<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 JUNE 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 X . No .
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of August 1, 1998.
Class: Shares of Common Stock, $1.00 par value
Outstanding 25,456,788 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 - June 30, 1998
and December 31, 1997 3
Consolidated Statements of Income - Three
and six months ended June 30, 1998 and 1997 4
Consolidated Statements of Shareholders' Equity-
Six months ended June 30, 1998
and 1997 5
Consolidated Statements of Cash Flows-
Six months ended June 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. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
EXHIBIT INDEX 16
-2-
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1998 1997
(UNAUDITED) (NOTE)
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Real estate investments:
Real property owned:
Land $ 39,305 $ 22,445
Buildings & improvements 385,031 239,549
Construction in progress 87,905 47,050
--------- ---------
512,241 309,044
Less accumulated depreciation (15,930) (11,769)
--------- ---------
Total real property owned 496,311 297,275
Loans receivable 390,683 412,734
Direct financing leases 7,722 7,935
--------- ---------
894,716 717,944
Less allowance for losses on loans receivable (4,687) (4,387)
--------- ---------
Net real estate investments 890,029 713,557
Other Assets:
Direct investments 21,790 4,964
Marketable securities 3,832 4,671
Deferred loan expenses 2,582 2,275
Cash and cash equivalents 1,270 1,381
Receivables and other assets 7,484 7,479
--------- ---------
36,958 20,770
--------- ---------
TOTAL ASSETS $ 926,987 $ 734,327
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowings under line of credit obligations $ 89,600 $ 78,400
Senior unsecured notes 240,000 162,000
Mortgages payable 7,467 8,670
Accrued expenses and other liabilities 19,313 15,333
--------- ---------
TOTAL LIABILITIES 356,380 264,403
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 - 25,456,788
in 1998 and 24,341,030 in 1997 25,457 24,341
Capital in excess of par value 460,700 435,603
Undistributed net income 9,172 8,841
Accumulated other comprehensive
income 3,644 4,671
Unamortized restricted stock (3,366) (3,532)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 570,607 469,924
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 926,987 $ 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
-3-
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
1998 1997 1998 1997
---------------------- ----------------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
REVENUES:
Interest on loans receivable $11,442 $11,319 $23,364 $21,935
Prepayment fees 477 477
Operating lease rent 9,625 5,461 17,269 10,424
Direct financing lease income 214 357 428 714
Loan and commitment fees 1,286 717 2,512 1,301
Other income 592 117 812 166
------- ------- ------- -------
Total Revenue $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 expenses 1,336 1,181 2,717 2,361
Loan expense 181 161 357 378
Provision for losses 150 150 300 300
------- ------- ------- -------
Total expenses $ 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 common shares outstanding:
Basic 25,272 21,845 24,768 20,523
Diluted 25,612 22,101 25,130 20,779
Net income available to Common Shareholders per share:
Basic $ 0.55 $ 0.55 $ 1.10 $ 1.06
Diluted 0.54 0.54 1.09 1.05
</TABLE>
See notes to unaudited consolidated financial statements
-4-
<PAGE> 5
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Six months ended June 30, 1998
------------------------------------------------------------------------------------------------
Capital In Unamortized Accum. Other
Preferred Common Excess of Restricted Undistributed Comprehensive
In thousands Stock Stock 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 28,148 28,148
Unrealized gains (losses)
on securities (838) (838)
Foreign currency translation
adjustment (189) (189)
--------
Comprehensive income 27,121
--------
Proceeds from issuance of shares
from dividend reinvestment
plan 147 3,758 3,905
Proceeds from issuance of shares
from stock incentive plan 56 1,008 1,064
Proceeds from sale of shares 913 22,808 23,721
Proceeds from sale of Preferred
Stock 75,000 (2,477) 72,523
Reserved for restricted stock
net of amortization 166 166
Cash dividends paid (27,817) (27,817)
------- ------- -------- ------- --------- -------- --------
Balance at end of period $75,000 $25,457 $460,700 $(3,366) $ 9,172 $ 3,644 $570,607
======= ======= ======== ======= ========= ======== ========
<CAPTION>
Six months ended June 30, 1997
------------------------------------------------------------------------------------------------
Capital In Unamortized Accum. Other
Preferred Common Excess of Restricted Undistributed Comprehensive
Stock Stock 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 21,754 21,754
Unrealized gains on securities 670 670
--------
Comprehensive income 22,424
--------
Proceeds from issuance of shares
from dividend reinvestment plan 90 2,012 2,102
