<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): SEPTEMBER 21, 1999
HRPT 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 02458
(Address of principal executive offices) (Zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 617-332-3990
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
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INTRODUCTION.
In its Current Reports on Form 8-K dated December 23, 1998 and July 30,
1999, HRPT Properties Trust ("HRP") announced a plan for a possible
separate financing of certain senior housing properties which would include a
public offering of common shares of a subsidiary ("Senior Housing") and/or a
distribution to HRP's shareholders of common shares of that subsidiary. On
September 21, 1999, HRP announced that it will distribute the common shares of
Senior Housing in the manner described below (the "Spin-Off").
References in this Form 8-K to HRP include its consolidated subsidiaries,
unless the context otherwise requires.
THE SPIN-OFF.
Senior Housing, a Maryland real estate investment trust, is a wholly owned
subsidiary of HRP that HRP organized in December 1998. In June and July 1999,
HRP contributed to other wholly owned subsidiaries its interest in 93 properties
(the "Senior Housing Properties"), which include (i) 14 properties leased to
subsidiaries of Marriott International, Inc., (ii) four properties leased to
subsidiaries of Brookdale Living Communities, Inc., (iii) 26 properties leased
to subsidiaries of Mariner Post-Acute Network, Inc., (iv) 42 properties leased
to subsidiaries of Integrated Health Services, Inc., (v) one property leased to
a subsidiary of Genesis Health Ventures, Inc. and (vi) six properties leased to
other tenants. On or about September 1, 1999, HRP transferred 100% of the
ownership of its senior housing subsidiaries to Senior Housing. In consideration
of these transfers, Senior Housing and one of its subsidiaries have agreed to
pay $200 million to HRPT.
Senior Housing currently has 26 million common shares of beneficial
interest ("Senior Housing Common Shares") outstanding. On September 21, 1999,
the Securities and Exchange Commission declared effective Senior Housing's
registration statement on Form S-11 relating to the Spin-Off and HRP's
distribution of Senior Housing Common Shares to HRP's shareholders. On or about
October 12, 1999, HRP will distribute 13.2 million Senior Housing Common Shares
(the "Spin-Off Shares") to HRP shareholders of record on October 8, 1999. The
New York Stock Exchange (the "NYSE") has approved the Spin-Off Shares for
listing. Senior Housing will distribute a prospectus concerning the Spin-Off
Shares to HRP's shareholders.
In connection with the Spin-Off, Senior Housing has entered into a $350
million bank credit facility, secured by certain of the Senior Housing
Properties. Shortly after the distribution of Senior Housing Common Shares to
HRP shareholders, Senior Housing will borrow $200 million under its bank credit
facility and pay its formation debt to HRP.
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Upon completion of the Spin-Off, HRP's investment advisor, REIT Management
& Research, Inc. ("RMR") will become the investment advisor to Senior Housing,
and RMR's contract with HRP will be amended so that amounts invested by HRP in
Senior Housing Common Shares will not be counted for purposes of determining the
advisory fees payable by HRP to RMR.
A primary purpose of the Spin-Off is to capitalize separately Senior
Housing as a new REIT with a strong core of senior housing and healthcare real
estate and industry contacts that can take advantage of favorable market and
demographic conditions. To facilitate these efforts two senior officers of RMR
will be assigned to devote approximately 75% of their business time to Senior
Housing. David J. Hegarty is currently the President and Chief Operating Officer
of RMR and of HRP. Ajay Saini is currently a Vice President of RMR and Treasurer
and Chief Financial Officer of HRP. Upon completion of the Spin-Off, Messrs.
Hegarty and Saini will resign their positions at HRP and assume similar
positions at Senior Housing. Upon the resignation of Mr. Hegarty from HRP, it is
expected that John A. Mannix, a Vice President of RMR and Executive Vice
President of HRP, would become President and Chief Operating Officer of HRP.
Upon the resignation of Mr. Saini, it is expected that John Popeo, Treasurer and
Chief Financial Officer of RMR, would become Treasurer, Chief Financial Officer
and Secretary of HRP. In addition, Bruce M. Gans, M.D., currently an Independent
Trustee of HRP, would resign from HRP and become an independent trustee of
Senior Housing. No nominee replacement for Dr. Gans has been announced.
