<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
October 16, 1998 (January 30, 1998)
---------------- ------------------
NATIONWIDE HEALTH PROPERTIES, INC.
--------------------------------------------------
(Exact name of registrant as specified in charter)
Maryland 1-9028 95-3997619
------------------------------------------------------
(State or other (Commission (IRS employer
jurisdiction of file number) identification
incorporation) number)
610 Newport Center Drive, Suite 1150, Newport Beach, CA 92660-6429
------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code:
(949) 718-4400
--------------
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS.
During the period from January 1, 1998 through October 1, 1998, Nationwide
Health Properties, Inc. (the "Company") acquired from parties not related to the
Company, 14 assisted living facilities ("ALF"), 15 skilled nursing facilities
("SNF"), 2 continuing care retirement communities ("CCRC") and 8 residential
care facilities for the elderly ("RCFE") in 23 separate transactions at an
aggregate purchase price of approximately $110,905,000. The facilities were,
concurrently with their acquisition, leased on a triple net basis to 10
different operators under terms generally similar to the Company's existing
leases. The transactions were funded by bank borrowings on the Company's
revolving bank line of credit with Wells Fargo Bank, National Association, Sanwa
Bank California, The Bank of New York and Nationsbank, N.A., approximately
$4,137,000 of debt assumption, the issuance of 201,190 shares of the Company's
common stock and by cash on hand. Except as indicated below, the Company
purchased the assets of each of the facilities. The Company periodically uses
funds raised through the issuance of medium-term notes and equity offerings to
repay indebtedness under its revolving bank line of credit.
<TABLE>
<CAPTION>
Facility Acquisition Purchase
Facility Name City State Type Beds Units Date Price
- ----------------------------------- --------------- ------- -------- ----- ----- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Monticello Residential Care Jackson MO CCRC 31 1/30/98 $ 2,460,000
Autumn Rose 13 Newport Beach CA RCFE 6 2/19/98 640,000
Autumn Rose 14 Murrieta CA RCFE 6 2/27/98 176,555
Autumn Rose 15 Murrieta CA RCFE 6 2/27/98 189,210
Autumn Rose 16 Murrieta CA RCFE 6 2/27/98 248,470
Autumn Rose 18 Murrieta CA RCFE 6 2/27/98 248,470
Autumn Rose 19 Murrieta CA RCFE 6 2/27/98 155,666
Sterling House of Hickory Hickory NC ALF 42 4/9/98 2,902,000
Sterling House of Richland County Columbia SC ALF 42 4/9/98 2,857,000
Drury Place of Alvamar (1) (2) Lawrence KS ALF 67 4/30/98 4,608,441
Drury Place of Salina (1) (2) (3) Salina KS ALF 61 4/30/98 3,132,968
Drury Place of Topeka (1) (2) Topeka KS ALF 61 4/30/98 3,282,219
Normandy House Nursing Home Melrose MA SNF 82 5/15/98 4,394,037
Countrywood Estates Monticello AR SNF 80 6/1/98 3,497,825
Ashley County Conv. Center Wilmot AR SNF 100 6/1/98 2,424,393
Riverview Manor Morrilton AR SNF 88 6/1/98 3,835,743
Saline Nursing Home Benton AR SNF 119 6/1/98 5,151,650
Wynwood Nursing Center (3) Wynne AR SNF 100 6/1/98 4,287,325
Brookridge Life Care & Rehab Center Morrilton AR SNF 118 6/1/98 5,331,888
Regional Nursing Center of Bryant Bryant AR SNF 116 6/1/98 4,950,885
Lakewood Rehab Center Lake Village AR SNF 102 6/1/98 4,080,000
The Arches Benton AR ALF 28 6/1/98 1,639,425
Sterling House of Chandler Chandler AZ ALF 52 7/17/98 3,240,000
Sterling House of Panama City Panama City FL ALF 42 7/17/98 2,992,000
The Arbor on the Brazos College Station TX CCRC 120 27 8/1/98 6,676,400
Thorton Nursing Home Northborough MA SNF 84 8/20/98 2,733,692
Autumn Rose 24 Laguna Niguel CA RCFE 6 8/31/98 430,000
Upshur Manor Gilmer TX SNF 112 9/1/98 3,208,000
Sterling House of Greenville Greenville SC ALF 42 9/4/98 2,750,000
Sterling House of Lancaster Lancaster OH ALF 42 9/4/98 2,420,000
Sterling House of Youngstown Youngstown OH ALF 42 9/16/98 2,645,000
Sterling House of Deptford Deptford NJ ALF 52 9/18/98 4,064,494
Langston House Clinton SC ALF 39 9/18/98 2,600,000
Ashley House Greenwood SC ALF 39 9/18/98 2,700,000
Autumn Rose 27 Murrieta CA RCFE 6 9/29/98 141,628
Aurora Australis Lodge (2) Columbus MS SNF 120 10/1/98 4,200,000
Imperial Manor Nashville TN SNF 150 10/1/98 7,490,000
Oak Ridge Acres Hiawatha KS SNF 49 10/1/98 910,000
Westwood Manor Topeka KS SNF 53 10/1/98 1,210,000
------ ---- ------------
Total 1,641 709 $110,905,384
====== ==== ============
</TABLE>
- ----------------------------------------------
(1) Denotes a facility acquired by the issuance of the Company's stock.
