Filed Pursuant to Rule 424(b)(5)
File No. 333-26887
PROSPECTUS SUPPLEMENT
(To Prospectus Dated May 30, 1997)
2,500,000 Shares
Health and Retirement Properties Trust
Common Shares of Beneficial Interest
Health and Retirement Properties Trust (the "Company" or "HRP") is a
real estate investment trust (a "REIT"), which invests primarily in healthcare
related real estate and office buildings leased to various agencies of the
United States Government. The Company's common shares of beneficial interest
(the "Shares") offered hereby (this "Offering") are being issued and sold by the
Company. The Shares are traded on the New York Stock Exchange (the "NYSE") under
the symbol "HRP." On February 18, 1998 the last reported sale price for the
Shares on the NYSE was $20 per Share.
A.G. Edwards & Sons, Inc. (the "Underwriter") has agreed to purchase
the Shares offered hereby from the Company at a price of $19 per Share,
resulting in aggregate proceeds to the Company of $47,500,000 before payment of
expenses by the Company estimated at $100,000, subject to the terms and
conditions of an Underwriting Agreement. The Underwriter intends to sell the
Shares offered hereby to the sponsor of a newly formed unit investment trust
registered under the Investment Company Act of 1940, as amended, at $19.20 per
Share, or an aggregate purchase price of $48,000,000. The aggregate underwriting
discount is $500,000. Such sponsor intends to deposit the Shares into the Trust
in exchange for units in the Trust. The units of the Trust will be sold to
investors at a price based upon the net asset value of the securities in the
Trust. For purposes of this calculation, the value of the Shares on February 18,
1998 was $20.00 per Share. The Company has agreed to indemnify the Underwriter
against certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The Shares offered hereby are offered by the Underwriter subject to
prior sale, when, as and if accepted by the Underwriter and subject to certain
conditions. It is expected that delivery of the Shares will be made on or about
February 23, 1998, at the offices of A.G. Edwards & Sons, Inc., New York, New
York.
A.G. Edwards & Sons, Inc.
February 18, 1998
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE
SHARES. SPECIFICALLY, THE UNDERWRITER MAY BID FOR, AND PURCHASE, SHARES IN THE
OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
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References in this Prospectus Supplement to the "Company" or "HRP"
include consolidated subsidiaries unless the context indicates otherwise. Unless
otherwise noted, the data set forth below with respect to the Company's
investments and tenants is presented as of December 31, 1997 and without giving
effect to acquisitions which occurred or may occur after that date.
THE COMPANY
The Company is one of the largest publicly traded REITs in the United
States with an equity market capitalization of approximately $2.0 billion at
December 31, 1997. The Company has investments of approximately $2.2 billion in
217 properties located in 33 states and the District of Columbia. The Company
principally invests in healthcare related real estate and office buildings
leased to various agencies of the United States Government. In addition, 5% of
the Company's assets, at cost, is an equity investment in Hospitality Properties
Trust ("HPT"), a NYSE listed REIT formed by the Company which invests in hotels.
The principal executive offices of the Company are located at 400
Centre Street, Newton, Massachusetts 02158; and its telephone number is (617)
332-3990.
RECENT DEVELOPMENTS
From January 1, 1997 through December 31, 1997 (or as otherwise
described below), the Company engaged in the following significant activities:
Investments
Government Office Properties. In February 1997, the Company entered
into an agreement to acquire 30 office buildings containing 3.4 million square
feet ("Government Office Properties"), substantially all of which are leased to
various agencies of the United States Government. As of December 31, 1997, the
Company acquired 29 properties, one of which is under construction, and elected
not to acquire one property. Subsequent to December 31, 1997, one of the 29
properties was sold. The Company's aggregate purchase price for the 29
properties (3.3 million square feet) was approximately $439 million. The total
purchase price for the Government Office Properties was paid by the issuance of
$77 million in shares, the assumption of approximately $27 million of debt by
subsidiaries of the Company secured by mortgages on three acquired properties,
and a net cash payment of approximately $335 million, which was used in part to
retire other debt of the seller assumed by the Company as part of the
acquisition transaction and to pay closing costs.
