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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, 1998
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)
610 Newport Center Drive, Suite 1150
Newport Beach, California 92660
(Address of principal executive offices)
(949) 718-4400
(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, 1998 - 44,705,013.
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<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
FORM 10-Q
June 30, 1998
TABLE OF CONTENTS
Part I--Financial Information
Page
----
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.................................... 8
Part II--Other Information
Item 4. Submission of Matters to a Vote of Security Holders.......... 11
Item 5. Other Information............................................ 11
Item 6. Exhibits and Reports on Form 8-K............................. 11
1
<PAGE>
PART I
NATIONWIDE HEALTH PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
June 30, December 31,
1998 1997
----------- ------------
(Unaudited)
(Dollars in thousands)
<S> <C> <C>
Investments in real estate
Real estate properties:
Land........................................ $ 143,378 $ 120,236
Buildings and improvements.................. 919,045 809,217
Construction in progress.................... 33,838 31,078
---------- ----------
1,096,261 960,531
Less accumulated depreciation............... (118,587) (107,077)
---------- ----------
977,674 853,454
Mortgage loans receivable, net................. 196,472 199,819
---------- ----------
1,174,146 1,053,273
Cash and cash equivalents.......................... 13,914 10,192
Receivables........................................ 4,782 4,362
Other assets....................................... 14,210 9,567
---------- ----------
$1,207,052 $1,077,394
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank borrowings.................................... $ 87,700 $ 19,600
Senior notes due 2000-2037......................... 375,000 355,000
Convertible debentures............................. 58,875 64,512
Notes and bonds payable............................ 65,234 58,297
Accounts payable and accrued liabilities........... 35,993 26,939
Stockholders' equity:
Preferred stock $1.00 par value; 5,000,000
shares authorized; Issued and outstanding:
1998-1,000,000; 1997-1,000,000, stated at
liquidation preference of $100 per share.... 100,000 100,000
Common stock $.10 par value; 100,000,000 shares
authorized; Issued and outstanding:
1998-44,641,706; 1997-43,128,889............ 4,464 4,313
Capital in excess of par value................. 524,538 490,737
Cumulative net income.......................... 401,932 363,896
Cumulative dividends........................... (446,684) (405,900)
---------- ----------
Total stockholders' equity............... 584,250 553,046
---------- ----------
$1,207,052 $1,077,394
========== ==========
</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,
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Minimum rent.......................................... $24,746 $18,469 $48,536 $36,747
Interest and other income............................. 5,703 5,372 11,396 10,095
Additional rent and additional interest............... 4,042 3,357 7,717 6,658
------- ------- ------- -------
34,491 27,198 67,649 53,500
Expenses:
Interest and amortization of deferred financing costs. 8,584 6,665 16,836 12,767
Depreciation and non-cash charges..................... 6,658 4,694 12,803 9,252
General and administrative............................ 1,103 925 2,295 1,812
------- ------- ------- -------
16,345 12,284 31,934 23,831
------- ------- ------- -------
Net income before gain on sale of properties........... 18,146 14,914 35,715 29,669
Gain on sale of properties............................. -- -- 2,321 --
------- ------- ------- -------
Net income............................................. 18,146 14,914 38,036 29,669
Preferred stock dividends.............................. (1,919) -- (3,839) --
------- ------- ------- -------
Net income available to common stockholders............ $16,227 $14,914 $34,197 $29,669
======= ======= ======= =======
Per share amounts:
Basic/diluted income from continuing operations
available to common stockholders.................... $ .37 $ .36 $ .73 $ .71
======= ======= ======= =======
Basic/diluted net income available to common
stockholders........................................ $ .37 $ .36 $ .78 $ .71
======= ======= ======= =======
Dividends paid per share.............................. $ .42 $ .39 $ .84 $ .78
======= ======= ======= =======
Weighted average shares outstanding.................... 44,248 41,804 43,760 41,802
======= ======= ======= =======
</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,
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Cash flow from operating activities:
Net income......................................... $ 38,036 $ 29,669
Gain on sale of properties......................... (2,321) --
Depreciation and non-cash charges.................. 12,803 9,252
Amortization of deferred financing costs........... 442 370
Net decrease in other assets and liabilities....... 3,706 271
--------- ---------
Net cash provided by operating activities....... 52,666 39,562
Cash flow from investing activities:
Acquisition of real estate properties.............. (130,757) (73,213)
Disposition of real estate properties.............. 5,496 --
Investment in mortgage loans receivable............ (2,399) (34,095)
Principal payments on mortgage loans receivable.... 6,423 1,026
--------- ---------
Net cash used in investing activities........... (121,237) (106,282)
Cash flow from financing activities:
Bank borrowings.................................... 144,300 126,000
Repayment of bank borrowings....................... (76,200) (112,000)
Issuance of senior unsecured debt.................. 20,000 85,000
Issuance of common stock........................... 23,149 --
Dividends paid..................................... (40,784) (32,607)
Issuance of notes and bonds........................ 2,402 --
Principal payments on notes and bonds.............. (204) (40)
Other, net......................................... (370) (656)
--------- ---------
Net cash provided by financing activities....... 72,293 65,697
--------- ---------
Increase (decrease) in cash and cash equivalents....... 3,722 (1,023)
Cash and cash equivalents, beginning of period......... 10,192 11,709
--------- ---------
Cash and cash equivalents, end of period............... $ 13,914 $ 10,686
========= =========
</TABLE>
See accompanying notes.
4
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
(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,
1998 and 1997 pursuant to the rules and regulations of the Securities and
Exchange Commission. All such adjustments are of a normal recurring nature.
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
1997 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, 1998 and 1997 are not necessarily indicative of the results for a
full year.
(ii) The Company invests in health care related real estate and, as of
June 30, 1998, had investments in 317 facilities located in 32 states. The
facilities include 195 skilled nursing facilities, 90 assisted living
facilities, 13 continuing care retirement communities, 14 residential care
facilities for the elderly, 2 rehabilitation hospitals and 3 medical clinics.
The Company's facilities are operated by 60 different operators, including the
following publicly traded companies: Alternative Living Services, Inc., American
Retirement Corporation, ARV Assisted Living, Inc., Beverly Enterprises, Inc.,
Harborside Healthcare Corporation, HEALTHSOUTH Corporation, Integrated Health
Services, Inc., Lexington Healthcare Group, Inc., Mariner Post-Acute Network,
Inc., NewCare Health Corporation, Res-Care, Inc. and Sun Healthcare Group, Inc.
Of the operators of the facilities, only Alternative Living Services, Inc. and
Beverly Enterprises, Inc. account for more than 10% of the Company's revenues.
They accounted for 12% and 15% respectively of the Company's total revenues for
the six months ended June 30, 1998.
As of June 30, 1998, the Company had direct ownership of 152 skilled
nursing facilities, 84 assisted living facilities, 8 continuing care retirement
communities, 14 residential care facilities for the elderly, 2 rehabilitation
hospitals and 3 medical clinics. All of the Company's owned facilities are
leased under "net" leases (the "Leases"), which are accounted for as operating
leases.
