<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, 1998
----------------------------------------
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
stock, as of October 15, 1998.
Class: Shares of Common Stock, $1.00 par value
Outstanding 28,040,734 shares
Shares of Preferred Stock, $1.00 par value
Outstanding 3,000,000 shares
<PAGE> 2
HEALTH CARE REIT, INC.
INDEX
Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - September 30, 1998
and December 31, 1997 3
Consolidated Statements of Income - Three
and nine months ended September 30, 1998 and 1997 4
Consolidated Statements of Shareholders' Equity-
Nine months ended September 30, 1998
and 1997 5
Consolidated Statements of Cash Flows-
Nine months ended September 30, 1998 and 1997 6
Notes to Unaudited Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II. OTHER INFORMATION
Item 4. Other Information 13
Item 5. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
EXHIBIT INDEX 15
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<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1998 1997
(UNAUDITED) (NOTE)
--------------- --------------
ASSETS (IN THOUSANDS)
<S> <C> <C>
Real estate investments:
Real property owned:
Land $ 42,357 $ 22,445
Buildings & improvements 414,709 239,549
Construction in progress 105,634 47,050
--------------- --------------
562,700 309,044
Less accumulated depreciation (17,742) (11,769)
--------------- ---------------
Total real property owned 544,958 297,275
Loans receivable 396,222 412,734
Direct financing leases 6,776 7,935
--------------- --------------
947,956 717,944
Less allowance for losses on loans receivable (4,837) (4,387)
--------------- ---------------
Net real estate investments 943,119 713,557
Other Assets:
Direct investments 24,658 4,964
Marketable securities 2,967 4,671
Deferred loan expenses 2,407 2,275
Cash and cash equivalents 1,473 1,381
Receivables and other assets 10,730 7,479
--------------- --------------
42,235 20,770
--------------- --------------
TOTAL ASSETS $ 985,354 $ 734,327
=============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowings under line of credit obligations $ 143,800 $ 78,400
Senior unsecured notes 240,000 162,000
Mortgages payable 7,450 8,670
Accrued expenses and other liabilities 21,971 15,333
--------------- --------------
TOTAL LIABILITIES 413,221 264,403
Shareholders' equity:
Preferred Stock, $1.00 par value:
Authorized - 10,000,000 shares
Issued and outstanding - 3,000,000 75,000
Common Stock, $1.00 par value:
Authorized - 40,000,000 shares
Issued and outstanding - 25,540,734
in 1998 and 24,341,030 in 1997 25,541 24,341
Capital in excess of par value 462,294 435,603
Undistributed net income 9,528 8,841
Accumulated other comprehensive
income 2,973 4,671
Unamortized restricted stock (3,203) (3,532)
--------------- ---------------
TOTAL SHAREHOLDERS' EQUITY 572,133 469,924
--------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 985,354 $ 734,327
=============== ==============
</TABLE>
NOTE: The balance sheet at December 31, 1997 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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<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1998 1997 1998 1997
--------------- -------------- -------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
REVENUES:
<S> <C> <C> <C> <C>
Interest income $ 11,294 $ 11,694 $ 35,241 $ 33,629
Prepayment fees 421 0 421 477
Operating lease rent 12,213 5,694 29,482 16,118
Direct financing lease income 331 357 759 1,071
Loan and commitment fees 1,425 779 3,937 2,080
Other income 153 35 382 201
-------------- -------------- -------------- ------------
Total Revenue 25,837 18,559 70,222 53,576
EXPENSES:
Interest expense 4,878 3,871 13,579 11,634
Provision for depreciation 2,964 1,348 7,126 3,809
General and administrative expenses 1,640 1,245 4,357 3,606
Loan expense 176 172 533 550
Provision for losses 150 150 450 450
-------------- -------------- -------------- ------------
Total expenses 9,808 6,786 26,045 20,049
-------------- -------------- -------------- ------------
Net Income 16,029 11,773 44,177 33,527
Preferred stock dividends 1,664 2,496
-------------- -------------- -------------- ------------
Net Income Available to
Common Shareholders $ 14,365 $ 11,773 $ 41,681 $ 33,527
============== ============== ============== ============
Average number of common shares outstanding:
Basic 25,356 21,974 24,966 21,012
Diluted 25,637 22,289 25,301 21,327
Net income available to Common
Shareholders per share:
Basic $ 0.57 $ 0.54 $ 1.67 $ 1.60
Diluted 0.56 0.53 1.65 1.57
</TABLE>
See notes to unaudited consolidated financial statements
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<PAGE> 5
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Nine months ended September 30, 1998
------------------------------------------------------------------------------------------------
Capital Unamortized Accum. Other
Preferred Common In Excess Restricted Undistributed Comprehensive
In thousands Stock Stock of Par Value Stock Net Income Income Total
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $ $ 24,341 $435,603 $ (3,532) $ 8,841 $ 4,671 $469,924
Comprehensive income:
Net income 44,177 44,177
Unrealized gains (losses) (1,704) (1,704)
on securities
Foreign currency translation
adjustment 6 6
--------
Comprehensive income 42,479
Proceeds from issuance of
shares from dividend
reinvestment plan 217 5,429 5,646
Proceeds from issuance of
shares from stock incentive plan 70 1,244 1,314
Proceeds from sale of shares 913 22,808 23,721
Proceeds from sale of
Preferred Stock 75,000 (2,790) 72,210
Amortization of restricted stock 329 329
Cash dividends paid (43,490) (43,490)
-------- -------- -------- -------- -------- -------- --------
Balance at end of period $ 75,000 $ 25,541 $462,294 $ (3,203) $ 9,528 $ 2,973 $572,133
======== ======== ======== ======== ======== ======== ========
<CAPTION>
Nine months ended September 30, 1997
