FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(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, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ________________
Health Care REIT, Inc.
(Exact name of registrant as specified in its charter)
Delaware 34-1096634
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One SeaGate, Suite 1950, Toledo, Ohio 43604
(Address of principal executive office) (Zip Code)
(Registrant's telephone number, including area code)-[419] 247-2800
_________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
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 .
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes _____. No _____.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class: Shares of Common Stock, $1.00 par value
Outstanding 11,517,237 shares
<PAGE>
HEALTH CARE REIT, INC.
INDEX
Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of June 30,
1994 and December 31, 1993. 3
Consolidated Statements of Income -- Three
months ended June 30, 1994 and 1993; Six
months ended June 30, 1994 and 1993. 4
Consolidated Statements of Cash Flows --
Six months ended June 30, 1994 and 1993. 5
Consolidated Statements of Shareholders' Equity
-- Six months ended June 30, 1994 and 1993. 6
Notes to Consolidated Financial Statements. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 7
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders. 9
Item 5. Other Information. 10
Item 6. Exhibits and Reports on Form 8-K. 10
SIGNATURES 11
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS (Unaudited)
HEALTH CARE REIT, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
June 30 December 31
1994 1993
(Unaudited) (Note)
------------ ------------
<C> <C>
<S>
ASSETS
Real Estate Related Investments:
Loans receivable:
Mortgage loans $200,883,663 $165,147,444
Construction and other short-term loans 23,218,953 12,899,830
Working capital loans to related parties 6,861,610 7,234,327
------------ ------------
230,964,226 185,281,601
Investment in operating-lease properties 54,456,434 42,776,361
Investment in direct financing leases 21,816,945 52,950,188
------------ ------------
307,237,605 281,008,150
Less allowance for losses 4,400,000 4,150,000
------------ ------------
NET REAL ESTATE RELATED INVESTMENTS 302,837,605 276,858,150
Other Assets:
Deferred loan expenses 1,198,821 1,579,134
Cash and cash equivalents 323,620 4,896,314
Receivables and other assets 2,483,266 1,690,783
------------ ------------
4,005,707 8,166,231
------------ ------------
$306,843,312 $285,024,381
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowings under line of credit arrangements $ 55,300,000 $ 35,000,000
Other long-term obligations 58,555,419 61,311,115
Accrued expenses and other liabilities 5,829,963 4,581,438
------------ ------------
TOTAL LIABILITIES 119,685,382 100,892,553
Shareholders' Equity:
Common Stock, $1.00 par value:
Authorized - 15,000,000 shares
Issued and outstanding - 11,517,237 in
1994 and 11,446,249 in 1993 11,517,237 11,446,249
Capital in excess of par value 159,597,976 158,013,957
Undistributed net income 16,042,717 14,671,622
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 187,157,930 184,131,828
------------ ------------
$306,843,312 $285,024,381
============ ============
</TABLE>
NOTE: The balance sheet as December 31, 1993 has been derived from
the audited financial statements at that date, but does not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
See notes to consolidated financial statements
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
HEALTH CARE REIT, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
----------------------- ------------------------
<C> <C> <C> <C>
<S>
Gross Income:
Interest and other income $ 6,208,096 $5,677,229 $11,444,192 $10,282,252
Direct financing leases:
Lease income 1,484,739 2,059,969 3,301,416 4,276,855
Gain on exercise of
options 3,429,493 262,408 3,621,768 1,593,761
Operating leases:
Rents 1,220,489 655,863 2,239,307 956,287
Gain on exercise of
options 100,029 100,029
Loan and commitment fees 287,869 293,119 465,242 442,302
Other real estate owned-net 548 548
----------- ---------- ----------- -----------
12,730,715 8,949,136 21,171,954 17,552,005
Expenses:
Interest:
Senior notes and other
long-term obligations 1,600,887 1,861,044 3,146,096 2,938,247
Line of credit arrange-
ments 897,361 1,038,555 1,426,315 2,220,992
Loan expenses 286,355 102,354 360,598 166,494
Management fees 948,574 589,016 1,591,628 1,204,339
Provision for depreciation 347,093 204,276 649,030 286,867
Provision for losses 250,000 250,000 150,000
Other operating expenses 600,588 363,979 964,180 654,545
----------- ---------- ----------- -----------
4,930,858 4,159,224 8,387,847 7,621,484
----------- ---------- ----------- -----------
NET INCOME $ 7,799,857 $4,789,912 $12,784,107 $ 9,930,521
=========== ========== =========== ===========
Average number of shares
outstanding 11,504,848 8,811,802 11,486,049 8,791,582
