<PAGE> 1
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 SEPTEMBER 30, 1997
--------------------------------------------------
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 1500, 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 October 31, 1997.
Class: Shares of Common Stock, $1.00 par value
Outstanding 24,124,633 shares
<PAGE> 2
HEALTH CARE REIT, INC.
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - September 30, 1997
and December 31, 1996 3
Consolidated Statements of Income - Three
and nine months ended September 30, 1997 and 1996 4
Consolidated Statements of Shareholders'
Equity - Nine months ended September 30, 1997
and 1996 5
Consolidated Statements of Cash Flows-
Nine months ended September 30, 1997 and 1996 6
Notes to Unaudited Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. OTHER INFORMATION
Item 4. Other Information 11
Item 5. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
EXHIBIT INDEX 13
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
--------------------
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1997 1996
(UNAUDITED) (NOTE)
----------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Real estate investments:
Loans receivable:
Mortgage loans $ 347,414 $ 292,442
Construction loans 50,142 61,013
Working capital loans 7,068 4,727
----------------- -----------------
404,624 358,182
Investment in operating leases 243,422 153,623
Investment in direct financing leases 10,638 10,876
----------------- -----------------
658,684 522,681
Less allowance for losses (10,237) (9,787)
----------------- -----------------
NET REAL ESTATE INVESTMENTS 648,447 512,894
Other Assets:
Investments 2,803 768
Deferred loan expenses 2,442 1,432
Cash and cash equivalents 28,090 581
Receivables and other assets 4,853 4,156
----------------- -----------------
38,188 6,937
----------------- -----------------
TOTAL ASSETS $ 686,635 $ 519,831
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowings under line of credit arrangements $ 85,600 $ 92,125
Other long-term obligations 170,693 92,270
Accrued expenses and other liabilities 17,866 9,900
----------------- -----------------
TOTAL LIABILITIES 274,159 194,295
Shareholders' equity:
Preferred Stock, $1.00 par value:
Authorized - 10,000,000 shares
Issued and outstanding - None
Common Stock, $1.00 par value:
Authorized - 40,000,000 shares
Issued and outstanding - 22,124,633
in 1997 and 18,320,291 in 1996 22,125 18,320
Capital in excess of par value 381,602 298,281
Undistributed net income 8,796 8,167
Unrealized gains on investment securities
available for sale 2,475 768
Unamortized restricted stock (2,522)
----------------- -----------------
TOTAL SHAREHOLDERS' EQUITY 412,476 325,536
----------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 686,635 $ 519,831
================= =================
</TABLE>
NOTE: The balance sheet at December 31, 1996 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 unaudited consolidated financial statements
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CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1997 1996 1997 1996
------------------ ----------------- ----------------- -------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
REVENUES:
Interest income $ 11,694 $ 9,664 $ 33,629 $ 26,764
Prepayment fees 0 844 477 2,385
Operating leases:
Rent 5,694 2,487 16,118 6,713
Gain on exercise of options 0 0 0 155
Direct financing leases:
Lease income 357 366 1,071 1,099
Gain on exercise of options 0 0 0 421
Loan and commitment fees 779 681 2,080 1,946
Other income 35 26 201 101
----------------- ---------------- ------------ ---------------
Total Revenue $ 18,559 $ 14,068 $ 53,576 $ 39,584
EXPENSES:
Interest expense $ 3,871 $ 3,703 $ 11,634 $ 11,263
Loan expense 172 204 550 594
Provision for depreciation 1,348 637 3,809 1,667
Provision for losses 150 150 450 450
Disposition of investment 0 808 0 808
General and administrative expenses 1,245 1,183 3,606 3,173
------------------ ----------------- --------------- -----------------
Total expenses $ 6,786 $ 6,685 20,049 17,955
------------------ ----------------- --------------- -----------------
Net Income $ 11,773 $ 7,383 $ 33,527 $ 21,629
================= ================= =============== =================
Average number of shares outstanding 22,088 14,818 21,127 13,315
Net income per share $ 0.53 $ 0.50 $ 1.59 $ 1.62
Dividends per share $ 0.530 $ 0.520 $ 1.575 $ 1.560
</TABLE>
See notes to unaudited consolidated financial statements
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
1997 1996
------------------------------------
(IN THOUSANDS)
<S> <C> <C>
Balances at beginning of period $ 325,536 $ 187,598
Net income 33,527 21,629
Proceeds from issuance of shares under the
dividend reinvestment plan - 137,616 in
1997 and 96,005 in 1996 3,303 2,013
