<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 MARCH 31, 2000
------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to __________________________
Commission File number 1-8923
HEALTH CARE REIT, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 34-1096634
- ----------------------------- ------------------------------
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One SeaGate, Suite 1500, Toledo, Ohio 43604
- ------------------------------------- ------------------------------
(Address of principal executive office) (Zip Code)
(Registrant's telephone number, including area code) (419) 247-2800
---------------------------
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X . No .
------- ------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes _____. No _____.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 11, 2000.
Class: Shares of Common Stock, $1.00 par value
Outstanding 28,576,877 shares
<PAGE> 2
HEALTH CARE REIT, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - March 31, 2000
and December 31, 1999 3
Consolidated Statements of Income - Three
months ended March 31, 2000 and 1999 4
Consolidated Statements of Shareholders'
Equity - Three months ended March 31, 2000
and 1999 5
Consolidated Statements of Cash Flows -
Three months ended March 31, 2000 and 1999 6
Notes to Unaudited Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosure About Market Risk 11
PART II. OTHER INFORMATION
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
EXHIBIT INDEX 14
</TABLE>
-2-
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
--------------------
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
2000 1999
(UNAUDITED) (NOTE)
------------- -------------
ASSETS (IN THOUSANDS)
<S> <C> <C>
Real estate investments:
Real property owned:
Land $ 72,373 $ 73,234
Buildings & improvements 720,601 730,337
Construction in progress 52,975 58,954
----------- -----------
845,949 862,525
Less accumulated depreciation (40,494) (35,746)
----------- -----------
Total real property owned 805,455 826,779
Loans receivable 404,189 401,019
----------- -----------
1,209,644 1,227,798
Less allowance for loan losses (5,837) (5,587)
----------- -----------
Net real estate investments 1,203,807 1,222,211
Other Assets:
Direct investments 31,164 25,361
Marketable securities 545 863
Cash and cash equivalents 1,380 2,129
Deferred loan expenses 3,461 3,311
Receivables and other assets 21,509 17,296
----------- -----------
58,059 48,960
----------- -----------
TOTAL ASSETS $ 1,261,866 $ 1,271,171
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowings under line of credit obligations $ 172,900 $ 177,500
Senior unsecured notes 290,000 290,000
Secured debt 71,318 71,342
Accrued expenses and other liabilities 21,739 25,333
----------- -----------
TOTAL LIABILITIES 555,957 564,175
Shareholders' equity:
Preferred Stock, $1.00 par value:
Authorized - 10,000,000 shares
Issued and outstanding - 6,000,000 shares 150,000 150,000
Common Stock, $1.00 par value:
Authorized - 75,000,000 shares
Issued and outstanding - 28,576,877
in 2000 and 28,532,419 in 1999 28,577 28,532
Capital in excess of par value 524,778 524,204
Undistributed net income 7,087 8,883
Accumulated other
comprehensive income 248 593
Unamortized restricted stock (4,781) (5,216)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 705,909 706,996
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,261,866 $ 1,271,171
=========== ===========
</TABLE>
NOTE: The consolidated balance sheet at December 31, 1999 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
MARCH 31
2000 1999
------------ -------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C>
REVENUES:
Rental income $21,630 $14,140
Interest income 11,521 11,895
Commitment fees and other income 1,676 1,946
Prepayment fees - 183
------- -------
Total revenue 34,827 28,164
EXPENSES:
Interest expense 9,101 4,269
Loan expense 317 166
Provision for depreciation 5,263 3,555
Provision for losses 250 150
General and administrative expenses 1,900 1,674
------- -------
Total expenses 16,831 9,814
------- -------
Net income before gains on sale of properties 17,996 18,350
Gains on sale of properties 123 628
------- -------
Net income 18,118 18,978
Preferred stock dividends 3,362 2,759
------- -------
Net Income Available to Common Shareholders $14,757 $16,219
======= =======
Average number of shares outstanding:
Basic 28,315 28,077
Diluted 28,546 28,393
Net income per share:
Basic $ 0.52 $ 0.58
Diluted 0.52 0.57
Dividends declared and paid per common share $ 0.58 $ 0.56
</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>
Three months ended March 31, 2000
--------------------------------------------------------------------------------------------
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 $150,000 28,532 $524,204 $(5,216) $ 8,883 $ 593 $706,996
Comprehensive income:
Net income 18,118 18,118
Unrealized gains on securities (318) (318)
Foreign currency translation
adjustment (27) (27)
--------
Comprehensive income 18,042
Proceeds from issuance of shares
from dividend reinvestment and
stock incentive plans, net of
forfeitures 45 574 118 737
Restricted stock amortization 317 317
Cash dividends paid 19,914 19,914
------- ------- ------- -------- --------- --------- --------
Balance at end of period $150,000 $28,577 $524,778 $(4,781) $ 7,087 $ 248 $705,909
======== ======= ======== ======== ========= ========= ========
</TABLE>
<TABLE>
<CAPTION>
Three months ended March 31, 1999
--------------------------------------------------------------------------------------------
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 $75,000 $28,240 $520,692 $(4,589) $ 10,434 $ 3,982 $633,759
Comprehensive income:
Net income 18,978 18,978
Unrealized gains on securities (1,873) (1,873)
--------
Comprehensive income 17,105
Proceeds from issuance of shares
from dividend reinvestment plan 77 1,745 (228) 1,594
Proceeds from sale of Preferred Stock 75,000 (2,455) 72,545
Restricted stock amortization 269 269
Cash dividends paid (18,578) (18,578)
-------- ------- -------- ------- --------- -------- --------
Balance at end of period $150,000 $28,317 $519,982 $(4,548) $ 10,834 $ 2,109 $706,694
======== ======= ======== ======= ========= ======== ========
</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>
THREE MONTHS ENDED
MARCH 31
2000 1999
------------------------------
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 18,118 $ 18,978
Adjustments to reconcile net income to net cash
Provision for depreciation 5,484 3,650
Provision for losses 250 150