(2) Denotes a transaction involving the acquisition of the facility's stock.
(3) Denotes a transaction involving the assumption of the facility's debt by
the Company.
1
<PAGE>
The Company believes these acquisitions are consistent with the Company's
historical business strategy of acquiring and concurrently net leasing health
care facilities to qualified operators. In assessing the facilities, the Company
considered the type, location, age, design and physical condition of the
facilities acquired, as well as historical, if applicable, and projected
operating results of the health care operations conducted at the facilities.
Additionally, the Company considers the operating ability, financial condition
and reputation of the operator to which the acquired facilities are to be
leased. After reasonable inquiry, the Company is not aware of any material
factors that would cause the financial information reported not to be
necessarily indicative of future operating results. The Company intends to
continue the current use of each property.
Although no single acquisition is considered a "significant acquisition"
pursuant to the rules governing the reporting of transactions on Form 8-K, under
Rule 3-14 of Regulation S-X, these acquisitions in the aggregate, may be
considered to be material in nature. Certain audited pro forma financial
information concerning these properties is provided in Item 7 of this Current
Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Financial information for the health care operations of the acquired
facilities is not presented because the related operating information for such
facilities, after exclusion of items not comparable to the proposed net leased
real estate operations by the Company pursuant to Rule 3-14 of Regulation S-X,
would not be meaningful. Alternatively, the Company has presented audited pro
forma operating information for each of the acquired properties as if the
acquired properties had been owned and net leased by the Company since January
1, 1997.
(a) (3) -Audited pro forma statements of income for the acquired facilities
for the year ended December 31, 1997.
(b) (1) -Unaudited pro forma balance sheet as of September 30, 1998 for the
Company after giving effect to the acquisition of the facilities.
-Pro forma statement of operations for the Company after giving
effect to the acquisition of the facilities for the nine-month
period ended September 30, 1998.
-Pro forma statement of operations for the Company after giving
effect to the acquisition of the facilities for the year ended
December 31, 1997.
(c) Consent of Arthur Andersen LLP.
2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE STOCKHOLDERS AND DIRECTORS, NATIONWIDE HEALTH PROPERTIES, INC.:
We have examined the pro forma adjustments reflecting the transactions described
in Note 1 and the application of those adjustments to the assembly of the
accompanying pro forma statements of income of the properties acquired by
Nationwide Health Properties, Inc. during the period January 1, 1998 to October
1, 1998 as indicated in Item 5 of this Form 8-K (collectively "the Acquired
Properties") for the year ended December 31, 1997. The historical statements of
income are omitted since substantially all historical amounts are not relevant
on a pro forma basis and in some cases, the facilities were opened in 1998. The
pro forma adjustments are based upon management's assumptions described in Note
2. Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
such procedures as we considered necessary in the circumstances.
The objective of this pro forma financial information is to show what the
significant effects on the historical financial information might have been had
the transactions occurred at an earlier date. However, the pro forma statements
of income are not necessarily indicative of the results of operations that would
have been attained had the above-mentioned transactions actually occurred
earlier.
In our opinion, management's assumptions provide a reasonable basis for
presenting the significant effects directly attributable to the above-mentioned
transactions described in Note 1, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma statements of income
for the year ended December 31, 1997 reflect the proper application of those
adjustments to the historical statement of income amounts.