Net income per share $ .68 $ .54 $ 1.11 $ 1.13
Dividends per share $ .50 $ .48 $ .995 $ .955
</TABLE>
See notes to consolidated financial statements
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
HEALTH CARE REIT, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Six Months Ended
June 30
1994 1993
----------------------------
<C> <C>
<S>
OPERATING ACTIVITIES
Net income $ 12,784,107 $ 9,930,521
Adjustments to reconcile net income to
cash provided by operating activities:
Amortization of loan and organization
expenses 361,676 166,494
Provision for losses 250,000 148,502
Provision for depreciation 649,030 286,867
Loan and commitment fees earned less
than cash received 327,677 507,280
Direct financing lease income less
than cash received 634,178 143,142
Interest income less than (in excess
of) cash received 800,810 (193,956)
Increase in accrued expenses and
other liabilities 402,202 1,263,718
Increase in other receivables and
prepaid items (793,562) (587,783)
------------ ------------
NET CASH PROVIDED FROM OPERATING ACTIVITIES 15,416,118 11,664,785
INVESTING ACTIVITIES
Proceeds from exercise of lease purchase
options 26,879,323 7,056,207
Decrease in funds held in escrow--net 135,000
Investment in operating-lease properties (10,541,786) (9,700,000)
Investment in loans receivable (53,942,568) (54,648,646)
Investment in direct financing leases (1,300,000)
Principal collected on loans 11,110,206 9,448,883
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (27,794,825) (47,708,556)
FINANCING ACTIVITIES
Long-term borrowings under line of credit
arrangments 97,800,000 158,500,000
Principal payments on long-term borrowings
under line of credit arrangements (77,500,000) (158,000,000)
Net proceeds from the issuance of shares 1,655,007 1,826,621
Borrowings under other long-term
obligations 52,000,000
Principal payments on other long-term
obligations (2,755,696) (8,763,514)
Decrease (increase) in deferred loan
expense 19,714 (968,943)
Cash distributions to shareholders (11,413,012) (8,378,330)
------------ ------------
NET CASH PROVIDED FROM FINANCING ACTIVITIES 7,806,013 36,215,834
------------ ------------
(Decrease) increase in cash and cash
equivalents (4,572,694) 172,063
Cash and cash equivalents at beginning
of period 4,896,314 265,868
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 323,620 $ 437,931
============ ============
Supplemental Cash Flow Information --
Interest Paid $ 4,512,401 $ 4,439,692
============ ============
</TABLE>
See notes to consolidated financial statements
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
HEALTH CARE REIT, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Six Months Ended
June 30
1994 1993
------------ ------------
<C> <C>
<S>
Balances at beginning of period $184,131,828 $118,947,994
Net income 12,784,107 9,930,521
Proceeds from issuance of shares under the
dividend reinvestment plan - 70,988 in
1994 and 80,551 in 1993 1,655,007 1,826,621
Cash dividend paid (11,413,012) (8,378,330)
------------ ------------
Balances at end of period $187,157,930 $122,326,806
============ ============
</TABLE>
See notes to consolidated financial statements
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HEALTH CARE REIT, INC. AND SUBSIDIARY
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered for a fair
presentation have been included. Operating results for the six
months ended June 30, 1994 are not necessarily an indication of the
results that may be expected for the year ended December 31, 1994.
For further information, refer to the financial statements and
footnotes thereto included in the Company's annual report on Form
10-K for the year ended December 31, 1993.
Net income per share has been computed by dividing net income
by the average number of shares outstanding.
Note B - Contingencies
As disclosed in the financial statements for the year ended
December 31, 1993, the Company was contingently liable for certain
obligations amounting to approximately $21,255,000. No significant
change in these contingencies has occurred as of June 30, 1994.
Note C - Noncash Transactions
During the first six months, the Company reclassified two
direct financing lease properties, one for approximately $3,324,000
to a mortgage loan and one for approximately $3,582,000 to an
operating-lease property. Both reclassifications were due to
contract changes made in the ordinary course of business.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
During the first half of 1994, the Company financed six
mortgage loans for a total of $37,288,000. In addition, the
Company advanced approximately $15,461,000 for 14 construction
loans, of which most financing was for new facilities rather than
additions to existing facilities. Five mortgage loans were paid
off during the first six months of 1994 for a total of $8,353,000.
The above loan activity, plus changes in working capital loans and
normal principal repayments, were the reasons net loans increased
approximately $45,683,000.