Amortization 633 443
Loan and commitment fees earned (more) less than cash received (1,154) 529
Direct financing lease income less than cash received - 35
Rental income in excess of cash received (1,697) (1,573)
Interest and other income in excess of cash received (75) (107)
Increase(decrease) in accrued expenses and other liabilities (2,440) 1,527
Increase in receivables and other assets (2,059) (1,730)
---------- ----------
NET CASH PROVIDED FROM OPERATING ACTIVITIES 17,060 21,902
INVESTING ACTIVITIES
Investment in real properties (10,188) (84,829)
Investment in loans receivable (3,799) (13,039)
Other investments, net (5,754) (1,919)
Principal collected on loans 630 6,634
Proceeds from sale of properties 26,248 5,567
Other (679) (318)
------------ ------------
NET CASH PROVIDED FROM/(USED IN) INVESTING ACTIVITIES 6,458 (87,904)
FINANCING ACTIVITIES
Net payments under line of credit arrangements (4,600) (82,350)
Principal payments on long-term obligations (24) (21)
Net proceeds from the issuance of Common Stock 737 1,594
Net proceeds from the issuance of Preferred Stock - 72,723
Proceeds from issuance of Senior Notes - 50,000
Proceeds from issuance of Secured Debt - 44,000
Increase in deferred loan expense (466) (1,404)
Cash distributions to shareholders (19,914) (18,578)
------------ ------------
NET CASH PROVIDED FROM/(USED IN) FINANCING ACTIVITIES (24,267) 65,964
------------ -----------
Decrease in cash and cash equivalents (749) (38)
Cash and cash equivalents at beginning of period 2,129 1,269
------------ -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,380 $ 1,231
============ ===========
Supplemental Cash Flow Information -- Interest Paid $ 11,522 $ 6,523
============ ===========
</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 has been
included. Operating results for the three months ended March 31, 2000, are not
necessarily an indication of the results that may be expected for the year
ending December 31, 2000. For further information, refer to the financial
statements and footnotes thereto included in the Company's annual report on Form
10-K for the year ended December 31, 1999.
NOTE B - REAL ESTATE INVESTMENTS
During the three months ended March 31, 2000, the Company invested $183,000 in
real property, made construction advances of $12,083,000 and funded $5,867,000
of equity related investments. During the three months ended March 31, 2000, the
Company sold $26,248,000 of real property, received principal payments on real
estate mortgages of $630,000 and had net advances on working capital loans of
$1,756,000.
With respect to the above-mentioned construction advances, funding for
construction in progress in connection with twelve properties owned directly by
the Company totaling $10,104,000, and funding associated with six construction
loans represented $1,979,000. During the three months ended March 31, 2000, one
of the construction properties in progress with an investment balance of
$3,305,000 completed the construction phase of the Company's investment process
and was converted to permanent operating leases.. Also, during the three months
ended March 31, 2000, one of the construction loans with an investment balance
of $2,975,000 completed the construction phase of the Company's investment
process and was converted to investments in permanent mortgage loans.
NOTE C - 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 March
31, 2000, direct investments included the preferred stock of one private
corporation and 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 D - MARKETABLE SECURITIES
Marketable securities are stated at market value with unrealized gains and
losses reported in a separate component of shareholders' equity. At March 31,
2000, marketable securities reflected the market value of the common stock of
two publicly owned corporations which were obtained by the Company at no cost.
-7-
<PAGE> 8
NOTE E - CONTINGENT LIABILITIES
As disclosed in the financial statements for the year ended December 31, 1999,
the Company was contingently liable for certain obligations amounting to
$12,425,000.
NOTE F - DISTRIBUTIONS PAID TO COMMON SHAREHOLDERS
On February 21, 2000, the Company paid a dividend of $0.58 per share to
shareholders of record on February 2, 2000. This dividend related to the period
from October 1, 1999 through December 31, 1999.
NOTE G - 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 March 31
-------------------------------------------------
2000 1999
------------------ ------------------
<S> <C> <C>
Numerator for basic and diluted earnings per
share-income available to common shareholders $ 14,757 $ 16,219
================== ==================
Denominator for basic earnings per share -
weighted average shares 28,315 28,077
Effect of dilutive securities:
Employee stock options - 116
Nonvested restricted shares 231 200
------------------ ------------------
Dilutive potential common shares 231 316
------------------ ------------------
Denominator for diluted earnings per share -
adjusted weighted average shares 28,546 28,393
================== ==================
Basic earnings per share $ 0.52 $ 0.58
Diluted earnings per share $ 0.52 $ 0.57
</TABLE>
The diluted earnings per share calculation excludes the dilutive effect of
1,813,000 and 179,000 shares for 2000 and 1999, respectively, because the
exercise price was greater than the average market price. The Series C
Cumulative Convertible Preferred Stock was not included in this calculation as
the effect of the conversion was anti-dilutive.
-8-
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Company's net real estate investments totaled
approximately $1,203,807,000, which included 179 assisted living facilities, 48
nursing facilities, six specialty care facilities and two behavioral care
facilities. Depending upon the availability and cost of external capital, the
Company anticipates making additional investments in health care related
facilities. New investments are funded from temporary borrowings under the
Company's line of credit arrangements, internally generated cash and the
proceeds derived from asset sales. Permanent financing for future investments,
which replaces funds drawn under the line of credit arrangements, is expected to
be provided through a combination of private and public offerings of debt and
equity securities, and the assumption of secured debt. The Company believes its
liquidity and various sources of available capital are sufficient to fund
operations, meet debt service and dividend requirements, and finance future
investments.