Upon completion of the Spin-Off, HRP will focus on managing and growing its
office building investments. As of September 1, 1999, these investments
consisted of 175 office buildings that cost $2.5 billion. HRP also owns 4
million common shares of beneficial interest of Hospitality Properties Trust,
a NYSE-listed real estate investment trust that HRP created in 1995, which
invests in hotels. HRP will retain ownership of 12.8 million Senior Housing
Common Shares.
Copies of the prospectus relating to the Spin-Off of Senior Housing and the
distribution of Spin-Off Shares by HRP can be obtained upon request, by writing
to Senior Housing Properties Trust, 400 Centre Street, Newton, MA 02458, or by
calling (617) 796-8350.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
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(b) Unaudited Pro Forma Consolidated Financial Statements of HRPT
Properties Trust (set forth beginning on page F-1)
FORWARD LOOKING STATEMENTS
This Current Report on Form 8-K contains statements and information that
constitute forward looking statements within the meaning of the Securities
Exchange Act of 1934, as amended. These statements appear in a number of places
in this Form 8-K and include statements regarding strategies, plans, beliefs and
current expectations of HRP's management. Readers are cautioned that any such
forward looking statements are not guarantees of future events and involve risks
and uncertainties that could cause actual results to differ materially from
those in the forward looking statements. Such risks and uncertainties include,
but are not limited to, the factors discussed in this Form 8-K.
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HRPT PROPERTIES TRUST
INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated balance sheet at June 30,
1999 is intended to present the financial position of HRPT Properties Trust as
if the transactions described in the notes had been completed as of June 30,
1999. The following unaudited pro forma consolidated statements of income are
intended to present the results of operations of HRPT as if these transactions
had been completed as of January 1, 1998.
These unaudited pro forma consolidated financial statements are not
necessarily indicative of what the actual consolidated financial position or
results of operations of HRPT would have been as of the date or for the periods
indicated, nor do they represent our expected consolidated financial position or
results of operations for any future period. Differences would result from,
among other considerations, future changes in HRPT's investments, changes in
rent which we receive, changes in interest rates and changes in the capital
structure of HRPT. For more information about the financial condition and
results of operations of HRPT, please refer to the financial statements of HRPT
filed with the SEC, including the audited consolidated financial statements for
the year ended December 31, 1998, included in HRPT's Current Report on Form 8-K
dated March 5, 1999, and the unaudited consolidated financial statements for the
quarter ended June 30, 1999, included in HRPT's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1999.
F-1
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HRPT PROPERTIES TRUST
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL(A) ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C>
ASSETS
Real estate properties:
Land................................................. $378,714 $(69,673) $309,041
Buildings and improvements........................... 2,627,807 (662,720) 1,965,087
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3,006,521 (732,393) 2,274,128
Accumulated depreciation............................. (184,992) 105,823 (79,169)
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2,821,529 (626,570)(B) 2,194,959
Real estate mortgages.................................. 60,530 (37,638)(B) 22,892
Investment in Hospitality Properties................... 108,242 -- 108,242
Investment in Senior Housing........................... -- 220,548 (C) 220,548
Cash and cash equivalents.............................. 26,984 (26,593)(D) 391
Other assets, net...................................... 84,869 (9,918)(B) 74,951
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$3,102,154 $(480,171) $2,621,983
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LIABILITIES AND SHAREHOLDERS' EQUITY
Bank credit facility................................... $-- $-- $--
Senior notes payable, net.............................. 957,513 (200,000)(E) 757,513
Mortgage notes payable................................. 23,985 -- 23,985
Convertible subordinated debentures.................... 204,863 -- 204,863
Other liabilities...................................... 51,252 (756)(B) 50,496
Deferred rents and other deferred revenues............. 32,509 (27,369)(B) 5,140
Security deposits...................................... 19,332 (15,235)(B) 4,097
Shareholders' equity:
Preferred shares of beneficial interest; $0.01 par
value; 50,000,000 shares authorized; none issued..... -- -- --
Common shares of beneficial interest; $0.01 par value;
150,000,000 shares authorized; 131,894,626 shares
issued and outstanding............................... 1,319 -- 1,319
Additional paid-in capital............................. 1,971,168 -- 1,971,168
Cumulative net income.................................. 643,924 (10,000)(G) 633,924
Cumulative distributions............................... (803,711) (226,811)(F) (1,030,522)
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Total shareholders' equity........................... 1,812,700 (236,811) 1,575,889
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$3,102,154 $(480,171) $2,621,983
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</TABLE>
See accompanying notes.