During the first six months of 1994, the Company purchased
three facilities, made additional advances for two other operating-
lease properties, and continued construction on three other
facilities. In addition, one operating-lease lessee exercised its
option to purchase. The net effect of the above activity, plus the
noncash transaction mentioned in Note C, were the principal reasons
for the increase in operating-lease properties of approximately
$11,680,000. Also, seven direct financing lease purchase options
were exercised while the Company invested in one new direct
financing lease property. The seven lease exercises and one new
investment caused the investment in direct financing leases to
decline $31,133,000.
Since December 31, 1993, borrowings under lines of credit
arrangements increased $20,300,000 due to the investment activity
discussed above. As of June 30, 1994, the Company had
approximately $46,537,000 in unfunded commitments and total
available funding sources of approximately $73,200,000.
During the first half of 1994, the Company received
approximately $1,655,000 from the sale of its shares under the
dividend reinvestment plan.
Results of Operations
Gross income for the first half of 1994 was $21,171,954 or
20.6% greater than the first half of 1993. Except for direct
financing lease income, all major components of gross income
increased. The increase in interest income on loans receivable,
operating-lease rents and loan and commitment fees is attributable
to the growth in the loan and operating-lease properties portfolio,
long-term trends which the Company anticipates will continue. The
decrease in direct financing lease income is a reflection of
another long-term trend which should continue due to the greater
market acceptance of mortgage loans and operating leases.
Contributing to the increase in gross income in the first half
of 1994 over the comparable period in 1993 was the gain on the
exercise of lease purchase options. There were eight lessees
exercising options in 1994 versus four in 1993. These 1994
exercises resulted in an increase in gain on the exercise of lease
purchase options of $2,128,000.
Net income totalled $12,784,107 in the first half of 1994
versus $9,930,521 for the comparable period in 1993. While net
income increased, net income per share declined to $1.11 versus
$1.13 per share in the first half of 1993. The decline in net
income per share was primarily caused by the sale of 2,500,000
additional shares in the fourth quarter of 1993.
The 1994 net income was also affected by several trends.
First, average earnings on assets declined 67 basis points
(excluding gains) in the first half of 1994 versus the first half
of 1993. The narrowing of the net interest margin was heightened
by an increase of 34 basis points (1994 versus 1993) in the average
cost of borrowing. The decline in average earnings on assets
reversed in the second quarter of 1994 and has started to increase,
which is a reflection of the recent rise in interest rates. The
increase in the average cost of borrowing also reversed in the
second quarter of 1994 in spite of the general rise in interest
rates. The decline in average cost of borrowing in the second
quarter versus first quarter was due to higher average borrowings
on the lines of credit, which is the Company's lowest cost of debt
financing.
For the balance of 1994, the Company anticipates a continued
general rise in both its average earnings on assets and its average
cost of debt. Average earnings on assets is anticipated to rise
both because of the general interest rate environment and the
anticipated required conversion of certain variable interest-rate
assets to a higher fixed rate debt. Average cost of debt is
anticipated to rise because of the general interest rate
environment.
Lastly, the Company's net income was affected by the average
quarter-end, debt-to-equity ratio of .63 to 1 in 1994 versus 1.09
to 1 in the first half of 1993. This decrease is solely due to the
fourth quarter of 1993 equity offering, which was initially used to
pay down debt. The decrease in debt had the affect of decreasing
the Company's interest-related expense, and thereby increasing net
income.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders of Health Care REIT, Inc.
was duly called and held on May 18, 1994 in Toledo, Ohio. Proxies
for the meeting were solicited on behalf of the Company's
management and Board of Directors pursuant to Regulation 14A of the
General Rules and Regulations of the Commission. There was no
solicitation in opposition to the management's nominees for
election as directors as listed in the Proxy Statement, and all
such nominees were elected.
Votes were cast at the meeting upon the proposals described in
the Proxy Statement for the meeting (filed with the Commission
pursuant to Regulation 14A and incorporated herein by reference) as
follows:
Proposal #1 - The election of two directors:
Nominee For Against
----------------- ---------- -------
Pier C. Borra 10,202,037 130,795
George L. Chapman 10,205,304 127,528
The terms of Messrs. Chopivsky, Douglas, Glowacki, Thompson,
Unverferth and Wolfe continue.