During 1999 and the first quarter of 2000, the underperformance of publicly
owned nursing home and assisted living companies, combined with the much
publicized shift in equity funds flow from income-oriented investments to
high-growth opportunities, impaired the stock valuations of all health care
REITs. The availability of external capital is limited and expensive,
constraining new investment activity and earnings growth. The Company believes
the restrictive capital environment will continue until the prospects for the
long-term care industry improve.
In October 1999, the Company announced a $200 million asset divestiture program,
which is proceeding as planned. The Company believes the limited asset sales
will strengthen the Company's portfolio and generate liquidity, enhancing the
Company's balance sheet. This strategy should position the Company for new
investment and growth opportunities in the future.
As of March 31, 2000, the Company had a total outstanding debt balance of
$534,218,000 and shareholders' equity of $705,909,000 which represents a debt to
equity ratio of 0.76 to 1.0, and a debt to total capitalization ratio of 0.43 to
1.0.
As of March 31, 2000, the Company had an unsecured revolving line of credit
expiring March 31, 2001 in the amount of $175,000,000 bearing interest at the
lender's prime rate or LIBOR plus 1.0%. In addition, the Company had an
unsecured revolving line of credit in the amount of $20,000,000 bearing interest
at the lender's prime rate expiring April 30, 2001. At March 31, 2000, under the
Company's line of credit arrangements, available funding totaled $22,100,000.
As of March 31, 2000, the Company has effective shelf registrations on file with
the Securities and Exchange Commission under which the Company may issue up to
$380,319,000 of securities including debt, convertible debt, common and
preferred stock. Depending upon market conditions, 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.
-9-
<PAGE> 10
RESULTS OF OPERATIONS
Revenues for the three months ended March 31, 2000, were $34,950,000 as compared
with $28,792,000 for the three months ended March 31, 1999. Revenue growth was
generated primarily by increased rental income of $7,490,000 as a result of
additional real estate investments made during the past twelve months.
During the three months ended March 31, 2000, the Company recognized gains on
sales of properties and prepayment fees of $123,000 as compared with $811,000
for the same period in the prior year.
Expenses for the three months ended March 31, 2000, totaled $16,831,000, an
increase of $7,017,000 from expenses of $9,814,000 for the same period in 1999.
The increases in total 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 March 31, 2000, was $9,101,000 as
compared to $4,269,000 for the same period in 1999. The increase in the 1999
period was primarily due to the issuance of $114,000,000 of long-term debt and
higher average borrowings under the Company's lines of credit. Interest expense
is offset by the amount of capitalized interest recorded.
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 months ended March 31, 2000 totaled
$1,220,000, as compared with $3,158,000 for the same period in 1999.
The provision for depreciation for the three months ended March 31, 2000,
totaled $5,263,000, an increase of $1,644,000 over the comparable period in 1999
as a result of additional investments in properties owned directly by the
Company.
General and administrative expenses for the three months ended March 31, 2000,
totaled $1,900,000, as compared with $1,674,000 for the same period in 1999. The
expenses for the three month period in 2000 were 5.4% of revenues as compared
with 5.8% for the same period in 1999.
Dividend expense, associated with the Company's outstanding preferred stock, for
the three months ended March 31, 2000, totaled $3,362,000, as compared with
$2,759,000 for the same period in 1999.
As a result of the various factors mentioned above, net income available to
common shareholders for the three months ended March 31, 2000, was $14,757,000,
or $.52 per diluted share, as compared with $16,219,000, or $0.57 per diluted
share, for the comparable periods in 1999.
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 reflect long-term investments with fixed rents or
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.
-10-
<PAGE> 11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
The Company is exposed to various market risks, including the potential loss
arising from adverse changes in interest rates. The Company seeks to mitigate
the effects of fluctuations in interest rates by matching the term of new
investments with new long-term fixed rate borrowings to the extent possible.
The market value of the Company's long-term fixed rate borrowings is subject to
interest rate risk. Generally, the market value of fixed rate financial
instruments will decrease as interest rates rise and increase as interest rates
fall. The estimated fair value of the Company's senior unsecured notes at March
31, 2000 was $259 million. A 1% increase in interest rates would result in a
decrease in fair value of the Company's senior unsecured notes by approximately
$9 million.
The Company is subject to risks associated with debt financing, including the
risk that existing indebtedness may not be refinanced or that the terms of such
refinancing may not be as favorable as the terms of current indebtedness. The
majority of the Company's borrowings were completed pursuant to indentures or
contractual agreements which limit the amount of indebtedness the Company may
incur. Accordingly, in the event that the Company is unable to raise additional
equity or borrow money because of these limitations, the Company's ability to
acquire additional properties may be limited.
At March 31, 2000, the Company's variable interest rate debt exceeded its
variable interest rate assets, presenting an exposure to rising interest rates.
The Company may or may not elect to use financial derivative instruments to
hedge variable interest rate exposure. Such decisions are principally based on
the Company's policy to match its variable rate investments with comparable
borrowings, but is also based on the general trend in interest rates at the
applicable dates and the Company's perception of future volatility of interest
rates.
POTENTIAL RISKS FROM BANKRUPTCIES
The Company is exposed to the risk that its operators may not be able to meet
the rent and interest payments due the Company, which may result in an operator
bankruptcy or insolvency. Although the Company's operating lease agreements and
loans provide the Company the right to terminate an investment, evict an
operator, demand immediate repayment, and other remedies, the bankruptcy laws
afford certain rights to a party that has filed for bankruptcy or
reorganization. An operator in bankruptcy may be able to restrict the Company's
ability to collect unpaid rent or interest, and collect interest during the
bankruptcy proceeding.
