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FILED PURSUANT TO RULE 424(B)(3)
REGISTRATION NO. 333-70707
Prospectus Supplement to Prospectus dated February 16, 1999.
$500,000,000
[LOGO OF NATIONWIDE HEALTH PROPERTIES, INC.]
Medium-Term Notes, Series D
Due 9 Months or More from Date of Issue
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TERMS OF SALE
The following terms may apply to the notes which Nationwide Health
Properties, Inc. may sell at one or more times. The final terms for each note
will be included in a pricing supplement. Nationwide Health Properties, Inc.
will receive between $496,250,000 and $499,375,000 of the proceeds from the
sale of the notes, after paying the agents commissions of between $625,000 and
$3,750,000.
. Mature 9 months to 30 years or more
. Fixed or floating interest rate or indexed notes or zero-coupon or other
original issue discount notes. The floating interest rate may be based on:
. CD rate
. Commercial paper rate
. Federal Funds effective rate
. LIBOR
. Prime rate
. Treasury rate
. Any other rate specified by us in the pricing supplement
. Any combination of rates specified in a pricing supplement
. Certificated or book-entry form
. Subject to redemption and repurchase at option of Nationwide Health
Properties, Inc. or the holder
. Not convertible, amortized or subject to a sinking fund
. Interest paid on fixed rate notes semi-annually
. Interest paid on floating rate notes monthly, quarterly, semi-annually or
annually
. Minimum denominations of $1,000 increased in multiples of $1,000
. May be foreign currency or composite currency denominated
. Same day settlement and payment. Immediately available funds
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Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
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Nationwide Health Properties, Inc. may sell the notes directly or through one
or more agents or dealers, including the agents listed below. The agents are
not required to sell any specific number or amount of the notes. The agents
will use their reasonable efforts to sell the notes offered.
Goldman, Sachs & Co. Merrill Lynch & Co.
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Prospectus Supplement dated February 18, 1999.
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THE COMPANY
Nationwide Health Properties, Inc., a Maryland corporation organized in
October 1985 (the "Company"), is a real estate investment trust ("REIT") which
invests primarily in health care related facilities and provides financing to
health care providers. As of September 30, 1998, the Company had investments in
337 facilities located in 33 states. The facilities include 198 skilled nursing
facilities, 104 assisted living facilities, 14 continuing care retirement
communities, 16 residential care facilities for the elderly, two rehabilitation
hospitals and three medical clinics. The facilities are operated by 60
different operators, including the following publicly traded companies:
Alternative Living Services, Inc., American Retirement Corporation, ARV
Assisted Living, Inc., Assisted Living Concepts, Inc., Beverly Enterprises,
Inc., Extendicare Health Services, 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., Sun Healthcare Group, Inc. and UNISON HealthCare Corporation. 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 nine months ended September 30, 1998.
As of September 30, 1998, the Company had direct ownership of 154 skilled
nursing facilities, 96 assisted living facilities, nine continuing care
retirement communities, 16 residential care facilities for the elderly, two
rehabilitation hospitals and three medical clinics. All of the Company's owned
facilities are leased under "net" leases, which are accounted for as operating
leases.
The leases have initial terms ranging from 9 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. Most leases contain provisions such that 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 176
facilities are backed by irrevocable letters of credit or security deposits
which cover one 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 September 30, 1998, the Company held 34 mortgage loans secured by 44
skilled nursing care facilities, eight assisted living facilities and five
continuing care retirement communities. As of September 30, 1998, the mortgage
loans had a net book value of approximately $208,094,000 with individual
outstanding balances ranging from approximately $571,000 to $21,500,000 and
maturities ranging from 1999 to 2031.
The Company anticipates providing lease or mortgage financing for health
care facilities to qualified operators and acquiring additional health care
related facilities, including skilled nursing facilities, assisted living
facilities, acute care hospitals and medical office buildings. 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 that it has operated in such a manner as to qualify for
taxation as a REIT under Sections 856 through 860 of the Internal Revenue Code
of 1986, as amended, commencing with its taxable year ending December 31, 1985,
and the Company intends to continue to operate in such a manner. If the Company
qualifies for taxation as a REIT, it will generally not be subject to federal
corporate income taxes on its net income that is currently distributed to
stockholders. This
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treatment substantially eliminates the "double taxation" (e.g., at the
corporate and stockholder levels) that generally results from investment in
stock of a corporation. Among the requirements for taxation as a REIT, the
Company is required to distribute substantially all of its taxable income
(determined without regard to capital gains) each year. Failure to do so may
cause the Company to fail to qualify for taxation as a REIT.
RECENT DEVELOPMENTS
Between September 30, 1998 and December 31, 1998, the Company acquired six
skilled nursing facilities, one assisted living facility and one residential
care facility for the elderly in six separate transactions for an aggregate
investment of approximately $25,137,000. Construction of one skilled nursing
facility, one assisted living facility and one continuing care retirement
community was also completed in which the Company's total investment was
approximately $19,969,000. Upon acquisition or completion of construction, as
applicable, the facilities were concurrently leased under terms generally
similar to the Company's existing leases. The acquisitions and construction
were funded by bank borrowings on the Company's revolving bank line of credit
and by cash on hand.
Between September 30, 1998 and December 31, 1998, one mortgage loan securing
two facilities which had a principal balance at September 30, 1998 of
approximately $2,154,000 was repaid.
On November 20, 1998, the Company issued $65,000,000 in aggregate principal
amount of medium-term notes. The notes bear fixed interest at a weighted
average interest rate of 7.71% and have a weighted average maturity of 22.0
years. The proceeds were used to repay borrowings on the Company's revolving
bank line of credit.
PRICING SUPPLEMENT
The pricing supplement for each offering of notes will contain the specific
information and terms for that offering. The pricing supplement may also add,
update or change information contained in this prospectus supplement. It is
important for you to consider the information contained in this prospectus
supplement, the prospectus, the incorporated documents and the pricing
supplement in making your investment decision.
USE OF PROCEEDS
The net proceeds from the sale of the notes will be used for general
corporate purposes, including the repayment of amounts outstanding under the
Company's revolving bank line of credit. As of December 31, 1998, the aggregate
amount of such indebtedness was approximately $42 million having interest rates
between 6.0625% and 7.75% and a maturity date of March 31, 2001. Amounts
outstanding under the bank line of credit were incurred for general corporate
purposes, including the acquisition of health care facilities and mortgage
loans secured by health care facilities.
RATIO OF EARNINGS TO FIXED CHARGES
The Ratio of Earnings to Fixed Charges for each of the periods indicated is
as follows:
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended December 31, September 30,
------------------------ -------------
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio............................... 7.63 5.52 4.44 3.64 3.03 3.22
</TABLE>
For current information on the Ratio of Earnings to Fixed Charges, please
see our most recent Form 10-K and 10-Q. See "Where You Can Find More
Information."
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DESCRIPTION OF THE NOTES
We will issue the notes under an indenture between us and the Trustee, Chase
Manhattan Bank and Trust Company, dated January 13, 1999. This prospectus
supplement briefly outlines some of the indenture provisions. If you would like
more information on these provisions, review the indenture and its supplements
that we filed with the SEC. See "Where You Can Find More Information" on how to
locate the indenture and the supplements.
The indenture does not limit the amount of debt securities that may be
issued. As of the date of this prospectus supplement, the Company has
authorized the issuance of up to $500,000,000 of notes as a separate series of
debt securities. Each series of debt securities may differ as to their terms.
For current information on the Company's outstanding debt see our most recent
Form 10-K and 10-Q. See "Where You Can Find More Information."
The notes are unsecured and will rank equally with all of the Company's
unsecured and unsubordinated indebtedness. The notes will be denominated in
U.S. dollars and the Company will pay principal and interest in U.S. dollars.
The notes will not be subject to any conversion, amortization or sinking fund.
It is anticipated that the notes will be "book-entry," represented by a
permanent global note registered in the name of The Depository Trust Company,
or its nominee. However, the Company reserves the right to issue notes in
certificate form registered in the names of the noteholders.
In the discussion that follows, whenever we talk about paying principal on
the notes, we mean at maturity, redemption or repurchase. In discussing the
time for notices and how the different interest rates are calculated, all times
are New York City time, unless otherwise noted.
As used herein, "Business Day" means, unless otherwise specified in the
applicable pricing supplement, any day other than a Saturday or Sunday or any
other day on which banks in The City of New York are generally authorized or
obligated by law or executive order to close and, with respect to notes as to
which LIBOR is an applicable Base Rate, is also a London Business Day. As used
herein, "London Business Day" means any day on which dealings in deposits in
U.S. dollars are transacted in the London interbank market.
The following terms may apply to each note as specified in the applicable
pricing supplement and the note.
Redemption
If provided in the applicable pricing supplement, the Company may redeem the
notes, in whole or in part, at the option of the Company, upon notice given not
less than 30 nor more than 60 days prior to the date of redemption unless a
shorter period is set forth in the pricing supplement. The pricing supplement
will set forth the terms of any redemption, including, but not limited to, the
dates on which redemption may be elected and the price (including premium, if
any) at which the notes may be redeemed.
Repayment
If provided in the applicable pricing supplement, the noteholder may have
the right to cause the Company to repay the notes prior to maturity on the
dates specified in the pricing supplement. Noteholders desiring to exercise
their repayment option must notify the paying agent at least 30 but not more
than 60 days prior to the optional repayment date. If no optional repayment
date is included in the pricing supplement, the notes will not be repayable at
the option of the noteholder prior to maturity.
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Interest
General
Unless otherwise specified in the applicable pricing supplement, each note
will bear interest from the date of issue at the rate per annum or, in the case
of a floating rate note, pursuant to the Base Rate or interest rate formula,
stated therein until the principal thereof is paid or made available for
payment. Unless otherwise specified in an applicable pricing supplement,
interest payments shall be the amount of interest accrued from and including
the next preceding Interest Payment Date in respect of which interest has been
paid (or from and including the date of issue if no interest has been paid with
respect to a note), to but excluding the Interest Payment Date or Maturity (an
"Interest Accrual Period"), as the case may be.
Interest will be payable in arrears on each date specified in the applicable
pricing supplement on which an installment of interest is due and payable
(each, an "Interest Payment Date") and at maturity. Interest will be payable to
the person in whose name a note is registered at the close of business on the
Regular Record Date next preceding each Interest Payment Date; provided,
however, that interest payable at maturity will be payable to the person to
whom principal shall be payable. Unless otherwise specified in an applicable
pricing supplement, if the original issue date of a note is between a Regular
Record Date and the related Interest Payment Date, the initial interest payment
will be made on the Interest Payment Date following the next succeeding Regular
Record Date to the registered holder on such next succeeding Regular Record
Date. Unless otherwise specified in the applicable pricing supplement, the
"Regular Record Date" will be the date 15 calendar days (whether or not a
Business Day) immediately preceding the related Interest Payment Date.
Interest rates offered on the notes may differ depending upon, among other
factors, the aggregate principal amount of notes purchased in any single
transaction. Notes with different variable terms other than interest rates may
also be offered concurrently to different investors. Interest rates or formulas
and other terms of notes are subject to change from time to time, but no such
change will affect any note previously issued or as to which an offer to
purchase has been accepted by us.
Fixed Rate Notes
Unless otherwise specified in the applicable pricing supplement, interest on
fixed rate notes will be payable semiannually on each April 1 and October 1 and
at maturity. If any Interest Payment Date or maturity of a fixed rate note
falls on a day that is not a Business Day, the related payment of principal,
premium, if any, and interest will be made on the next succeeding Business Day
as if it were made on the date such payment was due and no interest shall
accrue on the amount so payable for the period from and after such Interest
Payment Date or maturity, as the case may be. Unless otherwise specified in an
applicable pricing supplement, interest on each fixed rate note will be
calculated on the basis of a 360-day year of twelve 30-day months.