Proceeds from issuance of shares under the
employee stock incentive plan - 186,726
in 1997 and 40,000 in 1996 4,073 714
Net proceeds from sale of 3,480,000 shares in 1997
and 3,910,000 in 1996 79,750 82,270
Change in net unrecognized gain on
investment securities available for sale 1,706 593
Reserved for restricted stock, net of amortization (2,522)
Cash dividends paid (32,897) (20,064)
----------------- ----------------
Balances at end of period $ 412,476 $ 274,753
=============== ==============
</TABLE>
See notes to unaudited consolidated financial statements
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<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
1997 1996
----------------------------------
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 33,527 $ 21,629
Adjustments to reconcile net income to net cash
Provision for depreciation 3,853 1,676
Provision for losses, net of charge-offs 450 168
Disposition of investment 808
Amortization of loan and organization expenses 552 595
Loan and commitment fees earned less than cash received 3,240 1,335
Direct financing lease income less than cash received 238 117
Rental income in excess of cash received ( 1,090) (326)
Interest income in excess of cash received (25) (129)
Increase in accrued expenses and other liabilities 4,726 2,035
Increase in other receivables and prepaid items 410 (464)
--------- -----------
NET CASH PROVIDED FROM OPERATING ACTIVITIES 45,881 27,444
INVESTING ACTIVITIES
Investment in operating-lease properties (90,851) (33,438)
Investment in loans receivable (92,457) (118,168)
Principal collected on loans 18,654 29,750
Proceeds from defeasance escrow 24,628
Proceeds from exercise of lease purchase options 9,508
Other (390) (181)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (140,416) (112,529)
FINANCING ACTIVITIES
Net payments under line of credit arrangements (6,525) (12,975)
Principal payments on long-term obligations (1,577) (304)
Net proceeds from the issuance of shares 84,604 85,084
Borrowings under Senior Notes 80,000 30,000
Assumption of mortgage loan payable 6,539
Increase in deferred loan expense (1,561) (579)
Cash distributions to shareholders (32,897) (20,064)
----------- -----------
NET CASH PROVIDED FROM FINANCING ACTIVITIES 122,044 87,701
Increase in cash and cash equivalents 27,509 2,616
----------- -----------
Cash and cash equivalents at beginning of period 581 860
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 28,090 $ 3,476
=========== ===========
Supplemental Cash Flow Information -- Interest Paid $ 9,136 $ 8,305
=========== ===========
See notes to unaudited consolidated financial statements
</TABLE>
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<PAGE> 7
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
HEALTH CARE REIT, INC. AND SUBSIDIARIES
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 nine months ended September 30, 1997 are not
necessarily an indication of the results that may be expected for the year
ending December 31, 1997. 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, 1996.
Net income per share has been computed by dividing net income by the average
number of common shares.
NOTE B - REAL ESTATE INVESTMENTS
During the nine months ended September 30, 1997, the Company provided permanent
mortgage financings of $48,791,000, invested $38,202,000 in operating leases and
made construction advances of $98,251,000. During the nine months ended
September 30, 1997, the Company received principal payments on real estate
mortgages of $18,654,000 and had net advances on working capital loans of
$2,341,000.
With respect to the above-mentioned construction advances, funding associated
with 28 construction loans represented $55,175,000, and funding for construction
in progress in connection with 22 properties owned directly by the Company
totaled $43,076,000. During the nine months ended September 30, 1997, nine of
the construction loans completed the construction phase of the Company's
investment process and were converted to investments in permanent mortgage
loans, with an aggregate investment of $66,989,000. Also during the nine months
ended September 30, 1997, three of the construction properties in progress
completed the construction phase of the Company's investment process and were
converted to permanent operating leases, with an aggregate investment balance of
$11,535,000.
NOTE C - INDEBTEDNESS AND SHAREHOLDERS' EQUITY
In January 1997, in connection with the underwriters' exercise of an over
allotment option associated with the Company's December 18, 1996 offering of
2,200,000 shares of common stock, the Company issued 330,000 shares of Common
Stock, $1.00 par value per share, at the price of $23.875 per share, which
generated net proceeds of $7,485,000 to the Company.