The Leases have initial terms ranging from 10 to 19 years, and the Leases
generally have two or more multiple-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 or as a percentage of the increase in
the Consumer Price Index. Additional rents are generally calculated and payable
monthly or quarterly. The base amounts, in most cases, are net patient revenues
for the first year of the lease. Most leases contain provisions such that the
total rent cannot decrease from one year to the next. Most Leases contain
cross-collateralization and cross-default provisions tied to other Leases with
the same lessee, as well as grouped lease renewals and grouped purchase options.
Obligations under the Leases have corporate guarantees, and Leases covering 172
facilities are backed by irrevocable letters of credit or security deposits
which cover 1 to 12 months of monthly minimum rents. Under the terms of the
Leases, the lessee is responsible for all maintenance, repairs, taxes and
insurance on the leased properties.
As of June 30, 1998, the Company held 32 mortgage loans secured by 43
skilled nursing facilities, 6 assisted living facilities and 5 continuing care
retirement communities. As of June 30, 1998, the mortgage loans had a net book
value of approximately $196,472,000 with individual outstanding balances ranging
from approximately $601,000 to $21,400,000 and maturities ranging from 1998 to
2031.
5
<PAGE>
(iii) Basic earnings per share is computed by dividing income available to
common stockholders by the weighted average common shares outstanding. Income
available to common stockholders is calculated by deducting dividends declared
on preferred stock from income from continuing operations and net income.
Diluted earnings per share includes the effect of the potential shares
outstanding: dilutive stock options and dilutive convertible debentures. The
effect of convertible debentures was not dilutive in 1998 and 1997.
<TABLE>
<CAPTION>
Three months ended June 30,
1998 1997
----------------- -----------------
Income Shares Income Shares
-------- ------ -------- ------
(in thousands)
<S> <C> <C> <C> <C>
Income before gain on sale of properties $18,146 $14,914
Less: preferred stock dividends 1,919 --
------- -------
Amounts used to calculate Basic EPS 16,227 44,248 14,914 41,804
Effect of dilutive securities:
Stock options -- 18 -- 3
6.25% Convertible debentures -- -- -- --
------- ------ ------- ------
Amounts used to calculate Diluted EPS $16,227 44,266 $14,914 41,807
======= ====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
Six months ended June 30,
1998 1997
----------------- -----------------
Income Shares Income Shares
-------- ------ -------- ------
(in thousands)
<S> <C> <C> <C> <C>
Income before gain on sale of properties $35,715 $29,669
Less: preferred stock dividends 3,839 --
------- -------
Amounts used to calculate Basic EPS 31,876 43,760 29,669 41,802
Effect of dilutive securities:
Stock options -- 11 -- 3
6.25% Convertible debentures -- -- -- --
------- ------ ------- ------
Amounts used to calculate Diluted EPS $31,876 43,771 $29,669 41,805
======= ====== ======= ======
</TABLE>
(iv) 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 ninety-five percent (95%) of its taxable income to its stockholders.
Accordingly, no provision has been made for federal income taxes.
(v) During the six-month period ended June 30, 1998, the Company acquired
ten skilled nursing facilities, six assisted living facilities, one continuing
care retirement community and six residential care facilities for the elderly in
eight separate transactions for an aggregate investment of approximately
$61,479,000. Construction of six assisted living facilities, one continuing care
retirement community and two clinics was also completed, in which the Company's
total aggregate investment was $57,256,000, $21,936,000 of which was a current
year investment included in the new construction financing amount below. Upon
acquisition or completion of construction, as applicable, the facilities were
concurrently leased under terms generally similar to the Company's existing
leases. During the six-month period ended June 30, 1998, the Company provided
new construction financing of approximately $68,122,000. The Company also funded
approximately $8,780,000 in capital improvements in accordance with certain
existing lease provisions. Such capital improvements will result in an increase
in the minimum rents earned by the Company.
6
<PAGE>
During the six months ended June 30, 1998, the Company funded an additional
$2,399,000 on existing mortgage loans. Such additional amounts funded will
result in an increase in interest income earned by the Company.
During the six-month period ended June 30, 1998, the Company sold two
skilled nursing facilities in two separate transactions for an aggregate price
of approximately $5,512,000, less transaction costs, resulting in an aggregate
gain of approximately $2,321,000.
During the six months ended June 30, 1998, two of the Company's mortgage
loans matured and were repaid in full in an aggregate principal amount of
approximately $5,382,000.
During the six-month period ended June 30, 1998, the Company issued
$20,000,000 in aggregate principal amount of medium-term notes. The notes bear
fixed interest at a weighted average rate of 6.68% and have a weighted average
maturity of 9 years.
(vi) On April 29, 1998, the Company issued 1,048,128 shares of common
stock resulting in aggregate proceeds, net of the underwriter's fee, of
approximately $23,214,000 before expenses related to the offering.
(vii) The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 130 Reporting Comprehensive Income and SFAS No. 131 Disclosures
about Segments of an Enterprise and Related Information which were issued in
June 1997. The adoption of SFAS No. 130 and SFAS No. 131 is required in 1998.
There are no differences between the Company's net income, as reported, and
comprehensive income, as defined, for the periods presented. The Company
believes it operates in only one business segment.
ETIF Issue No. 97-11 Accounting for Internal Costs Relating to Real Estate
Property Acquisitions released by the Emerging Issues Task Force of the
Financial Accounting Standards Board which prohibits the capitalization of
internal costs related to the acquisition of operating property was issued
during the first quarter of 1998. The impact of this pronouncement is
immaterial to the Company's financial statements.
EITF Issue 98-9 Accounting for Contingent Rent in Interim Financial Periods
released by the Emerging Issues Task Force of the Financial Accounting Standards
Board requires lessors to defer recognition of contingent rental income in
interim periods until the specific target that triggers the contingent rental
income is achieved. Under most of the Company's Leases the specific targets that
trigger contingent rental income are met either monthly or quarterly and,
therefore, EITF Issue 98-9 would not impact the Company's quarterly accounting
for those Leases. The impact of the deferral of rental income recognition
related to the Company's Leases under which the specific targets are annual is
not believed to be material.
7
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
June 30, 1998
Statement Regarding Forward Looking Disclosure
Certain information contained in this report includes forward looking
statements, which can be identified by the use of forward looking terminology
such as "may," "will," "expect," "should" or comparable terms or the negative
thereof. These statements involve risks and uncertainties that could cause
actual results to differ materially from those described in the statements.
These risks and uncertainties include (without limitation) the following: the
effect of economic and market conditions and changes in interest rates,
government regulations, including changes in Medicare and Medicaid payment
levels, changes in the health industry, the amount of any additional
investments, access to capital markets and changes in the ratings of the
Company's debt securities or preferred stock.