Biotech Facilities and Medical and Other Office and Clinic Buildings.
During 1997, the Company purchased 42 biotech facilities, medical and other
office and clinic buildings for an aggregate purchase price of approximately
$525 million. Acquisitions of facilities or buildings with a purchase price of
at least $25 million included the following: (a) a first class office building
in midtown Manhattan containing approximately 420,368 square feet purchased in
October 1997 for approximately $110 million (this building is 100% occupied
under long term leases to three tenants, with the majority of the building being
leased to Health Insurance Plan of Greater New York, a large not-for-profit
health maintenance organization); (b) two first class buildings containing
330,715 square feet plus two parking structures for approximately 1,700 cars
located in West Los Angeles purchased in May 1997 for approximately $109 million
(these buildings are known as the Cedars Sinai Medical Towers and Garages and
are located adjacent to the Cedars Sinai Medical Center, an investment grade
rated not-for-profit hospital which is also the largest tenant in these
buildings); (c) an office complex in Austin, Texas containing five commercial
office properties, with approximately 441,145 square feet purchased in December
1997 for $79 million; (d) a first class 25 story office tower located in
Philadelphia containing approximately 608,161 square feet purchased in November
1997 for approximately $79 million (approximately 98% of this building is leased
on a long-term basis to SmithKline Beecham Corporation, an investment grade
rated international pharmaceutical manufacturer and distributor); and
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(e) 20 medical office and clinic buildings containing approximately 373,500
square feet located in central Massachusetts purchased in May 1997 for
approximately $47 million (these buildings are triple net leased on a long term
basis to a regional health maintenance organization that is partially owned by
Tenet Healthcare Corporation). Certain of these properties are gross leased and
the net operating income which the Company realizes from these investments will
depend upon the efficiency with which the Company is able to operate these
buildings.
Brookdale Living Communities. In May 1997, the Company purchased for
$14 million a 200-unit retirement housing property located in Spokane,
Washington. This property and three other retirement housing properties (629
units) purchased for $87.5 million in December 1996 are all net leased to
Brookdale Living Communities, Inc. ("BLCI") for an initial term of 23 years plus
renewal options totaling an additional 50 years. During 1997, BLCI was
recapitalized by two public offerings of equity and as of December 31, 1997 had
an equity market capitalization of over $124 million. At December 31, 1997, the
occupancy at these four properties was approximately 97% and all of the revenues
are derived from sources other than Medicaid and Medicare.
Financing
Debt Offerings. In July 1997, the Company issued $200 million of
Remarketed Reset Notes due July 9, 2007 (the "Reset Notes"). The net proceeds of
that issuance (approximately $199 million) were used to prepay other
indebtedness of the Company then due in 1999 ($125 million) and to reduce
amounts outstanding under the Company's bank credit facility.
On February 18, 1998, the Company agreed to sell an additional $50
million aggregate principal amount of the Reset Notes (the "Additional Reset
Notes") in an offering registered pursuant to the Securities Act of 1933, as
amended (the "Securities Act"). The Additional Reset Notes will be sold to the
public at varying prices to be determined by the underwriter at the time of each
sale. The net proceeds of the Company will be 99.85245% of the principal amount
of the Additional Reset Notes, plus accrued interest, before deducting expenses
payable by the Company. Subject to the terms and conditions of the underwriting
agreement, the Company expects such offering to close on February 23, 1998, and
expects that its net proceeds from such offering, after payment of the Company's
expenses, will be $49.8 million. The Company expects to use the net proceeds
from the offering of the Additional Reset Notes, together with the proceeds of
the offering of the 6.7% Notes, the Concurrent Offerings (as defined below) and
this Offering, to reduce amounts outstanding under the Company's bank credit
facility and for general business purposes. There can be no assurance that the
offering of the Additional Reset Notes will be consummated. The consummation of
this Offering is not contingent upon the consummation of the offering of the
Additional Reset Notes, and the consummation of such offering is not contingent
upon the consummation of this Offering.