Proceeds from issuance of shares
from stock incentive plan 152 3,307 3,459
Reserved for restricted stock,
Net of amortization (2,608) (2,608)
Proceeds from sale of shares 3,480 76,266 79,746
Cash dividends paid (21,197) (21,197)
------- ------- --------- -------- ---------- --------- --------
Balance at end of period $ 0 $22,042 $ 379,866 $(2,608) $ 8,724 $ 1,438 $409,462
======= ======= ========= ======== ========== ========= ========
</TABLE>
See notes to unaudited consolidated financial statements
-5-
<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
1998 1997
---------------------------
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 28,148 $ 21,754
Adjustments to reconcile net income to net cash
Provision for depreciation 4,198 2,489
Provision for losses 300 300
Amortization 588 379
Loan and commitment fees earned less than cash received 523 452
Direct financing lease income less than cash received 213 144
Rental income in excess of cash received (569) (706)
Interest and other income in excess of cash received (164) (17)
Increase in accrued expenses and other liabilities 3,459 1,108
(Increase)/decrease in receivables and other assets 695 (351)
--------- ---------
NET CASH PROVIDED FROM OPERATING ACTIVITIES 37,391 25,552
INVESTING ACTIVITIES
Investment in real properties (129,768) (60,476)
Investment in loans receivable (62,980) (69,361)
Investment in equity related investments (16,856) 0
Principal collected on loans 11,606 12,761
Other (169) (349)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (198,167) (117,425)
FINANCING ACTIVITIES
Net (payments)/advances under line of credit arrangements 11,200 (47,525)
Principal payments on long-term obligations (23,203) (197)
Net proceeds from the issuance of Common Stock 28,625 82,699
Net proceeds from the issuance of Preferred Stock 72,523
Proceeds from issuance of Senior Notes 100,000 80,000
Increase in deferred loan expense (663) (1,515)
Cash distributions to shareholders (27,817) (21,197)
--------- ---------
NET CASH PROVIDED FROM FINANCING ACTIVITIES 160,665 92,265
Increase/(decrease) in cash and cash equivalents (111) 392
--------- ---------
Cash and cash equivalents at beginning of period 1,381 581
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,270 $ 973
========= =========
Supplemental Cash Flow Information -- Interest Paid $ 10,155 $ 7,487
========= =========
</TABLE>
See notes to unaudited consolidated financial statements
-6-
<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 six months ended June 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 six months ended June 30, 1998, the Company provided permanent
mortgage financings of $36,384,000, invested $57,187,000 in real property, made
construction advances of $99,177,000, and funded $16,856,000 of equity related
investments. During the six months ended June 30, 1998, the Company received
principal payments on real estate mortgages of $11,172,000 and had net payments
on working capital loans of $434,000.
With respect to the above-mentioned construction advances, funding associated
with 19 construction loans represented $26,595,000, and funding for construction
in progress in connection with 34 properties owned directly by the Company
totaled $72,582,000. During the six months ended June 30, 1998, six 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 $22,448,000. Also during the six months ended June 30,
1998, six 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 $31,726,000.
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 $72,523,000.
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%. A total of
approximately $95,400,000 was available at June 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 June
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 June 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
$15,054,000. No significant change in these contingencies had occurred as of
June 30, 1998.
NOTE G - DISTRIBUTIONS PAID TO SHAREHOLDERS
On May 20, 1998, the Company paid a dividend of $0.545 per share to shareholders
of record on May 5, 1998. This dividend related to the period from January 1,
1998 through March 31, 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>
Six months ended June 30
--------------------------
1998 1997
------- -------
<S> <C> <C>
Numerator for basic and diluted earnings per
share-income available to common shareholders $27,316 $21,754
======= =======
Denominator for basic earnings per share -
weighted average shares 24,768 20,523
Effect of dilutive securities:
Employee stock options 219 141
Nonvested restricted shares 143 115
------- -------
Dilutive potential common shares 362 256
------- -------
Denominator for diluted earnings per share -
adjusted weighted average shares 25,130 20,779
======= =======
Basic earnings per share $ 1.10 $ 1.06
Diluted earnings per share $ 1.09 $ 1.05
</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 six months of 1998 and 1997, total comprehensive income
amounted to $27,121,000 and $22,424,000, respectively.