Proposal #2 - to approve the increase in the number of common
stock and to authorize preferred stock:
For 9,176,911
Against 972,269
Abstain 183,652
Proposal #3 - to approve amendments to the Company's Restated
Certificate of Incorporation and By-Laws regarding stockholder
proposals:
For 5,784,847
Against 1,252,871
Abstain 185,000
Proposal #4 - to approve an amendment to the Company's
Incentive Stock Option Plan:
For 9,618,927
Against 491,289
Abstain 222,621
Proposal #5 - to ratify the Management Agreement between
Health Care REIT, Inc. and First Toledo Corporation or its
assignee:
For 10,032,965
Against 95,918
Abstain 203,948
Proposal #6 - to ratify the appointment of Ernst & Young as
independent auditors for 1994:
For 10,189,632
Against 57,571
Abstain 85,629
Item 5. Other Information
On April 20, 1994, the Company issued a press release in which
it announced, among other things, that the Board of Directors voted
to pay a quarterly cash dividend of $.50 payable to shareholders of
record on May 6, 1994, and that net income was $.43, a decrease of
$.16 from the first quarter of 1993.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4. Specimen of Note with Fifth Third Bank
4. Specimen of Note with Capital Bank
99. Press Release dated April 20, 1994
(b) Reports on Form 8-K
None
Pursuant to the requirement of the Securities and Exchange Act
of 1934, the Registrant had duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
HEALTH CARE REIT, INC.
Date: July 28, 1994 By: BRUCE G. THOMPSON
Bruce G. Thompson, Chairman
and Chief Executive Officer
Date: July 28, 1994 By: FREDERIC D. WOLFE
Frederic D. Wolfe, President
Date: July 28, 1994 By: ROBERT J. PRUGER
Robert J. Pruger, Chief
Financial Officer
Date: July 28, 1994 By: KATHLEEN S. PREPHAN
Kathleen S. Prephan, Chief
Accounting Officer
<PAGE>
EXHIBIT INDEX
The following documents are included in this Form 10-Q as Exhibits:
Designation
Number Under
Exhibit Item 601 of Exhibit Page
Number Regulation S-K Description Number
- - ------- -------------- -------------------------- ------
1 4 Note with Fifth Third Bank 13
2 4 Note with Capital Bank 20
3 99 Press Release
dated April 20, 1994 22
OPEN-END DEMAND NOTE
$8,500,000.00 June 3, 1994
Sylvania, Ohio
FOR VALUE RECEIVED, the undersigned, HEALTH CARE REIT, INC. (the
"Maker"), unconditionally promises to pay to the order of Capital
Bank, N.A., a national banking association (the "Bank"), at 5520
Monroe Street, Sylvania, Ohio 43560, the principal sum of EIGHT
MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($8,500,000.00) or
so much as may have been advanced and is outstanding from time to
time plus interest at the Prime rate in effect from time to time at
Bank.
All unpaid principal and interest shall be payable upon
demand of Bank.
Until Bank demands payment, the interest owing on the
unpaid principal shall be paid quarterly commencing August 31,
1994.
All payments shall be credited first to interest accrued
but unpaid and then to the payment and reduction of principal.
Late payments will be charged a fee of 10% of the payment amount.
Interest shall be calculated by means of the 365/360 day
method.
Maker shall make all payments on this Note at the
principal offices of Bank or at such other place as the holder
hereof may designate.
Maker may prepay all or part of the this Note at any time
without penalty.
This Note is issued under and entitled to the benefits of
the provisions of a Line of Credit Agreement of even date herewith,
incorporated hereunder by reference.
In the event the Maker fails to make any payment when due
or upon the occurrence of an event of default as defined in the
Line of Credit Agreement of even date herewith, Bank at its
election may declare any and all obligations or liabilities of
Maker to Bank immediately due and payable without presentment,
demand, protest or notice upon default and may proceed against any
and all security and may enforce any and all of its remedies at law
or equity. In such event, the entire principal balance and accrued
interest then owing shall bear interest at a rate which is the
greater of sixteen percent (16%) or four percent (4%) above the
prime interest rate in effect from time to time at Bank until fully
paid, provided, however, that in no event shall the amount of
interest paid hereunder exceed the maximum rate of interest
permitted by law. Maker agrees to pay all costs of collection
hereof, including reasonable attorney's fees.
This Note shall be construed under the laws of the State
of Ohio.
Bank's acceptance of one or more late or partial payments
shall not be a course of dealing upon which the Maker may rely on
future occasions or a waiver of Bank's right to prompt full payment
when due under this Note. Bank's forbearance from exercising any
right or remedy under this Note shall not be a waiver of such
rights and remedies. Bank's forbearance from exercising any right
or remedy under this Note on any one or more occasions shall not be
a course of dealing or waiver on which the Maker may rely on any
future occasions. Bank's exercise of any rights or remedies or a
part of a right or remedy on one or more occasions shall not
preclude Bank from exercising the right or remedy at any other
time. Bank's rights and remedies under this Note and the law and
equity are cumulative to, but independent of, each other.
