FORM 10-K
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-K
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2008
Commission File
No. 1-8923
HEALTH CARE REIT,
INC.
(Exact name of registrant as
specified in its charter)
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Delaware
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34-1096634
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(State or other jurisdiction
of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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One SeaGate, Suite 1500, Toledo, Ohio
(Address of principal
executive office)
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43604
(Zip
Code)
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(419) 247-2800
(Registrants telephone number, including area code)
Securities registered pursuant to Section 12(b) of the
Act:
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $1.00 par value
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New York Stock Exchange
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7.875% Series D Cumulative
Redeemable Preferred Stock, $1.00 par value
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New York Stock Exchange
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7.625% Series F Cumulative
Redeemable Preferred Stock, $1.00 par value
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New York Stock Exchange
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7.5% Series G Cumulative
Convertible Preferred Stock, $1.00 par value
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes þ No o
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the
Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months; and (2) has been subject to such filing
requirements for the past
90 days. Yes þ No o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this
Form 10-K
or any amendment of this
Form 10-K. þ
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large
accelerated
filer þ
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting
company o
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(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the
Act). Yes o No þ
The aggregate market value of the shares of voting common stock
held by non-affiliates of the registrant, computed by reference
to the closing sales price of such shares on the New York Stock
Exchange as of the last business day of the registrants
most recently completed second fiscal quarter was $4,010,810,766.
As of February 16, 2009, there were 110,736,958 shares
of common stock outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions of the registrants definitive proxy statement for
the annual stockholders meeting to be held May 7,
2009, are incorporated by reference into Part III.
HEALTH
CARE REIT, INC.
2008
FORM 10-K
ANNUAL REPORT
TABLE OF CONTENTS
PART I
General
Health Care REIT, Inc., an S&P 500 company with
headquarters in Toledo, Ohio, is a real estate investment trust
(REIT) that invests in senior housing and health
care real estate. We also provide an extensive array of property
management and development services. As of December 31,
2008, our broadly diversified portfolio consisted of 633
properties in 39 states. Founded in 1970, we were the first
real estate investment trust to invest exclusively in health
care facilities. More information is available on the Internet
at www.hcreit.com.
Our primary objectives are to protect stockholder capital and
enhance stockholder value. We seek to pay consistent cash
dividends to stockholders and create opportunities to increase
dividend payments to stockholders as a result of annual
increases in rental and interest income and portfolio growth. To
meet these objectives, we invest in the full spectrum of senior
housing and health care real estate and diversify our investment
portfolio by property type, operator/tenant and geographic
location.
Depending upon the availability and cost of external capital, we
believe our liquidity is sufficient to fund operations, meet
debt service obligations (both principal and interest), make
dividend distributions and complete construction projects in
process. We also anticipate evaluating opportunities to finance
future investments. New investments are generally funded from
temporary borrowings under our unsecured line of credit
arrangement, internally generated cash and the proceeds from
sales of real property. Our investments generate internal cash
from rent and interest receipts and principal payments on loans
receivable. Permanent financing for future investments, which
replaces funds drawn under the unsecured line of credit
arrangement, has historically been provided through a
combination of public and private offerings of debt and equity
securities and the incurrence or assumption of secured debt.
References herein to we, us,
our or the Company refer to Health Care
REIT, Inc. and its subsidiaries unless specifically noted
otherwise.
Portfolio
of Properties
The following table summarizes our portfolio as of
December 31, 2008:
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Investments
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Percentage of
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Number of
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# Beds/Units
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Investment per
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Type of Property
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(In thousands)
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Investments
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Properties
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or Sq. Ft.
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metric (1)
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States
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Independent living/CCRCs
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$
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1,105,460
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18.9
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%
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63
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7,544 units
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$
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170,861 per unit
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20
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Assisted living facilities
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1,173,748
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20.0
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%
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186
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11,297 units
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116,625 per unit
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30
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Skilled nursing facilities
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1,583,084
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27.0
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%
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225
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30,669 beds
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52,420 per bed
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27
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Specialty care facilities
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619,670
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10.6
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%
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31
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1,911 beds
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463,039 per bed
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13
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Medical office buildings
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1,379,717
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23.5
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%
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128
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5,604,802 sq. ft.
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266 per sq. ft.
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23
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Totals
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$
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5,861,679
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100.0
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%
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633
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(1)
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Investment per metric was computed
by using the total investment amount of $6,590,957,000 which
includes real estate investments and unfunded construction
commitments for which initial funding has commenced which
amounted to $5,861,679,000 and $729,278,000, respectively.
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Property
Types
Our primary property types include investment properties and
medical office buildings. Under the investment property segment,
we invest in senior housing and health care real estate through
acquisition and financing of
3
primarily single tenant properties. Properties acquired are
primarily leased under
triple-net
leases. We are not involved in the management of the property.
Our primary investment property types include skilled nursing
facilities, assisted living facilities, independent
living/continuing care retirement communities and specialty care
facilities. Under the medical office building segment, our
properties are typically leased to tenants under gross leases,
modified gross leases or
triple-net
leases, to multiple tenants, and generally require a certain
level of property management. Our properties include stand-alone
facilities that provide one level of service, combination
facilities that provide multiple levels of service, and
communities or campuses that provide a wide range of services.
The following is a summary of our various property types.
Assisted
Living Facilities
Assisted living facilities are state regulated rental properties
that provide the same services as independent living facilities,
but also provide supportive care from trained employees to
residents who require assistance with activities of daily
living, including management of medications, bathing, dressing,
toileting, ambulating and eating.
Alzheimers/Dementia Care
Facilities. Certain assisted living facilities
may include state licensed settings that specialize in caring
for those afflicted with Alzheimers disease
and/or
similar forms of dementia.
Skilled
Nursing Facilities
Skilled nursing facilities are licensed daily rate or rental
properties where the majority of individuals require
24-hour
nursing
and/or
medical care. Generally, these properties are licensed for
Medicaid
and/or
Medicare reimbursement.
Independent
Living/Continuing Care Retirement Communities
These communities may include one or more of the following
property types.
Continuing Care Retirement
Communities. Continuing care retirement
communities include a combination of detached homes, an
independent living facility, an assisted living facility
and/or a
skilled nursing facility on one campus. These communities are
appealing to residents because there is no need for relocating
when health and medical needs change. Resident payment plans
vary, but can include entrance fees, condominium fees and rental
fees. Many of these communities also charge monthly maintenance
fees in exchange for a living unit, meals and some health
services.
Active Adult Communities. Active adult
communities contain primarily for-sale single-family homes,
townhomes, cluster homes, mobile homes
and/or
condominiums with no specialized services. These communities are
typically restricted or targeted to adults at least
55 years of age or older. Residents generally lead an
independent lifestyle. Communities may include amenities such as
a clubhouse, golf course and recreational spaces.
Independent Living Facilities. Independent
living facilities are age-restricted multifamily properties with
central dining facilities that provide residents access to meals
and other services such as housekeeping, linen service,
transportation and social and recreational activities.
Specialty
Care Facilities
Our specialty care facilities generally include acute care
hospitals, long-term acute care hospitals and other similar
properties. Acute care hospitals provide a wide range of
inpatient and outpatient services, including, but not limited
to, surgery, rehabilitation, therapy and clinical laboratories.
Long-term acute care hospitals provide inpatient services for
patients with complex medical conditions that require more
intensive care, monitoring or emergency support than that
available in most skilled nursing facilities. Other specialty
care facilities typically provide specialized inpatient and
outpatient care for specific illnesses or diseases, including,
among others, orthopedic and neurologic care.
4
Medical
Office Buildings
Medical office buildings are office and clinic facilities, often
located near hospitals or on hospital campuses, specifically
constructed and designed for use by physicians and other health
care personnel to provide services to their patients. They may
also include ambulatory surgery centers that are used for
general or specialty surgical procedures not requiring an
overnight stay in a hospital. Medical office buildings typically
contain sole and group physician practices and may provide
laboratory and other patient services.
Investments
We invest in senior housing and health care real estate. We
diversify our investment portfolio by property type,
operator/tenant and geographic location. In determining whether
to invest in a property, we focus on the following: (1) the
experience of the obligors management team; (2) the
historical and projected financial and operational performance
of the property; (3) the credit of the obligor; (4) the
security for the lease or loan; and (5) the capital
committed to the property by the obligor. We conduct market
research and analysis for all potential investments. In
addition, we review the value of all properties, the interest
rates and covenant requirements of any debt to be assumed and
the anticipated sources of repayment of any existing debt that
is not to be assumed.
We monitor our investments through a variety of methods
determined by the type of property and obligor. Our asset
management process for investment properties generally includes
review of monthly financial statements and other operating data
for each property, periodic review of obligor creditworthiness,
periodic property inspections and review of covenant compliance
relating to licensure, real estate taxes, letters of credit and
other collateral. We actively manage and monitor substantially
all of our medical office buildings performance with a
comprehensive property management system including property
management, leasing and maintenance personnel employed by the
Company. This property management system monitors tenant
relations, tenant expirations, tenant mix of health service
providers, hospital/health system relationships, property
performance, capital improvement needs and market conditions
among other things. In monitoring our portfolio, our personnel
use a proprietary database to collect and analyze
property-specific data. Additionally, we conduct extensive
research to ascertain industry trends and risks.
Through asset management and research, we evaluate the operating
environment in each propertys market to determine whether
payment risk is likely to increase. When we identify
unacceptable levels of payment risk, we seek to mitigate,
eliminate or transfer the risk. We categorize the risk as
obligor, property or market risk. For obligor risk, we typically
find a substitute operator/tenant to run the property. For
property risk, we usually work with the operator/tenant to
institute property-level management changes to address the risk.
Finally, for market risk, we often encourage an obligor to
change its capital structure, including refinancing the property
or raising additional equity. Through these asset management and
research efforts, we are generally able to intervene at an early
stage to address payment risk, and in so doing, support both the
collectability of revenue and the value of our investment.
Depending upon market conditions, we believe that new
investments will be available in the future with spreads over
our cost of capital that will generate appropriate returns to
our stockholders.
Segment
Reporting
Our business consists of two business segments
investment properties and medical office buildings. For
additional information regarding business segments, see
Note 19 to our audited consolidated financial statements.
Investment
Properties
Real Property. Our investment properties are
those in which we do not participate in the management of the
property and are primarily land, building, improvements and
related rights that are leased to operators under long-term
operating leases. The net value of our investment properties
(excluding construction in progress) aggregated approximately
$3,456,430,000 at December 31, 2008. The leases generally
have a fixed contractual term of 12 to 15 years and contain
one or more five to
15-year
renewal options. Most of our rents are received under
triple-net
leases requiring the operator to pay rent and all additional
charges incurred in the operation of the leased property. The
tenants are required to repair, rebuild and maintain the leased
properties. Substantially all of these operating
5
leases are designed with either fixed or contingent escalating
rent structures. Leases with fixed annual rental escalators are
generally recognized on a straight-line basis over the initial
lease period, subject to a collectability assessment. Rental
income related to leases with contingent rental escalators is
generally recorded based on the contractual cash rental payments
due for the period.
At December 31, 2008, 85% of our investment properties were
subject to master leases. A master lease is a lease of multiple
properties to one tenant entity under a single lease agreement.
From time to time, we may acquire additional properties that are
then leased to the tenant under the master lease. The tenant is
required to make one monthly payment that represents rent on all
the properties that are subject to the master lease. Typically,
the master lease tenant can exercise its right to purchase the
properties or to renew the master lease only with respect to all
leased properties at the same time. This bundling feature
benefits us because the tenant cannot limit the purchase or
renewal to the better performing properties and terminate the
leasing arrangement with respect to the poorer performing
properties. This spreads our risk among the entire group of
properties within the master lease. The bundling feature may
provide a similar advantage if the master lease tenant is in
bankruptcy. Subject to certain restrictions, a debtor in
bankruptcy has the right to assume or reject each of its leases.
It is our intent that a tenant in bankruptcy would be required
to assume or reject the master lease as a whole, rather than
deciding on a property by property basis.
Construction. We currently provide for the
construction of properties for tenants as part of long-term
operating leases. We capitalize certain interest costs
associated with funds used to pay for the construction of
properties owned by us. The amount capitalized is based upon the
amount advanced during the construction period using the rate of
interest that approximates our cost of financing. Our interest
expense is reduced by the amount capitalized. We also typically
charge a transaction fee at the commencement of construction
which we defer and amortize to income over the term of the
resulting lease. The construction period commences upon funding
and terminates upon the earlier of the completion of the
applicable property or the end of a specified period. During the
construction period, we advance funds to the tenants in
accordance with agreed upon terms and conditions which require,
among other things, periodic site visits by a Company
representative. During the construction period, we generally
require an additional credit enhancement in the form of payment
and performance bonds
and/or
completion guaranties. At December 31, 2008, we had
outstanding construction investments of $542,647,000 and were
committed to providing additional funds of approximately
$617,070,000 to complete construction for investment properties.
Real Estate Loans. Our real estate loans are
typically structured to provide us with interest income,
principal amortization and transaction fees and are generally
secured by a first, second or third mortgage lien, leasehold
mortgage, corporate guaranties
and/or
personal guaranties. At December 31, 2008, we had
outstanding real estate loans of $482,885,000. The interest
yield averaged approximately 8.52% per annum on our outstanding
real estate loan balances. Our yield on real estate loans
depends upon a number of factors, including the stated interest
rate, average principal amount outstanding during the term of
the loan and any interest rate adjustments. The real estate
loans outstanding at December 31, 2008 are generally
subject to three to
20-year
terms with principal amortization schedules
and/or
balloon payments of the outstanding principal balances at the
end of the term. Typically, real estate loans are
cross-defaulted and cross-collateralized with other real estate
loans, operating leases or agreements between us and the obligor
and its affiliates.
Medical
Office Buildings
Our medical office buildings primarily consist of multi-tenant
properties leased to health care providers. Management of these
properties is provided by our Management Services Group. Leases
with our tenants are primarily triple net leases that require
the tenants to pay their proportionate share of operating
expenses. Other lease types with our tenants are gross or
modified gross leases, where all or a portion of our operating
expenses are not reimbursed by tenants. Accordingly, we incur
certain property operating expenses, such as real estate taxes,
repairs and maintenance, utilities and insurance. At
December 31, 2008, 83% of our medical office building
leases were triple net as compared to 4% gross and 13% modified
gross leases. Substantially all of our leases at medical office
buildings include annual base rent escalation clauses that are
either predetermined fixed increases or are a function of an
inflation index, and typically have an initial term ranging from
one to 20 years, with a weighted average remaining term of
approximately five years as of December 31, 2008. Operating
property leases are normally credit
6
enhanced by guaranties
and/or
letters of credit. The net value of our medical office buildings
(excluding construction in progress) aggregated approximately
$1,282,945,000 at December 31, 2008. We also had
outstanding construction investments of $96,772,000 and expected
to provide additional funds of approximately $112,208,000 to
complete construction for medical office buildings.
Development
Services Group
Through our subsidiary, HCN Development Services Group, Inc.
(DSG), we develop quality specialty medical
properties. Formerly known as Hospital Affiliates Development
Corporation or HADC, DSG develops and constructs new
build-to-suit and multi-tenant facilities for us,
and in some instances, for third parties who are expected to
develop long-term relationships with the Company. DSG provides
services such as property development, facility and medical
equipment planning and implementation services to healthcare
services, physician groups and third party medical property
owners.
Equity
Investments
Equity investments at December 31, 2008 and 2007 include an
investment in a public company that has a readily determinable
fair market value. We classify this equity investment as
available-for-sale and, accordingly, record this investment at
its fair market value with unrealized gains and losses included
in accumulated other comprehensive income, a separate component
of stockholders equity. Additionally, equity investments
at December 31, 2008 include an investment in a private
company. We do not have the ability to exercise influence over
the company, so the investment was accounted for under the cost
method. Under the cost method of accounting, investments in
private companies are carried at cost and are adjusted only for
other-than-temporary declines in fair value, return of capital
and additional investments. These equity investments represented
a minimal ownership interest in these companies.
Borrowing
Policies
We utilize a combination of debt and equity to fund the purchase
of new properties and to provide loan financing. Our debt and
equity levels are determined by management to maintain a
conservative credit profile. Generally, we intend to issue
unsecured, fixed rate public debt with long-term maturities to
approximate the maturities on our leases and loans. For
short-term purposes, we may borrow on our unsecured line of
credit arrangement. We replace these borrowings with long-term
capital such as senior unsecured notes, common stock or
preferred stock. When terms are deemed favorable, we may invest
in properties subject to existing mortgage indebtedness. In
addition, we may obtain secured financing for unleveraged
properties in which we have invested or may refinance properties
acquired on a leveraged basis. It is our intent to limit secured
indebtedness. In our agreements with our lenders, we are subject
to restrictions with respect to secured and unsecured
indebtedness.
Competition
We compete with other real estate investment trusts, real estate
partnerships, private equity and hedge fund investors, banks,
insurance companies, finance/investment companies,
government-sponsored agencies, taxable and tax-exempt bond
funds, health care operators, developers and other investors in
the acquisition, development, leasing and financing of health
care and senior housing properties. Some of our competitors are
larger with greater resources and lower costs of capital than
us. Increased competition inhibits our ability to identify and
successfully complete investments. We compete for investments
based on a number of factors including rates, financings
offered, underwriting criteria and reputation. Our ability to
successfully compete is also impacted by economic and population
trends, availability of acceptable investment opportunities, our
ability to negotiate beneficial investment terms, availability
and cost of capital, construction and renovation costs and new
and existing laws and regulations.
The operators/tenants of our properties compete on a local and
regional basis with operators/tenants of properties that provide
comparable services. Operators/tenants compete for patients and
residents based on a number of factors including quality of
care, reputation, physical appearance of properties, services
offered, family preferences, physicians, staff and price. We
also face competition from other health care facilities for
tenants, such as physicians and other health care providers that
provide comparable facilities and services.
7
For additional information on the risks associated with our
business, please see Item 1A Risk
Factors of this Annual Report on
Form 10-K.
Employees
As of December 31, 2008, we had 203 employees.
Customer
Concentrations
The following table summarizes certain information about our
customer concentrations as of December 31, 2008 (dollars in
thousands):
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Number of
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Total
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Percent of
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Properties
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Investment
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Investment(1)
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Concentration by investment:
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Senior Living Communities, LLC
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10
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$
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345,974
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6
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%
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Signature Healthcare LLC
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34
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317,284
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5
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%
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Brookdale Senior Living, Inc.
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86
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298,143
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5
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%
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Life Care Centers of America, Inc.
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25
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264,578
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5
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%
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Emeritus Corporation
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21
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245,741
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4
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%
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Remaining portfolio
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457
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4,389,959
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75
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%
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Totals
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633
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$
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5,861,679
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100
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%
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Number of
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Total
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Percent of
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Properties
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Revenue(2)
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Revenue(3)
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Concentration by revenue(4):
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Signature Healthcare LLC
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34
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$
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41,291
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7
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%
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Emeritus Corporation
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21
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40,553
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7
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%
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Brookdale Senior Living, Inc.
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86
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38,065
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7
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%
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Life Care Centers of America, Inc.
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25
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27,671
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5
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%
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Merrill Gardens LLC
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|
13
|
|
|
|
19,816
|
|
|
|
3
|
%
|
Remaining portfolio
|
|
|
454
|
|
|
|
394,848
|
|
|
|
69
|
%
|
Other income
|
|
|
n/a
|
|
|
|
10,521
|
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
633
|
|
|
$
|
572,765
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Investments with our top five
customers comprised 27% of total investments at
December 31, 2007.
|
|
(2)
|
|
Revenues include gross revenues and
revenues from discontinued operations for the year ended
December 31, 2008.
|
|
(3)
|
|
Revenues from our top five
customers were 30% and 43% for the years ended December 31,
2007 and 2006, respectively.
|
|
(4)
|
|
All of our top five customers are
in our investment properties segment.
|
Certain
Government Regulations
Health
Law Matters Generally
We invest in assisted living, skilled nursing, independent
living/continuing care retirement communities, medical office
buildings and specialty care facilities, which represented
approximately 20%, 27%, 19%, 23% and 11%, respectively, of our
investments at December 31, 2008.
Typically, operators of assisted living and independent living
facilities do not receive significant funding from governmental
programs and are regulated by the states, not the federal
government. Operators of skilled nursing and specialty care
facilities do receive significant funding from governmental
programs and are subject to federal and state laws that regulate
the type and quality of the medical
and/or
nursing care provided, ancillary services (e.g., respiratory,
occupational, physical and infusion therapies), qualifications
of the administrative personnel and
8
nursing staff, the adequacy of the physical plant and equipment,
distribution of pharmaceuticals, reimbursement and rate setting
and operating policies. In addition, as described below, a
number of our property operators are subject to extensive laws
and regulations pertaining to health care fraud and abuse,
including kickbacks, physician self-referrals and false claims.
Hospitals, physician group practice clinics, and other health
care facilities in our portfolio are subject to extensive
federal, state and local licensure, certification, and
inspection laws and regulations. Our tenants failure to
comply with any of these laws could result in loss of
accreditation, denial of reimbursement, imposition of fines,
suspension or decertification or exclusion from federal and
state health care programs, loss of license or closure of the
facility.
Licensing
and Certification
The primary regulations that affect assisted living facilities
are the states licensing laws. In granting and renewing
these licenses, the regulatory authorities consider numerous
factors relating to a propertys physical plant and
operations including, but not limited to, admission and
discharge standards and staffing and training. A decision to
grant or renew a license is also affected by a propertys
record with respect to patient and consumer rights and
medication guidelines and rules. Certain of the senior housing
facilities mortgaged to or owned by us may require the resident
to pay an entrance or upfront fee, a portion of which may be
refundable. These entrance fee communities are subject to
significant state regulatory oversight, including, for example,
oversight of each facilitys financial condition,
establishment and monitoring of reserve requirements and other
financial restrictions, the right of residents to cancel their
contracts within a specified period of time, lien rights in
favor of residents, restrictions on change of ownership and
similar matters. Such oversight and the rights of residents
within these entrance fee communities may have an effect on the
revenue or operations of the operators of such facilities and
therefore may adversely affect us.
Skilled nursing facilities are subject to a variety of licensure
and certificate of need (CON) laws and regulations.
CON laws in those states that have them generally require a
facility to demonstrate the need for constructing a new
facility, expanding an existing facility, changing the ownership
or control of an existing licensed facility, or terminating
services that have been approved through the CON process. CONs,
where applicable, generally are required before a covered
facility can construct a new facility, add beds or expand
services, invest in major capital equipment or add new services,
or terminate services for which the facility has previously been
awarded a CON and a license. The CON laws and regulations may
restrict the ability of operators to add new properties or
expand an existing facilitys size or services. In
addition, CON laws may constrain the ability of an operator to
transfer responsibility for operating a particular facility to a
new operator. If we have to replace a barred property operator
(as discussed below), our ability to replace the operator may be
affected by CON rules and policies governing changes in control.
With respect to licensure, generally our skilled nursing and
specialty care facilities are required to be licensed and
certified for participation in the Medicare and Medicaid
programs. This generally requires license renewals and
compliance surveys on an annual or bi-annual basis. The failure
of our operators to maintain or renew any required license or
regulatory approval or the failure to correct serious survey
deficiencies identified in compliance surveys could prevent them
from continuing operations at a property. In addition, if a
property is found out of compliance with the conditions of
participation in Medicare, Medicaid or other health care
programs, the property may be barred from participation in
government reimbursement programs. Any of these occurrences may
impair the ability of our operators to meet their obligations to
us. If we have to replace a barred property operator, our
ability to replace the operator may be affected by federal and
state rules and policies governing changes in control. This may
result in payment delays, an inability to find a replacement
operator, a significant working capital commitment from us to a
new operator or other difficulties.
Reimbursement
Assisted Living Facilities. Approximately 22%
of our rental revenues for the year ended December 31, 2008
were attributable to assisted living facilities. The majority of
the revenues received by the operators of our assisted living
facilities are from private pay sources. The remaining revenue
source is primarily Medicaid under certain waiver programs. As a
part of the Omnibus Budget Reconciliation Act (OBRA)
of 1981, Congress established a waiver program enabling some
states to offer Medicaid reimbursement to assisted living
facilities as an alternative
9
to institutional long-term care services. The provisions of OBRA
and the subsequent OBRA Acts of 1987 and 1990 permit states to
seek a waiver from typical Medicaid requirements to develop
cost-effective alternatives to long-term care, including
Medicaid payments for assisted living and home health. At
December 31, 2008, six of our 23 assisted living
operators received Medicaid reimbursement pursuant to Medicaid
waiver programs. For the twelve months ended September 30,
2008, approximately 10% of the revenues at our assisted living
facilities were from Medicaid reimbursement. There can be no
guarantee that a state Medicaid program operating pursuant to a
waiver will be able to maintain its waiver status.
Rates paid by self-pay residents are set by the facilities and
are largely determined by local market conditions and operating
costs. Generally, facilities receive a higher payment per day
for a private pay resident than for a Medicaid beneficiary who
requires a comparable level of care. The level of Medicaid
reimbursement varies from state to state. Thus, the revenues
generated by operators of our assisted living facilities may be
adversely affected by payor mix, acuity level and changes in
Medicaid eligibility and reimbursement levels. In addition, a
state could lose its Medicaid waiver and no longer be permitted
to utilize Medicaid dollars to reimburse for assisted living
services. Changes in revenues could in turn have a material
adverse effect on an operators ability to meet its
obligations to us.
Skilled Nursing Facilities and Specialty Care
Facilities. Skilled nursing and specialty care
facilities typically receive most of their revenues from
Medicare and Medicaid, with the balance representing private
pay, including private insurance. Consequently, changes in
federal or state reimbursement policies may also adversely
affect an operators ability to cover its expenses,
including our rent or debt service. Skilled nursing and
specialty care facilities are subject to periodic pre- and
post-payment reviews and other audits by federal and state
authorities. A review or audit of claims of a property operator
could result in recoupments, denials or delays of payments in
the future, which could have a material adverse effect on the
operators ability to meet its obligations to us. Due to
the significant judgments and estimates inherent in payor
settlement accounting, no assurance can be given as to the
adequacy of any reserves maintained by our property operators
for potential adjustments to reimbursements for payor
settlements. Due to budgetary constraints, governmental payors
may limit or reduce payments to skilled nursing and specialty
care facilities. As a result of government reimbursement
programs being subject to such budgetary pressures and
legislative and administrative actions, an operators
ability to meet its obligations to us may be significantly
impaired.
Medicare Reimbursement and Skilled Nursing
Facilities. For the twelve months ended
September 30, 2008, approximately 30% of the revenues at
our skilled nursing facilities (which comprised 31% of our
rental revenues for the year ended December 31,
2008) were from Medicare reimbursement. Skilled nursing
facilities are reimbursed under the skilled nursing facility
prospective payment system. This type of reimbursement program
puts facilities at risk to the extent that their costs exceed
the fixed payments under the prospective payment system. In
addition, there is a risk that payments under the prospective
payment system may be set too low, which could result in
immediate financial difficulties for skilled nursing facilities
and cause operators to seek bankruptcy protection. Skilled
nursing facilities have had these types of difficulties since
the implementation of the prospective payment system.
Skilled nursing facilities received a 3.4% inflationary market
basket increase in Medicare payments for federal fiscal year
2009, which represents $780 million of additional Medicare
spending. Section 5008 of the Deficit Reduction Act of 2005
directs the Secretary (as defined in that statute) to conduct a
demonstration program beginning January 1, 2008 assessing
the costs and outcomes of patients discharged from hospitals in
a variety of post-acute care settings, including skilled nursing
facilities. The outcome of that demonstration program could lead
to changes in Medicare coverage and reimbursement for post-acute
care. It is not known how either the demonstration program, or
any other changes in Medicare reimbursement or regulatory
obligations that might be proposed, might impact tenants of the
Companys properties.
The Balanced Budget Act of 1997 mandated caps on Medicare
reimbursement for certain therapy services. However, Congress
imposed various moratoriums on the implementation of those caps.
The moratoriums on the therapy caps for Part B outpatient
rehabilitation services expired December 31, 2005. The
annual payment cap of $1,810 per patient applies to occupational
therapy and a separate $1,810 cap applies to speech and physical
therapy. Congress has permitted patients exceeding the cap to
obtain additional Medicare coverage through a waiver program if
the therapy is deemed medically necessary. The waiver program
was most recently extended under the Medicare Improvements for
Patients and Providers Act of 2008 through December 31,
2009. If the waiver is
10
allowed to expire, patients will need to use private funds to
pay for the cost of therapy above the caps. The waiver has
historically been extended.
Medicare Reimbursement and Specialty Care
Facilities. For the twelve months ended
September 30, 2008, approximately 43% of the revenues at
our specialty care facilities (which comprised 8% of our rental
revenues for the year ended December 31, 2008) were
from Medicare. Specialty care facilities generally are
reimbursed by Medicare under either the diagnosis related group
prospective payment system reimbursement methodology for
inpatient hospitals, or the long-term acute care hospital
prospective payment system for long-term acute care hospitals or
the inpatient rehabilitation facility prospective payment
system. Acute care hospitals provide a wide range of inpatient
and outpatient services including, but not limited to, surgery,
rehabilitation, therapy and clinical laboratories. Long-term
acute care hospitals provide inpatient services for patients
with complex medical conditions that require more intensive
care, monitoring or emergency support than that available in
most skilled nursing facilities. Inpatient rehabilitation
facilities provide intensive rehabilitation services in an
inpatient setting for patients requiring at least three hours of
rehabilitation services a day.
With respect to Medicares diagnosis related
group/outpatient prospective payment system methodology for
regular hospitals, reimbursement for inpatient services is made
on the basis of a fixed, prospective rate based on the principal
diagnosis of the patient. Hospitals are at risk to the extent
that their costs in treating a specific case exceed the fixed
payment. The diagnosis related group reimbursement system was
changed in 2008, with the expansion of diagnosis groups from 538
to 745 diagnosis related groups to greater reflect severity. It
is possible that this change in the DRG system will adversely
impact reimbursement for some of our hospitals. In some cases, a
hospital might be able to qualify for an outlier payment if the
hospitals losses exceed a threshold.
Medicaid Reimbursement. Medicaid is a major
payor source for residents in our skilled nursing and specialty
care facilities. For the twelve months ended September 30,
2008, approximately 51% of the revenues of our skilled nursing
facilities and 19% of the revenues of our specialty care
facilities were attributable to Medicaid payments. The federal
government and the states share responsibility for financing
Medicaid. The federal matching rate, known as the Federal
Medical Assistance Percentage, varies by state based on relative
per capita income, but is at least 50% in all states. On
average, Medicaid is the largest component of total state
spending, representing approximately 21% of total state
spending. The percentage of Medicaid dollars used for long-term
care varies from state to state due in part to different ratios
of elderly population and eligibility requirements. Within
certain federal guidelines, states have a wide range of
discretion to determine eligibility and reimbursement
methodology. Many states reimburse long-term care facilities
using fixed daily rates, which are applied prospectively based
on patient acuity and the historical costs incurred in providing
patient care. Reasonable costs typically include allowances for
staffing, administrative and general, and property and equipment
(e.g., real estate taxes, depreciation and fair rental).
In most states, Medicaid does not fully reimburse the cost of
providing skilled nursing services. Certain states are
attempting to slow the rate of growth in Medicaid expenditures
by freezing rates or restricting eligibility and benefits. At
the beginning of their respective fiscal years, states in which
we have skilled nursing property investments increased their per
diem Medicaid rates roughly 1.7% on average for fiscal year 2009
and seven of our states effectively froze rates, which will
impact profitability to the extent that expenses continue to
rise. Our skilled nursing portfolios average Medicaid rate
will likely vary throughout the year as states continue to make
interim changes to their budgets and Medicaid funding. In
addition, Medicaid rates may decline if revenues in a particular
state are not sufficient to fund budgeted expenditures.
The Medicare Part D drug benefit became effective
January 1, 2006. Nursing home residents dually eligible for
Medicare (and enrolled in one of the new Part D plans) and
Medicaid may now enroll and receive reimbursement for drugs
through Medicare Part D rather than through Medicaid.
Part D will result in increased administrative
responsibilities for nursing home operators because enrollment
in Part D is voluntary and residents have the choice of
multiple prescription drug plans. Operators may also experience
increased expenses to the extent that patients specific
prescribed drugs may not be on the Part D drug plan
formulary for the plan in which specific patients are enrolled.
The reimbursement methodologies applied to health care
facilities continue to evolve. Federal and state authorities
have considered and may seek to implement new or modified
reimbursement methodologies that may
11
negatively impact health care property operations. The impact of
any such change, if implemented, may result in a material
adverse effect on our skilled nursing and specialty care
property operations. No assurance can be given that current
revenue sources or levels will be maintained. Accordingly, there
can be no assurance that payments under a government
reimbursement program are currently, or will be in the future,
sufficient to fully reimburse the property operators for their
operating and capital expenses. As a result, an operators
ability to meet its obligations to us could be adversely
impacted.
Recent Developments. The American
Reinvestment and Recovery Act of 2009 was passed
February 17, 2009. Between October 1, 2008 and
December 31, 2010, the bill will provide nearly
$87 billion in additional federal Medicaid funding for
states. Each state will receive a 6.2 percentage point
increase in their federal medical assistance percentage (FMAP),
thus lowering the states share of the cost through 2010.
The remaining 35% of the $87 billion will be allocated to
states with higher unemployment rates. In order to receive
funding, states must maintain eligibility levels for Medicaid
that were previously in place. The passage of this bill and
distribution of funds should relieve some of the budgetary
pressures that many states currently face. This increased
federal funding should help prevent state cuts to provider
Medicaid rates.
Other
Related Laws
Skilled nursing and specialty care facilities (and assisted
living facilities that receive Medicaid payments) are subject to
federal, state and local laws and regulations that govern the
operations and financial and other arrangements that may be
entered into by health care providers. Certain of these laws
prohibit direct or indirect payments of any kind for the purpose
of inducing or encouraging the referral of patients for medical
products or services reimbursable by governmental programs.
Other laws require providers to furnish only medically necessary
services and submit to the government valid and accurate
statements for each service. Still other laws require providers
to comply with a variety of safety, health and other
requirements relating to the condition of the licensed property
and the quality of care provided. Sanctions for violations of
these laws and regulations may include, but are not limited to,
criminal
and/or civil
penalties and fines and a loss of licensure, immediate
termination of governmental payments, and exclusion from
eligibility for any governmental reimbursement. In certain
circumstances, violation of these rules (such as those
prohibiting abusive and fraudulent behavior) with respect to one
property may subject other facilities under common control or
ownership to sanctions, including exclusion from participation
in the Medicare and Medicaid programs. In the ordinary course of
its business, a property operator is regularly subjected to
inquiries, investigations and audits by federal and state
agencies that oversee these laws and regulations.
