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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 September 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 (I.R.S. EMPLOYER
INCORPORATION 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 October
31, 1995--19,360,266.
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<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
FORM 10-Q
SEPTEMBER 30, 1995
TABLE OF CONTENTS
PART I--FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Item 1. Financial Statements
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 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>
SEPTEMBER 30, DECEMBER 31,
1995 1994
-------------- ----------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Investments in real estate
Real estate properties:
Land.......................................................... $ 46,896 $ 39,981
Buildings..................................................... 454,089 418,137
-------- --------
500,985 458,118
Less accumulated depreciation................................. (70,220) (62,080)
-------- --------
430,765 396,038
-------- --------
Mortgage loans receivable........................................ 126,610 105,824
-------- --------
557,375 501,862
Cash and cash equivalents.......................................... 6,039 3,742
Receivables........................................................ 3,411 2,936
Other assets....................................................... 5,269 5,269
--------- --------
$ 572,094 $513,809
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank borrowings.................................................... $ 48,700 $ 80,200
Senior notes due 2000-2015......................................... 56,000 -
Notes and bonds payable............................................ 14,190 20,520
Convertible debentures............................................. 65,000 65,000
Senior subordinated convertible debentures......................... - 2,690
Accounts payable and accrued liabilities........................... 15,301 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 - 19,360,268, 1994 - 18,238,193... 1,936 1,824
Capital in excess of par value................................... 403,245 364,959
Cumulative net income............................................ 232,308 194,764
Cumulative dividends............................................. (264,586) (225,441)
--------- ---------
Total stockholders' equity.................................. 372,903 336,106
--------- ---------
$ 572,094 $ 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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1995 1994 1995 1994
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Revenues:
Minimum rent............................................ $13,946 $12,349 $39,947 $35,211
Interest and other income............................... 3,669 2,982 10,826 9,254
Additional rent and additional interest................. 3,250 2,544 8,909 7,290
Gain on sale of facilities.............................. 989 - 989 -
------- ------- ------- -------
21,854 17,875 60,671 51,755
Expenses:
Depreciation and non-cash charges....................... 3,563 3,130 10,246 8,984
Interest and amortization of deferred financing costs... 3,637 2,614 10,525 6,961
General and administrative.............................. 764 760 2,356 2,287
------- ------- ------- -------
7,964 6,504 23,127 18,232
------- ------- ------- -------
Net income................................................ $13,890 $11,371 $37,544 $33,523
======= ======= ======= =======
Net income per share...................................... $0.72 $ 0.62 $ 2.00 $ 1.85
======= ======= ======= =======
Dividends paid per share.................................. $.7125 $ .6625 $ 2.10 $ 1.95
======= ======= ======= =======
Weighted average shares outstanding....................... 19,360 18,209 18,750 18,161
======= ======= ======= =======
</TABLE>
See accompanying notes.
3
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1995 1994
--------- ---------
<S> <C> <C>
Cash flow from operating activities:
Net income.......................................... $ 37,544 $ 33,523
Depreciation and non-cash charges................... 10,246 8,984
Gain on sale of facility............................ (989) -
-------- --------
Funds from operations............................ 46,801 42,507
Amortization of deferred financing costs....... 476 438
Net decrease in other assets and liabilities... 3,789 2,201
-------- --------
Net cash provided by operating activities...... 51,066 45,146
Cash flow from investing activities:
Acquisition of real estate properties............... (54,345) (61,916)
Disposition of real estate properties............... 8,940 -
Investment in mortgage loans receivable............. (28,680) (26,656)
Principal payments on mortgage loans receivable..... 11,265 11,753
-------- --------
Net cash used in investing activities............ (62,820) (76,819)
Cash flow from financing activities:
Bank borrowings, net................................ (31,500) 70,800
Issuance of common stock............................ 35,494 -
Issuance of senior debt............................. 56,000 -
Dividends paid...................................... (39,145) (35,443)
Principal payments on notes and bonds............... (6,330) (1,907)
Other, net.......................................... (468) (148)
-------- --------
Net cash provided by financing activities........ 14,051 33,302
-------- --------
Increase in cash and cash equivalents................. 2,297 1,629
Cash and cash equivalents, beginning of period........ 3,742 3,627
-------- --------
Cash and cash equivalents, end of period.............. $ 6,039 $ 5,256
======== ========
</TABLE>
See accompanying notes.
