, one for $103,000,000 that expires on
November 2, 2000 and one for $207,000,000 that expires on November 3, 2003.
Availability on these lines of credit is reduced by outstanding letters of
credit aggregating $3,500,000. As of June 30, 2000, we had $85,700,000 available
on these lines of credit. Since 1986, the debt rating agencies have rated our
Senior Notes and Convertible Subordinated Notes investment grade. Current
ratings are as follows:
<TABLE>
<CAPTION>
Moody's Standard & Poor's Fitch
------- ----------------- -----
<S> <C> <C> <C>
Senior Notes Baa2 BBB+ BBB+
Convertible
Subordinated Notes Baa3 BBB BBB
</TABLE>
-14-
<PAGE>
On July 20, 2000, we completed a secured debt transaction in the amount of
$42 million on a portfolio of six medical office buildings with an investment
value of approximately $68 million. This secured financing bears interest at
8.25% (8.5% effective rate after including related costs) with interest only
payable over the first three years and interest plus principal payments based
upon a 30 year amortization thereafter until the final due date of July 20,
2010. These proceeds will initially be invested in reducing borrowings under the
Company's revolving lines of credit and, in due course, to redeem the remaining
amount of our convertible subordinated notes due November 8, 2000.
Since our inception in May 1985, we have recorded approximately
$892,009,000 in cumulative FFO. Of this amount, we have distributed a total of
$741,517,000 to stockholders as dividends on common stock. We have retained the
balance of $150,492,000 and used it as an additional source of capital.
On May 19, 2000, we paid a dividend of $0.73 per common share or
$37,307,000 in the aggregate. Total dividends paid on common stock during the
six months ended June 30, 2000, as a percentage of FFO, was 85%. During the
third quarter of 2000, we declared a dividend of $0.74 per common share or
approximately $37,712,000 in the aggregate to be paid August 18, 2000.
Letters of Credit
At June 30, 2000, we held approximately $62,000,000 in depositary accounts
and irrevocable letters of credit from commercial banks to secure the
obligations of many lessees' lease and borrowers' loan obligations. We may draw
upon the letters of credit or depositary accounts if there are any defaults
under the leases and/or loans. Amounts available under letters of credit or
depositary accounts could change based upon facility operating conditions and
other factors and such changes may be material.
Facility Rollovers
As of June 30, 2000, we have 14 facilities that are subject to lease
expiration and mortgage maturities during the remainder of 2000. These
facilities currently represent approximately 1.1% of annualized revenue. For the
year ending December 31, 2001, we have 39 facilities that are subject to lease
expiration and mortgage maturities. These facilities currently represent
approximately 7.1% of annualized revenue.
INTERNAL GROWTH
For the six months ended June 30, 2000, we had internal same facility rent
growth, net of rent decreases, of approximately $755,000 or 1.3% of rents in our
Triple Net portfolio.
YEAR 2000 ISSUE
The Year 2000 issue was the result of widely used computer programs that
identify the year by two digits, rather than by four digits. It was believed
that continued use of these programs may result in widespread computer-generated
malfunctions and miscalculations beginning in the year 2000, when the digits
"00" are interpreted as "1900." It was believed that those miscalculations could
cause disruption of operations including the temporary inability to process
transactions such as invoices for payment. Those computer programs that identify
the year based on four digits are considered "Year 2000
-15-
<PAGE>
compliant." The statements in the following section include "Year 2000 readiness
disclosure" within the meaning of the Year 2000 Information and Readiness
Disclosure Act of 1998.
Preparing for Year 2000 had been a high priority for us. Internal and
external resources were engaged to achieve Year 2000 readiness. We successfully
completed our Year 2000 preparedness plans including the upgrade and replacement
of all systems, as well as full-scale testing and implementation of those
systems. Our contingency plans were also thoroughly tested. The cost of the
foregoing was not material. To date, we have not seen any adverse impact or
disruption in cash flows as a result of the Year 2000 transition on any of our
systems or those of our lessees or vendors.
Readers are cautioned that statements contained in the "Year 2000 Issue"
paragraphs are forward looking and should be read in conjunction with our
disclosures under the heading "Cautionary Language Regarding Forward Looking
Statements" set forth below.