Operating Results
Six Months 1998 Compared to Six Months 1997
Revenues for the six months ended June 30, 1998 increased $14,149,000 or
26% over the same period in 1997. The increase is due to increased minimum rent
and interest income resulting from additional investments in real estate
properties and mortgage loans receivable during the last twelve months. The
increase was also attributable to increased additional rent and additional
interest earned under the Company's existing leases and mortgage loans
receivable based on increases in the facility revenues and the Consumer Price
Index.
Total expenses for the six-month period ended June 30, 1998 increased
$7,563,000 or 32% over the same period in 1997. The increase is due to
increased interest expense as a result of the issuance of fixed rate medium-term
notes during the last twelve months and to increased depreciation in connection
with the acquisition of additional facilities during the last twelve months.
In addition, during the six months ended June 30, 1998, the Company
recognized a gain of approximately $2,321,000 from the sale of two skilled
nursing facilities.
Second Quarter 1998 Compared to Second Quarter 1997
Revenues for the three months ended June 30, 1998 increased $7,293,000 or
27% over the same period in 1997. The increase is due to increased minimum rent
and interest income resulting from additional investments in real estate
properties and mortgage loans receivable during the last twelve months,
partially offset by the payoff of certain mortgage loans during the quarter. The
increase was also attributable to increased additional rent and additional
interest earned under the Company's existing leases and mortgage loans
receivable based on increases in the facility revenues and the Consumer Price
Index.
Total expenses for the three-month period ended June 30, 1998 increased
$4,061,000 or 33% over the same period in 1997. The increase is primarily due
to increased interest expense as a result of the issuance of fixed rate medium-
term notes during the last twelve months and to increased depreciation in
connection with the acquisition of additional facilities during the last twelve
months.
The Company expects increased rental revenues and interest income due to
the addition of facilities to its property base and mortgage loans receivable
over the last twelve months. The Company also expects increased additional rent
and additional interest because the Company's leases and mortgages generally
contain provisions under which additional rents or interest income increase with
increases in facility revenues and/or increases in the
8
<PAGE>
Consumer Price Index. Historically, revenues at the Company's facilities and the
Consumer Price Index generally have increased; although, there are no assurances
that they will continue to increase in the future. Sales of facilities or
repayments of mortgages would serve to offset the aforementioned revenue
increases. 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.
The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 130 Reporting Comprehensive Income and SFAS No. 131 Disclosures
about Segments of an Enterprise and Related Information which were issued in
June 1997. The adoption of SFAS No. 130 and SFAS No. 131 is required in 1998.
There are no differences between the Company's net income, as reported, and
comprehensive income, as defined, for the periods presented. The Company
believes it operates in only one business segment.
Issue No. 97-11 Accounting for Internal Costs Relating to Real Estate
Property Acquisitions released by the Emerging Issues Task Force of the
Financial Accounting Standards Board which prohibits the capitalization of
internal costs related to the acquisition of operating property was issued
during the first quarter of 1998. The impact of this pronouncement is
immaterial to the Company's financial statements.
EITF Issue 98-9 Accounting for Contingent Rent in Interim Financial Periods
released by the Emerging Issues Task Force of the Financial Accounting Standards
Board requires lessors to defer recognition of contingent rental income in
interim periods until the specific target that triggers the contingent rental
income is achieved. Under most of the Company's Leases the specific targets that
trigger contingent rental income are met either monthly or quarterly and,
therefore, EITF Issue 98-9 would not impact the Company's quarterly accounting
for those Leases. The impact of the deferral of rental income recognition
related to the Company's Leases under which the specific targets are annual is
not believed to be material.
Liquidity and Capital Resources
During the six-month period ended June 30, 1998, the Company acquired ten
skilled nursing facilities, six assisted living facilities, one continuing care
retirement community and six residential care facilities for the elderly in
eight separate transactions for an aggregate investment of approximately
$61,479,000. Construction of six assisted living facilities, one continuing care
retirement community and two clinics was also completed, in which the Company's
total aggregate investment was $57,256,000, $21,936,000 of which was a current
year investment included in the new construction financing amount below. Upon
acquisition or completion of construction, as applicable, the facilities were
concurrently leased under terms generally similar to the Company's existing
leases. During the six-month period ended June 30, 1998, the Company provided
new construction financing of approximately $68,122,000. The Company also
funded approximately $8,780,000 in capital improvements in accordance with
certain existing lease provisions. Such capital improvements will result in an
increase in the minimum rents earned by the Company. The acquisitions,
construction advances and capital improvement advances were funded by borrowings
on the Company's bank line of credit and by cash on hand.
During the six months ended June 30, 1998, the Company funded an additional
$2,399,000 on existing mortgage loans. Such additional amounts funded will
result in an increase in interest income earned by the Company. The additional
amounts funded were financed by borrowings on the Company's bank line of credit
and by cash on hand.
During the six-month period ended June 30, 1998, the Company sold two
skilled nursing facilities in two separate transactions for an aggregate price
of approximately $5,512,000, less transaction costs, resulting in an aggregate
gain of approximately $2,321,000. The proceeds of the sales were used to repay
borrowings on the Company's bank line of credit.
During the six months ended June 30, 1998, two of the Company's mortgage
loans matured and were repaid in full in an aggregate principal amount of
approximately $5,382,000. The proceeds were used to repay borrowings on the
Company's bank line of credit.
9
<PAGE>
During the six months ended June 30, 1998, the Company issued $20,000,000
in aggregate principal amount of medium-term notes. The notes bear fixed
interest at a weighted average rate of 6.68% and have a weighted average
maturity of 9 years. The proceeds were used to repay borrowings on the Company's
bank line of credit.
At June 30, 1998, the Company had $12,300,000 available under its
$100,000,000 bank line of credit. The Company has shelf registrations on file
with the Securities and Exchange Commission under which the Company may issue
(a) up to $225,000,000 in aggregate principal amount of medium term notes and
(b) up to approximately $208,622,000 of securities including debt, convertible
debt, common and preferred stock. The Company anticipates issuing securities
under such shelf registrations to repay borrowings under the Company's bank line
of credit.
On April 29, 1998, the Company issued 1,048,128 shares of common stock
resulting in aggregate proceeds, net of the underwriter's fee, of approximately
$23,214,000 before expenses related to the offering. The net proceeds were used
to repay borrowings under the Company's bank line of credit.
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 of credit, 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.
10
<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 17, 1998 ("Annual
Meeting"). At the Annual Meeting, John C. Argue was elected and David R. Banks
and Milton J. Brock, Jr. were re-elected to serve for a three-year term until
the 2001 Annual Meeting of Stockholders. The other directors whose term of
office continued after the meeting are Sam A. Brooks, Jr., Jack D. Samuelson, R.
Bruce Andrews and Charles D. Miller. Additionally, the selection of Arthur
Andersen LLP as independent accountants for the year ended December 31, 1998 was
ratified.