The Reset Notes currently bear interest at a floating rate equal to
three month LIBOR plus a spread of .45% per annum. In July 1998, the Company
will have the option to prepay the Reset Notes or to have the Reset Notes
remarketed and the interest rate reset on either a floating or fixed rate basis.
In December 1997, the Company issued $150 million of 6 3/4% Senior
Notes due 2002 (the "6 3/4% Notes") in a private placement to institutional
investors. The net proceeds from the offering (approximately $149 million) were
used to reduce amounts then outstanding under the Company's bank credit
facility. The Company has agreed with the initial purchasers of the 6 3/4% Notes
to use its best efforts to consummate an offer to exchange the 6 3/4% Notes for
new notes with terms substantially identical in all material respects to the 6
3/4% Notes, which would be registered pursuant to the Securities Act.
On February 18, 1998, the Company agreed to sell an aggregate of $100
million of 6.7% Senior Notes due 2005 (the "6.7% Notes") at a price to the
public of 99.945% in an offering registered pursuant to the Securities Act.
Subject to the terms and conditions of the underwriting agreement, the Company
expects such offering to close on February 23, 1998, and expects that its net
proceeds from such offering, after payment of the Company's
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expenses, will be $99.1 million. The Company expects to use the net proceeds of
such offering, together with the proceeds of the offering of the Additional
Reset Notes, the Concurrent Offerings (as defined below) and this Offering, to
reduce amounts outstanding under the Company's bank credit facility and for
general business purposes. There can be no assurance that the offering described
above will be consummated. The consummation of this Offering is not contingent
upon the consummation of the offering described in this paragraph, and the
consummation of such offering is not contingent upon the consummation of this
Offering.
Equity Offering. In March 1997, the Company issued 27,025,000 Shares in
a public offering. The gross proceeds of the offering were $510.1 million
($18.875 per share), and the net proceeds to the Company were $483.2 million.
On February 18, 1998, the Company sold an aggregate of 2,995,776 Shares
at a price to the public of $20.125 per Share in two offerings registered
pursuant to the Securities Act to underwriters who indicated to the Company that
they intended to deposit Shares purchased in such offering into registered unit
investment trusts sponsored by them (collectively, the "Concurrent Offerings").
The net proceeds from the Concurrent Offerings, after payment of the Company's
expenses, were approximately $57.0 million in the aggregate. The Company expects
to use the net proceeds of the Concurrent Offerings, together with the proceeds
of the offerings of the Additional Reset Notes and the 6.7% Notes and this
Offering, to reduce amounts outstanding under the Company's bank credit facility
and for general business purposes.
Convertible Debentures. In October 1996, the Company sold three
tranches of convertible subordinated debentures totaling $240 million. All of
these debentures are convertible into Shares at a rate of $18 per share and are
callable at par by the Company at any time on or after October 1, 1999. During
1997, the trading price of the Company's Shares has averaged above $18 per
share. Through December 31, 1997, approximately $28 million of these debentures
have been converted into approximately 1.6 million Shares.
Bank Credit Facility. In July 1997, the Company's $250 million
unsecured revolving credit facility with a syndicate of banks was increased to
$450 million (the "Bank Credit Facility"), and in March 1997, the term of the
Bank Credit Facility was extended to 2001. The Company is currently in
discussion with the lenders under the Bank Credit Facility to amend the Bank
Credit Facility to modify certain covenants of the Company and possibly to
increase the maximum principal amount that may be outstanding thereunder. No
assurances can be given at this time that the Company and such lenders will
reach a final agreement as to such changes. The Bank Credit Facility (which is
guaranteed by certain of the Company's subsidiaries) is used for interim
acquisition funding until equity or long-term debt is raised, working capital
and general business purposes. Outstanding borrowings under the Bank Credit
Facility at December 31, 1997 were $200 million. Net proceeds of this Offering,
the offerings of the Additional Reset Notes and the 6.7% Notes, and the
Concurrent Offerings will be used to reduce amounts outstanding under the Bank
Credit Facility. See "Use of Proceeds."