NOTE J - SUBSEQUENT EVENTS
On July 21, 1998, the Company declared a dividend of $0.55 per share payable on
August 20, 1998 to shareholders of record on August 4, 1998. The dividend
relates to the period from April 1, 1998 through June 30, 1998.
-9-
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, the Company's net real estate investments totaled
approximately $890,029,000, which included 56 skilled nursing facilities, 130
assisted living facilities, 15 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 June 30, 1998, the Company had shareholders' equity of $570,607,000 and a
total outstanding debt balance of $337,067,000, which represents a debt to
equity ratio of 0.59 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 $72,523,000.
During the six months ended June 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 June 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 June 30, 1998, the Company had approximately $239,345,000 in unfunded
commitments. Under the Company's line of credit arrangements, available funding
totaled $95,400,000, 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, finance future
investments, and meet debt service and dividend requirements.
RESULTS OF OPERATIONS
Revenues for the three months ended June 30, 1998 were $23,159,000 as compared
with $18,448,000 for the three months ended June 30, 1997. Revenue growth
resulted primarily from increased operating lease income of $4,164,000,
increased interest income of $123,000 and increased loan and commitment fees of
$569,000 as a result of additional real estate investments made during the past
twelve months.
Revenues for the six months ended June 30, 1998 were $44,385,000 as compared
with $35,017,000 for the six months ended June 30, 1997, an increase of
$9,368,000 or 27%. Revenue growth resulted primarily from increased operating
lease income of $6,845,000, increased interest income of $1,429,000, and
increased loan and commitment fees of $1,211,000 as a result of additional real
estate investments made during the past twelve months.
-10-
<PAGE> 11
The growth in income for the three and six month periods ended June 30, 1998 was
offset by prepayment fees during the second quarter of 1997 of $477,000. There
were no such prepayment fees during the first six months of 1998.
Expenses for the three months ended June 30, 1998 totaled $8,420,000, an
increase of $1,900,000 from expenses of $6,520,000 for the same period in 1997.
Expenses for the six months ended June 30, 1998 totaled $16,237,000, an increase
of $2,974,000 from expenses of $13,263,000 for the same period in 1997. The
increases in total expenses for the three and six month periods ended June 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 June 30, 1998 was $4,461,000 as
compared to $3,752,000 for the same period in 1997. For the six month period
ended June 30, 1998, interest expense totaled $8,701,000 as compared to
$7,763,000 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 six 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 six month periods in 1998 totaled
$1,617,000, and $2,843,000, respectively, as compared with $381,000 and $628,000
for the same periods in 1997.
The provision for depreciation for the three and six month periods ended June
30, 1998 totaled $2,292,000 and $4,162,000, respectively, increases of
$1,016,000 and $1,701,000 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 six month periods ended
June 30, 1998 totaled $1,336,000 and $2,717,000, respectively, as compared with
$1,181,000 and $2,361,000 for the same periods in 1997. The expenses for the
three and six month periods in 1998 were 5.77% and 6.12% of revenues as compared
with 6.40% and 6.74% for the same periods in 1997.
Dividend expense, associated with the Company's outstanding preferred stock, for
the three and six month periods ended June 30, 1998 totaled $832,000 and
$832,000 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 six month periods ended June 30, 1998 was
$13,907,000, or $0.54 per diluted share, and $27,316,000, or $1.09 per diluted
share, respectively, as compared with $11,928,000, or $0.54 per diluted share,
and $21,754,000, or $1.05 per diluted share for the comparable periods in 1997.
Net income for the three and six month periods ended June 30, 1997 included
$477,000, or $0.02 per share, of prepayment fees. There were no such prepayment
fees in the same period in 1998.