Maker represents and warrants that the loan evidenced by
this Note is for business purposes and not primarily for personal,
family, household or agricultural purposes.
Maker hereby authorizes any attorney in any court of
record in the State of Ohio after this Note becomes due and payable
to appear on its behalf; to waive the issuing and service of
process and its constitutional rights to due process of law; to
confess a judgment hereon against it in favor of any holder hereof
for the amount then appearing due together with cost of suit; and
thereupon to release all errors and waive all rights of appeal and
stays of execution. Maker agrees that any exercise of the
foregoing Power of Attorney shall not terminate the same but such
power shall continue until the entire balance due on this Note
including interest and costs of suit is fully paid. With full
knowledge of constitutional rights, Maker voluntarily waives all
rights to notice and hearing prior to judgment being so confessed.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE
AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE
TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A
COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU
MAY HAVE AGAINST THE CREDITOR, WHETHER FOR RETURNED GOODS, FAULTY
GOODS, FAILURE ON ITS PART TO COMPLY WITH THIS AGREEMENT, OR ANY
OTHER CAUSE.
MAKER: HEALTH CARE REIT, INC.
By: __________________________________
Robert J. Pruger, Chief Financial
Officer
REVOLVING COGNOVIT DEMAND NOTE
$10,000,000.00 Toledo, Ohio June 1, 1994
ON DEMAND, FOR VALUE RECEIVED, Health Care REIT, Inc., a
Delaware corporation (the "Borrower"), having an address of One
SeaGate, Toledo, Ohio, 43604, hereby promises to pay to the order
of The Fifth Third Bank of Northwestern Ohio, N.A., a national
banking association ("Lender"), having an address of 606 Madison
Avenue, Toledo, Ohio, 43604, the sum of Ten Million Dollars
($10,000,000.00) or such lesser principal amount as may be advanced
by Lender and outstanding hereunder from time to time, plus
interest from this date until fully paid.
1. Interest. Borrower shall pay interest on the
outstanding principal balance of this Revolving Cognovit Demand
Note (the "Note") at the variable rate per annum equal to the rate
of interest announced by the Lender as its prime rate of interest.
The prime rate is not necessarily the lowest rate offered by the
Lender and the interest rate will change as and when Lender's prime
rate changes. Lender's decision as to the prime rate shall be
final and binding. Borrower shall pay interest on any amounts not
paid when due, and on any judgment on this Note, at the default
rate of interest (the "Default Rate") equal to six percent (6%) per
annum plus the rate of interest otherwise payable on this Note.
Interest shall be calculated based on the actual number of days
elapsed over a 360-day year (365/360 method).
2. Payments. Commencing June 30, 1994, and on the last day
of each consecutive month thereafter, Borrower shall make monthly
payments of interest until the earlier of (i) demand by Lender, or
(ii) May 31, 1995, at which time all outstanding principal and
accrued but unpaid interest shall be due and payable. Each payment
shall be made in U.S. Dollars, in immediately available funds
without set off or counterclaim.
3. Renewal. Provided that no event of default (as that
term is defined in Section 11 infra.) has occurred, in the event
that Lender determines that this Note will not be renewed at
maturity, Lender shall provide Borrower with not less than thirty
(30) days' prior written notice of non-renewal. Nothing in this
Section 3 obligates Lender to renew or extend this Note or affects
Lender's right to demand full payment of this Note at any time.
4. Place of Payment. Borrower shall make all payments on
this Note at Lender's office at 606 Madison Avenue, Toledo, Ohio,
43604 or at such other place as the Lender may designate.
5. Purpose. Borrower shall use the proceeds of this Note
for working capital purposes in the ordinary course of business.
6. Prepayment. Borrower may prepay this note in whole or
in part without penalty, provided Borrower provides Lender with ten
(10) days' prior written notice thereof. No partial prepayment
will postpone the due date or affect the amount of the next
scheduled payment due hereunder.
7. Late Charge. Borrower acknowledges that default in any
payment due under this Note will result in loss and additional
expense to Lender in handling such delinquent payments and meeting
its other financial obligations, and to the extent such loss and
additional expense is extremely difficult and impractical to
ascertain, Borrower agrees that if any payment hereunder is not
paid within ten (10) days of the due date, Borrower shall pay to
Lender a late charge equal to five percent (5%) of the amount of
the overdue payment.