Each skilled nursing and specialty care property (and any
assisted living property that receives Medicaid payments) is
subject to the federal anti-kickback statute that generally
prohibits persons from offering, providing, soliciting or
receiving remuneration to induce either the referral of an
individual or the furnishing of a good or service for which
payment may be made under a federal health care program such as
the Medicare and Medicaid programs. Skilled nursing and
specialty care facilities are also subject to the federal Ethics
in Patient Referral Act of 1989, commonly referred to as the
Stark Law. The Stark Law generally prohibits the submission of
claims to Medicare for payment if the claim results from a
physician referral for certain designated services and the
physician has a financial relationship with the health service
provider that does not qualify under one of the exceptions for a
financial relationship under the Stark Law. Similar prohibitions
on physician self-referrals and submission of claims apply to
state Medicaid programs. Further, skilled nursing and specialty
care facilities (and assisted living facilities that receive
Medicaid payments) are subject to substantial financial
penalties under the Civil Monetary Penalties Act and the False
Claims Act and, in particular, actions under the False Claims
Acts whistleblower provisions. Private
enforcement of health care fraud has increased due in large part
to amendments to the False Claims Act that encourage private
individuals to sue on behalf of the government. These
whistleblower suits by private individuals, known as qui tam
actions, may be filed by almost anyone, including present and
former patients, nurses and other employees. Some cases have
been brought under the federal False Claims Act asserting claims
for treble damages and up to $11,000 per claim on the basis of
the alleged failure of a nursing facility to meet applicable
regulations relating to the operation of the nursing facility.
Prosecutions, investigations or whistle blower actions could
have a material adverse effect on a property operators
liquidity, financial condition and results of operations which
could adversely affect the ability of the operator to meet its
obligations to us. Finally, various state false claim and anti-
12
kickback laws also may apply to each property operator.
Violation of any of the foregoing statutes can result in
criminal
and/or civil
penalties that could have a material adverse effect on the
ability of an operator to meet its obligations to us.
Other legislative developments over the past several years,
including the Health Insurance Portability and Accountability
Act of 1996 (HIPAA), have greatly expanded the
definition of health care fraud and related offenses and
broadened its scope to include private health care plans in
addition to government payors. Congress also has greatly
increased funding for the Department of Justice, Federal Bureau
of Investigation and the Office of the Inspector General of the
Department of Health and Human Services to audit, investigate
and prosecute suspected health care fraud. Moreover, a
significant portion of the billions in health care fraud
recoveries over the past several years has also been returned to
government agencies to further fund their fraud investigation
and prosecution efforts.
Additionally, other HIPAA provisions and regulations provide for
communication of health information through standard electronic
transaction formats and for the privacy and security of health
information. In order to comply with the regulations, health
care providers must undergo significant operational and
technical changes. Operators also face significant financial
exposure if they fail to maintain the confidentiality of medical
records and personal, identifiable health information about
individuals.
In November 2002, the Centers for Medicare & Medicaid
Services (CMS), an agency of the U.S. Department of Health
and Human Services, began a national Nursing Home Quality
Initiative (NHQI). Under this initiative, historical survey
information, the NHQI Pilot Evaluation Report and the NHQI
Overview is made available to the public on-line. The NHQI
website provides consumer and provider information regarding the
quality of care in nursing homes. The data allows consumers,
providers, states and researchers to compare quality information
that shows how well nursing homes are caring for their
residents physical and clinical needs. The posted nursing
home quality measures come from resident assessment data that
nursing homes routinely collect on the residents at specified
intervals during their stay. If the operators of nursing
facilities are unable to achieve quality of care ratings that
are comparable or superior to those of their competitors, they
may lose market share to other facilities, reducing their
revenues and adversely impacting their ability to make rental
payments.
Finally, government investigation and enforcement of health care
laws has increased dramatically over the past several years and
is expected to continue. Some of these enforcement actions
represent novel legal theories and expansions in the application
of false claims laws. The costs for an operator of a health care
property associated with both defending such enforcement actions
and the undertakings in settlement agreements can be substantial
and could have a material adverse effect on the ability of an
operator to meet its obligations to us.
Environmental
Laws
A wide variety of federal, state and local environmental and
occupational health and safety laws and regulations affect
health care facility operations or special medical properties.
Under various federal, state and local environmental laws,
ordinances and regulations, an owner of real property or a
secured lender (such as the Company) may be liable for the costs
of removal or remediation of hazardous or toxic substances at,
under or disposed of in connection with such property, as well
as other potential costs relating to hazardous or toxic
substances (including government fines and damages for injuries
to persons and adjacent property). The cost of any required
remediation, removal, fines or personal or property damages and
the owners or secured lenders liability for such
costs could exceed the value of the property,
and/or the
assets of the owner or secured lender. In addition, the presence
of such substances, or the failure to properly dispose of or
remediate such substances, may adversely affect the owners
ability to sell or rent such property or to borrow using such
property as collateral which, in turn, would reduce revenues.
Taxation
Federal
Income Tax Considerations
The following summary of the taxation of the Company and the
material federal tax consequences to the holders of our debt and
equity securities is for general information only and is not tax
advice. This summary does
13
not address all aspects of taxation that may be relevant to
certain types of holders of stock or securities (including, but
not limited to, insurance companies, tax-exempt entities,
financial institutions or broker-dealers, persons holding shares
of common stock as part of a hedging, integrated conversion, or
constructive sale transaction or a straddle, traders in
securities that use a mark-to-market method of accounting for
their securities, investors in pass-through entities and foreign
corporations and persons who are not citizens or residents of
the United States).
This summary does not discuss all of the aspects of
U.S. federal income taxation that may be relevant to you in
light of your particular investment or other circumstances. In
addition, this summary does not discuss any state or local
income taxation or foreign income taxation or other tax
consequences. This summary is based on current U.S. federal
income tax law. Subsequent developments in U.S. federal
income tax law, including changes in law or differing
interpretations, which may be applied retroactively, could have
a material effect on the U.S. federal income tax
consequences of purchasing, owning and disposing of our
securities as set forth in this summary. Before you purchase our
securities, you should consult your own tax advisor regarding
the particular U.S. federal, state, local, foreign and
other tax consequences of acquiring, owning and selling our
securities.
General
We elected to be taxed as a real estate investment trust (a
REIT) commencing with our first taxable year. We
intend to continue to operate in such a manner as to qualify as
a REIT, but there is no guarantee that we will qualify or remain
qualified as a REIT for subsequent years. Qualification and
taxation as a REIT depends upon our ability to meet a variety of
qualification tests imposed under federal income tax law with
respect to income, assets, distribution level and diversity of
share ownership as discussed below under
Qualification as a REIT. There can be no
assurance that we will be owned and organized and will operate
in a manner so as to qualify or remain qualified.
In any year in which we qualify as a REIT, in general, we will
not be subject to federal income tax on that portion of our REIT
taxable income or capital gain that is distributed to
stockholders. We may, however, be subject to tax at normal
corporate rates on any taxable income or capital gain not
distributed. If we elect to retain and pay income tax on our net
long-term capital gain, stockholders are required to include
their proportionate share of our undistributed long-term capital
gain in income, but they will receive a refundable credit for
their share of any taxes paid by us on such gain.
Despite the REIT election, we may be subject to federal income
and excise tax as follows:
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To the extent that we do not distribute all of our net capital
gain or distribute at least 90%, but less than 100%, of our
REIT taxable income, as adjusted, we will be subject
to tax on the undistributed amount at regular corporate tax
rates;
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We may be subject to the alternative minimum tax
(the AMT) on certain tax preference items to the
extent that the AMT exceeds our regular tax;
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If we have net income from the sale or other disposition of
foreclosure property that is held primarily for sale
to customers in the ordinary course of business or other
non-qualifying income from foreclosure property, such income
will be taxed at the highest corporate rate;
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Any net income from prohibited transactions (which are, in
general, sales or other dispositions of property held primarily
for sale to customers in the ordinary course of business, other
than dispositions of foreclosure property and dispositions of
property due to an involuntary conversion) will be subject to a
100% tax;
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If we fail to satisfy either the 75% or 95% gross income tests
(as discussed below), but nonetheless maintain our qualification
as a REIT because certain other requirements are met, we will be
subject to a 100% tax on an amount equal to (1) the gross
income attributable to the greater of (i) 75% of our gross
income over the amount of qualifying gross income for purposes
of the 75% gross income test (discussed below) or (ii) 95%
of our gross income (90% of our gross income for taxable years
beginning on or before October 22, 2004) over the
amount of qualifying gross income for purposes of the 95% gross
income test (discussed below) multiplied by (2) a fraction
intended to reflect our profitability;
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If we fail to distribute during each year at least the sum of
(1) 85% of our REIT ordinary income for the year,
(2) 95% of our REIT capital gain net income for such year
(other than capital gain that we elect to retain and pay tax on)
and (3) any undistributed taxable income from preceding
periods, we will be subject to a 4% excise tax on the excess of
such required distribution over amounts actually
distributed; and
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We will be subject to a 100% tax on the amount of any rents from
real property, deductions or excess interest paid to us by any
of our taxable REIT subsidiaries that would be
reduced through reallocation under certain federal income tax
principles in order to more clearly reflect income of the
taxable REIT subsidiary. See Qualification as
a REIT Investments in Taxable REIT
Subsidiaries.
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If we acquire any assets from a corporation, which is or has
been a C corporation, in a carryover basis
transaction, we could be liable for specified liabilities that
are inherited from the C corporation. A
C corporation is generally defined as a corporation
that is required to pay full corporate level federal income tax.
If we recognize gain on the disposition of the assets during the
ten-year period beginning on the date on which the assets were
acquired by us, then, to the extent of the assets
built-in gain (i.e., the excess of the fair market
value of the asset over the adjusted tax basis in the asset, in
each case determined as of the beginning of the ten-year
period), we will be subject to tax on the gain at the highest
regular corporate rate applicable. The results described in this
paragraph with respect to the recognition of built-in gain
assume that the built-in gain assets, at the time the built-in
gain assets were subject to a conversion transaction (either
where a C corporation elected REIT status or a REIT
acquired the assets from a C corporation), were not
treated as sold to an unrelated party and gain recognized.
Qualification
as a REIT
A REIT is defined as a corporation, trust or association:
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(1)
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which is managed by one or more trustees or directors;
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(2)
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the beneficial ownership of which is evidenced by transferable
shares or by transferable certificates of beneficial interest;
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(3)
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which would be taxable as a domestic corporation but for the
federal income tax law relating to REITs;
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(4)
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which is neither a financial institution nor an insurance
company;
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(5)
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the beneficial ownership of which is held by 100 or more persons
in each taxable year of the REIT except for its first taxable
year;
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(6)
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not more than 50% in value of the outstanding stock of which is
owned during the last half of each taxable year, excluding its
first taxable year, directly or indirectly, by or for five or
fewer individuals (which includes certain entities) (the
Five or Fewer Requirement); and
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(7)
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which meets certain income and asset tests described below.
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Conditions (1) to (4), inclusive, must be met during the
entire taxable year and condition (5) must be met during at
least 335 days of a taxable year of 12 months or
during a proportionate part of a taxable year of less than
12 months. For purposes of conditions (5) and (6),
pension funds and certain other tax-exempt entities are treated
as individuals, subject to a look-through exception
in the case of condition (6).
Based on publicly available information, we believe we have
satisfied the share ownership requirements set forth in
(5) and (6) above. In addition, Article VI of our
Amended and Restated By-Laws provides for restrictions regarding
ownership and transfer of shares. These restrictions are
intended to assist us in continuing to satisfy the share
ownership requirements described in (5) and (6) above.
These restrictions, however, may not ensure that we will, in all
cases, be able to satisfy the share ownership requirements
described in (5) and (6) above.
We have complied with, and will continue to comply with,
regulatory rules to send annual letters to certain of our
stockholders requesting information regarding the actual
ownership of our stock. If, despite sending the annual letters,
we do not know, or after exercising reasonable diligence would
not have known, whether we failed to meet the Five or Fewer
Requirement, we will be treated as having met the Five or Fewer
Requirement. If we fail to comply with these regulatory rules,
we will be subject to a monetary penalty. If our failure to
comply was due to
15
intentional disregard of the requirement, the penalty would be
increased. However, if our failure to comply were due to
reasonable cause and not willful neglect, no penalty would be
imposed.
We may own a number of properties through wholly owned
subsidiaries. A corporation will qualify as a qualified
REIT subsidiary if 100% of its stock is owned by a REIT,
and the REIT does not elect to treat the subsidiary as a taxable
REIT subsidiary. A qualified REIT subsidiary will
not be treated as a separate corporation, and all assets,
liabilities and items of income, deductions and credits of a
qualified REIT subsidiary will be treated as assets,
liabilities and items (as the case may be) of the REIT. A
qualified REIT subsidiary is not subject to federal
income tax, and our ownership of the voting stock of a qualified
REIT subsidiary will not violate the restrictions against
ownership of securities of any one issuer which constitute more
than 10% of the value or total voting power of such issuer or
more than 5% of the value of our total assets, as described
below under Asset Tests.
If we invest in a partnership, a limited liability company or a
trust taxed as a partnership or as a disregarded entity, we will
be deemed to own a proportionate share of the
partnerships, limited liability companys or
trusts assets. Likewise, we will be treated as receiving
our share of the income and loss of the partnership, limited
liability company or trust, and the gross income will retain the
same character in our hands as it has in the hands of the
partnership, limited liability company or trust. These
look-through rules apply for purposes of the income
tests and assets tests described below.
Income Tests. There are two separate
percentage tests relating to our sources of gross income that we
must satisfy for each taxable year.
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At least 75% of our gross income (excluding gross income from
certain sales of property held primarily for sale) must be
directly or indirectly derived each taxable year from
rents from real property, other income from
investments relating to real property or mortgages on real
property or certain income from qualified temporary investments.
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At least 95% of our gross income (excluding gross income from
certain sales of property held primarily for sale) must be
directly or indirectly derived each taxable year from any of the
sources qualifying for the 75% gross income test and from
dividends (including dividends from taxable REIT subsidiaries)
and interest.
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For taxable years beginning on or before October 22, 2004,
(1) payments to us under an interest rate swap or cap
agreement, option, futures contract, forward rate agreement or
any similar financial instrument entered into by us to reduce
interest rate risk on indebtedness incurred or to be incurred
and (2) gain from the sale or other disposition of any such
investment are treated as income qualifying under the 95% gross
income test. As to transactions entered into in taxable years
beginning after October 22, 2004, any of our income from a
clearly identified hedging transaction that is
entered into by us in the normal course of business, directly or
indirectly, to manage the risk of interest rate movements, price
changes or currency fluctuations with respect to borrowings or
obligations incurred or to be incurred by us, or such other
risks that are prescribed by the Internal Revenue Service, is
excluded from the 95% gross income test.
For transactions entered into after July 30, 2008, any of
our income from a clearly identified hedging
transaction that is entered into by us in the normal course of
business, directly or indirectly, to manage the risk of interest
rate movements, price changes or currency fluctuations with
respect to borrowings or obligations incurred or to be incurred
by us is excluded from the 95% and 75% gross income tests.
For transactions entered into after July 30, 2008, any of
our income from a clearly identified hedging
transaction entered into by us primarily to manage risk of
currency fluctuations with respect to any item of income or gain
that is included in gross income in the 95% and 75% gross income
tests is excluded from the 95% and 75% gross income tests.
In general, a hedging transaction is clearly
identified if (1) the transaction is identified as a
hedging transaction before the end of the day on which it is
entered into and (2) the items or risks being hedged are
identified substantially contemporaneously with the
hedging transaction. An identification is not substantially
contemporaneous if it is made more than 35 days after
entering into the hedging transaction.
As to gains and items of income recognized after July 30,
2008, passive foreign exchange gain for any taxable
year will not constitute gross income for purposes of the 95%
gross income test and real estate foreign
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exchange gain for any taxable year will not constitute
gross income for purposes of the 75% gross income test. Real
estate foreign exchange gain is foreign currency gain (as
defined in Internal Revenue Code section 988(b)(1)) which
is attributable to: (i) any qualifying item of income or
gain for purposes of the 75% gross income test; (ii) the
acquisition or ownership of obligations secured by mortgages on
real property or interests in real property; or
(iii) becoming or being the obligor under obligations
secured by mortgages on real property or on interests in real
property. Real estate foreign exchange gain also includes
Internal Revenue Code section 987 gain attributable to a
qualified business unit (a QBU) of a REIT if the QBU
itself meets the 75% income test for the taxable year and the
75% asset test at the close of each quarter that the REIT has
directly or indirectly held the QBU. Real estate foreign
exchange gain also includes any other foreign currency gain as
determined by the Secretary of the Treasury. Passive foreign
exchange gain includes all real estate foreign exchange gain and
foreign currency gain which is attributable to: (i) any
qualifying item of income or gain for purposes of the 95% gross
income test; (ii) the acquisition or ownership of
obligations; (iii) becoming or being the obligor under
obligations; and (iv) any other foreign currency gain as
determined by the Secretary of the Treasury.
Generally, other than income from clearly identified
hedging transactions entered into by us in the normal course of
business, any foreign currency gain derived by us from dealing,
or engaging in substantial and regular trading, in securities
will constitute gross income which does not qualify under the
95% or 75% gross income tests.
Rents received by us will qualify as rents from real
property for purposes of satisfying the gross income tests
for a REIT only if several conditions are met:
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The amount of rent must not be based in whole or in part on the
income or profits of any person, although rents generally will
not be excluded merely because they are based on a fixed
percentage or percentages of receipts or sales.
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Rents received from a tenant will not qualify as rents from real
property if the REIT, or an owner of 10% or more of the REIT,
also directly or constructively owns 10% or more of the tenant,
unless the tenant is our taxable REIT subsidiary and certain
other requirements are met with respect to the real property
being rented.
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If rent attributable to personal property leased in connection
with a lease of real property is greater than 15% of the total
rent received under the lease, then the portion of rent
attributable to such personal property will not qualify as
rents from real property.
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For rents to qualify as rents from real property, we generally
must not furnish or render services to tenants, other than
through a taxable REIT subsidiary or an independent
contractor from whom we derive no income, except that we
may directly provide services that are usually or
customarily rendered in the geographic area in which the
property is located in connection with the rental of real
property for occupancy only, or are not otherwise considered
rendered to the occupant for his convenience.
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For taxable years beginning after July 30, 2008, the REIT
may lease qualified health care property (as defined in Internal
Revenue Code section 856(e)(6)(D)) on an arms-length
basis to a taxable REIT subsidiary if the property is operated
on behalf of such subsidiary by a person who is an eligible
independent contractor (as defined in Internal Revenue Code
section 856(d)(9)(A)). Generally, the rent that the REIT
receives from the taxable REIT subsidiary will be treated as
rents from real property.
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For taxable years beginning after August 5, 1997, a REIT
has been permitted to render a de minimis amount of
impermissible services to tenants and still treat amounts
received with respect to that property as rent from real
property. The amount received or accrued by the REIT during the
taxable year for the impermissible services with respect to a
property may not exceed 1% of all amounts received or accrued by
the REIT directly or indirectly from the property. The amount
received for any service or management operation for this
purpose shall be deemed to be not less than 150% of the direct
cost of the REIT in furnishing or rendering the service or
providing the management or operation. Furthermore,
impermissible services may be furnished to tenants by a taxable
REIT subsidiary subject to certain conditions, and we may still
treat rents received with respect to the property as rent from
real property.
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The term interest generally does not include any
amount if the determination of the amount depends in whole or in
part on the income or profits of any person, although an amount
generally will not be excluded from the term
interest solely by reason of being based on a fixed
percentage of receipts or sales.
If we fail to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, we may nevertheless qualify as a
REIT for such year if we are eligible for relief. For taxable
years beginning on or before October 22, 2004, these relief
provisions generally will be available if: (1) our failure
to meet such tests was due to reasonable cause and not due to
willful neglect; (2) we attach a schedule of the sources of
our income to our return; and (3) any incorrect information
on the schedule was not due to fraud with intent to evade tax.
For taxable years beginning after October 22, 2004, these
relief provisions generally will be available if
(1) following our identification of the failure, we file a
schedule for such taxable year describing each item of our gross
income, and (2) the failure to meet such tests was due to
reasonable cause and not due to willful neglect.
It is not now possible to determine the circumstances under
which we may be entitled to the benefit of these relief
provisions. If these relief provisions apply, a 100% tax is
imposed on an amount equal to (a) the gross income
attributable to (1) 75% of our gross income over the amount
of qualifying gross income for purposes of the 75% income test
and (2) 95% of our gross income (90% of our gross income
for taxable years beginning on or before October 22,
2004) over the amount of qualifying gross income for
purposes of the 95% income test, multiplied by (b) a
fraction intended to reflect our profitability.
The Secretary of the Treasury is given broad authority to
determine whether particular items of income or gain qualify or
not under the 75% and 95% gross income tests, or are to be
excluded from the measure of gross income for such purposes.
Asset Tests. Within 30 days after the
close of each quarter of our taxable year, we must also satisfy
several tests relating to the nature and diversification of our
assets determined in accordance with generally accepted
accounting principles. At least 75% of the value of our total
assets must be represented by real estate assets, cash, cash
items (including receivables arising in the ordinary course of
our operation), government securities and qualified temporary
investments. Although the remaining 25% of our assets generally
may be invested without restriction, we are prohibited from
owning securities representing more than 10% of either the vote
(the 10% vote test) or value (the 10% value
test) of the outstanding securities of any issuer other
than a qualified REIT subsidiary, another REIT or a taxable REIT
subsidiary. Further, no more than 20% (25% for taxable years
after 2008) of the total assets may be represented by
securities of one or more taxable REIT subsidiaries (the
20% asset test) (the 25% asset test for
taxable years after 2008) and no more than 5% of the value
of our total assets may be represented by securities of any
non-governmental issuer other than a qualified REIT subsidiary
(the 5% asset test), another REIT or a taxable REIT
subsidiary. Each of the 10% vote test, the 10% value test and
the 20% (25% for taxable years after 2008) and 5% asset
tests must be satisfied at the end of each quarter. There are
special rules which provide relief if the value related tests
are not satisfied due to changes in the value of the assets of a
REIT.
For taxable years beginning after December 31, 2000,
certain items are excluded from the 10% value test, including:
(1) straight debt securities of an issuer (including
straight debt that provides certain contingent payments);
(2) any loan to an individual or an estate; (3) any
rental agreement described in Section 467 of the Internal
Revenue Code, other than with a related person;
(4) any obligation to pay rents from real property;
(5) certain securities issued by a state or any subdivision
thereof, the District of Columbia, a foreign government, or any
political subdivision thereof, or the Commonwealth of Puerto
Rico; (6) any security issued by a REIT; and (7) any
other arrangement that, as determined by the Secretary of the
Treasury, is excepted from the definition of security
(excluded securities). Special rules apply to
straight debt securities issued by corporations and entities
taxable as partnerships for federal income tax purposes. If a
REIT, or its taxable REIT subsidiary, holds (1) straight
debt securities of a corporate or partnership issuer and
(2) securities of such issuer that are not excluded
securities and have an aggregate value greater than 1% of such
issuers outstanding securities, the straight debt
securities will be included in the 10% value test.
For taxable years beginning after December 31, 2000, a
REITs interest as a partner in a partnership is not
treated as a security for purposes of applying the 10% value
test to securities issued by the partnership. Further, any debt
instrument issued by a partnership will not be a security for
purposes of applying the 10% value test (1) to the extent
of the REITs interest as a partner in the partnership and
(2) if at least 75% of the partnerships gross income
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(excluding gross income from prohibited transactions) would
qualify for the 75% gross income test. For taxable years
beginning after October 22, 2004, for purposes of the 10%
value test, a REITs interest in a partnerships
assets is determined by the REITs proportionate interest
in any securities issued by the partnership (other than the
excluded securities described in the preceding paragraph).
For taxable years beginning after July 30, 2008, if the
REIT or its QBU uses a foreign currency as its functional
currency, the term cash includes such foreign
currency, but only to the extent such foreign currency is
(i) held for use in the normal course of the activities of
the REIT or QBU which give rise to items of income or gain that
are included in the 95% and 75% gross income tests or are
directly related to acquiring or holding assets qualifying under
the 75% asset test, and (ii) not held in connection with
dealing or engaging in substantial and regular trading in
securities.
With respect to corrections of failures for which the
requirements for corrections are satisfied after
October 22, 2004, regardless of whether such failures
occurred in taxable years beginning on, before or after such
date, as to violations of the 10% vote test, the 10% value test
or the 5% asset test, a REIT may avoid disqualification as a
REIT by disposing of sufficient assets to cure a violation that
does not exceed the lesser of 1% of the REITs assets at
the end of the relevant quarter or $10,000,000, provided that
the disposition occurs within six months following the last day
of the quarter in which the REIT first identified the assets.
For violations of any of the REIT asset tests due to reasonable
cause and not willful neglect that exceed the thresholds
described in the preceding sentence, a REIT can avoid
disqualification as a REIT after the close of a taxable quarter
by taking certain steps, including disposition of sufficient
assets within the six month period described above to meet the
applicable asset test, paying a tax equal to the greater of
$50,000 or the highest corporate tax rate multiplied by the net
income generated by the non-qualifying assets during the period
of time that the assets were held as non-qualifying assets and
filing a schedule with the Internal Revenue Service that
describes the non-qualifying assets.
Investments in Taxable REIT Subsidiaries. For
taxable years beginning after December 31, 2000, REITs may
own more than 10% of the voting power and value of securities in
taxable REIT subsidiaries. We and any taxable corporate entity
in which we own an interest are allowed to jointly elect to
treat such entity as a taxable REIT subsidiary.
Certain of our subsidiaries have elected to be treated as a
taxable REIT subsidiary. Taxable REIT subsidiaries are subject
to full corporate level federal taxation on their earnings but
are permitted to engage in certain types of activities that
cannot be performed directly by REITs without jeopardizing their
REIT status. Our taxable REIT subsidiaries will attempt to
minimize the amount of these taxes, but there can be no
assurance whether or the extent to which measures taken to
minimize taxes will be successful. To the extent our taxable
REIT subsidiaries are required to pay federal, state or local
taxes, the cash available for distribution as dividends to us
from our taxable REIT subsidiaries will be reduced.
The amount of interest on related-party debt that a taxable REIT
subsidiary may deduct is limited. Further, a 100% tax applies to
any interest payments by a taxable REIT subsidiary to its
affiliated REIT to the extent the interest rate is not
commercially reasonable. A taxable REIT subsidiary is permitted
to deduct interest payments to unrelated parties without any of
these restrictions.
The Internal Revenue Service may reallocate costs between a REIT
and its taxable REIT subsidiary where there is a lack of
arms-length dealing between the parties. Any deductible
expenses allocated away from a taxable REIT subsidiary would
increase its tax liability. Further, any amount by which a REIT
understates its deductions and overstates those of its taxable
REIT subsidiary will, subject to certain exceptions, be subject
to a 100% tax. Additional taxable REIT subsidiary elections may
be made in the future for additional entities in which we own an
interest.
Annual Distribution Requirements. In order to
avoid being taxed as a regular corporation, we are required to
make distributions (other than capital gain distributions) to
our stockholders which qualify for the dividends paid deduction
in an amount at least equal to (1) the sum of (i) 90%
of our REIT taxable income (computed without regard
to the dividends paid deduction and our net capital gain) and
(ii) 90% of the after-tax net income, if any, from
foreclosure property, minus (2) a portion of certain items
of non-cash income. These distributions must be paid in the
taxable year to which they relate, or in the following taxable
year if declared before we timely file our tax return
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for that year and if paid on or before the first regular
distribution payment after such declaration. The amount
distributed must not be preferential. This means that every
stockholder of the class of stock to which a distribution is
made must be treated the same as every other stockholder of that
class, and no class of stock may be treated otherwise than in
accordance with its dividend rights as a class. To the extent
that we do not distribute all of our net capital gain or
distribute at least 90%, but less than 100%, of our REIT
taxable income, as adjusted, we will be subject to tax on
the undistributed amount at regular corporate tax rates.
Finally, as discussed above, we may be subject to an excise tax
if we fail to meet certain other distribution requirements. We
intend to make timely distributions sufficient to satisfy these
annual distribution requirements.
It is possible that, from time to time, we may not have
sufficient cash or other liquid assets to meet the 90%
distribution requirement, or to distribute such greater amount
as may be necessary to avoid income and excise taxation, due to,
among other things, (1) timing differences between
(i) the actual receipt of income and actual payment of
deductible expenses and (ii) the inclusion of income and
deduction of expenses in arriving at our taxable income, or
(2) the payment of severance benefits that may not be
deductible to us. In the event that timing differences occur, we
may find it necessary to arrange for borrowings or, if possible,
pay dividends in the form of taxable stock dividends in order to
meet the distribution requirement.
Under certain circumstances, in the event of a deficiency
determined by the Internal Revenue Service, we may be able to
rectify a resulting failure to meet the distribution requirement
for a year by paying deficiency dividends to
stockholders in a later year, which may be included in our
deduction for distributions paid for the earlier year. Thus, we
may be able to avoid being taxed on amounts distributed as
deficiency dividends; however, we will be required to pay
applicable penalties and interest based upon the amount of any
deduction taken for deficiency dividend distributions.
The Internal Revenue Service recently issued Revenue Procedure
2008-68,
which provides temporary relief to publicly traded REITs seeking
to preserve liquidity by electing cash/stock dividends. Under
Revenue Procedure
2008-68, a
REIT may treat the entire dividend, including the stock portion,
as a taxable dividend distribution, thereby qualifying for the
dividends-paid deduction, provided certain requirements are
satisfied. The cash portion of the dividend may be as low as
10%. The Revenue Procedure applies to dividends declared on or
after January 1, 2008, and with respect to a taxable year
ending on or before December 31, 2009.
Failure
to Qualify as a REIT
If we fail to qualify for taxation as a REIT in any taxable
year, we will be subject to federal income tax, including any
applicable alternative minimum tax, on our taxable income at
regular corporate rates. Distributions to stockholders in any
year in which we fail to qualify as a REIT will not be
deductible nor will any particular amount of distributions be
required to be made in any year. All distributions to
stockholders will be taxable as ordinary income to the extent of
current and accumulated earnings and profits allocable to these
distributions and, subject to certain limitations, will be
eligible for the dividends received deduction for corporate
stockholders. Unless entitled to relief under specific statutory
provisions, we also will be disqualified from taxation as a REIT
for the four taxable years following the year during which
qualification was lost. It is not possible to state whether in
all circumstances we would be entitled to statutory relief.
Failure to qualify for even one year could result in our need to
incur indebtedness or liquidate investments in order to pay
potentially significant resulting tax liabilities.
In addition to the relief described above under
Income Tests and Asset
Tests, relief is available in the event that we violate a
provision of the Internal Revenue Code that would result in our
failure to qualify as a REIT if: (1) the violation is due
to reasonable cause and not due to willful neglect; (2) we
pay a penalty of $50,000 for each failure to satisfy the
provision; and (3) the violation does not include a
violation described under Income
Tests or Asset Tests above. It is
not now possible to determine the circumstances under which we
may be entitled to the benefit of these relief provisions.
Federal
Income Taxation of Holders of Our Stock
Treatment of Taxable
U.S. Stockholders. The following summary
applies to you only if you are a
U.S. stockholder. A
U.S. stockholder is a holder of shares of stock
who, for United States federal income tax purposes, is:
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a citizen or resident of the United States;
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a corporation, partnership or other entity classified as a
corporation or partnership for these purposes, created or
organized in or under the laws of the United States or of any
political subdivision of the United States, including any state;
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an estate, the income of which is subject to United States
federal income taxation regardless of its source; or
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a trust, if, in general, a U.S. court is able to exercise
primary supervision over the trusts administration and one
or more U.S. persons, within the meaning of the Internal
Revenue Code, has the authority to control all of the
trusts substantial decisions.
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So long as we qualify for taxation as a REIT, distributions on
shares of our stock made out of the current or accumulated
earnings and profits allocable to these distributions (and not
designated as capital gain dividends) will be includable as
ordinary income for federal income tax purposes. None of these
distributions will be eligible for the dividends received
deduction for U.S. corporate stockholders.
Generally, for taxable years ending after May 6, 2003
through December 31, 2010, the maximum marginal rate of tax
payable by individuals on dividends received from corporations
that are subject to a corporate level of tax is 15%. Except in
limited circumstances, this tax rate will not apply to dividends
paid to you by us on our shares, because generally we are not
subject to federal income tax on the portion of our REIT taxable
income or capital gains distributed to our stockholders. The
reduced maximum federal income tax rate will apply to that
portion, if any, of dividends received by you with respect to
our shares that are attributable to: (1) dividends received
by us from non-REIT corporations or other taxable REIT
subsidiaries; (2) income from the prior year with respect
to which we were required to pay federal corporate income tax
during the prior year (if, for example, we did not distribute
100% of our REIT taxable income for the prior year); or
(3) the amount of any earnings and profits that were
distributed by us and accumulated in a non-REIT year.
Distributions that are designated as capital gain dividends will
be taxed as long-term capital gains (to the extent they do not
exceed our actual net capital gain for the taxable year),
without regard to the period for which you held our stock.
However, if you are a corporation, you may be required to treat
a portion of some capital gain dividends as ordinary income.
If we elect to retain and pay income tax on any net long-term
capital gain, you would include in income, as long-term capital
gain, your proportionate share of this net long-term capital
gain. You would also receive a refundable tax credit for your
proportionate share of the tax paid by us on such retained
capital gains, and you would have an increase in the basis of
your shares of our stock in an amount equal to your includable
capital gains less your share of the tax deemed paid.
You may not include in your federal income tax return any of our
net operating losses or capital losses. Federal income tax rules
may also require that certain minimum tax adjustments and
preferences be apportioned to you. In addition, any distribution
declared by us in October, November or December of any year on a
specified date in any such month shall be treated as both paid
by us and received by you on December 31 of that year, provided
that the distribution is actually paid by us no later than
January 31 of the following year.
We will be treated as having sufficient earnings and profits to
treat as a dividend any distribution up to the amount required
to be distributed in order to avoid imposition of the 4% excise
tax discussed under General and
Qualification as a REIT Annual
Distribution Requirements above. As a result, you may be
required to treat as taxable dividends certain distributions
that would otherwise result in a tax-free return of capital.
Moreover, any deficiency dividend will be treated as
a dividend (an ordinary dividend or a capital gain dividend, as
the case may be), regardless of our earnings and profits. Any
other distributions in excess of current or accumulated earnings
and profits will not be taxable to you to the extent these
distributions do not exceed the adjusted tax basis of your
shares of our stock. You will be required to reduce the tax
basis of your shares of our stock by the amount of these
distributions until the basis has been reduced to zero, after
which these distributions will be taxable as capital gain, if
the shares of our stock are held as capital assets. The tax
basis as so reduced will be used in computing the capital gain
or loss, if any, realized upon sale of the shares of our stock.
Any loss upon a sale or exchange of shares of our stock which
were held for six months or less (after application of certain
holding period rules) will generally be treated as a long-term
capital loss to the extent you previously received capital gain
distributions with respect to these shares of our stock.
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Upon the sale or exchange of any shares of our stock to or with
a person other than us or a sale or exchange of all shares of
our stock (whether actually or constructively owned) with us,
you will generally recognize capital gain or loss equal to the
difference between the amount realized on the sale or exchange
and your adjusted tax basis in these shares of our stock. This
gain will be capital gain if you held these shares of our stock
as a capital asset.
If we redeem any of your shares in us, the treatment can only be
determined on the basis of particular facts at the time of
redemption. In general, you will recognize gain or loss (as
opposed to dividend income) equal to the difference between the
amount received by you in the redemption and your adjusted tax
basis in your shares redeemed if such redemption:
(1) results in a complete termination of your
interest in all classes of our equity securities; (2) is a
substantially disproportionate redemption; or
(3) is not essentially equivalent to a dividend
with respect to you. In applying these tests, you must take into
account your ownership of all classes of our equity securities
(e.g., common stock, preferred stock, depositary shares and
warrants). You also must take into account any equity securities
that are considered to be constructively owned by you.