Voting at the Annual Meeting was as follows:
<TABLE>
<CAPTION>
Abstentions
Votes Cast Votes Cast Broker
Matter For Against non-Votes
------ ---------- ---------- -----------
<S> <C> <C> <C>
Election of John C. Argue 38,611,097 652,495 -
Election of David R. Banks 38,692,553 571,039 -
Election of Milton J. Brock, Jr. 38,632,445 631,147 -
Ratification of selection of Arthur Andersen LLP 38,971,551 56,901 235,140
</TABLE>
Item 5. Other Information
The Company hereby advises stockholders that January 25, 1999 is the
date after which notice of a stockholder sponsored proposal submitted outside
the processes of Rule 14a-8 under the Securities Exchange Act of 1934 (i.e., a
proposal to be presented at the next annual meeting of stockholders but not
submitted for inclusion in the Company's proxy statement) will be considered
untimely under the SEC's proxy rules.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10. Material Contracts
10.1 Amendment Number Seven and Restatement of Amendments One
through Six to Credit Agreement dated as of April 6, 1997
between the Company and Wells Fargo Bank, National
Association, The Bank of New York, Sanwa Bank California,
the Sumitomo Bank Limited and BHF-Bank Aktiengesellschaft.
10.2 Assumption Agreement dated as of May 28, 1998 between the
Company and Wells Fargo Bank, National Association, The Bank
of New York, Sanwa Bank California and Nationsbank, N.A.
27. Financial Data Schedule
(b) Reports on Form 8-K
A Form 8-K dated April 23, 1998 was filed to include an exhibit
related to the issue and sale of common stock by the Company.
11
<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 13, 1998
NATIONWIDE HEALTH PROPERTIES, INC.
By /s/ MARK L. DESMOND
-------------------------------------
Mark L. Desmond
Senior Vice President and Chief
Financial Officer
(Principal Financial Officer)
12
<PAGE>
EXHIBIT 10.1
AMENDMENT NUMBER SEVEN AND RESTATEMENT OF
-----------------------------------------
AMENDMENTS ONE THROUGH SIX TO CREDIT AGREEMENT
----------------------------------------------
This AMENDMENT NUMBER SEVEN AND RESTATEMENT OF AMENDMENTS ONE THROUGH SIX TO
CREDIT AGREEMENT, dated as of April 6, 1997 (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 fees and interest rates, the revision
of covenants in connection with the incurrence of indebtedness by the Borrower,
and the revision of covenants in connection with the making of loans and
instruments by the Borrower.
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 Seven and Restatement of Amendments
---------
One through Six 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, that
certain Amendment Number Two to Credit Agreement dated as of July 11, 1995, that
certain Amendment Number Three to Credit Agreement dated as of January 22, 1996,
that certain Amendment Number Four and Waiver to Credit Agreement dated as of
December 10, 1996, that certain Amendment Number Five to Credit Agreement dated
as of April 1, 1997, and that certain Amendment Number Six and Waiver to Credit
Agreement dated as of August 15, 1997.
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," "Commitment,"
"Healthcare Property," "Majority Banks," and "Termination Date"; and (b)
inserting the following defined terms:
<PAGE>
"1996 Indenture" means that certain Indenture, dated as of January 12, 1996,
--------------
from the Borrower to The Bank of New York, as Trustee, providing for the
issuance from time to time of unsecured and unsubordinated debentures, notes or
other evidences of indebtedness of the Borrower.
"1996 Indenture Indebtedness" means Indebtedness of the Borrower incurred
---------------------------
under or pursuant to the 1996 Indenture.
"1997 Indenture" means that certain Indenture, dated as of August 19, 1997,
--------------
from the Borrower to The Bank of New York, as Trustee, providing for the
issuance from time to time of unsecured and unsubordinated debentures, notes or
other evidences of indebtedness of the Borrower.
"1997 Indenture Indebtedness" means Indebtedness of the Borrower incurred
---------------------------
under or pursuant to the 1997 Indenture.
"Applicable Eurodollar Rate Margin" means, for each Eurodollar Rate Portion of
---------------------------------
Loans outstanding prior to the Termination Date,
(i) 1.00%, if Borrower has at least two of the following long-
term senior debt ratings: (A) bal or less as determined by Moody's
Investors Service ("Moody's"), (B) BB+ or less as determined by Standard
and Poor's Corporation ("S&P"), and (C) BB+ or less as determined by Duff &
Phelps Inc. ("Duff");
(ii) 0.625%, if Borrower has at least two of the following long-
term senior debt ratings: (A) Baa3 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) 0.50%, if the Borrower has at least two of the following
long-term senior debt ratings: (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;
(iv) 0.425%, if the Borrower has at least two of the following
long-term senior debt ratings: (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; or
(v) 0.35%, if the Borrower has at least two of the following
long-term senior debt ratings: (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.
"Applicable Facility Fee Rate" means, for each calendar quarter,
----------------------------
(i) 0.375% per annum, if Borrower has at least two of the
following long-term senior debt ratings: (A) bal or less as determined by
Moody's, (B) BB+ or less as determined by S&P, and (C) BB+ or less as determined
by Duff;
(ii) 0.25% per annum, if Borrower has at least two of the
following long-term senior debt ratings: (A) Baa3 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;
2
<PAGE>
(iii) 0.25% per annum, if the Borrower has at least two of the
following long-term senior debt ratings: (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;
(iv) 0.20% per annum, if the Borrower has at least two of the
following long-term senior debt ratings: (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; or
(v) 0.15% per annum, if the Borrower has at least two of the
following long-term senior debt ratings: (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 Facility Fee Rate
shall be the percentage amount applicable to the highest ratings requirement
clause met by the Borrower. 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 Facility Fee
Rate shall be 0.375%. Each change in the Applicable Facility Fee Rate based on a
change in such long-term senior debt rating shall be effective for the calendar
quarter commencing on or after the date that the Borrower provides written
notice to the Agent of such rating change.
"Commitment" means, when used with reference to any Bank at the time any
----------
determination thereof is to be made, the amount set forth opposite the name of
such Bank on the signature pages of the Restated Amendment, (and on the
signature pages of any future amendment to the Credit Agreement adding a
financial institution as a signatory to the Credit Agreement (an "Additional
Bank"), to the extent of the amount set forth opposite the name of the
Additional Bank on the signature pages of such future amendment, accepted by an
Additional Bank as its obligation to make Loans up to such amount on the terms
and conditions set forth in this Agreement; provided that the amount of the
obligation of the Additional Bank shall not exceed the difference between
$100,000,000 and the total of the Commitments set forth opposite the names of
the Banks on the signature pages to the Restated Amendment, as from time to time
reduced pursuant to Section 4.1, or, where the context so requires, the
-----------
obligation of each such Bank to make Loans up to such amount on the terms and
conditions set forth in this Agreement.
"First Amendment" means that certain Amendment Number One to Credit Agreement,
---------------
dated as of April 28, 1994, among the Borrower, the Banks, and the Agent.
"Healthcare Property" means a property operating as a nursing home, an acute
-------------------
care hospital, a rehabilitation hospital, an assisted living facility, an adult
congregate living facility, a personal care facility, a medical office building,
or any combination of the foregoing; provided that any of the foregoing may
--------
also include independent living units as a part of any such property.