8. Application of Payments. Unless Lender elects
otherwise, all payments and other amounts received by Lender shall
be credited first to any charges, costs, expenses and fees due
hereunder or payable by Borrower in connection herewith; second, to
interest on the foregoing amounts at the Default Rate from the due
date or date of payment by Lender, as the case may be; third, to
accrued by unpaid interest on this Note; fourth, to the principal
amount outstanding; and the balance, if any, to Borrower.
9. Covenants, Etc. Run to Lender. All representations,
warranties undertakings and covenants, both financial and non-
financial, now or hereafter made, given, accepted or agreed upon by
Borrower to or in favor of any lender (including, without
limitation, those representations, warranties, undertakings and
covenants set forth in the Section Amended and Restated Credit
Agreement between Borrower and Five Banks and National City Bank,
As Agent, dated October 1, 1989, together with any extensions,
renewals, amendments, restatements, modifications or refinancings
thereof and further including, without limitation, those
representations warranties, undertakings and covenants set forth in
the Note Purchase Agreement dated as of April 18, 1993 between
Borrower and The Equitable Life Assurance Society of the United
States, Equitable Variable Life Insurance Company, Allstate Life
Insurance Company, The Life Insurance Company of Virginia, and
Central Life Assurance Company, together with any extensions,
renewals, amendments, restatements, modifications or refinancings
thereof), are hereby incorporated herein by reference. Borrower
intends and agrees that Lender shall enjoy the benefits of such
representations, warranties, undertakings and covenants as if made
directly in favor of Lender by Borrower herein. Notwithstanding
the foregoing, Borrower shall furnish Lender with only the
statements, reports and information listed below at the times or
intervals specified unless Lender requests from Borrower additional
information, statements, reports, certifications, data or material
in which event Borrower shall, from time to time, satisfy Lender's
requests for such additional information, statements,
certifications, data or material:
a. Within one hundred twenty (120) days after the close
of each fiscal year, audited financial statements for the year
ended prepared by independent outside accountants, satisfactory to
Lender.
b. Within one hundred twenty (120) days after the close
of each fiscal year, a copy of its 10-K report filed with the
Securities and Exchange Commission.
c. Within forty-five (45) days after the close of each
quarter, a copy of Borrower's financial statements certified by an
officer of the Borrower as of the close of that period.
d. Within forty-five (45) days after the close of each
quarter, a copy of Borrower's Delinquency Report and Unfunded
Commitment Report.
e. Within forty-five (45) days after the close of each
quarter, a statement, certified by an officer of the Borrower, to
the effect that the Borrower is in compliance with its covenants
with its lenders.
10. Furnish Copies. At all times during which (i) any
amount is outstanding under this Note, or (ii) credit is available
to Borrower under this Note, Borrower shall promptly furnish to
Lender true, correct and complete copies of any and all loan
agreements, credit agreements or other similar agreements as well
as all notes, mortgages, security agreements and the like, together
with all amendments and modifications to each of them
(collectively, the "Loan Documents") pursuant to or in connection
with which Borrower obtains or can obtain borrowed funds.
11. Default. The following shall constitute events of
default ("Event of Default") under this Note:
a) If Borrower or any subsidiary of Borrower shall fail
to pay when due any amount owed to Lender of every nature or type.
b) If Borrower or any subsidiary of Borrower shall fail
to perform any obligation (other than payment obligations) to or in
favor of Lender of every nature or type (i) which failure continues
of a period of ten (10) calendar days following notice by Lender,
or (ii) if, by reason of the nature of such failure, the same
cannot be remedied within said ten (10) days, Borrower fails to
proceed with diligence satisfactory to Bank after receipt of the
notice to cure the same or, in any event, fails to cure such
default within sixty (60) days after receipt of the notice.
c) If Borrower or any subsidiary of Borrower shall fail
to pay when due any material obligation to any third party and such
third party accelerates the obligation or institutes legal
proceedings with respect to such non-payment.
d) If any representation, warranty or statement or
material information now existing or hereafter made by Borrower in
writing to Lender or to any other lender shall be false or
erroneous in any material respect.
e) If Borrower or any subsidiary of Borrower shall fail
or omit to observe or perform any material covenant or agreement
now or hereafter undertaken by Borrower in any credit agreement,
note purchase agreement, loan agreement, note, mortgage,
assignment, security agreement or other document pursuant to or in
connection with which Borrower obtains or can obtain borrowed funds
from any lender, note purchaser or the like.
f) If an event of default under any Loan Document has
occurred.
g) If Borrower becomes insolvent or generally unable to
meet its debt as they become due or fails, suspends or goes out of
business.
h) If there is a material adverse change in Borrower's
business or financial condition.
i) If a trustee, receiver or custodian is appointed
over all or any part of Borrower's property.
j) If Borrower or any subsidiary of Borrower shall
commence or consent to any law relating to bankruptcy, insolvency,
reorganization or relief of debtors.
k) If there shall be a commenced against the Company or
any subsidiary any proceeding under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors which is not
dismissed within sixty (60) days of the commencement thereof.
