<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(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, 1995
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 1-9028
NATIONWIDE HEALTH PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Maryland 95-3997619
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
4675 MacArthur Court, Suite 1170
Newport Beach, California 92660
(Address of principal executive offices)
(714) 251-1211
(Registrant's telephone number, including area code)
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
------ ------
Shares of registrant's common stock, $.10 par value, outstanding at July 31,
1995--19,360,269.
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<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
FORM 10-Q
June 30, 1995
TABLE OF CONTENTS
Part I--Financial Information
<TABLE>
<CAPTION>
Page
----
Item 1. Financial Statements
<S> <C> <C>
Condensed Consolidated Balance Sheets................ 2
Condensed Consolidated Statements of Operations...... 3
Condensed Consolidated Statements of Cash Flows...... 4
Notes to Condensed Consolidated Financial
Statements.......................................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 7
Part II--Other Information
Item 4. Submission of Matters to a Vote of Security Holders.. 9
Item 6. Exhibits and Reports on Form 8-K..................... 9
</TABLE>
1
<PAGE>
PART I
NATIONWIDE HEALTH PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- -----------
(Unaudited)
(Dollars in thousands)
<S> <C> <C>
Investments in real estate
Real estate properties:
Land......................................................... $ 47,696 $ 39,981
Buildings.................................................... 460,923 418,137
-------- ---------
508,619 458,118
Less accumulated depreciation................................ (67,805) (62,080)
-------- ---------
440,814 396,038
Mortgage loans receivable....................................... 119,485 105,824
-------- ---------
560,299 501,862
Cash and cash equivalents......................................... 4,906 3,742
Receivables....................................................... 2,391 2,936
Other assets...................................................... 6,366 5,269
-------- ---------
$ 573,962 $ 513,809
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank borrowings................................................... $ 47,800 $ 80,200
Senior notes due 2000-2015........................................ 56,000 -
Notes and bonds payable........................................... 20,054 20,520
Convertible debentures............................................ 65,000 65,000
Senior subordinated convertible debentures........................ - 2,690
Accounts payable and accrued liabilities.......................... 12,302 9,293
Stockholders' equity:
Preferred stock $1.00 par value; 5,000,000 shares authorized;
none issued or outstanding
Common stock $.10 par value; 100,000,000 shares authorized;
issued and outstanding: 1995 - 19,360,270, 1994 - 18,238,193.. 1,936 1,824
Capital in excess of par value.................................. 403,245 364,959
Cumulative net income........................................... 218,418 194,764
Cumulative dividends............................................ (250,793) (225,441)
--------- ---------
Total stockholders' equity................................. 372,806 336,106
--------- ---------
$ 573,962 $ 513,809
========= =========
</TABLE>
See accompanying notes.
2
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- --------------------
1995 1994 1995 1994
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Minimum rent........................................... $13,195 $11,706 $26,001 $22,862
Interest and other income.............................. 3,927 3,215 7,157 6,272
Additional rent and additional interest................ 2,843 2,459 5,659 4,746
------- ------- ------- -------
19,965 17,380 38,817 33,880
Expenses:
Depreciation and non-cash charges...................... 3,396 3,001 6,683 5,854
Interest and amortization of deferred financing costs.. 3,564 2,427 6,888 4,347
General and administrative............................. 808 744 1,592 1,527
------- ------- ------- -------
7,768 6,172 15,163 11,728
------- ------- ------- -------
Net income............................................... $12,197 $11,208 $23,654 $22,152
======= ======= ======= =======
Net income per share..................................... $ 0.66 $ 0.62 $ 1.28 $ 1.22
======= ======= ======= =======
Dividends paid per share................................. $ 0.70 $ 0.65 $1.3875 $1.2875
======= ======= ======= =======
Weighted average shares outstanding...................... 18,614 18,172 18,440 18,136
======= ======= ======= =======
</TABLE>
See accompanying notes.