"Majority Banks" means at any time at least two (2) of the Banks holding at
--------------
least an aggregate 67% of the then aggregate unpaid principal amount of the
Loans, or, if no such principal amount is then outstanding, at least two (2) of
the Banks having at least 67% of the aggregate Commitments.
"Net Real Estate Property Assets" means the Borrower's gross investment in
-------------------------------
real estate properties (excluding mortgage loan receivables) less the
----
accumulated depreciation on such gross investment.
"Restated Amendment" means that certain Amendment Number Seven and Restatement
------------------
of Amendments One Through Six to Credit Agreement, dated as of April 6, 1998,
among the Borrower, the Banks, and the Agent.
"Termination Date" means, unless extended pursuant to Section 4.1(b), March
---------------- --------------
31, 2001.
ARTICLE 2
3
<PAGE>
AMENDMENT OF CERTAIN PROVISIONS
-------------------------------
OF THE CREDIT AGREEMENT
-----------------------
2.1 Amendment of Section 2.2(a) of the Credit Agreement. Section 2.2(a)
---------------------------------------------------
of the Credit Agreement is amended by deleting clause (C) therefrom in its
entirety and substituting therefor the following clause:
(C) the aggregate amount of the Borrowing, which (1) in the case of the
Base Rate Portions thereof shall be in the amount of $500,000 or a greater
amount which is an integral multiple of $100,000, and (2) in the case of the
Eurodollar Rate Portions thereof shall be in the amount of $2,000,000 or a
greater amount which is an integral multiple of $100,000;
2.2 Amendment of Section 3.3 of the Credit Agreement. Section 3.3 of the
------------------------------------------------
Credit Agreement is amended by deleting subsection (a) therefrom in its entirety
and substituting therefor the following subsection:
(a) Facility Fee. The Borrower agrees to pay to the Agent for the
------------
account of each Bank a facility fee on such Bank's Commitment as in effect from
time to time from the date that each Bank executes this Agreement (as set forth
below such Bank's name on the signature pages hereof) until the Termination Date
at the Applicable Facility Fee Rate, payable quarterly in arrears on the last
Business Day of March, June, September and December in each year, commencing on
the first such date after the date of this Agreement, and on the earlier of the
date such Bank's Commitment is terminated hereunder or the Termination Date.
2.3 Amendment of Section 3.5(a) of the Credit Agreement. Section 3.5(a)
---------------------------------------------------
of the Credit Agreement is amended by deleting clause (C) therefrom in its
entirety and substituting therefor the following clause:
(C) the aggregate amount of the Loans that are the subject of such
continuation or conversion, which in the case of a conversion into or
continuation of Eurodollar Rate Portions shall be in the amount of
$2,000,000 or a greater amount which is an integral multiple of $100,000;
and
2.4 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
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
-------
4
<PAGE>
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. In the event that such an assignment is effected on
a date other than the last day of an Interest Period for any Eurodollar
Rate Portion then outstanding, the Borrower shall compensate the Rejecting
Bank for all losses, costs and expenses sustained by such Bank as a result
thereof, in accordance with the provisions of Section 5.2.
-----------
2.5 Amendment of Section 4.3 of the Credit Agreement. Section 4.3 of the
------------------------------------------------
Credit Agreement is amended by deleting subsection (a) therefrom in its entirety
and substituting therefor the following subsection:
(a) Optional Prepayments. The Borrower may, upon at least one Business
--------------------
Day's written notice to the Agent for Base Rate Portions and three
Eurodollar Business Day's written notice to the Agent for Eurodollar Rate
Portions, prepay the outstanding amount of the Loans in whole or ratably in
part, without premium or penalty, subject to a Bank's right to make a
request for compensation as provided in Section 5.2. Partial prepayments of
Base Rate Portions shall be in an aggregate principal amount of at least
$500,000 or a greater amount which is an integral multiple of $100,000, and
partial prepayments of Eurodollar Rate Portions in each case shall be in an
aggregate principal amount of at least $2,000,000 or a greater amount which
is an integral multiple of $100,000.
2.6 Amendment of Section 4.3(b) of the Credit Agreement. Section 4.3(b)
---------------------------------------------------
of the Credit Agreement is amended by deleting clause (i) therefrom in its
entirety and substituting therefor the following clause:
(i) If the Borrower shall create or incur Indenture Indebtedness, 1996
Indenture Indebtedness or 1997 Indenture Indebtedness or, with the prior
written consent of the Majority Banks, shall create, incur or assume
Indebtedness pursuant to Sections 9.4(a)(v) or 9.4(a)(vii), the Borrower
---------------------------------
shall pay to the Agent as a prepayment in whole or ratably in part of the
outstanding amount of the Loans, an amount equal to the Net Cash Proceeds
received by the Borrower from such Indebtedness as created, incurred or
assumed (to the extent of the amount of the Loans then outstanding).
2.7 Amendment of Section 8.1 of the Credit Agreement. Section 8.1 of the
------------------------------------------------
Credit Agreement is amended by inserting the following new subsection (u)
immediately following subsection (t) thereof:
(u) Compliance with Securities Laws. Each of the Borrower and
-------------------------------
its Subsidiaries is in compliance in all material respects with all
applicable federal and state securities laws, rules, regulations and orders
of any Governmental Authority with respect to the 1997 Indenture and the
Indebtedness issued and to be issued pursuant to the 1997 Indenture.
2.8 Amendment of Section 9.1(b) of the Credit Agreement. Section 9.1(b)
---------------------------------------------------
of the Credit Agreement is amended by (a) deleting clause (xi) therefrom in its
entirety and substituting therefor the following clause (xi), (b) renumbering
clause (xii) thereof to be clause (xiv) and (c) by inserting the following new
clauses (xii) and (xiii) immediately following new clause (xi):
(xi) as soon as reasonably practical and, in any event, not
less than two days prior to the consummation thereof, written notice of (A)
the proposed incurrence or issuance of Indenture Indebtedness, 1996
Indenture Indebtedness or 1997 Indenture Indebtedness or (B) any proposed
supplement or amendment to the Indenture, the 1996 Indenture or the 1997
Indenture;
(xii) within five Business Days after any long-term senior debt
rating change by Moody's, S&P or Duff with respect to the Borrower, written
notice setting forth such rating change;
(xiii) promptly after consummation of any purchase of a
Healthcare Property for a purchase price (including the estimated costs of
any renovations committed at the time of purchase)
5
<PAGE>
greater than or equal to $15,000,000, a description of such transaction, in
reasonable detail, together with copies of all materials presented to the
Borrower's Board of Directors in connection with the approval of such
transaction; and
2.9 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 1.3 to 1.0; and
(b) Minimum Consolidated Tangible Net Worth. The Borrower will
---------------------------------------
maintain Consolidated Tangible Net Worth of not less than $500,000,000.