CAUTIONARY LANGUAGE REGARDING FORWARD LOOKING STATEMENTS
Statements in this Annual Report that are not historical factual statements
are "forward looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The statements include, among other things,
statements regarding the intent, belief or expectations of HCPI and its officers
and can be identified by the use of terminology such as "may", "will", "expect",
"believe", "intend", "plan", "estimate", "should" and other comparable terms or
the negative thereof. In addition, we, through our senior management, from time
to time make forward looking oral and written public statements concerning our
expected future operations and other developments. Shareholders and investors
are cautioned that, while forward looking statements reflect our good faith
belief and best judgment based upon current information, they are not guarantees
of future performance and are subject to known and unknown risks and
uncertainties. Actual results may differ materially from the expectations
contained in the forward-looking statements as a result of various factors. In
addition to the factors set forth under the caption Risk Factors in our annual
report on Form 10-K, readers should consider the following:
(a) 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;
(b) 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 which may result in operators experiencing financial difficulties,
seeking rent concessions or filing for bankruptcies;
(c) Competition for lessees and mortgagors, including with respect to new
leases and mortgages and the renewal or rollover of existing leases;
(d) Competition for the acquisition and financing of healthcare facilities;
(e) 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;
(f) Changes in national or regional economic conditions, including changes in
interest rates and the availability and cost of capital for us; and
(g) The expected benefits from the merger with American Health Properties, such
as cost savings, operating efficiencies and other synergies may not be
realized due to increased demands on our management resources following the
merger.
-16-
<PAGE>
DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks related to fluctuations in interest rates on
our mortgage loans receivable and on our debt instruments. We provide mortgage
loans to operators of healthcare facilities in the normal course of business.
All of the mortgage loans receivable have fixed interest rates or interest rates
with periodic fixed increases. Therefore, the mortgage loans receivable are all
considered to be fixed rate loans. We generally borrow on our short-term bank
lines of credit to complete acquisition transactions. We then repay borrowings
using proceeds from subsequent long-term debt and equity offerings. We may also
assume mortgage notes payable already in place as part of an acquisition
transaction. Currently, we have two mortgage notes payable with variable
interest rates and the remaining mortgage notes payable have fixed interest
rates or interest rates with fixed periodic increases. Our Senior Notes and
Convertible Subordinated Notes bear interest at fixed rates. The variable rate
loans bear interest at interest rates below the current prime rate of 9.5%, and
fluctuations are tied to the prime rate or to a rate currently below the prime
rate. There have been no significant changes in our mortgage loans receivable or
debt instruments since December 31, 1999.
Fluctuation in the interest rate environment will not affect our future
earnings and cash flows on our fixed rate debt until that debt matures and must
be replaced or refinanced. Interest rate changes will affect the fair value of
the fixed rate instruments. Conversely, changes in interest rates on variable
rate debt would change our future earnings and cash flows, but not affect the
fair value on those instruments. Assuming a one percentage point increase in the
interest rate related to the variable rate debt including the mortgage notes
payable and the bank lines of credit, and assuming no change in the outstanding
balance as of year end, interest expense for 2000 would increase by
approximately $2,268,000. Approximately 7.7% of the increase in interest expense
related to the bank lines of credit, or $170,000, would be capitalized into
construction projects.
We do not believe that the future market rate risks related to our mortgage
loans receivable or debt instruments will have a material impact on us or the
results of our future operations. Readers are cautioned that most of the
statements contained in these "Disclosures about Market Risk" paragraphs are
forward looking and should be read in conjunction with our disclosures under the
heading "Cautionary Language Regarding Forward Looking Statements" set forth
above.
NEW PRONOUNCEMENTS
See Note 11 to the financial statements for a discussion of our
implementation of the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and hedging Activities.
-17-
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Company held its annual stockholders meeting on May 9, 2000. The
following matters were voted upon at the meeting:
1. Election of Directors:
Votes Cast
----------------
Against or
Name of Director Elected For Withheld
--------------------------- ---------------- ----------------
Robert R. Fanning, Jr. 46,001,502 625,366
Michael D. McKee 46,006,988 619,880
Harold M. Messmer 46,004,012 622,856
Name of Each Other Director
Whose Term of Office as Director
Continued After the Meeting
---------------------------
Paul V. Colony
Orville E. Melby
Peter L. Rhein
Kenneth B. Roath
2. Approval of the 2000
Stock Incentive Plan:
For Against Abstain
------------------------------------
29,879,341 2,324,664 646,255
3. Ratification of Arthur Andersen LLP
As the Company's Independent
Accountants for the Fiscal Year
Ending December 31, 2000:
For Against Abstain
------------------------------------
46,878,372 179,582 207,882
-18-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibits:
2.1 Agreement and Plan of Merger, dated as of August 4, 1999,
between HCPI and American Health Properties, Inc.
(incorporated herein by reference to exhibit 2.1 to HCPI's
current report on form 8-K dated August 4, 1999).