3
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
1995 1994
--------- ---------
<S> <C> <C>
Cash flow from operating activities:
Net income....................................... $ 23,654 $ 22,152
Depreciation and non-cash charges................ 6,683 5,854
--------- ---------
Funds from operations........................... 30,337 28,006
Amortization of deferred financing costs....... 314 312
Net decrease in other assets and liabilities... 1,293 2,611
--------- ---------
Net cash provided by operating activities...... 31,944 30,929
Cash flow from investing activities:
Acquisition of real estate properties............ (53,583) (42,412)
Disposition of real estate properties............ 586 -
Investment in mortgage loans receivable.......... (21,450) (20,656)
Principal payments on mortgage loans receivable.. 10,741 9,004
--------- ---------
Net cash used in investing activities........... (63,706) (54,064)
Cash flow from financing activities:
Bank borrowings, net............................. (32,400) 48,000
Issuance of common stock......................... 35,588 -
Issuance of senior debt.......................... 56,000 -
Dividends paid................................... (25,352) (23,374)
Principal payments on notes and bonds............ (466) (1,714)
Other, net....................................... (444) (144)
--------- ---------
Net cash provided by financing activities....... 32,926 22,768
--------- ---------
Increase (decrease) in cash and cash equivalents.. 1,164 (367)
Cash and cash equivalents, beginning of period.... 3,742 3,627
--------- ---------
Cash and cash equivalents, end of period.......... $ 4,906 $ 3,260
--------- ---------
</TABLE>
See accompanying notes.
4
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995
(Unaudited)
(i) The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, and include all adjustments which are,
in the opinion of management, necessary for a fair presentation of the results
of operations for the three-month and six-month periods ended June 30, 1995 and
1994 pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. Although the Company believes that the disclosures in such
financial statements are adequate to make the information presented not
misleading, these condensed consolidated financial statements should be read in
conjunction with the Company's financial statements and the notes thereto
included in the Company's 1994 Annual Report on Form 10-K filed with the
Securities and Exchange Commission. The results of operations for the three-
month and six-month periods ended June 30, 1995 and 1994 are not necessarily
indicative of the results for a full year.
(ii) Certain amounts in the 1994 financial statements have been reclassified
for consistent financial statement presentation.
(iii) The Company qualifies as a real estate investment trust under Sections
856 through 860 of the Internal Revenue Code of 1986, as amended. The Company
intends to continue to qualify as such and therefore to distribute at least 95
percent of its taxable income to its stockholders. Accordingly, no provision
has been made for federal income taxes.
(iv) The Company invests in health care related real estate and, as of June
30, 1995, has investments in 191 facilities, including 174 long-term health care
facilities, 15 assisted living facilities and 2 rehabilitation hospitals.
The Company's facilities which are owned and leased under "net" leases are
accounted for as operating leases. The leases have initial terms ranging from
10 to 14 years, and most of the leases have eight five-year renewal options.
The Company earns fixed monthly minimum rents and may earn periodic additional
rents. The additional rent payments are generally computed as a percentage of
facility net patient revenues in excess of base amounts. The base amounts, in
most cases, are net patient revenues for the first year of the lease. Under the
terms of the leases, the lessee is responsible for all maintenance, repairs,
taxes and insurance on the leased properties. Forty-five of the facilities were
leased to and operated by subsidiaries of Beverly Enterprises, Inc.
(v) During the six-month period ended June 30, 1995, the Company acquired 10
assisted living facilities in 10 separate transactions for an aggregate purchase
price of approximately $52,600,000. The acquisitions were funded by bank
borrowings on the Company's bank line of credit and cash on hand. The
facilities were concurrently leased under terms generally similar to the
Company's existing leases.
During the six-month period ended June 30, 1995, the Company provided three
mortgage loans secured by two long-term health care facilities and one assisted
living facility in the aggregate amount of $21,450,000. In addition, the
Company received a principal repayment of approximately $9,800,000 in connection
with the maturity of one mortgage loan secured by two long-term health care
facilities. The proceeds were used to repay short-term bank borrowings.
During April 1995, the Company sold two long-term health care facilities to
Beverly Enterprises, Inc., the lessee of such facilities, for an aggregate
purchase price of $6,250,000. The Company received $625,000 in cash and
$5,625,000 in mortgage notes which are secured by the two facilities. The
related gain of approximately
5
<PAGE>
$3,864,000 on such sale will be recognized into income on a deferred basis in
proportion to the receipt of principal payments on the mortgage loans provided
by the Company.