------------------------------------------------------------------------------------------------
Capital Unamortized Accum. Other
Preferred Common In Excess Restricted Undistributed Comprehensive
In thousands Stock Stock of Par Value Stock Net Income Income Total
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $ $18,320 $298,281 $ 0 $ 8,167 $ 768 $325,536
Comprehensive income:
Net income 33,527 33,527
Unrealized gains on securities 1,706 1,706
------
Comprehensive income 35,233
Proceeds from issuance of shares
from dividend reinvestment plan 138 3,165 3,303
Proceeds from issuance of shares
from stock incentive plan 187 3,886 (2,522) 1,551
Proceeds from sale of shares 3,480 76,270 79,750
Cash dividends paid (32,897) (32,897)
------- ------- -------- -------- ---------- --------- --------
Balance at end of period $ 0 $22,125 $381,602 $(2,522) $ 8,797 $ 2,474 $412,476
======= ======= ======== ======== ========== ========= ========
</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
1998 1997
------------------------------
(IN THOUSANDS)
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 44,177 $ 33,527
Adjustments to reconcile net income to net cash
Provision for depreciation 7,162 3,853
Provision for losses 450 450
Amortization 927 552
Loan and commitment fees earned less than cash received 1,222 3,240
Direct financing lease income less than cash received 257 238
Rental income in excess of cash received (1,918) (1,090)
Interest and other income in excess of cash received (271) (25)
Increase in accrued expenses and other liabilities 5,416 4,726
(Increase)/decrease in receivables and other assets (1,101) 3,087
---------- -----------
NET CASH PROVIDED FROM OPERATING ACTIVITIES 56,321 48,558
INVESTING ACTIVITIES
Investment in real properties (189,677) (90,851)
Investment in loans receivable (76,246) (92,457)
Investment in equity related investments (19,422) 18,654
Principal collected on loans 19,333 24,628
Proceeds from sale of properties 9,200
Other (270) (390)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (257,082) (140,416)
FINANCING ACTIVITIES
Net (payments)/advances under line of credit arrangements 65,400 (6,525)
Principal payments on long-term obligations (23,220) (1,577)
Net proceeds from the issuance of Common Stock 30,617 81,927
Net proceeds from the issuance of Preferred Stock 72,210
Proceeds from issuance of Senior Notes 100,000 80,000
Increase in deferred loan expense (664) (1,561)
Cash distributions to shareholders (43,490) (32,897)
------------ ------------
NET CASH PROVIDED FROM FINANCING ACTIVITIES 200,853 119,367
Increase in cash and cash equivalents 92 27,509
----------- -----------
Cash and cash equivalents at beginning of period 1,381 581
------------ -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,473 $ 28,090
============ ===========
Supplemental Cash Flow Information -- Interest Paid $ 11,499 $ 9,136
============ ===========
</TABLE>
See notes to unaudited consolidated financial statements
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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, 1998 are not
necessarily an indication of the results that may be expected for the year
ending December 31, 1998. For further information, refer to the financial
statements and footnotes thereto included in the Company's annual report on Form
10-K/A for the year ended December 31, 1997.
NOTE B - REAL ESTATE INVESTMENTS
During the nine months ended September 30, 1998, the Company provided permanent
mortgage financings of $37,588,000, invested $79,419,000 in real property, made
construction advances of $148,915,000 and funded $19,923,000 of equity related
investments. During the nine months ended September 30, 1998, the Company
received principal payments on real estate mortgages of $19,139,000 and had net
payments on working capital loans of $194,000.
With respect to the above-mentioned construction advances, funding associated
with 21 construction loans represented $38,657,000, and funding for construction
in progress in connection with 37 properties owned directly by the Company
totaled $110,258,000. During the nine months ended September 30, 1998, 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 $32,715,000. Also during the nine months
ended September 30, 1998, nine 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
$51,673,000.
NOTE C - INDEBTEDNESS AND SHAREHOLDERS' EQUITY
In March 1998, the Company completed the sale of $100 million of 7.625% Senior
Unsecured Notes due March 15, 2008.
In March 1998, the Company issued 913,242 shares of Common Stock, $1.00 par
value per share, at the price of $27.375 per share, which generated net proceeds
to the Company of $23,721,000.
In May 1998, the Company issued 3,000,000 shares of 8.875% Cumulative Redeemable
Preferred Stock at the price of $25.00 per share, which generated net proceeds
to the Company of $72,210,000.
The Company has a total of $190,000,000 in unsecured credit facilities bearing
interest at the lenders' prime rate or LIBOR plus 1.00%. A total of
approximately $46,200,000 was available at September 30, 1998, subject to
compliance with the terms and conditions of the unsecured credit facilities.
-7-
<PAGE> 8
NOTE D - DIRECT INVESTMENTS
Management determines the appropriate classification of a direct investment at
the time of acquisition and reevaluates such designation as of each balance
sheet date. Debt securities which are classified as held to maturity are stated
at historical cost. Equity investments are stated at historical cost. At
September 30, 1998, direct investments included the preferred stock of one
private corporation, subordinated debt in eight private corporations, and
ownership representing a 31% interest in Atlantic Healthcare Finance L.P., a
property investment group that specializes in the financing, through sale and
leaseback transactions, of nursing homes located in the United Kingdom and
continental Europe.