-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. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of Health Care REIT, Inc. was duly called and
held on April 21, 1998 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 three directors:
Nominee For Withheld
------------------------ ---------------- -----------------
Jeffrey H. Donahue 22,249,048 193,127
Bruce G. Thompson 22,258,434 183,741
Richard A. Unverferth 22,216,385 225,790
Proposal #2 - The approval of an amendment to the Company's
Stock Plan for Non-Employee Directors:
For 19,957,231
Against 2,032,249
Abstain 452,695
Proposal #3 - The ratification of the appointment of Ernst &
Young LLP as independent auditors for the fiscal
year 1998:
For 22,171,313
Against 92,894
Abstain 177,968
ITEM 5. OTHER INFORMATION
On April 14, 1998, the Company issued a press release in which it announced
record new investments of $110 million for first quarter of 1998.
On April 21, 1998, the Company issued a press release in which it announced
record first quarter 1998 results and an increase in quarterly dividend.
On May 8, 1998, the Company issued a press release in which it announced the
sale of $75 million of cumulative redeemable preferred stock.
-13-
<PAGE> 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports
27 Financial Data Schedule
99.1 Press release dated April 14, 1998
99.2 Press release dated April 21, 1998
99.3 Press release dated May 8, 1998
(b) Reports on Form 8-K
Form 8-K filed on May 8, 1998
-14-
<PAGE> 15
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: August 11, 1998 By: /s/ GEORGE L. CHAPMAN
---------------------- -------------------------------------------
George L. Chapman,
Chairman, Chief Executive Officer and
President
Date: August 11, 1998 By: /s/ EDWARD F. LANGE, JR.
---------------------- -------------------------------------------
Edward F. Lange, Jr.,
Chief Financial Officer
Date: August 11, 1998 By: /s/ MICHAEL A. CRABTREE
---------------------- -------------------------------------------
Michael A. Crabtree,
Chief Accounting Officer
-15-
<PAGE> 16
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 April 14, 1998
99.2 Press release dated April 21, 1998
99.3 Press release dated May 8, 1998
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000766704
<NAME> HEALTH CAFE REIT INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,270
<SECURITIES> 3,832
<RECEIVABLES> 7,484
<ALLOWANCES> 4,687
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 512,241
<DEPRECIATION> 15,930
<TOTAL-ASSETS> 926,987
<CURRENT-LIABILITIES> 0
<BONDS> 337,067
0
75,000
<COMMON> 25,457
<OTHER-SE> 470,150
<TOTAL-LIABILITY-AND-EQUITY> 926,987
<SALES> 0
<TOTAL-REVENUES> 44,385
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,519
<LOSS-PROVISION> 300
<INTEREST-EXPENSE> 4,461
<INCOME-PRETAX> 13,907
<INCOME-TAX> 0
<INCOME-CONTINUING> 13,907
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,907
<EPS-PRIMARY> 1.10
<EPS-DILUTED> 1.09
</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
April 14, 1998
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES RECORD NEW
INVESTMENTS OF $110 MILLION FOR FIRST QUARTER
Toledo, Ohio, April 14, 1998..... HEALTH CARE REIT, INC. (NYSE/HCN) announced
today record quarterly investment activity for the first quarter of 1998
totaling $110,175,000.
The 1998 investment activity contributed to a 13.5 percent increase in net real
estate investments which totaled $810,117,000 at March 31, 1998, as compared
with $713,557,000 at December 31, 1997.
First quarter investment activity, inclusive of recurring construction funding
of $35,933,000, included $68,419,000 of operating leases, $38,040,000 of
mortgage loans and $3,716,000 for equity related investments. Real estate
investments were comprised of $55,543,000 for 41 assisted living facilities,
$47,550,000 for 10 nursing homes, $2,222,000 for four retirement centers and
$1,144,000 for two behavioral care facilities. The company funded equity related
investments in four privately held health care companies. Aggregate funding was
provided to 20 operators in 14 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 March 31, 1998 the
company had investments in 194 health care facilities in 29 states and had total
assets of approximately $836 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.
#####
-17-
<PAGE> 1
Exhibit 99.2
F O R I M M E D I A T E R E L E A S E
APRIL 21, 1998
FOR MORE INFORMATION CONTACT:
ERIN IBELE - (419) 247-2800
ED LANGE - (419) 247-2800
HEALTH CARE REIT, INC.