Secured Indebtedness. The Company has no outstanding secured
indebtedness other than mortgages on three properties totaling approximately $26
million, which the Company assumed in connection with the acquisition of the
Government Office Properties.
Other Developments
Horizon/CMS Healthcare Corporation; HEALTHSOUTH Corporation; and
Integrated Health Services, Inc. As of December 31, 1997, the Company had
invested approximately $168 million, at cost, in properties that had been leased
by, mortgaged to or managed by Horizon/CMS Healthcare Corporation ("HHC"). In
October 1997, HHC merged into HEALTHSOUTH Corporation ("HEALTHSOUTH"). In return
for the Company's consent to this merger, HEALTHSOUTH agreed to guarantee
unconditionally all of the lease, mortgage and management obligations of HHC due
to the Company and to extend the terms of the management contracts of three
properties that were scheduled to expire during 1998 until 2001. In December
1997, HRP consented to the release of
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HEALTHSOUTH from the guarantee and to the assignment of certain leases and
mortgages from HEALTHSOUTH and its predecessor, HHC, to Integrated Health
Services, Inc. ("IHS") as part of a $1.2 billion transaction between HEALTHSOUTH
and IHS for nursing homes, specialty hospitals and pharmacy services. In
connection with this consent, IHS guaranteed leases, mortgages and management
obligations to HRP affecting the former HHC properties, and the maturities of
these leases, mortgages and management obligations, which were previously
scheduled for 2000, 2001 and 2005, were extended to 2006.
GranCare, Inc.; Living Centers of America, Inc.; and Paragon Health
Network, Inc. As of December 31, 1997, the Company had invested approximately
$98 million, at cost, in properties that had been leased to, or mortgaged by,
GranCare, Inc. ("GC"). In February 1997, GC distributed to its shareholders all
of its nursing home operations and merged its pharmacy business into Vitalink,
Inc. ("Vitalink"), another public company. Under the terms of the GC Vitalink
agreement, the GC nursing home operations became a new public company ("New
GC"), and certain subsidiaries of New GC remained tenants of and mortgagors to
the Company (the "Tenant Subsidiaries"). The Company consented to this GC
Vitalink transaction on certain terms and conditions, including: (i) all of the
leases and mortgages between the Company and the Tenant Subsidiaries being cross
defaulted, cross collateralized, cross secured and unconditionally guaranteed by
New GC; (ii) Vitalink providing a $15 million unconditional guarantee of the
obligations due to the Company; and (iii) GC paying an amendment fee to the
Company. In October 1997, New GC merged into Living Centers of America, Inc.
("LCA"), another public company. As part of the New GC LCA transaction a large
number of LCA and New GC shares were repurchased, LCA was recapitalized by new
investors, the combined New GC LCA enterprise changed its name to Paragon Health
Network, Inc. ("Paragon"), and Paragon solicited the Company to release Vitalink
from its guaranty obligations to the Company. The Company consented to the New
GC LCA Paragon transaction and released Vitalink from its guaranty on certain
terms and conditions, including: (a) certain mortgage obligations totaling
approximately $11.5 million due to the Company being prepaid in full; (b)
certain properties owned by the Company and leased to the Tenant Subsidiaries
being exchanged for other properties formerly owned by LCA or the Tenant
Subsidiaries, which properties were to be leased to the Tenant Subsidiaries; (c)
the term of certain leases being extended and all renewal options for properties
leased to the Tenant Subsidiaries being renewable only on an all or none basis;
(d) the rent payable to the Company being increased; (e) all obligations with
respect to all properties leased or financed with the Tenant Subsidiaries being
guaranteed by Paragon and the guaranty being secured by a cash deposit of $15
million; (f) all obligations of the Tenant Subsidiaries being subject to cross
default and cross collateralization, and guaranteed by New GC (now a subsidiary
of Paragon); and (g) payment to the Company of an amendment fee. The Company
believes that the properties leased and to be leased by it to subsidiaries of
Paragon had historical operating income in the 12 months ended September 30,
1997 of approximately 2 times the rent due to the Company.