NOTE E - MARKETABLE SECURITIES
Marketable securities are stated at market value with unrealized gains and
losses reported in a separate component of shareholders' equity. At September
30, 1998, marketable securities reflected the market value of the common stock
of two publicly owned corporations, which were obtained by the Company at no
cost, and the fair value of the common stock related to warrants in one publicly
owned corporation in excess of the exercise price.
NOTE F - CONTINGENT LIABILITIES
As disclosed in the financial statements for the year ended December 31, 1997,
the Company was contingently liable for certain obligations amounting to
$15,055,000. No significant change in these contingencies had occurred as of
September 30, 1998.
NOTE G - DISTRIBUTIONS PAID TO SHAREHOLDERS
On August 20, 1998, the Company paid a dividend of $.55 per share to
shareholders of record on August 4, 1998. This dividend related to the period
from April 1, 1998 through June 30, 1998.
NOTE H - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share (in thousands, except per share data):
<TABLE>
<CAPTION>
Three months ended Sept. 30 Nine months ended Sept. 30
--------------------------- --------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Numerator for basic and diluted earnings per
share-income available to common shareholders $ 14,365 $ 11,773 $ 41,681 $ 33,527
========= ========== ========= ==========
Denominator for basic earnings per share -
weighted average shares 25,356 21,974 24,966 21,012
Effect of dilutive securities:
Employee stock options 138 201 192 201
Nonvested restricted shares 143 114 143 114
--------- ---------- --------- ----------
Dilutive potential common shares 281 315 335 315
--------- ---------- --------- ----------
Denominator for diluted earnings per share -
adjusted weighted average shares 25,637 22,289 25,301 21,327
========= ========== ========= ==========
Basic earnings per share $ 0.57 $ 0.54 $ 1.67 $ 1.60
Diluted earnings per share $ 0.56 $ 0.53 $ 1.65 $ 1.57
</TABLE>
-8-
<PAGE> 9
NOTE I - COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for the reporting and
display of comprehensive income and its components. The adoption of this
Statement had no impact on the Company's net income or shareholders' equity.
Statement 130 requires unrealized gains or losses on the Company's marketable
securities and foreign currency translation adjustments to be included in other
comprehensive income. Prior to adoption of Statement 130, unrealized gains and
losses were reported separately in shareholders' equity. Prior year financial
statements have been reclassified to conform to the requirements of Statement
130.
During the first nine months of 1998 and 1997, total comprehensive income
amounted to $42,479,000 and $35,233,000, respectively. During the three months
ended September 30, 1998, total comprehensive income amounted to $15,358,000 and
$12,809,000, respectively.
NOTE J - SUBSEQUENT EVENTS
In October 1998, the Company issued 2,500,000 shares of Common Stock, $1.00 par
value per share, at the price of $23.9375, which generated net proceeds of
$56,444,000. The net proceeds of the offering were used to repay borrowings
under the Company's revolving line of credit arrangements.
On October 20, 1998, the Company declared a dividend of $.555 per share payable
on November 20, 1998 to shareholders of record on November 3, 1998. The dividend
relates to the period from July 1, 1998 through September 30, 1998.
-9-
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1998, the Company's net real estate investments totaled
approximately $943,119,000, which included 55 skilled nursing facilities, 131
assisted living facilities, 16 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, 1998, the Company had shareholders' equity of $572,133,000
and a total outstanding debt balance of $391,250,000, which represents a debt to
equity ratio of .68 to 1.0.
In March 1998, the Company completed the sale of $100 million of 7.625% Senior
Unsecured Notes due March 15, 2008.
In March 1998, the Company issued 913,242 shares of Common Stock, $1.00 par
value per share, at the price of $27.375 per share, which generated net proceeds
to the Company of $23,721,000.
In May 1998, the Company issued 3,000,000 shares of 8.875% Cumulative Redeemable
Preferred Stock at the price of $25.00 per share, which generated net proceeds
to the Company of $72,210,000.
During the nine months ended September 30, 1998, the proceeds derived from the
Company's capital raising activities were used to invest in additional health
care properties and reduce bank debt under the Company's revolving line of
credit arrangements.
As of September 30, 1998, the Company had effective shelf registrations on file
with the Securities and Exchange Commission under which the Company may issue up
to $441,269,000 of securities including debt, convertible debt, common and
preferred stock. The Company anticipates issuing securities under such shelf
registrations to invest in additional health care facilities and to repay
borrowings under the Company's line of credit arrangements.
As of September 30, 1998, the Company had approximately $246,162,000 in unfunded
commitments. Under the Company's line of credit arrangements, available funding
totaled $46,200,000, subject to compliance with the terms and conditions of the
line of credit arrangements. The Company believes its liquidity and various
sources of available capital are sufficient to fund operations, meet debt
service and dividend requirements and finance continued investment activity.
RESULTS OF OPERATIONS
Revenues for the three months ended September 30, 1998 were $25,837,000 as
compared with $18,559,000 for the three months ended September 30, 1997. Revenue
growth resulted primarily from increased operating lease income of $6,519,000
and increased loan and commitment fees of $646,000 as a result of additional
real estate investments made during the past twelve months.
Revenues for the nine months ended September 30, 1998 were $70,222,000 as
compared with $53,576,000 for the nine months ended September 30, 1997, an
increase of $16,646,000 or 31%. Revenue growth resulted primarily from increased
operating lease income of $13,364,000, increased interest income of $1,612,000,
and increased loan and commitment fees of $1,857,000 as a result of additional
real estate investments made during the past twelve months.