Floating Rate Notes
Unless otherwise specified in an applicable pricing supplement, floating
rate notes will be issued as described below. Interest on floating rate notes
will be determined by reference to a "Base Rate," which may be one or more of
(a) the Certificate of Deposit Rate; (b) the Commercial Paper Rate; (c) the
Federal Funds Rate; (d) LIBOR; (e) the Prime Rate; (f) the Treasury Rate; or
(g) such other Base Rate or interest rate formula as may be set forth in the
applicable pricing supplement. In addition, a floating rate note may bear
interest by reference to two or more Base Rates determined in the same manner
as the Base Rates are determined for the types of notes described above.
The applicable pricing supplement and the related note will specify the Base
Rate or Rates and the Spread and/or Spread Multiplier (each, as defined below),
if any, and the maximum or minimum
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interest rate limitation, if any, applicable to each floating rate note. In
addition, the pricing supplement and the applicable note will define or
particularize for each floating rate note the following terms (each, as
defined below), if applicable: Initial Interest Rate, Index Maturity, Interest
Payment Dates, Interest Reset Dates, Interest Reset Period, Regular Record
Dates and Calculation Agent (if other than Chase Manhattan Bank and Trust
Company).
The interest rate on each floating rate note will be calculated by
reference to the specified Base Rate or two or more specified Base Rates, in
either case plus or minus the Spread, if any, and/or multiplied by the Spread
Multiplier, if any. The "Spread" is the number of basis points to be added to
or subtracted from the related Base Rate or Rates applicable to the floating
rate note. The "Spread Multiplier" is the percentage of the related Base Rate
or Rates applicable to the floating rate note by which such Base Rate or Rates
will be multiplied to determine the applicable interest rate on the floating
rate note. The "Index Maturity" is the period to maturity of the instrument or
obligation with respect to which the related Base Rate or Rates is calculated.
The Spread, Spread Multiplier, Index Maturity and other variable terms of the
floating rate notes are subject to change by the Company from time to time,
but no such change will affect any floating rate note previously issued or as
to which an offer to purchase has been accepted by the Company.
Each applicable pricing supplement will specify whether the rate of
interest on each floating rate note will be reset daily, weekly, monthly,
quarterly, semiannually, annually or such other period (each, an "Interest
Reset Period"), and the dates on which such interest rate will be reset (each,
an "Interest Reset Date"). Unless otherwise specified in an applicable pricing
supplement, the Interest Reset Date will be, in the case of floating rate
notes which reset:
(a) daily, each Business Day;
(b) weekly, the Wednesday of each week (with the exception of weekly reset
Treasury Rate Notes which will reset the Tuesday of each week, except as
specified below);
(c) monthly, the third Wednesday of each month;
(d) quarterly, the third Wednesday of March, June, September and December
of each year;
(e) semiannually, the third Wednesday of each of the two months specified
in the applicable pricing supplement; and
(f) annually, the third Wednesday of the month specified in the applicable
pricing supplement.
If any Interest Reset Date for any floating rate note would otherwise be a
day that is not a Business Day, such Interest Reset Date will be postponed to
the next succeeding Business Day, except that in the case of a LIBOR note (or
a note for which the interest rate is determined with reference to LIBOR), if
such Business Day is in the next succeeding calendar month, such Interest
Reset Date shall be the immediately preceding Business Day.
The interest rate applicable to each Interest Accrual Period commencing on
the Interest Reset Date applicable to such Interest Accrual Period will be the
rate determined on the applicable "Interest Determination Date." Unless
otherwise specified in an applicable pricing supplement, the Interest
Determination Date with respect to the Certificate of Deposit Rate, Commercial
Paper Rate, Federal Funds Rate and the Prime Rate will be the second Business
Day preceding each Interest Reset Date for the related note; and the Interest
Determination Date with respect to LIBOR will be the second London Business
Day preceding each Interest Reset Date for the related note. With respect to
the Treasury Rate, unless otherwise specified in an applicable pricing
supplement, the Interest Determination Date will be the day of the week in
which the Interest Reset Date falls on which Treasury Bills (as defined below)
normally would be auctioned (Treasury Bills are normally sold at auction on
Monday of each week, unless that day is a legal holiday, in which case the
auction is
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normally held on the following Tuesday, except that such auction may be held on
the preceding Friday); provided, however, that if as a result of a legal
holiday an auction is held on the Friday of the week preceding the related
Interest Reset Date, the related Interest Determination Date shall be such
preceding Friday; and provided, further, that if an auction shall fall on any
Interest Reset Date, then the related Interest Reset Date shall instead be the
first Business Day following such auction. The Interest Determination Date
pertaining to a floating rate note, the interest rate of which is determined
with reference to two or more Base Rates, will be the latest Business Day which
is at least two Business Days prior to the Interest Reset Date for the note on
which each Base Rate is determinable. Each Base Rate shall be determined and
compared on such date, and the applicable interest rate shall take effect on
the related Interest Reset Date.
A floating rate note may also have either or both of the following: (a) a
maximum limit, or ceiling, on the rate of interest which may accrue during any
Interest Accrual Period, and (b) a minimum limit, or floor, on the rate of
interest which may accrue during any Interest Accrual Period. In addition to
any maximum interest rate that may be applicable to any floating rate note
pursuant to the above provisions, the interest rate on floating rate notes will
in no event be higher than the maximum rate permitted by New York law, as the
same may be modified by United States law of general application.
Except as provided below or in the applicable pricing supplement, interest
will be payable, in the case of floating rate notes which reset (a) daily,
weekly or monthly, on the third Wednesday of each month or on the third
Wednesday of March, June, September and December of each year, as specified in
the applicable pricing supplement; (b) quarterly, on the third Wednesday of
March, June, September and December of each year; (c) semiannually, on the
third Wednesday of each of the two months of each year specified in the
applicable pricing supplement; and (d) annually, on the third Wednesday of the
month specified in the applicable pricing supplement and, in each case, at
maturity.
If any Interest Payment Date (other than at maturity) with respect to a
floating rate note falls on a day that is not a Business Day, such Interest
Payment Date will be the following Business Day, except that, in the case of a
LIBOR note (or a note for which the interest rate is determined with reference
to LIBOR), if such Business Day is in the next succeeding calendar month, such
Interest Payment Date shall be the immediately preceding Business Day. If the
maturity of a floating rate note falls on a day that is not a Business Day, the
payment of principal, premium, if any, and interest will be made on the next
succeeding Business Day, and no interest on such payment shall accrue for the
period from and after such maturity.
The interest rate in effect with respect to a floating rate note on each day
that is not an Interest Reset Date will be the interest rate determined as of
the Interest Determination Date pertaining to the immediately preceding
Interest Reset Date and the interest rate in effect on any day that is an
Interest Reset Date will be the interest rate determined as of the Interest
Determination Date pertaining to such Interest Reset Date, subject in either
case to any maximum or minimum interest rate limitation referred to above;
provided, however, that the interest rate in effect with respect to a floating
rate note for the period from the date of issue to the first Interest Reset
Date will be the Initial Interest Rate specified in the applicable pricing
supplement and the related note.
With respect to each floating rate note, accrued interest is calculated by
multiplying its face amount by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for each
day from the date of issue, or from the last date to which interest has been
paid, to the date for which accrued interest is being calculated. Unless
otherwise specified in an applicable pricing supplement, the interest factor
for each such day is computed by dividing the interest rate applicable to such
day by 360, in the case of Certificate of Deposit Rate notes, Commercial Paper
Rate notes, Federal Funds Rate notes, LIBOR notes and Prime Rate notes, or by
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the actual number of days in the year in the case of Treasury Rate notes.
Unless otherwise specified in the applicable pricing supplement, the interest
factor for notes for which the interest rate is calculated with reference to
the lowest of two or more Base Rates will be calculated in each period in the
same manner as if only the lowest of the applicable Base Rates applied.
All percentages resulting from any calculation on floating rate notes will
be rounded to the nearest one hundred-thousandth of a percentage point with
five one-millionths of a percentage point rounded upwards (e.g., 9.876545% (or
.09876545) would be rounded to 9.87655% (or .0987655)), and all dollar amounts
used in or resulting from such calculation on floating rate notes will be
rounded to the nearest cent (with one-half cent being rounded upward).
Unless otherwise specified in the applicable pricing supplement, Chase
Manhattan Bank and Trust Company will be the "Calculation Agent." Upon the
request of the holder of any floating rate note, the Calculation Agent will
provide the interest rate then in effect and, if determined, the interest rate
that will become effective as a result of a determination made for the next
Interest Reset Date with respect to the floating rate note. Unless otherwise
specified in an applicable pricing supplement, the "Calculation Date," if
applicable, pertaining to any Interest Determination Date will be the earlier
of (i) the tenth calendar day after such Interest Determination Date or, if any
such day is not a Business Day, the next succeeding Business Day or (ii) the
Business Day preceding the applicable Interest Payment Date or the maturity, as
the case may be.
The interest rate in effect with respect to a floating rate note from the
date of issue to the first Interest Reset Date (the "Initial Interest Rate")
will be specified in the applicable pricing supplement. The interest rate for
each subsequent Interest Reset Date will be determined by the Calculation Agent
as follows:
Certificate of Deposit Rate. Certificate of Deposit Rate notes will bear
interest at the interest rates (calculated with reference to the Certificate of
Deposit Rate and the Spread and/or Spread Multiplier, if any) specified in such
Certificate of Deposit Rate notes and in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement,
"Certificate of Deposit Rate" means, with respect to any Interest Determination
Date relating to a Certificate of Deposit Rate note or any Interest
Determination Date for a floating rate note for which the interest rate is
determined with reference to the Certificate of Deposit Rate (a "Certificate of
Deposit Rate Interest Determination Date"), the rate on such date for
negotiable certificates of deposit having the Index Maturity specified in the
applicable pricing supplement as published by the Board of Governors of the
Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates" or any successor publication ("H.15(519)") under the heading "CDs
(Secondary Market)." In the event such rate is not so published by 3:00 P.M.,
New York City time, on the Calculation Date pertaining to such Certificate of
Deposit Rate Interest Determination Date, then the Certificate of Deposit Rate
will be the rate on such Certificate of Deposit Rate Interest Determination
Date for negotiable certificates of deposit of the Index Maturity specified in
the applicable pricing supplement as published in H.15 Daily Update (as defined
herein) or such other recognized electronic source used for the purposes of
displaying such rate under the heading "CDs (Secondary Market)." If such rate
is not published in H.15(519), H.15 Daily Update or another recognized
electronic source by 3:00 P.M., New York City time, on such Calculation Date,
then the Certificate of Deposit Rate on such Certificate of Deposit Rate
Interest Determination Date will be calculated by the Calculation Agent and
will be the arithmetic mean of the secondary market offered rates as of 10:00
A.M., New York City time, on such Certificate of Deposit Rate Interest
Determination Date, of three leading nonbank dealers in negotiable U.S. dollar
certificates of deposit in New York, New York (which may include one or both of
the agents or their affiliates) selected by the Calculation Agent for
negotiable certificates of deposit of major United States money center banks in
the market for negotiable certificates of deposit with a
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remaining maturity closest to the Index Maturity specified in the applicable
pricing supplement in an amount that is representative for a single transaction
in that market at that time; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the Certificate of Deposit Rate in effect for the applicable period
will be the Certificate of Deposit Rate in effect on such Certificate of
Deposit Rate Interest Determination Date.