In March, 1997, the Company issued 3,150,000 shares of Common Stock, $1.00 par
value per share, at the price of $24.375 per share, which generated net proceeds
to the Company of $72,265,000.
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<PAGE> 8
In March 1997, the Company closed a $175 million unsecured credit facility which
replaced the Company's then existing secured credit facility. Simultaneous with
the closing of the new credit facility, all senior noteholders released
collateral which had served as security for the Company's then outstanding $82
million of senior indebtedness.
In April 1997, the Company completed the sale of $80 million of Senior Unsecured
Notes. The Company priced $20 million of notes due 2000, $20 million of notes
due 2002 and $40 million of notes due 2004. The notes have a weighted average
interest rate of 7.91%.
The Company has a total of $185,000,000 in unsecured credit facilities bearing
interest at the lenders' prime rate or LIBOR plus 1.125%, of which $99,400,000
was available at September 30, 1997.
NOTE D - INVESTMENT SECURITIES AVAILABLE FOR SALE
Investment securities available for sale are stated at fair value with
unrealized gains and losses reported in a separate component of shareholders'
equity. At September 30, 1997, available-for-sale securities reflected the
market value of the common stock of two publicly owned corporations.
NOTE E - CONTINGENT LIABILITIES
As disclosed in the financial statements for the year ended December 31, 1996,
the Company was contingently liable for certain obligations amounting to
$18,815,000. No significant change in these contingencies had occurred as of
September 30, 1997.
NOTE F - DISTRIBUTIONS PAID TO SHAREHOLDERS
On August 20, 1997, the Company paid a dividend of $0.53 per share to
shareholders of record on August 4, 1997. This dividend related to the period
from April 1, 1997 through June 30, 1997.
NOTE G - NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share, which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share. The impact on primary earnings per share and
fully diluted earnings per share is not expected to be material. In addition,
the FASB has issued Statement No. 129 (Disclosure of Information about Capital
Structure), Statement No. 130 (Reporting Comprehensive Income) and Statement No.
131 (Disclosure of Segments of an Enterprise and Related Information), which are
not anticipated to have a material effect on the Company.
NOTE H - SUBSEQUENT EVENTS
On July 22, 1997, the Company declared a dividend of $0.535 per share payable on
November 20, 1997 to shareholders of record on November 3, 1997. The dividend
relates to the period from July 1, 1997 through September 30, 1997.
In October 1997, the Company issued 2,000,000 shares of Common Stock, $1.00 par
value per share, at the price of $26.625 per share, which generated net proceeds
to the Company of $50,900,000.
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<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At September 30, 1997, the Company's net real estate investments totaled
approximately $648,447,000, which included 51 skilled nursing facilities, 100
assisted living facilities, 10 retirement centers, six specialty care facilities
and two behavioral care facilities. The Company funds its investments through a
combination of long-term and short-term financing, utilizing both debt and
equity.
As of September 30, 1997, the Company had shareholders' equity of $412,476,000
and a total outstanding debt balance of $256,293,000, which represents a debt to
equity ratio of 0.62 to 1.0.
In January 1997, in connection with the underwriters' exercise of an over
allotment option associated with the Company's December 18, 1996 offering of
2,200,000 shares of common stock, the Company issued 330,000 shares of Common
Stock, $1.00 par value per share, at the price of $23.875 per share, which
generated net proceeds of $7,485,000 to the Company.
In March 1997, the Company issued 3,150,000 shares of Common Stock, $1.00 par
value per share, at the price of $24.375 per share, which generated net proceeds
to the Company of $72,265,000.
In April 1997, the Company completed the sale of $80 million of Senior Unsecured
Notes. The Company priced $20 million of notes due 2000, $20 million of notes
due 2002 and $40 million of notes due 2004. The notes have a weighted average
interest rate of 7.91%.
During the nine months ended September 30, 1997, the proceeds derived from the
Company's capital raising activities were used to reduce bank debt under the
Company's revolving lines of credit arrangements.
In March 1997, the Company closed a $175 million unsecured credit facility which
replaced the Company's then existing secured credit facility. Simultaneous with
the closing of the new credit facility, all senior noteholders released
collateral which had served as security for the Company's then outstanding $82
million of senior indebtedness.
