SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 19, 1998
HEALTH AND RETIREMENT PROPERTIES TRUST
(Exact name of registrant as specified in charter)
Maryland 1-9317 04-6558834
(State or other (Commission file (IRS employer
jurisdiction of number) identification no.)
incorporation)
400 Centre Street, Newton, Massachusetts 02158
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 617-332-3990
<PAGE>
THIS CURRENT REPORT CONTAINS FORWARD-LOOKING STATEMENTS. SUCH
STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES WHICH COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED OR PROJECTED.
INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING
STATEMENTS WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE REGISTRANT UNDERTAKES NO
OBLIGATION TO PUBLISH REVISED FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR
CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(b) Unaudited Pro Forma Consolidated Financial Statements (set forth
beginning on page P-1).
(c) Exhibits.
23 Consent of Arthur Andersen LLP.
-2-
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HEALTH AND RETIREMENT PROPERTIES TRUST
Unaudited Pro Forma Consolidated Financial Statements
The following unaudited pro forma consolidated balance sheet as of
December 31, 1997 and the consolidated statement of income for the year ended
December 31, 1997, present the consolidated financial position and the results
of operations of Health and Retirement Properties Trust and consolidated
subsidiaries (the "Company") as if the transactions described in the notes to
unaudited financial statements were consummated on January 1, 1997. Additional
information with respect to such transactions is provided in the Company's
Annual Report on Form 10-K for its fiscal year ended December 31, 1997 (and in
materials incorporated by reference therein), which is incorporated by reference
into this Current Report. These unaudited pro forma consolidated financial
statements should be read in connection with, and are qualified in their
entirety by reference to, the separate consolidated financial statements of the
Company for the year ended December 31, 1997, included in the Company's Current
Report on Form 8-K dated February 27, 1998, which is incorporated by reference
into this Current Report. These unaudited pro forma consolidated financial
statements are not necessarily indicative of the financial position and the
expected results of operations of the Company for any future period. Differences
could result from, among other considerations, future changes in the Company's
portfolio of investments, changes in interest rates, changes in the capital
structure of the Company, delays in the acquisition of certain properties and
changes in property level operating expenses.
P-1
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<TABLE>
<CAPTION>
Health and Retirement Properties Trust
Pro Forma Consolidated Balance Sheets
December 31, 1997
(dollars in thousands)
(unaudited)
Recent
Historical Acquisitions (A) Pro Forma
------------ ----------------- ---------
<S> <C> <C> <C>
ASSETS
Real estate properties, at cost: $1,969,023 $ 152,651 $2,121,674
Less accumulated depreciation 111,669 -- 111,669
---------- ---------- ----------
1,857,354 152,651 2,010,005
Real estate mortgages, net 104,288 -- 104,288
Investment in Hospitality Properties Trust 111,134 -- 111,134
Other assets 63,187 (52,651) 10,536
---------- ---------- ----------
$2,135,963 100,000 2,235,963
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank notes payable $ 200,000 $ 100,000 $ 300,000
Senior notes and bonds payable, net 349,900 -- 349,900
Mortgage notes payable 26,329 -- 26,329
Convertible subordinated debentures 211,650 -- 211,650
Other liabilities 81,824 81,824
Shareholders' equity 1,266,260 1,266,260
---------- ---------- ----------
$2,135,963 $ 100,000 $2,235,963
========== ========== ==========
</TABLE>
See accompanying notes to unaudited pro forma financial statements
P-2
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<TABLE>
<CAPTION>
Health and Retirement Properties Trust
Pro Forma Consolidated Statements of Income
Year Ended December 31, 1997
(amounts in thousands, except per share data)
(unaudited)
Second Third
Quarter Quarter West
Acquisitions Acquisitions 34th
Historical GPI(B) CSMC(C) (D) (D) Street (E)
----------- ---------- ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Rental Income $188,000 $ 11,959 $ 6,831 $ 2,948 $ 3,179 $ 10,771
Interest Income 20,863 (366) -- -- -- --
-------- -------- -------- -------- -------- --------
Total revenues 208,863 11,593 6,831 2,948 3,179 10,771
-------- -------- -------- -------- -------- --------
Expenses:
Operating 26,765 2,053 1,910 -- 954 3,641
Interest 36,766 (1,216) 3,232 1,087 1,463 2,876
Depreciation and amortization 39,330 4,156 1,119 627 501 1,869
General and administrative 11,670 2,105 249 139 111 415
-------- -------- -------- -------- -------- --------
Total expenses 114,531 7,098 6,510 1,853 3,029 8,801
-------- -------- -------- -------- -------- --------
Income before equity in earnings of
Hospitality Properties Trust and
before extraordinary item 94,332 4,495 321 1,095 150 1,970
Equity in earnings of Hospitality
Properties Trust 8,590
Gain on equity transaction of
Hospitality Properties Trust 9,282 - -
-------- -------- -------- -------- -------- --------
Net income before extraordinary item $112,204 $ 4,495 $ 321 $ 1,095 $ 150 $ 1,970
-------- -------- -------- -------- -------- --------
Average shares outstanding 92,168
Basic and diluted earnings per commonshare:
Net income before extraordinary item $ 1.22