3.1 Articles of Restatement of HCPI (incorporated herein by
reference to exhibit 3.1 to HCPI's annual report on form 10-K
for the year ended December 31, 1994).
3.2 Second amended and restated bylaws of HCPI (incorporated
herein by reference to exhibit 3.2 of HCPI's quarterly report
on form 10-Q for the period ended March 31, 1999).
3.3 Articles supplementary establishing the terms of the 7 7/8%
Series A Cumulative Redeemable Preferred Stock (incorporated
by reference to exhibit 2.3 to HCPI's registration statement
on form 8-A filed on September 25, 1997).
3.4 Articles supplementary establishing and fixing the rights and
preferences of the 8.70% Series B Cumulative Preferred Stock
(incorporated herein by reference to exhibit 3.3 to HCPI's
registration statement on form 8-A dated September 2, 1998).
3.5 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 HCPI's current report on form 8-K dated August 4,
1999).
4.1 Rights agreement, dated as of July 27, 2000, between Health
Care Property Investors, Inc. and the Bank of New York which
includes the form of Certificate of Designations of the Series
D Junior Participating Preferred Stock of Health Care Property
Investors, Inc. as Exhibit A, the form of Right Certificate as
Exhibit B and the Summary of Rights to Purchase Preferred
Shares as Exhibit C (incorporated by reference to Exhibit 4.1
of Health Care Property Investors, Inc.'s Current Report on
Form 8-Contract dated July 28, 2000).
4.2 Indenture, dated as of September 1, 1993, between HCPI and The
Bank of New York, as Trustee, with respect to the Series B
Medium Term Notes and the Senior Notes due 2006 (incorporated
by reference to exhibit 4.1 to HCPI's registration statement
on form S-3 dated September 9, 1993).
4.3 Indenture, dated as of April 1, 1989, between HCPI and The
Bank of New York for Debt Securities (incorporated by
reference to exhibit 4.1 to HCPI's registration statement on
form S-3 dated March 20, 1989).
4.4 Form of Fixed Rate Note (incorporated by reference to exhibit
4.2 to HCPI's registration statement on form S-3 dated March
20, 1989) .
4.5 Form of Floating Rate Note (incorporated by reference to
exhibit 4.3 to HCPI's registration statement on form S-3 dated
March 20, 1989).
-19-
<PAGE>
4.8 Registration Rights Agreement dated November 20, 1998 between
HCPI and James D. Bremner (incorporated by reference to
exhibit 4.8 to HCPI's annual report on form 10-K for the year
ended December 31, 1999). This exhibit is identical in all
material respects to two other documents except the parties
thereto. The parties to these other documents, other than
HCPI, were James P. Revel and Michael F. Wiley.
4.9 Registration Rights Agreement dated January 20, 1999 between
HCPI and Boyer Castle Dale Medical Clinic, L.L.C.
(incorporated by reference to exhibit 4.9 to HCPI's annual
report on form 10-K for the year ended December 31, 1999).
This exhibit is identical in all material respects to 13 other
documents except the parties thereto. The parties to these
other documents, other than HCPI, 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.
4.10 Form of Deposit Agreement (including form of Depositary
Receipt with respect to the Depositary Shares, each
representing one-one hundredth of a share of our 8.60%
Cumulative Redeemable Preferred Stock, Series C) dated as of
November 4, 1999 by and among HCPI, 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 HCPI's registration statement on
form 8-A filed on November 4, 1999).
4.11 Indenture, dated as of January 15, 1997, between American
Health Properties, Inc. and The Bank of New York, as trustee
(incorporated herein by reference to exhibit 4.1 to American
Health Properties, Inc.'s current report on form 8-K (file no.
001-09381), dated January 21, 1997).
4.12 First Supplemental Indenture, dated as of November 4, 1999,
between HCPI and The Bank of New York, as trustee
(incorporated by reference to HCPI's quarterly report on form
10-Q for the period ended September 30, 1999).
10.1 Amendment No. 1, dated as of May 30, 1985, to Partnership
Agreement of Health Care Property Partners, a California
general partnership, the general partners of which consist of
HCPI and certain affiliates of Tenet (incorporated by
reference to exhibit 10.1 to HCPI's annual report on form 10-K
for the year ended December 31, 1985).