As of September 30, 1997, the Company had approximately $283,620,000 in unfunded
commitments. Under the Company's line of credit arrangements, available funding
totaled $99,400,000. The Company believes its liquidity and various sources of
available capital are sufficient to fund operations, finance future investments,
and meet debt service and dividend requirements.
RESULTS OF OPERATIONS
- ---------------------
Revenues for the three months ended September 30, 1997 were $18,559,000 as
compared with $14,068,000 for the three months ended September 30, 1996. Revenue
growth resulted primarily from increased interest income of $2,030,000 and
increased operating lease income of $3,207,000 as a result of additional real
estate investments made during the past twelve months.
Revenues for the nine months ended September 30, 1997 were $53,576,000 as
compared with $39,584,000 for the nine months ended September 30, 1996, an
increase of $13,992,000 or 35%. Revenue growth resulted primarily from increased
interest income of $6,865,000 and increased operating lease income of $9,405,000
as a result of additional real estate investments made during the past twelve
months.
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<PAGE> 10
The growth in interest and rental income for the three and nine month periods
ended September 30, 1997 was offset by prepayment fees and gains on the exercise
of purchase options earned during the second and third quarters of 1996, which
totaled $2,117,000 and $844,000 respectively, as compared with $477,000 for the
second quarter of 1997. There were no such prepayment fees or gains during the
third quarter of 1997.
Expenses for the three months ended September 30, 1997 totaled $6,786,000, an
increase of $101,000 from expenses of $6,685,000 for the same period in 1996.
Expenses for the nine months ended September 30, 1997 totaled $20,049,000, an
increase of $2,094,000 from expenses of $17,955,000 for the same period in 1996.
The increase in total expenses for the three and nine month periods ended
September 30, 1997 was primarily related to an increase in interest expense,
additional expense associated with the provision for depreciation and an
increase in general and administrative expenses. Expenses for the three and nine
month periods ended September 30, 1996 were negatively influenced by a $808,000
disposition of investment expense associated with the Company's elimination of
certain investments in behavioral care facilities.
Interest expense for the three months ended September 30, 1997 was $3,871,000
as compared to $3,703,000 for the same period in 1996. For the nine month period
ended September 30, 1997, interest expense totaled $11,634,000 as compared to
$11,263,000 for the same period in 1996. The increases in the 1997 periods were
primarily due to the issuance of $80,000,000 Senior Notes in April 1997. The
increases in the 1997 periods were offset by the amount of capitalized interest
recorded in the 1997 periods.
The Company capitalizes certain interest costs associated with funds used to
finance the construction of properties owned directly by the Company. The amount
capitalized is based upon the borrowings outstanding during the construction
period using the rate of interest which approximates the Company's cost of
financing. The Company's interest expense is reduced by the amount capitalized.
Capitalized interest for the three and nine month periods in 1997 totaled
$663,000 and $1,290,000 respectively, as compared with $72,000 and $107,000 for
the same periods in 1996.
The provision for depreciation for the three and nine month periods ended
September 30, 1997 totaled $1,348,000 and $3,809,000 respectively, an increase
of $711,000 and $2,142,000 over the comparable periods in 1996 as a result of
additional investments in properties owned directly by the Company.
General and administrative expense for the three and nine month periods ended
September 30, 1997 totaled $1,245,000 and $3,606,000 respectively, as compared
with $1,183,000 and $3,173,000 for the same periods in 1996. The expenses for
the three and nine month periods in 1997 were 6.71% and 6.73% of revenues as
compared with 8.41% and 8.02% for the same periods in 1996.
As a result of the various factors mentioned above, net income for the three and
nine month periods ended September 30, 1997 was $11,773,000, or $0.53 per share,
and $33,527,000, or $1.59 per share, respectively, as compared with $7,383,000,
or $0.50 per share, and $21,629,000, or $1.62 per share, for the comparable
periods in 1996. Net income for the nine months ended September 30, 1996
included $2,961,000, or $0.22 per share, of prepayment fees and gains on the
exercise of purchase options, as compared with $477,000, or $0.02 per share, for
the same period in 1997.
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<PAGE> 11
PART II. OTHER INFORMATION
ITEM 4. OTHER INFORMATION
-----------------
On July 15, 1997, the Company issued a press release in which it announced that
during the first and second quarters of 1997, it had funded $131 million of new
investments.