12. Acceleration, Remedies. Upon the occurrence of any
Event of Default, in addition to any and all other remedies at law
or in equity, at the option of Lender the outstanding principal
balance of this Note and all accrued and unpaid interest thereon
and all other amounts payable by Borrower to Lender of every nature
and type shall be immediately due and payable, and all such amounts
shall bear interest at the Default Rate from the date of the Event
of Default until paid. Lender may exercise any and all remedies
without notice or demand of any kind which are hereby waived by
Borrower.
13. Demand Feature Unconditional. Notwithstanding the
Events of Default set forth in Section 11 above, Lender's right to
demand full payment of this Note by Borrower at any time is
unconditional and does not require the existence of an Event of
Default.
14. Representations. Borrower hereby represents and
warrants to Lender that (i) Borrower is a duly organized and
validly existing Delaware corporation in good standing; (ii)
Borrower has requisite corporate power and authority to execute and
deliver this Note and to incur the indebtedness reflected thereby;
(iii) the execution and deliver of this Note and the consummation
of the transactions contemplated hereby shall not result in a
breach by Borrower under any note, mortgage, loan agreement,
security agreement or other contract to which Borrower is a party
or signatory; and (iv) the officer of Borrower executing and
delivering this Note on Borrower's behalf has been duly authorized
to do so.
15. Certification of No Default. At all times during which
(i) any amount is outstanding under this Note, or (ii) credit is
available to Borrower under this Note, Borrower shall furnish to
Lender, on the last day of each quarter, its certificate signed by
its chief executive or chief financial officer, to the effect that
no default has occurred under any Loan Document or, if a default
has occurred, that a default has occurred together with a
description of such default.
16. Compensating Balance. At all times during which (i)
any amount is outstanding under this Note, or (ii) credit is
available to Borrower under this Note, Borrower shall maintain with
Lender a non-interest bearing deposit account with a minimum
balance of $100,000.00.
17. Time is of the Essence. Time is of the essence in the
payment of this Note.
18. Waivers. None of the following shall constitute a
course of dealing, estoppel, waiver or the like upon which Borrower
may rely: (a) Lender's acceptance of one or more late or partial
payments; (b) Lender's forbearance from exercising any right or
remedy under this Note; or (c) Lender's forbearance from exercising
any right or remedy under this Note on any one or more occasions.
Lender's exercise of any rights or remedies or a part of a right or
remedy on one or more occasions shall not preclude Lender from
exercising the right or remedy at any other time. Lender's rights
and remedies under this Note and the law and equity are cumulative
to, but independent of, each other.
19. Jury Trial Waiver. The Borrower hereby waives any right
to a trial by jury in any action to enforce or defend any matter
arising from or related to the Note, or any other document or
agreement evidencing or relating to the loan.
20. Notices. All notices, demands, requests and consents
(hereinafter "notices") given or made pursuant to this Note shall
be in writing, shall be addressed to the addresses set forth in the
introductory paragraph hereof or such other address as either party
may designate for itself by a notice complying with this Section,
and shall be served by: (a) personal delivery; (b) United States
mail, postage prepaid; or (c) nationally recognized overnight
courier service. All notices shall be deemed to be given upon the
earlier of actual receipt, three (3) days after mailing or one (1)
business day after deposit with the overnight courier. Any notices
meeting the requirements of this Section shall be effective,
regardless of whether or not actually received.
21. Representation and Warranty Regarding Business Purpose.
Borrower represents and warrants that the loan evidenced by this
Note is for business purposes and not for personal, family,
household, or agricultural purposes.
22. Security. This Note is unsecured.
23. Waiver of Demands. Borrower hereby waives presentment,
dishonor, notice of dishonor, protest, noting for protest, notice
of default all other notices, and all demands.
24. Attorneys' Fees and Expenses. After an Event of
Default has occurred or has been declared, Borrower shall pay to
Lender all reasonable costs and expenses incurred by Lender in
enforcing or preserving Lender's rights under this Note (regardless
of whether such Event of Default is subsequently cured) including
but not limited to, (a) attorneys' and paralegals' fees and
disbursements; (b) the fees and expenses of any litigation,
administrative, bankruptcy, insolvency, receivership and any other
similar proceeding; (c) court costs; (d) the expenses of Lender,
its employees, agents, attorneys and witnesses in preparing for
litigation, administrative, bankruptcy, insolvency and other
proceedings and for lodging, travel, and attendance at meetings,
hearings, depositions, and trials; and (e) consulting and witness
fees incurred by Lender in connection with any litigation or other
proceeding.