ARTHUR ANDERSEN LLP
Orange County, California
October 15, 1998
3
<PAGE>
Pro Forma Statements of Income
For the Year Ended December 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Monticello
Residential Autumn Autumn Autumn Autumn Autumn Autumn
Care Rose 13 Rose 14 Rose 15 Rose 16 Rose 18 Rose 19
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Minimum Rent $222,581 $70,400 $19,421 $20,813 $27,332 $27,332 $17,123
-----------------------------------------------------------------------------------------------
222,581 70,400 19,421 20,813 27,332 27,332 17,123
Expenses:
Depreciation 60,427 17,286 4,119 4,408 5,763 5,763 3,642
Interest 130,072 33,255 9,231 9,882 12,930 12,930 8,157
-----------------------------------------------------------------------------------------------
190,499 50,541 13,350 14,290 18,693 18,693 11,799
-----------------------------------------------------------------------------------------------
Net Income $ 32,082 $19,859 $ 6,071 $ 6,523 $ 8,639 $ 8,639 $ 5,324
===============================================================================================
</TABLE>
See accompanying notes.
4
<PAGE>
Pro Forma Statements of Income
For the Year Ended December 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Sterling Normandy
Sterling House of Drury Drury Drury House Country-
House of Richland Place of Place of Place of Nursing wood
Hickory County Alvamar Salina Topeka Home Estates
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Minimum Rent $256,827 $252,845 $416,216 $277,477 $297,297 $399,744 $305,024
----------------------------------------------------------------------------------------------
256,827 252,845 416,216 277,477 297,297 399,744 305,024
Expenses:
Depreciation 63,269 66,585 95,534 82,475 98,423 134,112 81,043
Interest 149,967 147,789 141,635 163,046 86,703 229,155 182,162
----------------------------------------------------------------------------------------------
213,236 214,374 237,169 245,521 185,126 363,267 263,205
----------------------------------------------------------------------------------------------
Net Income $ 43,591 $ 38,471 $179,047 $ 31,956 $112,171 $ 36,477 $ 41,819
==============================================================================================
</TABLE>
See accompanying notes.
5
<PAGE>
Pro Forma Statements of Income
For the Year Ended December 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Brookridge Regional
Ashley County Saline Wynwood Life Care & Nursing
Convalescent Riverview Nursing Nursing Rehabilitation Center of
Center Manor Center Center Center Bryant
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Minimum Rent $217,874 $335,526 $449,605 $374,744 $464,944 $431,914
-------------------------------------------------------------------------------------------
217,874 335,526 449,605 374,744 464,944 431,914
Expenses:
Depreciation 73,902 103,853 129,466 114,708 127,302 134,088
Interest 126,376 199,812 268,293 345,713 277,746 257,841
-------------------------------------------------------------------------------------------
200,278 303,665 397,759 460,421 405,048 391,929
-------------------------------------------------------------------------------------------
Net Income $ 17,596 $ 31,861 $ 51,846 $(85,677) $ 59,896 $ 39,985
===========================================================================================
</TABLE>
See accompanying notes.
6
<PAGE>
Pro Forma Statements of Income
For the Year Ended December 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Sterling
Lakewood Sterling House of The Arbor Thorton
Rehabilitation The House of Panama on the Nursing Autumn
Center Arches Chandler City Brazos Home Rose 24
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Minimum Rent $355,571 $143,797 $281,588 $260,035 $612,420 $241,658 $47,300
----------------------------------------------------------------------------------------------
355,571 143,797 281,588 260,035 612,420 241,658 47,300
Expenses:
Depreciation 96,805 42,230 68,818 66,427 149,855 82,533 11,597
Interest 212,585 85,382 167,556 154,820 351,148 142,778 22,318
----------------------------------------------------------------------------------------------
309,390 127,612 236,374 221,247 501,003 225,311 33,915
----------------------------------------------------------------------------------------------
Net Income $ 46,181 $ 16,185 $ 45,214 $ 38,788 $111,417 $ 16,347 $13,385
==============================================================================================
</TABLE>
See accompanying notes.
7
<PAGE>
Pro Forma Statements of Income
For the Year Ended December 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Sterling Sterling Sterling Sterling
Upshur House of House of House of House of Langston
Manor Greenville Lancaster Youngstown Deptford House
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Minimum Rent $255,000 $238,893 $210,225 $229,771 $353,091 $221,260
--------------------------------------------------------------------------------
255,000 238,893 210,225 229,771 353,091 221,260
Expenses:
Depreciation 86,456 59,693 52,059 54,713 85,689 63,673
Interest 168,391 142,096 125,105 136,738 209,981 135,471
--------------------------------------------------------------------------------
254,847 201,789 177,164 191,451 295,670 199,144
--------------------------------------------------------------------------------
Net Income $ 153 $ 37,104 $ 33,061 $ 38,320 $ 57,421 $ 22,116
================================================================================
</TABLE>
See accompanying notes.