On July 22, 1997, the Company issued a press release in which it announced that
the Board of Directors voted to pay a quarterly dividend of $0.53 per share on
August 20, 1997 payable to shareholders of record as of August 4, 1997.
On July 23, 1997, the Company issued a press release in which it announced
financial results for the second quarter 1997.
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
---------------------------------
(a) Reports
27 Financial Data Schedule
99.1 Press release dated July 15, 1997
99.2 Press release dated July 22, 1997
99.3 Press release dated July 23, 1997
(b) Reports on Form 8-K
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<PAGE> 12
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: November 12, 1997 By: GEORGE L. CHAPMAN
----------------------- ----------------------
George L. Chapman,
Chairman, Chief Executive Officer, and
President
Date: November 12, 1997 By: EDWARD F. LANGE, JR.
---------------------- ------------------------
Edward F. Lange, Jr.,
Chief Financial Officer
Date: November 12, 1997 By: MICHAEL A. CRABTREE
---------------------- ----------------------
Michael A. Crabtree,
Chief Accounting Officer
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<PAGE> 13
EXHIBIT INDEX
-------------
The following documents are included in this Form 10-Q as Exhibits:
<TABLE>
<CAPTION>
DESIGNATION
NUMBER UNDER
ITEM 601 OF
REGULATION S-K EXHIBIT DESCRIPTION
-------------- -------------------
<S> <C>
27 Financial Data Schedule
99.1 Press release dated July 15, 1997
99.2 Press release dated July 22, 1997
99.3 Press release dated July 23, 1997
</TABLE>
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<PAGE> 1
Exhibit 99.1
F O R I M M E D I A T E R E L E A S E
July 15, 1997
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES YEAR TO DATE INVESTMENTS
OF $131 MILLION
Toledo, Ohio, July 15, 1997..... HEALTH CARE REIT, INC. (NYSE/HCN) announced
today that investment activity for the second quarter of 1997 totaled
$41,756,000. For the six months ended June 30, 1997, the company funded
investments of $131,134,000.
The year-to-date investment activity contributed to a 22% increase in Net Real
Estate Investments which totaled $627,082,000 at June 30, 1997, as compared to
$512,894,000 at December 31, 1996.
Second quarter investment activity, inclusive of recurring construction funding
of $25,297,000, included $17,282,000 of operating leases and $24,474,000 of
mortgage loans. These investments were comprised of $28,621,000 for 33 assisted
living facilities, $7,442,000 for two retirement centers and $5,693,000 for four
nursing homes. Funding was provided to 13 operators in 12 states.
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate
investment trust, which invests in health care facilities, primarily nursing
homes, assisted living facilities and retirement centers. At June 30, 1997 the
company had investments in 158 health care facilities in 28 states and has total
assets of approximately $637 million.
#####
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<PAGE> 1
Exhibit 99.2
F O R I M M E D I A T E R E L E A S E
July 22, 1997
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES
INCREASE IN QUARTERLY DIVIDEND
Toledo, Ohio, July 22, 1997....HEALTH CARE REIT, INC. (NYSE/HCN) announced today
that upon a review of the company's operating results and financial condition,
the Board of Directors voted to declare a dividend for the quarter ended June
30, 1997 of $0.53 cents per share as compared to $0.52 per share for the same
period in 1996.
The dividend is a one-half cent increase from the dividend paid for the first
quarter of 1997 and represents the 105th consecutive dividend payment. The
dividend will be payable August 20, 1997 to shareholders of record on August 4,
1997.
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate
investment trust which invests in health care facilities, primarily nursing
homes, assisted living facilities and retirement centers. At June 30, 1997, the
company had investments in 158 health care facilities in 28 states and had total
assets of approximately $637 million.
#####
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<PAGE> 1
Exhibit 99.3
F O R I M M E D I A T E R E L E A S E
JULY 23, 1997
FOR MORE INFORMATION CONTACT:
ERIN IBELE - (419) 247-2800
ED LANGE - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES
SECOND QUARTER RESULTS
SECOND QUARTER 1997 RESULTS SIX MONTHS 1997 HIGHLIGHTS
--------------------------- --------------------------
- $637,595,000 Total Assets - 9.5% FFO growth
- $18,448,000 Gross Income - 47% asset growth
- $0.58 per share FFO - $131 million new investments
- $0.62 per share CAD - $536 million market capitalization
- $0.525 per share dividends paid
- 90.5% FFO payout ratio
Toledo, Ohio, July 23, 1997 ........HEALTH CARE REIT, INC. (NYSE/HCN) announced
today record funds from operations (FFO) of $0.58 per share for the second
quarter of 1997 and FFO of $1.15 per share for the first six months of 1997, an
increase of 7.4 percent and 9.5 percent, respectively, as compared with the same
periods in 1996.