ANNOUNCES RECORD FIRST QUARTER RESULTS
AND INCREASE IN QUARTERLY DIVIDEND
FIRST QUARTER RESULTS FIRST QUARTER HIGHLIGHTS
--------------------- ------------------------
- $836 million total assets - $110 million new investments
- $21 million gross income - 37% asset growth
- $0.62 per diluted share FFO - 8.8% per share FFO growth
- $0.54 per share dividends - 87% FFO payout ratio
Toledo, Ohio, April 21, 1998........HEALTH CARE REIT, INC. (NYSE/HCN) today
reported record operating results for the first quarter of 1998. Funds from
operations (FFO) achieved a record level of $15,279,000, or $0.62 per diluted
share, for the three months ended March 31, 1998, an 8.8 percent per share
increase from $11,011,000, or $0.57 per diluted share, in the prior year.
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 March 31, 1998, of $0.545 per share as compared with $0.525
per share for the same period in 1997.
The dividend is a one-half cent increase from the dividend paid for the fourth
quarter of 1997 and represents the 108th consecutive dividend payment. The
dividend will be payable May 20, 1998, to shareholders of record on May 5, 1998.
Net income for the first quarter of 1998 totaled $13,409,000, or $0.54 per
diluted share, on revenue of $21,226,000, as compared with net income of
$9,826,000, or $0.51 per diluted share, on revenue of $16,569,000 for the three
months ended March 31, 1997.
In comparing the results for the first quarter of 1998 with the corresponding
period of the prior year, George Chapman, chairman and chief executive officer,
noted that the increased level of earnings was positively influenced by a higher
level of rental income. Operating lease revenue for the three months ended March
31, 1998, increased $2,681,000 over the corresponding period in 1997 from
$4,963,000 to $7,644,000. The growth in rental income resulted primarily from
additional real estate investments made in 1997 and the first quarter of 1998 of
$262,646,000 and $110,175,000, respectively.
-18-
<PAGE> 2
APRIL 21, 1998
HEALTH CARE REIT, INC. PAGE 2
- --------------------------------------------------------------------------------
Chapman further noted that the first quarter investment activity contributed to
a 37 percent increase in total assets, which at March 31, 1998, totaled
$836,006,000 as compared with total assets of $608,432,000 at March 31, 1997.
"The first quarter investment activity reflects the strength and breadth of our
investment strategy," added Chapman. "Our continued focus on providing growth
capital to emerging health care operators has produced consistent investment
results and generated strong earnings growth. At the end of the first quarter
our unfunded commitments totaled $257 million, which we anticipate funding
during the next 12 to 15 months. We expect continued success throughout the
balance of the year."
During the first quarter of 1998, the company completed the sale of $100 million
of 7.625 percent senior unsecured notes due March 15, 2008. The notes are rated
"Ba1" by Moody's Investors Service, "BBB-" by Standard & Poor's Corporation and
"BBB-" by Duff & Phelps Credit Rating Co.
During the first three months of 1998, the company completed a secondary sale of
913,242 shares of common stock, which generated net proceeds of approximately
$23.7 million. The net proceeds derived from the offering of common stock and
the sale of notes 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 March 31, 1998, the
company had investments in 194 health care facilities in 29 states and had total
assets of approximately $836 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
#####
-19-
<PAGE> 3
HEALTH CARE REIT, INC.