2.10 Amendment of Section 9.3 of the Credit Agreement. Section 9.3 of the
------------------------------------------------
Credit Agreement is amended by deleting subsection (j) therefor 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 a 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.
2.11 Further Amendment of Section 9.3 of the Credit Agreement. Section 9.3
--------------------------------------------------------
of the Credit Agreement is hereby amended to add the following as a new
subsection (l) thereunder:
(l) Year 2000 Complaint. Borrower shall perform such acts as may be
-------------------
reasonably necessary to reasonably ensure that Borrower and any business in
which Borrower owns a substantial interest become Year 2000 Compliant
within a reasonable time. Such acts shall include, without limitation,
Borrower's performance of a reasonable review and assessment of its
material systems. With respect to Borrower's customers, suppliers and
vendors that are material to Borrower's business, Borrower shall make a
reasonable effort to (i) assess the risks posed to Borrower's business by
the failure of any such entity that is material to Borrower's business to
become Year 2000 Compliant within a reasonable time, (ii) make reasonable
inquiries or other reasonable assessment of such entities as to whether
they will become Year 2000 Compliant within a reasonable time, and (iii)
develop a reasonable plan for dealing with such entities which do not
become Year 2000 Compliant within a reasonable time. As used in this
paragraph, "Year 2000 Compliant" shall mean, in regard to any entity, that
all software, hardware, firmware, equipment, goods or systems material to
the business operations or financial condition of such entity will properly
perform date sensitive functions before, during, and after the year 2000.
Borrower shall, within 30 days of written request by Agent, provide to
Agent a written report summarizing in reasonable detail Borrower's actions
to comply with this covenant and the results of such actions; provided,
--------
however, that Borrower shall not be obligated to respond to more than one
-------
such request per six month period.
2.12 Amendment of Section 9.4(a) of the Credit Agreement. Section 9.4(a)
---------------------------------------------------
of the Credit Agreement is amended by deleting clause (ix) thereof in its
entirety and substituting therefor the following clause (ix):
(ix) Indebtedness in connection with the acquisition of any Healthcare
Property permitted pursuant to Section 9.4(f)(iii) which is secured by a
Lien permitted pursuant to Section 9.4(b)(iii) upon such Healthcare
Property, whether or not the Borrower has assumed or become liable for
payment of such Indebtedness; and
2.13 Further Amendment of Section 9.4(a) of the Credit Agreement. Section
-----------------------------------------------------------
9.4(a) of the Credit Agreement is amended by deleting the "." at the end of
clause (x) thereof and inserting in place thereof ";" and by inserting
immediately thereafter the following new clauses (xi) and (xii);
(xi) 1996 Indenture Indebtedness; provided, however, that: (a) the
-------- -------
maximum aggregate principal amount of 1996 Indenture Indebtedness at any
time outstanding shall not exceed $200,000,000; (b)
6
<PAGE>
without the prior written consent of the Majority Banks, no regularly
scheduled principal payment on any 1996 Indenture Indebtedness shall be
required prior to the fifth (5th) anniversary of the issuance of the
debenture, note or other evidence of indebtedness evidencing such 1996
Indenture Indebtedness (without regard to the effect of the acceleration
provisions set forth in Section 502 of the 1996 Indenture); (c) all 1996
Indenture Indebtedness shall be unsecured; (d) in connection with the
incurrence or issuance of any 1996 Indenture Indebtedness, no covenant
(financial or otherwise) shall be imposed upon, or agreed to by, the
Borrower that is more restrictive (in the judgment of the Majority Banks)
than the covenants set forth in this Agreement; and (e) prior to the
effectiveness thereof, the Majority Banks shall have approved, in their
sole discretion, each supplement or amendment to the 1996 Indenture; and
(xii) 1997 Indenture Indebtedness; provided, however, that:
-------- -------
(a) the maximum aggregate principal amount of 1997 Indenture Indebtedness
at any time outstanding shall not exceed $300,000,000; (b) without the
prior written consent of the Majority Banks, no regularly scheduled
principal payment on any 1997 Indenture Indebtedness shall be required
prior to the fifth (5th) anniversary of the issuance of the debenture, note
or other evidence of indebtedness evidencing such 1997 Indenture
Indebtedness (without regard to the effect of the acceleration provisions
set forth in Section 502 of the 1997 Indenture); (c) all 1997 Indenture
Indebtedness shall be unsecured; (d) in connection with the incurrence or
issuance of any 1997 Indenture Indebtedness, no covenant (financial or
otherwise) shall be imposed upon, or agreed to by, the Borrower that is
more restrictive (in the judgment of the Majority Banks) than the covenants
set forth in this Agreement; and (e) prior to the effectiveness thereof,
the Majority Banks shall have approved, in their sole discretion, each
supplement or amendment to the 1997 Indenture.
2.14 Amendment of Section 9.4(b) of the Credit Agreement. Section 9.4(b)
---------------------------------------------------
of the Credit Agreement is amended by deleting the "and" at the end of clause
(i) thereof, and the "." at the end of clause (ii) thereof and inserting in
place thereof "; and" and by inserting thereafter the following new clause
(iii):
(iii) Liens securing Indebtedness that is incurred pursuant to
Section 9.4(a)(ix) hereof in an aggregate principal amount outstanding
----------
not to exceed a principal amount equal to seven and one-half percent (7.5%)
of Consolidated Total Assets at any time of determination.
2.15 Amendment of Section 9.4(f) of the Credit Agreement. Section 9.4(f)
---------------------------------------------------
of the Credit Agreement is amended by deleting clauses (iii) and (v) therefrom
in their entireties and substituting therefor the following clauses:
(iii) additional purchases of Healthcare Properties of other
Persons and any renovation of the subject Healthcare Properties committed
at the time of purchase, the consideration (whether in cash or in kind) for
which together with the estimated costs of any such committed renovation or
expansion (exclusive of expenditures permitted under subsection (g)) does
not exceed (A) $30,000,000 individually and (B) $275,000,000 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
(including new construction and renovations); provided that the aggregate
--------
amount thereof, as of the end of any fiscal quarter of the Borrower, shall
not exceed seven and one-half percent (7.5%) of Consolidated Total Assets.
2.16 Amendment of Section 9.4(g) of the Credit Agreement. Section 9.4 of
---------------------------------------------------
the Credit Agreement is amended by deleting subsection (g) therefrom in its
entirety and substituting therefor the following subsection:
(g) Capital Expenditures. Without the prior written consent of the
--------------------
Majority Banks, the Borrower will not, and will not permit any of its
Subsidiaries to, make any expenditures (exclusive of
7
<PAGE>
investments permitted under clauses (iii) and (v) of subsection (f)) for
fixed or capital assets, including obligations under Capital Leases, in an
aggregate amount in excess of $5,000,000 in any fiscal year.
2.17 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 first sentence of this subparagraph 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 Amendment Fee. The Borrower agrees to pay to the Agent for the account
-------------
of each Bank an amendment fee in an amount equal to one-tenth of one percent
(0.10%) of such Bank's Commitment as set forth on the signature pages hereto.