"The positive financial results and growth levels are attributable to the
continued execution of our investment strategy that focuses on providing growth
capital to emerging operators," stated George L. Chapman, chairman and chief
executive officer. "Subsequent to the end of the second quarter, Moody's
Investor Service assigned a `Ba1' rating to the company's senior unsecured
notes. This was our first opportunity to work with Moody's and we were quite
pleased with the credit review process and the initial rating assigned by
Moody's. The new credit rating enhances the company's access to capital and
furthers our goal of reducing the company's cost of capital."
For the three months ended June 30, 1997, FFO totaled $12,727,000, or $0.58 per
share, as compared with FFO of $7,007,000, or $0.54 per share, for the same
period in 1996, an increase of 7.4 percent. Net income for the second quarter of
1997 totaled $11,928,000, or $0.54 per share, on revenue of $18,448,000, as
compared with net income of $8,569,000, or $0.66 per share, on revenue of
$14,625,000 for the three months ended June 30, 1996.
-16-
<PAGE> 2
For the six months ended June 30, 1997, FFO totaled $23,738,000, or $1.15 per
share, as compared with FFO of $13,159,000, or $1.05 per share, for the same
period in 1996, an increase of 9.5 percent. Net income for the six month period
ended June 30, 1997, totaled $21,754,000, or $1.05 per share, on revenue of
$35,017,000, as compared with net income of $14,246,000, or $1.13 per share, on
revenue of $25,515,000 for the same period in 1996.
For the six month period ended June 30, 1997, cash flows from operating
activities available for distribution (CAD) totaled $25,501,000, or $1.24 per
share, as compared with CAD of $16,575,000, or $1.32 per share, for the
comparable period in 1996.
The growth in revenue, net income and CAD for the three and six month periods
ended June 30, 1997 was offset by $2,117,000 of prepayment fees and gains on the
exercise of purchase options earned during the second quarter of 1996, as
compared with $477,000 for the same period in 1997.
Investment activity for the three and six month periods ended June 30, 1997,
totaled $41,756,000 and $131,134,000 respectively. Management noted that the
year to date investment activity contributed to a 47 percent increase in total
assets, which at June 30, 1997, totaled $637,595,000 as compared with total
assets of $434,477,000 at June 30, 1996.
During the second quarter of 1997, the company completed the sale of $80 million
of senior unsecured notes. The company priced $20 million of notes due 2000, $20
million of notes due 2002 and $40 million of notes due 2004. The notes have a
weighted average interest rate of 7.91 percent and are rated `Ba1' by Moody's
Investor Service and `BBB-' by Duff & Phelps Credit Rating Co. The net proceeds
derived from the offering were used to invest in additional health care
properties.
As reported in a press release dated July 22, 1997, the company announced that
the Board of Directors voted to increase the quarterly dividend payable August
20, 1997, to $0.53 per share, as compared with $0.52 per share for the same
period in 1996.
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate
investment trust which invests in health care facilities, primarily nursing
homes, assisted living facilities and retirement centers. The company has
investments in 158 health care facilities in 28 states and has total assets of
approximately $638 million.
This document and supporting schedules may contain "forward-looking" statements
as defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties,
which may cause the company's actual results in the future to differ materially
from expected results. These risks and uncertainties include, among others,
competition in the financing of health care facilities, the availability of
capital, and regulatory and other changes in the health care sector, as
described in the company's filings with the Securities and Exchange Commission.
FINANCIAL SCHEDULES FOLLOW
-17-
<PAGE> 3
HEALTH CARE REIT, INC.