Community Care of America, Inc. and Integrated Health Services, Inc. As
of December 31, 1997, the Company had invested approximately $112 million, at
cost, in properties that had been operated by Community Care of America, Inc.
("CCA"). In September 1997, CCA was acquired by IHS. The Company consented to
IHS's acquisition of CCA on certain terms and conditions including: (i)
mortgages due to the Company totaling approximately $12.2 million being prepaid
in full; (ii) certain properties formerly leased to CCA being purchased from the
Company at their historical cost of approximately $33.5 million; (iii) the
extension of terms of certain remaining leases and mortgages; (iv) the remaining
leases and mortgages being subject to cross default and cross collateralization,
and unconditionally guaranteed by IHS; and (v) payment to the Company of an
amendment fee. The Company believes that former CCA properties now leased to or
mortgaged by IHS and its subsidiaries had historical operating income in the 12
months ended September 30, 1997 of approximately 1.5 times the rents and
mortgage payments due to the Company.
Marriott Spin Off and Merger. As of December 31, 1997, the Company had
invested approximately $326 million, at cost, in properties leased to a
subsidiary of Marriott International, Inc. ("Marriott"). In October 1997,
Marriott announced a plan to dividend to its shareholders a new company which
will own and operate Marriott's lodging and senior living businesses and to
merge the remaining company with Sodexho S.A. As a result of this spin off and
merger the Company's current guarantor was expected to have a negative net worth
and its obligations
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were not expected to be rated investment grade. Upon learning of this planned
transaction, the Company entered negotiations with Marriott and, as a result of
those negotiations, an agreement has been entered into that will be effective
upon consummation of the Marriott spin off and merger transaction. This
agreement requires that the spin off entity created by Marriott assume the
guarantee obligations to the Company. The new spin off entity is expected to be
investment grade rated.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Shares offered
hereby, after deducting expenses related to this Offering, are approximately
$47.4 million. The net proceeds from this Offering, the offerings of the
Additional Reset Notes and the 6.7% Notes and the Concurrent Offerings are
expected to be used to reduce amounts outstanding under the Company's Bank
Credit Facility and for general business purposes. Outstanding amounts under the
Company's Bank Credit Facility bear interest, at the Company's option, at LIBOR
plus a margin or prime, and the Bank Credit Facility expires in 2001. At
December 31, 1997, the effective interest rate on outstanding amounts under the
Bank Credit Facility was 6.82% per annum.
FEDERAL INCOME TAX CONSEQUENCES
The following description of certain changes to federal income tax
matters relating to the Company is intended to supplement, and is qualified in
its entirety by reference to, the more detailed description of certain federal
income tax matters contained in the Company's Annual Report on Form 10-K for its
fiscal year ended December 31, 1996 (the "Annual Report"), which is incorporated
in the accompanying Prospectus and in this Prospectus Supplement by reference.