"H.15 Daily Update" means the daily update of H.15(519), available through
the world-wide-web site of the Board of Governors of the Federal Reserve System
at http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
Commercial Paper Rate. Commercial Paper Rate notes will bear interest at the
interest rates (calculated with reference to the Commercial Paper Rate and the
Spread and/or Spread Multiplier, if any) specified in such Commercial Paper
Rate notes and in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, "Commercial
Paper Rate" means, with respect to any Interest Determination Date relating to
a Commercial Paper Rate note or any Interest Determination Date for a floating
rate note for which the interest rate is determined with reference to the
Commercial Paper Rate (a "Commercial Paper Rate Interest Determination Date"),
the Money Market Yield (as defined below) on such date of the rate for
commercial paper having the Index Maturity specified in the applicable pricing
supplement as published in H.15(519) under the heading "Commercial Paper-
Nonfinancial." In the event that such rate is not published by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such Commercial Paper
Rate Interest Determination Date, then the Commercial Paper Rate will be the
Money Market Yield on such Commercial Paper Rate Interest Determination Date of
the rate for commercial paper of the Index Maturity specified in the applicable
pricing supplement as published in H.15 Daily Update or such other recognized
electronic source used for the purpose of displaying such rate under the
heading "Commercial Paper-Nonfinancial" (with an Index Maturity of one month or
three months being deemed to be equivalent to an Index Maturity of 30 days or
90 days, respectively). If such rate is not published in H.15(519), H.15 Daily
Update or another recognized electronic source by 3:00 P.M., New York City
time, on such Calculation Date, then the Commercial Paper Rate will be
calculated by the Calculation Agent and will be the Money Market Yield of the
arithmetic mean of the offered rates, as of 11:00 A.M., New York City time, on
such Commercial Paper Rate Interest Determination Date, of three leading
dealers of commercial paper in New York, New York (which may include one or
both of the agents or their affiliates) selected by the Calculation Agent for
commercial paper of the specified Index Maturity placed for an industrial
issuer whose bond rating is "AA," or the equivalent, from a nationally
recognized statistical rating organization; provided, however, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Commercial Paper Rate in effect for the
applicable period will be the Commercial Paper Rate in effect on such
Commercial Paper Rate Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point)
calculated in accordance with the following formula:
Money Market Yield = D X 360 X 100
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360 -- (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
Federal Funds Rate. Federal Funds Rate notes will bear interest at the
interest rates (calculated with reference to the Federal Funds Rate and the
Spread and/or Spread Multiplier, if any) specified in such Federal Funds Rate
notes and in the applicable pricing supplement.
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Unless otherwise specified in the applicable pricing supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date relating to
a Federal Funds Rate note or any Interest Determination Date for a floating
rate note for which the interest rate is determined with reference to the
Federal Funds Rate (a "Federal Funds Rate Interest Determination Date"), the
rate of interest on that day for federal funds as published in H.15(519) under
the heading "Federal Funds (Effective)," as such rate is displayed on Bridge
Telerate, Inc. (or any successor service) on page 120 ("Telerate Page 120"). In
the event such rate does not appear on Telerate Page 120 or is not so published
by 3:00 P.M., New York City time, on the Calculation Date pertaining to such
Federal Funds Rate Interest Determination Date, then the Federal Funds Rate
will be the rate on such Federal Funds Rate Interest Determination Date as
published in H.15 Daily Update or such other recognized electronic source used
for the purpose of displaying such rate, under the heading "Federal Funds
(Effective)." If such rate does not appear on Telerate Page 120 or is not
published in H.15(519), H.15 Daily Update or another recognized electronic
source by 3:00 P.M., New York City time, on such Calculation Date, the Federal
Funds Rate on such Federal Funds Rate Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
rates for the last transaction in overnight federal funds arranged by three
leading dealers of federal funds transactions in New York, New York (which may
include one or both of the agents or their affiliates) selected by the
Calculation Agent as of 9:00 A.M., New York City time, on such Federal Funds
Rate Interest Determination Date; provided, however, that if the dealers so
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the Federal Funds Rate in effect for the applicable period will
be the Federal Funds Rate in effect on such Federal Funds Rate Interest
Determination Date.
LIBOR. LIBOR notes will bear interest at the interest rates (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any) specified
in the LIBOR notes and in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, "LIBOR"
means the rate determined by the Calculation Agent in accordance with the
following provisions:
(i) With respect to an Interest Determination Date relating to a LIBOR note
or any Interest Determination Date for a floating rate note for which the
interest rate is determined with reference to LIBOR (a "LIBOR Interest
Determination Date"), LIBOR will be, as specified in the applicable pricing
supplement, either: (a) the arithmetic mean of the offered rates for deposits
in U.S. dollars having the Index Maturity designated in the applicable pricing
supplement, commencing on the second London Business Day immediately following
that LIBOR Interest Determination Date, that appear on the Reuters Screen LIBO
Page as of 11:00 A.M., London time, on that LIBOR Interest Determination Date,
if at least two such offered rates appear on the Reuters Screen LIBO Page
("LIBOR Reuters"), or (b) the rate for deposits in U.S. dollars having the
Index Maturity designated in the applicable pricing supplement commencing on
the second London Business Day immediately following that LIBOR Interest
Determination Date, that appears on the Telerate Page 3750 as of 11:00 A.M.,
London time, on that LIBOR Interest Determination Date ("LIBOR Telerate").
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks). "Telerate Page 3750" means the display designated as
page "3750" on the Telerate Service (or such other page as may replace the 3750
page on that service or such other service or services as may be nominated by
the British Bankers' Association for the purpose of displaying London interbank
offered rates for U.S. dollar deposits). If neither LIBOR Reuters nor LIBOR
Telerate is specified in the applicable pricing supplement, LIBOR will be
determined as if LIBOR Telerate has been specified. If fewer than two offered
rates appear on the Reuters Screen LIBO Page, or if no rate appears on the
Telerate Page 3750, as applicable, LIBOR in respect of that LIBOR Interest
Determination Date will be determined as if the parties had specified the rate
described in (ii) below.
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(ii) With respect to a LIBOR Interest Determination Date on which fewer than
two offered rates appear on the Reuters Screen LIBO Page, as specified in (i)
(a) above, or on which no rate appears on Telerate Page 3750, as specified in
(i) (b) above, as applicable, LIBOR will be determined on the basis of the
rates at which deposits in U.S. dollars having the Index Maturity designated in
the applicable pricing supplement are offered at approximately 11:00 A.M.,
London time, on that LIBOR Interest Determination Date by four major banks in
the London interbank market selected by the Calculation Agent ("Reference
Banks") to prime banks in the London interbank market (which may include
affiliates of the agents) commencing on the second London Business Day
immediately following that LIBOR Interest Determination Date and in a principal
amount that is representative for a single transaction in such market at such
time. The Calculation Agent will request the principal London office of each of
the Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR in respect of that LIBOR Interest Determination
Date will be the arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR in respect of that LIBOR Interest Determination
Date will be the arithmetic mean of the rates quoted at approximately 11:00
A.M., New York City time, on that LIBOR Interest Determination Date by three
major banks (which may include affiliates of the agents) in the City of New
York selected by the Calculation Agent for loans in U.S. dollars to leading
European banks having the Index Maturity designated in the applicable pricing
supplement commencing on the second London Business Day immediately following
that LIBOR Interest Determination Date and in a principal amount that is
representative for a single transaction in such market at such time; provided,
however, that if the banks selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, LIBOR with respect to such LIBOR
Interest Determination Date will be LIBOR in effect on such LIBOR Interest
Determination Date.
Prime Rate. Prime Rate notes will bear interest at the rates (calculated
with reference to the Prime Rate and the Spread and/or Spread Multiplier, if
any) specified in such Prime Rate notes and the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, "Prime
Rate" means, with respect to any Interest Determination Date relating to a
Prime Rate note or any floating rate note for which the interest rate is
determined with reference to the Prime Rate (a "Prime Rate Interest
Determination Date"), the rate on such date as such rate is published in
H.15(519) under the heading "Bank Prime Loan." If such rate is not published by
3:00 P.M., New York City time, on the related Calculation Date, then the Prime
Rate will be the rate published in H.15 Daily Update or such other recognized
electronic source used for the purpose of displaying such rate, under the
caption "Bank Prime Loan." If such rate is not published in H.15(519), H.15
Daily Update or another recognized electronic source, then the Prime Rate shall
be the arithmetic mean of the rates of interest publicly announced by each bank
that appears on the Reuters Screen USPRIME1 Page (as defined below) as such
bank's prime rate or base lending rate as in effect as of 11:00 A.M., New York
City, time for such Prime Rate Interest Determination Date. If fewer than four
such rates appear on the Reuters Screen USPRIME1 Page for such Prime Rate
Interest Determination Date, the Prime Rate shall be the arithmetic mean of the
prime rates quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on such Prime Rate
Interest Determination Date by three major banks (which may include affiliates
of the agents) in The City of New York selected by the Calculation Agent;
provided, however, that if the banks selected as aforesaid are not quoting as
mentioned in this sentence, the Prime Rate determined as of such Prime Rate
Interest Determination Date will be the Prime Rate in effect on such Prime Rate
Interest Determination Date.
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"Reuters Screen USPRIME1 Page" means the display designated as page
"USPRIME1" on the Reuters Monitor Money Rates Service (or any successor
service) (or such other page as may replace the USPRIME1 page on that service
for the purpose of displaying prime rates or base lending rates of major United
States banks).
Treasury Rate. Treasury Rate notes will bear interest at the rates
(calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any) specified in such Treasury Rate notes and in the applicable
pricing supplement.
Unless otherwise specified in the applicable pricing supplement, "Treasury
Rate" means, with respect to any Interest Determination Date relating to a
Treasury Rate note or any Interest Determination Date for a floating rate note
for which the interest rate is determined with reference to the Treasury Rate
(a "Treasury Rate Interest Determination Date"), the rate applicable to the
most recent auction of direct obligations of the United States ("Treasury
Bills") having the Index Maturity specified in the applicable pricing
supplement under the caption "INVESTMENT RATE" on the display on Bridge
Telerate, Inc. (or any successor service) on page 56 (or any other page as may
replace such page on such service) ("Telerate Page 56") or page 57 (or any
other page as may replace such page on such service) ("Telerate Page 57") or,
if not published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Treasury Rate Interest Determination Date, the Bond
Equivalent Yield (as defined below) of the auction rate of such Treasury Bills
as announced by the United States Department of the Treasury. In the event that
the auction rate of Treasury Bills having the Index Maturity specified in the
applicable pricing supplement is not so announced by the United States
Department of the Treasury, or if no such auction is held, then the Treasury
Rate will be the Bond Equivalent Yield of the rate on such Treasury Rate
Interest Determination Date of Treasury Bills having the Index Maturity
specified in the applicable pricing supplement as published in H.15(519) under
the caption "U.S. Government Securities/Treasury Bills/Secondary Market" or, if
not yet published by 3:00 P.M., New York City time, on the related Calculation
Date, the rate on such Treasury Rate Interest Determination Date of such
Treasury Bills as published in H.15 Daily Update, or such other recognized
electronic source used for the purpose of displaying such rate, under the
caption "U.S. Government Securities/Treasury Bills/Secondary Market." If such
rate is not yet published in H.15(519), H.15 Daily Update or another recognized
electronic source, then the Treasury Rate shall be calculated by the
Calculation Agent and shall be the Bond Equivalent Yield of the arithmetic mean
of the secondary market bid rates, as of approximately 3:30 P.M., New York City
time, on such Treasury Rate Interest Determination Date, of three primary U.S.
government securities dealers (which may include one or both of the agents or
their affiliates) selected by the Calculation Agent, for the issue of Treasury
Bills with a remaining maturity closest to the specified Index Maturity;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Treasury Rate in
effect for the applicable period will be the Treasury Rate in effect on such
Treasury Rate Interest Determination Date.
"Bond Equivalent Yield" means a yield (expressed as a percentage) calculated
in accordance with the following formula:
Bond Equivalent Yield = D X N X 100
-----------
360 -- (D X M)
where "D" refers to the applicable per annum rate for Treasury Bills quoted on
a bank discount basis, "N" refers to 365 or 366, as the case may be, and "M"
refers to the actual number of days in the applicable Interest Reset Period.
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Original Issue Discount Notes
Notes may be issued at a price less than their stated redemption price at
maturity, resulting in the notes being treated as issued with original issue
discount for federal income tax purposes. Such discounted notes may currently
pay no interest or interest at a rate which at the time of issuance is below
market rates and such notes may provide that upon redemption or repayment prior
to their stated maturity or upon acceleration of the maturity of such notes, an
amount less than the stated principal amount thereof shall become due and
payable. If notes are issued with original issue discount, holders of such
notes will be required to include the amount of original issue discount in
income in accordance with applicable provisions of the Internal Revenue Code of
1986, as amended (the "Code"), and the Treasury Regulations promulgated
thereunder. Special federal income tax and other considerations applicable to
any such discounted notes may be described in the applicable pricing
supplement.