The receipt of liquidation proceeds or the replacement of an operator that has
defaulted on its lease or loan could be delayed by the approval process of any
federal, state or local agency necessary for the transfer of the property or the
replacement of the operator licensed to manage the facility. In addition, the
Company may be required to fund certain expenses (i.e. real estate taxes and
maintenance) to retain control of a property. In some instances the Company may
take possession of a property, which may expose the Company to successor
liabilities. Should such events occur, the Company's revenue and operating cash
flow may be adversely affected.
-11-
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-----------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
27 Financial Data Schedule
99.1 Press release dated January 10, 2000
99.2 Press release dated January 18, 2000
99.3 Press release dated January 20, 2000
99.4 Press release dated February 3, 2000
(b) Reports on Form 8-K
None
-12-
<PAGE> 13
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEALTH CARE REIT, INC.
Date: May 15, 2000 By: /S/ GEORGE L. CHAPMAN
---------------------- ----------------------------------------
George L. Chapman,
Chairman, Chief Executive Officer
and President
Date: May 15, 2000 By: /S/ EDWARD F. LANGE, JR.
--------------------- ----------------------------------------
Edward F. Lange, Jr.,
Chief Financial Officer
Date: May 15, 2000 By: /S/ MICHAEL A. CRABTREE
--------------------- ----------------------------------------
Michael A. Crabtree,
Chief Accounting Officer
-13-
<PAGE> 14
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 January 10, 2000
99.2 Press release dated January 18, 2000
99.3 Press release dated January 20, 2000
99.4 Press release dated February 3, 2000
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000766704
<NAME>HEALTH CARE REIT, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,380
<SECURITIES> 545
<RECEIVABLES> 21,509
<ALLOWANCES> 5,837
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 805,455
<DEPRECIATION> 40,494
<TOTAL-ASSETS> 1,261,866
<CURRENT-LIABILITIES> 0
<BONDS> 534,218
0
150,000
<COMMON> 28,577
<OTHER-SE> 527,332
<TOTAL-LIABILITY-AND-EQUITY> 1,261,866
<SALES> 0
<TOTAL-REVENUES> 34,827
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,580
<LOSS-PROVISION> 250
<INTEREST-EXPENSE> 9,101
<INCOME-PRETAX> 14,757
<INCOME-TAX> 0
<INCOME-CONTINUING> 14,757
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,757
<EPS-BASIC> 0.52
<EPS-DILUTED> 0.52
</TABLE>
<PAGE> 1
Exhibit 99.1
JANUARY 10, 2000
FOR MORE INFORMATION CONTACT:
ERIN IBELE - (419) 247-2800
ED LANGE - (419) 247-2800
HEALTH CARE REIT EXPANDS RELATIONSHIP WITH
SUMMERVILLE HEALTHCARE GROUP
Toledo, Ohio, January 10, 2000 - HEALTH CARE REIT, INC. (NYSE/HCN) today
reported that $93 million of leases relating to eight assisted living properties
leased by Chancellor Senior Housing, Inc. and operated by CareMatrix Corporation
have been assigned to Summerville HealthCare Group, one of Health Care REIT's
key private operators.
"This is an important transaction, benefiting all of the parties involved," said
George L. Chapman, chairman and chief executive officer of Health Care REIT. "We
are able to increase our investment portfolio with Summerville, a
well-capitalized operator with a successful track record. Summerville gains
significant critical mass with the addition of modern, purpose-built facilities,
and CareMatrix reduces the number of noncore properties it will operate."
"We are pleased to support CareMatrix's repositioning efforts in light of our
excellent relationship with that organization and its principals. At the same
time, we successfully retained these properties with Summerville with whom we
have been working for more than three years with very favorable results," said
Chapman.
With the addition of the CareMatrix properties, the company's Summerville
investment balance totaled approximately $171 million at December 31, 1999,
13.5% of total assets. As part of the assignment and in keeping with Health Care
REIT's commitment to portfolio diversification, Summerville has agreed to
refinance five development projects, which would reduce the Summerville
investment to approximately $136 million, or 10% of the company's total assets.
Including the CareMatrix properties, Summerville, which was founded in 1996, now
has 55 communities in operation or development in 12 states with more than 5,100
units and more than 2,200 employees.
Summerville President and CEO, Russell D. Ragland, said, "We're excited to have
these state-of-the-art communities, their residents and employees as part of
Summerville. Moreover, expanding our relationship with a partner like Health
Care REIT, with its strong management team, assisted living expertise and
industry relationships, ensures that we are well-positioned to maximize this
opportunity."
-15-
<PAGE> 2
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate
investment trust that invests in health care facilities, primarily nursing
homes, assisted living facilities and retirement centers. At December 31, 1999,
the company had investments in 238 health care facilities in 34 states and had
total assets of approximately $1.3 billion. For more information on Health Care
REIT, Inc., via facsimile at no cost, dial 1-800-PRO-INFO and enter the company
code - HCN. Information is also available on the Internet at
http://www.hcreit.com.
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,
general economic conditions, the availability of capital, competition within the
financial services and real estate markets, the performance of operators within
Health Care REIT's portfolio, and regulatory and other changes in the health
care sector, as described in the company's filings with the Securities and
Exchange Commission.
####
-16-
<PAGE> 1
Exhibit 99.2
FOR IMMEDIATE RELEASE
January 18, 2000
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES
INCREASE IN QUARTERLY DIVIDEND
Toledo, Ohio, January 18, 2000...HEALTH CARE REIT, INC. (NYSE/HCN) announced
today that the Board of Directors voted to declare a dividend for the quarter
ended December 31, 1999 of $0.58 per share as compared to $0.56 per share for
the same period in 1998.
The dividend is a one-half cent increase from the dividend paid for the third
quarter of 1999 and represents the 115th consecutive dividend payment. The
dividend will be payable February 21, 2000 to shareholders of record on February
1, 2000.
