SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant /X/ Filed by a Party other than the Registrant / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e(2))
/ / Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Health and Retirement Properties Trust
(Name of Registrant as Specified In Its Charter)
Health and Retirement Properties Trust
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
or Item 22 (a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3). / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
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<PAGE>
To Our Shareholders:
The Company reported record results for the first quarter of 1996. Revenues for
the quarter ended March 31, 1996 were $27.74 million versus $25.99 million for
the comparable quarter in 1995 which represented an increase of 6.7%. Income
before gain on the sale of property and extraordinary loss from the early
extinguishment of debt for the 1996 quarter was $18.21 million versus $15.83
million for the 1995 quarter, an increase of 15%. During the quarter ended March
31, 1996, the Company refinanced its revolving line of credit and the write-off
of unamortized fees and costs of $2.4 million related to the previous line of
credit was recognized as an extraordinary loss during the quarter. The Company's
Funds From Operations increased to $24.16 million for the 1996 quarter versus
$20.1 million for the 1995 quarter, an increase of 20.4%. On a per share basis,
the Funds From Operations increased to $.37 per share from $.34 per share in the
previous year, an increase of 8.8%. Based, in part, on the results for the
quarter, the Board of Trustees declared a dividend of $.35 per share on April
10, 1996 to be paid on May 21, 1996 to shareholders of record on April 25, 1996.
The Company continued to invest in those areas of healthcare real estate that it
finds attractive. During the quarter, the Company funded $27.25 million of
investments in a medical clinic building leased to an investment grade rated
not-for-profit institution, a mortgage loan to a publicly traded assisted living
company and a loan to a publicly traded long-term care Company. The Company has
an additional $42 million of commitments to fund the acquisition of five nursing
homes and two medical clinics which properties will be leased to a publicly
traded long-term care company and two investment grade rated not-for-profit
institutions.
Management continually focuses on the capital structure of the Company. In the
first quarter, the Company refinanced its $250 million revolving credit
facility. The interest rate on outstanding borrowings was lowered and the
maturity was extended to March 15, 2000. Subsequent to the quarter, the Company
repaid more expensive secured debt with the revolving line of credit and filed a
shelf registration statement for up to $750 million of securities, including
both equity and debt securities. A shelf registration statement allows a company
access to the capital markets on an expedited basis by filing a prospectus
supplement. Any offering of securities under the registration statement will be
made only by means of a prospectus and prospectus supplement.
On May 14, 1996, the Company adjourned the Annual Meeting of Shareholders, in
part, to June 28, 1996 due to insufficient responses in connection with one
item. The item to be voted on would amend the Declaration of Trust to allow the
Board of Trustees to increase or decrease the amount of authorized capital stock
of the Company. This amendment saves the time and expense of requesting
shareholder approval every few years. The Board of Trustees advise Shareholders
to read the Proxy Statement in connection with the Annual Meeting of
Shareholders for further information regarding the proposed amendment. If you
haven't already received a new proxy, you soon will and we ask that you please
respond as soon as possible.
Thank you for your continued support.
Sincerely,
David J. Hegarty
President and Chief Operating Officer
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME Quarter Ended March 31,
---------------------------------
(Dollars in thousands except per share data) (Unaudit 1996 1995
----------- ----------
<S> <C> <C>
REVENUES:
Rental income $ 22,938 $ 19,530
Interest income 4,798 6,462
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Total revenues 27,736 25,992
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EXPENSES:
Interest 4,961 4,131
Depreciation and amortization 5,182 4,615
General, administrative and advisory 1,473 1,414
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Total expenses 11,616 10,160
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Income before equity in income of Hospitality Properties Trust,
gain on sale of properties and extraordinary item 16,120 15,832
Equity in income of Hospitality Properties Trust 2,092 -
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Income before gain on sale of properties and extraordinary item 18,212 15,832
Gain on sale of properties - 2,476
Extraordinary item - early extinguishment of debt ( 2,443) -
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Net income $ 15,769 $ 18,308
========== =========
Funds from operation (1) $ 24,161 $ 20,059
========== =========
Weighted averages shares outstanding 66,155 58,554
========== =========
PER SHARE AMOUNTS:
Income before equity income, gain on sale of
properties and extraordinary item $ .24 $ .27
========== ==========
Income before gain on sale properties and extraordinary item $ .28 $ .27
========== ==========
Net income $ .24 $ .31
========== ==========
Funds from operation (1) $ .37 $ .34
========== ==========
Dividends $ .35 $ .34
========== ==========
<FN>
(1) Funds from operations is determined based on the revised definition from
National Association of Real Estate Investment Trusts. Figures for 1995 have
been restated to conform to revised definition.
</FN>
<PAGE>
<CAPTION>
CONDENSED BALANCE SHEETS March 31, December 31,
(Dollars in thousands) (Unaudited) 1996 1995
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<S> <C> <C>
ASSETS
Real estate properties, at cost:
Land $ 73,323 $ 72,124
Buildings and improvements 718,288 706,087
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791,611 778,211
Less accumulated depreciation 60,906 55,855
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730,705 722,356
Real estate mortgages and notes, net 156,821 141,307
Investment in Hospitality Properties Trust 99,731 99,959
Cash and cash equivalents 20,824 18,640
Other assets 15,565 17,415
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$1,023,646 $999,677
============ ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank notes payable $ 80,000 $ 53,000
Notes and bonds payable, net 216,820 216,759
Other liabilities 18,636 44,326
Shareholders' equity:
Preferred shares of beneficial interest - -
Common shares of beneficial interest, 66,165,166 shares and
65,690,166 shares issued and outstanding, respectively 662 657
Additional paid-in capital 782,678 775,688
Dividends in excess of earnings ( 75,150) ( 90,753)
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Total shareholders' equity 708,190 685,592
------------ ---------
$1,023,646 $999,677
============ =========
</TABLE>