-10-
<PAGE> 11
Expenses for the three months ended September 30, 1998 totaled $9,808,000, an
increase of $3,022,000 from expenses of $6,786,000 for the same period in 1997.
Expenses for the nine months ended September 30, 1998 totaled $26,045,000, an
increase of $5,996,000 from expenses of $20,049,000 for the same period in 1997.
The increases in total expenses for the three and nine month periods ended
September 30, 1998 were related to an increase in interest expense, an
additional expense associated with the provision for depreciation and an
increase in general and administrative expenses.
Interest expense for the three months ended September 30, 1998 was $4,878,000 as
compared with $3,871,000 for the same period in 1997. For the nine month period
ended September 30, 1998, interest expense totaled $13,579,000 as compared with
$11,634,000 for the same period in 1997. The increase in the 1998 period was
primarily due to the issuance of $80,000,000 Senior Notes in April 1997 and the
issuance of $100,000,000 Senior Notes in March 1998. The increases in the 1998
periods were offset by the amount of capitalized interest recorded during the
first nine months of 1998.
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 1998 totaled
$2,130,000, and $4,973,000, respectively, as compared with $663,000 and
$1,290,000 for the same periods in 1997.
The provision for depreciation for the three and nine month periods ended
September 30, 1998 totaled $2,964,000 and $7,126,000, respectively, increases of
$1,616,000 and $3,317,000 over the comparable periods in 1997 as a result of
additional investments in properties owned directly by the Company.
General and administrative expenses for the three and nine month periods ended
September 30, 1998 totaled $1,640,000 and $4,357,000, respectively, as compared
with $1,245,000 and $3,606,000 for the same periods in 1997. The expenses for
the three and nine month periods in 1998 were 6.35% and 6.21% of revenues as
compared with 6.71% and 6.73% for the same periods in 1997.
Dividend payments, associated with the Company's outstanding preferred stock,
for the three and nine month periods ended September 30, 1998 totaled $1,664,000
and $2,496,000 respectively. There were no such dividend payments in the same
periods in 1997.
As a result of the various factors mentioned above, net income available to
common shareholders for the three and nine month periods ended September 30,
1998 was $14,365,000, or $.56 per diluted share, and $41,681,000, or $1.65 per
diluted share, respectively, as compared with $11,773,000, or $.53 per diluted
share, and $33,527,000, or $1.57 per diluted share for the comparable periods in
1997.
-11-
<PAGE> 12
IMPACT OF INFLATION
During the past three years, inflation has not significantly affected the
earnings of the Company because of the moderate inflation rate. Additionally,
earnings of the Company are primarily long-term investments with fixed interest
rates. These investments are mainly financed with a combination of equity,
senior notes and borrowings under the revolving lines of credit. During
inflationary periods, which generally are accompanied by rising interest rates,
the Company's ability to grow may be adversely affected because the yield on new
investments may increase at a slower rate than new borrowing costs. Presuming
the current inflation rate remains moderate and long-term interest rates do not
increase significantly, the Company believes that equity and debt financing will
continue to be available.
OTHER INFORMATION
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.
The Company has assessed its current computer software for proper functioning
with respect to dates in the year 2000 and thereafter. The year 2000 issue and
related costs are not expected to have a material impact on the operations of
the Company.
-12-
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 4. OTHER INFORMATION
On July 14, 1998, the Company issued a press release in which it announced year
to date investments of $210 million.
On July 21, 1998, the Company issued a press release in which it announced
record second quarter 1998 results and an increase in quarterly dividend.
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports
27 Financial Data Schedule
99.1 Press release dated July 14, 1998
99.2 Press release dated July 21, 1998
(b) Reports on Form 8-K
None
-13-
<PAGE> 14
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: October 23, 1998 By: /s/ GEORGE L. CHAPMAN
---------------------------- ------------------------------
George L. Chapman,
Chairman, Chief Executive
Officer and President
Date: October 23, 1998 By: /s/ EDWARD F. LANGE, JR.
---------------------------- ------------------------------
Edward F. Lange, Jr.,
Chief Financial Officer
Date: October 23, 1998 By: /s/ MICHAEL A. CRABTREE
---------------------------- -----------------------------
Michael A. Crabtree,
Chief Accounting Officer
-14-
<PAGE> 15
EXHIBIT INDEX
-------------
The following documents are included in this Form 10-Q as Exhibits:
DESIGNATION
NUMBER UNDER
ITEM 601 OF
REGULATION S-K EXHIBIT DESCRIPTION
-------------- ---------------------------------
27 Financial Data Schedule
99.1 Press release dated July 14, 1998
99.2 Press release dated July 21, 1998
-15-
<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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,473
<SECURITIES> 2,967
<RECEIVABLES> 10,730
<ALLOWANCES> 4,837
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 562,700
<DEPRECIATION> 17,742
<TOTAL-ASSETS> 985,354
<CURRENT-LIABILITIES> 0
<BONDS> 391,250
0
75,000
<COMMON> 25,541
<OTHER-SE> 471,592
<TOTAL-LIABILITY-AND-EQUITY> 985,354
<SALES> 0
<TOTAL-REVENUES> 70,222
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,659
<LOSS-PROVISION> 450
<INTEREST-EXPENSE> 13,579
<INCOME-PRETAX> 41,681
<INCOME-TAX> 0
<INCOME-CONTINUING> 41,681
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,681
<EPS-PRIMARY> 1.67
<EPS-DILUTED> 1.65
</TABLE>
<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 14, 1998
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES YEAR TO DATE
INVESTMENTS OF $210 MILLION
Toledo, Ohio, July 14, 1998..... HEALTH CARE REIT, INC. (NYSE/HCN) announced
today investment activity for the second quarter of 1998 totalled $99,428,000.