FINANCIAL SUPPLEMENT
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31
-------------------------------
1998 1997
-------------------------------
<S> <C> <C>
ASSETS
Real estate investments:
Real property owned:
Land $ 27,654 $ 17,486
Buildings & improvements 300,451 170,198
Construction in progress 62,676 16,636
--------- ---------
390,781 204,320
Less accumulated depreciation (13,638) (7,667)
--------- ---------
Total real property owned 377,143 196,653
Loans receivable 429,686 402,055
Direct financing leases 7,825 10,804
--------- ---------
814,654 609,512
Less allowance for losses on loans receivable (4,537) (9,937)
--------- ---------
Net real estate investments 810,117 599,575
Other assets:
Deferred loan expenses 2,584 2,002
Cash and cash equivalents 1,689 121
Direct investments 8,680
Marketable securities 5,009 966
Receivables and other assets 7,927 5,768
--------- ---------
25,889 8,857
--------- ---------
Total assets $ 836,006 $ 608,432
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowings under line of credit obligations $ 49,000 $ 100,500
Senior unsecured notes 262,000 82,000
Bonds and mortgages payable 8,650 10,097
Accrued expenses and other liabilities 19,255 11,401
--------- ---------
Total liabilities $ 338,905 $ 203,998
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 - 25,367,997
in 1998 and 21,737,294 in 1997 25,368 21,737
Capital in excess of par value 461,102 373,443
Undistributed net income 9,103 8,288
Unrealized gains on investment securities
available for sale 5,009 966
Unamortized restricted stock (3,481)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY $ 497,101 $ 404,434
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 836,006 $ 608,432
========= =========
</TABLE>
-20-
<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
MARCH 31
-----------------------------
1998 1997
---------- ----------
<S> <C> <C>
Revenues:
Interest on loans receivable $11,922 $10,616
Prepayment fees 0 0
Operating leases:
Rents 7,644 4,963
Gain on exercise of options 0 0
Direct financing leases:
Lease income 214 357
Gain on exercise of options 0 0
Loan and commitment fees 1,226 584
Other income 220 49
------- -------
$21,226 $16,569
Expenses:
Interest expense $ 4,240 $ 4,011
Provision for depreciation 1,870 1,185
General and administrative 1,381 1,180
Loan expense 176 217
Provision for losses 150 150
------- -------
7,817 6,743
------- -------
Net Income $13,409 $ 9,826
======= =======
Average number of shares outstanding:
Basic 24,259 19,286
Diluted 24,642 19,450
Net income per share:
Basic $ 0.55 $ 0.51
Diluted 0.54 0.51
Funds from operations $15,279 $11,011
Funds from operations per share:
Basic $ 0.63 $ 0.57
Diluted 0.62 0.57
Dividends per share $ 0.540 $ 0.520
</TABLE>
-21-
<PAGE> 5
HEALTH CARE REIT, INC.
FINANCIAL SUPPLEMENT - MARCH 31, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
PORTFOLIO COMPOSITION ($000'S) EXHIBIT 1
- ------------------------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA # Properties # Beds/Units Balance (1) % Balance
-------------------------------------------------------------------------------
Loans Receivable 82 8,660 $ 429,686 52%
Real Property 109 8,471 377,143 46%
Direct Financing Leases 3 243 7,825 1%
Direct Investments -na- -na- 8,680 1%
-------------------------------------------------------------------------------
Total Investments 194 17,374 $ 823,334 100%
INVESTMENT DATA # Properties # Beds/Units Investment (2) % Investment
-------------------------------------------------------------------------------
Assisted Living Facilities 120 8,213 $ 405,047 49%
Nursing Homes 54 7,009 273,800 33%
Retirement Centers 12 1,145 48,324 6%
Specialty Care Facilities 6 713 92,460 11%
Behavioral Care 2 294 10,588 1%
-------------------------------------------------------------------------------
Real Estate Investments 194 17,374 $ 830,219 100%
INVESTMENT BY OWNER TYPE # Properties # Beds/Units Investment (2) % Investment
-------------------------------------------------------------------------------
Publicly Traded 91 6,898 $ 356,463 43%
Key Private 61 6,047 313,718 38%
Privately Held 42 4,429 160,038 19%
-------------------------------------------------------------------------------
Real Estate Investments 194 17,374 $ 830,219 100%
<FN>
NOTES: (1) TOTAL INVESTMENTS INCLUDE GROSS REAL ESTATE INVESTMENTS AND DIRECT INVESTMENTS WHICH AMOUNTED TO
$814,654,000 AND $8,680,000.