8
<PAGE>
Pro Forma Statements of Income
For the Year Ended December 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Aurora Oak
Ashley Autumn Australis Imperial Ridge Westwood
House Rose 27 Lodge Manor Acres Manor
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Minimum Rent $229,770 $15,579 $388,500 $664,363 $85,690 $113,590
------------------------------------------------------------------------------
229,770 15,579 388,500 664,363 85,690 113,590
Expenses:
Depreciation 65,687 3,224 100,000 183,329 22,386 29,671
Interest 140,643 7,295 218,592 387,809 47,319 62,749
------------------------------------------------------------------------------
206,330 10,519 318,592 571,138 69,705 92,420
------------------------------------------------------------------------------
Net Income $ 23,440 $ 5,060 $ 69,908 $ 93,225 $15,985 $ 21,170
==============================================================================
</TABLE>
See accompanying notes.
9
<PAGE>
FOOTNOTES TO PRO FORMA STATEMENTS OF INCOME
NOTE 1: Nationwide Health Properties, Inc. (the "Company") acquired 14 assisted
living facilities, 15 skilled nursing facilities, 2 continuing care retirement
communities and 8 residential care facilities for the elderly in 23 separate
transactions at an aggregate purchase price of approximately $110,905,000. The
facilities were leased to 10 different operators under terms generally similar
to the Company's existing leases. The facilities are leased under "net" leases
which are accounted for as operating leases. The leases have initial terms of 9
to 15 years. The Company earns fixed monthly minimum rent and may earn periodic
additional rents. The additional payments are generally computed as a
percentage of facility net patient revenues in excess of base amounts or as a
percentage of the increase in the Consumer Price Index. Additional rents are
generally calculated and payable monthly or quarterly and generally commence in
the second year of the leases. Under terms of the leases, the lessees are
responsible for all maintenance, repairs, taxes and insurance on the leased
properties.
The pro forma statements of income reflect the acquisitions of the properties as
if they had been owned since January 1, 1997.
NOTE 2: Pro forma minimum rents are based upon the monthly minimum rents
specified in the leases. No additional rent amounts are assumed for purposes of
the pro forma statements of income based upon the terms of the leases.
Pro forma depreciation is based upon the purchase prices of the facilities being
allocated to building and depreciated over 30 to 40 year lives.
Pro forma interest expense is based upon allocating the Company's 1998 debt and
equity financing to the acquisitions on a proportional basis, except in the case
of facilities which were directly financed by the assumption of debt or the
issuance of the Company's common stock. For such facilities, interest expense
is based upon applying the actual interest rate to the debt assumed and
allocating the Company's 1998 debt and equity financing to the acquisitions on a
proportional basis for any balance remaining after deducting the debt assumed
and the common stock issued. The weighted average borrowing rate applied to the
general debt financing is based upon the Company's 1998 medium term note
issuances and its September 30, 1998 weighted average rate on its unsecured
revolving line of credit. Such weighted average rate was 6.84%. The Company's
unsecured line of credit matures on March 31, 2001. The Company anticipates
repaying such line of credit borrowings at some time in the future prior to its
current maturity with proceeds from public offerings or private placements of
long-term unsecured debt or equity. Accordingly, the actual interest expense
resulting from the acquisitions of the facilities may vary.
No pro forma general and administrative costs are included because: (1) such
amounts are expected to be immaterial, and (2) the Company does not expect to
add additional staff as a result of the transactions described in Note 1 above.
NOTE 3: The preparation of financial statements requires management to make
estimates and assumptions that affect the revenues and expenses during the
reporting period. Actual results could differ from those estimates.
10
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following unaudited Pro Forma Balance Sheet as of September 30, 1998
and unaudited Pro Forma Statements of Operations for the nine months ended
September 30, 1998 and for the year ended December 31, 1997 have been prepared
to reflect the acquisition of 14 assisted living facilities, 15 skilled nursing
facilities, 2 continuing care retirement communities and 8 residential care
facilities for the elderly in 23 separate transactions at an aggregate purchase
price of approximately $110,905,000 during the period from January 1, 1998
through October 1, 1998 (the "Acquired Facilities") and the adjustments
described in the accompanying notes. The pro forma financial information is
based on the historical financial statements of Nationwide Health Properties,
Inc. (the "Company") as reported in the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1998 and the Company's Annual Report to
Shareholders on Form 10-K for the year ended December 31, 1997, and should be
read in conjunction with those financial statements and the notes thereto.