If, as a result of a redemption by us of your shares, you no
longer own (either actually or constructively) any of our equity
securities or only own (actually and constructively) an
insubstantial percentage of our equity securities, then it is
probable that the redemption of your shares would be considered
not essentially equivalent to a dividend and, thus,
would result in gain or loss to you. However, whether a
distribution is not essentially equivalent to a
dividend depends on all of the facts and circumstances,
and if you rely on any of these tests at the time of redemption,
you should consult your tax advisor to determine their
application to the particular situation.
Generally, if the redemption does not meet the tests described
above, then the proceeds received by you from the redemption of
your shares will be treated as a distribution taxable as a
dividend to the extent of the allocable portion of current or
accumulated earnings and profits. If the redemption is taxed as
a dividend, your adjusted tax basis in the redeemed shares will
be transferred to any other shareholdings in us that you own. If
you own no other shareholdings in us, under certain
circumstances, such basis may be transferred to a related
person, or it may be lost entirely.
Gain from the sale or exchange of our shares held for more than
one year is taxed at a maximum long-term capital gain rate,
which is currently 15%. Pursuant to Internal Revenue Service
guidance, we may classify portions of our capital gain dividends
as gains eligible for the long-term capital gains rate or as
gain taxable to individual stockholders at a maximum rate of 25%.
Treatment of Tax-Exempt
U.S. Stockholders. Tax-exempt entities,
including qualified employee pension and profit sharing trusts
and individual retirement accounts (Exempt
Organizations), generally are exempt from federal income
taxation. However, they are subject to taxation on their
unrelated business taxable income (UBTI). The
Internal Revenue Service has issued a published revenue ruling
that dividend distributions from a REIT to an exempt employee
pension trust do not constitute UBTI, provided that the shares
of the REIT are not otherwise used in an unrelated trade or
business of the exempt employee pension trust. Based on this
ruling, amounts distributed by us to Exempt Organizations
generally should not constitute UBTI. However, if an Exempt
Organization finances its acquisition of the shares of our stock
with debt, a portion of its income from us will constitute UBTI
pursuant to the debt financed property rules.
Likewise, a portion of the Exempt Organizations income
from us would constitute UBTI if we held a residual interest in
a real estate mortgage investment conduit.
In addition, in certain circumstances, a pension trust that owns
more than 10% of our stock is required to treat a percentage of
our dividends as UBTI. This rule applies to a pension trust
holding more than 10% of our stock only if: (1) the
percentage of our income that is UBTI (determined as if we were
a pension trust) is at least 5%; (2) we qualify as a REIT
by reason of the modification of the Five or Fewer Requirement
that allows beneficiaries of the pension trust to be treated as
holding shares in proportion to their actuarial interests in the
pension trust; and (3) either (i) one pension trust
owns more than 25% of the value of our stock, or (ii) a
group of pension trusts individually holding more than 10% of
the value of our stock collectively own more than 50% of the
value of our stock.
Backup Withholding and Information
Reporting. Under certain circumstances, you may
be subject to backup withholding at applicable rates on payments
made with respect to, or cash proceeds of a sale or exchange of,
shares of our stock. Backup withholding will apply only if you:
(1) fail to provide a correct taxpayer identification
number,
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which if you are an individual, is ordinarily your social
security number; (2) furnish an incorrect taxpayer
identification number; (3) are notified by the Internal
Revenue Service that you have failed to properly report payments
of interest or dividends; or (4) fail to certify, under
penalties of perjury, that you have furnished a correct taxpayer
identification number and that the Internal Revenue Service has
not notified you that you are subject to backup withholding.
Backup withholding will not apply with respect to payments made
to certain exempt recipients, such as corporations and
tax-exempt organizations. You should consult with a tax advisor
regarding qualification for exemption from backup withholding,
and the procedure for obtaining an exemption. Backup withholding
is not an additional tax. Rather, the amount of any backup
withholding with respect to a payment to a stockholder will be
allowed as a credit against such stockholders United
States federal income tax liability and may entitle such
stockholder to a refund, provided that the required information
is provided to the Internal Revenue Service. In addition,
withholding a portion of capital gain distributions made to
stockholders may be required for stockholders who fail to
certify their non-foreign status.
Taxation of Foreign Stockholders. The
following summary applies to you only if you are a foreign
person. The federal taxation of foreign persons is a highly
complex matter that may be affected by many considerations.
Except as discussed below, distributions to you of cash
generated by our real estate operations in the form of ordinary
dividends, but not by the sale or exchange of our capital
assets, generally will be subject to U.S. withholding tax
at a rate of 30%, unless an applicable tax treaty reduces that
tax and you file with us the required form evidencing the lower
rate.
In general, you will be subject to United States federal income
tax on a graduated rate basis rather than withholding with
respect to your investment in our stock if such investment is
effectively connected with your conduct of a trade
or business in the United States. A corporate foreign
stockholder that receives income that is, or is treated as,
effectively connected with a United States trade or business may
also be subject to the branch profits tax, which is payable in
addition to regular United States corporate income tax. The
following discussion will apply to foreign stockholders whose
investment in us is not so effectively connected. We expect to
withhold United States income tax, as described below, on the
gross amount of any distributions paid to you unless
(1) you file an Internal Revenue Service
Form W-8ECI
with us claiming that the distribution is effectively
connected or (2) certain other exceptions apply.
Distributions by us that are attributable to gain from the sale
or exchange of a United States real property interest will be
taxed to you under the Foreign Investment in Real Property Tax
Act of 1980 (FIRPTA) as if these distributions were
gains effectively connected with a United States
trade or business. Accordingly, you will be taxed at the normal
capital gain rates applicable to a U.S. stockholder on
these amounts, subject to any applicable alternative minimum tax
and a special alternative minimum tax in the case of nonresident
alien individuals. Distributions subject to FIRPTA may also be
subject to a branch profits tax in the hands of a corporate
foreign stockholder that is not entitled to treaty exemption.
We will be required to withhold from distributions subject to
FIRPTA, and remit to the Internal Revenue Service, 35% of
designated capital gain dividends, or, if greater, 35% of the
amount of any distributions that could be designated as capital
gain dividends. In addition, if we designate prior distributions
as capital gain dividends, subsequent distributions, up to the
amount of the prior distributions not withheld against, will be
treated as capital gain dividends for purposes of withholding.
For taxable years beginning after October 22, 2004, any
capital gain dividend with respect to any class of stock that is
regularly traded on an established securities market
will be treated as an ordinary dividend if the foreign
stockholder did not own more than 5% of such class of stock at
any time during the taxable year. Once this provision takes
effect, foreign stockholders generally will not be required to
report distributions received from us on U.S. federal
income tax returns and all distributions treated as dividends
for U.S. federal income tax purposes including any capital
gain dividend will be subject to a 30% U.S. withholding tax
(unless reduced under an applicable income tax treaty) as
discussed above. In addition, the branch profits tax will no
longer apply to such distributions.
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Unless our shares constitute a United States real property
interest within the meaning of FIRPTA or are effectively
connected with a U.S. trade or business, a sale of our
shares by you generally will not be subject to United States
taxation. Our shares will not constitute a United States real
property interest if we qualify as a domestically
controlled REIT. We do, and expect to continue to, qualify
as a domestically controlled REIT. A domestically controlled
REIT is a REIT in which at all times during a specified testing
period less than 50% in value of its shares is held directly or
indirectly by foreign stockholders. However, if you are a
nonresident alien individual who is present in the United States
for 183 days or more during the taxable year and certain
other conditions apply, you will be subject to a 30% tax on such
capital gains. In any event, a purchaser of our shares from you
will not be required under FIRPTA to withhold on the purchase
price if the purchased shares are regularly traded
on an established securities market or if we are a domestically
controlled REIT. Otherwise, under FIRPTA, the purchaser may be
required to withhold 10% of the purchase price and remit such
amount to the Internal Revenue Service.
Backup withholding tax and information reporting will generally
not apply to distributions paid to you outside the United States
that are treated as: (1) dividends to which the 30% or
lower treaty rate withholding tax discussed above applies;
(2) capital gains dividends; or (3) distributions
attributable to gain from the sale or exchange by us of
U.S. real property interests. Payment of the proceeds of a
sale of stock within the United States or conducted through
certain U.S. related financial intermediaries is subject to
both backup withholding and information reporting unless the
beneficial owner certifies under penalties of perjury that he or
she is not a U.S. person (and the payor does not have
actual knowledge that the beneficial owner is a
U.S. person) or otherwise established an exemption. You may
obtain a refund of any amounts withheld under the backup
withholding rules by filing the appropriate claim for refund
with the Internal Revenue Service.
U.S.
Federal Income Taxation of Holders of Depositary
Shares
Owners of our depositary shares will be treated as if you were
owners of the series of preferred stock represented by the
depositary shares. Thus, you will be required to take into
account the income and deductions to which you would be entitled
if you were a holder of the underlying series of preferred stock.
Conversion or Exchange of Shares for Preferred
Stock. No gain or loss will be recognized upon
the withdrawal of preferred stock in exchange for depositary
shares and the tax basis of each share of preferred stock will,
upon exchange, be the same as the aggregate tax basis of the
depositary shares exchanged. If you held your depositary shares
as a capital asset at the time of the exchange for shares of
preferred stock, the holding period for your shares of preferred
stock will include the period during which you owned the
depositary shares.
U.S.
Federal Income and Estate Taxation of Holders of Our Debt
Securities
The following is a general summary of the United States federal
income tax consequences and, in the case that you are a holder
that is a
non-U.S. holder,
as defined below, the United States federal estate tax
consequences, of purchasing, owning and disposing of debt
securities periodically offered under one or more indentures
(the notes). This summary assumes that you hold the
notes as capital assets. This summary applies to you only if you
are the initial holder of the notes and you acquire the notes
for a price equal to the issue price of the notes. The issue
price of the notes is the first price at which a substantial
amount of the notes is sold other than to bond houses, brokers
or similar persons or organizations acting in the capacity of
underwriters, placement agents or wholesalers. In addition, this
summary does not consider any foreign, state, local or other tax
laws that may be applicable to us or a purchaser of the notes.
U.S.
Holders
The following summary applies to you only if you are a
U.S. holder, as defined below.
Definition of a U.S. Holder. A
U.S. holder is a beneficial owner of a note or
notes that is for United States federal income tax purposes:
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a citizen or resident of the United States;
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a corporation, partnership or other entity classified as a
corporation or partnership for these purposes, created or
organized in or under the laws of the United States or of any
political subdivision of the United States, including any state;
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an estate, the income of which is subject to United States
federal income taxation regardless of its source; or
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a trust, if, in general, a U.S. court is able to exercise
primary supervision over the trusts administration and one
or more U.S. persons, within the meaning of the Internal
Revenue Code, has the authority to control all of the
trusts substantial decisions.
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Payments of Interest. Stated interest on the
notes generally will be taxed as ordinary interest income from
domestic sources at the time it is paid or accrues in accordance
with your method of accounting for tax purposes.
Sale, Exchange or Other Disposition of
Notes. The adjusted tax basis in your note
acquired at a premium will generally be your cost. You generally
will recognize taxable gain or loss when you sell or otherwise
dispose of your notes equal to the difference, if any, between:
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the amount realized on the sale or other disposition, less any
amount attributable to any accrued interest, which will be
taxable in the manner described under Payments
of Interest above; and
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your adjusted tax basis in the notes.
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Your gain or loss generally will be capital gain or loss. This
capital gain or loss will be long-term capital gain or loss if
at the time of the sale or other disposition you have held the
notes for more than one year. Subject to limited exceptions,
your capital losses cannot be used to offset your ordinary
income.
Backup Withholding and Information
Reporting. In general, backup
withholding may apply to any payments made to you of
principal and interest on your note, and to payment of the
proceeds of a sale or other disposition of your note before
maturity, if you are a non-corporate U.S. holder and:
(1) fail to provide a correct taxpayer identification
number, which if you are an individual, is ordinarily your
social security number; (2) furnish an incorrect taxpayer
identification number; (3) are notified by the Internal
Revenue Service that you have failed to properly report payments
of interest or dividends; or (4) fail to certify, under
penalties of perjury, that you have furnished a correct taxpayer
identification number and that the Internal Revenue Service has
not notified you that you are subject to backup withholding.
The amount of any reportable payments, including interest, made
to you (unless you are an exempt recipient) and the amount of
tax withheld, if any, with respect to such payments will be
reported to you and to the Internal Revenue Service for each
calendar year. You should consult your tax advisor regarding
your qualification for an exemption from backup withholding and
the procedures for obtaining such an exemption, if applicable.
The backup withholding tax is not an additional tax and will be
credited against your U.S. federal income tax liability,
provided that correct information is provided to the Internal
Revenue Service.
Non-U.S.
Holders
The following summary applies to you if you are a beneficial
owner of a note and are not a U.S. holder, as defined above
(a
non-U.S. holder).
Special rules may apply to certain
non-U.S. holders
such as controlled foreign corporations,
passive foreign investment companies and
foreign personal holding companies. Such entities
are encouraged to consult their tax advisors to determine the
United States federal, state, local and other tax consequences
that may be relevant to them.
U.S. Federal Withholding Tax. Subject to
the discussion below, U.S. federal withholding tax will not
apply to payments by us or our paying agent, in its capacity as
such, of principal and interest on your notes under the
portfolio interest exception of the Internal Revenue
Code, provided that:
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you do not, directly or indirectly, actually or constructively,
own 10% or more of the total combined voting power of all
classes of our stock entitled to vote;
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you are not (1) a controlled foreign corporation for
U.S. federal income tax purposes that is related, directly
or indirectly, to us through sufficient stock ownership, as
provided in the Internal Revenue Code, or (2) a bank
receiving interest described in Section 881(c)(3)(A) of the
Internal Revenue Code;
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such interest is not effectively connected with your conduct of
a U.S. trade or business; and
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you provide a signed written statement, under penalties of
perjury, which can reliably be related to you, certifying that
you are not a U.S. person within the meaning of the
Internal Revenue Code and providing your name and address to:
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us or our paying agent; or
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a securities clearing organization, bank or other financial
institution that holds customers securities in the
ordinary course of its trade or business and holds your notes on
your behalf and that certifies to us or our paying agent under
penalties of perjury that it, or the bank or financial
institution between it and you, has received from you your
signed, written statement and provides us or our paying agent
with a copy of such statement.
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Treasury regulations provide that:
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if you are a foreign partnership, the certification requirement
will generally apply to your partners, and you will be required
to provide certain information;
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if you are a foreign trust, the certification requirement will
generally be applied to you or your beneficial owners depending
on whether you are a foreign complex trust,
foreign simple trust, or foreign grantor
trust as defined in the Treasury regulations; and
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look-through rules will apply for tiered partnerships, foreign
simple trusts and foreign grantor trusts.
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If you are a foreign partnership or a foreign trust, you should
consult your own tax advisor regarding your status under these
Treasury regulations and the certification requirements
applicable to you.
If you cannot satisfy the portfolio interest requirements
described above, payments of interest will be subject to the 30%
United States withholding tax, unless you provide us with a
properly executed (1) Internal Revenue Service
Form W-8BEN
claiming an exemption from or reduction in withholding under the
benefit of an applicable treaty or (2) Internal Revenue
Service
Form W-8ECI
stating that interest paid on the note is not subject to
withholding tax because it is effectively connected with your
conduct of a trade or business in the United States. Alternative
documentation may be applicable in certain circumstances.
If you are engaged in a trade or business in the United States
and interest on a note is effectively connected with the conduct
of that trade or business, you will be required to pay United
States federal income tax on that interest on a net income basis
(although you will be exempt from the 30% withholding tax
provided the certification requirement described above is met)
in the same manner as if you were a U.S. person, except as
otherwise provided by an applicable tax treaty. If you are a
foreign corporation, you may be required to pay a branch profits
tax on the earnings and profits that are effectively connected
to the conduct of your trade or business in the United States.
Sale, Exchange or other Disposition of
Notes. You generally will not have to pay
U.S. federal income tax on any gain or income realized from
the sale, redemption, retirement at maturity or other
disposition of your notes, unless:
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in the case of gain, you are an individual who is present in the
United States for 183 days or more during the taxable year
of the sale or other disposition of your notes, and specific
other conditions are met;
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you are subject to tax provisions applicable to certain United
States expatriates; or
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the gain is effectively connected with your conduct of a
U.S. trade or business.
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If you are engaged in a trade or business in the United States,
and gain with respect to your notes is effectively connected
with the conduct of that trade or business, you generally will
be subject to U.S. income tax on a net basis on the gain.
In addition, if you are a foreign corporation, you may be
subject to a branch profits tax on your effectively connected
earnings and profits for the taxable year, as adjusted for
certain items.
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U.S. Federal Estate Tax. If you are an
individual and are not a U.S. citizen or a resident of the
United States, as specially defined for U.S. federal estate
tax purposes, at the time of your death, your notes will
generally not be subject to the U.S. federal estate tax,
unless, at the time of your death (1) you owned actually or
constructively 10% or more of the total combined voting power of
all our classes of stock entitled to vote, or (2) interest
on the notes is effectively connected with your conduct of a
U.S. trade or business.
Backup Withholding and Information
Reporting. Backup withholding will not apply to
payments of principal or interest made by us or our paying
agent, in its capacity as such, to you if you have provided the
required certification that you are a
non-U.S. holder
as described in U.S. Federal Withholding
Tax above, and provided that neither we nor our paying
agent have actual knowledge that you are a U.S. holder, as
described in U.S. Holders above. We
or our paying agent may, however, report payments of interest on
the notes.
The gross proceeds from the disposition of your notes may be
subject to information reporting and backup withholding tax. If
you sell your notes outside the United States through a
non-U.S. office
of a
non-U.S. broker
and the sales proceeds are paid to you outside the United
States, then the U.S. backup withholding and information
reporting requirements generally will not apply to that payment.
However, U.S. information reporting, but not backup
withholding, will apply to a payment of sales proceeds, even if
that payment is made outside the United States, if you sell your
notes through a
non-U.S. office
of a broker that:
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is a U.S. person, as defined in the Internal Revenue Code;
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derives 50% or more of its gross income in specific periods from
the conduct of a trade or business in the United States;
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is a controlled foreign corporation for
U.S. federal income tax purposes; or
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is a foreign partnership, if at any time during its tax year,
one or more of its partners are U.S. persons who in the
aggregate hold more than 50% of the income or capital interests
in the partnership, or the foreign partnership is engaged in a
U.S. trade or business, unless the broker has documentary
evidence in its files that you are a
non-U.S. person
and certain other conditions are met or you otherwise establish
an exemption. If you receive payments of the proceeds of a sale
of your notes to or through a U.S. office of a broker, the
payment is subject to both U.S. backup withholding and
information reporting unless you provide a
Form W-8BEN
certifying that you are a
non-U.S. person
or you otherwise establish an exemption.
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You should consult your own tax advisor regarding application of
backup withholding in your particular circumstance and the
availability of and procedure for obtaining an exemption from
backup withholding. Any amounts withheld under the backup
withholding rules from a payment to you will be allowed as a
refund or credit against your U.S. federal income tax
liability, provided the required information is furnished to the
Internal Revenue Service.
U.S.
Federal Income and Estate Taxation of Holders of Our
Warrants
Exercise of Warrants. You will not generally
recognize gain or loss upon the exercise of a warrant. Your
basis in the debt securities, preferred stock, depositary shares
or common stock, as the case may be, received upon the exercise
of the warrant will be equal to the sum of your adjusted tax
basis in the warrant and the exercise price paid. Your holding
period in the debt securities, preferred stock, depositary
shares or common stock, as the case may be, received upon the
exercise of the warrant will not include the period during which
the warrant was held by you.
Expiration of Warrants. Upon the expiration of
a warrant, you will recognize a capital loss in an amount equal
to your adjusted tax basis in the warrant.
Sale or Exchange of Warrants. Upon the sale or
exchange of a warrant to a person other than us, you will
recognize gain or loss in an amount equal to the difference
between the amount realized on the sale or exchange and your
adjusted tax basis in the warrant. Such gain or loss will be
capital gain or loss and will be long-term capital gain or loss
if the warrant was held for more than one year. Upon the sale of
the warrant to us, the Internal Revenue Service may argue that
you should recognize ordinary income on the sale. You are
advised to consult your own tax advisors as to the consequences
of a sale of a warrant to us.
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Potential
Legislation or Other Actions Affecting Tax
Consequences
Current and prospective securities holders should recognize that
the present federal income tax treatment of an investment in us
may be modified by legislative, judicial or administrative
action at any time and that any such action may affect
investments and commitments previously made. The rules dealing
with federal income taxation are constantly under review by
persons involved in the legislative process and by the Internal
Revenue Service and the Treasury Department, resulting in
revisions of regulations and revised interpretations of
established concepts as well as statutory changes. Revisions in
federal tax laws and interpretations of these laws could
adversely affect the tax consequences of an investment in us.
Internet
Access to Our SEC Filings
Our annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K
and amendments to those reports, as well as our proxy statements
and other materials that are filed with, or furnished to, the
Securities and Exchange Commission are made available, free of
charge, on the Internet at www.hcreit.com, as soon as reasonably
practicable after they are filed with, or furnished to, the
Securities and Exchange Commission.
Forward-Looking
Statements and Risk Factors
This section discusses the most significant factors that affect
our business, operations and financial condition. It does not
describe all risks and uncertainties applicable to us, our
industry or ownership of our securities. If any of the following
risks, as well as other risks and uncertainties that are not yet
identified or that we currently think are not material, actually
occur, we could be materially adversely affected. In that event,
the value of our securities could decline.
This Annual Report on
Form 10-K
and the documents incorporated by reference contain statements
that constitute forward-looking statements as that
term is defined in the federal securities laws. These
forward-looking statements include, but are not limited to,
those regarding:
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the possible expansion of our portfolio;
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the sale of properties;
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the performance of our operators/tenants and properties;
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our ability to enter into agreements with new viable tenants for
vacant space or for properties that we take back from
financially troubled tenants, if any;
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our occupancy rates;
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our ability to acquire, develop
and/or
manage properties;
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our ability to make distributions to stockholders;
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our policies and plans regarding investments, financings and
other matters;
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our tax status as a real estate investment trust;
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our critical accounting policies;
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our ability to appropriately balance the use of debt and equity;
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our ability to access capital markets or other sources of
funds; and
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our ability to meet our earnings guidance.
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When we use words such as may, will,
intend, should, believe,
expect, anticipate, project,
estimate or similar expressions, we are making
forward-looking statements. Forward-looking statements are not
guarantees of future performance and involve risks and
uncertainties. Our expected results may not be achieved, and
28
actual results may differ materially from our expectations. This
may be a result of various factors, including, but not limited
to:
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the status of the economy;
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the status of capital markets, including availability and cost
of capital;
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issues facing the health care industry, including compliance
with, and changes to, regulations and payment policies,
responding to government investigations and punitive settlements
and operators/tenants difficulty in cost-effectively
obtaining and maintaining adequate liability and other insurance;
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changes in financing terms;
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competition within the health care and senior housing industries;
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negative developments in the operating results or financial
condition of operators/tenants, including, but not limited to,
their ability to pay rent and repay loans;
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our ability to transition or sell facilities with profitable
results;
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the failure to make new investments as and when anticipated;
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acts of God affecting our properties;
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our ability to re-lease space at similar rates as vacancies
occur;
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our ability to timely reinvest sale proceeds at similar rates to
assets sold;
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operator/tenant bankruptcies or insolvencies;
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government regulations affecting Medicare and Medicaid
reimbursement rates and operational requirements;
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liability or contract claims by or against operators/tenants;
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unanticipated difficulties
and/or
expenditures relating to future acquisitions;
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environmental laws affecting our properties;
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changes in rules or practices governing our financial reporting;
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other legal and operational matters, including REIT
qualification and key management personnel recruitment and
rentention; and
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the risks described below:
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Risk
factors related to our operators revenues and
expenses
Our investment property operators revenues are primarily
driven by occupancy, Medicare and Medicaid reimbursement, if
applicable, and private pay rates. Expenses for these facilities
are primarily driven by the costs of labor, food, utilities,
taxes, insurance and rent or debt service. Revenues from
government reimbursement have, and may continue to, come under
pressure due to reimbursement cuts and state budget shortfalls.
Liability insurance and staffing costs continue to increase for
our operators. To the extent that any decrease in revenues
and/or any
increase in operating expenses result in a property not
generating enough cash to make payments to us, the credit of our
operator and the value of other collateral would have to be
relied upon.
The recent and ongoing credit and liquidity crisis, and the
weakening economy, may have an adverse effect on our operators
and tenants, including their ability to access credit or
maintain occupancy rates. If the operations, cash flows or
financial condition of our operators are materially adversely
impacted by the current economic conditions, our revenue and
operations may be adversely affected.
29
Increased
competition may affect our operators ability to meet their
obligations to us
The operators of our properties compete on a local and regional
basis with operators of properties and other health care
providers that provide comparable services. We cannot be certain
that the operators of all of our facilities will be able to
achieve and maintain occupancy and rate levels that will enable
them to meet all of their obligations to us. Our operators are
expected to encounter increased competition in the future that
could limit their ability to attract residents or expand their
businesses.
Risk
factors related to obligor bankruptcies
We are exposed to the risk that our obligors may not be able to
meet the rent, principal and interest or other payments due us,
which may result in an obligor bankruptcy or insolvency, or that
an obligor might become subject to bankruptcy or insolvency
proceedings for other reasons. Although our operating lease
agreements provide us with the right to evict a tenant, demand
immediate payment of rent and exercise other remedies, and our
loans provide us with the right to terminate any funding
obligation, demand immediate repayment of principal and unpaid
interest, foreclose on the collateral and exercise other
remedies, the bankruptcy and insolvency laws afford certain
rights to a party that has filed for bankruptcy or
reorganization. An obligor in bankruptcy or subject to
insolvency proceedings may be able to limit or delay our ability
to collect unpaid rent in the case of a lease or to receive
unpaid principal and interest in the case of a loan, and to
exercise other rights and remedies.
We may be required to fund certain expenses (e.g., real estate
taxes and maintenance) to preserve the value of an investment
property, avoid the imposition of liens on a property
and/or
transition a property to a new tenant. In some instances, we
have terminated our lease with a tenant and relet the property
to another tenant. In some of those situations, we have provided
working capital loans to and limited indemnification of the new
obligor. If we cannot transition a leased property to a new
tenant, we may take possession of that property, which may
expose us to certain successor liabilities. Should such events
occur, our revenue and operating cash flow may be adversely
affected.
Transfers
of health care facilities may require regulatory approvals and
these facilities may not have efficient alternative
uses
Transfers of health care facilities to successor operators
frequently are subject to regulatory approvals, including change
of ownership approvals under certificate of need
(CON) laws, state licensure laws and Medicare and
Medicaid provider arrangements, that are not required for
transfers of other types of real estate. The replacement of an
operator could be delayed by the approval process of any
federal, state or local agency necessary for the transfer of the
facility or the replacement of the operator licensed to manage
the facility. Alternatively, given the specialized nature of our
facilities, we may be required to spend substantial time and
funds to adapt these properties to other uses. If we are unable
to timely transfer properties to successor operators or find
efficient alternative uses, our revenue and operations may be
adversely affected.
Risk
factors related to government regulations
Our obligors businesses are affected by government
reimbursement and private payor rates. To the extent that an
operator/tenant receives a significant portion of its revenues
from governmental payors, primarily Medicare and Medicaid, such
revenues may be subject to statutory and regulatory changes,
retroactive rate adjustments, recovery of program overpayments
or set-offs, administrative rulings, policy interpretations,
payment or other delays by fiscal intermediaries or carriers,
government funding restrictions (at a program level or with
respect to specific facilities) and interruption or delays in
payments due to any ongoing governmental investigations and
audits at such property. In recent years, governmental payors
have frozen or reduced payments to health care providers due to
budgetary pressures. Health care reimbursement will likely
continue to be of paramount importance to federal and state
authorities. We cannot make any assessment as to the ultimate
timing or effect any future legislative reforms may have on the
financial condition of our obligors and properties. There can be
no assurance that adequate reimbursement levels will be
available for services provided by any property operator,
whether the property receives reimbursement from Medicare,
Medicaid or private payors. Significant limits on the scope of
services reimbursed and on reimbursement rates and fees could
have a material adverse effect on an obligors liquidity,
financial
30
condition and results of operations, which could adversely
affect the ability of an obligor to meet its obligations to us.
See Item 1 Business Certain
Government Regulations Reimbursement above.
Our operators and tenants generally are subject to extensive
federal, state and local licensure, certification and inspection
laws and regulations. Our operators or tenants
failure to comply with any of these laws could result in loss of
accreditation, denial of reimbursement, imposition of fines,
suspension or decertification from federal and state health care
programs, loss of license or closure of the facility. Such
actions may have an effect on our operators or
tenants ability to make lease payments to us and,
therefore, adversely impact us. See
Item 1 Business Certain
Government Regulations Other Related Laws
above.
Many of our properties may require a license
and/or CON
to operate. Failure to obtain a license or CON, or loss of a
required license or CON would prevent a facility from operating
in the manner intended by the operators or tenants. These events
could materially adversely affect our operators or
tenants ability to make rent payments to us. State and
local laws also may regulate expansion, including the addition
of new beds or services or acquisition of medical equipment, and
the construction of health care facilities, by requiring a CON
or other similar approval. See Item 1
Business Certain Government Regulations
Licensing and Certification above.
The American Reinvestment and Recovery Act of 2009, which was
signed into law on February 17, 2009, provides
$87 billion in additional federal Medicaid funding for
states Medicaid expenditures between October 1, 2008
and December 31, 2010. Under this Act, states meeting
certain eligibility requirements will temporarily receive
additional money in the form of an increase in the federal
medical assistance percentage (FMAP). Thus, for a limited period
of time, the share of Medicaid costs that are paid for by the
federal government will go up, and each states share will
go down. We cannot predict whether states are, or will remain,
eligible to receive the additional federal Medicaid funding, or
whether the states will have sufficient funds for their Medicaid
programs. We also cannot predict the impact that this
broad-based, far-reaching legislation will have on the
U.S. economy or our business.
Risk
factors related to liability claims and insurance
costs
Long-term care property operators (skilled nursing facilities,
assisted living facilities, and independent living/continuing
care retirement communities) have experienced substantial
increases in both the number and size of patient care liability
claims in recent years. As a result, general and professional
liability costs have increased in some markets. No assurances
can be given that the climate for long-term care general and
professional liability insurance will improve in any states
where the property operators conduct business. Insurance
companies may reduce or stop writing general and professional
liability policies for long-term care facilities. Thus, general
and professional liability insurance coverage may be restricted
or very costly, which may adversely affect the property
operators future operations, cash flows and financial
condition, and may have a material adverse effect on the
property operators ability to meet their obligations to us.
Risk
factors related to acquisitions
We are exposed to the risk that some of our acquisitions may not
prove to be successful. We could encounter unanticipated
difficulties and expenditures relating to any acquired
properties, including contingent liabilities, and acquired
properties might require significant management attention that
would otherwise be devoted to our ongoing business. If we agree
to provide construction funding to an operator/tenant and the
project is not completed, we may need to take steps to ensure
completion of the project. Moreover, if we issue equity
securities or incur additional debt, or both, to finance future
acquisitions, it may reduce our per share financial results.
These costs may negatively affect our results of operations.
Risk
factors related to indebtedness
Permanent financing for our investments is typically provided
through a combination of public and private offerings of debt
and equity securities and the incurrence or assumption of
secured debt. The incurrence or assumption of indebtedness may
cause us to become more leveraged, which could (1) require
us to dedicate a greater portion of our cash flow to the payment
of debt service, (2) make us more vulnerable to a downturn
in the economy, (3) limit our ability to obtain additional
financing, or (4) negatively affect our credit ratings or
outlook by one or more of the noted rating agencies.
31
Our debt agreements contain various covenants, restrictions and
events of default. Among other things, these provisions require
us to maintain certain financial ratios and minimum net worth
and impose certain limits on our ability to incur indebtedness,
create liens and make investments or acquisitions. Breaches of
these covenants could result in defaults under the instruments
governing the applicable indebtedness, in addition to any other
indebtedness cross-defaulted against such instruments. These
defaults could have a material adverse impact on our business,
results of operations and financial condition.
Risk
factors related to our credit ratings
As of February 16, 2009, our senior unsecured notes were
rated Baa2 (stable), BBB- (stable) and BBB (stable) by
Moodys Investors Service, Standard & Poors
Ratings Services and Fitch Ratings, respectively. We plan to
manage the Company to maintain investment grade status with a
capital structure consistent with our current profile, but there
can be no assurance that we will be able to maintain our current
credit ratings. Any downgrades in terms of ratings or outlook by
any or all of the noted rating agencies could have a material
adverse impact on our cost and availability of capital, which
could in turn have a material adverse impact on our consolidated
results of operations, liquidity
and/or
financial condition.
Risk
factors related to interest rate swaps
We enter into interest rate swap agreements from time to time to
manage some of our exposure to interest rate volatility. These
swap agreements involve risks, such as the risk that
counterparties may fail to honor their obligations under these
arrangements. In addition, these arrangements may not be
effective in reducing our exposure to changes in interest rates.
When we use forward-starting interest rate swaps, there is a
risk that we will not complete the long-term borrowing against
which the swap is intended to hedge. If such events occur, our
results of operations may be adversely affected.
Risk
factors related to environmental laws
Under various federal and state laws, owners or operators of
real estate may be required to respond to the presence or
release of hazardous substances on the property and may be held
liable for property damage, personal injuries or penalties that
result from environmental contamination or exposure to hazardous
substances. We may become liable to reimburse the government for
damages and costs it incurs in connection with the
contamination. Generally, such liability attaches to a person
based on the persons relationship to the property. Our
tenants or borrowers are primarily responsible for the condition
of the property. Moreover, we review environmental site
assessments of the properties that we own or encumber prior to
taking an interest in them. Those assessments are designed to
meet the all appropriate inquiry standard, which we
believe qualifies us for the innocent purchaser defense if
environmental liabilities arise. Based upon such assessments, we
do not believe that any of our properties are subject to
material environmental contamination. However, environmental
liabilities may be present in our properties and we may incur
costs to remediate contamination, which could have a material
adverse effect on our business or financial condition or the
business or financial condition of our obligors.
Risk
factors related to facilities that require entrance
fees
Certain of our senior housing facilities require the payment of
an upfront entrance fee by the resident, a portion of which may
be refundable by the operator. Some of these facilities are
subject to substantial oversight by state regulators relating to
these funds. As a result of this oversight, residents of these
facilities may have a variety of rights, including, for example,
the right to cancel their contracts within a specified period of
time and certain lien rights. The oversight and rights of
residents within these facilities may have an effect on the
revenue or operations of the operators of such facilities and
therefore may negatively impact us.
Risk
factors related to facilities under construction or
development
At any given time, we may be in the process of constructing one
or more new facilities that ultimately will require a CON and
license before they can be utilized by the operator for their
intended use. The operator also may need to obtain Medicare and
Medicaid certification and enter into Medicare and Medicaid
provider agreements
32
and/or third
party payor contracts. In the event that the operator is unable
to obtain the necessary CON, licensure, certification, provider
agreements or contracts after the completion of construction,
there is a risk that we will not be able to earn any revenues on
the facility until either the initial operator obtains a license
or certification to operate the new facility and the necessary
provider agreements or contracts or we can find and contract
with a new operator that is able to obtain a license to operate
the facility for its intended use and the necessary provider
agreements or contracts.