Indexed Notes
Notes also may be issued with the principal amount payable at maturity,
premium, if any, and/or interest to be paid thereon to be determined with
reference to the price or prices of specified commodities or stocks, interest
rate indices, interest rate or exchange rate swap indices, the exchange rate of
one or more specified currencies (including a composite currency such as the
European Currency Unit) relative to an indexed currency, or such other price or
exchange rate or other financial index or indices as may be specified in such
note ("Indexed Notes"), as set forth in an indexed note supplement. Holders of
such notes may receive a principal amount at maturity that is greater than or
less than the face amount of the notes depending upon the relative value at
maturity of the specified indexed item. Information as to the method for
determining the principal payable at maturity and, where applicable, certain
historical information with respect to the specified indexed item or items and
tax considerations associated with investment in Indexed Notes, will be set
forth in the applicable indexed note supplement.
An investment in notes indexed, as to principal, premium and/or interest, to
one or more values of currencies (including exchange rates and swap indices
between currencies), commodities or interest rate or other indices entails
significant risks that are not associated with similar investments in a
conventional fixed-rate debt security. If the interest rate of an Indexed Note
is so indexed, it may result in an interest rate that is less than that payable
on a conventional fixed-rate debt security issued at the same time, including
the possibility that no interest will be paid, and, if the principal of and/or
premium amount of such an Indexed Note is so indexed, the principal amount
payable in respect thereof may be less than the original purchase price of such
Indexed Note if allowed pursuant to the terms thereof, including the
possibility that no principal will be paid. The secondary market for Indexed
Notes will be affected by a number of factors, independent of the
creditworthiness of the Company and the value of the applicable currency,
commodity or interest rate index, including the volatility of the applicable
currency, commodity or interest rate index, the time remaining to the maturity
of such notes, the amount outstanding of such notes and market interest rates.
The value of the applicable currency, commodity or interest rate index depends
on a number of interrelated factors, including economic, financial and
political events, over which the Company has no control. Additionally, if the
formula used to determine the principal, premium or interest payable with
respect to Indexed Notes contains a multiple or leverage factor, the effect of
any change in the applicable currency, commodity or interest rate index may be
increased. The historical experience of the relevant currencies, commodities or
interest rate indices should not be taken as an indication of future
performance of such currencies, commodities or interest rate indices during the
term of any Indexed Note. Accordingly, prospective investors should consult
their own financial and legal advisors as to the risks entailed by an
investment in Indexed Notes and the suitability of Indexed Notes in light of
their particular circumstances.
S-13
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Notwithstanding anything to the contrary contained herein or in the
prospectus, for purposes of determining the rights of a holder of a note
indexed as to principal in respect of voting for or against amendments to the
Indenture and modifications and the waiver of rights thereunder, the principal
amount of such Indexed Note shall be deemed to be equal to the face amount
thereof upon issuance. The amount of principal payable at maturity will be
specified in the applicable pricing supplement.
Book-Entry Notes
Unless otherwise specified in an applicable pricing supplement, upon
issuance, all Book-Entry Notes having the same original issue date, stated
maturity and otherwise having identical terms and provisions will be
represented by a single global security (each, a "Global Security"). Each
Global Security representing Book-Entry Notes will be deposited with, or on
behalf of, the depositary. Except as set forth below, a Global Security may not
be transferred except as a whole by the depositary to a nominee of the
depositary or by a nominee of the depositary to the depositary or another
nominee of the depositary or by the depositary or any nominee to a successor of
the depositary or a nominee of such successor.
The Depository Trust Company, New York, New York ("DTC"), will be the
initial depositary with respect to the notes. DTC has advised the Company and
the agents that it is a limited-purpose trust company organized under the
banking laws of the State of New York, a member of the Federal Reserve System,
a "clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended. DTC was created to hold
securities of its participants and to facilitate the clearance and settlement
of securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers (including the agents),
banks, trust companies, clearing corporations and certain other organizations,
some of whom (and/or their representatives) own DTC. Access to DTC's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. Persons who are not participants
may beneficially own securities held by DTC only through participants.
Upon the issuance of the notes represented by a Global Security, DTC will
credit, on its book-entry registration and transfer system, the principal
amounts of the notes represented by such Global Security to the accounts of
participants. The accounts to be credited will be designated by the agents or
underwriters of such book-entry notes, as the case may be. Ownership of
beneficial interests in the Global Security will be limited to participants or
persons that hold interests through participants. Ownership of beneficial
interests in the notes will be shown on, and the transfer of that ownership
will be effected only through, records maintained by DTC (with respect to
interests of participants in DTC), or by participants in DTC or persons that
may hold interests through such participants (with respect to persons other
than participants in DTC). The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limitations and such laws may impair the ability of
holders of the notes to transfer beneficial interests in a Global Security.
So long as the depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, the depositary or its nominee, as the
case may be, will be considered the sole owner or holder of the notes
represented by such Global Security for all purposes under the Indenture.
Except as provided below, owners of beneficial interests in the notes
represented by a Global Security will not be entitled to have the notes
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of the notes in definitive form and
will not be considered the owners or holders thereof under the Indenture.
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Payments of principal of and interest on the notes will be made by the
Company through the Trustee to DTC or its nominee, as the case may be, as the
registered owner of a Global Security. Neither the Company nor the Trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests of a Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests. The Company expects that DTC, upon receipt
of any payment of principal or interest in respect of a Global Security, will
credit the accounts of the related participants with payment in amounts
proportionate to their respective holdings in principal amount of beneficial
interest in such Global Security as shown on the records of DTC. The Company
also expects that payments by participants to owners of beneficial interests in
a Global Security will be governed by standing customer instructions and
customary practices, as is now the case with securities held for the accounts
of customers in bearer form or registered in "street name" and will be the
responsibility of such participants.
If DTC is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by the Company within 60 days, the
Company will issue definitive notes in exchange for the notes represented by
such Global Security or Securities. In addition, the Company may at any time
and in its sole discretion determine to discontinue use of the Global Security
and, in such event, will issue definitive notes in exchange for the notes
represented by such Global Security or Securities. Notes so issued will be
issued in denominations of $1,000 and integral multiples thereof and will be
issued in registered form only, without coupons.
DTC management is aware that some computer applications, systems, and the
like for processing data ("Systems") that are dependent upon calendar dates,
including dates before, on, and after January 1, 2000, may encounter "Year 2000
problems." DTC has informed its participants and other members of the financial
community (the "Industry") that it has developed and is implementing a program
so that its Systems, as the same relate to the timely payment of distributions
(including principal and income payments) to securityholders, book-entry
deliveries, and settlement of trades within DTC ("DTC Services"), continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, DTC's plan includes
a testing phase, which is expected to be completed within appropriate time
frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as DTC's direct and indirect participants and third party vendors from
whom DTC licenses software and hardware, and third party vendors on whom DTC
relies for information or the provision of services, including
telecommunication and electrical utility service providers, among others. DTC
has informed the Industry that it is contacting (and will continue to contact)
third party vendors from whom DTC acquires services to: (i) impress upon them
the importance of such services being Year 2000 compliant; and (ii) determine
the extent of their efforts for Year 2000 remediation (and, as appropriate,
testing) of their services. In addition, DTC is in the process of developing
such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for information purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.
S-15
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UNITED STATES TAXATION
Set forth below is a summary of certain U.S. federal income tax
considerations of importance to holders of the notes. The summary applies to
holders who hold the notes as capital assets and not special classes of
holders, such as banks, insurance companies, regulated investment companies,
dealers in securities or currencies, persons who hold the notes as a hedge
against currency risks or who hedge any currency risks of holding the notes,
tax-exempt investors or U.S. holders whose functional currency is other than
the U.S. dollar. The summary also does not deal with holders of the notes other
than original purchasers. The discussion below is based upon the Code and
final, temporary and proposed U.S. Treasury Regulations, which are subject to
change possibly with retroactive effect. Persons considering the purchase of
the notes should consult their own tax advisors concerning the application of
U.S. federal income tax laws to their particular situations as well as any
consequences arising under the laws of any other taxing jurisdiction.
U.S. Tax Considerations for U.S. Holders
General
Interest on the notes will be taxable to a U.S. holder as ordinary interest
income at the time it is accrued or received, depending in part on the U.S.
holder's method of accounting for tax purposes.
As used herein, "U.S. holder" is a holder of a note who is a citizen or
resident of the United States, a corporation or partnership (including an
entity treated as a corporation or partnership for U.S. tax purposes) or other
entity created or organized in or under the laws of the United States or any
State thereof or the District of Columbia (unless, in the case of a
partnership, Treasury regulations provide otherwise), an estate the income of
which is subject to U.S. federal income taxation regardless of its source, a
trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S. persons
have authority to control all substantial decisions of the trust, and any other
holder whose ownership of a note is effectively connected with the conduct of a
trade or business in the United States. Notwithstanding the preceding sentence,
to the extent provided in Treasury regulations, certain trusts in existence on
August 20, 1996, and treated as U.S. persons prior to such date, that elect to
continue to be treated as U.S. persons will also be a U.S. holder. The term
"non-U.S. holder" means a holder that is not a U.S. holder.
Original Issue Discount
General. Notes with a term greater than one year may be issued with original
issue discount for federal income tax purposes. Original issue discount is the
excess of the "stated redemption price at maturity" of a note over its "issue
price." If this excess is less than 0.25% of the note's stated redemption price
at maturity multiplied by the number of complete years to its maturity (a "de
minimis amount"), the amount of original issue discount is considered to be
zero. The "stated redemption price at maturity" of a note is all amounts
payable on the note however designated, other than payments of "qualified
stated interest." "Issue price" is defined as the first offering price to the
public at which a substantial amount of the notes have been sold. "Qualified
stated interest" is stated interest that is unconditionally payable in cash or
in property (other than debt instruments of the issuer) at least annually at a
single fixed rate (a single fixed rate is a rate that takes into account the
length of time between payments). If a note has certain interest payment
characteristics (e.g., interest holidays, interest payable in additional notes
or stepped interest rates), then the note may also be treated as having
original issue discount for federal income tax purposes even if such note was
issued at an issue price which does not otherwise result in original issue
discount.
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Accrual of Original Issue Discount. U.S. holders are required to include
original issue discount in income before the receipt of cash attributable to
such income regardless of such U.S. holder's method of accounting for tax
purposes. The amount of original issue discount includible in income by the
initial U.S. holder of a note is the sum of the daily portions of original
issue discount which accrues under a constant yield method with respect to such
note for each day during the accrual period or portion of the accrual period in
which such U.S. holder held such note. The amount of original issue discount
which accrues in an accrual period is an amount equal to the excess (if any) of
(a) the product of the note's adjusted issue price at the beginning of such
accrual period and its yield to maturity (determined on the basis of
compounding at the end of each accrual period and appropriately adjusted to
take into account the length of the particular accrual period), over (b) the
sum of the qualified stated interest payments, if any, allocable to the accrual
period. The daily portion of original issue discount is determined by
allocating to each day in any accrual period a ratable portion of the increase
during such accrual period in the note's "adjusted issue price." The "adjusted
issue price" of a note at the beginning of any accrual period is the sum of the
issue price of such note plus the original issue discount allocable to all
prior accrual periods reduced by payments on the note other than qualified
stated interest. An "accrual period" may be of any length and the accrual
periods may even vary in length over the term of the note, provided that each
accrual period is no longer than one year and each scheduled payment of
principal or interest occurs on the first day or the last day of an accrual
period. Under these rules, U.S. holders will generally have to include in
income increasingly greater amounts of original issue discount in successive
accrual periods.