The Pro Forma Balance Sheet was prepared as if the Acquired Facilities were
owned on September 30, 1998. The Pro Forma Statements of Operations were
prepared as if the Acquired Facilities were purchased as of the beginning of the
period presented.
The combined pro forma financial information is not necessarily indicative
of the financial position or results of operations which actually would have
occurred if such transactions had been consummated on the dates described, nor
does it purport to represent the Company's future financial position or results
of operations.
11
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1998
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Pro Forma
September 30, September 30,
ASSETS 1998 Adjustments 1998
----------------- ------------------ ------------------
<S> <C> <C> <C>
Investments in real estate:
Real estate properties
Land $ 143,792 $ 2,191 $ 145,983
Buildings and improvements 982,299 11,739 994,038
Construction in progress 53,798 - 53,798
---------- ------- ----------
1,179,889 13,930 1,193,819
Less accumulated depreciation (125,559) - (125,559)
---------- ------- ----------
1,054,330 13,930 1,068,260
Mortgage loans receivable, net 208,094 - 208,094
---------- ------- ----------
1,262,424 13,930 1,276,354
Cash and cash equivalents 13,153 (430) 12,723
Receivables 5,945 - 5,945
Other assets 14,036 - 14,036
---------- ------- ----------
$1,295,558 $13,500 $1,309,058
========== ======= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank borrowings $ 30,400 $13,500 $ 43,900
Senior notes due 2000-2038 480,150 - 480,150
Convertible debentures 57,456 - 57,456
Notes and bonds payable 66,584 - 66,584
Accounts payable and accrued
liabilities 47,589 - 47,589
Stockholders' equity:
Preferred stock 100,000 - 100,000
Common stock 4,621 - 4,621
Capital in excess of par value 555,879 - 555,879
Cumulative net income 420,258 - 420,258
Cumulative dividends (467,379) - (467,379)
---------- ------- ----------
Total stockholders' equity 613,379 - 613,379
---------- ------- ----------
$1,295,558 $13,500 $1,309,058
========== ======= ==========
</TABLE>
See accompanying notes.
12
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Pro Forma
Nine Months Nine Months
Ended Ended
September 30, 1998 Adjustments September 30, 1998
------------------ ---------------- -------------------
<S> <C> <C> <C>
Revenues:
Minimum rent $ 75,536 $4,941 $ 80,477
Interest and other income 17,009 - 17,009
Additional rent and additional interest 11,729 - 11,729
-------- ------ --------
104,274 4,941 109,215
Expenses:
Interest and amort. of deferred financing 26,745 2,897 29,642
costs
Depreciation and non-cash charges 20,035 1,374 21,409
General and administrative 3,453 - 3,453
-------- ------ --------
50,233 4,271 54,504
-------- ------ --------
Net income before gain on sale of facilities 54,041 670 54,711
Gain on sale of facilities 2,321 - 2,321
-------- ------ --------
Net income 56,362 670 57,032
Preferred stock dividends (5,758) - (5,758)
-------- ------ --------
Net income available to common stockholders $ 50,604 $ 670 $ 51,274
======== ====== ========
Basic/diluted earnings from continuing
operations available to common stockholders $1.09 $1.09
======== ========
Basic/diluted net income available to common
stockholders $1.15 $1.14
======== ========
Weighted average shares outstanding 44,108 1,009 45,117
======== ====== ========
</TABLE>
See accompanying notes.
13
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Pro Forma
Year Ended Year Ended
December 31, 1997 Adjustments December 31, 1997
----------------- --------------- -----------------
<S> <C> <C> <C>
Revenues:
Minimum rent $ 79,587 $9,833 $ 89,420
Interest and other income 22,454 - 22,454
Additional rent and additional interest 13,664 - 13,664
-------- ------ --------
115,705 9,833 125,538
Expenses:
Interest and amort. of deferred financing costs 28,899 5,711 34,610
Depreciation and non-cash charges 19,825 2,731 22,556
General and administrative 3,993 - 3,993
-------- ------ --------
52,717 8,442 61,159
-------- ------ --------
Net income before gain on sale of facilities 62,988 1,391 64,379
Gain on sale of facilities 829 - 829
-------- ------ --------
Net income 63,817 1,391 65,208
Preferred stock dividends (1,962) - (1,962)
-------- ------ --------
Net income available to common stockholders $ 61,855 $1,391 $ 63,246
======== ====== ========
Basic/diluted earnings from continuing
operations available to common stockholders $ 1.45 $ 1.43
======== ========
Basic/diluted net income available to common
stockholders $ 1.47 $ 1.45
======== ========
Weighted average shares outstanding 42,164 1,333 43,497
======== ====== ========
</TABLE>
See accompanying notes.