In the first six months of 1995, the Company issued $56,000,000 in medium-term
notes. The notes bear fixed interest at a weighted average of 8.5% and have a
weighted average maturity of 8.5 years. The proceeds were used to paydown
borrowings on the Company's bank line of credit.
In May 1995, the Company issued a notice of redemption and expiration of
conversion privilege in connection with its 8.9% senior subordinated convertible
debentures due 2001. Of the $2,277,000 in debentures outstanding at the time of
notice, $2,267,000 of debentures were converted into 88,894 shares of the
Company's common stock and the remaining $10,000 in debentures were redeemed at
par plus accrued interest.
In June 1995, the Company issued 1,000,000 shares of common stock in a public
offering at a price of $37.50 per share. Proceeds from the offering, net of
underwriters' fees and associated expenses, were approximately $35,588,000. The
net proceeds were used to repay borrowings under the Company's bank line of
credit.
In July 1995, the Company amended the terms of its bank line of credit to,
among other things, extend its maturity date to March 31, 1998 and to provide
the Company with the option to automatically extend the bank line of credit to a
three year maturity with concurrence of the bank group. Additionally, the
pricing structure was amended to provide for reduced borrowing costs as the
Company's debt ratings are upgraded and to reduce the current pricing from LIBOR
plus 125 basis points to LIBOR plus 90 basis points.
6
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
June 30, 1995
Operating Results
Six Months 1995 Compared to Six Months 1994
Revenues for the six-months ended June 30, 1995 increased $4,937,000 or 15%
over the same period in 1994. The increase is primarily due to increased
minimum rent and interest income resulting from investments in additional
facilities during the last twelve months and increased additional rent and
additional interest earned under the Company's existing leases and mortgages
receivable.
Total expenses for the six-month period increased $3,435,000 or 29% over the
same period in 1994. The increase is primarily due to increased interest
expense as a result of increased borrowings and higher short-term interest
rates. The increase in total expenses was also attributable to increased
depreciation due to the acquisition of additional facilities in the last twelve
months.
Second Quarter 1995 Compared to Second Quarter 1994
Revenues for the three months ended June 30, 1995 increased $2,585,000 or 15%
over the same period in 1994. The increase is primarily due to increased
minimum rent and interest income resulting from investments in additional
facilities during the last twelve months and increased additional rent and
additional interest earned under the Company's existing leases and mortgages
receivable.
Total expenses for the three-months ended June 30, 1995 increased $1,596,000
or 26% over the same period in 1994. The increase is primarily due to increased
interest expense as a result of increased borrowings and higher short-term
interest rates in the second quarter of 1995 as compared with the second quarter
of 1994. The increase in total expenses was also attributable to increased
depreciation due to the acquisition of additional facilities in the last twelve
months.
The Company expects increased rental revenues due to the addition of
facilities to its property base in the last twelve months and due to increased
additional rents under its leases. The Company also expects increased interest
income resulting from additional investments in mortgage loans over the last
twelve months. Additional investments in health care facilities would also
increase rental and/or interest income. As additional investments in facilities
are made, depreciation and/or interest expense could also increase. Any such
increases, however, are expected to be more than offset by rents or interest
income associated with the investments.
Liquidity and Capital Resources
During the six-month period ended June 30, 1995, the Company acquired 10
assisted living facilities in 10 separate transactions for an aggregate purchase
price of approximately $52,600,000. The acquisitions were funded by bank
borrowings on the Company's bank line of credit and cash on hand. The
facilities were concurrently leased under terms generally similar to the
Company's existing leases.
During the six-month period ended June 30, 1995, the Company provided three
mortgage loans secured by two long-term health care facilities and one assisted
living facility in the aggregate amount of $21,450,000. Such mortgages were
funded by bank borrowings on the Company's bank line of credit and cash on hand.
In addition, the Company received a principal repayment of approximately
$9,800,000 in connection with the
7
<PAGE>
maturity of one mortgage loan secured by two long-term health care facilities.
The proceeds were used to repay short-term bank borrowings.