(2) REAL ESTATE INVESTMENTS INCLUDE GROSS REAL ESTATE INVESTMENTS AND CREDIT ENHANCEMENTS WHICH AMOUNTED
TO $814,654,000 AND $15,565,000 RESPECTIVELY.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
REVENUE COMPOSITION ($000'S) EXHIBIT 2
- ----------------------------
Three Months Ended
March 31, 1998 Year-to-Date
------------------------------- -------------------------------
REVENUE BY INVESTMENT TYPE
<S> <C> <C> <C>
Mortg. Loans & Other Loans $12,483 59%
Real Property 8,334 39%
Direct Financing Leases 215 1%
Direct Investments 194 1%
------------------------------- -------------------------------
Total $21,226 100%
REVENUE BY FACILITY TYPE
Assisted Living Facilities $10,068 47%
Nursing Homes 6,983 33%
Specialty Care Facilities 2,951 14% (Not Applicable)
Retirement Centers 1,024 5%
Behavioral Care 200 1%
------------------------------- -------------------------------
Total $21,226 100%
REVENUE BY OWNER TYPE
Publicly Traded $ 9,532 45%
Key Private 7,417 35%
Privately Held 4,277 20%
------------------------------- -------------------------------
Total $21,226 100%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
-22-
<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 400 566 966 1%
2000 380 1,732 2,112 2%
2001 0 3,733 3,733 4%
2002 873 1,162 2,035 2%
Thereafter 39,953 40,004 79,957 90%
--------------------------------------------------------------------------------------------------
Total $ 42,456 $ 47,197 $ 89,653 100%
<FN>
NOTES: (1) REVENUE IMPACT BY YEAR, ANNUALIZED
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<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 120 8,213 $ 551,996 $ 67,210
Nursing Homes 54 7,009 287,708 41,048
Retirement Centers 12 1,145 56,155 49,044
Specialty Care Facilities 6 713 92,460 129,678
Behavioral Care 2 294 10,588 36,013
--------------------------------------------------------------------------------
Total 194 17,374 $ 998,907 n/a
NOTES: (1) COMMITTED BALANCE INCLUDES REAL ESTATE INVESTMENTS, CREDIT ENHANCEMENTS AND UNFUNDED COMMITMENTS FOR WHICH
INITIAL FUNDING HAD COMMENCED.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
OPERATOR CONCENTRATION ($000'S) EXHIBIT 5
- -------------------------------
CONCENTRATION BY INVESTMENT # Properties Investment % Investment
-----------------------------------------------------------------------
<S> <C> <C> <C>
Kapson Senior Quarters 7 $ 79,951 10%
Life Care Centers of America, Inc. 12 75,527 9%
Olympus Healthcare Group, Inc. 12 67,554 8%
Greenbriar Corporation 15 58,674 7%
Doctors Corporation of America 3 49,227 6%
Remaining Operators 145 499,286 60%
-----------------------------------------------------------------------
Total 194 $ 830,219 100%
CONCENTRATION BY REVENUE # Properties Revenue (1) % Revenue
-----------------------------------------------------------------------
Life Care Centers of America, Inc. 12 $ 2,041 10%
Olympus Healthcare Group, Inc. 12 1,931 9%
Kapson Senior Quarters 7 1,919 9%
Doctors Corporation of America 3 1,514 7%
Greenbriar Corporation 15 1,509 7%
Remaining Operators 145 12,312 58%
-----------------------------------------------------------------------
Total 194 $ 21,226 100%
<FN>
NOTES: (1) THREE MONTHS ENDED MARCH 31, 1998
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
-23-
<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% 41% 1.98x 1.45x
Assisted Living Facilities 90% 100% 1.43x 1.24x
Retirement Centers 97% 100% 2.34x 2.06x
Specialty Care Facilities n/a 68% 3.73x 3.23x
Behavioral Care n/a n/a n/a n/a
-------------------------------------------
2.17x 1.76x
<FN>
NOTES: (1) FACILITY DATA REPORTED AS OF DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
SECURITY DEPOSITS & OTHER CREDIT SUPPORT ($000'S) EXHIBIT 7
- -------------------------------------------------
Balance % Investment
--------------------------------
<S> <C> <C> <C>
Cross Defaulted $ 713,693 86% of gross real estate investments
Cross Collateralized 381,562 88% of mortgage loans
Bank Letters of Credit & Cash 43,485 4% of committed balance
CURRENT CAPITALIZATION ($000'S) Balance % Balance LEVERAGE & PERFORMANCE RATIOS
- ------------------------------- -------------------------------- --------------------------------------
Borrowings Under Bank Lines $ 49,000 5% Debt/Total Mkt. Cap 31%
Long-Term Debt Obligations 270,650 27% Debt/Mkt. Cap 46%
Equity Market Capitalization 697,620 68% Interest Coverage 3.88x 1st Qtr.