3.2 Loan Documents. This Amendment shall be one of the Loan Documents.
--------------
3.3 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 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.
3.4 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.
3.5 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.
3.6 Governing Law. This Amendment shall be governed by, and construed and
-------------
enforced in accordance with, the laws of the State of California.
8
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and
delivered as of the date first above written.
Commitment: WELLS FARGO BANK, NATIONAL ASSOCIATION, in its
- ---------- individual capacity and as Agent
$42,000,000 By
------------------------------------------
Title: Vice President
$19,000,000 SANWA BANK CALIFORNIA
By
------------------------------------------
Title:
-------------------------------------
$15,000,000 THE BANK OF NEW YORK
By
------------------------------------------
Title
--------------------------------------
NATIONWIDE HEALTH PROPERTIES, INC.
By
------------------------------------------
Title
--------------------------------------
<PAGE>
EXHIBIT 10.2
ASSUMPTION AGREEMENT
--------------------
THIS ASSUMPTION AGREEMENT (this "Agreement") is dated as of May 28, 1998
among NATIONSBANK, N.A. ("NB"), WELLS FARGO BANK, NATIONAL ASSOCIATION, ("WFB"),
THE BANK OF NEW YORK ("BNY") and SANWA BANK CALIFORNIA ("SBC", and together with
WFB and BNY, each a "Continuing Bank," and collectively, the "Continuing
Banks"), WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent for the Banks under
the Credit Agreement, as hereinafter defined (in such capacity, the "Agent"),
and NATIONWIDE HEALTH PROPERTIES, INC. ("Borrower").
WHEREAS, pursuant to that certain Withdrawal Agreement dated as of April 6,
1998, among BHF-Bank Aktiengesellschaft ("BHF"), Sumitomo Bank, Limited
("Sumitomo" and together with BHF, each a "Withdrawing Bank" and collectively,
the "Withdrawing Banks"), the Continuing Banks, Borrower and Agent (the
"Withdrawal Agreement"), the Withdrawing Banks withdrew from the credit facility
established by that certain Credit Agreement dated as of May 20, 1993 (as
amended, supplemented or restated from time to time, the "Credit Agreement")
among the Banks, Borrower, and Agent. Capitalized terms used but not defined in
this Agreement shall have the meanings as set forth in the Withdrawal Agreement
or in the Credit Agreement (in the event of a conflict between the Credit
Agreement and the Withdrawal Agreement, the Withdrawal Agreement shall control).
The Credit Agreement and all other agreements, documents and instruments
referred therein or delivered pursuant thereto are collectively called "Credit
Documents".
WHEREAS, after giving effect to the Withdrawal Agreement, the Total
Commitment under the Credit Agreement remained at $100,000,000; the amount of
the Total Commitment funded by the Continuing Banks was $76,000,000; and the
Unfunded Commitments Amount was the balance of the Total Commitment of
$24,000,000.
WHEREAS, NB desires to become a party to the Credit Agreement and to assume a
$24,000,000 portion of the Total Commitment, being the entire Unfunded
Commitment Amount.
WHEREAS, the Borrower, the Agent and the Continuing Banks desire to permit
the assumption by NB of a $24,000,000 Commitment under the Credit Agreement
pursuant to the terms and conditions hereof.
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto agree as follows:
1. Assignment.
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Effective on the Assignment Effective Date (as defined in Section 3 below),
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NB hereby assumes, without recourse, and without representation or warranty
(except as expressly provided in Section 6 below), the Assigned Share (as
---------
defined below), including without limitation those relating to the Commitment
and the Loans. The Assigned Share of all such rights, title, interest and
obligations is referred to collectively herein as the "Assigned Rights and
Obligations".
The "Assigned Share" means (a) a $24,000,000 portion of the aggregate Total
Commitment of $100,000,000 on the Assignment Effective Date under the Credit
Agreement, and (b) the aggregate amount of all Loans advanced by the Continuing
Banks and outstanding under the Credit Agreement on the Assignment Effective
Date to equalize on a pro rata basis the Loans among NB and the Continuing Banks
--------
(24.000000% being the Assigned Share of $24,000,000 divided by the total of the
funded Commitment of the Continuing Banks of $76,000,000 plus the Assigned Share
----
of $24,000,000). The percentage of the aggregate Total Commitment represented
by the Assigned Shares shall equal the quotient of the above portion divided by
the aggregate Total Commitment on the Assignment Effective Date, expressed as a
percentage rounded to eight decimal places.
<PAGE>
2. Assumption.
----------
Effective on the Assignment Effective Date, NB hereby accepts the foregoing
assignment of, and hereby assumes, the Assigned Rights and Obligations.
3. Effectiveness.
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This Agreement shall become effective on the funding date of May 29, 1998
(the "Assignment Effective Date").
4. Payments on Assignment Effective Date.
-------------------------------------
In consideration of the assignment effected hereby to and the assumption by
NB of the Assigned Rights and Obligations, on the Assignment Effective Date: (a)
NB shall pay to the Agent for payment to each Continuing Bank the principal
amount of all Loans made by each Continuing Bank pursuant to the Credit
Agreement that are attributable to the Assigned Share and outstanding on the
Assignment Effective Date in the amounts set forth in column (7) below, and (b)
Agent shall pay to NB a commitment fee of $24,000.
<TABLE>
<CAPTION>
Loans Advanced Loans Advanced Request by NB
% of Prior to after giving to Continuing
Total % of Funded Effectiveness of Effect to this Bank
Bank Commitment Commitment Commitment this Agreement Agreement (5)-(6)=(7)
(1) (2) (3) (4) (5) (6) (7)
- ------------ ------------ --------- ----------- ---------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
WFB $ 42,000,000 42.0% 42.000000% $ 9,505,263.18 $ 7,224,000.00 $2,281,263.17
BNY $ 15,000,000 15.0% 15.000000% $ 3,394,736.82 $ 2,580,000.00 $ 814,736.83
SBC $ 19,000,000 19.0% 19.000000% $ 4,300,000.00 $ 3,268,000.00 $1,032,000.00
NB $ 24,000,000 24.0% 24.000000% -0- $ 4,128,000.00 $4,128,000.00
------------ ----- --------- -------------- -------------- -------------
$100,000,000 100.0% 100% $17,200,000.00 $17,200,000.00 $8,256,000.00
</TABLE>
5. Allocation and Payment of Interest and Fees.
-------------------------------------------
Agent shall pay to NB all interest, commitment fees and other amounts not
constituting principal that are paid by or on behalf of Borrower pursuant to the
Credit Documents and are attributable to the Assigned Rights and Obligations
("Borrower Amounts"), that accrue on and after the Assignment Effective Date.
If any Continuing Bank receives or collects any such Borrower Amounts, such
Continuing Bank shall promptly pay them to NB.