Floating Rate Notes
The floating rate notes are treated as either "variable rate debt
instruments" or contingent notes. The Treasury regulations provide special
rules for determining the amount and accrual of qualified stated interest and
original issue discount on a floating rate note. A floating rate note will
qualify as a variable rate debt instrument if (a) its issue price does not
exceed the total noncontingent principal payments due under such floating rate
note by more than a specified de minimis amount, (b) it provides for stated
interest, paid or compounded at least annually, at current values of (i) one or
more "qualified floating rates," (ii) a single fixed rate and one or more
qualified floating rates, (iii) a single "objective rate," or (iv) a single
fixed rate and a single objective rate that is a "qualified inverse floating
rate," as such terms are defined under the Treasury regulations, (c) it
provides that a qualified floating rate or objective rate in effect at any time
during its term is set at a current value of that rate, as such terms are
defined in the regulations, (d) except as provided under (a) above, it does not
provide for any contingent principal payments, and (e) if the floating rate is
subject to one or more restrictions (e.g., a cap or a floor), those
restrictions last throughout the term of the note and are not reasonably
expected as of the issue date to cause the yield on the floating rate note to
differ significantly from the expected yield determined without the
restriction. A variable rate is a "qualified floating rate" if variations in
the value of the rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
note is denominated. An "objective rate" is a rate that is not itself a
qualified floating rate but which is determined using a single fixed formula
and which is based upon objective financial or economic information. A
"qualified inverse floating rate" is any objective rate where such rate is
equal to a fixed rate minus a qualified floating rate as long as variations in
the rate can reasonably be expected to inversely reflect contemporaneous
variations in the qualified floating rate. The definitions of such terms and
their application, if any, to a particular floating rate note will be described
in the related pricing supplement.
If a floating rate note that qualifies as a variable rate debt instrument
provides for stated interest at a single qualified floating rate or a single
objective rate and the interest is unconditionally payable in cash or property
(other than debt instruments of the Company) at least annually, then all such
stated interest will constitute qualified stated interest, and will be taxable
to the U.S. holder as
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ordinary interest income at the time it is accrued or received, depending on
such U.S. holder's method of accounting for tax purposes. Thus, such a floating
rate note generally will not be treated as having original issue discount
unless its stated principal amount exceeds its issue price by more than a
specified de minimis amount. The amount of qualified stated interest and
original issue discount, if any, that accrues during an accrual period is
determined under the rules applicable to fixed rate debt instruments described
above by assuming that the variable rate is a fixed rate equal to (a) in the
case of a qualified floating rate or qualified inverse floating rate, the value
as of the issue date of the qualified floating rate, or qualified inverse
floating rate, or (b) in the case of an objective rate (other than a qualified
inverse floating rate), a fixed rate that reflects the yield that is reasonably
expected for the debt instrument. Moreover, the amount of qualified stated
interest allocable to an accrual period will be increased (or decreased) if the
interest actually paid during an accrual period exceeds (or is less than) the
interest assumed to be paid during the accrual period as determined under the
rules described in this paragraph.
In general, any other floating rate note that qualifies as a variable rate
debt instrument generally will be converted into an "equivalent fixed rate debt
instrument," and the amount and accrual of qualified stated interest and
original issue discount on such floating rate note are then determined by
applying the general original issue discount rules. The method for converting
such a floating rate note to a fixed rate instrument will depend on its
characteristics. Such a floating rate note providing for a qualified floating
rate or a qualified inverse floating rate is converted by substituting a fixed
rate (the "equivalent" fixed rate) equal to the value of the qualified floating
rate or qualified inverse floating rate as of such floating rate note's issue
date. Such a floating rate note providing for an objective rate (other than a
qualified inverse floating rate) is converted by substituting an equivalent
fixed rate that reflects the yield that is reasonably expected on such floating
rate note. In the case of a floating rate note that qualifies as a variable
rate debt instrument and provides for stated interest at either one or more
qualified floating rates or a qualified inverse floating rate and additionally
provides for stated interest at a single fixed rate, the fixed rate is
converted into a qualified floating rate (or a qualified inverse floating rate
if such floating rate note provides for a qualified inverse floating rate). The
qualified floating rate or qualified inverse floating rate that replaces the
fixed rate must be such that the fair market value of the variable rate debt
instrument as of the variable rate debt instrument's issue date is
approximately the same as the fair market value of an otherwise identical debt
instrument that provides for either the qualified floating rate (or qualified
inverse floating rate) rather than the fixed rate. Such a floating rate note is
then converted into an "equivalent fixed rate debt instrument" as described
above. Once the floating rate note is converted into an "equivalent fixed rate
debt instrument" pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, will be determined for the
"equivalent fixed rate debt instrument" by applying to it the general original
issue discount rules, and U.S. holders of a floating rate note will account for
such original issue discount and qualified stated interest as if they held the
"equivalent fixed rate debt instrument." For each accrual period appropriate
adjustments will be made to the amount of qualified stated interest or original
issue discount assumed to have been accrued or paid with respect to the
"equivalent fixed rate debt instrument" in the event that such amounts differ
from the actual amount of interest accrued or paid on the floating rate note
during the accrual period.
If a floating rate note does not qualify as a "variable rate debt
instrument" under the original issue discount regulations, it will be treated
as a contingent note (as defined below). The applications of these rules to a
particular floating rate note will be described in the related pricing
supplement.
Contingent Notes
Notes may be issued under circumstances in which the amount and/or timing of
interest and principal on the notes is subject to a contingency ("contingent
notes"). For example, the Company may issue indexed notes under which interest
and/or principal is determined by reference to multiple
S-18
<PAGE>
formulae based on the values of specified stocks, commodities, foreign
currencies or other personal property. If a floating rate note does not qualify
as a variable rate debt instrument under the regulations, then the floating
rate note would be treated as a contingent note for tax purposes. With some
exceptions, the amount of interest that will accrue on such contingent notes in
each accrual period will be determined under the "noncontingent bond method."
For each issue of contingent notes, the noncontingent bond method requires the
issuer to determine a comparable yield, a projected payment schedule, the daily
portions of interest accruing in each accrual period, and then to make
appropriate adjustments for any differences between projected and actual
contingent payments made to holders of contingent notes. The proper U.S.
federal income tax treatment of a contingent note will be described in the
related pricing supplement.
Notes with Put and/or Call Options
Certain notes (i) may be redeemable at the option of the Company prior to
their stated maturity (i.e., a "call option"), and /or (ii) may be repayable at
the option of the holder prior to their stated maturity (i.e., a "put option").
Notes containing such features may be subject to special rules. The
application, if any, of these rules will be described in the related pricing
supplement.
Acquisition Discount on Short Term Notes
Notes that have a fixed maturity of one year or less ("short-term notes")
may be issued with acquisition discount. U.S. holders who are accrual basis
taxpayers, cash basis taxpayers making an appropriate election under the Code
and taxpayers in certain specified classes will be required to include
acquisition discount in income currently in an amount and manner similar to
that applicable to original issue discount. Individuals and non-electing cash
basis taxpayers holding short-term notes are not required to include accrued
acquisition discount in income until the cash payments attributable to such
discount are received, which payments will be treated as ordinary income. A
U.S. holder who does not recognize acquisition discount currently will be
required to recognize ordinary income on the sale, exchange or retirement of
the short-term note to the extent of accrued acquisition discount, and may be
subject to limitations on the deductibility of interest on indebtedness
incurred to purchase or carry such notes.
Market Discount and Premium
If a U.S. holder purchases a note that was not issued with original issue
discount, for an amount that is less than its issue price (or, in the case of a
subsequent purchaser, its stated redemption price at maturity) or, in the case
of a note that was issued with original issue discount, its adjusted issue
price as of the purchase date, the amount of the difference will be treated as
a "market discount." If the market discount exceeds a de minimis amount, any
gain on the sale, exchange or retirement of the note is treated as ordinary
interest income at the time of the disposition to the extent of the accrued
market discount, unless the U.S. holder elects to accrue market discount in
income on a current basis. In addition, a U.S. holder is required to defer
deductions until maturity of the note or its earlier disposition for a portion
of such holder's interest expense on any indebtedness incurred to purchase or
carry such note. Market discount is normally accrued on a straight-line basis,
but a holder may elect to use a constant yield method.
If a U.S. holder acquires a note issued with original issue discount for an
amount above the adjusted issue price, such U.S. holder may be considered to
have purchased the note at an "acquisition premium." The amount of original
issue discount which such holder must otherwise include in its gross income
with respect to the note for any taxable year (or portion thereof in which the
holder holds the note) will be reduced (but not below zero) by the portion of
acquisition premium properly allocable to such period.
S-19
<PAGE>
A U.S. holder of a note whose tax basis immediately after its acquisition by
the holder exceeds the sum of all amounts payable on the note after the
acquisition date other than qualified stated interest shall be considered to
have purchased such note with "bond premium" equal in amount to such excess.
The U.S. holder may elect to amortize the bond premium by offsetting it against
qualified stated interest income. The offset will be calculated for each
accrual period using constant yield principles, but the offset for an accrual
period will be taken into account only when the U.S. holder takes the
corresponding qualified stated interest income into consideration. In case the
amount of bond premium available for offset is greater than the corresponding
amount of qualified stated interest, the excess bond premium will carry forward
to future accrual periods. In the case of floating rate notes acquired with
bond premium and treated as "variable rate debt instruments," the bond premium
and its allocation among the accrual periods will be determined by reference to
the "equivalent fixed rate debt instrument" to be constructed as of the date of
acquisition of such floating rate notes.
Election to Treat all Interest and Premium as Original Issue Discount
U.S. holders utilizing the accrual method of accounting may generally elect
to include all interest and discount (including stated interest, acquisition
discount, original issue discount, de minimis original issue discount, market
discount, de minimis market discount, and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium on a debt instrument) in income
by using the constant yield method applicable to original issue discount,
subject to certain limitations and exceptions.
Disposition or Repayment of a Note
U.S. holders of notes recognize gain or loss on the sale, redemption,
exchange or other disposition of a note. This gain or loss is measured by the
difference between the amount realized (except to the extent attributable to
accrued interest) and the U.S. holder's adjusted tax basis in the note. A U.S.
holder's adjusted tax basis for determining gain or loss on a sale or
disposition of a note generally will be such holder's cost increased by any
amounts included in income, other than qualified stated interest, and reduced
by any amortized premium and cash received other than qualified stated
interest. Gain or loss on the sale, exchange or redemption of a note generally
will be capital gain or loss (and will be long-term capital gain or loss if the
note was held for more than one year), except to the extent that gain
represents accrued market or acquisition discount not previously included in
the U.S. holder's income. Non-corporate taxpayers are subject to reduced
maximum rates on long-term capital gains and are generally subject to tax at
ordinary income rates on short-term capital gains. The deductibility of capital
losses is subject to certain limitations. Prospective investors should consult
their own tax advisors concerning these tax law provisions.
Foreign Currency Notes
Notes may be denominated in, or interest or principal on the notes may be
determined by reference to, a foreign currency or foreign currency unit (e.g.,
the euro) ("foreign currency notes"). Original issue discount for any accrual
period on a foreign currency note is determined under special rules. The
application of these rules will be described in an applicable pricing
supplement.
S-20
<PAGE>
U.S. Tax Considerations for Foreign Holders
Set forth below is a summary of certain U.S. federal income tax consequences
for non-U.S. holders of the notes.
Assuming certain certification requirements are satisfied (which generally
can be satisfied by providing Internal Revenue Service Form W-8 (or
substantially similar form), identifying the beneficial owner of the instrument
as a non-U.S. person and disclosing the non-U.S. holder's name and address),
under current U.S. federal income and estate tax laws:
(i) Payments of principal and interest (including original issue
discount) on a note to a non-U.S. holder will not be subject to U.S.
federal income tax or withholding tax, provided that, in the case of
interest and original issue discount, (a) the payments are not effectively
connected with a U.S. trade or business, (b) the holder does not actually
or constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote, (c) the holder is not a
controlled foreign corporation related to the Company through stock
ownership, and (d) the holder is not a bank receiving interest pursuant to
a loan agreement entered into in the ordinary course of its trade or
business;
(ii) A non-U.S. holder of a note will not be subject to U.S. federal
income tax on gain realized on the sale, exchange or redemption of a note
if (a) such gain is not effectively connected with a U.S. trade or
business, (b) in the case of a non-U.S. holder who is an individual, such
holder is not present in the United States for a total of 183 days or more
during the taxable year in which such gain is realized and (c) either (1)
such individual's "tax home" for United States federal income tax purposes
is in the United States, or (2) the gain is attributable to an office or
other fixed place of business maintained in the United States by such
individual; and
(iii) A note held by an individual who at the time of death is not a
citizen or resident of the United States (as determined for United States
estate tax purposes) will not be subject to U.S. federal estate tax as a
result of such individual's death, unless (a) the individual actually or
constructively owns 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote, (b) the interest received
on such note is effectively connected with the conduct by such holder of a
U.S. trade or business, or (c) such note provided for the payment of
certain contingent interest.