For the six months ended June 30, 1998, the company funded investments of
$209,603,000.
The 1998 investment activity contributed to a 26 percent increase in total
assets which totalled $926,987,000 at June 30, 1998, as compared with
$734,327,000 at December 31, 1997.
Year-to-date investment activity, inclusive of recurring construction funding of
$99,177,000, included $129,768,000 of operating leases, $62,979,000 of mortgage
loans and $16,856,000 for equity related investments. Real estate investments
were comprised of $121,753,000 for 53 assisted living facilities, $62,974,000
for 22 nursing homes, $6,346,000 for six retirement centers and $1,674,000 for
two behavioral care facilities. The company funded equity related investments in
nine privately held health care related companies. Aggregate funding was
provided to 25 operators in 20 states.
During the first six months of 1998, 12 construction projects completed the
construction phase of the company's investment process. Six facilities were
converted to investments in operating leases, with an aggregate investment of
$31,726,000. Six facilities were converted to permanent mortgage loans with an
aggregate investment balance of $22,448,000.
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, 1998 the
company had investments in 209 health care facilities in 32 states and had total
assets of approximately $927 million.
For more information on Health Care REIT, Inc., via
facsimile at no cost, dial-1-800-PRO-INFO and
enter the company code -- HCN.
#####
<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 21, 1998
FOR MORE INFORMATION CONTACT:
ERIN IBELE - (419) 247-2800
ED LANGE - (419) 247-2800
HEALTH CARE REIT, INC.
ANNOUNCES RECORD SECOND QUARTER RESULTS
AND INCREASE IN QUARTERLY DIVIDEND
SECOND QUARTER 1998 RESULTS SIX MONTHS 1998 HIGHLIGHTS
--------------------------- --------------------------
- $927 million total assets - $210 million new investments
- $23 million gross income - 45% asset growth
- $0.63 per diluted share FFO - 9.6% per share FFO growth
- $0.545 per share dividends - 87% FFO payout ratio
Toledo, Ohio, July 21, 1998........HEALTH CARE REIT, INC. (NYSE/HCN) announced
today record funds from operations (FFO) of $0.63 per diluted share for the
second quarter of 1998 and FFO of $1.25 per diluted share for the first six
months of 1998, an increase of 8.6 percent and 9.6 percent, respectively, as
compared with the same periods in 1997.
In addition, the company announced that upon a review of its operating results
and financial condition, the Board of Directors voted to declare a dividend for
the quarter ended June 30, 1998, of $0.55 per share as compared with $0.53 per
share for the same period in 1997.
The dividend is a one-half cent increase from the dividend paid for the first
quarter of 1998 and represents the 109th consecutive dividend payment. The
dividend will be payable August 20, 1998, to shareholders of record on August 4,
1998.
For the three months ended June 30, 1998, FFO totaled $16,199,000, or $0.63 per
diluted share, as compared with FFO of $12,727,000, or $0.58 per diluted share,
for the same period in 1997, an increase of 8.6 percent. Net income for the
second quarter of 1998 totaled $13,907,000, or $0.54 per diluted share, on
revenue of $23,159,000, as compared with net income of $11,928,000, or $0.54 per
diluted share, on revenue of $18,448,000 for the three months ended June 30,
1997.
For the six months ended June 30, 1998, FFO totaled $31,478,000, or $1.25 per
diluted share, as compared with FFO of $23,738,000, or $1.14 per diluted share,
for the same period in 1997, an increase of 9.6 percent. Net income for the six
month period ended June 30, 1998, totaled $27,316,000, or $1.09 per diluted
share, on revenue of $44,385,000, as compared with net income of $21,754,000, or
$l.05 per diluted share, on revenue of $35,017,000 for the same period in 1997.
<PAGE> 2
JULY 21, 1998
HEALTH CARE REIT, INC. PAGE 2
- --------------------------------------------------------------------------------
In comparing the results for the first six months of 1998 with the corresponding
period of the prior year, management noted that the increased level of earnings
was positively influenced by a higher level of rental and interest income.
Operating lease revenue for the six months ended June 30, 1998, increased
$6,845,000 over the corresponding period in 1997 to $17,269,000 from
$10,424,000. Interest on loans for the six months ended June 30, 1998, increased
$1,429,000 over the corresponding period in 1997 to $23,364,000 from
$21,935,000. The growth in rental and interest income resulted primarily from
additional real estate investments made in 1997 and the first six months of 1998
of $262,646,000 and $209,603,000, respectively.
Management further noted that the year-to-date investment activity contributed
to a 45 percent increase in total assets, which at June 30, 1998, totaled
$926,987,000 as compared with total assets of $637,595,000 at June 30, 1997.
"We are pleased to report strong second quarter results, which reflect the
continuing strength of our investment portfolio and Health Care REIT's unique
investment strategy of providing growth capital to emerging health care
operators," commented George L. Chapman, chairman and chief executive officer.