4
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 nine-month periods ended September 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 nine-month periods ended September 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
September 30, 1995, had investments in 192 facilities, including 173 long-term
health care facilities, 17 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 nine-month period ended September 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 nine-month period ended September 30, 1995, the Company provided
four mortgage loans secured by two long-term health care facilities and three
assisted living facilities in the aggregate amount of $28,680,000. 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 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.
During 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 $35,484,000. 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.
During September 1995, the Company sold one long-term health care facility to
the lessee of such facility pursuant to a purchase option in the facilitiy's
lease for a purchase price of approximately $8,344,000. The gain on such sale
is approximately $989,000. The Company received cash of approximately
$8,344,000 of which approximately $4,796,000 was used to repay a mortgage
secured by such facility.
6
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SEPTEMBER 30, 1995
OPERATING RESULTS
Nine Months 1995 Compared to Nine Months 1994
Revenues for the nine-months ended September 30, 1995 increased $8,916,000 or
17% 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. The increase in total revenues is also attributed to a gain on the
sale of one of the Company's facilities.
Total expenses for the nine-month period increased $4,895,000 or 27% over the
same period in 1994. The increase is primarily due to increased interest
expense as a result of increased borrowings on the Company's bank line of credit
and the issuance of $56,000,000 in medium term notes in the first half of 1995.
The increase in total expenses was also attributable to increased depreciation
due to the acquisition of additional facilities in the last twelve months.
Third Quarter 1995 Compared to Third Quarter 1994
Revenues for the three months ended September 30, 1995 increased $3,979,000 or
22% 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. The increase in total revenues is also attributed to a gain on the
sale of one of the Company's facilities.
Total expenses for the three-months ended September 30, 1995 increased
$1,460,000 or 22% over the same period in 1994. The increase is primarily due
to increased interest expense as a result of increased levels of borrowing on
the Company's bank line of credit and the issuance of $56,000,000 in medium term
notes in the first half of 1995. 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 nine-month period ended September 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 nine-month period ended September 30, 1995, the Company provided
four mortgage loans secured by two long-term health care facilities and three
assisted living facilities in the aggregate amount of
7
<PAGE>
$28,680,000. 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 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.
During 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 $35,484,000. 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.
During September 1995, the Company sold one long-term health care facility to
the lessee of such facility pursuant to a purchase option in the facility's
lease. The Company received cash of approximately $8,344,000 of which
approximately $4,796,000 was used to repay a mortgage secured by such facility
for a purchase price of approximately $8,344,000. The gain on such sale is
approximately $989,000.
At September 30, 1995, the Company had $51,300,000 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 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
None.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the nine-month
period ended September 30, 1995.
9
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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: November 7, 1995
NATIONWIDE HEALTH PROPERTIES, INC.
By /s/ MARK L. DESMOND
------------------------------
Mark L. Desmond
Vice President and Treasurer
(Principal Financial Officer)
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 6,039
<SECURITIES> 0
<RECEIVABLES> 3,411
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,269
<PP&E> 500,985
<DEPRECIATION> 70,220
<TOTAL-ASSETS> 572,094
<CURRENT-LIABILITIES> 0
<BONDS> 183,890
<COMMON> 1,936
0
0
<OTHER-SE> 370,967
<TOTAL-LIABILITY-AND-EQUITY> 572,094
<SALES> 0
<TOTAL-REVENUES> 60,671
<CGS> 0
<TOTAL-COSTS> 23,127
<OTHER-EXPENSES> 2,356
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,525
<INCOME-PRETAX> 37,544
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,544
<EPS-PRIMARY> 2.00
<EPS-DILUTED> 0
</TABLE>