During April 1995, the Company sold two long-term health care facilities to
Beverly Enterprises, Inc., the lessee of such facilities, for an aggregate
purchase price of $6,250,000. The Company received $625,000 in cash and
$5,625,000 in mortgage notes which are secured by the two facilities. The
related gain of approximately $3,864,000 on such sale will be recognized into
income on a deferred basis in proportion to the receipt of principal payments on
the mortgage loans provided by the Company.
In the first six months of 1995, the Company issued $56,000,000 in medium-term
notes. The notes bear fixed interest at a weighted average of 8.5% and have a
weighted average maturity of 8.5 years. The proceeds were used to paydown
borrowings on the Company's bank line of credit.
In May 1995, the Company issued a notice of redemption and expiration of
conversion privilege in connection with its 8.9% senior subordinated convertible
debentures due 2001. Of the $2,277,000 in debentures outstanding at the time of
notice, $2,267,000 of debentures were converted into 88,894 shares of the
Company's common stock and the remaining $10,000 in debentures were redeemed at
par plus accrued interest.
In June 1995, the Company issued 1,000,000 shares of common stock in a public
offering at a price of $37.50 per share. Proceeds from the offering, net of
underwriters' fees and associated expenses, were approximately $35,588,000. The
net proceeds were used to repay borrowings under the Company's bank line of
credit.
In July 1995, the Company amended the terms of its bank line of credit to,
among other things, extend its maturity date to March 31, 1998 and to provide
the Company with the option to automatically extend the bank line of credit to a
three year maturity with concurrence of the bank group. Additionally, the
pricing structure was amended to provide for reduced borrowing costs as the
Company's debt ratings are upgraded and to reduce the current pricing from LIBOR
plus 125 basis points to LIBOR plus 90 basis points.
At June 30, 1995, the Company had $52,200,000 available under its $100,000,000
bank line of credit. The Company has effective shelf registrations on file with
the Securities and Exchange Commission under which the Company may issue (a) up
to $44,000,000 in aggregate principal amount of medium term notes and (b) up to
$97,500,000 of securities including debt, convertible debt, common and preferred
stock.
The Company anticipates making additional investments in health care related
facilities. Financing for such future investments may be provided by borrowings
under the Company's bank line, private placements or public offerings of debt or
equity, and the assumption of secured indebtedness. The Company believes it has
sufficient liquidity and financing capability to finance future investments as
well as repay borrowings at or prior to their maturity.
8
<PAGE>
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Stockholders was held on April 21, 1995 ("Annual
Meeting"). At the Annual Meeting, Milton J. Brock, Jr., David R. Banks and Jack
D. Samuelson were re-elected as directors to serve for three-year terms until
the 1998 Annual Meeting of Stockholders. The other directors whose term of
office continued after the meeting are Sam A. Brooks, Jr., Robert H. Finch, R.
Bruce Andrews and Charles D. Miller.
Voting at the Annual Meeting was as follows:
<TABLE>
<CAPTION>
Abstentions
Votes Votes and broker
Matter cast for cast against non-votes
------ ---------- ------------ ----------
<S> <C> <C> <C>
Election of Milton J. Brock, Jr. 15,245,912 39,408 -
Election of David R. Banks 15,247,705 37,614 -
Election of Jack D. Samuelson 15,246,571 38,749 -
Ratification of selection of Arthur Andersen LLP 15,241,973 12,950 30,397
</TABLE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.1 Amendment Number Two to Credit Agreement dated as of May
20, 1993 between the Company and Wells Fargo Bank, National
Association, National Westminster Bank USA, The Diawa Bank,
Limited, and Sanwa Bank California.
27. Financial Data Schedule
(b) Reports on Form 8-K
During the three-month period ended June 30, 1995, the Company
filed a report on Form 8-K dated May 26, 1995 to file exhibits
with respect to the Company's public offering of 1,000,000 shares
of common stock in June 1995.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 4, 1995
NATIONWIDE HEALTH PROPERTIES, INC.
By
-----------------------------------
Mark L. Desmond
Vice President and Treasurer
(Principal Financial Officer)
10
<PAGE>
AMENDMENT NUMBER TWO TO CREDIT AGREEMENT
----------------------------------------
This AMENDMENT NUMBER TWO TO CREDIT AGREEMENT, dated as of July 11,
1995 (this "Amendment"), is entered into among NATIONWIDE HEALTH PROPERTIES,
INC., a Maryland corporation (the "Borrower"), the financial institutions which
are signatories to the Credit Agreement (each a "Bank" and, collectively, the
"Banks"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as agent for the Banks
thereunder (in such capacity, the "Agent").