"Our investment program has enhanced the company's level of real property
ownership, which has grown more than 130 percent year-over-year, allowing us to
meet our goal of achieving equity REIT status. Further, the continued execution
of our investment strategy should generate approximately $200 million of new
investments during the next 12 to 15 months. Our balance sheet provides us
significant financial flexibility and is well positioned to take advantage of
our strong investment pipeline. We expect continued success throughout the
balance of the year."
During the second quarter of 1998, the company completed the sale of $75 million
of 8.875 percent cumulative redeemable preferred stock. The preferred stock is
rated "Ba3" by Moody's Investors Service, "BB+" by Standard & Poor's Corporation
and "BB+" by Duff & Phelps Credit Rating Co. The net proceeds derived from the
sale of preferred stock were used to invest in additional health care properties
and repay borrowings under the company's revolving credit lines.
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, 1998, the
company had investments in 209 health care facilities in 32 states and had total
assets of approximately $927 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
For more information on Health Care REIT, Inc., via
facsimile at no cost, dial 1-800-PRO-INFO and
enter the company code -- HCN
#####
<PAGE> 3
HEALTH CARE REIT, INC.
FINANCIAL SUPPLEMENT
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30
-------------------------------
1998 1997
-------------------------------
<S> <C> <C>
ASSETS
Real estate investments:
Real property owned:
Land $ 39,305 $ 18,086
Buildings & improvements 385,031 176,099
Construction in progress 87,905 26,396
--------- ---------
512,241 220,581
Less accumulated depreciation (15,930) (8,943)
--------- ---------
Total real property owned 496,311 211,638
Loans receivable 390,683 414,799
Direct financing leases 7,722 10,732
--------- ---------
894,716 637,169
Less allowance for losses on loans receivable (4,687) (10,087)
--------- ---------
Net real estate investments 890,029 627,082
Other assets:
Direct investments 21,790 328
Marketable securities 3,832 1,438
Deferred loan expenses 2,582 2,568
Cash and cash equivalents 1,290 973
Receivables and other assets 7,328 5,206
--------- ---------
36,958 10,513
--------- ---------
Total assets $ 926,987 $ 637,595
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowings under line of credit obligations $ 89,600 $ 44,600
Senior unsecured notes 240,000 162,000
Mortgages payable 7,467 10,073
Accrued expenses and other liabilities 19,313 11,460
--------- ---------
Total liabilities $ 356,380 $ 228,133
Shareholders' equity:
Preferred Stock, $1.00 par value:
Authorized - 10,000,000 shares
Issued and outstanding - 3,000,000 75,000
Common Stock, $1.00 par value:
Authorized - 40,000,000 shares
Issued and outstanding - 25,456,788
in 1998 and 22,042,468 in 1997 25,457 22,042
Capital in excess of par value 460,700 379,866
Undistributed net income 9,172 8,724
Accumulated other
comprehensive income 3,644 1,438
Unamortized restricted stock (3,366) (2,608)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY $ 570,607 $ 409,462
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 926,987 $ 637,595
========= =========
</TABLE>
<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
---------------------------------- ----------------------------------
1998 1997 1998 1997
----------------- ---------------- ---------------- -----------------
Revenues:
<S> <C> <C> <C> <C>
Interest on loans receivable $ 11,442 $ 11,319 $ 23,364 $ 21,935
Prepayment fees 477 477
Operating leases:
Rents 9,625 5,461 17,269 10,424
Gain on exercise of options
Direct financing leases:
Lease income 214 357 428 714
Gain on exercise of options
Loan and commitment fees 1,286 717 2,512 1,301
Other income 592 117 812 166
-------------- ----------- ------------ -----------
$ 23,159 $ 18,448 $ 44,385 $ 35,017
Expenses:
Interest expense $ 4,461 $ 3,752 $ 8,701 $ 7,763
Provision for depreciation 2,292 1,276 4,162 2,461
General and administrative 1,336 1,181 2,717 2,361
Loan expense 181 161 357 378
Provision for losses 150 150 300 300
-------------- ----------- ------------ -----------
8,420 6,520 16,237 13,263
-------------- ----------- ------------ -----------
Net Income $ 14,739 $ 11,928 $ 28,148 $ 21,754
Preferred stock dividends 832 832
-------------- ----------- ------------
Net Income Available to Common Shareholders
$ 13,907 $ 11,928 $ 27,316 $ 21,754
============== =========== ============ ===========
Average number of shares outstanding:
Basic 25,272 21,845 24,768 20,523
Diluted 25,612 22,101 25,130 20,779
Net income per share:
Basic $ 0.55 $ 0.55 $ 1.10 $ 1.06
Diluted 0.54 0.54 1.09 1.05
Funds from operations $ 16,199 $ 12,727 $ 31,478 $ 23,738
Funds from operations per share:
Basic $ 0.64 $ 0.58 $ 1.27 $ 1.16
Diluted 0.63 0.58 1.25 1.14
Dividends per share $ 0.545 $ 0.525 $ 1.085 $ 1.045
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
HEALTH CARE REIT, INC.