F-2
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HRPT PROPERTIES TRUST
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL(A) ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C>
Revenues:
Rental income...................................... $203,335 $(42,409) $160,926
Interest and other income.......................... 7,619 (2,881) 4,738
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Total revenues............................... 210,954 (45,290)(H) 165,664
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Expenses:
Operating expenses................................. 50,548 -- 50,548
Interest........................................... 39,525 (5,600)(I) 33,925
Depreciation and amortization...................... 37,314 (11,207)(J) 26,107
General and administrative......................... 9,849 (2,259)(K) 7,590
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Total expenses............................... 137,236 (19,066) 118,170
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Income before equity in earnings of
Hospitality Properties and Senior Housing, and gain
on sale of properties.............................. 73,718 (26,224) 47,494
Equity in earnings of Hospitality Properties........... 4,029 -- 4,029
Equity in earnings of Senior Housing................... -- 11,976 (L) 11,976
Loss on equity transaction of Hospitality Properties... (711) -- (711)
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Income before gain on sale of properties............... 77,036 (14,248) 62,788
Gain on sale of properties............................. 8,307 -- 8,307
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Net income............................................. $85,343 $(14,248) $71,095
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Weighted average shares outstanding.................... 131,778 -- 131,778
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Basic and diluted earnings per share:
Income before gain on sale of properties........... $0.58 $0.48
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Net income......................................... $0.65 $0.54
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</TABLE>
See accompanying notes.
F-3
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HRPT PROPERTIES TRUST
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL(A) ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C>
Revenues:
Rental income...................................... $340,851 $(82,542) $258,309
Interest and other income.......................... 15,703 (5,764) 9,939
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Total revenues............................... 356,554 (88,306)(H) 268,248
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Expenses:
Operating expenses................................. 77,536 -- 77,536
Interest........................................... 64,326 (12,400)(I) 51,926
Depreciation and amortization...................... 60,764 (18,297)(J) 42,467
General and administrative......................... 17,172 (4,480)(K) 12,692
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Total expenses............................... 219,798 (35,177) 184,621
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Income before equity in earnings of Hospitality
Properties and Senior Housing, and extraordinary
item................................................. 136,756 (53,129) 83,627
Equity in earnings of Hospitality Properties........... 7,687 -- 7,687
Equity in earnings of Senior Housing................... -- 25,484 (L) 25,484
Gain on equity transaction of Hospitality Properties... 2,213 -- 2,213
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Income before extraordinary item....................... 146,656 (27,645) 119,011
Extraordinary item--early extinguishment of debt....... (2,140) -- (2,140)
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Net income............................................. $144,516 $(27,645) $116,871
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Weighted average shares outstanding.................... 119,867 -- 119,867
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Basic and diluted earnings per share:
Income before extraordinary item................... $1.22 $0.99
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Net income......................................... $1.21 $0.98
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</TABLE>
See accompanying notes.
F-4
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HRPT PROPERTIES TRUST
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
A. Represents the historical consolidated balance sheet and consolidated
statements of income of HRPT Properties Trust ("HRPT") as of the date and
for the periods presented.
CONSOLIDATED BALANCE SHEET ADJUSTMENTS
B. Represents elimination of HRPT's historical carrying value of 93 senior
housing investments and related assets and liabilities transferred by HRPT
to Senior Housing Properties Trust ("Senior Housing").