14
<PAGE>
FOOTNOTES TO PRO FORMA STATEMENTS OF INCOME
NOTE 1: The Company acquired 14 assisted living facilities, 15 skilled nursing
facilities, 2 continuing care retirement communities and 8 residential care
facilities for the elderly in 23 separate transactions at an aggregate purchase
price of approximately $110,905,000. The facilities were leased to 10 different
operators under terms generally similar to the Company's existing leases. The
facilities are leased under "net" leases which are accounted for as operating
leases. The leases have initial terms of 9 to 15 years. The Company earns
fixed monthly minimum rent and may earn periodic additional rents. The
additional payments are generally computed as a percentage of facility net
patient revenues in excess of base amounts or as a percentage of the increase in
the Consumer Price Index. Additional rents are generally calculated and payable
monthly or quarterly and generally commence in the second year of the leases.
Under terms of the leases, the lessees are responsible for all maintenance,
repairs, taxes and insurance on the leased properties.
The pro forma statements of income reflect the acquisitions of the properties as
if they had been owned since the beginning of the period presented, and the pro
forma balance sheet reflects the acquisition of the properties as if they had
been owned on September 30, 1998.
NOTE 2: The pro forma balance sheet adjustments reflect the allocation between
land and building and improvements of the $13,930,000 of acquired properties
purchased after September 30, 1998, the increase in bank borrowings related to
the acquisitions and a reduction in cash to reflect the payment of a portion of
the purchase price and miscellaneous closing costs. No adjustment has been made
to reflect accumulated depreciation for those properties acquired prior to
September 30, 1998.
NOTE 3: The pro forma minimum rent adjustment is based upon the monthly minimum
rents specified in the leases. No additional rent amounts are assumed for
purposes of the pro forma statements of income based upon the terms of the
leases.
The pro forma depreciation adjustment is based upon the purchase prices of the
facilities being allocated to building and depreciated over 30 to 40 year lives.
Pro forma interest expense is based upon allocating the Company's 1998 debt and
equity financing to the acquisitions on a proportional basis, except in the case
of facilities which were directly financed by the issuance of the Company's
common stock or the assumption of debt. For such facilities, interest expense is
based upon applying the actual interest rate to the debt assumed and allocating
the Company's 1998 debt and equity financing to the acquisitions on a
proportional basis for any balance remaining after deducting the debt assumed
and the common stock issued. The weighted average borrowing rate applied to the
debt financing is based upon the Company's 1998 medium term note issuances and
its September 30, 1998 weighted average rate on its unsecured revolving line of
credit. Such weighted average rate was 6.84%. The Company's unsecured line of
credit matures on March 31, 2001. The Company anticipates repaying such line of
credit borrowings at some time in the future prior to its current maturity with
proceeds from public offerings or private placements of long-term unsecured debt
or equity. Accordingly, the actual interest expense resulting from the
acquisitions of the facilities may vary.
No pro forma general and administrative costs are included because: (1) such
amounts are expected to be immaterial, and (2) the Company does not expect to
add additional staff as a result of the transactions described in Note 1 above.
The pro forma weighted average shares adjustment reflects the weighted average
impact of considering the portion of the 1998 stock issuances allocated to the
funding of acquisitions outstanding for the entire periods presented.
NOTE 4: The preparation of financial statements requires management to make
estimates and assumptions that affect the revenues and expenses during the
reporting period. Actual results could differ from those estimates.
15
<PAGE>
SIGNATURES
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.
NATIONWIDE HEALTH PROPERTIES, INC.
Date: October 16, 1998 By: /s/ MARK L. DESMOND
-----------------------------------
Name: Mark L. Desmond
Title: Senior Vice President and
Chief Financial Officer
16
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the previously filed Registration Statements (No. 33-35276,
No. 33-64798, No. 333-32135, No. 333-17061, and No. 333-20589) of Nationwide
Health Properties, Inc. of our report dated October 15, 1998, with respect to
the Pro Forma Statements of Income of the Acquired Properties (as listed in Item
5 of the Current Report on Form 8-K) included in the Current Report on Form 8-K
dated October 16, 1998, filed with the Securities and Exchange Commission.
ARTHUR ANDERSEN LLP
Orange County, California
October 16, 1998