-------------------------------- 4.02x LTM
Total Market Capitalization $ 1,017,270 100% FFO Payout Ratio 87% 1st Qtr.
89% LTM
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<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 $ 22,000 $ 1,222 $ 23,222
1999 1,000 0 90 1,090
2000 48,000 35,000 99 83,099
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 $ 49,000 $ 262,000 $ 8,650 $ 319,650
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
-24-
<PAGE> 8
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITY ($000'S) EXHIBIT 9
----------------------------
Three Months Ended
March 31, 1998 Year-to-Date
--------------------------------- ---------------------------------
<S> <C> <C> <C>
FUNDING BY INVESTMENT TYPE
Real Property $ 43,455 39%
Mortgage & Other Loans 27,071 25%
Construction Advances 35,933 33%
Direct Investments 3,716 3%
--------------------------------- ---------------------------------
Total $ 110,175 100%
(Not Applicable)
REAL ESTATE INVESTMENTS
Assisted Living Facilities $ 55,543 52%
Nursing Homes 47,550 45%
Retirement Centers 2,222 2%
Behavioral Care 1,144 1%
Specialty Care Facilities 0 0%
--------------------------------- ---------------------------------
Total $ 106,459 100%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
GEOGRAPHIC CONCENTRATION ($000'S) EXHIBIT 10
- ---------------------------------
<S> <C> <C> <C>
CONCENTRATION BY REGION # Properties Investment % Investment
---------------------------------------------------------------------
South 119 $ 404,269 49%
Northeast 33 238,070 29%
West 18 110,263 13%
Midwest 24 77,617 9%
---------------------------------------------------------------------
Total 194 $ 830,219 100%
CONCENTRATION BY STATE # Properties Investment % Investment
---------------------------------------------------------------------
Texas 47 $ 156,117 19%
Florida 25 100,283 12%
Massachusetts 14 79,099 9%
New York 7 70,202 8%
Pennsylvania 8 52,309 6%
Remaining States 93 372,209 46%
---------------------------------------------------------------------
Total 194 $ 830,219 100%
REVENUE BY STATE # Properties Revenue (1) % Revenue
---------------------------------------------------------------------
Texas 47 $ 4,121 19%
Massachusetts 14 2,077 10%
Florida 25 1,759 8%
New York 7 1,684 8%
Pennsylvania 8 1,318 6%
Remaining States 93 10,267 49%
---------------------------------------------------------------------
Total 194 $ 21,226 100%
<FN>
NOTES: (1) THREE MONTHS ENDED MARCH 31, 1998
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
-25-
<PAGE> 1
Exhibit 99.3
F O R I M M E D I A T E R E L E A S E
May 8, 1998
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES SALE OF $75 MILLION
OF CUMULATIVE REDEEMABLE PREFERRED STOCK
Toledo, Ohio, May 8, 1998..... HEALTH CARE REIT, INC. (NYSE/HCN) announced today
that it has priced a public offering of 3,000,000 shares of 8.875 percent Series
B cumulative redeemable preferred stock at $25 per share. It is anticipated that
closing and delivery will occur on or about May 13, 1998.
BT Alex. Brown Incorporated is the lead manager of the underwriting group, and
Salomon Smith Barney, EVEREN Securities, Inc. and Raymond James & Associates,
Inc. are the co-managers. The company has granted the underwriting group an
option for 30 days to purchase up to an additional 450,000 shares to cover
over-allotments.
The preferred stock, which has no stated maturity, may be redeemed by the
company at par on or after May 1, 2003, will not be subject to any sinking fund
or mandatory redemption and will not be convertible into any other security of
the company.
The net proceeds of the sale will be approximately $72.4 million, and will be
used to repay borrowings under the company's $175 million unsecured revolving
credit facility and to invest in additional health care properties.
"We are pleased to complete the company's first perpetual preferred stock
offering," commented George L. Chapman, chairman and chief executive officer.
"The preferred stock offering broadens our long-term capital structure and
demonstrates the company's ability to access the capital markets."
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
company has applied for approval to list the Series B preferred stock on the New
York Stock Exchange.
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 March 31, 1998, the
company had investments in 194 health care facilities in 29 states and had total
assets of approximately $836 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.
#####
-26-