The Taxpayer Relief Act of 1997 liberalized certain of the requirements
for qualifying and operating as a REIT under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended (the "Code"). These amendments apply
to the Company for its taxable year commencing January 1, 1998, but are not
expected to alter significantly either the Company's operations or its continued
federal tax qualification and taxation as a REIT. In comparison to the rules and
requirements in effect for the Company's 1997 taxable year (as discussed in the
Annual Report in the section captioned "Federal Income Tax Considerations"), the
amendments, inter alia: (i) eliminate REIT disqualification as the sanction for
failing to solicit certain shareholder ownership statements and instead impose a
penalty of $25,000 ($50,000 for intentional violations), and permit a REIT that
solicits necessary shareholder ownership statements and otherwise exercises
reasonable due diligence to rely on its actual knowledge for purposes of
satisfying the requirement that at no time during the last half of its taxable
year was more than 50% in value of its outstanding shares owned directly or
indirectly by five or fewer individuals; (ii) repeal the requirement that less
than 30% of a REIT's gross income be derived from sales or dispositions of
certain short-term property; (iii) treat income from a larger class of hedging
instruments as qualifying income for purposes of the 95% gross income
requirement; (iv) permit a REIT to receive de minimis amounts of otherwise
impermissible service income from tenants, and nevertheless have the rental
income from such tenants qualify as rents from real property for purposes of the
75% and 95% gross income requirements; and (v) permit a REIT to retain and pay
income tax on net long term capital gain, and without an actual distribution
thereof, pass through to its shareholders such gain and a refundable credit for
such taxes paid.
Treasury Regulations issued on October 6, 1997 (the "New Regulations")
alter the withholding rules on dividends paid to a non-U.S. shareholder,
generally effective with respect to dividends paid after December 31, 1998.
Under the New Regulations, to obtain a reduced rate of withholding under an
income tax treaty, a non-U.S. shareholder generally will be required to provide
an Internal Revenue Service Form W-8 certifying such non-U.S. shareholder's
entitlement to benefits under the treaty. The New Regulations also provide
special rules to determine whether, for purposes of determining the
applicability of a tax treaty, dividends paid to a non-U.S. shareholder that is
an entity should be treated as paid to the entity or to those holding an
interest in that entity, and whether such
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entity or such holders in the entity are entitled to benefits under the tax
treaty. The New Regulations also alter the information reporting and backup
withholding rules applicable to non-U.S. shareholders and, among other things,
provide certain presumptions under which a non-U.S. shareholder is subject to
backup withholding and information reporting until the Company receives
certification from such shareholder of its non-U.S. status. The foregoing is not
intended to be a complete discussion of the New Regulations, and prospective
investors are urged to consult their tax advisors with respect to the effect of
the New Regulations on an investment in the Shares.
UNDERWRITING
Pursuant to the terms and subject to the conditions of the Underwriting
Agreement (the "Underwriting Agreement") between the Company and the
Underwriter, the Underwriter has agreed to purchase from the Company, and the
Company has agreed to sell to the Underwriter, 2,500,000 Shares.
The Underwriting Agreement provides that the obligation of the
Underwriter to pay for and accept delivery of the Shares offered hereby is
subject to the approval of certain legal matters by counsel for the Underwriter
and certain other conditions. The Underwriter is obligated to take and pay for
all of the Shares offered hereby if any such Shares are taken.
The Underwriter intends to sell the Shares to Nike Securities L.P.,
which intends to deposit such shares, together with shares of common stock of
other entities also acquired from the Underwriter, into a newly-formed unit
investment trust (the "Trust") registered under the Investment Company Act of
1940, as amended, in exchange for units in the Trust. The Underwriter intends to
sell the Shares to Nike Securities L.P. at an aggregate purchase price of
$48,000,000. It is anticipated that the Underwriter will also participate in the
distribution of units of the Trust and will receive compensation therefor. The
Underwriter is not an affiliate of Nike Securities L.P. or the Trust.
Pursuant to the Underwriting Agreement, the Company has agreed to
indemnify the Underwriter against certain liabilities, including liabilities
under the Securities Act of 1933, as amended, or to contribute to payments the
Underwriter may be required to make in respect thereof.
Until the distribution of the Shares offered hereby is completed, rules
of the Securities and Exchange Commission may limit the ability of the
Underwriter to bid for and purchase Shares. As an exception to these rules, the
Underwriter is permitted to engage in certain transactions that stabilize the
price of the Shares. Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the Shares. It is not
currently anticipated that the Underwriter will engage in any such transactions
in connection with this offering.