<CAPTION>
Fourth
Quarter
Franklin Bridgepoint Acquisitions Recent
Plaza (F) Square (G) (D) Acquisitions (H) Pro Forma
---------- -------------- ------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Rental Income $ 9,614 $ 5,599 $ 8,461 $ 19,505 $266,867
Interest Income -- -- -- -- 20,497
-------- -------- -------- -------- --------
Total revenues 9,614 5,599 8,461 19,505 287,364
-------- -------- -------- -------- --------
Expenses:
Operating 4,904 2,162 2,634 4,240 49,263
Interest 2,486 3,216 4,338 6,500 60,748
Depreciation and amortization 1,334 1,175 1,269 3,435 54,815
General and administrative 296 262 283 764 16,294
-------- -------- -------- -------- --------
Total expenses 9,020 6,815 8,524 14,939 181,120
-------- -------- -------- -------- --------
Income before equity in earnings of
Hospitality Properties Trust and
before extraordinary item 594 (1,216) (63) 4,566 106,244
Equity in earnings of Hospitality
Properties Trust - 8,590
Gain on equity transaction of
Hospitality Properties Trust - - - 9,282
-------- -------- -------- -------- --------
Net income before extraordinary ite$ $ 594 $ (1,216) $ (63) $ 4,566 $124,116
-------- -------- -------- -------- --------
Average shares outstanding 98,838
Basic and diluted earnings per
common share
Net income before extraordinary item $ 1.26
</TABLE>
See accompanying notes to unaudited pro forma financial statements
P-3
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Notes to Unaudited Pro Forma Consolidated Financial Statements
Pro Forma Balance Sheet Adjustments at December 31, 1997.
A. Represents the Company's acquisitions, during January 1998, February 1998
and March 1998 of two medical office properties and three commercial
office properties located in Pennsylvania, four commercial office
properties located in Texas, a medical office property located in
Massachusetts, a commercial office property located in Maryland, one
medical office property and two commercial office properties located in
Minnesota and three medical office properties and a commercial office
property located in Florida (collectively, "Recent Acquisitions"). The
Recent Acquisitions were funded with available cash and by drawings under
the Company's existing revolving line of credit.
Pro Forma Statement of Income Adjustments for the Year Ended December 31, 1997.
B. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of the government office properties ("Government
Office Properties") from Government Property Investors, Inc. Also reflects
the decrease in interest expense arising from the Company's issuance of its
common shares of beneficial interest in a March 1997 offering, the proceeds
of which were used in part to repay amounts then outstanding under the
Company's revolving line of credit, net of an increase in interest expense
related to the Company's assumption of certain debt in connection with the
acquisition of the Government Office Properties.
C. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of two medical office properties and two parking
structures located in Los Angeles, California, as well as the increase in
interest expense due to the use of the Company's revolving line of credit
to fund this acquisition.
D. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of a) a 200 unit retirement housing property located
in Spokane, Washington and 20 medical office clinics and ancillary
structures located in Massachusetts during the second quarter, b) three
medical and two commercial office buildings located in Pennsylvania during
the third quarter and c) a medical office property located in Colorado, a
medical office property located in Maryland, a medical office property
located in Rhode Island, three medical office properties located in
California, and a medical office property located in Washington, D.C.
during the fourth quarter, as well as the increase in interest expense due
to the use of the Company's revolving line of credit to fund these
acquisitions.
E. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of West 34th Street in New York City, as well as the
increase in interest due to the use of the Company's revolving line of
credit to fund the acquisition.
F. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of Franklin Plaza in Philadelphia, Pennsylvania, as
well as the increase in interest expense due to the use of the Company's
revolving line of credit to fund the acquisition.
G. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of Bridgepoint Square, Austin, Texas. Bridgepoint
Square consists of five properties, of which one property was under
construction at September 30, 1997 and one property was completed in July
1997. Also represents the increase in interest expense due to the use of
the Company's revolving line of credit to fund the acquisition.
H. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's Recent Acquisitions as well as the increase in interest due to
the use of the Company's revolving line of credit to fund these
acquisitions.
P-4
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEALTH AND RETIREMENT PROPERTIES TRUST
By: /s/ Ajay Saini
Ajay Saini, Treasurer and Chief Financial
Officer
Date: March 24, 1998
EXHIBIT 23
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the
incorporation of our report dated January 16, 1998 included in Health and
Retirement Properties Trust's Form 8-K dated February 27, 1998 into the Health
and Retirement Properties Trust's Form 10-K, and into the previously filed
Registration Statements File Nos. 33-62135, 333-26887 and 333-34823.
/s/ Arthur Andersen LLP
Washington, D.C.
March 19, 1998