10.2 HCPI Second Amended and Restated Directors Stock Incentive
Plan (incorporated by reference to exhibit 10.43 to HCPI's
quarterly report on form 10-Q for the period ended March 31,
1997).*
10.3 HCPI Second Amended and Restated Stock Incentive Plan
(incorporated by reference to exhibit 10.44 to HCPI's
quarterly report on form 10-Q for the period ended March 31,
1997).*
10.4 HCPI Second Amended and Restated Directors Deferred
Compensation Plan (incorporated by reference to exhibit 10.45
to HCPI's quarterly report on form 10-Q for the period ended
September 30, 1997).*
-20-
<PAGE>
10.5 Employment Agreement dated April 28, 1988 between HCPI and
Kenneth B. Roath (incorporated by reference to exhibit 10.27
to HCPI's annual report on form 10-K for the year ended
December 31, 1988).*
10.6 First Amendment to Employment Agreement dated February 1, 1990
between HCPI and Kenneth B. Roath (incorporated by reference
to Appendix B of HCPI's annual report on form 10-K for the
year ended December 31, 1990).*
10.7 HCPI Executive Retirement Plan (incorporated by reference to
exhibit 10.28 to HCPI's annual report on Form 10-K for the
year ended December 31, 1987).*
10.8 Amendment No. 1 to HCPI Executive Retirement Plan
(incorporated by reference to exhibit 10.39 to HCPI's annual
report on form 10-K for the year ended December 31, 1995).*
10.9 Stock Transfer Agency Agreement between HCPI and The Bank of
New York dated as of July 1, 1996 (incorporated by reference
to exhibit 10.40 to HCPI's quarterly report on form 10-Q for
the period ended September 30, 1996).
10.12 Amended and Restated Limited Liability Company Agreement dated
November 20, 1998 of HCPI/Indiana, LLC (incorporated by
reference to exhibit 10.15 to HCPI's annual report on form 10-
k for the year ended December 31, 1998).
10.13 Amended and Restated Limited Liability Company Agreement dated
January 20, 1999 of HCPI/Utah, LLC (incorporated by reference
to exhibit 10.16 to HCPI's annual report on form 10-K for the
year ended December 31, 1998).
10.14 First Amendment to Second Amended and Restated Directors Stock
Incentive Plan, effective as of November 3, 1999 (incorporated
by reference to exhibit 10.1 to HCPI's quarterly report on
form 10-Q for the period ended September 30, 1999).
10.15 Second Amendment to Second Amended and Restated Directors
Stock Incentive Plan, effective as of January 4, 2000
(incorporated by reference to exhibit 10.15 to HCPI's annual
report on form 10-K for the year ended December 31, 1999).*
10.16 Second Amendment to Second Amended and Restated Directors
Deferred Compensation Plan, effective as of November 3, 1999
(incorporated by reference to exhibit 10.2 to HCPI's quarterly
report on form 10-Q for the period ended September 30, 1999).
10.17 Fourth Amendment to Second Amended and Restated Director
Deferred Compensation Plan, effective as of January 4, 2000
(incorporated by reference to exhibit 10.17 to HCPI's annual
report on form 10-K for the year ended December 31, 1999).*
10.18 First Amendment to Second Amended and Restated Stock Incentive
Plan effective as of November 3, 1999 (incorporated by
reference to exhibit 10.3 to HCPI's quarterly report on form
10-Q for the period ended September 30, 1999).
10.19 Revolving Credit Agreement, dated as of November 3, 1999,
among HCPI, each of the banks identified on the signature
pages hereof, The Bank of New York, as agent for the banks and
as issuing bank, and Bank of America, N.A. and Wells Fargo
Bank, N.A., as co-documentation agents, with BNY Capital
Markets, Inc., as lead arranger and Book Manager (incorporated
by reference to exhibit 10.4 to HCPI's quarterly report on
form 10-Q for the period ended September 30, 1999).
10.20 364-Day Revolving Credit Agreement, dated as of November 3,
1999 among HCPI, each of the banks identified on the signature
pages hereof, The Bank of New York, as agent for the banks,
and Bank of America, N.A. and Wells Fargo Bank, N.A., as co-
documentation agents, with BNY Capital Markets, Inc., as lead
arranger and book manager (incorporated by reference to
exhibit 10.5 to HCPI's quarterly report on form 10-Q for the
period ended September 30, 1999).
-21-
<PAGE>
27.1 Financial Data Schedule.
* Management Contract or Compensatory Plan or Arrangement.
b) Reports on Form 8-K:
On July 28, 2000, HCPI filed a Current Report on Form 8-K, reporting
the adoption of a Rights Plan.
-22-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 8, 2000 HEALTH CARE PROPERTY INVESTORS, INC.
(REGISTRANT)
/S/ James G. Reynolds
-------------------------------------------
James G. Reynolds
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
/S/ Devasis Ghose
-------------------------------------------
Devasis Ghose
Senior Vice President-Finance and Treasurer
(Principal Accounting Officer)
-23-