In connection with our renovation, redevelopment, development
and related construction activities, we may be unable to obtain,
or suffer delays in obtaining, necessary zoning, land-use,
building, occupancy and other required governmental permits and
authorizations. These factors could result in increased costs or
our abandonment of these projects. In addition, we may not be
able to obtain financing on favorable terms, which may render us
unable to proceed with our development activities, and we may
not be able to complete construction and
lease-up of
a property on schedule, which could result in increased debt
service expense or construction costs.
Additionally, the time frame required for development,
construction and
lease-up of
these properties means that we may have to wait years for
significant cash returns. Because we are required to make cash
distributions to our stockholders, if the cash flow from
operations or refinancing is not sufficient, we may be forced to
borrow additional money to fund such distributions. Newly
developed and acquired properties may not produce the cash flow
that we expect, which could adversely affect our overall
financial performance.
In deciding whether to acquire or develop a particular property,
we make assumptions regarding the expected future performance of
that property. In particular, we estimate the return on our
investment based on expected occupancy and rental rates. If our
financial projections with respect to a new property are
inaccurate, and the property is unable to achieve the expected
occupancy and rental rates, it may fail to perform as we
expected in analyzing our investment. Our estimate of the costs
of repositioning or redeveloping an acquired property may prove
to be inaccurate, which may result in our failure to meet our
profitability goals. Additionally, we may acquire new properties
that are not fully leased, and the cash flow from existing
operations may be insufficient to pay the operating expenses and
debt service associated with that property.
We do
not know if our tenants will renew their existing leases, and if
they do not, we may be unable to lease the properties on as
favorable terms, or at all
We cannot predict whether our tenants will renew existing leases
at the end of their lease terms, which expire at various times
through 2045. If these leases are not renewed, we would be
required to find other tenants to occupy those properties or
sell them. There can be no assurance that we would be able to
identify suitable replacement tenants or enter into leases with
new tenants on terms as favorable to us as the current leases or
that we would be able to lease those properties at all.
Our
ownership of properties through ground leases exposes us to the
loss of such properties upon breach or termination of the ground
leases
We have acquired an interest in certain of our properties by
acquiring a leasehold interest in the property on which the
building is located, and we may acquire additional properties in
the future through the purchase of interests in ground leases.
As the lessee under a ground lease, we are exposed to the
possibility of losing the property upon termination of the
ground lease or an earlier breach of the ground lease by us.
Illiquidity
of real estate investments could significantly impede our
ability to respond to adverse changes in the performance of our
properties
Real estate investments are relatively illiquid. Our ability to
quickly sell or exchange any of our properties in response to
changes in economic and other conditions will be limited. No
assurances can be given that we will recognize full value for
any property that we are required to sell for liquidity reasons.
Our inability to respond rapidly to changes in the performance
of our investments could adversely affect our financial
condition and results of operations. In addition, we are exposed
to the risks inherent in concentrating investments in real
estate, and in particular, the seniors housing and healthcare
industries. A downturn in the real estate industry could
adversely affect the value of our properties and our ability to
sell properties for a price or on terms acceptable to us.
33
Risk
factors related to reinvestment of sale proceeds
From time to time, we will have cash available from (1) the
proceeds of sales of our securities, (2) principal payments
on our loans receivable and (3) the sale of properties,
including non-elective dispositions, under the terms of master
leases or similar financial support arrangements. In order to
maintain current revenues and continue generating attractive
returns, we expect to re-invest these proceeds in a timely
manner. We compete for real estate investments with a broad
variety of potential investors. This competition for attractive
investments may negatively affect our ability to make timely
investments on terms acceptable to us.
Failure
to properly manage our rapid growth could distract our
management or increase our expenses
We have experienced rapid growth and development in a relatively
short period of time and expect to continue this rapid growth in
the future. Our rapid growth has resulted in increased levels of
responsibility for our management. Future property acquisitions
could place significant additional demands on, and require us to
expand, our management, resources and personnel. Our failure to
manage any such rapid growth effectively could harm our business
and, in particular, our financial condition, results of
operations and cash flows, which could negatively affect our
ability to make distributions to stockholders. Our rapid growth
could also increase our capital requirements, which may require
us to issue potentially dilutive equity securities and incur
additional debt.
We
might fail to qualify or remain qualified as a
REIT
We intend to operate as a REIT under the Internal Revenue Code
and believe we have and will continue to operate in such a
manner. If we lose our status as a REIT, we will face serious
tax consequences that will substantially reduce the funds
available for satisfying our obligations and for distribution to
our stockholders for each of the years involved because:
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we would not be allowed a deduction for distributions to
stockholders in computing our taxable income and would be
subject to federal income tax at regular corporate rates;
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we could be subject to the federal alternative minimum tax and
possibly increased state and local taxes; and
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unless we are entitled to relief under statutory provisions, we
could not elect to be subject to tax as a REIT for four taxable
years following the year during which we were disqualified.
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Since REIT qualification requires us to meet a number of complex
requirements, it is possible that we may fail to fulfill them,
and if we do, our earnings will be reduced by the amount of
federal taxes owed. A reduction in our earnings would affect the
amount we could distribute to our stockholders. Also, if we were
not a REIT, we would not be required to make distributions to
stockholders since a non-REIT is not required, in order to avoid
an excise tax, to pay dividends to stockholders amounting to at
least the sum of: (1) 85% of our REIT ordinary income for
the year; (2) 95% of our REIT capital gain income for such
year (other than capital gain that we elect to retain and pay
tax on); and (3) any undistributed taxable income from
preceding periods. See Item 1
Business Federal Income Tax Considerations for
a discussion of the provisions of the Internal Revenue Code that
apply to us and the effects of non-qualification.
In addition, if we fail to qualify as a REIT, all distributions
to stockholders would continue to be treated as dividends to the
extent of our current and accumulated earning and profits,
although corporate stockholders may be eligible for the
dividends received deduction, and individual stockholders may be
eligible for taxation at the rates generally applicable to
long-term capital gains (currently at a maximum rate of 15%)
with respect to distributions.
As a result of all these factors, our failure to qualify as a
REIT also could impair our ability to implement our business
strategy and would adversely affect the value of our common
stock.
Qualification as a REIT involves the application of highly
technical and complex Internal Revenue Code provisions for which
there are only limited judicial and administrative
interpretations. The determination of various factual matters
and circumstances not entirely within our control may affect our
ability to remain qualified as a REIT. Although we believe that
we qualify as a REIT, we cannot assure you that we will continue
to qualify or remain qualified as a REIT for tax purposes. See
Item 1 Business
Taxation Federal Income Tax Considerations
included in this Annual Report on
Form 10-K.
34
The
90% annual distribution requirement will decrease our liquidity
and may limit our ability to engage in otherwise beneficial
transactions
To comply with the 90% distribution requirement applicable to
REITs and to avoid the nondeductible excise tax, we must make
distributions to our stockholders. See
Item 1 Business
Taxation Federal Income Tax
Considerations Qualification as a REIT
Annual Distribution Requirements included in this Annual
Report on
Form 10-K.
Although we anticipate that we generally will have sufficient
cash or liquid assets to enable us to satisfy the REIT
distribution requirement, it is possible that, from time to
time, we may not have sufficient cash or other liquid assets to
meet the 90% distribution requirement, or we may decide to
retain cash or distribute such greater amount as may be
necessary to avoid income and excise taxation. This may be due
to timing differences between the actual receipt of income and
actual payment of deductible expenses, on the one hand, and the
inclusion of that income and deduction of those expenses in
arriving at our taxable income, on the other hand. In addition,
non-deductible expenses such as principal amortization or
repayments or capital expenditures in excess of non-cash
deductions may cause us to fail to have sufficient cash or
liquid assets to enable us to satisfy the 90% distribution
requirement. In the event that timing differences occur, or we
deem it appropriate to retain cash, we may borrow funds, issue
additional equity securities (although we cannot assure you that
we will be able to do so), pay taxable stock dividends, if
possible, distribute other property or securities or engage in a
transaction intended to enable us to meet the REIT distribution
requirements. This may require us to raise additional capital to
meet our obligations.
The amount of additional indebtedness we may incur is limited by
the terms of our line of credit arrangement and the indentures
governing our senior unsecured notes. In addition, adverse
economic conditions may impact the availability of additional
funds or could cause the terms on which we are able to borrow
additional funds to become unfavorable. In those circumstances,
we may be required to raise additional equity in the capital
markets. Our access to capital depends upon a number of factors
over which we have little or no control, including rising
interest rates, inflation and other general market conditions
and the markets perception of our growth potential and our
current and potential future earnings and cash distributions and
the market price of the shares of our capital stock. We cannot
assure you that we will be able to raise the capital necessary
to make future investments or to meet our obligations and
commitments as they mature.
Other
risk factors
We are also subject to other risks. First, our Second Restated
Certificate of Incorporation and Amended and Restated By-Laws
contain anti-takeover provisions (staggered board provisions,
restrictions on share ownership and transfer and super majority
stockholder approval requirements for business combinations)
that could make it more difficult for or even prevent a third
party from acquiring us without the approval of our incumbent
Board of Directors. Provisions and agreements that inhibit or
discourage takeover attempts could reduce the market value of
our common stock.
Additionally, we are dependent on key personnel. Although we
have entered into employment agreements with our executive
officers, losing any one of them could, at least temporarily,
have an adverse impact on our operations. We believe that losing
more than one could have a material adverse impact on our
business.
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Item 1B.
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Unresolved
Staff Comments
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None.
35
We lease our corporate headquarters located at One SeaGate,
Suite 1500, Toledo, Ohio 43604. We also own corporate
offices in Tennessee, lease corporate offices in Florida and
have ground leases relating to certain of our investment
properties and medical office buildings. The following table
sets forth certain information regarding the properties that
comprise our investments as of December 31, 2008 (dollars
in thousands):
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Number of
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Number of
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Total
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Annualized
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Property Location
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Properties
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Units
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Investment
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Income(1)
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Assisted Living Facilities:
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Arizona
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3
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|
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132
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$
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12,446
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$
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1,609
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California
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9
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637
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|
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56,879
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7,577
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Colorado
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1
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|
|
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46
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|
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3,950
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|
|
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583
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Connecticut
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5
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|
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529
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38,265
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5,509
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Delaware
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1
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|
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97
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|
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19,433
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2,504
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Florida
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|
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13
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|
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763
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|
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44,173
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|
|
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4,452
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Georgia
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2
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|
|
|
107
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|
|
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4,098
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|
|
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558
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Illinois
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7
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|
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687
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|
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96,592
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|
|
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4,010
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Indiana
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2
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|
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78
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|
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4,585
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718
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Iowa
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|
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1
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|
|
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237
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|
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24,280
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|
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0
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Kansas
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1
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|
|
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119
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|
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9,998
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|
|
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1,287
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Louisiana
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1
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|
|
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123
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|
|
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6,669
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|
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1,295
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Massachusetts
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5
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|
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397
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|
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94,008
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|
|
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10,691
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Mississippi
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|
1
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|
|
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78
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7,106
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|
|
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1,010
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Montana
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3
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|
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205
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13,752
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1,948
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Nevada
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4
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494
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54,976
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3,246
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New Jersey
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2
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90
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6,780
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1,025
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New York
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4
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284
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49,961
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4,319
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North Carolina
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|
40
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|
|
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1,866
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162,797
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22,533
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Ohio
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7
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481
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38,562
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5,090
|
|
Oklahoma
|
|
|
17
|
|
|
|
644
|
|
|
|
30,006
|
|
|
|
3,877
|
|
Oregon
|
|
|
2
|
|
|
|
70
|
|
|
|
7,634
|
|
|
|
1,289
|
|
Pennsylvania
|
|
|
4
|
|
|
|
302
|
|
|
|
32,029
|
|
|
|
1,513
|
|
South Carolina
|
|
|
2
|
|
|
|
124
|
|
|
|
6,638
|
|
|
|
946
|
|
Tennessee
|
|
|
5
|
|
|
|
322
|
|
|
|
45,393
|
|
|
|
4,255
|
|
Texas
|
|
|
24
|
|
|
|
1,122
|
|
|
|
93,284
|
|
|
|
10,456
|
|
Utah
|
|
|
2
|
|
|
|
150
|
|
|
|
12,110
|
|
|
|
1,673
|
|
Virginia
|
|
|
4
|
|
|
|
225
|
|
|
|
31,201
|
|
|
|
3,942
|
|
Washington
|
|
|
5
|
|
|
|
342
|
|
|
|
92,447
|
|
|
|
8,067
|
|
Wisconsin
|
|
|
9
|
|
|
|
546
|
|
|
|
73,696
|
|
|
|
6,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assisted Living Facilities
|
|
|
186
|
|
|
|
11,297
|
|
|
|
1,173,748
|
|
|
|
122,063
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Total
|
|
|
Annualized
|
|
Property Location
|
|
Properties
|
|
|
Beds
|
|
|
Investment
|
|
|
Income(1)
|
|
|
Skilled Nursing Facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alabama
|
|
|
7
|
|
|
|
1,013
|
|
|
$
|
35,469
|
|
|
$
|
4,742
|
|
Arizona
|
|
|
2
|
|
|
|
342
|
|
|
|
16,345
|
|
|
|
1,696
|
|
Colorado
|
|
|
4
|
|
|
|
650
|
|
|
|
30,212
|
|
|
|
3,542
|
|
Connecticut
|
|
|
6
|
|
|
|
728
|
|
|
|
20,854
|
|
|
|
2,542
|
|
Florida
|
|
|
44
|
|
|
|
5,759
|
|
|
|
286,706
|
|
|
|
35,745
|
|
Georgia
|
|
|
3
|
|
|
|
499
|
|
|
|
15,252
|
|
|
|
1,995
|
|
Idaho
|
|
|
3
|
|
|
|
393
|
|
|
|
27,274
|
|
|
|
1,689
|
|
Illinois
|
|
|
4
|
|
|
|
406
|
|
|
|
28,425
|
|
|
|
3,001
|
|
Indiana
|
|
|
6
|
|
|
|
644
|
|
|
|
31,052
|
|
|
|
3,957
|
|
Kansas
|
|
|
2
|
|
|
|
343
|
|
|
|
21,827
|
|
|
|
901
|
|
Kentucky
|
|
|
10
|
|
|
|
1,311
|
|
|
|
59,891
|
|
|
|
7,760
|
|
Louisiana
|
|
|
7
|
|
|
|
854
|
|
|
|
32,009
|
|
|
|
3,328
|
|
Maryland
|
|
|
2
|
|
|
|
240
|
|
|
|
14,297
|
|
|
|
1,479
|
|
Massachusetts
|
|
|
21
|
|
|
|
2,997
|
|
|
|
209,156
|
|
|
|
23,555
|
|
Michigan
|
|
|
1
|
|
|
|
99
|
|
|
|
4,329
|
|
|
|
450
|
|
Mississippi
|
|
|
11
|
|
|
|
1,527
|
|
|
|
43,087
|
|
|
|
5,831
|
|
Missouri
|
|
|
3
|
|
|
|
407
|
|
|
|
16,779
|
|
|
|
1,729
|
|
New Hampshire
|
|
|
1
|
|
|
|
68
|
|
|
|
4,266
|
|
|
|
530
|
|
New Jersey
|
|
|
1
|
|
|
|
176
|
|
|
|
4,396
|
|
|
|
530
|
|
Ohio
|
|
|
20
|
|
|
|
2,740
|
|
|
|
180,131
|
|
|
|
19,766
|
|
Oklahoma
|
|
|
3
|
|
|
|
668
|
|
|
|
19,397
|
|
|
|
2,604
|
|
Oregon
|
|
|
1
|
|
|
|
111
|
|
|
|
3,836
|
|
|
|
645
|
|
Pennsylvania
|
|
|
4
|
|
|
|
642
|
|
|
|
24,253
|
|
|
|
3,543
|
|
Tennessee
|
|
|
22
|
|
|
|
3,025
|
|
|
|
214,289
|
|
|
|
26,553
|
|
Texas
|
|
|
26
|
|
|
|
3,668
|
|
|
|
169,533
|
|
|
|
18,063
|
|
Utah
|
|
|
1
|
|
|
|
120
|
|
|
|
7,217
|
|
|
|
745
|
|
Virginia
|
|
|
10
|
|
|
|
1,239
|
|
|
|
62,802
|
|
|
|
6,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Skilled Nursing Facilities
|
|
|
225
|
|
|
|
30,669
|
|
|
|
1,583,084
|
|
|
|
183,149
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Total
|
|
|
Annualized
|
|
Property Location
|
|
Properties
|
|
|
Units
|
|
|
Investment
|
|
|
Income(1)
|
|
|
Independent Living Facilities/CCRCs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona
|
|
|
2
|
|
|
|
105
|
|
|
$
|
12,084
|
|
|
$
|
942
|
|
California
|
|
|
8
|
|
|
|
1,299
|
|
|
|
166,988
|
|
|
|
18,168
|
|
Colorado
|
|
|
4
|
|
|
|
580
|
|
|
|
74,159
|
|
|
|
7,047
|
|
Florida
|
|
|
7
|
|
|
|
1,230
|
|
|
|
193,981
|
|
|
|
14,351
|
|
Georgia
|
|
|
4
|
|
|
|
418
|
|
|
|
75,197
|
|
|
|
7,608
|
|
Idaho
|
|
|
1
|
|
|
|
254
|
|
|
|
12,778
|
|
|
|
1,800
|
|
Indiana
|
|
|
3
|
|
|
|
597
|
|
|
|
101,077
|
|
|
|
11,290
|
|
Kansas
|
|
|
1
|
|
|
|
120
|
|
|
|
11,837
|
|
|
|
1,158
|
|
Maryland
|
|
|
1
|
|
|
|
0
|
|
|
|
2,667
|
|
|
|
0
|
|
Massachusetts
|
|
|
7
|
|
|
|
219
|
|
|
|
59,551
|
|
|
|
4,494
|
|
Missouri
|
|
|
1
|
|
|
|
65
|
|
|
|
5,713
|
|
|
|
574
|
|
Nevada
|
|
|
1
|
|
|
|
103
|
|
|
|
6,749
|
|
|
|
1,185
|
|
New York
|
|
|
1
|
|
|
|
0
|
|
|
|
799
|
|
|
|
0
|
|
North Carolina
|
|
|
3
|
|
|
|
343
|
|
|
|
46,352
|
|
|
|
4,098
|
|
Ohio
|
|
|
1
|
|
|
|
288
|
|
|
|
49,117
|
|
|
|
0
|
|
Pennsylvania
|
|
|
4
|
|
|
|
0
|
|
|
|
28,779
|
|
|
|
2,316
|
|
South Carolina
|
|
|
10
|
|
|
|
1,197
|
|
|
|
210,800
|
|
|
|
8,187
|
|
Texas
|
|
|
2
|
|
|
|
518
|
|
|
|
18,116
|
|
|
|
2,391
|
|
Washington
|
|
|
1
|
|
|
|
70
|
|
|
|
5,079
|
|
|
|
549
|
|
Wisconsin
|
|
|
1
|
|
|
|
138
|
|
|
|
23,637
|
|
|
|
2,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Independent Living Facilities/CCRCs
|
|
|
63
|
|
|
|
7,544
|
|
|
|
1,105,460
|
|
|
|
88,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Total
|
|
|
Annualized
|
|
Property Location
|
|
Properties
|
|
|
Sq. Ft.
|
|
|
Investment
|
|
|
Income(1)
|
|
|
Medical Office Buildings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alabama
|
|
|
5
|
|
|
|
303,316
|
|
|
$
|
43,715
|
|
|
$
|
4,187
|
|
Alaska
|
|
|
1
|
|
|
|
63,383
|
|
|
|
28,674
|
|
|
|
2,505
|
|
Arizona
|
|
|
6
|
|
|
|
339,205
|
|
|
|
100,567
|
|
|
|
5,885
|
|
California
|
|
|
7
|
|
|
|
384,520
|
|
|
|
122,366
|
|
|
|
8,989
|
|
Colorado
|
|
|
1
|
|
|
|
36,386
|
|
|
|
7,221
|
|
|
|
585
|
|
Florida
|
|
|
27
|
|
|
|
935,943
|
|
|
|
268,853
|
|
|
|
18,641
|
|
Georgia
|
|
|
15
|
|
|
|
358,566
|
|
|
|
75,982
|
|
|
|
6,559
|
|
Illinois
|
|
|
3
|
|
|
|
71,345
|
|
|
|
16,981
|
|
|
|
1,558
|
|
Indiana
|
|
|
1
|
|
|
|
90,403
|
|
|
|
21,953
|
|
|
|
1,894
|
|
Kentucky
|
|
|
1
|
|
|
|
112,638
|
|
|
|
15,076
|
|
|
|
0
|
|
Missouri
|
|
|
1
|
|
|
|
50,156
|
|
|
|
16,406
|
|
|
|
1,412
|
|
Nevada
|
|
|
9
|
|
|
|
324,845
|
|
|
|
112,540
|
|
|
|
8,286
|
|
New Jersey
|
|
|
5
|
|
|
|
406,454
|
|
|
|
79,183
|
|
|
|
5,010
|
|
New York
|
|
|
7
|
|
|
|
276,104
|
|
|
|
59,845
|
|
|
|
5,801
|
|
North Carolina
|
|
|
10
|
|
|
|
156,251
|
|
|
|
23,854
|
|
|
|
2,239
|
|
Ohio
|
|
|
1
|
|
|
|
20,106
|
|
|
|
7,352
|
|
|
|
696
|
|
Oklahoma
|
|
|
1
|
|
|
|
44,803
|
|
|
|
12,373
|
|
|
|
1,097
|
|
Pennsylvania
|
|
|
1
|
|
|
|
98,132
|
|
|
|
22,097
|
|
|
|
2,030
|
|
South Carolina
|
|
|
1
|
|
|
|
47,114
|
|
|
|
16,987
|
|
|
|
1,335
|
|
Tennessee
|
|
|
7
|
|
|
|
295,017
|
|
|
|
67,171
|
|
|
|
6,123
|
|
Texas
|
|
|
16
|
|
|
|
839,711
|
|
|
|
203,671
|
|
|
|
14,774
|
|
Virginia
|
|
|
1
|
|
|
|
56,775
|
|
|
|
3,584
|
|
|
|
0
|
|
Wisconsin
|
|
|
1
|
|
|
|
293,629
|
|
|
|
53,266
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Medical Office Buildings
|
|
|
128
|
|
|
|
5,604,802
|
|
|
|
1,379,717
|
|
|
|
99,606
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Total
|
|
|
Annualized
|
|
Property Location
|
|
Properties
|
|
|
Beds
|
|
|
Investment
|
|
|
Income(1)
|
|
|
Specialty Care Facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California
|
|
|
5
|
|
|
|
569
|
|
|
$
|
119,596
|
|
|
$
|
7,346
|
|
Idaho
|
|
|
1
|
|
|
|
60
|
|
|
|
23,929
|
|
|
|
2,246
|
|
Illinois
|
|
|
1
|
|
|
|
72
|
|
|
|
51,012
|
|
|
|
4,796
|
|
Indiana
|
|
|
2
|
|
|
|
90
|
|
|
|
30,147
|
|
|
|
3,203
|
|
Kentucky
|
|
|
1
|
|
|
|
60
|
|
|
|
30,110
|
|
|
|
2,866
|
|
Louisiana
|
|
|
1
|
|
|
|
50
|
|
|
|
11,615
|
|
|
|
744
|
|
Massachusetts
|
|
|
4
|
|
|
|
240
|
|
|
|
43,450
|
|
|
|
4,367
|
|
Nebraska
|
|
|
1
|
|
|
|
60
|
|
|
|
28,073
|
|
|
|
0
|
|
New Jersey
|
|
|
1
|
|
|
|
76
|
|
|
|
37,740
|
|
|
|
3,594
|
|
Ohio
|
|
|
2
|
|
|
|
84
|
|
|
|
40,211
|
|
|
|
4,725
|
|
Oklahoma
|
|
|
2
|
|
|
|
91
|
|
|
|
11,991
|
|
|
|
1,102
|
|
Texas
|
|
|
9
|
|
|
|
397
|
|
|
|
167,218
|
|
|
|
16,121
|
|
Wisconsin
|
|
|
1
|
|
|
|
62
|
|
|
|
24,578
|
|
|
|
2,602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Specialty Care Facilities
|
|
|
31
|
|
|
|
1,911
|
|
|
|
619,670
|
|
|
|
53,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total All Properties
|
|
|
633
|
|
|
|
|
|
|
$
|
5,861,679
|
|
|
$
|
546,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects contract rate of interest
for loans, annual straight-line rent for leases with fixed
escalators or annual cash rent for leases with contingent
escalators, net of collectability reserves if applicable.
|
|
|
Item 3.
|
Legal
Proceedings
|
From time to time, there are various legal proceedings pending
to which we are a party or to which some of our properties are
subject arising in the normal course of business. We do not
believe that the ultimate resolution of these proceedings will
have a material adverse effect on our consolidated financial
position or results of operations.
|
|
Item 4.
|
Submission
of Matters to a Vote of Security Holders
|
None.
39
PART II
|
|
Item 5.
|
Market
for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
|
There were 5,200 stockholders of record as of February 16,
2009. The following table sets forth, for the periods indicated,
the high and low prices of our common stock on the New York
Stock Exchange, as reported on the Composite Tape, and common
dividends paid per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Price
|
|
|
Dividends
|
|
|
|
High
|
|
|
Low
|
|
|
Paid
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
46.45
|
|
|
$
|
39.26
|
|
|
$
|
0.6600
|
|
Second Quarter
|
|
|
50.49
|
|
|
|
44.00
|
|
|
|
0.6800
|
|
Third Quarter
|
|
|
53.98
|
|
|
|
42.54
|
|
|
|
0.6800
|
|
Fourth Quarter
|
|
|
53.50
|
|
|
|
30.14
|
|
|
|
0.6800
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
48.55
|
|
|
$
|
42.62
|
|
|
$
|
0.2991
|
(1)
|
Second Quarter
|
|
|
45.80
|
|
|
|
38.64
|
|
|
|
0.6600
|
|
Third Quarter
|
|
|
44.24
|
|
|
|
35.08
|
|
|
|
0.6600
|
|
Fourth Quarter
|
|
|
46.55
|
|
|
|
41.00
|
|
|
|
0.6600
|
|
|
|
|
(1)
|
|
Does not include the $0.3409
prorated dividend paid on December 28, 2006 in connection
with the merger with Windrose Medical Properties Trust.
|
Our Board of Directors has approved a quarterly dividend rate of
$0.68 per share of common stock per quarter. Our dividend policy
is reviewed annually by the Board of Directors. The declaration
and payment of quarterly dividends remains subject to the review
and approval of the Board of Directors.
40
Stockholder
Return Performance Presentation
Set forth below is a line graph comparing the yearly percentage
change and the cumulative total stockholder return on our shares
of common stock against the cumulative total return of the
S & P Composite-500 Stock Index and the NAREIT Equity
Index. As of December 31, 2008, 98 companies comprised
the NAREIT Equity Index. The Index consists of REITs identified
by NAREIT as equity (those REITs which have at least 75% of
their investments in real property). Upon written request sent
to the Senior Vice President-Administration and Corporate
Secretary, Health Care REIT, Inc., One SeaGate, Suite 1500,
P.O. Box 1475, Toledo, Ohio,
43603-1475,
we will provide stockholders with the names of the component
issuers. The data are based on the closing prices as of December
31 for each of the five years. 2003 equals $100 and dividends
are assumed to be reinvested.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/03
|
|
|
12/31/04
|
|
|
12/31/05
|
|
|
12/31/06
|
|
|
12/31/07
|
|
|
12/31/08
|
S & P 500
|
|
|
100.0
|
|
|
110.87
|
|
|
116.32
|
|
|
134.69
|
|
|
142.09
|
|
|
89.52
|
Health Care REIT
|
|
|
100.0
|
|
|
113.54
|
|
|
108.23
|
|
|
148.26
|
|
|
162.58
|
|
|
163.06
|
NAREIT Equity
|
|
|
100.0
|
|
|
131.58
|
|
|
147.59
|
|
|
199.33
|
|
|
168.05
|
|
|
104.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Except to the extent that we specifically incorporate this
information by reference, the foregoing Stockholder Return
Performance Presentation shall not be deemed incorporated by
reference by any general statement incorporating by reference
this Annual Report on
Form 10-K
into any filing under the Securities Act of 1933, as amended, or
under the Securities Exchange Act of 1934, as amended. This
information shall not otherwise be deemed filed under such acts.
41
|
|
Item 6.
|
Selected
Financial Data
|
The following selected financial data for the five years ended
December 31, 2008 are derived from our audited consolidated
financial statements (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
Operating Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues(1)
|
|
$
|
199,237
|
|
|
$
|
238,760
|
|
|
$
|
288,242
|
|
|
$
|
453,531
|
|
|
$
|
551,214
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense(1)
|
|
|
60,901
|
|
|
|
70,367
|
|
|
|
88,383
|
|
|
|
131,893
|
|
|
|
130,813
|
|
Depreciation and amortization(1)
|
|
|
53,127
|
|
|
|
64,446
|
|
|
|
81,828
|
|
|
|
135,224
|
|
|
|
156,154
|
|
Property operating expenses(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
1,039
|
|
|
|
34,707
|
|
|
|
43,990
|
|
General and administrative(1)
|
|
|
15,756
|
|
|
|
15,881
|
|
|
|
25,922
|
|
|
|
37,465
|
|
|
|
47,193
|
|
Provision for loan losses
|
|
|
1,200
|
|
|
|
1,200
|
|
|
|
1,000
|
|
|
|
0
|
|
|
|
94
|
|
Realized loss on derivatives
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
23,393
|
|
Loss (gain) on extinguishment of debt
|
|
|
0
|
|
|
|
21,484
|
|
|
|
0
|
|
|
|
(1,081
|
)
|
|
|
(2,094
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
130,984
|
|
|
|
173,378
|
|
|
|
198,172
|
|
|
|
338,208
|
|
|
|
399,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes and minority interests
|
|
|
68,253
|
|
|
|
65,382
|
|
|
|
90,070
|
|
|
|
115,323
|
|
|
|
151,671
|
|
Income tax (expense) benefit
|
|
|
(42
|
)
|
|
|
(282
|
)
|
|
|
(82
|
)
|
|
|
(188
|
)
|
|
|
(1,306
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before minority interests
|
|
|
68,211
|
|
|
|
65,100
|
|
|
|
89,988
|
|
|
|
115,135
|
|
|
|
150,365
|
|
Minority interests
|
|
|
0
|
|
|
|
0
|
|
|
|
(13
|
)
|
|
|
(238
|
)
|
|
|
(126
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
68,211
|
|
|
|
65,100
|
|
|
|
89,975
|
|
|
|
114,897
|
|
|
|
150,239
|
|
Income from discontinued operations, net(1)
|
|
|
17,160
|
|
|
|
19,186
|
|
|
|
12,775
|
|
|
|
26,505
|
|
|
|
137,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
85,371
|
|
|
|
84,286
|
|
|
|
102,750
|
|
|
|
141,402
|
|
|
|
288,111
|
|
Preferred stock dividends
|
|
|
12,737
|
|
|
|
21,594
|
|
|
|
21,463
|
|
|
|
25,130
|
|
|
|
23,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
72,634
|
|
|
$
|
62,692
|
|
|
$
|
81,287
|
|
|
$
|
116,272
|
|
|
$
|
264,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
51,544
|
|
|
|
54,110
|
|
|
|
61,661
|
|
|
|
78,861
|
|
|
|
93,732
|
|
Diluted
|
|
|
52,082
|
|
|
|
54,499
|
|
|
|
62,045
|
|
|
|
79,409
|
|
|
|
94,309
|
|
Per Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations available to common
stockholders
|
|
$
|
1.08
|
|
|
$
|
0.80
|
|
|
$
|
1.11
|
|
|
$
|
1.14
|
|
|
$
|
1.36
|
|
Discontinued operations, net
|
|
|
0.33
|
|
|
|
0.35
|
|
|
|
0.21
|
|
|
|
0.34
|
|
|
|
1.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders*
|
|
$
|
1.41
|
|
|
$
|
1.16
|
|
|
$
|
1.32
|
|
|
$
|
1.47
|
|
|
$
|
2.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations available to common
stockholders
|
|
$
|
1.07
|
|
|
$
|
0.80
|
|
|
$
|
1.10
|
|
|
$
|
1.13
|
|
|
$
|
1.35
|
|
Discontinued operations, net
|
|
|
0.33
|
|
|
|
0.35
|
|
|
|
0.21
|
|
|
|
0.33
|
|
|
|
1.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders*
|
|
$
|
1.39
|
|
|
$
|
1.15
|
|
|
$
|
1.31
|
|
|
$
|
1.46
|
|
|
$
|
2.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions per common share
|
|
$
|
2.385
|
|
|
$
|
2.46
|
|
|
$
|
2.8809
|
|
|
$
|
2.2791
|
|
|
$
|
2.70
|
|
|
|
|
*
|
|
Amounts may not sum due to rounding
|
42
|
|
|
(1)
|
|
In accordance with FASB Statement
No. 144, we have reclassified the income and expenses
attributable to the properties sold prior to or held for sale at
December 31, 2008, to discontinued operations for all
periods presented. See Note 4 to our audited consolidated
financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net real estate investments
|
|
$
|
2,441,972
|
|
|
$
|
2,849,518
|
|
|
$
|
4,122,893
|
|
|
$
|
5,012,620
|
|
|
$
|
5,854,179
|
|
Total assets
|
|
|
2,552,171
|
|
|
|
2,972,164
|
|
|
|
4,280,610
|
|
|
|
5,213,856
|
|
|
|
6,193,118
|
|
Total long-term obligations
|
|
|
1,192,958
|
|
|
|
1,500,818
|
|
|
|
2,198,001
|
|
|
|
2,704,668
|
|
|
|
2,863,772
|
|
Total liabilities and minority interests
|
|
|
1,216,892
|
|
|
|
1,541,408
|
|
|
|
2,301,817
|
|
|
|
2,809,500
|
|
|
|
2,981,532
|
|
Total redeemable preferred stock
|
|
|
283,751
|
|
|
|
276,875
|
|
|
|
338,993
|
|
|
|
330,243
|
|
|
|
289,929
|
|
Total stockholders equity
|
|
|
1,335,279
|
|
|
|
1,430,756
|
|
|
|
1,978,793
|
|
|
|
2,404,356
|
|
|
|
3,211,586
|
|
43
|
|
Item 7.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
The following discussion and analysis is based primarily on the
consolidated financial statements of Health Care REIT, Inc. for
the periods presented and should be read together with the notes
thereto contained in this Annual Report on
Form 10-K.
Other important factors are identified in Item 1
Business and Item 1A
Risk Factors above.