25. Governing Law. This Note shall be construed under the
laws of the State of Ohio.
26. Severability. If any clause, provision, section or
article of this Note is ruled invalid by any court of competent
jurisdiction, the invalidity of such clause, provision, section or
article shall not affect any of the remaining provisions hereof.
27. Assignment. Borrower shall neither assign its rights
or delegate its obligation under this Note.
28. Warrant of Attorney. With full knowledge of all
constitutional rights, Borrower hereby authorizes any attorney-at-
law to appear on Borrower's behalf in any court of record in the
State of Ohio after this Note becomes due and payable, whether by
demand, acceleration or otherwise; to waive the issuing and service
of process and all other constitutional rights to due process of
law; to confess a judgment against Borrower in favor of Lender for
the amount then appearing due together with the costs of suit; to
release all errors; and to waive all rights of appeal and stays of
execution. With full knowledge of all constitutional rights,
Borrower hereby voluntarily and knowingly waives all rights to
notice and hearing prior to judgment being so confessed against
Borrower.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE
AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE
TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A
COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU
MAY HAVE AGAINST THE CREDITOR, WHETHER FOR RETURNED GOODS, FAULTY
GOODS, FAILURE ON ITS PART TO COMPLY WITH THE AGREEMENT, OR ANY
OTHER CAUSE.
HEALTH CARE REIT, INC.
By:_____________________________
Title:__________________________
F O R I M M E D I A T E R E L E A S E
PRESS RELEASE
July 20, 1994
For more information contact:
Erin Ibele (419) 247-2800
Robert Pruger (419) 247-2800
HEALTH CARE REIT, INC. DECLARES DIVIDEND
AND ANNOUNCES SECOND QUARTER RESULTS
AND AN INCREASE IN CREDIT RATING
Toledo, Ohio, July 20, 1994....The Directors of Health
Care REIT, Inc. (NYSE/HCN) voted to pay a quarterly dividend at the
rate of $.505 per share, an increase of $.005 per share from the
previous dividend. The dividend will be payable August 19, 1994 to
shareholders of record on August 5, 1994. This will be the REIT's
93rd consecutive dividend distribution.
Net cash provided from operating activities for the six
months ended June 30, 1994 was $15,807,478 ($1.38 per share)
compared with $10,988,850 ($1.25 per share) for the six months
ended June 30, 1993.
For the quarter ended June 30, 1994, net income per share
of $.68 was up $.14 or 25.9% from the second quarter of 1993. The
increase is principally the result of gains on the exercise of
options in the second quarter of 1994. For the first half of 1994,
net income per share was $1.11 compared to $1.13 for the first half
of 1993.
Gross income for the three months ended June 30, 1994 was
up 42.3% from the second quarter of 1993. Total assets of $306.8
million at June 30, 1994 reflect a 10.4% increase from a year ago.
The following chart presents the information highlighted
above.
<TABLE>
<CAPTION> Three Months Ended
June 30 (Unaudited)
----------------------------
1994 1993
------------ ------------
<C> <C>
<S>
Gross income $ 12,730,715 $ 8,949,136
Net income $ 7,799,857 $ 4,789,912
Funds from operations $ 9,515,056 $ 5,424,459
Net income per share $ .68 $ .54
Funds from operations per share $ .83 $ .62
Average number of shares outstanding 11,504,848 8,811,802
</TABLE>
<TABLE>
<CAPTION> Six Months Ended
June 30 (Unaudited)
----------------------------
1994 1993
------------ ------------
<C> <C>
<S>
Gross income $ 21,171,954 $ 17,552,005
Net income $ 12,784,107 $ 9,930,521
Funds from operations $ 15,807,478 $ 10,988,850
Net income per share $ 1.11 $ 1.13
Funds from operations per share $ 1.38 $ 1.25
Average number of shares outstanding 11,486,049 8,791,582
Total assets as of June 30 $306,843,312 $278,032,160
</TABLE>
The Company is pleased to announce that it recently
received a notice of an increase in its credit rating to BBB from
Duff & Phelps Credit Rating Co.
Health Care REIT, Inc. is a real estate investment trust
which invests in health care facilities, primarily nursing homes.
The Company also invests in assisted living and retirement
facilities, rehabilitation centers, primary care facilities and
psychiatric hospitals.