WHEREAS, the Borrower has requested that the Banks amend certain
provisions of the Credit Agreement to provide for, among other things, the
extension of the Termination Date, the reduction of certain interest rates and
the revision of certain covenants.
WHEREAS, subject to the terms and conditions contained herein, the
Banks are willing to amend such provisions of the Credit Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, conditions,
and provisions hereinafter set forth, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS FOR THIS AMENDMENT;
------------------------------
AMENDMENT OF ARTICLE I OF THE CREDIT AGREEMENT
----------------------------------------------
1.1 Definitions for this Amendment. Any and all initially
------------------------------
capitalized terms used herein shall have the meanings ascribed thereto in the
Credit Agreement unless specifically defined herein. For purposes of this
Amendment, the following initially capitalized terms shall have the following
meanings:
"Agent" shall have the meaning set forth in the introduction to this
-----
Amendment.
"Amendment" means this Amendment Number Two to Credit Agreement among
---------
the Borrower, the Banks, and the Agent.
"Bank" and "Banks" shall have the respective meanings set forth in the
---- -----
introduction to this Amendment.
"Borrower" shall have the meaning set forth in the introduction to
--------
this Amendment.
"Credit Agreement" means that certain Credit Agreement, dated as of
----------------
May 20, 1993, among the Borrower, the Banks, and the Agent, as amended by
that certain Amendment Number One to Credit Agreement dated as of April 28,
1994.
1.2 Amendment of Section 1.1 of the Credit Agreement. Section 1.1 of
------------------------------------------------
the Credit Agreement is hereby amended by (a) deleting the following defined
terms in their entireties: "Applicable Eurodollar Rate Margin" and "Termination
Date"; and (b) inserting the following defined terms:
"Applicable Eurodollar Rate Margin" means, for each Eurodollar Rate
---------------------------------
Portion of Loans outstanding prior to the Termination Date,
<PAGE>
(i) 1.00%, if Borrower has at least two of the following long-
term senior debt ratings (A) Baa3 or less as determined by Moody's
Investors Service ("Moody's"), (B) BBB- or less as determined by Standard
and Poor's Corporation ("S&P"), and (C) BBB- or less as determined by Duff
& Phelps Inc. ("Duff");
(ii) 0.90%, if the Borrower has at least two of the following
long-term senior debt ratings of (A) Baa2 or better as determined by
Moody's, (B) BBB or better as determined by S&P, and (C) BBB or better as
determined by Duff;
(iii) 0.80%, if the Borrower has at least two of the following
long-term senior debt ratings of (A) Baa1 or better as determined by
Moody's, (B) BBB+ or better as determined by S&P, and (C) BBB+ or better as
determined by Duff;
(iv) 0.70%, if the Borrower has at least two of the following
long-term senior debt ratings of (A) A3 or better as determined by Moody's,
(B) A- or better as determined by S&P, and (C) A- or better as determined
by Duff.
In the event that the Borrower satisfies more than one of the ratings
requirements clauses in the preceding sentence, the Applicable Eurodollar
Rate Margin shall be the lowest applicable percentage amount. In the event
that the Borrower does not satisfy any of the ratings requirements clauses
in the preceding sentence (due to the unavailability of any such ratings or
otherwise), the Applicable Eurodollar Rate Margin shall be 1.00%. Each
change in the Applicable Eurodollar Rate Margin based on a change in such
long-term senior debt rating shall be effective for each Interest Period of
each Eurodollar Rate Portion of the Loans commencing on or after the second
Business Day after the date that the Borrower provides written notice to
the Agent of such rating change. Within five Business Days after any long-
term senior debt rating change by Moody's, S&P or Duff with respect to the
Borrower, the Borrower shall provide written notice thereof to the Agent.
"Termination Date" means, unless extended pursuant to Section 4.1(b),
---------------- --------------
March 31, 1998.