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 December 31, 1999,
the company had investments in 238 health care facilities in 34 states and had
total assets of approximately $1.3 billion.
For more information on Health Care REIT, Inc., via facsimile at no cost,
dial 1-800-PRO-INFO and enter the company code - HCN,
or visit the company's website at www.hcreit.com
#####
-17-
<PAGE> 1
Exhibit 99.3
FOR IMMEDIATE RELEASE
January 20, 2000
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES FOURTH
QUARTER INVESTMENTS OF $34 MILLION
1999 INVESTMENTS TOTAL $275 MILLION
Toledo, Ohio, January 20, 2000..... HEALTH CARE REIT, INC. (NYSE/HCN) announced
today that investment activity for the fourth quarter of 1999 totalled
$34,370,000. For the year ended December 31, 1999, the company funded
investments of $275,119,000.
The 1999 investment activity contributed to an 18.5 percent increase in total
assets which totalled $1,271,000,000 at December 31, 1999, as compared with
$1,073,000,000 at December 31, 1998.
Investment activity during 1999 included real property investments of
$215,339,000, mortgage loans of $52,318,000 and equity related investments of
$7,462,000. Facility-based investments, inclusive of construction advances, were
comprised of $216,808,000 for 77 assisted living facilities, $28,441,000 for ten
nursing homes and $22,408,000 for ten retirement centers. Aggregate funding was
provided to 26 operators in 28 states. At December 31, 1999, the company had
approximately $53 million in unfunded commitments.
During 1999, 55 construction projects completed the construction phase of the
company's investment process. Forty-three facilities were converted to permanent
real property investments, with an aggregate investment of $224,117,000. Twelve
facilities were converted to permanent mortgage loans with an aggregate
investment balance of $67,553,000.
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 December 31, 1999,
the company had investments in 238 health care facilities in 34 states and had
total assets of approximately $1.3 billion.
For more information on Health Care REIT, Inc., via facsimile at no cost,
dial 1-800-PRO-INFO and enter the company code - HCN,
or visit the company's website at www.hcreit.com.
#####
-18-
<PAGE> 1
Exhibit 99.4
FOR IMMEDIATE RELEASE
FEBRUARY 3, 2000
FOR MORE INFORMATION CONTACT:
ERIN IBELE - (419) 247-2800
ED LANGE - (419) 247-2800
HEALTH CARE REIT, INC. REPORTS 1999
OPERATING RESULTS
1999 YEAR END RESULTS 1999 YEAR END HIGHLIGHTS
--------------------- ------------------------
- $129 million gross income - $1.3 billion total assets
- $2.76 per diluted share FFO - $275 million new investments
- $2.27 per share dividends - 18% asset growth
- 82% FFO payout ratio - 7% per diluted share FFO growth
Toledo, Ohio, February 3, 2000........HEALTH CARE REIT, INC. (NYSE/HCN) today
announced operating results for the fourth quarter and year ended December 31,
1999.
For 1999, funds from operations (FFO), the generally accepted measure of
operating performance for the real estate investment trust industry, achieved a
record level of $78.4 million, or $2.76 per diluted share, a 7 percent per share
increase from $66.8 million, or $2.57 per diluted share, for the same period in
1998. Revenues for 1999 increased 32 percent to $129.3 million from $98 million
a year ago. Net income available to common shareholders for 1999, totaled $62.8
million, or $2.21 per diluted share, as compared with net income available to
common shareholders of $58.1 million, or $2.24 per diluted share, for the same
period in 1998.
For the fourth quarter of 1999, FFO totaled $19.9 million, or $0.70 per diluted
share, a 6 percent per share increase from $18.4 million, or $0.66 per diluted
share, for the same period in 1998. Revenues for the quarter increased 22
percent to $33.8 million from $27.8 million for the three months ended December
31, 1998. Net income available to common shareholders for the fourth quarter of
1999 totaled $14.6 million, or $0.51 per diluted share, as compared with net
income available to common shareholders of $16.5 million, or $0.59 per diluted
share, for the same period in 1998.
Revenue growth was generated primarily by new investment activity in 1998 and
1999 of $397.5 million and $275 million, respectively. Investment activity
contributed to an 18 percent increase in total assets, which at December 31,
1999, totaled $1.3 billion as compared with total assets of $1.1 billion at
December 31, 1998.
Dividend payments to common shareholders for the year ended December 31, 1999,
totaled $64.4 million, or $2.27 per share, as compared with dividend payments of
$56.5 million, or $2.19 per share, for the same period in 1998. Correspondingly,
the FFO payout ratio for 1999 was 82 percent as compared with 85 percent for
1998.
-19-
<PAGE> 2
At December 31, 1999, the company had a total outstanding debt balance of $539
million, and shareholders' equity of $707 million, which represents a debt to
total capitalization ratio of 0.43 to 1.0.
"We are pleased with the company's 1999 operating results, which were consistent
with consensus estimates and met management's expectations," commented George L.
Chapman, chairman and chief executive officer. "The company's FFO growth was
generated by continued investment activity, which was supported by the proceeds
realized from the placement of $75 million of convertible preferred stock in
January, the issuance of $50 million of senior unsecured notes in March and $56
million of asset sales.
"However, the past 12 months have presented many challenges to the health care
REIT sector. The underperformance of publicly owned nursing home and assisted
living companies, combined with the much publicized shift in equity funds flow
from income-oriented investments to high-growth opportunities, have impaired the
stock valuations of all health care REITs. The availability of external capital
is limited and expensive, constraining new investment activity and earnings
growth. We believe the restrictive capital environment will continue until the
prospects for the long-term care industry improve.
"Our top priority remains to preserve the company's outstanding fundamentals,
that include a well capitalized balance sheet with modest leverage, strong
interest coverage and an attractive FFO payout ratio that demonstrates
significant dividend coverage.