Executive
Overview
Company
Overview
Health Care REIT, Inc., an S&P 500 company, is a real
estate investment trust that invests in senior housing and
health care real estate. Founded in 1970, we were the first REIT
to invest exclusively in health care properties. The following
table summarizes our portfolio as of December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
Percentage of
|
|
|
Number of
|
|
|
# Beds/Units
|
|
|
Investment per
|
|
|
|
|
Type of Property
|
|
(in thousands)
|
|
|
Investments
|
|
|
Properties
|
|
|
or Sq. Ft.
|
|
|
metric(1)
|
|
|
States
|
|
|
Independent living/CCRCs
|
|
$
|
1,105,460
|
|
|
|
18.9
|
%
|
|
|
63
|
|
|
|
7,544 units
|
|
|
$
|
170,861 per unit
|
|
|
|
20
|
|
Assisted living facilities
|
|
|
1,173,748
|
|
|
|
20.0
|
%
|
|
|
186
|
|
|
|
11,297 units
|
|
|
|
116,625 per unit
|
|
|
|
30
|
|
Skilled nursing facilities
|
|
|
1,583,084
|
|
|
|
27.0
|
%
|
|
|
225
|
|
|
|
30,669 beds
|
|
|
|
52,420 per bed
|
|
|
|
27
|
|
Specialty care facilities
|
|
|
619,670
|
|
|
|
10.6
|
%
|
|
|
31
|
|
|
|
1,911 beds
|
|
|
|
463,039 per bed
|
|
|
|
13
|
|
Medical office buildings
|
|
|
1,379,717
|
|
|
|
23.5
|
%
|
|
|
128
|
|
|
|
5,604,802 sq. ft.
|
|
|
|
266 per sq. ft.
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
5,861,679
|
|
|
|
100.0
|
%
|
|
|
633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Investment per metric was computed
by using the total investment amount of $6,590,957,000 which
includes real estate investments and unfunded construction
commitments for which initial funding has commenced which
amounted to $5,861,679,000 and $729,278,000, respectively.
|
Health
Care Industry
The demand for health care services, and consequently health
care properties, is projected to reach unprecedented levels in
the near future. The Centers for Medicare and Medicaid Services
projects that national health expenditures will rise to $3.8
trillion in 2015 or 18.8% of gross domestic product
(GDP). This is up from $2 trillion or 15.9% of GDP
in 2005. Health expenditures per capita are projected to rise
5.8% per year from 2005 to 2015. While demographics are the
primary driver of demand, economic conditions and availability
of services contribute to health care service utilization rates.
We believe the health care property market is less susceptible
to fluctuations and economic downturns relative to other
property sectors. Investor interest in the market remains
strong, especially in specific sectors such as medical office,
regardless of the current stringent lending environment. As a
REIT, we believe we are positioned to benefit from any
turbulence in the capital markets due to our access to capital.
The total U.S. population is projected to increase by 22%
through 2030. The elderly are an important component of health
care utilization, especially independent living services,
assisted living services, skilled nursing services, inpatient
and outpatient hospital services and physician ambulatory care.
The elderly population aged 65 and over is projected to increase
by 83% through 2030. Most health care services are provided
within a health care facility such as a hospital, a
physicians office or a senior housing facility. Therefore,
we believe there will be continued demand for companies such as
ours with expertise in health care real estate.
44
The following chart illustrates the projected increase in the
elderly population aged 65 and over:
Source: U.S. Census Bureau
Health care real estate investment opportunities tend to
increase as demand for health care services increases. We
recognize the need for health care real estate as it correlates
to health care service demand. Health care providers require
real estate to house their businesses and expand their services.
We believe that investment opportunities in health care real
estate will continue to be present due to the:
|
|
|
|
|
Specialized nature of the industry which enhances the
credibility and experience of our company;
|
|
|
|
Projected population growth combined with stable or increasing
health care utilization rates which ensures demand; and
|
|
|
|
On-going merger and acquisition activity.
|
Economic
Outlook
Beginning in late 2007 and throughout 2008, the U.S. and
global economy entered a serious recession. The current economic
environment is characterized by a severe residential housing
slump, depressed commercial real estate valuations, weakened
consumer confidence, rising unemployment and concerns regarding
inflation, deflation and stagflation. Numerous financial systems
around the globe have become illiquid and banks have become less
willing to lend to other banks and borrowers. Further, capital
markets have become and remain volatile as risk is repriced and
investments are revalued. Uncertainty remains in terms of the
depth and duration of these adverse economic conditions.
The conditions described above have created an environment of
limited capital availability and increasing capital costs. This
was most evident in the credit markets, where lending
institutions cut back on loans, tightened credit standards and
significantly increased interest rate spreads. The equity
markets were characterized by sporadic accessibility until late
2008, when share prices in most sectors declined significantly.
Continued volatility in the capital markets could limit our
ability to access debt or equity funds which, in turn, could
impact our ability to finance future investments and react to
changing economic and business conditions. This difficult
operating environment also may make it more difficult for some
of our operators/tenants to meet their obligations to us.
During 2008, our focus gradually shifted from investment to
capital preservation. To that end, our efforts in 2009 will be
directed towards: liquidity, portfolio management and investment
rationalization.
|
|
|
|
|
Liquidity. Liquidity became increasingly
important and we concentrated efforts on further strengthening
our balance sheet. We raised over $1 billion in funds
during 2008 from a combination of three common stock offerings,
our dividend reinvestment plan, our new equity shelf program,
property sales and loan payoffs. As always, we will continue to
closely monitor the credit and capital markets for opportunities
to raise reasonably priced capital.
|
45
|
|
|
|
|
Portfolio Management. Our investment approach
has produced a portfolio that is very diverse with strong
property level payment coverages. Yet, todays adverse
economic conditions can negatively impact even the strongest
portfolio. Our portfolio management program is designed to
maintain our portfolios strength through a combination of
extensive industry research, stringent origination and
underwriting protocols and a rigorous asset management process.
|
|
|
|
Investment Strategy. For the short-term, we
expect to fund our ongoing development projects and will
evaluate new investments selectively and only when funding
sources are clearly identified. However, we will continue to
strengthen our existing customer relationships and begin to
cultivate new relationships. As we enter 2009, we remain focused
on preserving liquidity, but we intend to take advantage of what
we believe will be increasingly attractive investment
opportunities over time.
|
Business
Strategy
Our primary objectives are to protect stockholder capital and
enhance stockholder value. We seek to pay consistent cash
dividends to stockholders and create opportunities to increase
dividend payments to stockholders as a result of annual
increases in rental and interest income and portfolio growth. To
meet these objectives, we invest across the full spectrum of
senior housing and health care real estate and diversify our
investment portfolio by property type, operator/tenant and
geographic location.
Substantially all of our revenues and sources of cash flows from
operations are derived from operating lease rentals and interest
earned on outstanding loans receivable. These items represent
our primary source of liquidity to fund distributions and are
dependent upon our obligors continued ability to make
contractual rent and interest payments to us. To the extent that
our obligors experience operating difficulties and are unable to
generate sufficient cash to make payments to us, there could be
a material adverse impact on our consolidated results of
operations, liquidity
and/or
financial condition. To mitigate this risk, we monitor our
investments through a variety of methods determined by the type
of property and operator/tenant. Our asset management process
includes review of monthly financial statements for each
property, periodic review of obligor credit, periodic property
inspections and review of covenant compliance relating to
licensure, real estate taxes, letters of credit and other
collateral. In monitoring our portfolio, our personnel use a
proprietary database to collect and analyze property-specific
data. Additionally, we conduct extensive research to ascertain
industry trends and risks. Through these asset management and
research efforts, we are typically able to intervene at an early
stage to address payment risk, and in so doing, support both the
collectability of revenue and the value of our investment.
In addition to our asset management and research efforts, we
also structure our investments to help mitigate payment risk.
Operating leases and loans are normally credit enhanced by
guaranties
and/or
letters of credit. In addition, operating leases are typically
structured as master leases and loans are generally
cross-defaulted and cross-collateralized with other loans,
operating leases or agreements between us and the obligor and
its affiliates.
For the year ended December 31, 2008, rental income and
interest income represented 91% and 7%, respectively, of total
gross revenues (including discontinued operations).
Substantially all of our operating leases are designed with
either fixed or contingent escalating rent structures. Leases
with fixed annual rental escalators are generally recognized on
a straight-line basis over the initial lease period, subject to
a collectability assessment. Rental income related to leases
with contingent rental escalators is generally recorded based on
the contractual cash rental payments due for the period. Our
yield on loans receivable depends upon a number of factors,
including the stated interest rate, the average principal amount
outstanding during the term of the loan and any interest rate
adjustments.
Depending upon the availability and cost of external capital, we
believe our liquidity is sufficient to fund operations, meet
debt service obligations (both principal and interest), make
dividend distributions and complete construction projects in
process. We also anticipate evaluating opportunities to finance
future investments. New investments are generally funded from
temporary borrowings under our unsecured line of credit
arrangement, internally generated cash and the proceeds from
sales of real property. Our investments generate internal cash
from rent and interest receipts and principal payments on loans
receivable. Permanent financing for future investments, which
replaces funds drawn under the unsecured line of credit
arrangement, has historically been provided through a
combination of public and private offerings of debt and equity
securities and the incurrence or assumption of secured debt.
46
Depending upon market conditions, we believe that new
investments will be available in the future with spreads over
our cost of capital that will generate appropriate returns to
our stockholders. We expect to complete gross new investments of
$600,000,000 in 2009, comprised of funded new development. We
anticipate the sale of real property and the repayment of loans
receivable totaling approximately $200,000,000 to $300,000,000
during 2009. It is possible that additional loan repayments or
sales of real property may occur in the future. To the extent
that loan repayments and real property sales exceed new
investments, our revenues and cash flows from operations could
be adversely affected. We expect to reinvest the proceeds from
any loan repayments and real property sales in new investments.
To the extent that new investment requirements exceed our
available cash on-hand, we expect to borrow under our unsecured
line of credit arrangement. At December 31, 2008, we had
$23,370,000 of cash and cash equivalents, $154,070,000 of
restricted cash and $580,000,000 of available borrowing capacity
under our unsecured line of credit arrangement. Our investment
activity may exceed our borrowing capacity under our unsecured
line of credit. To the extent that we are unable to issue equity
or debt securities to provide additional capital, we may not be
able to fund all of our potential investments, which could have
an adverse effect on our revenues and cash flows from operations.
Key
Transactions in 2008
We completed the following key transactions during the year
ended December 31, 2008:
|
|
|
|
|
our Board of Directors increased our quarterly dividend to $0.68
per share, which represents a two cent increase from the
quarterly dividend of $0.66 paid for 2007. The dividend declared
for the quarter ended December 31, 2008 represented the
151st consecutive dividend payment;
|
|
|
|
we completed $1,234,088,000 of gross investments offset by
$194,243,000 of investment payoffs;
|
|
|
|
we recognized $163,933,000 of gains on sales of real property,
generating net proceeds of approximately $287,047,000;
|
|
|
|
we completed a public offering of 3,000,000 shares of
common stock with net proceeds of approximately $118,555,000 in
March 2008;
|
|
|
|
we completed a public offering of 4,600,000 shares of
common stock with net proceeds of approximately $193,157,000 in
July 2008;
|
|
|
|
we completed a public offering of 8,050,000 shares of
common stock with net proceeds of approximately $369,699,000 in
September 2008;
|
|
|
|
we issued 1,546,074 shares of common stock under our
dividend reinvestment plan with net proceeds of approximately
$67,055,000; and
|
|
|
|
we issued 794,221 shares of common stock under our equity
shelf program with net proceeds of approximately $30,272,000.
|
Recent
Events
S&P 500 Inclusion Offering. On February 3,
2009, we completed an offering of 5,816,870 shares of
common stock for $214,352,000 of gross proceeds. The offering
was made in connection with the Companys inclusion in the
S&P 500 Index at the close of trading on January 29,
2009.
LandAmerica Settlement. During 2008, we engaged in two
Internal Revenue Code section 1031 like kind exchange
transactions, and we retained LandAmerica 1031 Exchange
Services, Inc. (LES) to act as a qualified
intermediary. On November 26, 2008, LES and its parent,
LandAmerica Financial Group, filed for bankruptcy protection. At
that time, we had approximately $136,855,000 in two segregated
escrow accounts (the Exchange Funds) held by
Centennial Bank, an affiliate of LES. Although the terms of our
agreements with LES required that the Exchange Funds be returned
to us, the return of the Exchange Funds was stayed by the
bankruptcy proceedings. On February 23, 2009, the United
States Bankruptcy Court for the Eastern District of Virginia,
Richmond Division, entered an order approving the stipulation
and settlement agreement among LES, the unsecured creditors
committees and us. Pursuant to the terms of that settlement
agreement, the Exchange Funds plus $918,000 of interest were
returned to us on February 23, 2009, and we made a
settlement payment of $2,000,000 to the LES
47
bankruptcy estate. In connection with these proceedings, we
incurred approximately $500,000 in expenses. The settlement
payment and expenses were recorded as reductions of gains on
sales in 2008.
Key
Performance Indicators, Trends and Uncertainties
We utilize several key performance indicators to evaluate the
various aspects of our business. These indicators are discussed
below and relate to operating performance, credit strength and
concentration risk. Management uses these key performance
indicators to facilitate internal and external comparisons to
our historical operating results and in making operating
decisions.
Operating Performance. We believe that net
income available to common stockholders (NICS) is
the most appropriate earnings measure. Other useful supplemental
measures of our operating performance include funds from
operations (FFO) and net operating income
(NOI); however, these supplemental measures are not
defined by U.S. generally accepted accounting principles
(U.S. GAAP). Please refer to the section
entitled Non-GAAP Financial Measures for
further discussion of FFO and NOI and for reconciliations of FFO
and NOI. These earning measures and their relative per share
amounts are widely used by investors and analysts in the
valuation, comparison and investment recommendations of REITs.
The following table reflects the recent historical trends of our
operating performance measures (in thousands, except per share
data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
Net income available to common stockholders
|
|
$
|
81,287
|
|
|
$
|
116,272
|
|
|
$
|
264,910
|
|
Funds from operations
|
|
|
177,580
|
|
|
|
251,117
|
|
|
|
263,680
|
|
Net operating income
|
|
|
327,273
|
|
|
|
455,680
|
|
|
|
526,136
|
|
Per share data (fully diluted):
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
1.31
|
|
|
$
|
1.46
|
|
|
$
|
2.81
|
|
Funds from operations
|
|
|
2.86
|
|
|
|
3.16
|
|
|
|
2.80
|
|
Credit Strength. We measure our credit
strength both in terms of leverage ratios and coverage ratios.
Our leverage ratios include debt to book capitalization, debt to
undepreciated book capitalization and debt to market
capitalization. The leverage ratios indicate how much of our
balance sheet capitalization is related to total debt. Our
coverage ratios include interest coverage ratio and fixed charge
coverage ratio. The coverage ratios indicate our ability to
service interest and fixed charges (interest plus preferred
dividends and secured debt principal amortizations). We expect
to maintain capitalization ratios and coverage ratios sufficient
to maintain investment grade ratings with Moodys Investors
Service, Standard & Poors Ratings Services and
Fitch Ratings. The coverage ratios are based on adjusted
earnings before interest, taxes, depreciation and amortization
(Adjusted EBITDA) which is discussed in further
detail, and reconciled to net income, below in
Non-GAAP Financial Measures. Leverage ratios
and coverage ratios are widely used by investors, analysts and
rating agencies in the valuation, comparison, investment
recommendations and rating of companies. The following table
reflects the recent historical trends for our credit strength
measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
Debt to book capitalization ratio
|
|
|
53
|
%
|
|
|
53
|
%
|
|
|
47
|
%
|
Debt to undepreciated book capitalization ratio
|
|
|
49
|
%
|
|
|
48
|
%
|
|
|
43
|
%
|
Debt to market capitalization ratio
|
|
|
39
|
%
|
|
|
39
|
%
|
|
|
38
|
%
|
Adjusted interest coverage ratio
|
|
|
3.05
|
x
|
|
|
2.94
|
x
|
|
|
3.84
|
x
|
Adjusted fixed charge coverage ratio
|
|
|
2.45
|
x
|
|
|
2.41
|
x
|
|
|
3.20
|
x
|
Concentration Risk. We evaluate our
concentration risk in terms of asset mix, investment mix,
customer mix and geographic mix. Concentration risk is a
valuable measure in understanding what portion of our
investments could be at risk if certain sectors were to
experience downturns. Asset mix measures the portion of our
investments that are real property. In order to qualify as an
equity REIT, at least 75% of our real estate investments must be
real
48
property whereby each property, which includes the land,
buildings, improvements, intangibles and related rights, is
owned by us and leased to an operator pursuant to a long-term
operating lease. Investment mix measures the portion of our
investments that relate to our various property types. Customer
mix measures the portion of our investments that relate to our
top five customers. Geographic mix measures the portion of our
investments that relate to our top five states. The following
table reflects our recent historical trends of concentration
risk:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
Asset mix:
|
|
|
|
|
|
|
|
|
|
|
|
|
Real property
|
|
|
95
|
%
|
|
|
92
|
%
|
|
|
92
|
%
|
Loans receivable
|
|
|
5
|
%
|
|
|
8
|
%
|
|
|
8
|
%
|
Investment mix:
|
|
|
|
|
|
|
|
|
|
|
|
|
Assisted living facilities
|
|
|
25
|
%
|
|
|
21
|
%
|
|
|
20
|
%
|
Skilled nursing facilities
|
|
|
34
|
%
|
|
|
32
|
%
|
|
|
27
|
%
|
Independent/CCRC
|
|
|
13
|
%
|
|
|
15
|
%
|
|
|
19
|
%
|
Specialty care facilities
|
|
|
6
|
%
|
|
|
7
|
%
|
|
|
11
|
%
|
Medical office buildings
|
|
|
22
|
%
|
|
|
25
|
%
|
|
|
23
|
%
|
Customer mix:
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Living Communities, LLC
|
|
|
|
|
|
|
4
|
%
|
|
|
6
|
%
|
Signature Healthcare LLC
|
|
|
|
|
|
|
6
|
%
|
|
|
5
|
%
|
Brookdale Senior Living Inc
|
|
|
7
|
%
|
|
|
5
|
%
|
|
|
5
|
%
|
Life Care Centers of America, Inc.
|
|
|
6
|
%
|
|
|
5
|
%
|
|
|
5
|
%
|
Emeritus Corporation
|
|
|
9
|
%
|
|
|
7
|
%
|
|
|
4
|
%
|
Home Quality Management, Inc.
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
Merrill Gardens L.L.C.
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
Remaining portfolio
|
|
|
68
|
%
|
|
|
73
|
%
|
|
|
75
|
%
|
Geographic mix:
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida
|
|
|
17
|
%
|
|
|
15
|
%
|
|
|
14
|
%
|
Texas
|
|
|
11
|
%
|
|
|
13
|
%
|
|
|
11
|
%
|
California
|
|
|
7
|
%
|
|
|
7
|
%
|
|
|
8
|
%
|
Massachusetts
|
|
|
8
|
%
|
|
|
7
|
%
|
|
|
7
|
%
|
Tennessee
|
|
|
|
|
|
|
6
|
%
|
|
|
6
|
%
|
Ohio
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
Remaining portfolio
|
|
|
51
|
%
|
|
|
52
|
%
|
|
|
54
|
%
|
We evaluate our key performance indicators in conjunction with
current expectations to determine if historical trends are
indicative of future results. Our expected results may not be
achieved and actual results may differ materially from our
expectations. Management regularly monitors various economic and
other factors to develop strategic and tactical plans designed
to improve performance and maximize our competitive position.
Our ability to achieve our financial objectives is dependent
upon our ability to effectively execute these plans and to
appropriately respond to emerging economic and company-specific
trends. Please refer to Item 1A Risk
Factors above for further discussion.
49
Portfolio
Update
Net operating income. The primary performance
measure for our properties is net operating income
(NOI) as discussed below in
Non-GAAP Financial Measures. The following
table summarizes our net operating income for the periods
indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
Net operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment properties
|
|
$
|
324,479
|
|
|
$
|
379,516
|
|
|
$
|
436,811
|
|
Medical office buildings
|
|
|
2,132
|
|
|
|
74,636
|
|
|
|
87,633
|
|
Non-segment/corporate
|
|
|
662
|
|
|
|
1,528
|
|
|
|
1,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income
|
|
$
|
327,273
|
|
|
$
|
455,680
|
|
|
$
|
526,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment coverage. Payment coverage of the
operators in our investment property portfolio have stabilized.
Our overall payment coverage is at 1.96 times and represents a
decrease of three basis points from 2007 and an increase of
three basis point from 2006. The following table reflects our
recent historical trends of portfolio coverage. Coverage data
reflects the 12 months ended for the periods presented.
CBMF represents the ratio of facilities earnings before
interest, taxes, depreciation, amortization, rent and management
fees to contractual rent or interest due us. CAMF represents the
ratio of earnings before interest, taxes, depreciation,
amortization, and rent (but after imputed management fees) to
contractual rent or interest due us.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2006
|
|
|
September 30, 2007
|
|
|
September 30, 2008
|
|
|
|
CBMF
|
|
|
CAMF
|
|
|
CBMF
|
|
|
CAMF
|
|
|
CBMF
|
|
|
CAMF
|
|
|
Independent living/CCRCs
|
|
|
1.41
|
x
|
|
|
1.21
|
x
|
|
|
1.47
|
x
|
|
|
1.26
|
x
|
|
|
1.31
|
x
|
|
|
1.11
|
x
|
Assisted living facilities
|
|
|
1.54
|
x
|
|
|
1.33
|
x
|
|
|
1.57
|
x
|
|
|
1.35
|
x
|
|
|
1.55
|
x
|
|
|
1.32
|
x
|
Skilled nursing facilities
|
|
|
2.17
|
x
|
|
|
1.55
|
x
|
|
|
2.25
|
x
|
|
|
1.65
|
x
|
|
|
2.26
|
x
|
|
|
1.66
|
x
|
Specialty care facilities
|
|
|
2.88
|
x
|
|
|
2.34
|
x
|
|
|
2.72
|
x
|
|
|
2.16
|
x
|
|
|
2.26
|
x
|
|
|
1.83
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted averages
|
|
|
1.93
|
x
|
|
|
1.50
|
x
|
|
|
1.99
|
x
|
|
|
1.55
|
x
|
|
|
1.96
|
x
|
|
|
1.52
|
x
|
Corporate
Governance
Maintaining investor confidence and trust has become
increasingly important in todays business environment. Our
Board of Directors and management are strongly committed to
policies and procedures that reflect the highest level of
ethical business practices. Our corporate governance guidelines
provide the framework for our business operations and emphasize
our commitment to increase stockholder value while meeting all
applicable legal requirements. The Board of Directors adopted
and annually reviews its Corporate Governance Guidelines. These
guidelines meet the listing standards adopted by the New York
Stock Exchange and are available on the Internet at
www.hcreit.com and from us upon written request sent to the
Senior Vice President Administration and Corporate
Secretary, Health Care REIT, Inc., One SeaGate, Suite 1500,
P.O. Box 1475, Toledo, Ohio,
43603-1475.
Liquidity
and Capital Resources
Sources
and Uses of Cash
Our primary sources of cash include rent and interest receipts,
borrowings under our unsecured line of credit arrangement,
public and private offerings of debt and equity securities,
proceeds from the sales of real property and principal payments
on loans receivable. Our primary uses of cash include dividend
distributions, debt service payments (including principal and
interest), real property acquisitions, loan advances and general
and
50
administrative expenses. These sources and uses of cash are
reflected in our Consolidated Statements of Cash Flows and are
discussed in further detail below.
The following is a summary of our sources and uses of cash flows
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
One Year Change
|
|
|
Year Ended
|
|
|
One Year Change
|
|
|
Two Year Change
|
|
|
|
Dec. 31, 2006
|
|
|
Dec. 31, 2007
|
|
|
$
|
|
|
%
|
|
|
Dec. 31, 2008
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
Cash and cash equivalents at beginning of period
|
|
$
|
36,237
|
|
|
$
|
36,216
|
|
|
$
|
(21
|
)
|
|
|
0
|
%
|
|
$
|
30,269
|
|
|
$
|
(5,947
|
)
|
|
|
(16
|
)%
|
|
$
|
(5,968
|
)
|
|
|
(16
|
)%
|
Cash provided from (used in) operating activities
|
|
|
216,319
|
|
|
|
271,461
|
|
|
|
55,142
|
|
|
|
25
|
%
|
|
|
335,654
|
|
|
|
64,193
|
|
|
|
24
|
%
|
|
|
119,335
|
|
|
|
55
|
%
|
Cash provided from (used in) investing activities
|
|
|
(560,688
|
)
|
|
|
(892,914
|
)
|
|
|
(332,226
|
)
|
|
|
59
|
%
|
|
|
(1,010,496
|
)
|
|
|
(117,582
|
)
|
|
|
13
|
%
|
|
|
(449,808
|
)
|
|
|
80
|
%
|
Cash provided from (used in) financing activities
|
|
|
344,348
|
|
|
|
615,506
|
|
|
|
271,158
|
|
|
|
79
|
%
|
|
|
667,943
|
|
|
|
52,437
|
|
|
|
9
|
%
|
|
|
323,595
|
|
|
|
94
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
36,216
|
|
|
$
|
30,269
|
|
|
$
|
(5,947
|
)
|
|
|
(16
|
)%
|
|
$
|
23,370
|
|
|
$
|
(6,899
|
)
|
|
|
(23
|
)%
|
|
$
|
(12,846
|
)
|
|
|
(35
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Activities. The increases in net
cash provided from operating activities are primarily
attributable to increases in net income, excluding non-cash
items such as depreciation and amortization, stock-based
compensation, impairments, capitalized interest and net
straight-line rental income. Net income and the provisions for
depreciation and amortization increased primarily as a result of
net new investments in properties owned by us. See the
discussion of investing activities below for additional details.
To the extent that we acquire or dispose of additional
properties in the future, our net income and provisions for
depreciation and amortization will change accordingly.
The following is a summary of our straight-line rent (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
One Year Change
|
|
|
Year Ended
|
|
|
One Year Change
|
|
|
Two Year Change
|
|
|
|
Dec. 31, 2006
|
|
|
Dec. 31, 2007
|
|
|
$
|
|
|
%
|
|
|
Dec. 31, 2008
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
Gross straight-line rental income
|
|
$
|
9,432
|
|
|
$
|
17,029
|
|
|
$
|
7,597
|
|
|
|
81
|
%
|
|
$
|
20,489
|
|
|
$
|
3,460
|
|
|
|
20
|
%
|
|
$
|
11,057
|
|
|
|
117
|
%
|
Cash receipts due to real property sales
|
|
|
(3,544
|
)
|
|
|
(4,527
|
)
|
|
|
(983
|
)
|
|
|
28
|
%
|
|
|
(2,187
|
)
|
|
|
2,340
|
|
|
|
(52
|
)%
|
|
|
1,357
|
|
|
|
(38
|
)%
|
Prepaid rent receipts
|
|
|
(17,017
|
)
|
|
|
(12,942
|
)
|
|
|
4,075
|
|
|
|
(24
|
)%
|
|
|
(26,095
|
)
|
|
|
(13,153
|
)
|
|
|
102
|
%
|
|
|
(9,078
|
)
|
|
|
53
|
%
|
Amortization related to above/ (below) market leases, net
|
|
|
60
|
|
|
|
792
|
|
|
|
732
|
|
|
|
1220
|
%
|
|
|
1,039
|
|
|
|
247
|
|
|
|
31
|
%
|
|
|
979
|
|
|
|
1632
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(11,069
|
)
|
|
$
|
352
|
|
|
$
|
11,421
|
|
|
|
n/a
|
|
|
$
|
(6,754
|
)
|
|
$
|
(7,106
|
)
|
|
|
n/a
|
|
|
$
|
4,315
|
|
|
|
(39
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross straight-line rental income represents the non-cash
difference between contractual cash rent due and the average
rent recognized pursuant to Statement of Financial Accounting
Standards No. 13 Accounting for Leases
(SFAS 13) for leases with fixed rental
escalators, net of collectability reserves, if any. This amount
is positive in the first half of a lease term (but declining
every year due to annual increases in cash rent due) and is
negative in the second half of a lease term. The increase in
gross straight-line rental income and above/below amortization
is primarily due to an increase in the number of our leases with
fixed annual increases resulting primarily from the Windrose
merger completed in December 2006 and the Rendina/Paramount
acquisition completed in May 2007. The fluctuation in cash
receipts due to real property sales is attributable to a decline
in straight-line rent receivable balances on properties sold.
The change in prepaid rent cash receipts is due to the mix of
real property acquisitions during the periods presented. We
typically receive prepaid rent in connection with investment
property acquisitions.
51
Investing Activities. The changes in net cash
used in investing activities are primarily attributable to
changes in loans receivable and real property investments. The
following is a summary of our investment and disposition
activities (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31, 2006(1)
|
|
|
December 31, 2007(2)
|
|
|
December 31, 2008
|
|
|
|
Facilities
|
|
|
Amount
|
|
|
Facilities
|
|
|
Amount
|
|
|
Facilities
|
|
|
Amount
|
|
|
Real property acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent living/CCRCs
|
|
|
5
|
|
|
$
|
56,417
|
|
|
|
1
|
|
|
$
|
43,000
|
|
|
|
2
|
|
|
$
|
68,300
|
|
Assisted living facilities
|
|
|
8
|
|
|
|
77,600
|
|
|
|
4
|
|
|
|
36,233
|
|
|
|
3
|
|
|
|
45,490
|
|
Skilled nursing facilities
|
|
|
18
|
|
|
|
148,955
|
|
|
|
8
|
|
|
|
122,875
|
|
|
|
1
|
|
|
|
11,360
|
|
Specialty care facilities
|
|
|
|
|
|
|
0
|
|
|
|
1
|
|
|
|
11,923
|
|
|
|
7
|
|
|
|
196,303
|
|
Medical office buildings
|
|
|
|
|
|
|
0
|
|
|
|
28
|
|
|
|
381,134
|
|
|
|
7
|
|
|
|
121,809
|
|
Land parcels
|
|
|
|
|
|
|
10,250
|
|
|
|
|
|
|
|
8,928
|
|
|
|
1
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisitions
|
|
|
31
|
|
|
|
293,222
|
|
|
|
42
|
|
|
|
604,093
|
|
|
|
21
|
|
|
|
453,262
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumed debt
|
|
|
|
|
|
|
(25,049
|
)
|
|
|
|
|
|
|
(166,188
|
)
|
|
|
|
|
|
|
0
|
|
Assumed other assets/(liabilities), net
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
(2,432
|
)
|
|
|
|
|
|
|
(1,899
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash disbursed for acquisitions
|
|
|
|
|
|
|
268,173
|
|
|
|
|
|
|
|
435,473
|
|
|
|
|
|
|
|
451,363
|
|
Construction in progress additions
|
|
|
|
|
|
|
149,843
|
|
|
|
|
|
|
|
295,102
|
|
|
|
|
|
|
|
595,452
|
|
Capital improvements to existing properties
|
|
|
|
|
|
|
11,167
|
|
|
|
|
|
|
|
39,976
|
|
|
|
|
|
|
|
25,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash invested in real property
|
|
|
|
|
|
|
429,183
|
|
|
|
|
|
|
|
770,551
|
|
|
|
|
|
|
|
1,072,376
|
|
Real property dispositions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent living/CCRCs
|
|
|
1
|
|
|
|
12,745
|
|
|
|
1
|
|
|
|
5,346
|
|
|
|
2
|
|
|
|
15,547
|
|
Assisted living facilities
|
|
|
12
|
|
|
|
52,541
|
|
|
|
10
|
|
|
|
57,351
|
|
|
|
30
|
|
|
|
148,075
|
|
Skilled nursing facilities
|
|
|
3
|
|
|
|
10,079
|
|
|
|
7
|
|
|
|
18,107
|
|
|
|
4
|
|
|
|
6,290
|
|
Specialty care facilities
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
1
|
|
|
|
8,735
|
|
Medical office buildings
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
1
|
|
|
|
6,781
|
|
Land parcels
|
|
|
|
|
|
|
423
|
|
|
|
|
|
|
|
3,073
|
|
|
|
|
|
|
|
73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dispositions
|
|
|
16
|
|
|
|
75,788
|
|
|
|
18
|
|
|
|
83,877
|
|
|
|
38
|
|
|
|
185,501
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains on sales of real property
|
|
|
|
|
|
|
1,267
|
|
|
|
|
|
|
|
14,437
|
|
|
|
|
|
|
|
163,933
|
|
LandAmerica settlement
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
2,500
|
|
Extinguishment of other assets/(liabilities)
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
(116
|
)
|
Seller financing on sales of real property
|
|
|
|
|
|
|
(7,168
|
)
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
(64,771
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from real property sales
|
|
|
|
|
|
|
69,887
|
|
|
|
|
|
|
|
98,314
|
|
|
|
|
|
|
|
287,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash investments in real property
|
|
|
15
|
|
|
$
|
359,296
|
|
|
|
24
|
|
|
$
|
672,237
|
|
|
|
(17
|
)
|
|
$
|
785,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances on real estate loans receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in new loans
|
|
|
|
|
|
$
|
75,209
|
|
|
|
|
|
|
$
|
205,770
|
|
|
|
|
|
|
$
|
121,493
|
|
Draws on existing loans
|
|
|
|
|
|
|
11,781
|
|
|
|
|
|
|
|
30,124
|
|
|
|
|
|
|
|
21,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross investments in real estate loans
|
|
|
|
|
|
|
86,990
|
|
|
|
|
|
|
|
235,894
|
|
|
|
|
|
|
|
142,758
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seller financing on sales of real property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(59,649
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash advances on real estate loans receivable
|
|
|
|
|
|
|
86,990
|
|
|
|
|
|
|
|
235,894
|
|
|
|
|
|
|
|
83,109
|
|
Receipts on real estate loans receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan payoffs
|
|
|
|
|
|
|
65,002
|
|
|
|
|
|
|
|
42,028
|
|
|
|
|
|
|
|
8,815
|
|
Principal payments on loans
|
|
|
|
|
|
|
17,253
|
|
|
|
|
|
|
|
10,318
|
|
|
|
|
|
|
|
9,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total principal receipts on real estate loans
|
|
|
|
|
|
|
82,255
|
|
|
|
|
|
|
|
52,346
|
|
|
|
|
|
|
|
18,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash advances/(receipts) on real estate loans
|
|
|
|
|
|
$
|
4,735
|
|
|
|
|
|
|
$
|
183,548
|
|
|
|
|
|
|
$
|
64,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
2006 excludes the Windrose merger.
|
|
(2)
|
|
2007 includes the Rendina/Paramount
acquisition.
|
52
The investment in Windrose during 2006 primarily represented
$183,139,000 of cash provided to Windrose to extinguish secured
debt and cash used to pay advisory fees, lender consents and
other merger-related costs totaling $15,023,000. These cash uses
were offset by $15,591,000 of cash assumed from Windrose on the
effective date of the merger. The investment in
Rendina/Paramount primarily represented cash consideration of
$141,967,000 offset by $4,000 of cash assumed from Paramount.
Financing Activities. The changes in net cash
provided from or used in financing activities are primarily
attributable to changes related to our debt, common stock
issuances, preferred stock issuances and cash distributions to
stockholders.
The changes in our senior unsecured notes include: (i) the
issuance of $345,000,000 of our 4.75% convertible senior
unsecured notes in November 2006; (ii) the issuance
$400,000,000 of our 4.75% convertible senior unsecured notes in
July 2007; (iii) the extinguishment of $52,500,000 of
7.5% senior unsecured notes in August 2007; (iv) the
extinguishment of $42,330,000 of 7.625% senior unsecured
notes in March 2008.
During the year ended December 31, 2008, we extinguished
eight secured debt loans totaling $50,475,000 with a
weighted-average interest rate of 6.67% and recognized
extinguishment gains of $2,094,000. During the year ended
December 31, 2007, we extinguished five secured debt loans
totaling $29,797,000 with a weighted-average interest rate of
7.34%.