6. Representations and Warranties.
------------------------------
(a) NB, each Continuing Bank, Agent and Borrower represents and warrants to
the other as follows:
<PAGE>
(i) It has full power and authority, and has taken all action
necessary, to execute and deliver this Agreement and to fulfill its
obligations under, and to consummate the transactions contemplated by,
this Agreement;
(ii) The making and performance of this Agreement and all documents
required to be executed and delivered by it hereunder do not and will
not violate any law or regulation applicable to it;
(iii) This Agreement has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation enforceable in
accordance with its terms; and
(iv) All approvals, authorizations or other actions by, or filings
with, any governmental authority necessary for the validity or
enforceability of its obligations under this Agreement have been made
or obtained.
(v) Agent agrees to forward to NB within 30 day of the Assignment
Effective Date a full set of the closing binders of the Credit
Documents and all amendments thereto.
(b) NB represents and warrants to Agent and the Continuing Banks as follows:
(i) NB has made and shall continue to make its own independent
investigation of the financial condition, affairs and creditworthiness
of Borrower and any other person or entity obligated under the Credit
Documents (collectively, "Credit Parties"), and the value of any
collateral now or hereafter securing any of the obligations,
indebtedness, liabilities or understandings under the Credit Documents
("Collateral"), in connection with its assumption of the Assigned
Rights and Obligations; and
(ii) NB has received a copy of the Credit Documents and such other
documents, financial statements and information as it has deemed
appropriate to make its own credit analysis and decision to enter into
this Agreement.
7. No Assignor Responsibility.
--------------------------
The Agent and the Continuing Banks make no representation or warranty and
assume no responsibility to NB for:
(a) the execution, effectiveness, genuineness, validity, enforceability,
collectability or sufficiency of the Credit Documents or for any
representations, warranties, recitals or statements made in the Credit Documents
or in any financial or other written or oral statement, instrument, report,
certificate or any other document made or furnished or made available to NB by
or on behalf of any Credit Party in connection with the Credit Documents and the
transactions contemplated thereby;
(b) the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Credit Documents or
as to the existence or possible existence of any default or event of default
under the Credit Documents; or
(c) the accuracy or completeness of any information provided to NB, whether
by a Continuing Bank or Agent, or by or on behalf of the Borrower.
Neither Agent not any Continuing Bank shall have any initial or continuing
duty or responsibility to make any investigation of the financial condition,
affairs or creditworthiness of the Borrower, or the value of any Collateral, in
connection with the assignment of the Assigned Rights and Obligations or to
provide NB with any credit or other information with respect thereto, whether
coming into its possession before the date hereof or at any time or times
thereafter except to the extent required under the Credit Documents.
<PAGE>
8. NB Bound By Credit Agreement.
----------------------------
Effective on the Assignment Effective Date, NB: (a) shall be deemed to be a
party to the Credit Agreement, (b) agrees to be bound by the Credit Agreement as
it would have been if it had been an original Bank party thereto, and (c) agrees
to perform in accordance with their terms all of the obligations which are
required under the Credit Documents to be performed by it as a Bank. NB
appoints and authorizes Agent to take such actions as agent on its behalf and to
exercise such powers under the Credit Documents as are delegated to Agent by the
terms thereof, together with such powers as are reasonably incidental thereto.
9. New Note.
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On or promptly after the Assignment Effective Date, Borrower, Agent and NB
shall make appropriate arrangements so that a new Note executed by Borrower,
dated the Assignment Effective Date and in the amount of the Commitment of NB,
after giving effect to this Agreement, is issued to NB.
10. General.
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(a) This Agreement constitutes the entire understanding of the parties with
respect to the subject matter hereof and supersedes all prior and current
understandings and agreements, whether written or oral (other than with respect
to any fees payable as provided in Section 4 hereof).
---------
(b) No term or provision of this Agreement may be amended, waived or
terminated orally, but only by an instrument signed by the parties hereto.
(c) This Agreement may be executed in one or more counterparts. Each set of
executed counterparts shall be an original. Executed counterparts may be
delivered by facsimile transmission.
(d) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. NB may not assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of the Agent except as provided in the Credit Documents.
(e) All payments to the Continuing Banks, Agent or NB hereunder shall, unless
otherwise specified by the party entitled thereto, be made in Dollars, in
immediately available funds, and to the address or account specified on the
signature pages of this Agreement. The address of NB for notice purposes under
the Credit Agreement shall be as specified on the signature pages of this
Agreement.
(f) If any provision of this Agreement is held invalid, illegal or
unenforceable, the remaining provisions hereof will not be affected or impaired
in any way.
(g) Each party shall bear its own expenses in connection with the preparation
and execution of this Agreement.
(h) This Agreement shall be governed by and construed in accordance with the
laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
<PAGE>
NB: NATIONSBANK, N.A.
By:
------------------------------------------
Printed Name: Forrest Scott Singhoff
Title: Senior Vice President
NB's Notice Instructions:
-------------------------
Mr. Scott Singhoff
700 Louisiana Street
Houston, Texas 77002
Telephone: (713) 247-6961
Facsimile: (713) 247-6719
Mr. Matthew Mentz
101 North Tryon Street
Charlotte, North Carolina 28255
Telephone: (704) 388-6505
Facsimile: (704) 386-8694
NB's Payment Instructions:
--------------------------
NationsBank, N.A.
Charlotte
ABA No.053-000-196
Account No 136621-22506
Attention: Corporate Credit Services
Reference: Nationwide Health Properties
Telephone: ( )_____________________________
Facsimile: ( )_____________________________
ACKNOWLEDGED AND AGREED:
- ------------------------
<PAGE>
BORROWER: NATIONWIDE HEALTH PROPERTIES, INC.
By:
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Printed Name:
--------------------------------
Title:
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AGENT: WELLS FARGO BANK, N.A.
By:
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Printed Name: Richard LaPoint
Title: Vice President
REMAINING BANKS:
----------------
WELLS FARGO BANK, NATIONAL ASSOCIATION
By:
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Printed Name: Richard LaPoint
Title: Vice President
THE BANK OF NEW YORK
By:
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Printed Name:
--------------------------------
Title:
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SANWA BANK CALIFORNIA
By:
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Printed Name:
--------------------------------
Title:
---------------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 13,914
<SECURITIES> 0
<RECEIVABLES> 4,782
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 32,906
<PP&E> 1,096,261
<DEPRECIATION> 118,587
<TOTAL-ASSETS> 1,207,052
<CURRENT-LIABILITIES> 35,993
<BONDS> 586,809
0
100,000
<COMMON> 4,464
<OTHER-SE> 479,786
<TOTAL-LIABILITY-AND-EQUITY> 1,207,052
<SALES> 0
<TOTAL-REVENUES> 67,649
<CGS> 0
<TOTAL-COSTS> 15,098
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,836
<INCOME-PRETAX> 35,715
<INCOME-TAX> 0
<INCOME-CONTINUING> 35,715
<DISCONTINUED> 0
<EXTRAORDINARY> 2,321
<CHANGES> 0
<NET-INCOME> 38,036
<EPS-PRIMARY> .78
<EPS-DILUTED> .78
</TABLE>