If the Underwriter creates a short position in the Shares in connection
with this offering, i.e., if it sells more Shares than are set forth on the
cover page of this Prospectus Supplement, the Underwriter may reduce that short
position by purchasing Shares in the open market.
In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases.
Neither the Company nor the Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above might have on the price of the Shares. In addition, neither the
Company nor the Underwriter makes any representation that the Underwriter will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
In the ordinary course of business, the Underwriter and its affiliates
have engaged, and may in the future engage, in investment banking transactions
with the Company.
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LEGAL MATTERS
Certain legal matters with respect to the Shares offered by the Company
have been passed upon for the Company by Sullivan & Worcester LLP, Boston,
Massachusetts and for the Underwriter by Chapman and Cutler, Chicago, Illinois.
Sullivan & Worcester LLP and Chapman and Cutler will rely, as to all matters of
Maryland law, upon the opinion of Piper & Marbury L.L.P., Baltimore, Maryland.
Barry M. Portnoy was a partner in the firm of Sullivan & Worcester LLP until
March 31, 1997 and is a Managing Trustee of the Company and of HPT, a director
and 50% shareholder of HRPT Advisors, Inc. and REIT Management & Research, Inc.
and a director and/or significant shareholder of certain lessees of the Company.
Sullivan & Worcester LLP represents HPT, the other entities referred to above,
such lessees and certain of their affiliates on various matters.
EXPERTS
In addition to the matters referred to in the accompanying Prospectus
under the caption "Experts," the following financial statements have been
audited by the following independent public accountants:
The historical statement of gross income and direct operating expenses
of Bridgepoint Square for the year ended December 31, 1996 incorporated by
reference in this Prospectus Supplement from the Company's Current Report on
Form 8-K dated December 5, 1997, as amended, has been audited by Price
Waterhouse LLP, independent public accountants, as set forth in their report
thereon incorporated herein by reference, and is incorporated herein in reliance
upon the authority of such firm as experts in accounting and auditing.
The statement of revenues and certain expenses of Franklin Office
Associates for the year ended December 31, 1996 is incorporated by reference in
this Prospectus Supplement from the Company's Current Report on Form 8-K dated
November 13, 1997, as amended by Form 8-K/A dated January 14, 1998, in reliance
upon the report of KPMG Peat Marwick LLP, independent public accountants,
incorporated by reference herein and upon the authority of said firm as experts
in accounting and auditing.
The historical statement of revenues and certain expenses of Seven West
Associates, LLC for the period January 28, 1996 through January 25, 1997
incorporated by reference in this Prospectus Supplement from the Company's
Current Report on Form 8-K dated October 1, 1997, as amended, has been audited
by Deloitte & Touche LLP, independent public accountants, as set forth in their
report thereon incorporated herein by reference, and is incorporated herein in
reliance upon the authority of such firm as experts in accounting and auditing.
The historical summary of gross income and direct operating expenses
for two medical office buildings and two parking structures owned by
Wright-Carlyle Partners for the year ended December 31, 1996 included in the
Company's Current Report on Form 8-K dated October 1, 1997, as amended, has been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
In addition to the documents incorporated by reference or deemed
incorporated by reference into the accompanying Prospectus, which Prospectus is
supplemented by this Prospectus Supplement, the following documents, which have
been filed with the Commission pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), are hereby incorporated in this Prospectus
Supplement and specifically made a part hereof by reference: (i) the Company's
Current Reports on Form 8-K dated June 23, 1997, July 2, 1997, September 2,
1997, October 1, 1997, as amended, November 13, 1997, as amended, December 5,
1997, as amended, February 11, 1998, February 12, 1998, February 17, 1998 and
February 18, 1998, (ii) the Company's
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quarterly reports on Form 10-Q for the quarterly periods ended June 30, 1997 and
September 30, 1997, and (iii) the consolidated financial statements of Marriott
International, Inc., Commission File No. 1-12188, at and for the fiscal quarters
ended March 28, 1997, June 28, 1997 and September 27, 1997 incorporated herein
by reference from Marriott's Quarterly Reports on Form 10-Q for the quarters
ended March 28, 1997, June 28, 1997 and September 27, 1997. All documents filed
by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus Supplement and prior to the
termination of this Offering shall be deemed to be incorporated by reference
into this Prospectus Supplement and to be a part hereof from the respective
dates of filing of such documents.