In November 2007, we repurchased $50,000,000 liquidation amount
of preferred securities of a subsidiary trust and, in December
2007, obtained the satisfaction and discharge of a related
$51,000,000 liability of an operating partnership and recorded a
$1,081,000 gain on extinguishment of debt.
The change in common stock is primarily attributable to public
issuances and common stock issuances related to our dividend
reinvestment and stock purchase plan (DRIP). The
remaining difference in common stock issuances is primarily due
to issuances pursuant to stock incentive plans.
The following is a summary of our common stock issuances for the
years presented (dollars in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date Issued
|
|
Shares Issued
|
|
|
Average Price
|
|
|
Gross Proceeds
|
|
|
Net Proceeds
|
|
|
April 2006 public issuance
|
|
|
3,222,800
|
|
|
$
|
36.00
|
|
|
$
|
116,021
|
|
|
$
|
109,748
|
|
2006 Dividend reinvestment plan issuances
|
|
|
1,876,377
|
|
|
|
36.34
|
|
|
|
68,184
|
|
|
|
68,184
|
|
2006 Option exercises
|
|
|
226,961
|
|
|
|
22.62
|
|
|
|
5,133
|
|
|
|
5,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 Totals(1)
|
|
|
5,326,138
|
|
|
|
|
|
|
$
|
189,338
|
|
|
$
|
182,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 2007 public issuance
|
|
|
6,325,000
|
|
|
$
|
44.01
|
|
|
$
|
278,363
|
|
|
$
|
265,294
|
|
December 2007 public issuance
|
|
|
3,500,000
|
|
|
|
42.14
|
|
|
|
147,490
|
|
|
|
147,139
|
|
2007 Dividend reinvestment plan issuances
|
|
|
1,626,000
|
|
|
|
41.81
|
|
|
|
67,985
|
|
|
|
67,985
|
|
2007 Option exercises
|
|
|
401,630
|
|
|
|
27.82
|
|
|
|
11,175
|
|
|
|
11,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 Totals
|
|
|
11,852,630
|
|
|
|
|
|
|
$
|
505,013
|
|
|
$
|
491,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 2008 public issuance
|
|
|
3,000,000
|
|
|
$
|
41.44
|
|
|
$
|
124,320
|
|
|
$
|
118,555
|
|
July 2008 public issuance
|
|
|
4,600,000
|
|
|
|
44.50
|
|
|
|
204,700
|
|
|
|
193,157
|
|
September 2008 public issuance
|
|
|
8,050,000
|
|
|
|
48.00
|
|
|
|
386,400
|
|
|
|
369,699
|
|
2008 Dividend reinvestment plan issuances
|
|
|
1,546,074
|
|
|
|
43.37
|
|
|
|
67,055
|
|
|
|
67,055
|
|
2008 Equity shelf program issuances
|
|
|
794,221
|
|
|
|
39.28
|
|
|
|
31,196
|
|
|
|
30,272
|
|
2008 Option exercises
|
|
|
118,895
|
|
|
|
29.83
|
|
|
|
3,547
|
|
|
|
3,547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 Totals
|
|
|
18,109,190
|
|
|
|
|
|
|
$
|
817,218
|
|
|
$
|
782,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
2006 excludes $912,000 of costs
related to the Windrose merger.
|
In order to qualify as a REIT for federal income tax purposes,
we must distribute at least 90% of our taxable income (including
100% of capital gains) to our stockholders. The increases in
dividends are primarily attributable
53
to increases in the number of outstanding common and preferred
shares as discussed above, increases in our annual common stock
dividend per share and the payment of a prorated dividend of
$0.3409 in December 2006 in conjunction with the Windrose merger.
The following is a summary of our dividend payments (in
thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31, 2006
|
|
|
December 31, 2007
|
|
|
December 31, 2008
|
|
|
|
Per Share
|
|
|
Amount
|
|
|
Per Share
|
|
|
Amount
|
|
|
Per Share
|
|
|
Amount
|
|
|
Common Stock
|
|
$
|
2.8809
|
|
|
$
|
178,365
|
|
|
$
|
2.2791
|
|
|
$
|
182,969
|
|
|
$
|
2.70
|
|
|
$
|
253,659
|
|
Series D Preferred Stock
|
|
|
1.96875
|
|
|
|
7,875
|
|
|
|
1.96875
|
|
|
|
7,875
|
|
|
|
1.96875
|
|
|
|
7,875
|
|
Series E Preferred Stock
|
|
|
1.50
|
|
|
|
112
|
|
|
|
1.50
|
|
|
|
112
|
|
|
|
1.50
|
|
|
|
112
|
|
Series F Preferred Stock
|
|
|
1.90625
|
|
|
|
13,344
|
|
|
|
1.90625
|
|
|
|
13,344
|
|
|
|
1.90625
|
|
|
|
13,344
|
|
Series G Preferred Stock
|
|
|
0.0625
|
|
|
|
132
|
|
|
|
1.875
|
|
|
|
3,799
|
|
|
|
1.875
|
|
|
|
1,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
|
|
|
$
|
199,828
|
|
|
|
|
|
|
$
|
208,099
|
|
|
|
|
|
|
$
|
276,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Off-Balance
Sheet Arrangements
At December 31, 2008, we had four outstanding letter of
credit obligations totaling $4,615,130 and expiring between 2009
and 2013. Please see Note 11 to our consolidated financial
statements for additional information.
We are exposed to various market risks, including the potential
loss arising from adverse changes in interest rates. We may or
may not elect to use financial derivative instruments to hedge
interest rate exposure. These decisions are principally based on
the general trend in interest rates at the applicable dates, our
perception of the future volatility of interest rates and our
relative levels of variable rate debt and variable rate
investments. Our interest rate swaps are discussed below in
Results of Operations.
Contractual
Obligations
The following table summarizes our payment requirements under
contractual obligations as of December 31, 2008 (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
Contractual Obligations
|
|
Total
|
|
|
2009
|
|
|
2010-2011
|
|
|
2012-2013
|
|
|
Thereafter
|
|
|
Unsecured line of credit arrangement
|
|
$
|
570,000
|
|
|
$
|
0
|
|
|
$
|
570,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Senior unsecured notes(1)
|
|
|
1,845,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
550,000
|
|
|
|
1,295,000
|
|
Secured debt(1)
|
|
|
448,378
|
|
|
|
39,657
|
|
|
|
67,434
|
|
|
|
75,908
|
|
|
|
265,379
|
|
Contractual interest obligations
|
|
|
1,215,495
|
|
|
|
140,260
|
|
|
|
270,624
|
|
|
|
230,295
|
|
|
|
574,316
|
|
Capital lease obligations
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Operating lease obligations
|
|
|
163,978
|
|
|
|
4,220
|
|
|
|
8,352
|
|
|
|
7,831
|
|
|
|
143,575
|
|
Purchase obligations
|
|
|
744,556
|
|
|
|
209,068
|
|
|
|
531,296
|
|
|
|
4,192
|
|
|
|
0
|
|
Other long-term liabilities
|
|
|
4,828
|
|
|
|
337
|
|
|
|
488
|
|
|
|
4,003
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual obligations
|
|
$
|
4,992,235
|
|
|
$
|
393,542
|
|
|
$
|
1,448,194
|
|
|
$
|
872,229
|
|
|
$
|
2,278,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Amounts represent principal amounts
due and do not reflect unamortized premiums/discounts or other
fair value adjustments as reflected on the balance sheet.
|
At December 31, 2008, we had an unsecured credit
arrangement with a consortium of sixteen banks providing for a
revolving line of credit in the amount of $1,150,000,000, which
is scheduled to expire on August 5, 2011 (with the ability
to extend for one year at our discretion if we are in compliance
with all covenants). Borrowings under the agreement are subject
to interest payable in periods no longer than three months at
either the agent banks prime rate of interest or the
applicable margin over LIBOR interest rate, at our option (1.07%
at December 31, 2008). The applicable margin is based on
our ratings with Moodys Investors Service and
Standard & Poors Ratings Services
54
and was 0.6% at December 31, 2008. In addition, we pay a
facility fee annually to each bank based on the banks
commitment under the revolving credit facility. The facility fee
depends on our ratings with Moodys Investors Service and
Standard & Poors Ratings Services and was 0.15%
at December 31, 2008. We also pay an annual agents
fee of $50,000. Principal is due upon expiration of the
agreement. At December 31, 2008, we had $570,000,000
outstanding under the unsecured line of credit arrangement and
estimated total contractual interest obligations of $18,189,000.
Contractual interest obligations are estimated based on the
assumption that the balance of $570,000,000 at December 31,
2008 is constant until maturity at interest rates in effect at
December 31, 2008.
We have $1,845,000,000 of senior unsecured notes principal
outstanding with fixed annual interest rates ranging from 4.75%
to 8.0%, payable semi-annually. Total contractual interest
obligations on senior unsecured notes totaled $1,060,949,000 at
December 31, 2008. $745,000,000 of our senior unsecured
notes are convertible notes that also contain put features.
Please see Note 9 to our consolidated financial statements
for additional information.
Additionally, we have mortgage loans with total outstanding
principal of $448,378,000, collateralized by owned properties,
with fixed annual interest rates ranging from 4.89% to 8.08%,
payable monthly. The carrying values of the properties securing
the mortgage loans totaled $773,673,000 at December 31,
2008. Total contractual interest obligations on mortgage loans
totaled $136,357,000 at December 31, 2008.
At December 31, 2008, we had operating lease obligations of
$163,978,000 relating primarily to ground leases at certain of
our properties and office space leases.
Purchase obligations are comprised of unfunded construction
commitments and contingent purchase obligations. At
December 31, 2008, we had outstanding construction
financings of $639,419,000 for leased properties and were
committed to providing additional financing of approximately
$729,278,000 to complete construction. At December 31,
2008, we had contingent purchase obligations totaling
$15,278,000. These contingent purchase obligations primarily
relate to deferred acquisition fundings and capital
improvements. Deferred acquisition fundings are contingent upon
a tenant satisfying certain conditions in the lease. Upon
funding, amounts due from the tenant are increased to reflect
the additional investment in the property.
Other long-term liabilities relate to our Supplemental Executive
Retirement Plan (SERP) and certain non-compete
agreements. We have a SERP, a non-qualified defined benefit
pension plan, which provides certain executive officers with
supplemental deferred retirement benefits. The SERP provides an
opportunity for participants to receive retirement benefits that
cannot be paid under our tax-qualified plans because of the
restrictions imposed by ERISA and the Internal Revenue Code of
1986, as amended. Benefits are based on compensation and length
of service and the SERP is unfunded. No contributions by the
Company are anticipated for the 2009 fiscal year. Benefit
payments are expected to total $4,003,000 during the next five
fiscal years and no benefit payments are expected to occur
during the succeeding five fiscal years. We use a December 31
measurement date for the SERP. The accrued liability on our
balance sheet for the SERP was $3,109,000 at December 31,
2008 ($1,915,000 at December 31, 2007).
In connection with the Windrose merger, we entered into
consulting agreements with Fred S. Klipsch and Frederick L.
Farrar, which expired in December 2008. We entered into a new
consulting agreement with Mr. Farrar in December 2008,
which expires in December 2009 and may be terminated at any time
by Mr. Farrar. Each consultant has agreed not to compete
with the Company for a period of two years following termination
or expiration of the agreement. In exchange for complying with
the covenant not to compete, Messers. Klipsch and Farrar will
receive eight quarterly payments of $75,000 and $37,500,
respectively, with the first payment to be made on the date of
termination or expiration of the agreement. The first payment to
Mr. Klipsch was made in December 2008.
Capital
Structure
As of December 31, 2008, we had stockholders equity
of $3,211,586,000 and a total outstanding debt balance of
$2,863,772,000, which represents a debt to total book
capitalization ratio of 47%. Our ratio of debt to market
capitalization was 38% at December 31, 2008. For the twelve
months ended December 31, 2008, our adjusted interest
coverage ratio was 3.84 to 1.00. For the twelve months ended
December 31, 2008, our adjusted fixed charge
55
coverage ratio was 3.20 to 1.00. Also, at December 31,
2008, we had $23,370,000 of cash and cash equivalents,
$154,070,000 of restricted cash and $580,000,000 of available
borrowing capacity under our unsecured line of credit
arrangement.
Our debt agreements contain various covenants, restrictions and
events of default. Among other things, these provisions require
us to maintain certain financial ratios and minimum net worth
and impose certain limits on our ability to incur indebtedness,
create liens and make investments or acquisitions. As of
December 31, 2008, we were in compliance with all of the
covenants under our debt agreements. None of our debt agreements
contain provisions for acceleration which could be triggered by
our debt ratings with Moodys Investors Service and
Standard & Poors Ratings Services. However,
under our unsecured line of credit arrangement, these ratings on
our senior unsecured notes are used to determine the fees and
interest payable.
As of February 16, 2009, our senior unsecured notes were
rated Baa2 (stable), BBB- (stable) and BBB (stable) by
Moodys Investors Service, Standard & Poors
Ratings Services and Fitch Ratings, respectively. We plan to
manage the company to maintain investment grade status with a
capital structure consistent with our current profile. Any
downgrades in terms of ratings or outlook by any or all of the
noted rating agencies could have a material adverse impact on
our cost and availability of capital, which could in turn have a
material adverse impact on our consolidated results of
operations, liquidity
and/or
financial condition.
On May 12, 2006, we filed an open-ended automatic or
universal shelf registration statement with the
Securities and Exchange Commission covering an indeterminate
amount of future offerings of debt securities, common stock,
preferred stock, depositary shares, warrants and units. As of
February 16, 2009, we had an effective registration
statement on file in connection with our enhanced DRIP program
under which we may issue up to 10,760,247 shares of common
stock. As of February 16, 2009, 7,926,634 shares of
common stock remained available for issuance under this
registration statement. In November 2008, we entered into an
Equity Distribution Agreement with UBS Securities LLC relating
to the offer and sale from time to time of up to $250,000,000
aggregate amount of our common stock (Equity Shelf
Program). As of February 16, 2009, we had
$218,804,000 of remaining capacity under the Equity Shelf
Program. Depending upon market conditions, we anticipate issuing
securities under our registration statements to invest in
additional properties and to repay borrowings under our
unsecured line of credit arrangement.
Results
of Operations
Our primary sources of revenue include rent and interest. Our
primary expenses include interest expense, depreciation and
amortization, property operating expenses and general and
administrative expenses. These revenues and expenses are
reflected in our Consolidated Statements of Income and are
discussed in further detail below. The following is a summary of
our results of operations (dollars in thousands except per share
amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
One Year Change
|
|
|
Year Ended
|
|
|
One Year Change
|
|
|
Two Year Change
|
|
|
|
Dec. 31, 2006
|
|
|
Dec. 31, 2007
|
|
|
$
|
|
|
%
|
|
|
Dec. 31, 2008
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
Net income available to common stockholders
|
|
$
|
81,287
|
|
|
$
|
116,272
|
|
|
$
|
34,985
|
|
|
|
43
|
%
|
|
$
|
264,910
|
|
|
$
|
148,638
|
|
|
|
128
|
%
|
|
$
|
183,623
|
|
|
|
226
|
%
|
Funds from operations
|
|
|
177,580
|
|
|
|
251,117
|
|
|
|
73,537
|
|
|
|
41
|
%
|
|
|
263,680
|
|
|
|
12,563
|
|
|
|
5
|
%
|
|
|
86,100
|
|
|
|
48
|
%
|
Net operating income
|
|
|
327,273
|
|
|
|
455,680
|
|
|
|
128,407
|
|
|
|
39
|
%
|
|
|
526,136
|
|
|
|
70,456
|
|
|
|
15
|
%
|
|
|
198,863
|
|
|
|
61
|
%
|
Adjusted EBITDA
|
|
|
308,465
|
|
|
|
439,464
|
|
|
|
130,999
|
|
|
|
42
|
%
|
|
|
595,239
|
|
|
|
155,775
|
|
|
|
35
|
%
|
|
|
286,774
|
|
|
|
93
|
%
|
The components of the changes in revenues, expenses and other
items are discussed in detail below. The following is a summary
of certain items that impact the results of operations for the
year ended December 31, 2008:
|
|
|
|
|
$2,094,000 ($0.02 per diluted share) of net gains on
extinguishments of debt;
|
|
|
|
$2,500,000 ($0.03 per diluted share) of additional other income
related to a lease termination;
|
|
|
|
$2,291,000 ($0.02 per diluted share) of non-recurring terminated
transaction costs;
|
|
|
|
$1,325,000 ($0.01 per diluted share) of non-recurring income tax
expense;
|
56
|
|
|
|
|
$23,393,000 ($0.25 per diluted share) of realized loss on
derivatives;
|
|
|
|
$32,648,000 ($0.35 per diluted share) of impairment
charges; and
|
|
|
|
$163,933,000 ($1.74 per diluted share) of gains on the sales of
real property.
|
The components of the changes in revenues, expenses and other
items are discussed in detail below. The following is a summary
of certain items that impact the results of operations for the
year ended December 31, 2007:
|
|
|
|
|
$1,750,000 ($0.02 per diluted share) of one-time acquisition
finders fees;
|
|
|
|
$1,081,000 ($0.01 per diluted share) of net gains on
extinguishments of debt;
|
|
|
|
$3,900,000 ($0.05 per diluted share) of additional other income
related to the payoff of a warrant equity investment; and
|
|
|
|
$14,437,000 ($0.18 per diluted share) of gains on the sales of
real property.
|
The following is a summary of certain items that impact the
results of operations for the year ended December 31, 2006:
|
|
|
|
|
$5,213,000 ($0.08 per diluted share) of merger-related
expenses; and
|
|
|
|
$1,267,000 ($0.02 per diluted share) of gains on the sales of
real property.
|
The increase in fully diluted average common shares outstanding
is primarily the result of the Windrose merger, public and
private common stock offerings and common stock issuances
pursuant to our DRIP. The following table represents the changes
in outstanding common stock for the period from January 1,
2006 to December 31, 2008 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
Dec. 31,
|
|
|
Dec. 31,
|
|
|
Dec. 31,
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
Totals
|
|
|
Beginning balance
|
|
|
58,125
|
|
|
|
73,192
|
|
|
|
85,496
|
|
|
|
58,125
|
|
Windrose merger
|
|
|
9,679
|
|
|
|
0
|
|
|
|
0
|
|
|
|
9,679
|
|
Public offerings
|
|
|
3,223
|
|
|
|
9,825
|
|
|
|
16,444
|
|
|
|
29,492
|
|
DRIP issuances
|
|
|
1,877
|
|
|
|
1,626
|
|
|
|
1,546
|
|
|
|
5,049
|
|
Preferred stock conversions
|
|
|
0
|
|
|
|
212
|
|
|
|
975
|
|
|
|
1,187
|
|
Option exercises
|
|
|
227
|
|
|
|
402
|
|
|
|
119
|
|
|
|
748
|
|
Other, net
|
|
|
61
|
|
|
|
239
|
|
|
|
124
|
|
|
|
424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
|
73,192
|
|
|
|
85,496
|
|
|
|
104,704
|
|
|
|
104,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
61,661
|
|
|
|
78,861
|
|
|
|
93,732
|
|
|
|
|
|
Diluted
|
|
|
62,045
|
|
|
|
79,409
|
|
|
|
94,309
|
|
|
|
|
|
We evaluate our business and make resource allocations on our
two business segments investment properties and
medical office buildings. Under the investment property segment,
properties are primarily leased under
triple-net
leases and we are not involved in the management of the
property. Under the medical office building segment, our
properties are typically leased under gross leases, modified
gross leases or
triple-net
leases, to multiple tenants, and generally require a certain
level of property management. There are no intersegment sales or
transfers. Non-segment revenue consists mainly of interest
income on non-real estate investments and other income.
Non-property specific revenues and expenses are not allocated to
individual segments in determining net operating income. Please
see Note 19 to our consolidated financial statements for
additional information.
57
Investment
Properties
The following is a summary of our results of operations for the
investment properties segment (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
One Year
|
|
|
Year Ended
|
|
|
One Year
|
|
|
Two Year
|
|
|
|
Dec. 31,
|
|
|
Dec. 31,
|
|
|
Change
|
|
|
Dec. 31,
|
|
|
Change
|
|
|
Change
|
|
|
|
2006
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
262,468
|
|
|
$
|
313,123
|
|
|
$
|
50,655
|
|
|
|
19
|
%
|
|
$
|
371,667
|
|
|
$
|
58,544
|
|
|
|
19
|
%
|
|
$
|
109,199
|
|
|
|
42
|
%
|
Interest income
|
|
|
18,829
|
|
|
|
25,823
|
|
|
|
6,994
|
|
|
|
37
|
%
|
|
|
40,063
|
|
|
|
14,240
|
|
|
|
55
|
%
|
|
|
21,234
|
|
|
|
113
|
%
|
Other income
|
|
|
3,262
|
|
|
|
8,010
|
|
|
|
4,748
|
|
|
|
146
|
%
|
|
|
7,899
|
|
|
|
(111
|
)
|
|
|
(1
|
)%
|
|
|
4,637
|
|
|
|
142
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
284,559
|
|
|
|
346,956
|
|
|
|
62,397
|
|
|
|
22
|
%
|
|
|
419,629
|
|
|
|
72,673
|
|
|
|
21
|
%
|
|
|
135,070
|
|
|
|
47
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(2,573
|
)
|
|
|
248
|
|
|
|
2,821
|
|
|
|
n/a
|
|
|
|
3,291
|
|
|
|
3,043
|
|
|
|
1227
|
%
|
|
|
5,864
|
|
|
|
n/a
|
|
Depreciation and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amortization
|
|
|
80,816
|
|
|
|
93,034
|
|
|
|
12,218
|
|
|
|
15
|
%
|
|
|
107,683
|
|
|
|
14,649
|
|
|
|
16
|
%
|
|
|
26,867
|
|
|
|
33
|
%
|
Gain on extinguishment of debt.
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
n/a
|
|
|
|
(808
|
)
|
|
|
(808
|
)
|
|
|
n/a
|
|
|
|
(808
|
)
|
|
|
n/a
|
|
Provision for loan losses
|
|
|
1,000
|
|
|
|
0
|
|
|
|
(1,000
|
)
|
|
|
(100
|
)%
|
|
|
94
|
|
|
|
94
|
|
|
|
n/a
|
|
|
|
(906
|
)
|
|
|
(91
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79,243
|
|
|
|
93,282
|
|
|
|
14,039
|
|
|
|
18
|
%
|
|
|
110,260
|
|
|
|
16,978
|
|
|
|
18
|
%
|
|
|
31,017
|
|
|
|
39
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
205,316
|
|
|
|
253,674
|
|
|
|
48,358
|
|
|
|
24
|
%
|
|
|
309,369
|
|
|
|
55,695
|
|
|
|
22
|
%
|
|
|
104,053
|
|
|
|
51
|
%
|
Income tax (expense) benefit
|
|
|
0
|
|
|
|
293
|
|
|
|
293
|
|
|
|
n/a
|
|
|
|
(1,693
|
)
|
|
|
(1,986
|
)
|
|
|
n/a
|
|
|
|
(1,693
|
)
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
205,316
|
|
|
|
253,967
|
|
|
|
48,651
|
|
|
|
24
|
%
|
|
|
307,676
|
|
|
|
53,709
|
|
|
|
21
|
%
|
|
|
102,360
|
|
|
|
50
|
%
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sales of properties
|
|
|
1,267
|
|
|
|
14,437
|
|
|
|
13,170
|
|
|
|
1039
|
%
|
|
|
164,998
|
|
|
|
150,561
|
|
|
|
1043
|
%
|
|
|
163,731
|
|
|
|
12923
|
%
|
Income from discontinued operations, net
|
|
|
11,549
|
|
|
|
13,843
|
|
|
|
2,294
|
|
|
|
20
|
%
|
|
|
9,171
|
|
|
|
(4,672
|
)
|
|
|
(34
|
)%
|
|
|
(2,378
|
)
|
|
|
(21
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,816
|
|
|
|
28,280
|
|
|
|
15,464
|
|
|
|
121
|
%
|
|
|
174,169
|
|
|
|
145,889
|
|
|
|
516
|
%
|
|
|
161,353
|
|
|
|
1259
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
218,132
|
|
|
$
|
282,247
|
|
|
$
|
64,115
|
|
|
|
29
|
%
|
|
$
|
481,845
|
|
|
$
|
199,598
|
|
|
|
71
|
%
|
|
$
|
263,713
|
|
|
|
121
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The increase in rental income is primarily attributable to the
acquisitions of new investment properties from which we receive
rent. See the discussion of investing activities in
Liquidity and Capital Resources above for further
information. Certain of our leases contain annual rental
escalators that are contingent upon changes in the Consumer
Price Index
and/or
changes in the gross operating revenues of the tenants
properties. These escalators are not fixed, so no straight-line
rent is recorded; however, rental income is recorded based on
the contractual cash rental payments due for the period. If
gross operating revenues at our facilities
and/or the
Consumer Price Index do not increase, a portion of our revenues
may not continue to increase. Sales of real property would
offset revenue increases and, to the extent that they exceed new
acquisitions, could result in decreased revenues. Our leases
could renew above or below current rent rates, resulting in an
increase or decrease in rental income. Interest income increased
from 2007 and 2006 primarily due to an increase in the balance
of outstanding loans.
58
Interest expense for the years ended December 31, 2008,
2007 and 2006 represents $7,176,000, $8,763,000 and $9,042,000,
respectively, of secured debt interest expense offset by
interest allocated to discontinued operations. The change in
secured debt interest expense is due to the net effect and
timing of assumptions, extinguishments and principal
amortizations. During the year ended December 31, 2008, we
extinguished four investment property secured debt loans and
recognized extinguishment gains of $808,000. The following is a
summary of our investment property secured debt principal
activity (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2006
|
|
|
Year Ended December 31, 2007
|
|
|
Year Ended December 31, 2008
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
Weighted Average
|
|
|
|
Amount
|
|
|
Interest Rate
|
|
|
Amount
|
|
|
Interest Rate
|
|
|
Amount
|
|
|
Interest Rate
|
|
|
Beginning balance
|
|
$
|
107,540
|
|
|
|
7.328
|
%
|
|
$
|
129,617
|
|
|
|
7.134
|
%
|
|
$
|
114,543
|
|
|
|
7.000
|
%
|
Debt assumed
|
|
|
25,049
|
|
|
|
6.315
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt extinguished
|
|
|
|
|
|
|
|
|
|
|
(12,083
|
)
|
|
|
8.421
|
%
|
|
|
(17,821
|
)
|
|
|
7.022
|
%
|
Principal payments
|
|
|
(2,972
|
)
|
|
|
7.251
|
%
|
|
|
(2,991
|
)
|
|
|
7.085
|
%
|
|
|
(2,488
|
)
|
|
|
6.974
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
129,617
|
|
|
|
7.134
|
%
|
|
$
|
114,543
|
|
|
|
7.000
|
%
|
|
$
|
94,234
|
|
|
|
6.996
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monthly averages
|
|
$
|
125,375
|
|
|
|
7.173
|
%
|
|
$
|
121,562
|
|
|
|
7.065
|
%
|
|
$
|
103,927
|
|
|
|
6.996
|
%
|
Depreciation and amortization increased primarily as a result of
additional investments in properties owned directly by us. See
the discussion of investing activities in Liquidity and
Capital Resources above for additional details. To the
extent that we acquire or dispose of additional properties in
the future, our provision for depreciation and amortization will
change accordingly.
At December 31, 2008, we had one specialty care facility
that satisfied the requirements of Statement No. 144 for
held for sale treatment. We did not recognize an impairment loss
on this asset as the fair value less estimated costs to sell
exceeded our carrying value. During the year ended
December 31, 2008, we sold 30 assisted living facilities,
two independent living facilities, four skilled nursing
facilities, one specialty care facility and one parcel of land
with carrying values of $178,647,000 for net gains of
$164,998,000 and a deferred gain of $3,708,000. The following
illustrates the reclassification impact as a result of
classifying investment properties as discontinued operations for
the periods presented. Please refer to Note 4 to our
consolidated financial statements for further discussion.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental Income
|
|
$
|
39,920
|
|
|
$
|
32,560
|
|
|
$
|
17,182
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
11,615
|
|
|
|
8,515
|
|
|
|
3,885
|
|
Depreciation and amortization
|
|
|
15,636
|
|
|
|
10,202
|
|
|
|
4,126
|
|
General and adminstrative
|
|
|
1,120
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, net
|
|
$
|
11,549
|
|
|
$
|
13,843
|
|
|
$
|
9,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the three months ended December 31, 2007, we
recognized $3,900,000 of additional other income related to the
payoff of a warrant equity investment. During the three months
ended March 31, 2008, we determined that $1,325,000 of
income taxes were due in connection with that investment gain.
During the three months ended December 31, 2008, we
recognized $2,500,000 of additional other income related to a
lease termination.
As a result of our quarterly evaluations, we recorded a $94,000
addition to the allowance for loan losses at December 31,
2008. The provision for loan losses is related to our critical
accounting estimate for the allowance for loan losses and is
discussed below in Critical Accounting Policies.
59
Medical
Office Buildings
The following is a summary of our results of operations for the
medical office building segment (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
One Year
|
|
|
Year Ended
|
|
|
One Year
|
|
|
Two Year
|
|
|
|
Dec. 31,
|
|
|
Dec. 31,
|
|
|
Change
|
|
|
Dec. 31,
|
|
|
Change
|
|
|
Change
|
|
|
|
2006
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
3,021
|
|
|
$
|
104,550
|
|
|
$
|
101,529
|
|
|
|
3361
|
%
|
|
$
|
128,963
|
|
|
$
|
24,413
|
|
|
|
23
|
%
|
|
$
|
125,942
|
|
|
|
4169
|
%
|
Other income
|
|
|
0
|
|
|
|
497
|
|
|
|
497
|
|
|
|
n/a
|
|
|
|
930
|
|
|
|
433
|
|
|
|
87
|
%
|
|
|
930
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,021
|
|
|
|
105,047
|
|
|
|
102,026
|
|
|
|
3377
|
%
|
|
|
129,893
|
|
|
|
24,846
|
|
|
|
24
|
%
|
|
|
126,872
|
|
|
|
4200
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
519
|
|
|
|
21,407
|
|
|
|
20,888
|
|
|
|
4025
|
%
|
|
|
20,279
|
|
|
|
(1,128
|
)
|
|
|
(5
|
)%
|
|
|
19,760
|
|
|
|
3807
|
%
|
Property operating expenses
|
|
|
1,039
|
|
|
|
34,707
|
|
|
|
33,668
|
|
|
|
3240
|
%
|
|
|
43,990
|
|
|
|
9,283
|
|
|
|
27
|
%
|
|
|
42,951
|
|
|
|
4134
|
%
|
Depreciation and amortization
|
|
|
1,012
|
|
|
|
42,190
|
|
|
|
41,178
|
|
|
|
4069
|
%
|
|
|
48,471
|
|
|
|
6,281
|
|
|
|
15
|
%
|
|
|
47,459
|
|
|
|
4690
|
%
|
Gain on extinguishment of debt
|
|
|
0
|
|
|
|
(1,081
|
)
|
|
|
(1,081
|
)
|
|
|
n/a
|
|
|
|
(1,286
|
)
|
|
|
(205
|
)
|
|
|
19
|
%
|
|
|
(1,286
|
)
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,570
|
|
|
|
97,223
|
|
|
|
94,653
|
|
|
|
3683
|
%
|
|
|
111,454
|
|
|
|
14,231
|
|
|
|
15
|
%
|
|
|
108,884
|
|
|
|
4237
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes and
minority interests
|
|
|
451
|
|
|
|
7,824
|
|
|
|
7,373
|
|
|
|
1635
|
%
|
|
|
18,439
|
|
|
|
10,615
|
|
|
|
136
|
%
|
|
|
17,988
|
|
|
|
3988
|
%
|
Income tax (expense) benefit
|
|
|
0
|
|
|
|
12
|
|
|
|
12
|
|
|
|
n/a
|
|
|
|
(51
|
)
|
|
|
(63
|
)
|
|
|
n/a
|
|
|
|
(51
|
)
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before minority interests
|
|
|
451
|
|
|
|
7,836
|
|
|
|
7,385
|
|
|
|
1637
|
%
|
|
|
18,388
|
|
|
|
10,552
|
|
|
|
135
|
%
|
|
|
17,937
|
|
|
|
3977
|
%
|
Minority interests
|
|
|
(13
|
)
|
|
|
(238
|
)
|
|
|
(225
|
)
|
|
|
1731
|
%
|
|
|
(126
|
)
|
|
|
112
|
|
|
|
(47
|
)%
|
|
|
(113
|
)
|
|
|
869
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
438
|
|
|
|
7,598
|
|
|
|
7,160
|
|
|
|
1635
|
%
|
|
|
18,262
|
|
|
|
10,664
|
|
|
|
140
|
%
|
|
|
17,824
|
|
|
|
4069
|
%
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on sales of properties
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
n/a
|
|
|
|
(1,065
|
)
|
|
|
(1,065
|
)
|
|
|
n/a
|
|
|
|
(1,065
|
)
|
|
|
n/a
|
|
Impairment of assets
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
n/a
|
|
|
|
(32,648
|
)
|
|
|
(32,648
|
)
|
|
|
n/a
|
|
|
|
(32,648
|
)
|
|
|
n/a
|
|
Income from discontinued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations, net
|
|
|
(41
|
)
|
|
|
(1,775
|
)
|
|
|
(1,734
|
)
|
|
|
4229
|
%
|
|
|
(2,584
|
)
|
|
|
(809
|
)
|
|
|
46
|
%
|
|
|
(2,543
|
)
|
|
|
6202
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(41
|
)
|
|
|
(1,775
|
)
|
|
|
(1,734
|
)
|
|
|
4229
|
%
|
|
|
(36,297
|
)
|
|
|
(34,522
|
)
|
|
|
1945
|
%
|
|
|
(36,256
|
)
|
|
|
88429
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
397
|
|
|
$
|
5,823
|
|
|
$
|
5,426
|
|
|
|
1367
|
%
|
|
$
|
(18,035
|
)
|
|
$
|
(23,858
|
)
|
|
|
n/a
|
|
|
$
|
(18,432
|
)
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As discussed in Note 2 to our consolidated financial
statements, we completed our merger with Windrose Medical
Properties Trust on December 20, 2006. These operations are
the principal component of our medical office building segment
and represent the primary component of the change in results of
operations for this segment from 2006 to 2007. Additionally, in
May 2007, we completed the acquisition of 17 medical office
buildings and Paramount Real Estate Services, a property
management company, from affiliates of Rendina Companies. The
results of operations for these properties and Paramount have
been included in our consolidated results of operations from the
date of acquisition and represent the primary component of
change in results of operations for this segment from 2007 to
2008.
The increase in rental income is primarily attributable to the
acquisitions of medical office buildings from which we receive
rent. See the discussion of investing activities in
Liquidity and Capital Resources above for further
information. Certain of our leases contain annual rental
escalators that are contingent upon changes in the Consumer
Price Index. These escalators are not fixed, so no straight-line
rent is recorded; however, rental income is recorded based on
the contractual cash rental payments due for the period. If the
Consumer Price Index does not
60
increase, a portion of our revenues may not continue to
increase. Sales of real property would offset revenue increases
and, to the extent that they exceed new acquisitions, could
result in decreased revenues. Our leases could renew above or
below current rent rates, resulting in an increase or decrease
in rental income. The increase in other income is attributable
to third party management fee income.