"In October 1999, we announced a $200 million asset divestiture program, which
is proceeding as planned. The limited asset sales will strengthen the company's
portfolio and generate liquidity, enhancing the company's balance sheet. This
strategy positions the company for new investment and growth opportunities in
the future."
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate
investment trust that invests in health care facilities, primarily nursing homes
and assisted living facilities. At December 31, 1999, the company had
investments in 238 health care facilities in 34 states and had total assets of
approximately $1.3 billion. For more information on Health Care REIT, Inc., via
facsimile at no cost, dial 1-800-PRO-INFO and enter the company code - HCN. More
information is available on the Internet at http://www.hcreit.com.
FINANCIAL SCHEDULES FOLLOW
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,
general economic conditions, the availability of capital, competition within the
financial services and real estate markets, the performance of operators within
Health Care REIT's portfolio, and regulatory and other changes in the health
care sector, as described in the company's filings with the Securities and
Exchange Commission.
#####
-20-
<PAGE> 3
HEALTH CARE REIT, INC.
FINANCIAL SUPPLEMENT
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31
---------------------------------
1999 1998
---------------------------------
<S> <C> <C>
ASSETS Real estate investments:
Real property owned:
Land $ 73,234 $ 44,722
Buildings & improvements 730,337 443,574
Construction in progress 58,954 151,317
----------- -----------
862,525 639,613
Less accumulated depreciation (35,746) (19,624)
----------- -----------
Total real property owned 826,779 619,989
Loans receivable 401,019 412,704
----------- -----------
1,227,798 1,032,693
Less allowance for losses on loans receivable (5,587) (4,987)
----------- -----------
Net real estate investments 1,222,211 1,027,706
Other assets:
Direct investments 25,361 26,180
Marketable securities 863 4,106
Deferred loan expenses 3,311 2,389
Cash and cash equivalents 2,129 1,269
Receivables and other assets 17,296 11,774
----------- -----------
48,960 45,718
----------- -----------
TOTAL ASSETS $ 1,271,171 $ 1,073,424
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowings under line of credit obligations $ 177,500 $ 171,550
Senior unsecured notes 290,000 240,000
Secured debt 71,342 7,429
Accrued expenses and other liabilities 25,333 20,686
----------- -----------
Total liabilities $ 564,175 $ 439,665
Shareholders' equity:
Preferred Stock, $1.00 par value:
Authorized - 10,000,000 shares
Issued and outstanding - 6,000,000 in 1999
and 3,000,000 in 1998 150,000 75,000
Common Stock, $1.00 par value:
Authorized - 40,000,000 shares
Issued and outstanding -28,532,419
in 1999 and 28,240,165 in 1998 28,532 28,240
Capital in excess of par value 524,204 520,692
Undistributed net income 8,883 10,434
Accumulated other
comprehensive income 593 3,982
Unamortized restricted stock (5,216) (4,589)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY $ 706,996 $ 633,759
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,271,171 $ 1,073,424
=========== ===========
</TABLE>
-21-
<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 TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
---------------------------------- -----------------------------------
1999 1998 1999 1998
----------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Revenues:
Operating lease rents $ 20,872 $ 12,471 $ 72,700 $ 41,953
Interest income 11,574 12,274 48,076 48,488
Commitment fees and other income 1,365 1,809 6,263 5,914
Prepayment fees 0 167 1,565 588
Gain on sale of properties 0 1,049 703 1,049
-------------- ----------- ------------ -----------
$ 33,811 $ 27,770 $ 129,307 $ 97,992
Expenses:
Interest expense $ 8,234 $ 4,451 $ 26,916 $ 18,030
Provision for depreciation 5,271 3,128 17,885 10,254
General and administrative 1,932 1,757 7,359 6,114
Loan expense 250 152 909 685
Provision for losses 150 150 600 600
-------------- ----------- ------------ -----------
15,837 9,638 53,669 35,683
-------------- ----------- ------------ -----------
Net Income 17,974 18,132 75,638 62,309
Preferred stock dividends 3,351 1,664 12,814 4,160
-------------- ----------- ------------ -----------
Net Income Available to
Common Shareholders $ 14,623 $ 16,468 $ 62,824 $ 58,149
============== =========== ============ ===========
Average number of common shares outstanding:
Basic 28,216 27,572 28,128 25,579
Diluted 28,457 27,930 28,384 25,954
Net income per share:
Basic $ 0.52 $ 0.60 $ 2.23 $ 2.27
Diluted 0.51 0.59 2.21 2.24
Funds from operations $ 19,894 $ 18,380 $ 78,441 $ 66,766
Funds from operations per share:
Basic $ 0.71 $ 0.67 $ 2.79 $ 2.61
Diluted 0.70 0.66 2.76 2.57
Dividends per share $ 0.575 $ 0.555 $ 2.270 $ 2.190
</TABLE>
-22-
<PAGE> 5
HEALTH CARE REIT, INC.