FINANCIAL SUPPLEMENT - JUNE 30, 1998
PORTFOLIO COMPOSITION ($000'S)
EXHIBIT 1
BALANCE SHEET DATA # Properties # Beds/Units Balance (1) % Balance
-------------------- ------------------- -------------------- -----------------
<S> <C> <C> <C> <C>
Real Property 128 10,321 $ 496,311 54%
Loans Receivable 78 7,847 390,683 43%
Direct Financing Leases 3 243 7,722 1%
Direct Investments -na- -na- 21,790 2%
-------------------- ------------------ --------------------- -----------------
Total Investments 209 18,411 $ 916,506 100%
INVESTMENT DATA # Properties # Beds/Units Investment (2) % Investment
-------------------- ------------------ --------------------- -----------------
Assisted Living Facilities 130 8,745 $ 463,478 51%
Nursing Homes 56 7,193 286,920 32%
Specialty Care Facilities 6 713 92,302 10%
Retirement Centers 15 1,466 56,623 6%
Behavioral Care 2 294 10,447 1%
-------------------- ------------------ --------------------- -----------------
Real Estate Investments 209 18,411 $ 909,770 100%
INVESTMENT BY OWNER TYPE # Properties # Beds/Units Investment (2) % Investment
-------------------- ------------------ --------------------- -----------------
Publicly Traded 93 6,985 $ 384,738 42%
Key Private 72 6,853 353,823 39%
Privately Held 44 4,573 171,209 19%
-------------------- ------------------ --------------------- -----------------
Real Estate Investments 209 18,411 $ 909,770 100%
<FN>
NOTES: (1) TOTAL INVESTMENTS INCLUDE GROSS REAL ESTATE INVESTMENTS AND DIRECT INVESTMENTS WHICH AMOUNTED TO
$894,716,000 AND $21,790,000, RESPECTIVELY.
(2) REAL ESTATE INVESTMENTS INCLUDE GROSS REAL ESTATE INVESTMENTS AND
CREDIT ENHANCEMENTS WHICH AMOUNTED TO $894,716,000 AND $15,054,000,
RESPECTIVELY.
<CAPTION>
REVENUE COMPOSITION ($000'S)
EXHIBIT 2
Three Months Ended Six Months Ended
June 30, 1998 June 30, 1998
---------------------------------- ------------------------------
<S> <C> <C> <C> <C>
REVENUE BY INVESTMENT TYPE
Mortgage & Other Loans $ 11,919 52% $ 24,399 55%
Real Property 10,477 45% 18,814 42%
Direct Investments 547 2% 742 2%
Direct Financing Leases 216 1% 430 1%
----------------- ---------------- ---------------- --------------
Total $ 23,159 100% $ 44,385 100%
REVENUE BY FACILITY TYPE
Assisted Living Facilities $ 10,705 46% $ 20,781 47%
Nursing Homes 8,333 36% 15,313 34%
Specialty Care Facilities 2,910 13% 5,861 13%
Retirement Centers 1,211 5% 2,230 5%
Behavioral Care 0 0% 200 1%
----------------- ---------------- ---------------- --------------
Total $ 23,159 100% $ 44,385 100%
REVENUE BY OWNER TYPE
Publicly Traded $ 10,250 44% $ 19,818 44%
Key Private 8,891 39% 16,315 37%
Privately Held 4,018 17% 8,252 19%
----------------- ---------------- ---------------- --------------
Total $ 23,159 100% $ 44,385 100%
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
REVENUE COMPOSITION (CONTINUED) ($000'S) EXHIBIT 3
OPERATING LEASE EXPIRATIONS & LOAN MATURITIES
Current Lease Current Interest Interest and
Year Revenue (1) Revenue (1) Lease Revenue % of Total
- ------------------ ------------------------ ----------------------- ------------------------ ------------------
<S> <C> <C> <C> <C>
1998 $ 850 $ 0 $ 850 1%
1999 410 276 686 1%
2000 394 1,715 2,109 2%
2001 0 3,045 3,045 2%
2002 873 752 1,625 2%
Thereafter 61,058 36,966 98,024 92%
------------------------ ----------------------- ------------------------ ------------------
Total $ 63,585 $ 42,754 $ 106,339 100%
<FN>
NOTES: (1) REVENUE IMPACT BY YEAR, ANNUALIZED
<CAPTION>
COMMITTED INVESTMENT BALANCES
EXHIBIT 4
($000'S EXCEPT INVESTMENT PER BED/UNIT)
Committed Balance Investment per
# Properties # Beds/Units (1) Bed/Unit
-------------------- ------------------- -------------------- ------------------
<S> <C> <C> <C> <C>
Assisted Living Facilities 130 8,745 $ 607,732 $ 69,495
Nursing Homes 56 7,193 304,403 42,319
Retirement Centers 15 1,466 78,079 53,260
Specialty Care Facilities 6 713 92,302 129,456
Behavioral Care 2 294 10,447 35,534
-------------------- ------------------ --------------------- ------------------
Total 209 18,411 $ 1,092,963 n/a
<FN>
NOTES: (1) COMMITTED BALANCE INCLUDES REAL ESTATE INVESTMENTS, CREDIT ENHANCEMENTS AND UNFUNDED COMMITMENTS FOR
WHICH INITIAL FUNDING HAD COMMENCED.