Interest expense for the years ended December 31, 2008,
2007 and 2006 represents $21,828,000, $20,174,000 and $498,000,
respectively, of secured debt interest expense offset by
interest allocated to discontinued operations. Interest expense
for the years ended December 31, 2007 and 2006 also
includes $3,104,000 and $112,000, respectively, of interest
expense related to the subsidiary trust liability. The change in
secured debt interest expense is primarily due to the net effect
and timing of assumptions, extinguishments and principal
amortizations. During the year ended December 31, 2008, we
extinguished four medical office building secured debt loans and
recognized extinguishment gains of $1,286,000. The following is
a summary of our medical office building secured debt principal
activity (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2006
|
|
|
Year Ended December 31, 2007
|
|
|
Year Ended December 31, 2008
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
Weighted Average
|
|
|
|
Amount
|
|
|
Interest Rate
|
|
|
Amount
|
|
|
Interest Rate
|
|
|
Amount
|
|
|
Interest Rate
|
|
|
Beginning balance
|
|
$
|
0
|
|
|
|
0.000
|
%
|
|
$
|
248,783
|
|
|
|
5.939
|
%
|
|
$
|
392,430
|
|
|
|
5.854
|
%
|
Debt assumed
|
|
|
248,844
|
|
|
|
5.939
|
%
|
|
|
166,331
|
|
|
|
5.808
|
%
|
|
|
|
|
|
|
|
|
Debt extinguished
|
|
|
|
|
|
|
|
|
|
|
(17,713
|
)
|
|
|
6.599
|
%
|
|
|
(32,653
|
)
|
|
|
6.473
|
%
|
Principal payments
|
|
|
(61
|
)
|
|
|
5.939
|
%
|
|
|
(4,971
|
)
|
|
|
5.881
|
%
|
|
|
(5,631
|
)
|
|
|
5.741
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
248,783
|
|
|
|
5.939
|
%
|
|
$
|
392,430
|
|
|
|
5.854
|
%
|
|
$
|
354,146
|
|
|
|
5.799
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monthly averages
|
|
$
|
248,813
|
|
|
|
5.939
|
%
|
|
$
|
335,234
|
|
|
|
5.892
|
%
|
|
$
|
365,661
|
|
|
|
5.802
|
%
|
At December 31, 2006, we had $51,000,000 of trust preferred
liability principal outstanding with a fixed annual interest
rate of 7.22%. On November 6, 2007, we purchased all
$50,000,000 of the outstanding trust preferred securities at par
for the purpose of unwinding this financing arrangement and
extinguishing the liability of the operating partnership to the
subsidiary trust and recorded a $1,081,000 gain on
extinguishment of debt.
The increase in property operating expenses is primarily
attributable to the acquisition of new medical office buildings
for which we incur certain property operating expenses offset by
property operating expenses associated with discontinued
operations.
Depreciation and amortization increased primarily as a result of
additional investments in properties owned directly by us. See
the discussion of investing activities in Liquidity and
Capital Resources above for additional details. To the
extent that we acquire or dispose of additional properties in
the future, our provision for depreciation and amortization will
change accordingly.
Income tax expense is related to third party management fee
income.
Minority interests primarily relate to certain joint venture
properties acquired in connection with the Windrose merger in
December 2006.
At December 31, 2008, we had 14 medical office buildings
that satisfied the requirements of Statement No. 144 for
held for sale treatment. In determining the fair value of the
assets, we used a combination of third party appraisals based on
market comparable transactions, other market listings and asset
quality as well as management calculations based on projected
net operating income and published capitalization rates.
Managements estimates projected that the carrying value of
the assets was less than the estimated fair value and an
impairment charge of $32,648,000 was recorded to reduce the
properties to their estimated fair value. During the year ended
December 31, 2008, we sold one medical office building with
a carrying value of $6,781,000 for a loss of $1,061,000. The
following illustrates the reclassification impact as a result of
classifying these medical office buildings as
61
discontinued operations for the periods presented. Please refer
to Note 4 to our consolidated financial statements for
further discussion.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental Income
|
|
$
|
226
|
|
|
$
|
7,064
|
|
|
$
|
4,369
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
91
|
|
|
|
1,871
|
|
|
|
1,549
|
|
Property operating expenses
|
|
|
76
|
|
|
|
2,768
|
|
|
|
2,639
|
|
Depreciation and amortization
|
|
|
100
|
|
|
|
4,200
|
|
|
|
2,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, net
|
|
$
|
(41
|
)
|
|
$
|
(1,775
|
)
|
|
$
|
(2,584
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Segment/Corporate
The following is a summary of our results of operations for the
non-segment/corporate activities (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Year
|
|
|
|
|
|
One Year
|
|
|
Two Year
|
|
|
|
Year Ended
|
|
|
Change
|
|
|
Year Ended
|
|
|
Change
|
|
|
Change
|
|
|
|
Dec. 31, 2006
|
|
|
Dec. 31, 2007
|
|
|
$
|
|
|
%
|
|
|
Dec. 31, 2008
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
$
|
662
|
|
|
$
|
1,528
|
|
|
$
|
866
|
|
|
|
131
|
%
|
|
$
|
1,692
|
|
|
$
|
164
|
|
|
|
11
|
%
|
|
$
|
1,030
|
|
|
|
156
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
90,437
|
|
|
|
110,238
|
|
|
|
19,801
|
|
|
|
22
|
%
|
|
|
107,243
|
|
|
|
(2,995
|
)
|
|
|
(3
|
)%
|
|
|
16,806
|
|
|
|
19
|
%
|
General and administrative
|
|
|
25,922
|
|
|
|
37,465
|
|
|
|
11,543
|
|
|
|
45
|
%
|
|
|
47,193
|
|
|
|
9,728
|
|
|
|
26
|
%
|
|
|
21,271
|
|
|
|
82
|
%
|
Realized loss on derivatives
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
n/a
|
|
|
|
23,393
|
|
|
|
23,393
|
|
|
|
n/a
|
|
|
|
23,393
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116,359
|
|
|
|
147,703
|
|
|
|
31,344
|
|
|
|
27
|
%
|
|
|
177,829
|
|
|
|
30,126
|
|
|
|
20
|
%
|
|
|
61,470
|
|
|
|
53
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
(115,697
|
)
|
|
|
(146,175
|
)
|
|
|
(30,478
|
)
|
|
|
26
|
%
|
|
|
(176,137
|
)
|
|
|
(29,962
|
)
|
|
|
20
|
%
|
|
|
(60,440
|
)
|
|
|
52
|
%
|
Income tax (expense) benefit
|
|
|
(82
|
)
|
|
|
(493
|
)
|
|
|
(411
|
)
|
|
|
501
|
%
|
|
|
438
|
|
|
|
931
|
|
|
|
n/a
|
|
|
|
520
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
(115,779
|
)
|
|
|
(146,668
|
)
|
|
|
(30,889
|
)
|
|
|
27
|
%
|
|
|
(175,699
|
)
|
|
|
(29,031
|
)
|
|
|
20
|
%
|
|
|
(59,920
|
)
|
|
|
52
|
%
|
Preferred stock dividends
|
|
|
21,463
|
|
|
|
25,130
|
|
|
|
3,667
|
|
|
|
17
|
%
|
|
|
23,201
|
|
|
|
(1,929
|
)
|
|
|
(8
|
)%
|
|
|
1,738
|
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
(137,242
|
)
|
|
$
|
(171,798
|
)
|
|
$
|
(34,556
|
)
|
|
|
25
|
%
|
|
$
|
(198,900
|
)
|
|
$
|
(27,102
|
)
|
|
|
16
|
%
|
|
$
|
(61,658
|
)
|
|
|
45
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income primarily represents income from non-real estate
activities such as interest earned on temporary investments of
cash reserves.
The following is a summary of our non-segment/corporate interest
expense (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
One Year Change
|
|
|
Year Ended
|
|
|
One Year Change
|
|
|
Two Year Change
|
|
|
|
Dec. 31, 2006
|
|
|
Dec. 31, 2007
|
|
|
$
|
|
|
%
|
|
|
Dec. 31, 2008
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
Senior unsecured notes
|
|
$
|
80,069
|
|
|
$
|
101,618
|
|
|
$
|
21,549
|
|
|
|
27
|
%
|
|
$
|
106,732
|
|
|
$
|
5,114
|
|
|
|
5
|
%
|
|
$
|
26,663
|
|
|
|
33
|
%
|
Unsecured lines of credit
|
|
|
11,397
|
|
|
|
15,652
|
|
|
|
4,255
|
|
|
|
37
|
%
|
|
|
18,878
|
|
|
|
3,226
|
|
|
|
21
|
%
|
|
|
7,481
|
|
|
|
66
|
%
|
Capitalized interest
|
|
|
(4,470
|
)
|
|
|
(12,526
|
)
|
|
|
(8,056
|
)
|
|
|
180
|
%
|
|
|
(25,029
|
)
|
|
|
(12,503
|
)
|
|
|
100
|
%
|
|
|
(20,559
|
)
|
|
|
460
|
%
|
SWAP losses (savings)
|
|
|
197
|
|
|
|
(89
|
)
|
|
|
(286
|
)
|
|
|
n/a
|
|
|
|
(161
|
)
|
|
|
(72
|
)
|
|
|
81
|
%
|
|
|
(358
|
)
|
|
|
n/a
|
|
Loan expense
|
|
|
3,245
|
|
|
|
5,581
|
|
|
|
2,336
|
|
|
|
72
|
%
|
|
|
6,823
|
|
|
|
1,242
|
|
|
|
22
|
%
|
|
|
3,578
|
|
|
|
110
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
90,438
|
|
|
$
|
110,236
|
|
|
$
|
19,798
|
|
|
|
22
|
%
|
|
$
|
107,243
|
|
|
$
|
(2,993
|
)
|
|
|
(3
|
)%
|
|
$
|
16,805
|
|
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62
The change in interest expense on senior unsecured notes is due
to the net effect and timing of issuances and extinguishments.
The following is a summary of our senior unsecured notes
activity (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2006
|
|
|
Year Ended December 31, 2007
|
|
|
Year Ended December 31, 2008
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
Weighted Average
|
|
|
|
Amount
|
|
|
Interest Rate
|
|
|
Amount
|
|
|
Interest Rate
|
|
|
Amount
|
|
|
Interest Rate
|
|
|
Beginning balance
|
|
$
|
1,194,830
|
|
|
|
6.566
|
%
|
|
$
|
1,539,830
|
|
|
|
6.159
|
%
|
|
$
|
1,887,330
|
|
|
|
5.823
|
%
|
Debt issued
|
|
|
345,000
|
|
|
|
4.750
|
%
|
|
|
400,000
|
|
|
|
4.750
|
%
|
|
|
|
|
|
|
|
|
Debt extinguished
|
|
|
|
|
|
|
|
|
|
|
(52,500
|
)
|
|
|
7.500
|
%
|
|
|
(42,330
|
)
|
|
|
7.625
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
1,539,830
|
|
|
|
6.159
|
%
|
|
$
|
1,887,330
|
|
|
|
5.823
|
%
|
|
$
|
1,845,000
|
|
|
|
5.782
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monthly averages
|
|
$
|
1,244,445
|
|
|
|
6.494
|
%
|
|
$
|
1,704,253
|
|
|
|
5.991
|
%
|
|
$
|
1,854,768
|
|
|
|
5.792
|
%
|
The change in interest expense on unsecured lines of credit
arrangements is due primarily to changes in average amounts
outstanding and fluctuating variable interest rates. The
following is a summary of our unsecured lines of credit
arrangements (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
Balance outstanding at December 31
|
|
$
|
225,000
|
|
|
$
|
307,000
|
|
|
$
|
570,000
|
|
Maximum amount outstanding at any month end
|
|
|
276,000
|
|
|
|
434,000
|
|
|
|
744,000
|
|
Average amount outstanding (total of daily principal balances
divided by days in year)
|
|
|
164,905
|
|
|
|
234,392
|
|
|
|
500,561
|
|
Weighted average interest rate (actual interest expense divided
by average borrowings outstanding)
|
|
|
6.91
|
%
|
|
|
6.68
|
%
|
|
|
3.77
|
%
|
We capitalize certain interest costs associated with funds used
to finance the construction of properties owned directly by us.
The amount capitalized is based upon the borrowings outstanding
during the construction period using the rate of interest that
approximates our cost of financing. Our interest expense is
reduced by the amount capitalized. Capitalized interest for the
years ended December 31, 2006, 2007 and 2008 totaled
$4,470,000, $12,526,000 and $25,029,000, respectively.
On May 6, 2004, we entered into two interest rate swap
agreements (the 2004 Swaps) for a total notional
amount of $100,000,000 to hedge changes in fair value
attributable to changes in the LIBOR swap rate of $100,000,000
of fixed rate debt with a maturity date of November 15,
2013. The 2004 Swaps were treated as fair-value hedges for
accounting purposes and we utilized the short-cut method to
assess effectiveness. The 2004 Swaps were with highly rated
counterparties in which we received a fixed rate of 6.0% and
paid a variable rate based on six-month LIBOR plus a spread. For
the year ended December 31, 2006, we incurred $197,000 of
losses related to the 2004 Swaps that was recorded as an
addition to interest expense. For the year ended
December 31, 2007, we generated $89,000 of savings related
to the 2004 Swaps that was recorded as a reduction of interest
expense. On September 12, 2007, we terminated the 2004
Swaps and we received a $2,125,000 cash settlement. The
unamortized amount of this settlement at December 31, 2008
was $1,634,000 ($1,973,000 at December 31, 2007) and
is recorded as an adjustment to the hedged item. This amount
will be amortized to interest expense over the life of the
hedged debt using the effective interest method. For the year
ended December 31, 2008, $339,000 of amortization was
recognized as a reduction to senior unsecured notes interest
expense.
On July 2, 2007, we entered into two forward-starting
interest rate swaps (the July 2007 Swaps), with an
aggregate notional amount of $200,000,000 that were designated
as cash flow hedges of the variability in forecasted interest
payments attributable to changes in the LIBOR swap rate, on
long-term fixed rate debt forecasted to be issued in 2007. The
July 2007 Swaps had the economic effect of fixing $200,000,000
of our debt at 4.913% for five years. The July 2007 Swaps were
settled on July 17, 2007, which was the date that the
forecasted debt was priced. The cash settlement value of these
contracts at July 17, 2007 was $733,000. This amount
represented the effective portion of the hedges as there was no
hedge ineffectiveness. Therefore, the $733,000 settlement value
was deferred in accumulated other comprehensive income
(AOCI) and will be amortized to interest expense
using the effective interest method. The unamortized amount of
AOCI related to these contracts at December 31, 2008 is
$521,000
63
($668,000 at December 31, 2007). For the years ended
December 31, 2008 and 2007, we reclassified $147,000 and
$65,000, respectively, out of AOCI as a reduction of interest
expense.
On September 12, 2007, we entered into two forward-starting
interest rate swaps (the September 2007 Swaps) for a
total notional amount of $250,000,000 to hedge 10 years of
interest payments associated with a long-term borrowing that was
expected to occur in 2008. The September 2007 Swaps each had an
effective date of September 12, 2008 and a maturity date of
September 12, 2018. We expected to settle the 2007 Swaps
when the debt was to be priced. The September 2007 Swaps were to
have the economic effect of fixing $250,000,000 of our future
debt at 4.469% plus a credit spread for 10 years. The
September 2007 Swaps had been designated as cash flow hedges and
we expected the 2007 Swaps to be highly effective at offsetting
changes in cash flows of interest payments on $250,000,000 of
our future debt due to changes in the LIBOR swap rate.
Therefore, effective changes in the fair value of the September
2007 Swaps were recorded in AOCI and were to be reclassified to
interest expense when the hedged forecasted transactions
affected earnings (as interest payments are made on the expected
debt issuance). The ineffective portion of the changes in fair
value was to be recorded directly in earnings.
At December 31, 2007, the September 2007 Swaps were
reported at their fair value of $7,990,000 and were included in
other liabilities and AOCI. During the year ended
December 31, 2008, as a result of the severe dislocation in
the credit markets, we terminated plans to issue debt and also
terminated the September 2007 Swaps for $23,393,000. Amounts
previously recorded in AOCI were reclassified to realized loss
on derivatives resulting in $23,393,000 of expense as the
forecasted transaction was no longer probable to occur.
Loan expense represents the amortization of deferred loan costs
incurred in connection with the issuance and amendments of debt.
The change in loan expense is primarily due to costs associated
with the issuance of $345,000,000 of senior unsecured
convertible notes in November and December 2006, the issuance of
$400,000,000 of senior unsecured convertible notes in July 2007
and costs associated with the extension and expansion of our
unsecured line of credit in August 2007.
General and administrative expenses as a percentage of revenues
(including revenues from discontinued operations) for the year
ended December 31, 2008 were 8.24%, as compared with 7.64%
and 8.26% for the same periods in 2007 and 2006. The increase
from 2006 to 2007 is primarily related to the Windrose merger
completed on December 20, 2006, the Paramount acquisition
completed in May 2007, $1,750,000 of acquisition finders
fees paid during the three months ended June 30, 2007 and
costs associated with our initiatives to attract and retain
appropriate personnel to achieve our business objectives. During
the quarter ended June 30, 2007, we recorded $1,750,000 of
one-time acquisition finders fees paid to former Windrose
management in connection with the closing of the
Rendina/Paramount transaction. These fees relate to services
rendered prior to the consummation of the Windrose merger in
December 2006. Due to the recipients current employment
status with the company, the fees have been expensed as
compensation rather than included in the purchase price of the
acquisition, as is typical with such fees. The increase from
2007 to 2008 is primarily due to $2,291,000 of non-recurring
terminated transaction costs and costs associated with our
initiatives to attract and retain appropriate personnel to
achieve our business objectives. The terminated transaction
costs primarily related to the termination of the
Arcapita/Sunrise agreement.
The change in preferred dividends is primarily due to the change
in average outstanding preferred shares. The following is a
summary of our preferred stock activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2006
|
|
|
Year Ended December 31, 2007
|
|
|
Year Ended December 31, 2008
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
Weighted Average
|
|
|
|
Shares
|
|
|
Dividend Rate
|
|
|
Shares
|
|
|
Dividend Rate
|
|
|
Shares
|
|
|
Dividend Rate
|
|
|
Beginning balance
|
|
|
11,074,989
|
|
|
|
7.704
|
%
|
|
|
13,174,989
|
|
|
|
7.672
|
%
|
|
|
12,879,189
|
|
|
|
7.676
|
%
|
Shares issued
|
|
|
2,100,000
|
|
|
|
7.500
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares converted
|
|
|
|
|
|
|
|
|
|
|
(295,800
|
)
|
|
|
7.500
|
%
|
|
|
(1,362,887
|
)
|
|
|
7.500
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
|
13,174,989
|
|
|
|
7.672
|
%
|
|
|
12,879,189
|
|
|
|
7.676
|
%
|
|
|
11,516,302
|
|
|
|
7.696
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monthly averages
|
|
|
11,236,527
|
|
|
|
7.701
|
%
|
|
|
13,129,481
|
|
|
|
7.672
|
%
|
|
|
12,138,161
|
|
|
|
7.686
|
%
|
In conjunction with the acquisition of Windrose Medical
Properties Trust in December 2006, we issued
2,100,000 shares of 7.5% Series G Cumulative
Convertible Preferred Stock. These shares have a liquidation
value
64
of $25.00 per share. Dividends are payable quarterly in arrears.
The preferred stock, which has no stated maturity, may be
redeemed by us at a redemption price of $25.00 per share, plus
accrued and unpaid dividends on such shares to the redemption
date, on or after June 30, 2010. Each Series G
Preferred Share is convertible by the holder into our common
stock at a conversion price of $34.93, equivalent to a
conversion rate of 0.7157 common shares per Series G
Preferred Share. These shares were recorded at $29.58 per share,
which was deemed to be the fair value at the date of issuance.
Non-GAAP Financial
Measures
We believe that net income, as defined by U.S. GAAP, is the
most appropriate earnings measurement. However, we consider FFO
to be a useful supplemental measure of our operating
performance. Historical cost accounting for real estate assets
in accordance with U.S. GAAP implicitly assumes that the
value of real estate assets diminishes predictably over time as
evidenced by the provision for depreciation. However, since real
estate values have historically risen or fallen with market
conditions, many industry investors and analysts have considered
presentations of operating results for real estate companies
that use historical cost accounting to be insufficient. In
response, the National Association of Real Estate Investment
Trusts (NAREIT) created FFO as a supplemental
measure of operating performance for REITs that excludes
historical cost depreciation from net income. FFO, as defined by
NAREIT, means net income, computed in accordance with
U.S. GAAP, excluding gains (or losses) from sales of real
estate, plus depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures.
Net operating income (NOI) is used to evaluate the
operating performance of our properties. We define NOI as total
revenues, including tenant reimbursements, less property
operating expenses, which exclude depreciation and amortization,
general and administrative expenses, impairments and interest
expense. We believe NOI provides investors relevant and useful
information because it measures the operating performance of our
properties at the property level on an unleveraged basis. We use
NOI to make decisions about resource allocations and to assess
the property level performance of our properties.
EBITDA stands for earnings before interest, taxes, depreciation
and amortization. A covenant in our line of credit arrangement
contains a financial ratio based on a definition of EBITDA that
is specific to that agreement. Failure to satisfy this covenant
could result in an event of default that could have a material
adverse impact on our cost and availability of capital, which
could in turn have a material adverse impact on our consolidated
results of operations, liquidity
and/or
financial condition. Due to the materiality of this debt
agreement and the financial covenant, we have disclosed Adjusted
EBITDA, which represents EBITDA as defined above and adjusted
for stock-based compensation expense, provision for loan losses
and gain/loss on extinguishment of debt. We use Adjusted EBITDA
to measure our adjusted fixed charge coverage ratio, which
represents Adjusted EBITDA divided by fixed charges on a
trailing twelve months basis. Fixed charges include total
interest (excluding capitalized interest), secured debt
principal amortization and preferred dividends. Our covenant
requires an adjusted fixed charge ratio of at least 1.75 times.
Other than Adjusted EBITDA, our supplemental reporting measures
and similarly entitled financial measures are widely used by
investors, equity and debt analysts and rating agencies in the
valuation, comparison, rating and investment recommendations of
companies. Management uses these financial measures to
facilitate internal and external comparisons to our historical
operating results and in making operating decisions.
Additionally, these measures are utilized by the Board of
Directors to evaluate management. Adjusted EBITDA is used solely
to determine our compliance with a financial covenant of our
line of credit arrangement and is not being presented for use by
investors for any other purpose. None of our supplemental
measures represent net income or cash flow provided from
operating activities as determined in accordance with
U.S. GAAP and should not be considered as alternative
measures of profitability or liquidity. Finally, the
supplemental reporting measures, as defined by us, may not be
comparable to similarly entitled items reported by other real
estate investment trusts or other companies. Multi-period
amounts may not equal the sum of the individual quarterly
amounts due to rounding.
65
The table below reflects the reconciliation of FFO to net income
available to common stockholders, the most directly comparable
U.S. GAAP measure, for the periods presented. The
provisions for depreciation and amortization include provisions
for depreciation and amortization from discontinued operations.
Amounts are in thousands except for per share data.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
FFO Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
81,287
|
|
|
$
|
116,272
|
|
|
$
|
264,910
|
|
Depreciation and amortization
|
|
|
97,564
|
|
|
|
149,626
|
|
|
|
163,045
|
|
Loss (gain) on sales of properties
|
|
|
(1,267
|
)
|
|
|
(14,437
|
)
|
|
|
(163,933
|
)
|
Minority interests
|
|
|
(4
|
)
|
|
|
(344
|
)
|
|
|
(342
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations
|
|
$
|
177,580
|
|
|
$
|
251,117
|
|
|
$
|
263,680
|
|
Average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
61,661
|
|
|
|
78,861
|
|
|
|
93,732
|
|
Diluted
|
|
|
62,045
|
|
|
|
79,409
|
|
|
|
94,309
|
|
Per share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.32
|
|
|
$
|
1.47
|
|
|
$
|
2.83
|
|
Diluted
|
|
|
1.31
|
|
|
|
1.46
|
|
|
|
2.81
|
|
Funds from operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
2.88
|
|
|
$
|
3.18
|
|
|
$
|
2.81
|
|
Diluted
|
|
|
2.86
|
|
|
|
3.16
|
|
|
|
2.80
|
|
The table below reflects the reconciliation of NOI for the
periods presented. All amounts include amounts from discontinued
operations, if applicable. Amounts are in thousands.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
NOI Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent living/CCRCs
|
|
$
|
36,474
|
|
|
$
|
43,072
|
|
|
$
|
66,402
|
|
Assisted living facilities
|
|
|
103,899
|
|
|
|
108,475
|
|
|
|
117,009
|
|
Skilled nursing facilities
|
|
|
149,248
|
|
|
|
167,718
|
|
|
|
161,642
|
|
Specialty care facilities
|
|
|
12,767
|
|
|
|
26,418
|
|
|
|
43,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment property rental income
|
|
|
302,388
|
|
|
|
345,683
|
|
|
|
388,849
|
|
Interest income
|
|
|
18,829
|
|
|
|
25,823
|
|
|
|
40,063
|
|
Other income
|
|
|
3,262
|
|
|
|
8,010
|
|
|
|
7,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment property revenues
|
|
|
324,479
|
|
|
|
379,516
|
|
|
|
436,811
|
|
Medical office buildings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
|
3,247
|
|
|
|
111,614
|
|
|
|
133,332
|
|
Other income
|
|
|
0
|
|
|
|
497
|
|
|
|
930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total medical office building revenues
|
|
|
3,247
|
|
|
|
112,111
|
|
|
|
134,262
|
|
Corporate other income
|
|
|
662
|
|
|
|
1,528
|
|
|
|
1,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
328,388
|
|
|
|
493,155
|
|
|
|
572,765
|
|
Property operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment properties
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Medical office buildings
|
|
|
1,115
|
|
|
|
37,475
|
|
|
|
46,629
|
|
Non-segment/corporate
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property operating expenses
|
|
|
1,115
|
|
|
|
37,475
|
|
|
|
46,629
|
|
Net operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment properties
|
|
|
324,479
|
|
|
|
379,516
|
|
|
|
436,811
|
|
Medical office buildings
|
|
|
2,132
|
|
|
|
74,636
|
|
|
|
87,633
|
|
Non-segment/corporate
|
|
|
662
|
|
|
|
1,528
|
|
|
|
1,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income
|
|
$
|
327,273
|
|
|
$
|
455,680
|
|
|
$
|
526,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66
The table below reflects the reconciliation of Adjusted EBITDA
to net income, the most directly comparable U.S. GAAP
measure, for the periods presented. Interest expense and the
provisions for depreciation and amortization include
discontinued operations. Dollars are in thousands.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
Adjusted EBITDA Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
102,750
|
|
|
$
|
141,402
|
|
|
$
|
288,111
|
|
Interest expense
|
|
|
100,089
|
|
|
|
142,279
|
|
|
|
136,247
|
|
Tax expense/(benefit)
|
|
|
82
|
|
|
|
188
|
|
|
|
1,306
|
|
Depreciation and amortization
|
|
|
97,564
|
|
|
|
149,626
|
|
|
|
163,045
|
|
Stock-based compensation expense
|
|
|
6,980
|
|
|
|
7,050
|
|
|
|
8,530
|
|
Provision for loan losses
|
|
|
1,000
|
|
|
|
0
|
|
|
|
94
|
|
Loss/(gain) on extinguishment of debt, net
|
|
|
0
|
|
|
|
(1,081
|
)
|
|
|
(2,094
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
308,465
|
|
|
$
|
439,464
|
|
|
$
|
595,239
|
|
Interest Coverage Ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
100,089
|
|
|
$
|
142,279
|
|
|
$
|
136,247
|
|
Non-cash interest expense
|
|
|
(3,296
|
)
|
|
|
(5,366
|
)
|
|
|
(6,419
|
)
|
Capitalized interest
|
|
|
4,470
|
|
|
|
12,526
|
|
|
|
25,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest
|
|
|
101,263
|
|
|
|
149,439
|
|
|
|
154,857
|
|
Adjusted EBITDA
|
|
$
|
308,465
|
|
|
$
|
439,464
|
|
|
$
|
595,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted interest coverage ratio
|
|
|
3.05
|
x
|
|
|
2.94
|
x
|
|
|
3.84
|
x
|
Fixed Charge Coverage Ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest
|
|
$
|
101,263
|
|
|
$
|
149,439
|
|
|
$
|
154,857
|
|
Secured debt prinicipal amortization
|
|
|
3,033
|
|
|
|
7,950
|
|
|
|
8,119
|
|
Preferred dividends
|
|
|
21,463
|
|
|
|
25,130
|
|
|
|
23,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fixed charges
|
|
|
125,759
|
|
|
|
182,519
|
|
|
|
186,177
|
|
Adjusted EBITDA
|
|
$
|
308,465
|
|
|
$
|
439,464
|
|
|
$
|
595,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted fixed charge coverage ratio
|
|
|
2.45
|
x
|
|
|
2.41
|
x
|
|
|
3.20x
|
|
Critical
Accounting Policies
Our consolidated financial statements are prepared in accordance
with U.S. GAAP, which requires us to make estimates and
assumptions. Management considers an accounting estimate or
assumption critical if:
|
|
|
|
|
the nature of the estimates or assumptions is material due to
the levels of subjectivity and judgment necessary to account for
highly uncertain matters or the susceptibility of such matters
to change; and
|
|
|
|
the impact of the estimates and assumptions on financial
condition or operating performance is material.
|
Management has discussed the development and selection of its
critical accounting policies with the Audit Committee of the
Board of Directors and the Audit Committee has reviewed the
disclosure presented below relating to them. Management believes
the current assumptions and other considerations used to
estimate amounts reflected in our consolidated financial
statements are appropriate and are not reasonably likely to
change in the future. However, since these estimates require
assumptions to be made that were uncertain at the time the
estimate was made, they bear the risk of change. If actual
experience differs from the assumptions and other considerations
used in estimating amounts reflected in our consolidated
financial statements, the resulting changes could have a
material adverse effect on our consolidated results of
operations, liquidity
and/or
financial condition. Please refer to Note 1 of our audited
consolidated financial statements for further information on
significant accounting policies that impact us. There were no
material changes to these policies in 2008.
67
The following table presents information about our critical
accounting policies, as well as the material assumptions used to
develop each estimate:
|
|
|
Nature of Critical
|
|
Assumptions/
|
Accounting Estimate
|
|
Approach Used
|
|
|
|
|
Allowance for Losses on Loans Receivable
|
|
|
We maintain an allowance for losses on loans receivable in
accordance with Statement of Financial Accounting Standards
No. 114, Accounting by Creditors for Impairment of a Loan,
as amended, and SEC Staff Accounting Bulletin No. 102,
Selected Loan Loss Allowance Methodology and Documentation
Issues. The allowance for loan losses is maintained at a level
believed adequate to absorb potential losses in our loans
receivable. The determination of the allowance is based on a
quarterly evaluation of all outstanding loans. If this
evaluation indicates that there is a greater risk of loan
charge-offs, additional allowances or placement on non-accrual
status may be required. A loan is impaired when, based on
current information and events, it is probable that we will be
unable to collect all amounts due as scheduled according to the
contractual terms of the original loan agreement. Consistent
with this definition, all loans on non-accrual are deemed
impaired. To the extent circumstances improve and the risk of
collectability is diminished, we will return these loans to full
accrual status.
|
|
The determination of the allowance is based on a quarterly
evaluation of all outstanding loans, including general economic
conditions and estimated collectability of loan payments and
principal. We evaluate the collectability of our loans
receivable based on a combination of factors, including, but not
limited to, delinquency status, historical loan charge-offs,
financial strength of the borrower and guarantors and value of
the underlying property.
As a result of our quarterly evaluation, we recorded a $94,000
addition to the allowance for losses on loans receivable at
December 31, 2008, resulting in an allowance of $7,500,000
relating to loans with outstanding balances of $121,893,000.
Also at December 31, 2008, we had loans with outstanding
balances of $72,770,000 on non-accrual status.
|
|
|
|
Business Combinations
Substantially all of the properties owned by us are leased under
operating leases and are recorded at cost. The cost of our real
property is allocated to land, buildings, improvements and
intangibles in accordance with Statement of Financial Accounting
Standards No. 141, Business Combinations.
|
|
We compute depreciation and amortization on our properties using
the straight-line method based on their estimated useful lives
which range from 15 to 40 years for buildings and five to
15 years for improvements. Lives for intangibles are based
on the remaining term of the underlying leases.
For the year ended December 31, 2008, we recorded $118,204,000,
$32,212,000 and $12,629,000 as provisions for depreciation and
amortization relating to buildings, improvements and
intangibles, respectively, including amounts reclassified as
discontinued operations. The average useful life of our
buildings, improvements and intangibles was 35.5 years,
10.6 years and 6.6 years, respectively, for the year
ended December 31, 2008.
|
|
|
|
Impairment of Long-Lived Assets
|
|
|
We review our long-lived assets for potential impairment in
accordance with Statement of Financial Accounting Standards
No. 144, Accounting for the Impairment and Disposal of
Long-Lived Assets (SFAS 144). An impairment
charge must be recognized when the carrying value of a
long-lived asset is not recoverable. The carrying value is not
recoverable if it exceeds the sum of the undiscounted cash flows
expected to result from the use and eventual disposition of the
asset. If it is determined that a permanent impairment of a
long-lived asset has occurred, the carrying value of the asset
is reduced to its fair value and an impairment charge is
recognized for the difference between the carrying value and the
fair value.
When assets are identified that meet the criteria for held for
sale classification in accordance with SFAS 144 an analysis
is completed that compares the estimated fair value (estimated
sales value less cost of sales) to the carrying value of the
assets. If it is determined that the carrying value of these
assets is in excess of the estimated fair value, the assets are
reduced to the estimated fair value.
|
|
The net book value of long-lived assets is reviewed quarterly on
a property by property basis to determine if there are
indicators of impairment. These indicators may include
anticipated operating losses at the property level, the
tenants inability to make rent payments, a decision to
dispose of an asset before the end of its estimated useful life
and changes in the market that may permanently reduce the value
of the property. If indicators of impairment exist, then the
undiscounted future cash flows from the most likely use of the
property are compared to the current net book value. This
analysis requires us to determine if indicators of impairment
exist and to estimate the most likely stream of cash flows to be
generated from the property during the period the property is
expected to be held.
At December 31, 2008, it was determined that 14 medical office
buildings met the criteria for the held for sale classification.
In determining the fair value of the assets, we used a
combination of third party appraisals based on market comparable
transactions, other market listings and asset quality as well as
management calculations based on projected net operating income
and published capitalization rates. Managements estimates
projected that the carrying value of the assets was less than
the estimated fair value and an impairment charge of $32,648,000
was recorded to reduce the properties to their estimated fair
value.
|
68
|
|
|
Nature of Critical
|
|
Assumptions/
|
Accounting Estimate
|
|
Approach Used
|
|
|
|
|
Fair Value of Derivative Instruments
The valuation of derivative instruments is accounted for in
accordance with Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Instruments and Hedging
Activities (SFAS 133), as amended by Statement
of Financial Accounting Standards No. 138, Accounting for
Certain Derivative Instruments and Certain Hedging Activities.