ARTICLE 2
AMENDMENT OF CERTAIN PROVISIONS
-------------------------------
OF THE CREDIT AGREEMENT
-----------------------
2.1 Amendment of Section 4.1 of the Credit Agreement. Section 4.1 of
------------------------------------------------
the Credit Agreement is amended by deleting subsection (b) therefrom in its
entirety and substituting therefor the following subsection:
(b) Mandatory Termination.
---------------------
(i) The Commitments shall terminate on the Termination Date.
(ii) Notwithstanding Section 4.1(b)(i), not later than January 31
-----------------
of each year, commencing January 31, 1996, the Borrower may (at its option)
give written notice to the Agent and each Bank that it requests the Banks
to extend the Termination Date then in effect for an additional one year
period. Each of the Banks may grant or reject such request in its sole
-2-
<PAGE>
discretion and shall provide written notice of such grant or rejection to
the Borrower and the Agent not later than the March 31 following such
request; provided that failure of any Bank so to provide such written
--------
notice to the Borrower and the Agent shall be deemed a rejection of such
request.
(iii) In the event that all of the Banks grant such request, the
Termination Date then in effect shall be so extended.
(iv) In the event that Banks having more than 25% of the
aggregate Commitments reject such request, the Termination Date then in
effect shall not be extended.
(v) In the event that Banks having not more than 25% of the
aggregate Commitments reject such request (each, a "Rejecting Bank"), the
Borrower may (at its option) arrange to have one or more banks or other
financial institutions (each, a "Successor Bank") succeed to all of the
Rejecting Banks' rights and obligations hereunder and under the other Loan
Documents on the basis and subject to the provisions set forth in Section
-------
12.9(b), and each Rejecting Bank agrees to make such an assignment to the
-------
Successor Bank(s); provided that each Successor Bank shall have agreed to
--------
extend the Termination Date to the date requested by the Borrower; provided
--------
further that such assignment shall be consummated (if at all) prior to the
-------
January 31 following the rejection by the Rejecting Banks of the proposed
extension. In the event that all of such rights and obligations of the
Rejecting Banks are so assigned, the Termination Date then in effect shall
be extended as requested by the Borrower. In the event that all of such
rights and obligations of the Rejecting Banks are not so assigned, the
Termination Date then in effect shall not be extended.
2.2 Amendment of Section 9.2 of the Credit Agreement. Section 9.2 of
------------------------------------------------
the Credit Agreement is amended by deleting subsections (a) and (b) therefrom in
their entireties and substituting therefor the following subsections:
(a) Leverage Ratio. The Borrower will not permit the ratio of
--------------
Consolidated Total Liabilities to Consolidated Tangible Net Worth to be
greater than 1.1 to 1.0;
(b) Minimum Consolidated Tangible Net Worth. The Borrower will
---------------------------------------
maintain Consolidated Tangible Net Worth of not less than $300,000,000; and
2.3 Amendment of Section 9.3 of the Credit Agreement. Section 9.3 of
------------------------------------------------
the Credit Agreement is amended by deleting subsection (j) therefrom in its
entirety and substituting therefor the following subsection:
(j) Use of Proceeds. The Borrower will use the proceeds of the
---------------
Loans solely for (i) the acquisition of Healthcare Properties, (ii) the
investment in mortgage loans on Healthcare Properties, (iii) payment of
quarterly dividends to holders of the Borrower's common stock, and (iv)
general corporate purposes; provided that no proceeds of the Loans shall be
--------
used in connection with any hostile acquisition.
2.4 Amendment of Section 9.4(f) of the Credit Agreement. Section
---------------------------------------------------
9.4(f) of the Credit Agreement is amended by deleting clauses (iii), (iv) and
(v) therefrom in their entireties and substituting therefor the following
clauses:
-3-
<PAGE>
(iii) additional purchases of Healthcare Properties of other
Persons the consideration (whether in cash or in kind) for which (exclusive
of expenditures permitted under subsection (g)) does not exceed (A)
$20,000,000 individually and (B) $150,000,000 in aggregate in any fiscal
year (or such greater amounts as shall be approved by the prior written
consent of the Majority Banks); provided that, after giving effect to such
--------
purchase, no Default shall have occurred and be continuing;
(iv) Investments in mortgage loans secured by Healthcare
Properties in an aggregate amount not to exceed thirty percent (30%) of the
aggregate amount (before depreciation and amortization) then invested by
the Borrower in fixed or capital assets of Healthcare Properties; or
(v) Investments in development or construction projects in an
aggregate amount not to exceed $30,000,000.