FINANCIAL SUPPLEMENT - DECEMBER 31, 1999
PORTFOLIO COMPOSITION ($000'S)
- ------------------------------
EXHIBIT 1
<TABLE>
<CAPTION>
BALANCE SHEET DATA # Properties # Beds/Units Balance (1) % Balance
-------------------- ------------------- -------------------- -----------------
<S> <C> <C> <C> <C>
Real Property 165 12,804 $ 826,779 66%
Loans Receivable & Other 73 7,675 401,019 32%
Direct Investments -na- -na- 25,361 2%
-------------------- ------------------- -------------------- -----------------
Total Investments 238 20,479 $ 1,253,159 100%
INVESTMENT DATA # Properties # Beds/Units Investment (2) % Investment
-------------------- ------------------- -------------------- -----------------
Assisted Living Facilities 182 12,683 $ 865,634 70%
Nursing Homes 48 6,807 281,594 22%
Specialty Care Facilities 6 695 83,807 7%
Behavioral Care 2 294 9,188 1%
-------------------- ------------------- -------------------- -----------------
Real Estate Investments 238 20,479 $ 1,240,223 100%
INVESTMENT BY OWNER TYPE # Properties # Beds/Units Investment (2) % Investment
-------------------- ------------------- -------------------- -----------------
Publicly Traded 83 5,536 $ 365,360 29%
Key Private 109 10,403 693,471 56%
Privately Held 46 4,540 181,392 15%
-------------------- ------------------- -------------------- -----------------
Real Estate Investments 238 20,479 $ 1,240,223 100%
</TABLE>
NOTES: (1) TOTAL INVESTMENTS INCLUDE GROSS REAL ESTATE INVESTMENTS AND DIRECT
INVESTMENTS WHICH AMOUNTED TO $1,227,798,000 AND $25,361,000,
RESPECTIVELY.
(2) REAL ESTATE INVESTMENTS INCLUDE GROSS REAL ESTATE INVESTMENTS AND
CREDIT ENHANCEMENTS WHICH AMOUNTED TO $1,227,798,000 AND
$12,425,000, RESPECTIVELY.
REVENUE COMPOSITION ($000'S)
- ----------------------------
EXHIBIT 2
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, 1999 December 31, 1999
---------------------------------- ------------------------------
<S> <C> <C> <C> <C>
REVENUE BY INVESTMENT TYPE
Real Property $ 21,654 64% $ 77,491 60%
Loans Receivable & Other 11,595 34% 49,275 38%
Direct Investments 562 2% 2,541 2%
------------------ --------------- ----------------- -------------
Total $ 33,811 100% $ 129,307 100%
REVENUE BY FACILITY TYPE
Assisted Living Facilities $ 22,807 68% $ 82,022 64%
Nursing Homes 8,180 24% 35,323 27%
Specialty Care Facilities 2,824 8% 11,962 9%
Behavioral Care 0 0% 0 0%
------------------ --------------- ----------------- -------------
Total $ 33,811 100% $ 129,307 100%
REVENUE BY OWNER TYPE
Publicly Traded $ 11,532 34% $ 40,716 31%
Key Private 17,957 53% 67,291 52%
Privately Held 4,322 13% 21,300 17%
------------------ --------------- ----------------- -------------
Total $ 33,811 100% $ 129,307 100%
</TABLE>
-23-
<PAGE> 6
REVENUE COMPOSITION (CONTINUED) ($000'S) EXHIBIT 3
- ----------------------------------------
<TABLE>
<CAPTION>
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>
2000 $ 1,417 $ 1,268 $ 2,685 2%
2001 0 1,004 1,004 1%
2002 1,241 1,247 2,488 2%
2003 3,677 7,382 11,059 8%
2004 0 7,116 7,116 5%
Thereafter 87,263 24,726 111,989 82%
------------------------ ------------------------ ----------------------- -------------------
Total $ 93,598 $ 42,743 $ 136,341 100%
</TABLE>
NOTES: (1) REVENUE IMPACT BY YEAR, ANNUALIZED
EXHIBIT 4
COMMITTED INVESTMENT BALANCES
- -----------------------------
($000'S EXCEPT INVESTMENT PER BED/UNIT)
<TABLE>
<CAPTION>
Committed Balance Investment per
# Properties # Beds/Units (1) Bed/Unit
-------------------- ------------------- -------------------- ------------------
<S> <C> <C> <C>
Assisted Living Facilities 182 12,683 $ 910,527 $ 71,791
Nursing Homes 48 6,807 290,057 42,612
Specialty Care Facilities 6 695 83,807 120,586
Behavioral Care 2 294 9,188 31,252
-------------------- ------------------- -------------------- ------------------
Total 238 20,479 $ 1,293,579 n/a
</TABLE>
NOTES: (1) COMMITTED BALANCE INCLUDES REAL ESTATE INVESTMENTS, CREDIT
ENHANCEMENTS AND UNFUNDED COMMITMENTS FOR WHICH INITIAL FUNDING HAD
COMMENCED.
EXHIBIT 5
OPERATOR CONCENTRATION ($000'S)
- -------------------------------
<TABLE>
<CAPTION>
CONCENTRATION BY INVESTMENT # Properties Investment % Investment
----------------------- ---------------------- -----------------------
<S> <C> <C> <C>
Summerville Healthcare 17 $ 171,139 14%
Atria Senior Quarters 11 93,117 8%
Alterra Healthcare 38 88,219 7%
Life Care Centers of America, Inc. 13 87,337 7%
Olympus Healthcare Group, Inc. 11 80,584 6%
Remaining Operators 148 719,827 58%
----------------------- ---------------------- -----------------------
Total 238 $ 1,240,223 100%
CONCENTRATION BY REVENUE # Properties Revenue (1) % Revenue
----------------------- ---------------------- -----------------------
Summerville Healthcare 17 $ 11,248 9%
Atria Senior Quarters 11 10,160 8%
Olympus Healthcare Group, Inc. 11 9,218 7%
Alterra Healthcare 38 8,628 7%
Life Care Centers of America, Inc. 13 7,974 6%
Remaining Operators 148 82,079 63%
----------------------- ---------------------- -----------------------
Total 238 $ 129,307 100%
</TABLE>
NOTES: (1) YEAR ENDED DECEMBER 31, 1999
-24-
<PAGE> 7
SELECTED FACILITY DATA
- ----------------------
EXHIBIT 6
<TABLE>
<CAPTION>
Coverage Data
% Payor Mix ----------------------------------
------------------------------------ Before After
Census Private Medicare Mgt. Fees Mgt. Fees
------------------ ------------------------------------ ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Nursing Homes 84% 24% 12% 1.89x 1.36x
Assisted Living Facilities 92% 100% 0% 1.34x 1.16x
Specialty Care Facilities 53% 22% 31% 3.27x 2.71x
Behavioral Care 44% 12% 88% 3.39x 2.17x
------------------ ---------------
Weighted Averages 1.85x 1.46x
</TABLE>
NOTES: DATA AS OF SEPTEMBER 30, 1999
SECURITY DEPOSITS & OTHER CREDIT SUPPORT ($000'S) EXHIBIT 7
- -------------------------------------------------
<TABLE>
<CAPTION>
Balance % Investment
--------------- -----------------
<S> <C> <C>
Cross Defaulted $ 1,146,058 92% of gross real estate investments
Cross Collateralized 384,594 96% of mortgage loans
Bank Letters of Credit & Cash 44,790 4% of investment balance
CURRENT CAPITALIZATION ($000'S) Balance % Balance LEVERAGE & PERFORMANCE RATIOS
- ------------------------------- --------------- ----------------- ----------------------------------------
<S> <C> <C> <C> <C>
Borrowings Under Bank Lines $ 177,500 14% Debt/Total Book Cap 43%
Long-Term Debt Obligations 361,342 29% Debt/Equity 76%
Shareholders' Equity 706,996 57% Interest Coverage 3.42x 4th Qtr.