Backup Withholding and Information Reporting
Under current United States federal income tax law, a 31% backup withholding
tax and information reporting requirements apply to certain interest and
principal payments made to, and to the proceeds of sales before maturity by,
certain noncorporate United States holders. Backup withholding will apply only
if (i) such holders fail to supply their taxpayer identification number
("TIN"), (ii) the Company is notified by the Internal Revenue Service that such
United States holders furnished an incorrect TIN, (iii) the Company is notified
by the Internal Revenue Service that such United States holders have failed to
properly report payments of interest and dividends, or (iv) such United States
holders fail to certify, under penalty of perjury, that they have furnished a
correct TIN and have not been notified by the Internal Revenue Service that
they are subject to backup withholding for failure to report interest and
dividend payments.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments on notes made outside the United States
(other than payments made to an address in the United States or by transfer to
an account maintained by the holder with a bank in the United States) by the
Company or any paying agent thereof to a Non-United States holder of a note
S-21
<PAGE>
provided that neither the Company nor any such paying agent has actual
knowledge that the holder is a United States person for purposes of such backup
withholding tax and information reporting requirements. In addition, if such
principal or interest is paid to the beneficial owner of a note by a foreign
office of a foreign custodian, foreign nominee or other foreign agent of such
beneficial owner, or if a foreign office of a foreign "broker" (as defined in
applicable Treasury Regulations) pays the proceeds of the sale of a note to the
seller thereof, backup withholding and information reporting will not apply to
such payment (provided that such nominee, custodian, agent or broker derives
less than 50% of its gross income for certain periods from the conduct of a
trade or business in the United States and is not a controlled foreign
corporation). Principal and interest so paid by a foreign office of other
custodians, nominees or agents, or the payment by a foreign office of other
brokers of the proceeds of the sale of a note will not be subject to backup
withholding, but will be subject to information reporting unless the custodian,
nominee, agent or broker has documentary evidence in its records that the
beneficial owner is not a United States person for purposes of such backup
withholding and information reporting requirements and certain conditions are
met, or the beneficial owner otherwise establishes an exemption. Principal and
interest so paid by the United States office of a custodian, nominee or agent,
or the payment of the proceeds of sale of a note by the United States office of
a broker, is subject to both backup withholding and information reporting
unless the beneficial owner certifies its non-United States status under
penalties of perjury or otherwise establishes an exemption.
Treasury Regulations issued on October 6, 1997 (the "Withholding
Regulations") would modify certain of the rules discussed above generally with
respect to payments on the notes made after December 31, 1999. For payments
made after December 31, 1999, the Withholding Regulations provide that to the
extent a non-United States holder provides the appropriate certification as to
such holder's status as a foreign person, the backup withholding provisions and
information reporting provisions generally will not apply. A payor may rely on
a certification provided by a non-United States holder provided that such payor
does not have actual knowledge or a reason to know that any information or
certification stated in such certificate is unreliable.
S-22
<PAGE>
SUPPLEMENTAL PLAN OF DISTRIBUTION
The Company and Goldman, Sachs & Co. and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated (the "Agents") have entered into a
distribution agreement with respect to the notes. Subject to certain
conditions, the Agents have agreed to use their reasonable efforts to solicit
purchases of the notes. The Company has the right to accept offers to purchase
notes and may reject any proposed purchase of the notes. The Agents may also
reject any offer to purchase notes. The Company will pay the Agents a
commission on any notes sold through the Agents. The commission will range from
0.125% to 0.750% of the principal amount of the notes, depending on the
maturity of the notes.
The Company may also sell notes to the Agents who will purchase the notes as
principals for their own accounts. Any such sale will be made at a discount
equal to the agent commissions set forth on the cover page hereof if no other
discount is agreed. Any notes the Agents purchase as principal may be resold at
the market price or at other prices determined by the Agents at the time of
resale. The Company may also sell notes directly on its own behalf. No
commissions will be paid on notes sold directly by the Company.
The Agents may resell any notes they purchase to other brokers or dealers at
a discount which may include all or part of the discount the Agents received
from the Company. The Agents will purchase the notes at a price equal to 100%
of the principal amount less a discount. Unless otherwise stated the discount
will equal the applicable commission on an agency sale of notes of the same
maturity. If all the notes are not sold at the initial offering price, the
Agents may change the offering price and the other selling terms.
The Agents, whether acting as agents or principals, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933. The Company
has agreed to indemnify the several Agents against certain liabilities,
including liabilities under the Securities Act of 1933.
The Agents may sell to dealers who may resell to investors and the Agents
may pay all or part of the discount or commission they receive from the Company
to the dealers. Such dealers may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933.
The notes are a new issue of securities with no established trading market
and will not be listed on a securities exchange. No assurance can be given as
to the liquidity of the trading market for the notes.
In connection with the offering, the Agents may purchase and sell notes in
the open market. These transactions may include short sales, stabilizing
transactions and purchases to cover positions created by short sales. Short
sales involve the sale by the Agents of a greater number of notes than they are
required to purchase in the offering. Stabilizing transactions consist of
certain bids or purchases made for the purpose of preventing or retarding a
decline in the market price of the notes while the offering is in progress.
The Agents also may impose a penalty bid. This occurs when a particular
agent repays to the Agents a portion of the discount received by it because the
representatives have repurchased notes sold by or for the account of such agent
in stabilizing or short covering transactions.
These activities may stabilize, maintain or otherwise affect the market
price of the notes. As a result, the price of the notes may be higher than the
price that otherwise might exist in the open market. If these activities are
commenced, they may be discontinued by the Agents at any time. These
transactions may be effected in the over-the-counter market or otherwise.
S-23
<PAGE>
The Company estimates that its share of the total expenses of the offering,
excluding underwriting discounts and commissions, will be approximately
$800,000.
Unless otherwise indicated in the applicable pricing supplement, the
purchase price of the notes will be required to be paid in immediately
available funds in The City of New York.
Goldman, Sachs & Co. and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated may be customers of, engage in transactions with and
perform services for the Company in the ordinary course of business.
S-24
<PAGE>
PROSPECTUS
Nationwide Health Properties, Inc.
Debt Securities
----------------
The Company may periodically issue up to $500,000,000 of its senior
unsecured debt securities. The terms of the debt securities and distribution
arrangements will be included in prospectus supplements and pricing
supplements.
The Debt Securities--
.will be in one or more series;
. will be offered in amounts, at prices and on terms to be agreed
upon by the Company and the purchasers;
. will be issued in amounts, with maturities, interest rates and
offering prices set forth in a prospectus supplement; and
. will be sold by the Company through agents or to or through
underwriters or dealers.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus. Any representation to the contrary is
a criminal offense.
----------------
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a prospectus supplement.
----------------
The date of this Prospectus is February 16, 1999.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
The Company files with the Securities and Exchange Commission (the "SEC")
annual, quarterly and other reports, proxy statements and other information.
You may read and copy any document we file at the SEC's public reference rooms
at 450 Fifth Street, N.W., Washington, DC 20549 and in New York, New York and
Chicago, Illinois. For further information on the public reference rooms you
can call the SEC at 1-800-SEC-0330. Our SEC filings are also available at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005. In addition, the Company's SEC filings are available to the public
at the SEC's web site at: http://www.sec.gov.
The Company has filed with the SEC a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended. This prospectus and
the accompanying prospectus supplement do not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the SEC's rules. You may read or obtain copies of the complete
Registration Statement in the manner described above, including the SEC's web
site.
The SEC allows us to "incorporate by reference" the information that we file
with them, which means that we can disclose important information to you by
referring you to other documents filed with the SEC. The information
incorporated by reference is considered to be part of this prospectus, and
later information that we file with the SEC will automatically update and may
supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended, until all of the
notes have been sold:
. Annual Report on Form 10-K for the fiscal year ended December 31,
1997;
. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998; and
. Current Reports on Form 8-K, filed with the Commission on April 30,
1998, October 8, 1998 and October 16, 1998.
You may request a copy of these filings, at no cost, by writing or calling
us at the following address:
Nationwide Health Properties, Inc.
610 Newport Center Drive, Suite 1150
Newport Beach, California 92660
Attention: Mark L. Desmond
Telephone number: (949) 718-4400
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We are not making an offer of
these debt securities in any state where the offer is not permitted. You should
not assume that the information in this prospectus or any supplement is
accurate as of any date other than the date on the front of those documents.
2
<PAGE>
THE COMPANY
Nationwide Health Properties, Inc., a Maryland corporation organized in
October 1985 (the "Company"), is a real estate investment trust ("REIT") which
invests primarily in health care related facilities and provides financing to
health care providers. As of September 30, 1998, the Company had investments in
337 facilities located in 33 states. The facilities include 198 skilled nursing
facilities, 104 assisted living facilities, 14 continuing care retirement
communities, 16 residential care facilities for the elderly, two rehabilitation
hospitals and three medical clinics. The facilities are operated by 60
different operators, including the following publicly traded companies:
Alternative Living Services, Inc., American Retirement Corporation, ARV
Assisted Living, Inc., Assisted Living Concepts, Inc., Beverly Enterprises,
Inc., Extendicare Health Services, 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., Sun Healthcare Group, Inc. and UNISON HealthCare Corporation. 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 nine months ended September 30, 1998.
As of September 30, 1998, the Company had direct ownership of 154 skilled
nursing facilities, 96 assisted living facilities, nine continuing care
retirement communities, 16 residential care facilities for the elderly, two
rehabilitation hospitals and three medical clinics. All of the Company's owned
facilities are leased under "net" leases, which are accounted for as operating
leases.
The leases have initial terms ranging from 9 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. Most leases contain provisions such that 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 176
facilities are backed by irrevocable letters of credit or security deposits
which cover one 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 September 30, 1998, the Company held 34 mortgage loans secured by 44
skilled nursing care facilities, eight assisted living facilities and five
continuing care retirement communities. As of September 30, 1998, the mortgage
loans had a net book value of approximately $208,094,000 with individual
outstanding balances ranging from approximately $571,000 to $21,500,000 and
maturities ranging from 1999 to 2031.
The Company anticipates providing lease or mortgage financing for health
care facilities to qualified operators and acquiring additional health care
related facilities, including skilled nursing facilities, assisted living
facilities, acute care hospitals and medical office buildings. 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 that it has operated in such a manner as to qualify for
taxation as a REIT under Sections 856 through 860 of the Internal Revenue Code
of 1986, as amended, commencing with its taxable year ending December 31, 1985,
and the Company intends to continue to operate in such a manner. If the Company
qualifies for taxation as a REIT, it will generally not be subject to federal
corporate income taxes on its net income that is currently distributed to
stockholders. This
3
<PAGE>
treatment substantially eliminates the "double taxation" (e.g., at the
corporate and stockholder levels) that generally results from investment in
stock of a corporation. Among the requirements for taxation as a REIT, the
Company is required to distribute substantially all of its taxable income
(determined without regard to capital gains) each year. Failure to do so may
cause the Company to fail to qualify for taxation as a REIT.
The Company's principal executive offices are located at 610 Newport Center
Drive, Suite 1150, Newport Beach, California 92660, and its telephone number is
(949) 718-4400.
4
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial information of the Company for
each of the three years in the period ended December 31, 1997 is derived from
the Company's 1997, 1996 and 1995 Annual Reports on Form 10-K. The selected
consolidated financial information for the periods ended September 30, 1998 and
September 30, 1997 is derived from the Company's Quarterly Reports on Form 10-Q
for the periods ended September 30, 1998 and 1997. The Company's consolidated
financial statements in the 1997 Annual Report on Form 10-K have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports incorporated by reference herein. The Company's consolidated financial
statements in the 1996 and 1995 Annual Reports on Form 10-K have been audited
by Arthur Andersen LLP, independent public accountants, but are not included or
incorporated by reference herein. The selected consolidated financial
information set forth below should be read in conjunction with the detailed
information, consolidated financial statements and related notes and applicable
"Management's Discussion and Analysis" included in the 1997 Annual Report on
Form 10-K and the Quarterly Report on Form 10-Q for the period ended September
30, 1998.