C. Represents adjustments to reflect HRPT's investment in Senior Housing after
the spin-off and related transactions using the equity method of accounting,
calculated as follows:
<TABLE>
<S> <C>
Net historical carrying value of 93 senior housing investments and
related assets and liabilities transferred to Senior Housing (see note
B)...................................................................... $630,934
Estimated cash transferred by HRPT to Senior Housing (see note D)........ 16,425
Cash payment by Senior Housing of the formation debt to HRPT (see note
E)...................................................................... (200,000)
Distribution by HRPT of Senior Housing shares to HRPT shareholders (see
note F)................................................................. (226,811)
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HRPT's equity investment in Senior Housing............................... $220,548
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</TABLE>
D. Represents the net cash effect of the spin-off and related transactions,
calculated as follows:
<TABLE>
<S> <C>
Senior Housing cash at June 30, 1999..................................... $(168)
Estimated cash transferred to Senior Housing from HRPT................... (16,425)
Estimated transaction costs paid by HRPT (not reimbursed by Senior
Housing)................................................................ (10,000)
Cash received by HRPT from Senior Housing to pay the formation debt (see
note E)................................................................. 200,000
Cash used by HRPT to prepay HRPT senior debt outstanding (see note E).... (200,000)
---------
$(26,593)
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</TABLE>
E. After completion of the spin-off, Senior Housing will borrow $200,000 under
its bank credit facility to pay the Senior Housing formation debt due HRPT
of $200,000. This adjustment reflects the application of these proceeds by
HRPT to prepay HRPT senior debt outstanding.
F. Represents the distribution of Senior Housing shares to HRPT shareholders on
the basis of one Senior Housing share for each 10 HRPT shares outstanding,
calculated as follows:
<TABLE>
<S> <C>
Net historical carrying value of 93 senior housing investments and
related assets and liabilities transferred to Senior Housing (see note
B)...................................................................... $630,934
Estimated cash transferred to Senior Housing............................. 16,425
Cash received by HRPT from Senior Housing to pay the formation debt (see
note E)................................................................. (200,000)
---------
447,359
Multiplied by:
Senior Housing shares distributed to HRPT shareholders (13.19 million)
as a percentage of total Senior Housing shares outstanding (26
million)................................................................ X 50.7%
---------
$226,811
---------
---------
</TABLE>
F-5
<PAGE>
HRPT PROPERTIES TRUST
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
G. Represents estimated transaction costs of $10 million to be expensed by HRPT.
These expenses are not reflected in the pro forma statements of income
because they are not recurring.
CONSOLIDATED STATEMENTS OF INCOME ADJUSTMENTS
H. Represents historical rent, interest and other income realized by HRPT from
properties transferred to Senior Housing.
I. Represents the reduction in HRPT's interest expense, calculated as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
1999 1998
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<S> <C> <C>
HRPT's senior notes prepaid (see note E)...................... $200,000 $200,000
Multiplied by:
Historical interest rate of debt to be prepaid............... X 5.6% X 6.2%
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Reduction in HRPT's interest expense.......................... $5,600 $12,400
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</TABLE>
J. Represents the historical depreciation expense related to the properties
transferred to Senior Housing.
K. Represents the amount of HRPT's general and administrative expense allocated
to the properties transferred to Senior Housing. This allocation is based
upon HRPT's advisory fee formula and other costs allocated pro rata to the
historical cost of the transferred assets compared to HRPT's historical cost
of all its properties. Management believes that this method of allocating
general and administrative expenses is reasonable.
L. Represents HRPT's share of the pro forma consolidated net income of Senior
Housing, calculated as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
1999 1998
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<S> <C> <C>
Senior Housing pro forma net income........................... $24,293 $51,691
Multiplied by:
HRPT's ownership of Senior Housing shares (12.81 million) as
a percentage of total Senior Housing shares outstanding (26
million)..................................................... X 49.3% X 49.3%
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Equity in earnings of Senior Housing.......................... $11,976 $25,484
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</TABLE>
F-6
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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.
HRPT PROPERTIES TRUST
By: /s/ AJAY SAINI
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Ajay Saini,
Treasurer and Chief Financial Officer
Date: September 21, 1999