Any statement contained herein or in a document incorporated or deemed
to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Prospectus Supplement to the extent that a
statement contained herein, or in any other subsequently filed document that
also is or is deemed to be incorporated herein by reference, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus Supplement.
The Company will provide without charge to each person to whom this
Prospectus Supplement is delivered, upon the written or oral request of such
person, a copy of any and all of the information that has been incorporated by
reference in this Prospectus Supplement (excluding exhibits unless such exhibits
are specifically requested or such exhibits are specifically incorporated by
reference into the information that this Prospectus Supplement incorporates).
Requests for such copies should be made to the Company at its principal
executive offices, 400 Centre Street, Newton, MA 02158, Attention: Investor
Relations, telephone (617) 332-3990.
FORWARD LOOKING STATEMENTS
THIS PROSPECTUS SUPPLEMENT 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.
PROSPECTIVE PURCHASERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE
FORWARD LOOKING STATEMENTS WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE COMPANY
UNDERTAKES NO OBLIGATION TO PUBLISH REVISED FORWARD LOOKING STATEMENTS TO
REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE
OCCURRENCE OF PRESENTLY UNANTICIPATED EVENTS.
------------------
THE AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING THE COMPANY, DATED
JULY 1, 1994, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED IN THE OFFICE OF THE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HEALTH AND RETIREMENT
PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS
TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER,
SHAREHOLDER, EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY PERSONAL
LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE
COMPANY. ALL PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL LOOK ONLY TO
THE ASSETS OF THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
S-9
<PAGE>
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained or incorporated by
reference in this Prospectus Supplement and Prospectus. If given or made, such
information or representation must not be relied upon as having been authorized
by the Company or the Underwriter. This Prospectus Supplement and the Prospectus
do not constitute an offer to sell, or solicitation of an offer to buy, Common
Shares in any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. Neither the delivery of this
Prospectus Supplement or the Prospectus nor any sale made hereunder or
thereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company since the date hereof.
TABLE OF CONTENTS
Page
Prospectus Supplement
The Company..................................................S-2
Recent Developments..........................................S-2
Use of Proceeds..............................................S-6
Federal Income Tax Consequences..............................S-6
Underwriting.................................................S-7
Legal Matters................................................S-8
Experts......................................................S-8
Incorporation of Certain Information by Reference............S-9
Forward Looking Statements...................................S-9
Prospectus
Available Information.......................................(ii)
Incorporation of Certain Documents by
Reference.................................................(ii)
The Company....................................................1
Use of Proceeds................................................1
Ratio of Earnings to Fixed Changes.............................1
Description of Debt Securities.................................1
Description of Shares.........................................12
Description of Preferred Shares...............................13
Description of Depositary Shares..............................18
Description of Warrants.......................................22
Description of Convertible Subordinated
Debentures..................................................22
Limitation of Liability; Shareholder Liability................23
Redemption; Business Combinations
and Control Share Acquisitions..............................23
Plan of Distribution..........................................26
Legal Matters.................................................27
Experts.......................................................28
2,500,000 Shares
HEALTH AND RETIREMENT
PROPERTIES TRUST
Common Shares
of Beneficial Interest
PROSPECTUS SUPPLEMENT
A.G. Edwards & Sons, Inc.
February 18, 1998