2.5 Amendment of Section 9.4(o) of the Credit Agreement. Section 9.4
---------------------------------------------------
of the Credit Agreement is amended by deleting subsection (o) therefrom in its
entirety and substituting therefor the following subsection:
(o) Lease of Premises. The Borrower will not, and will not
-----------------
permit any of its Subsidiaries to, lease or enter into any agreement to
lease any Premises now or hereafter owned by it to any lessee unless such
lessee (A) has a long-term senior debt rating of Baa3 or better as
determined by Moody's Investors Service, BBB- or better as determined by
Standard and Poor's Corporation, or BBB- or better as determined by
Duff & Phelps Inc.; or (B) provides to Borrower or such Subsidiary an
irrevocable standby letter of credit or deposit in an amount not less than
six months base rent under the subject lease as security for the lessee's
obligations under such lease; or (C) has credit quality acceptable to the
Majority Banks in their sole discretion. The provisions of the preceding
sentence shall not apply to any lessee with regard to any lease in effect
as of May 20, 1993 between such lessee and the Borrower or any such
Subsidiary. In addition, the provisions of the preceding sentence shall
not apply to any lessee so long as the Borrower has a long-term senior debt
rating of Baa3 or better as determined by Moody's Investors Service, or
BBB- or better as determined by Standard and Poor's Corporation, or BBB- or
better as determined by Duff & Phelps Inc. (each an "Investment Grade
Rating"), or to any lessee with regard to any lease entered into between
such lessee and the Borrower or any such Subsidiary as of a date when the
Borrower held such an Investment Grade Rating.
ARTICLE 3
MISCELLANEOUS
-------------
3.1 Loan Documents. This Amendment shall be one of the Loan
--------------
Documents.
3.2 Execution. This Amendment may be executed in any number of
---------
counterparts, each of which when so executed and delivered shall be deemed an
original. All of such counterparts shall constitute but one and the same
instrument. Delivery of an executed counterpart of the signature pages of this
Amendment by telecopier shall be equally effective as delivery of a manually
executed counterpart. Any party delivering an executed counterpart of the
signature pages of this Amendment by telecopier shall
-4-
<PAGE>
thereafter also promptly deliver a manually executed counterpart, but the
failure to deliver such manually executed counterpart shall not affect the
validity, enforceability, and binding effect of this Amendment.
3.3 Effectiveness. This Amendment shall be effective as of the date
-------------
first written above, when one or more counterparts hereof shall have been
executed by the Borrower, the Banks, and the Agent and shall have been delivered
to the Agent.
3.4 No Other Amendment. Except as expressly amended hereby, the
------------------
Credit Agreement shall remain unchanged and in full force and effect. To the
extent any terms or provisions of this Amendment conflict with those of the
Credit Agreement, the terms and provisions of this Amendment shall control.
This Amendment shall be deemed a part of and is hereby incorporated in the
Credit Agreement.
3.5 Governing Law. This Amendment shall be governed by, and
-------------
construed and enforced in accordance with, the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed and delivered as of the date first set forth above.
THE BORROWER
------------
NATIONWIDE HEALTH PROPERTIES, INC.
By
--------------------------------------
Title: Vice President and Treasurer
THE AGENT
---------
WELLS FARGO BANK, NATIONAL ASSOCIATION
By
--------------------------------------
Title: Vice President
-5-
<PAGE>
THE BANKS
---------
WELLS FARGO BANK, NATIONAL ASSOCIATION
By
--------------------------------------
Title: Vice President
NATWEST BANK N.A.
By
--------------------------------------
Title:
--------------------------------
THE DAIWA BANK, LIMITED
By
--------------------------------------
Title:
--------------------------------
By
--------------------------------------
Title:
--------------------------------
SANWA BANK CALIFORNIA
By
--------------------------------------
Title:
--------------------------------
-6-
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