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
----------------------------- ----------------------
1997 1996 1995 1998 1997
---------- -------- -------- ---------- ----------
(in thousands)
<S> <C> <C> <C> <C> <C>
Revenues:
Minimum rent........... $ 79,587 $ 66,536 $ 54,504 $ 75,536 $ 56,623
Interest and other
income................ 22,454 17,104 14,759 17,009 15,986
Additional rent and
additional interest... 13,664 12,136 11,776 11,729 10,187
---------- -------- -------- ---------- ----------
115,705 95,776 81,039 104,274 82,796
Expenses:
Depreciation and non-
cash charges.......... 19,825 16,723 13,885 20,035 14,001
Interest and
amortization of
deferred financing
costs................. 28,899 20,797 14,628 26,745 20,639
General and
administrative........ 3,993 3,312 3,144 3,453 2,774
---------- -------- -------- ---------- ----------
52,717 40,832 31,657 50,233 37,414
---------- -------- -------- ---------- ----------
Income before gain on
sale of facilities...... 62,988 54,944 49,382 54,041 45,382
Gain on sale of
facilities.............. 829 -- 989 2,321 829
---------- -------- -------- ---------- ----------
Net income............... 63,817 54,944 50,371 56,362 46,211
Preferred stock
dividends............... (1,962) -- -- (5,758) (43)
---------- -------- -------- ---------- ----------
Net income available to
common stockholders..... $ 61,855 $ 54,944 $ 50,371 $ 50,604 $ 46,168
========== ======== ======== ========== ==========
Financial Position (at
end of period):
Total assets........... $1,077,394 $744,984 $670,111 $1,295,558 $1,053,330
Bank borrowings........ 19,600 32,300 93,900 30,400 --
Senior notes due 2000-
2038.................. 355,000 190,000 100,000 480,150 355,000
Convertible
debentures............ 64,512 64,920 65,000 57,456 64,534
Notes and bonds
payable............... 58,297 9,229 23,364 66,584 48,908
Stockholders' equity... 553,046 428,588 371,822 613,379 554,052
</TABLE>
5
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The Ratio of Earnings to Fixed Charges for each of the periods indicated is
as follows:
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended December 31, September 30,
------------------------ -------------
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio............................... 7.63 5.52 4.44 3.64 3.03 3.22
</TABLE>
For current information on the Ratio of Earnings to Fixed Charges, please
see our most recent Form 10-K and 10-Q. See "Where You Can Find More
Information."
USE OF PROCEEDS
Unless otherwise specified in the prospectus supplement which accompanies
this prospectus, the net proceeds from the sale of the Debt Securities offered
from time to time hereby will be used for general corporate purposes, including
the repayment of short term bank lines of credit and investments in health care
related facilities. The Company uses its existing revolving bank credit
facility primarily to provide short term financing for the acquisitions of
health care related facilities. To the extent that the Company has amounts
outstanding under the credit facility at the time it issues Debt Securities, it
is currently required to use the proceeds of such issuance to repay amounts
outstanding under the credit facility.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities may be issued from time to time as a single series or in
two or more separate series. The following description of the terms of the Debt
Securities sets forth certain general terms and provisions of the Debt
Securities to which any prospectus supplement may relate. The particular terms
of the Debt Securities offered by any prospectus supplement (the "Offered Debt
Securities"), and the extent to which such general provisions may apply to the
Offered Debt Securities, will be described in a prospectus supplement relating
to such Offered Debt Securities.
The Debt Securities will be issued under an indenture, dated as of January
13, 1999, as such indenture may be amended from time to time (the "Indenture"),
between the Company and Chase Manhattan Bank and Trust Company, as trustee (the
"Trustee"). The terms of the Debt Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and holders of
the Debt Securities are referred to the Indenture and the Trust Indenture Act
for a statement thereof. The following summary of certain provisions of the
Debt Securities and of the Indenture does not purport to be complete and is
qualified in its entirety by reference to the Indenture, a copy of which has
been filed as an exhibit to the Registration Statement of which this prospectus
is a part. Capitalized terms used but not defined herein have the meanings
given to them in the Indenture.
General
The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder, and Debt Securities may be issued
thereunder from time to time as a single series or in two or more separate
series up to the aggregate principal amount from time to time authorized by the
Company for each series. As of the date of this prospectus, the Company has
authorized the issuance under the Indenture of up to $500,000,000 aggregate
initial offering price of Debt Securities, of which none has been issued.
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The Debt Securities will be unsecured general obligations of the Company and
will rank pari passu with all other unsecured and unsubordinated indebtedness
of the Company from time to time outstanding.
The applicable prospectus supplement or prospectus supplements will describe
the terms of the Offered Debt Securities, including: (i) the aggregate
principal amount and denominations of such Debt Securities; (ii) the date on
which such Debt Securities will mature; (iii) the date or dates on which the
principal of such Debt Securities is payable, if other than on maturity, or the
method of determination thereof; (iv) the rate or rates per annum (which may be
fixed or variable), or formula for determining such rate or rates, at which
such Debt Securities will bear interest, if any; (v) the dates on which such
interest, if any, will be payable; (vi) the Place of Payment or transfer with
respect to such Debt Securities; (vii) the provisions for redemption or
repayment of such Debt Securities, if any, including the redemption and/or
repayment price or prices and any remarketing arrangements relating thereto;
(viii) the sinking fund requirements or similar provisions, if any, with
respect to such Debt Securities; (ix) whether such Debt Securities are
denominated or provide for payment in United States dollars or a foreign
currency or units of two or more currencies; (x) the form (registered or bearer
or both) in which such Debt Securities may be issued and the terms applicable
to the exchange of one form for another and any restrictions on the offer, sale
and delivery of Debt Securities in either form; (xi) if the Company will pay
additional amounts ("Additional Amounts") in respect of Debt Securities held by
a person who is not a U.S. person in respect of specified taxes, assessments or
other governmental charges, under what circumstances the Company will pay such
Additional Amounts and whether the Company has the option to redeem the
affected Debt Securities rather than pay such Additional Amounts; (xii) whether
such Debt Securities will be issued in whole or in part in the form of one or
more global securities and, in such case, the Depositary for such global
securities; (xiii) the title of such Debt Securities and the series of which
such Debt Securities shall be a part; and (xiv) any other terms of such Debt
Securities. Reference is made to the prospectus supplement for the terms of the
Debt Securities being offered thereby. The variable terms of the Debt
Securities are subject to change from time to time, but no such change will
affect any Debt Security already issued or as to which an offer to purchase has
been accepted by the Company.
The provisions of the Indenture described above provide the Company with the
ability, in addition to the ability to issue Debt Securities with terms
different from those of Debt Securities previously issued, to "reopen" a
previous issue or a series of Debt Securities and issue additional Debt
Securities of such issue or series.
Unless otherwise indicated in a pricing supplement, the covenants contained
in the Indenture would not necessarily afford holders of Debt Securities
protection in the event of a highly leveraged or other transaction involving
the Company that may adversely affect holders.
Payment and Paying Agents
Unless otherwise indicated in an applicable prospectus supplement, payment
of principal of and premium and interest, if any, on Debt Securities will be
made at the office of such Paying Agent or Paying Agents as the Company may
designate from time to time, except that at the option of the Company payment
of any interest may be made (i) by check mailed to the address of the person
entitled thereto as such address shall appear in the Security Register or (ii)
by wire transfer to an account maintained by the person entitled thereto as
specified in the Security Register. Unless otherwise indicated in an applicable
prospectus supplement, payment of any installment of interest on Debt
Securities will be made to the person in whose name such Debt Security is
registered at the close of business on the Regular Record Date for such
interest.
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Unless otherwise indicated in an applicable prospectus supplement, the
Trustee, acting through its Corporate Trust Office, will be designated as the
Company's sole Paying Agent for payments with respect to Debt Securities of
such series. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent or approve a change in the office
through which any Paying Agent acts, except that the Company will be required
to maintain a Paying Agent in each Place of Payment for such series. All monies
paid by the Company to a Paying Agent for the payment of principal of or
premium or interest, if any, on any Debt Security which remain unclaimed at the
end of two years after such principal, premium or interest shall have become
due and payable will be repaid to the Company, and the holder of such Debt
Security or any coupon will thereafter look only to the Company for payment
thereof.
Global Securities
The Debt Securities of a series may be issued in whole or in part in global
form. A Debt Security in global form will be deposited with, or on behalf of, a
Depositary, which will be identified in an applicable prospectus supplement. A
global Debt Security may be issued in either registered or bearer form and in
either temporary or permanent form. A Debt Security in global form may not be
transferred except as a whole by the Depositary for such Debt Security to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary, or by such Depositary or any
such nominee to a successor of such Depositary or a nominee of such successor.
If any Debt Securities of a series are issuable in global form, the applicable
prospectus supplement will describe the circumstances, if any, under which
beneficial owners of interests in any such global Debt Security may exchange
such interests for definitive Debt Securities of such series and of like tenor
and principal amount in any authorized form and denomination, the manner of
payment of principal of, premium and interest, if any, on any such global Debt
Security and the material terms of the depositary arrangement with respect to
any such global Debt Security.
Certain Covenants
The Debt Securities will not be secured by mortgage, pledge or other lien.
The Company will covenant in the Indenture not to pledge or otherwise subject
to any lien any property or assets of the Company unless the Debt Securities
are secured by such pledge or lien equally and ratably with all other
obligations secured thereby so long as such obligations shall be so secured;
provided, however, that such covenant will not apply to liens securing
obligations which do not in the aggregate at any one time outstanding exceed
10% of Consolidated Net Tangible Assets (as defined below) of the Company and
its consolidated subsidiaries and will not apply to:
(1) Any lien or charge on any property, tangible or intangible, real or
personal, existing at the time of acquisition or construction of such
property (including acquisition through merger or consolidation) or given
to secure the payment of all or any part of the purchase or construction
price thereof or to secure any indebtedness incurred prior to, at the time
of, or within one year after, the acquisition or completion of construction
thereof for the purpose of financing all or any part of the purchase or
construction price thereof;
(2) Any liens securing the performance of any contract or undertaking of
the Company not directly or indirectly in connection with the borrowing of
money, obtaining of advances or credit or the securing of debts, if made
and continuing in the ordinary course of business;
(3) Any lien to secure nonrecourse obligations in connection with the
Company's engaging in leveraged or single investor lease transactions;
(4) Any lien in favor of the United States or any state thereof or the
District of Columbia, or any agency, department or other instrumentality
thereof, to secure progress, advance, or other payments pursuant to any
contract or provision of any statute;
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<PAGE>
(5) Mechanics', materialmen's, carriers', or other like liens arising in
the ordinary course of business (including construction of facilities) in
respect of obligations which are not due or which are being contested in
good faith;
(6) Any lien arising by reason of deposits with, or the giving of any
form of security to, any governmental agency or any body created or
approved by law or governmental regulations, which is required by law or
governmental regulation as a condition to the transaction of any business,
or the exercise of any privilege, franchise or license;
(7) Any liens for taxes, assessments or governmental charges or levies
not yet delinquent, or liens for taxes, assessments or governmental charges
or levies already delinquent but the validity of which is being contested
in good faith;
(8) Liens (including judgment liens) arising in connection with legal
proceedings so long as such proceedings are being contested in good faith
and in the case of judgment liens, execution thereof is stayed;
(9) Liens relating to secured indebtedness of the Company outstanding on
December 31, 1998; and
(10) Any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, of any lien referred to
in the foregoing clauses (1) to (9) inclusive; provided, however, that the
amount of any and all obligations and indebtedness secured thereby shall
not exceed the amount thereof so secured immediately prior to the time of
such extension, renewal or replacement and that such extension, renewal or
replacement shall be limited to all or a part of the property which secured
the charge or lien so extended, renewed or replaced (plus improvements on
such property).