FINANCIAL SUPPLEMENT
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30
-----------------------------------------
1997 1996
-----------------------------------------
<S> <C> <C>
ASSETS
Real estate investments:
Loans receivable:
Mortgage loans $ 375,060 $ 294,809
Construction and short-term loans 32,391 5,512
Working capital loans 7,348 43,100
----------------- -----------------
414,799 343,421
Investment in operating leases 211,638 82,359
Investment in direct financing leases 10,732 10,902
----------------- -----------------
637,169 436,682
Less allowance for losses (10,087) (9,968)
------------------ -------------------
Net real estate investments 627,082 426,714
Other Assets:
Investments 1,766 1,669
Deferred loan expenses 2,568 1,765
Cash and cash equivalents 973 679
Receivables and other assets 5,206 3,650
----------------- -----------------
10,513 7,763
----------------- -----------------
TOTAL ASSETS $ 637,595 $ 434,477
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowings under line of credit obligations $ 44,600 $ 98,900
Other long-term obligations 172,073 85,771
Accrued expenses and other liabilities 11,460 9,510
----------------- -----------------
Total liabilities $ 228,133 $ 194,181
Shareholders' equity:
Preferred Stock, $1.00 par value:
Authorized - 10,000,000 shares
Issued and outstanding - None
Common Stock, $1.00 par value:
Authorized - 40,000,000 shares
Issued and outstanding - 22,042,468
in 1997 and 14,457,086 in 1996 22,042 14,457
Capital in excess of par value 379,866 216,553
Undistributed net income 8,724 7,618
Unrealized gains on investment securities
available for sale 1,438 1,669
Unamortized restricted stock (2,608)
----------------- -----------------
Total shareholders' equity $ 409,462 $ 240,297
----------------- -----------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 637,595 $ 434,478
================= =================
</TABLE>
-18-
<PAGE> 4
HEALTH CARE REIT, INC.
FINANCIAL SUPPLEMENT
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
---------------------------------- ---------------------------------
1997 1996 1997 1996
----------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Gross Income:
Interest income $ 11,319 $ 8,996 $ 21,935 $ 17,100
Prepayment fees 477 1,541 477 1,541
Operating leases:
Rent 5,461 2,264 10,424 4,225
Gain on exercise of options 0 576 0 576
Direct financing leases:
Lease income 357 366 714 733
Gain on exercise of options 0 0 0 0
Loan and commitment fees 717 845 1,301 1,265
Other income 117 37 166 75
---------------- -------------- ------------ -----------
Gross Income $ 18,448 14,625 $ 35,017 $ 25,515
Expenses:
Interest:
Line of credit arrangements $ 724 2,457 $ 2,885 $ 4,753
Senior notes and other long-
term obligations 3,028 1,592 4,878 2,807
Loan expense 161 202 378 389
Provision for depreciation 1,276 555 2,461 1,030
Provision for losses 150 150 300 300
General and administrative expenses 1,181 1,100 2,361 1,190
---------------- -------------- --------------- -------------
Total expenses 6,520 6,056 13,263 11,269
---------------- -------------- --------------- -------------
Net Income $ 11,928 $ 8,569 $ 21,754 $ 14,246
================ ============== =============== =============
Average number of shares outstanding 21,960 13,058 20,638 12,555
Net income per share $ 0.54 $ 0.66 $ 1.05 $ 1.13
Funds From Operations $ 12,727 $ 7,007 $ 23,738 $ 13,159
Funds From Operations per share $ 0.58 $ 0.54 $ 1.15 $ 1.05
Dividends per share $ 0.525 $ 0.520 $ 1.045 $ 1.040
</TABLE>
#####
-19-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000766704
<NAME> HEALTH CARE REIT, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,090
<SECURITIES> 2,803
<RECEIVABLES> 4,853
<ALLOWANCES> 10,237
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 253,713
<DEPRECIATION> 10,291
<TOTAL-ASSETS> 686,635
<CURRENT-LIABILITIES> 0
<BONDS> 256,293
0
0
<COMMON> 22,125
<OTHER-SE> 390,351
<TOTAL-LIABILITY-AND-EQUITY> 686,635
<SALES> 0
<TOTAL-REVENUES> 53,576
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,359
<LOSS-PROVISION> 450
<INTEREST-EXPENSE> 11,634
<INCOME-PRETAX> 33,527
<INCOME-TAX> 0
<INCOME-CONTINUING> 33,527
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,527
<EPS-PRIMARY> 1.59
<EPS-DILUTED> 1.59
</TABLE>