--------------- -----------------
Total Book Capitalization $ 1,245,838 100% 3.66x L12M
FFO Payout Ratio 82% 4th Qtr.
82% L12M
</TABLE>
EXHIBIT 8
DEBT MATURITIES AND PRINCIPAL PAYMENTS ($000'S)
- -----------------------------------------------
<TABLE>
<CAPTION>
Year Lines of Credit (1) Senior Notes Secured Debt Total
- ------------------- ------------------------ ------------------------ ----------------------- -------------------
<S> <C> <C> <C> <C>
2000 $ 20,000 $ 35,000 $ 99 $ 55,099
2001 175,000 10,000 109 185,109
2002 0 20,000 121 20,121
2003 0 35,000 133 35,133
2004 0 40,000 64,186 94,186
2005 0 0 549 549
Thereafter 0 150,000 6,145 156,145
------------------------ ------------------------ ----------------------- -------------------
Total $ 195,000 $ 290,000 $ 71,342 $ 556,342
</TABLE>
NOTES: (1) LINES OF CREDIT REFLECT 100% CAPACITY
-25-
<PAGE> 8
INVESTMENT ACTIVITY ($000'S)
----------------------------
EXHIBIT 9
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, 1999 December 31, 1999
--------------------------------- ---------------------------------
<S> <C> <C> <C> <C>
FUNDING BY INVESTMENT TYPE
Real Property $ 1,478 4% $ 81,008 29%
Mortgage & Other Loans 2,829 8% 17,565 6%
Construction Advances 28,498 83% 169,085 62%
Direct Investments 1,565 5% 7,461 3%
----------------- --------------- ---------------- ----------------
Total $ 34,370 100% $ 275,119 100%
REAL ESTATE INVESTMENTS
Assisted Living Facilities $ 29,790 91% $ 239,216 89%
Nursing Homes 3,015 9% 28,442 11%
Behavioral Care 0 0% 0 0%
Specialty Care Facilities 0 0% 0 0%
----------------- --------------- ---------------- ----------------
Total $ 32,805 100% $ 267,658 100%
</TABLE>
GEOGRAPHIC CONCENTRATION ($000'S) EXHIBIT 10
- ---------------------------------
<TABLE>
<CAPTION>
CONCENTRATION BY REGION # Properties Investment % Investment
----------------------- ---------------------- -----------------------
<S> <C> <C> <C>
South 140 $ 636,048 51%
Northeast 38 284,848 23%
West 32 182,423 15%
Midwest 28 136,904 11%
----------------------- ---------------------- -----------------------
Total 238 $ 1,240,223 100%
CONCENTRATION BY STATE # Properties Investment % Investment
----------------------- ---------------------- -----------------------
Texas 47 $ 189,120 15%
Florida 30 148,645 12%
Massachusetts 14 99,130 8%
North Carolina 18 87,690 7%
Pennsylvania 14 82,781 7%
Remaining States 115 632,857 51%
----------------------- ---------------------- -----------------------
Total 238 $ 1,240,223 100%
REVENUE BY STATE # Properties Revenue (1) % Revenue
----------------------- ---------------------- -----------------------
Texas 47 $ 21,364 17%
Florida 30 12,507 10%
Massachusetts 14 11,424 9%
Pennsylvania 14 9,699 7%
North Carolina 18 8,285 6%
Remaining States 115 66,028 51%
----------------------- ---------------------- -----------------------
Total 238 $ 129,307 100%
</TABLE>
NOTES: (1) YEAR ENDED DECEMBER 31, 1999
-26-
<PAGE> 9
FUNDS FROM OPERATIONS COMPUTATION EXHIBIT 11
- ---------------------------------
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, 1999 December 31, 1999
------------------------------- --------------------------
<S> <C> <C>
Net Income Available to Common Shareholders $ 14,623 $ 62,824
Add: Depreciation Expense 5,271 17,885
Loss on Sale of Assets 0 0
Asset Impairment Charges 0 0
Deduct: Gain on Sale of Assets 0 (703)
Prepayment Fees 0 (1,565)
---------------------------- -- --------------------------
Funds From Operations (FFO) $ 19,894 $ 78,441
Average Common Shares Outstanding:
Basic 28,216 28,128
Diluted 28,457 28,384
FFO Per Common Share:
Basic $0.71 $2.79
Diluted $0.70 $2.76
</TABLE>
-27-