<CAPTION>
OPERATOR CONCENTRATION ($000'S)
EXHIBIT 5
CONCENTRATION BY INVESTMENT # Properties Investment % Investment
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
Kapson Senior Quarters 7 $ 79,737 9%
Life Care Centers of America, Inc. 12 77,743 9%
Olympus Healthcare Group, Inc. 13 75,042 8%
Greenbriar Corporation 15 58,293 6%
CareMatrix 14 51,661 6%
Remaining Operators 148 567,294 62%
----------------------- ----------------------- -----------------------
Total 209 $ 909,770 100%
CONCENTRATION BY REVENUE # Properties Revenue (1) % Revenue
----------------------- ----------------------- -----------------------
Life Care Centers of America, Inc. 12 $ 4,052 9%
Kapson Senior Quarters 7 4,023 9%
Olympus Healthcare Group, Inc. 13 3,897 9%
Greenbriar Corporation 15 3,260 7%
Doctors Corporation of America 3 3,034 7%
Remaining Operators 159 26,119 59%
----------------------- ----------------------- -----------------------
Total 209 $ 44,385 100%
<FN>
NOTES: (1) SIX MONTHS ENDED JUNE 30, 1998
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
SELECTED FACILITY DATA
EXHIBIT 6
% Private Pay Coverage Before Coverage After
Occupancy and Medicare Mgt. Fees Mgt. Fees
----------------- --------------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Nursing Homes 84% 44% 1.90x 1.38x
Assisted Living Facilities 89% 100% 1.32x 1.14x
Retirement Centers 96% 100% 2.28x 2.00x
Specialty Care Facilities n/a 68% 4.81x 4.22x
Behavioral Care n/a 100% 6.15x 3.81x
---------------------- --------------------
2.34x 1.90x
<FN>
NOTES: (1) FACILITY DATA REPORTED AS OF MARCH 31, 1998
<CAPTION>
SECURITY DEPOSITS & OTHER CREDIT SUPPORT ($000'S) EXHIBIT 7
- -------------------------------------------------
Balance % Investment
--------------- -----------------
<S> <C> <C>
Cross Defaulted $ 778,848 87% of gross real estate investments
Cross Collateralized 353,769 89% of mortgage loans
Bank Letters of Credit & Cash 44,855 4% of committed balance
<CAPTION>
CURRENT CAPITALIZATION ($000'S) Balance % Balance LEVERAGE & PERFORMANCE RATIOS
--------------- ----------------- ----------------------------------------
<S> <C> <C> <C> <C>
Long-Term Debt Obligations $ 247,467 23% Debt/Total Mkt. Cap 32%
Borrowings Under Bank Lines 89,600 9% Debt/Book Equity 59%
Preferred Equity 75,000 7% Interest Coverage 3.72x 2nd Qtr.
Common Equity Market Cap. 649,148 61% 3.89x LTM
--------------- -----------------
Total Market Capitalization $ 1,061,215 100% FFO Payout Ratio 86% 2nd Qtr.
88% LTM
<CAPTION>
DEBT MATURITIES AND PRINCIPAL PAYMENTS ($000'S)
EXHIBIT 8
Year Bank Lines of Credit Senior Notes Other Debt Total
- ------------------ ------------------------ ----------------------- ------------------------ ------------------
<S> <C> <C> <C> <C>
1998 $ 0 $ 0 $ 39 $ 39
1999 9,600 0 90 9,690
2000 80,000 35,000 99 115,099
2001 0 10,000 109 10,109
2002 0 20,000 121 20,121
2003 0 35,000 133 35,133
2004 0 40,000 186 40,186
2005 0 0 549 549
Thereafter 0 100,000 6,141 106,141
------------------------ ----------------------- ------------------------ ------------------
Total $ 89,600 $ 240,000 $ 7,467 $ 337,067
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
INVESTMENT ACTIVITY ($000'S)
EXHIBIT 9
Three Months Ended Six Months Ended
June 30, 1998 June 30, 1998
--------------------------------- ---------------------------------
<S> <C> <C> <C> <C>
FUNDING BY INVESTMENT TYPE
Real Property $ 13,732 14% $ 57,187 27%
Mortgage & Other Loans 9,312 9% 36,383 18%
Construction Advances 63,244 64% 99,177 47%
Direct Investments 13,140 13% 16,856 8%
----------------- --------------- ---------------- ----------------
Total $ 99,428 100% $ 209,603 100%
REAL ESTATE INVESTMENTS
Assisted Living Facilities $ 67,019 77% $ 121,753 63%
Nursing Homes 15,424 18% 62,974 33%
Retirement Centers 3,315 4% 6,346 3%
Behavioral Care 530 1% 1,674 1%
Specialty Care Facilities 0 0% 0 0%
----------------- --------------- ---------------- ----------------
Total $ 86,288 100% $ 192,747 100%
</TABLE>
<TABLE>
<CAPTION>
GEOGRAPHIC CONCENTRATION ($000'S) EXHIBIT 10
CONCENTRATION BY REGION # Properties Investment % Investment
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
South 127 $ 448,793 49%
Northeast 35 256,727 28%
West 22 122,393 14%
Midwest 25 81,857 9%
----------------------- ----------------------- -----------------------
Total 209 $ 909,770 100%
CONCENTRATION BY STATE # Properties Investment % Investment
----------------------- ----------------------- -----------------------
Texas 47 $ 166,989 18%
Florida 26 109,455 12%
Massachusetts 15 90,564 10%
New York 7 70,653 8%
North Carolina 19 60,083 7%
Remaining States 95 412,026 45%
----------------------- ----------------------- -----------------------
Total 209 $ 909,770 100%
REVENUE BY STATE # Properties Revenue (1) % Revenue
----------------------- ----------------------- -----------------------
Texas 47 $ 8,514 19%
Florida 26 4,184 9%
Massachusetts 15 4,176 9%
New York 7 3,543 8%
Pennsylvania 8 2,849 7%
Remaining States 106 21,119 48%
----------------------- ----------------------- -----------------------
Total 209 $ 44,385 100%
<FN>
NOTES: (1) SIX MONTHS ENDED JUNE 30, 1998
</TABLE>