"Consolidated Net Tangible Assets" means the aggregate amount of assets
(less applicable reserves and other properly deductible items) less (i) all
current liabilities and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expenses and other like intangibles of the
Company and its consolidated subsidiaries, all as set forth on the most recent
balance sheet of the Company and its consolidated subsidiaries prepared in
accordance with generally accepted accounting principles.
The Company also covenants in the Indenture that it will not create, assume,
incur, or otherwise become liable in respect of, any
(a) Senior Debt (as defined below) unless the aggregate outstanding
principal amount of Senior Debt of the Company will not, at the time of
such creation, assumption or incurrence and after giving effect thereto and
to any concurrent transactions, exceed the greater of (i) 150% of Capital
Base (as defined below), or (ii) 225% of Tangible Net Worth (as defined
below); and
(b) Non-Recourse Debt (as defined below) unless the aggregate
outstanding principal amount of Senior Debt and Non-Recourse Debt of the
Company will not, at the time of such creation, assumption or incurrence
and after giving effect thereto and to any concurrent transactions, exceed
225% of Capital Base.
For the purposes of this limitation as to borrowing money, "Senior Debt"
means all Debt other than Non-Recourse Debt and Subordinated Debt; "Debt," with
respect to any person, means (i) its indebtedness, secured or unsecured, for
borrowed money; (ii) Liabilities secured by any existing lien on property owned
by such person; (iii) Capital Lease Obligations, and the present value of all
payments due under any arrangement for retention of title (discounted at a rate
per annum equal to the average interest borne by all outstanding Debt
Securities determined on a weighted average basis and compounded semi-annually)
if such arrangement is in substance an installment purchase or an arrangement
for the retention of title for security purposes; and (iv) guarantees of
obligations of
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the character specified in the foregoing clauses (i), (ii) and (iii), to the
full extent of the liability of the guarantor (discounted to the present value,
as provided in the foregoing clause (iii), in the case of guarantees of title
retention arrangements); "Capital Lease" means at any time any lease of
property, real or personal, which, in accordance with generally accepted
accounting principles, would at such time be required to be capitalized on a
balance sheet of the lessee; "Capital Lease Obligation" means at any time the
amount of the liability in respect of a Capital Lease which, in accordance with
generally accepted accounting principles, would at such time be required to be
capitalized on a balance sheet of the lessee; "Non-Recourse Debt" with respect
to any person, means any Debt secured by, and only by, property on or with
respect to which such Debt is incurred where the rights and remedies of the
holder of such Debt in the event of default do not extend to assets other than
the property constituting security therefor; "Subordinated Debt" means
unsecured Debt of the Company which is issued or assumed pursuant to, or
evidenced by, an indenture or other instrument which contains provisions for
the subordination of such Debt (to which appropriate reference shall be made in
the instruments evidencing such Debt if not contained therein) to the Debt
Securities (and, at the option of the Company, if so provided, to other Debt of
the Company, either generally or as specifically designated); "Capital Base"
means, at any date, the sum of Tangible Net Worth and Subordinated Debt;
"Tangible Net Worth" means, at any date, the net book value (after deducting
related depreciation, obsolescence, amortization, valuation and other proper
reserves) of the Tangible Assets of the Company at such date minus the amount
of its Liabilities at such date; "Tangible Assets" means all assets of the
Company (including assets held subject to Capital Leases, conditional sale
agreements or other arrangements pursuant to which title to property has been
retained by or vested in some other Person for security purposes) except: (i)
deferred assets, other than prepaid insurance, prepaid taxes and deposits; (ii)
patents, copyrights, trademarks, trade names, franchises, goodwill,
experimental expense and other similar intangibles; and (iii) unamortized debt
discount and expense; and "Liabilities" means, at any date, the items shown as
liabilities on the balance sheet of the Company, except any items of deferred
income, including capital gains.
Successor Corporation
The Indenture provides that the Company may consolidate with, or transfer or
lease all or substantially all of its properties and assets to, or consolidate
or merge with or into, any other person provided, that in any such case: (i)
the successor person shall be a corporation, limited liability company,
partnership or trust organized and existing under the laws of the United States
or any state thereof or the District of Columbia and shall expressly assume, by
a supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all of the obligations of the Company under the
Debt Securities and the Indenture; and (ii) the Company or such successor
person, as the case may be, shall not, immediately after such transaction, be
in default in the performance of any of such obligations. Subject to certain
limitations in the Indenture, the Trustee will receive from the Company an
officers' certificate and an opinion of counsel stating that any such
consolidation, merger, sale, lease or conveyance, and any such assumption,
complies with the provisions of the Indenture.
Supplemental Indentures
Supplemental indentures may be made by the Company and the Trustee with the
consent of the holders of 66 2/3% in principal amount of any series of
outstanding Debt Securities, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture or
of modifying in any manner the rights of the holders of each such series
affected by such modification or amendment, provided that no supplemental
indenture may, among other things, reduce the principal amount of or interest
on any Debt Securities, change the maturity date of the principal, the interest
payment dates or other terms of payment or reduce the percentage in principal
amount of outstanding Debt Securities of any series the consent of whose
holders is necessary to
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<PAGE>
modify or alter the Indenture, without the consent of each holder of Debt
Securities affected thereby. Under certain circumstances, supplemental
indentures may also be made without the consent of the holders.
Events of Default
The Indenture defines an Event of Default with respect to any series of Debt
Securities as being any one of the following events and such other events as
may be established for the Debt Securities of a particular series: (i) default
in payment of any interest or Additional Amount on the Debt Securities of such
series and continuance of such default for a period of 30 days; (ii) default in
payment of principal or premium, if any, on the Debt Securities of such series
at their maturity; (iii) default in the deposit of any sinking fund payment
with respect to such series when, as and if due; (iv) default in the
performance, or breach, of any covenant or warranty, of the Company in the
Indenture or any Debt Security of that series (other than a covenant or
warranty in the Indenture solely for the benefit of a series of Debt Securities
other than such series) continued for 60 days after appropriate notice; (v)
certain events of bankruptcy, insolvency, reorganization or other similar
occurrences; and (vi) certain other events of default, if any, relating to a
particular series of Debt Securities. No Event of Default with respect to a
particular series of Debt Securities issued under the Indenture necessarily
constitutes an Event of Default with respect to any other series of Debt
Securities issued thereunder. If an Event of Default occurs and is continuing,
the Trustee or the holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities of each series affected thereby may declare the
Debt Securities of such series to be due and payable. Any past default with
respect to a particular series of Debt Securities may be waived by the holders
of at least a majority in aggregate principal amount of the outstanding Debt
Securities of such series, except in a case of failure to pay principal of, or
premium, if any, or interest on or Additional Amounts with respect to such Debt
Securities for which payment had not been subsequently made or a default in
respect of a covenant or provision of the Indenture which cannot be modified or
amended without the consent of the holder of each outstanding Debt Security of
such series. The Company will be required to file with the Trustee annually an
Officers' Certificate as to the compliance with all conditions and covenants
under the Indenture. The Trustee may withhold notice to holders of any series
of Debt Securities of any default with respect to such series (except in
payment of principal, premium, if any, interest or Additional Amounts) if it in
good faith determines that it is in the interest of such holders to do so.
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the holders, unless such
holders have offered to the Trustee reasonable indemnity or security against
the costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction. Subject to provisions in the Indenture for the
indemnification of the Trustee and to certain other limitations, the holders of
a majority in principal amount of the outstanding Debt Securities of any series
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee with respect to the Debt Securities of such
series.
Satisfaction and Discharge of Indenture
The Indenture (except for certain specified surviving obligations including,
among other things, the Company's obligation to pay the principal of, and
premium, if any, and interest on the Debt Securities) will be discharged with
respect to the Debt Securities of any series which are due and payable or will
become due and payable at maturity or redemption within one year upon the
satisfaction of certain conditions, including the payment in full of the
principal of, and premium, if any,
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<PAGE>
and interest on all of the Debt Securities of such series or the deposit with
the Trustee of an amount in cash or United States government obligations
sufficient for such payment or redemption, in accordance with the Indenture.
Defeasance
The Company may terminate certain of its obligations under the Indenture
with respect to the Debt Securities of any series, including its obligations to
comply with the restrictive covenants set forth in the Indenture (see "Certain
Covenants") with respect to the Debt Securities of such series, on the terms
and subject to the conditions contained in the Indenture, by depositing in
trust with the Trustee cash or United States government obligations sufficient
to pay the principal of, and premium, if any, and interest on the Debt
Securities of such series to their maturity in accordance with the terms of the
Indenture and the Debt Securities of such series. In such event, the Trustee
will receive from the Company an opinion of counsel stating that such deposit
and termination will not have any federal income tax consequences to the
holders.
Regarding the Trustee
The Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee is permitted to engage in
other transactions with the Company; provided, however, that if the Trustee
acquires any conflicting interest it must eliminate such conflict or resign.
The Indenture provides that, in case an Event of Default has occurred and is
continuing, the Trustee is required to use the degree of care and skill of a
prudent person in the conduct of his or her own affairs in the exercise of its
rights and powers.
Governing Law
The Indenture and the Debt Securities will be governed by and construed in
accordance with the laws of the State of New York.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities through underwriters or agents or
directly to purchasers. A prospectus supplement will set forth the names of
such underwriters or agents, if any, and the specific designation, aggregate
principal amount, rate and time of payment and interest, if any, redemption
and/or repayment, if any, and other terms, and any listing on a securities
exchange of the Debt Securities in respect of which this prospectus is
delivered.
The Debt Securities may be sold to underwriters for their own account and
may be resold to the public from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. A prospectus supplement will set
forth any underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers.
The Debt Securities may be sold directly by the Company, or through agents
designated by the Company from time to time. A prospectus supplement will set
forth any commission payable by the Company to such agent. Unless otherwise
indicated in the prospectus supplement, any such agent will be acting on a
reasonable efforts basis for the period of its appointment.
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The net proceeds to the Company from the sale of the Debt Securities will be
the purchase price of the Debt Securities less any such discounts or
commissions and the other attributable expenses of issuance and distribution.
The Company will agree to indemnify underwriters and agents against certain
civil liabilities, including liabilities under the Securities Act of 1933, or
contribute to payments underwriters or agents may be required to make in
respect thereof.
LEGAL MATTERS
O'Melveny & Myers LLP will issue an opinion about the validity of the Debt
Securities. Unless otherwise specified in an applicable prospectus supplement,
Brown & Wood LLP will act as counsel for the underwriters or agents, if any.
Paul C. Pringle, a partner at Brown & Wood LLP, owns 5,000 shares of Common
Stock of the Company.
EXPERTS
Arthur Andersen LLP, independent public accountants, audited the Company's
financial statements and schedules incorporated by reference in this prospectus
and elsewhere in the registration statement. These documents are incorporated
by reference herein in reliance upon the authority of Arthur Andersen LLP as
experts in accounting and auditing in giving the audit reports.
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No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You
must not rely on any unauthorized information or representations. This
prospectus is an offer to sell only the notes offered hereby, but only under
circumstances and in jurisdictions where it is lawful to do so. The
information contained in this prospectus is current only as of its date.
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TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
The Company................................................................ S-2
Recent Developments........................................................ S-3
Pricing Supplement......................................................... S-3
Use of Proceeds............................................................ S-3
Ratio of Earnings to Fixed Charges......................................... S-3
Description of the Notes................................................... S-4
United States Taxation..................................................... S-16
Supplemental Plan of Distribution.......................................... S-23
Prospectus
Where You Can Find More Information........................................ 2
The Company................................................................ 3
Selected Consolidated Financial Information................................ 5
Ratio of Earnings to Fixed Charges......................................... 6
Use of Proceeds............................................................ 6
Description of Debt Securities............................................. 6
Plan of Distribution....................................................... 12
Legal Matters.............................................................. 13
Experts.................................................................... 13
</TABLE>
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$500,000,000
[LOGO OF NATIONWIDE HEALTH PROPERTIES, INC.]
Medium-Term Notes, Series D
Due 9 Months or More from Date of Issue
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PROSPECTUS SUPPLEMENT
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Goldman, Sachs & Co.
Merrill Lynch & Co.
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