SFAS 133, as amended, requires companies to record
derivatives at fair market value on the balance sheet as assets
or liabilities.
|
|
The valuation of derivative instruments requires us to make
estimates and judgments that affect the fair value of the
instruments. Fair values for our derivatives are estimated by
utilizing pricing models that consider forward yield curves and
discount rates. Such amounts and the recognition of such
amounts are subject to significant estimates which may change in
the future.
We were not party to any derivative instruments as of December
31, 2008.
|
|
|
|
Revenue Recognition
|
|
|
Revenue is recorded in accordance with Statement of Financial
Accounting Standards No. 13, Accounting for Leases, and SEC
Staff Accounting Bulletin No. 104, Revenue Recognition
in Financial Statements, as amended (SAB 104).
SAB 104 requires that revenue be recognized after four
basic criteria are met. These four criteria include persuasive
evidence of an arrangement, the rendering of service, fixed and
determinable income and reasonably assured collectability. If
the collectability of revenue is determined incorrectly, the
amount and timing of our reported revenue could be significantly
affected. Interest income on loans is recognized as earned based
upon the principal amount outstanding subject to an evaluation
of collectability risk. Substantially all of our operating
leases contain fixed and/or contingent escalating rent
structures. Leases with fixed annual rental escalators are
generally recognized on a straight-line basis over the initial
lease period, subject to a collectability assessment. Rental
income related to leases with contingent rental escalators is
generally recorded based on the contractual cash rental payments
due for the period.
|
|
We evaluate the collectability of our revenues and related
receivables on an on-going basis. We evaluate collectability
based on assumptions and other considerations including, but not
limited to, the certainty of payment, payment history, the
financial strength of the investments underlying
operations as measured by cash flows and payment coverages, the
value of the underlying collateral and guaranties and current
economic conditions.
If our evaluation indicates that collectability is not
reasonably assured, we may place an investment on non-accrual or
reserve against all or a portion of current income as an offset
to revenue.
For the year ended December 31, 2008, we recognized $40,063,000
of interest income and $522,181,000 of rental income, including
discontinued operations. Cash receipts on leases with deferred
revenue provisions were $28,282,000 as compared to gross
straight-line rental income recognized of $20,489,000 for the
twelve months ended December 31, 2008. At December 31, 2008,
our straight-line receivable balance was $44,963,000, net of
reserves totaling $251,000. Also at December 31, 2008, we had
loans with outstanding balances of $72,770,000 on non-accrual
status.
|
Impact of
Inflation
During the past three years, inflation has not significantly
affected our earnings because of the moderate inflation rate.
Additionally, our earnings are primarily long-term investments
with fixed rates of return. These investments are mainly
financed with a combination of equity, senior unsecured notes
and borrowings under our unsecured lines of credit arrangements.
During inflationary periods, which generally are accompanied by
rising interest rates, our ability to grow may be adversely
affected because the yield on new investments may increase at a
slower rate than new borrowing costs. Presuming the current
inflation rate remains moderate and long-term interest rates do
not increase significantly, we believe that inflation will not
impact the availability of equity and debt financing for us.
|
|
Item 7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
We are exposed to various market risks, including the potential
loss arising from adverse changes in interest rates. We seek to
mitigate the effects of fluctuations in interest rates by
matching the terms of new investments with new long-term fixed
rate borrowings to the extent possible. We may or may not elect
to use financial derivative instruments to hedge interest rate
exposure. These decisions are principally based on our policy to
match our variable rate investments with comparable borrowings,
but are also based on the general trend in interest rates at the
applicable dates and our perception of the future volatility of
interest rates. This section is presented to provide a
discussion of the risks associated with potential fluctuations
in interest rates.
We historically borrow on our unsecured lines of credit
arrangements to acquire, construct or make loans relating to
health care and senior housing properties. Then, as market
conditions dictate, we will issue equity or long-term fixed rate
debt to repay the borrowings under the unsecured lines of credit
arrangements.
69
A change in interest rates will not affect the interest expense
associated with our fixed rate debt. Interest rate changes,
however, will affect the fair value of our fixed rate debt.
Changes in the interest rate environment upon maturity of this
fixed rate debt could have an effect on our future cash flows
and earnings, depending on whether the debt is replaced with
other fixed rate debt, variable rate debt, or equity or repaid
by the sale of assets. To illustrate the impact of changes in
the interest rate markets, we performed a sensitivity analysis
on our fixed rate debt instruments whereby we modeled the change
in net present values arising from a hypothetical 1% increase in
interest rates to determine the instruments change in fair
value. The following table summarizes the analysis performed as
of the dates indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
December 31, 2007
|
|
|
|
Principal
|
|
|
Change in
|
|
|
Principal
|
|
|
Change in
|
|
|
|
Balance
|
|
|
Fair Value
|
|
|
Balance
|
|
|
Fair Value
|
|
|
Senior unsecured notes
|
|
$
|
1,845,000
|
|
|
$
|
(112,438
|
)
|
|
$
|
1,887,330
|
|
|
$
|
(96,726
|
)
|
Secured debt
|
|
|
448,378
|
|
|
|
(17,966
|
)
|
|
|
492,741
|
|
|
|
(24,530
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
2,293,378
|
|
|
$
|
(130,404
|
)
|
|
$
|
2,380,071
|
|
|
$
|
(121,256
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On September 12, 2007, we entered into two forward-starting
interest rate swaps (the September 2007 Swaps) for a
total notional amount of $250,000,000 to hedge 10 years of
interest payments associated with a long-term borrowing that was
expected to occur in 2008. The September 2007 Swaps each had an
effective date of September 12, 2008 and a maturity date of
September 12, 2018. We expected to settle the 2007 Swaps
when the debt was to be priced. The September 2007 Swaps were to
have the economic effect of fixing $250,000,000 of our future
debt at 4.469% plus a credit spread for 10 years. The
September 2007 Swaps had been designated as cash flow hedges and
we expected the 2007 Swaps to be highly effective at offsetting
changes in cash flows of interest payments on $250,000,000 of
our future debt due to changes in the LIBOR swap rate.
Therefore, effective changes in the fair value of the September
2007 Swaps were recorded in AOCI and were to be reclassified to
interest expense when the hedged forecasted transactions
affected earnings (as interest payments are made on the expected
debt issuance). The ineffective portion of the changes in fair
value was to be recorded directly in earnings. At
December 31, 2007, the September 2007 Swaps were reported
at their fair value of $7,990,000 and were included in other
liabilities and AOCI. During the year ended December 31,
2008, as a result of the severe dislocation in the credit
markets, we terminated plans to issue debt and also terminated
the September 2007 Swaps for $23,393,000. Amounts previously
recorded in AOCI were reclassified to realized loss on
derivatives resulting in $23,393,000 of expense as the
forecasted transaction was no longer probable to occur.
Our variable rate debt, including our unsecured line of credit
arrangement, is reflected at fair value. At December 31,
2008, we had $570,000,000 outstanding related to our variable
rate debt and assuming no changes in outstanding balances, a 1%
increase in interest rates would result in increased annual
interest expense of $5,700,000. At December 31, 2007, we
had $321,232,000 outstanding related to our variable rate debt
and assuming no changes in outstanding balances, a 1% increase
in interest rates would have resulted in increased annual
interest expense of $3,212,000.
We are subject to risks associated with debt financing,
including the risk that existing indebtedness may not be
refinanced or that the terms of refinancing may not be as
favorable as the terms of current indebtedness. The majority of
our borrowings were completed under indentures or contractual
agreements that limit the amount of indebtedness we may incur.
Accordingly, in the event that we are unable to raise additional
equity or borrow money because of these limitations, our ability
to acquire additional properties may be limited.
For additional information regarding fair values of financial
instruments, see Item 7 Managements
Discussion and Analysis of Financial Condition and Results of
Operations Critical Accounting Policies and
Note 16 to our audited consolidated financial statements.
70
|
|
Item 8.
|
Financial
Statements and Supplementary Data
|
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of Health Care REIT, Inc.
We have audited the accompanying consolidated balance sheets of
Health Care REIT, Inc. as of December 31, 2008 and 2007,
and the related consolidated statements of income,
stockholders equity, and cash flows for each of the three
years in the period ended December 31, 2008. Our audits
also included the financial statement schedules listed in
Item 15(a) (2) of this
Form 10-K.
These financial statements and schedules are the responsibility
of the Companys management. Our responsibility is to
express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Health Care REIT, Inc. at
December 31, 2008 and 2007, and the consolidated results of
its operations and its cash flows for each of the three years in
the period ended December 31, 2008, in conformity with
U.S. generally accepted accounting principles. Also, in our
opinion, the related financial statement schedules, when
considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the
information set forth therein.
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States),
Health Care REIT, Inc.s internal control over financial
reporting as of December 31, 2008, based on criteria
established in Internal Control-Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 27, 2009 expressed
an unqualified opinion thereon.
Toledo, Ohio
February 27, 2009
71
HEALTH
CARE REIT, INC.
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
ASSETS
|
Real estate investments:
|
|
|
|
|
|
|
|
|
Real property owned
|
|
|
|
|
|
|
|
|
Land and land improvements
|
|
$
|
504,907
|
|
|
$
|
447,029
|
|
Buildings and improvements
|
|
|
4,653,871
|
|
|
|
4,224,955
|
|
Acquired lease intangibles
|
|
|
133,324
|
|
|
|
131,312
|
|
Real property held for sale, net of accumulated depreciation
|
|
|
48,054
|
|
|
|
0
|
|
Construction in progress
|
|
|
639,419
|
|
|
|
313,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,979,575
|
|
|
|
5,117,005
|
|
Less accumulated depreciation and amortization
|
|
|
(600,781
|
)
|
|
|
(478,373
|
)
|
|
|
|
|
|
|
|
|
|
Total real property owned
|
|
|
5,378,794
|
|
|
|
4,638,632
|
|
Real estate loans receivable
|
|
|
482,885
|
|
|
|
381,394
|
|
Less allowance for losses on loans receivable
|
|
|
(7,500
|
)
|
|
|
(7,406
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
475,385
|
|
|
|
373,988
|
|
|
|
|
|
|
|
|
|
|
Net real estate investments
|
|
|
5,854,179
|
|
|
|
5,012,620
|
|
Other assets:
|
|
|
|
|
|
|
|
|
Equity investments
|
|
|
1,030
|
|
|
|
1,408
|
|
Deferred loan expenses
|
|
|
23,579
|
|
|
|
30,499
|
|
Cash and cash equivalents
|
|
|
23,370
|
|
|
|
30,269
|
|
Restricted cash
|
|
|
154,070
|
|
|
|
17,575
|
|
Receivables and other assets
|
|
|
136,890
|
|
|
|
121,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
338,939
|
|
|
|
201,236
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
6,193,118
|
|
|
$
|
5,213,856
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
Liabilities:
|
|
|
|
|
|
|
|
|
Borrowings under unsecured lines of credit arrangements
|
|
$
|
570,000
|
|
|
$
|
307,000
|
|
Senior unsecured notes
|
|
|
1,847,247
|
|
|
|
1,890,192
|
|
Secured debt
|
|
|
446,525
|
|
|
|
507,476
|
|
Accrued expenses and other liabilities
|
|
|
107,157
|
|
|
|
95,145
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,970,929
|
|
|
|
2,799,813
|
|
Minority interests
|
|
|
10,603
|
|
|
|
9,687
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Preferred stock, $1.00 par value:
|
|
|
289,929
|
|
|
|
330,243
|
|
Authorized 50,000,000 shares
|
|
|
|
|
|
|
|
|
Issued and outstanding 11,516,302 shares in
2008 and 12,879,189 shares in 2007 at liquidation preference
|
|
|
|
|
|
|
|
|
Common stock, $1.00 par value:
|
|
|
104,635
|
|
|
|
85,412
|
|
Authorized 225,000,000 shares
|
|
|
|
|
|
|
|
|
Issued 104,835,626 shares in 2008 and
85,600,333 shares in 2007
|
|
|
|
|
|
|
|
|
Outstanding 104,703,702 shares in 2008 and
85,496,164 shares in 2007
|
|
|
|
|
|
|
|
|
Capital in excess of par value
|
|
|
3,180,628
|
|
|
|
2,370,037
|
|
Treasury stock
|
|
|
(5,145
|
)
|
|
|
(3,952
|
)
|
Cumulative net income
|
|
|
1,362,366
|
|
|
|
1,074,255
|
|
Cumulative dividends
|
|
|
(1,723,819
|
)
|
|
|
(1,446,959
|
)
|
Accumulated other comprehensive income
|
|
|
(1,113
|
)
|
|
|
(7,381
|
)
|
Other equity
|
|
|
4,105
|
|
|
|
2,701
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
3,211,586
|
|
|
|
2,404,356
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
6,193,118
|
|
|
$
|
5,213,856
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes
72
HEALTH
CARE REIT, INC.
CONSOLIDATED
STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(In thousands, except per share data)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
500,630
|
|
|
$
|
417,673
|
|
|
$
|
265,489
|
|
Interest income
|
|
|
40,063
|
|
|
|
25,823
|
|
|
|
18,829
|
|
Other income
|
|
|
10,521
|
|
|
|
10,035
|
|
|
|
3,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
551,214
|
|
|
|
453,531
|
|
|
|
288,242
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
130,813
|
|
|
|
131,893
|
|
|
|
88,383
|
|
Property operating expenses
|
|
|
43,990
|
|
|
|
34,707
|
|
|
|
1,039
|
|
Depreciation and amortization
|
|
|
156,154
|
|
|
|
135,224
|
|
|
|
81,828
|
|
General and administrative
|
|
|
47,193
|
|
|
|
37,465
|
|
|
|
25,922
|
|
Realized loss on derivatives
|
|
|
23,393
|
|
|
|
0
|
|
|
|
0
|
|
Loss (gain) on extinguishment of debt
|
|
|
(2,094
|
)
|
|
|
(1,081
|
)
|
|
|
0
|
|
Provision for loan losses
|
|
|
94
|
|
|
|
0
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
399,543
|
|
|
|
338,208
|
|
|
|
198,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes and
minority interests
|
|
|
151,671
|
|
|
|
115,323
|
|
|
|
90,070
|
|
Income tax (expense) benefit
|
|
|
(1,306
|
)
|
|
|
(188
|
)
|
|
|
(82
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before minority interests
|
|
|
150,365
|
|
|
|
115,135
|
|
|
|
89,988
|
|
Minority interests
|
|
|
(126
|
)
|
|
|
(238
|
)
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
150,239
|
|
|
|
114,897
|
|
|
|
89,975
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on sales of properties
|
|
|
163,933
|
|
|
|
14,437
|
|
|
|
1,267
|
|
Impairment of assets
|
|
|
(32,648
|
)
|
|
|
0
|
|
|
|
0
|
|
Income from discontinued operations, net
|
|
|
6,587
|
|
|
|
12,068
|
|
|
|
11,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
137,872
|
|
|
|
26,505
|
|
|
|
12,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
288,111
|
|
|
|
141,402
|
|
|
|
102,750
|
|
Preferred stock dividends
|
|
|
23,201
|
|
|
|
25,130
|
|
|
|
21,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
|
264,910
|
|
|
$
|
116,272
|
|
|
$
|
81,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
93,732
|
|
|
|
78,861
|
|
|
|
61,661
|
|
Diluted
|
|
|
94,309
|
|
|
|
79,409
|
|
|
|
62,045
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations available to common
stockholders
|
|
|
1.36
|
|
|
$
|
1.14
|
|
|
$
|
1.11
|
|
Discontinued operations, net
|
|
|
1.47
|
|
|
|
0.34
|
|
|
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders*
|
|
|
2.83
|
|
|
$
|
1.47
|
|
|
$
|
1.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations available to common
stockholders
|
|
|
1.35
|
|
|
$
|
1.13
|
|
|
$
|
1.10
|
|
Discontinued operations, net
|
|
|
1.46
|
|
|
|
0.33
|
|
|
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders*
|
|
|
2.81
|
|
|
$
|
1.46
|
|
|
$
|
1.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Amounts may not sum due to rounding |
See accompanying notes
73
HEALTH
CARE REIT, INC.
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital in
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Preferred
|
|
|
Common
|
|
|
Excess of
|
|
|
Treasury
|
|
|
Cumulative
|
|
|
Cumulative
|
|
|
Comprehensive
|
|
|
Other
|
|
|
|
|
|
|
Stock
|
|
|
Stock
|
|
|
Par Value
|
|
|
Stock
|
|
|
Net Income
|
|
|
Dividends
|
|
|
Income
|
|
|
Equity
|
|
|
Total
|
|
|
|
(In thousands, except per share data)
|
|
|
Balances at December 31, 2005
|
|
$
|
276,875
|
|
|
$
|
58,050
|
|
|
$
|
1,306,471
|
|
|
$
|
(2,054
|
)
|
|
$
|
830,103
|
|
|
$
|
(1,039,032
|
)
|
|
$
|
0
|
|
|
$
|
343
|
|
|
$
|
1,430,756
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,750
|
|
Adjustment to adopt SFAS 158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(135
|
)
|
|
|
|
|
|
|
(135
|
)
|
Amounts related to issuance of common stock from dividend
reinvestment and stock incentive plans, net of forfeitures
|
|
|
|
|
|
|
2,200
|
|
|
|
75,081
|
|
|
|
(812
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(85
|
)
|
|
|
76,384
|
|
Option compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,066
|
|
|
|
1,066
|
|
Shares issued in Windrose Medical Properties Trust merger
|
|
|
62,118
|
|
|
|
9,679
|
|
|
|
386,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
458,052
|
|
Proceeds from issuance of common stock
|
|
|
|
|
|
|
3,223
|
|
|
|
106,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
109,748
|
|
SFAS 123(R) reclassification
|
|
|
|
|
|
|
|
|
|
|
(521
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
521
|
|
|
|
0
|
|
Cash dividends:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock-$2.8809 per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(178,365
|
)
|
|
|
|
|
|
|
|
|
|
|
(178,365
|
)
|
Preferred stock,
Series D-$1.96875
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,875
|
)
|
|
|
|
|
|
|
|
|
|
|
(7,875
|
)
|
Preferred stock,
Series E-$1.50
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(112
|
)
|
|
|
|
|
|
|
|
|
|
|
(112
|
)
|
Preferred stock,
Series F-$1.90625
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,344
|
)
|
|
|
|
|
|
|
|
|
|
|
(13,344
|
)
|
Preferred stock,
Series G-$0.0625
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(132
|
)
|
|
|
|
|
|
|
|
|
|
|
(132
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2006
|
|
|
338,993
|
|
|
|
73,152
|
|
|
|
1,873,811
|
|
|
|
(2,866
|
)
|
|
|
932,853
|
|
|
|
(1,238,860
|
)
|
|
|
(135
|
)
|
|
|
1,845
|
|
|
|
1,978,793
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
141,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
141,402
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on equity investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(192
|
)
|
|
|
|
|
|
|
(192
|
)
|
Unrealized actuarial gain/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
140
|
|
|
|
|
|
|
|
140
|
|
Cash flow hedge activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,194
|
)
|
|
|
|
|
|
|
(7,194
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
134,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts related to issuance of common stock from dividend
reinvestment and stock incentive plans, net of forfeitures
|
|
|
|
|
|
|
2,223
|
|
|
|
85,080
|
|
|
|
(1,086
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(250
|
)
|
|
|
85,967
|
|
Conversion of preferred stock
|
|
|
(8,750
|
)
|
|
|
212
|
|
|
|
8,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Option compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,106
|
|
|
|
1,106
|
|
Net proceeds from sale of common stock
|
|
|
|
|
|
|
9,825
|
|
|
|
402,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
412,433
|
|
Cash dividends:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock-$2.2791 per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(182,969
|
)
|
|
|
|
|
|
|
|
|
|
|
(182,969
|
)
|
Preferred stock,
Series D-$1.96875
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,875
|
)
|
|
|
|
|
|
|
|
|
|
|
(7,875
|
)
|
Preferred stock,
Series E-$1.50
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(112
|
)
|
|
|
|
|
|
|
|
|
|
|
(112
|
)
|
Preferred stock,
Series F-$1.90625
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,344
|
)
|
|
|
|
|
|
|
|
|
|
|
(13,344
|
)
|
Preferred stock,
Series G-$1.875
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,799
|
)
|
|
|
|
|
|
|
|
|
|
|
(3,799
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2007
|
|
|
330,243
|
|
|
|
85,412
|
|
|
|
2,370,037
|
|
|
|
(3,952
|
)
|
|
|
1,074,255
|
|
|
|
(1,446,959
|
)
|
|
|
(7,381
|
)
|
|
|
2,701
|
|
|
|
2,404,356
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
288,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
288,111
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on equity investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(846
|
)
|
|
|
|
|
|
|
(846
|
)
|
Unrecognized actuarial gain/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(715
|
)
|
|
|
|
|
|
|
(715
|
)
|
Cash flow hedge activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,829
|
|
|
|
|
|
|
|
7,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
294,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts related to issuance of common stock from dividend
reinvestment and stock incentive plans, net of forfeitures
|
|
|
|
|
|
|
1,804
|
|
|
|
76,013
|
|
|
|
(1,193
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(99
|
)
|
|
|
76,525
|
|
Conversion of preferred stock
|
|
|
(40,314
|
)
|
|
|
975
|
|
|
|
39,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Option compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,503
|
|
|
|
1,503
|
|
Net proceeds from sale of common stock
|
|
|
|
|
|
|
16,444
|
|
|
|
695,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
711,683
|
|
Cash dividends:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock-$2.70 per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(253,659
|
)
|
|
|
|
|
|
|
|
|
|
|
(253,659
|
)
|
Preferred stock,
Series D-$1.96875
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,875
|
)
|
|
|
|
|
|
|
|
|
|
|
(7,875
|
)
|
Preferred stock,
Series E-$1.50
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(112
|
)
|
|
|
|
|
|
|
|
|
|
|
(112
|
)
|
Preferred stock,
Series F-$1.90625
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,344
|
)
|
|
|
|
|
|
|
|
|
|
|
(13,344
|
)
|
Preferred stock,
Series G-$1.875
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,870
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,870
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2008
|
|
$
|
289,929
|
|
|
$
|
104,635
|
|
|
$
|
3,180,628
|
|
|
$
|
(5,145
|
)
|
|
$
|
1,362,366
|
|
|
$
|
(1,723,819
|
)
|
|
$
|
(1,113
|
)
|
|
$
|
4,105
|
|
|
$
|
3,211,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes
74
HEALTH
CARE REIT, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(In thousands)
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
288,111
|
|
|
$
|
141,402
|
|
|
$
|
102,750
|
|
Adjustments to reconcile net income to net cash provided from
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
163,045
|
|
|
|
149,626
|
|
|
|
97,564
|
|
Other amortization expenses
|
|
|
10,025
|
|
|
|
6,018
|
|
|
|
3,090
|
|
Stock-based compensation expense
|
|
|
8,530
|
|
|
|
7,050
|
|
|
|
6,980
|
|
Capitalized interest
|
|
|
(25,029
|
)
|
|
|
(12,526
|
)
|
|
|
(4,470
|
)
|
Provision for loan losses
|
|
|
94
|
|
|
|
0
|
|
|
|
1,000
|
|
Minority interests share of earnings
|
|
|
126
|
|
|
|
238
|
|
|
|
13
|
|
Impairment of assets
|
|
|
32,648
|
|
|
|
0
|
|
|
|
0
|
|
Loss (gain) on extinguishment of debt, net
|
|
|
(2,094
|
)
|
|
|
(1,081
|
)
|
|
|
0
|
|
Gain on investment
|
|
|
0
|
|
|
|
(3,900
|
)
|
|
|
0
|
|
Amortization of above/below market leases, net
|
|
|
(1,039
|
)
|
|
|
(792
|
)
|
|
|
(60
|
)
|
Rental income less than (in excess of) cash received
|
|
|
7,793
|
|
|
|
440
|
|
|
|
11,129
|
|
Loss (gain) on sales of properties
|
|
|
(163,933
|
)
|
|
|
(14,437
|
)
|
|
|
(1,267
|
)
|
Deferred gain on sales of properties
|
|
|
3,708
|
|
|
|
0
|
|
|
|
0
|
|
Increase (decrease) in accrued expenses and other liabilities
|
|
|
17,363
|
|
|
|
(3,253
|
)
|
|
|
5,810
|
|
Decrease (increase) in receivables and other assets
|
|
|
(3,694
|
)
|
|
|
2,676
|
|
|
|
(6,220
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided from (used in) operating activities
|
|
|
335,654
|
|
|
|
271,461
|
|
|
|
216,319
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in real property
|
|
|
(1,072,376
|
)
|
|
|
(631,209
|
)
|
|
|
(429,183
|
)
|
Investment in loans receivable
|
|
|
(83,109
|
)
|
|
|
(235,894
|
)
|
|
|
(86,990
|
)
|
Other investments, net of payments
|
|
|
(12,458
|
)
|
|
|
(22,998
|
)
|
|
|
(11,761
|
)
|
Principal collected on loans receivable
|
|
|
18,169
|
|
|
|
52,346
|
|
|
|
82,255
|
|
Investment in Windrose, net of cash assumed
|
|
|
0
|
|
|
|
0
|
|
|
|
(182,571
|
)
|
Investment in Rendina/Paramount, net of cash assumed
|
|
|
0
|
|
|
|
(141,963
|
)
|
|
|
0
|
|
Decrease (increase) in restricted cash
|
|
|
(138,502
|
)
|
|
|
(7,578
|
)
|
|
|
127
|
|
Proceeds from sales of properties
|
|
|
287,047
|
|
|
|
98,314
|
|
|
|
69,887
|
|
Other
|
|
|
(9,267
|
)
|
|
|
(3,932
|
)
|
|
|
(2,452
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided from (used in) investing activities
|
|
|
(1,010,496
|
)
|
|
|
(892,914
|
)
|
|
|
(560,688
|
)
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) under unsecured lines of credit
arrangements
|
|
|
263,000
|
|
|
|
82,000
|
|
|
|
30,000
|
|
Proceeds from derivative transactions
|
|
|
0
|
|
|
|
2,858
|
|
|
|
0
|
|
Proceeds from issuance of senior unsecured notes
|
|
|
0
|
|
|
|
388,943
|
|
|
|
337,517
|
|
Payments to extinguish senior unsecured notes
|
|
|
(42,330
|
)
|
|
|
(52,500
|
)
|
|
|
0
|
|
Payments to extinguish liability to subsidiary trust issuing
preferred securities
|
|
|
0
|
|
|
|
(50,000
|
)
|
|
|
0
|
|
Principal payments on secured debt
|
|
|
(58,594
|
)
|
|
|
(37,758
|
)
|
|
|
(3,033
|
)
|
Net proceeds from the issuance of common stock
|
|
|
782,285
|
|
|
|
491,593
|
|
|
|
182,069
|
|
Contributions by minority interests
|
|
|
3,556
|
|
|
|
2,865
|
|
|
|
0
|
|
Distributions to minority interests
|
|
|
(2,766
|
)
|
|
|
(419
|
)
|
|
|
0
|
|
Decrease (increase) in deferred loan expense
|
|
|
(348
|
)
|
|
|
(3,977
|
)
|
|
|
(2,377
|
)
|
Cash distributions to stockholders
|
|
|
(276,860
|
)
|
|
|
(208,099
|
)
|
|
|
(199,828
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided from (used in) financing activities
|
|
|
667,943
|
|
|
|
615,506
|
|
|
|
344,348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
(6,899
|
)
|
|
|
(5,947
|
)
|
|
|
(21
|
)
|
Cash and cash equivalents at beginning of year
|
|
|
30,269
|
|
|
|
36,216
|
|
|
|
36,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
23,370
|
|
|
$
|
30,269
|
|
|
$
|
36,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes
75
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
|
|
1.
|
Accounting
Policies and Related Matters
|
Industry
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is an
equity real estate investment trust (REIT) that
invests in senior housing and health care real estate. Our full
service platform also offers property management and development
services to our customers. As of December 31, 2008, our
broadly diversified portfolio consisted of 633 properties in
39 states. Founded in 1970, we were the first real estate
investment trust to invest exclusively in health care
facilities. More information is available on the Internet at
www.hcreit.com.
Principles
of Consolidation
The consolidated financial statements include our accounts, the
accounts of our wholly-owned subsidiaries and the accounts of
our majority owned and controlled joint ventures. All material
intercompany accounts and transactions have been eliminated.
Use of
Estimates
The preparation of the financial statements in conformity with
U.S. generally accepted accounting principles requires us
to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Revenue
Recognition
Revenue is recorded in accordance with Statement of Financial
Accounting Standards No. 13, Accounting for Leases, and SEC
Staff Accounting Bulletin No. 104, Revenue Recognition
in Financial Statements, as amended (SAB 104).
SAB 104 requires that revenue be recognized after four
basic criteria are met. These four criteria include persuasive
evidence of an arrangement, the rendering of service, fixed and
determinable income and reasonably assured collectability.
Interest income on loans is recognized as earned based upon the
principal amount outstanding subject to an evaluation of
collectability risk. Substantially all of our operating leases
contain either fixed or contingent escalating rent structures.
Leases with fixed annual rental escalators are generally
recognized on a straight-line basis over the initial lease
period, subject to a collectability assessment. Rental income
related to leases with contingent rental escalators is generally
recorded based on the contractual cash rental payments due for
the period.
Cash
and Cash Equivalents
Cash and cash equivalents consist of all highly liquid
investments with an original maturity of three months or less.
Restricted
Cash
Restricted cash primarily consists of amounts held in escrow for
use in an Internal Revenue Code Section 1031 exchange.
Restricted cash also includes amounts held by lenders to provide
future payments for real estate taxes, insurance, tenant and
capital improvements and amounts held in escrow relating to
acquisitions we are entitled to receive over a period of time as
outlined in the escrow agreement.
Deferred
Loan Expenses
Deferred loan expenses are costs incurred by us in connection
with the issuance, assumption and amendments of debt
arrangements. We amortize these costs over the term of the debt
using the straight-line method, which approximates the effective
interest method.
76
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Equity
Investments
Equity investments at December 31, 2008 and 2007 include an
investment in a public company that has a readily determinable
fair market value. We classify this equity investment as
available-for-sale and, accordingly, record this investment at
its fair market value with unrealized gains and losses included
in accumulated other comprehensive income, a separate component
of stockholders equity. Additionally, equity investments
at December 31, 2008 include an investment in a private
company. We do not have the ability to exercise influence over
the company, so the investment was accounted for under the cost
method. Under the cost method of accounting, investments in
private companies are carried at cost and are adjusted only for
other-than-temporary declines in fair value, return of capital
and additional investments. These equity investments represented
a minimal ownership interest in these companies.
Real
Property Owned
Real property developed by us is recorded at cost, including the
capitalization of construction period interest. The cost of real
property acquired is allocated to net tangible and identifiable
intangible assets based on their respective fair values in
accordance with Statement of Financial Accounting Standards
No. 141, Business Combinations. Substantially all of the
properties owned by us are leased under operating leases and are
recorded at cost. These properties are depreciated on a
straight-line basis over their estimated useful lives which
range from 15 to 40 years for buildings and five to
15 years for improvements.
The remaining purchase price is allocated among identifiable
intangible assets primarily consisting of the above or below
market component of in-place leases and the value of in-place
leases. The value allocable to the above or below market
component of the acquired in-place lease is determined based
upon the present value (using a discount rate which reflects the
risks associated with the acquired leases) of the difference
between (i) the contractual amounts to be paid pursuant to
the lease over its remaining term, and
(ii) managements estimate of the amounts that would
be paid using fair market rates over the remaining term of the
lease. The amounts allocated to above market leases are included
in acquired lease intangibles and below market leases are
included in other liabilities in the balance sheet and are
amortized to rental income over the remaining terms of the
respective leases.
The total amount of other intangible assets acquired is further
allocated to in-place lease values and customer relationship
values based on managements evaluation of the specific
characteristics of each tenants lease and the
Companys overall relationship with that respective tenant.
Characteristics considered by management in allocating these
values include the nature and extent of the Companys
existing business relationships with the tenant, growth
prospects for developing new business with the tenant, the
tenants credit quality and expectations of lease renewals,
among other factors. The estimated aggregate amortization
expense for acquired lease intangibles is expected to be
recognized over a weighted average period of 28.9 years and
is as follows for the periods indicated (in thousands):
|
|
|
|
|
2009
|
|
$
|
11,791
|
|
2010
|
|
|
10,079
|
|
2011
|
|
|
8,031
|
|
2012
|
|
|
6,305
|
|
2013
|
|
|
5,337
|
|
Thereafter
|
|
|
60,329
|
|
|
|
|
|
|
Totals
|
|
$
|
101,872
|
|
|
|
|
|
|
The net book value of long-lived assets is reviewed quarterly on
a property by property basis to determine if facts and
circumstances suggest that the assets may be impaired or that
the depreciable life may need to be changed. We consider
external factors relating to each asset. If these external
factors and the projected undiscounted cash flows of the asset
over the remaining depreciation period indicate that the asset
will not be recoverable, the carrying value is reduced to the
estimated fair market value.
77
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Capitalization
of Construction Period Interest
We capitalize interest costs associated with funds used to
finance the construction of properties owned directly by us. The
amount capitalized is based upon the balance outstanding during
the construction period using the rate of interest which
approximates our cost of financing. We capitalized interest
costs of $25,029,000, $12,526,000, and $4,470,000 during 2008,
2007 and 2006, respectively, related to construction of real
property owned by us. Our interest expense reflected in the
consolidated statements of income has been reduced by the
amounts capitalized.
Gain
on Sale of Assets
We recognize sales of assets only upon the closing of the
transaction with the purchaser. Payments received from
purchasers prior to closing are recorded as deposits and
classified as other assets on our Consolidated Balance Sheets.
Gains on assets sold are recognized using the full accrual
method upon closing when the collectability of the sales price
is reasonably assured, we are not obligated to perform
significant activities after the sale to earn the profit, we
have received adequate initial investment from the buyer and
other profit recognition criteria have been satisfied. Gains may
be deferred in whole or in part until the sales satisfy the
requirements of gain recognition on sales of real estate under
Statement of Financial Accounting Standards No. 66,
Accounting for Sales of Real Estate.
Real
Estate Loans Receivable
Real estate loans receivable consist of mortgage loans and other
real estate loans. Interest income on loans is recognized as
earned based upon the principal amount outstanding subject to an
evaluation of collectability risks. The loans are primarily
collateralized by a first, second or third mortgage lien, a
leasehold mortgage on, or an assignment of the partnership
interest in, the related properties, corporate guaranties
and/or
personal guaranties.
Allowance
for Losses on Loans Receivable
The allowance for losses on loans receivable is maintained at a
level believed adequate to absorb potential losses in our loans
receivable. The determination of the allowance is based on a
quarterly evaluation of these loans, including general economic
conditions and estimated collectability of loan payments. We
evaluate the collectability of our loans receivable based on a
combination of factors, including, but not limited to,
delinquency status, historical loan charge-offs, financial
strength of the borrower and guarantors and value of the
underlying collateral. If such factors indicate that there is
greater risk of loan charge-offs, additional allowances or
placement on non-accrual status may be required. A loan is
impaired when, based on current information and events, it is
probable that we will be unable to collect all amounts due as
scheduled according to the contractual terms of the original
loan agreement. Consistent with this definition, all loans on
non-accrual are deemed impaired. At December 31, 2008, we
had loans with outstanding balances of $72,770,000 on
non-accrual status ($799,000 at December 31, 2007). To the
extent circumstances improve and the risk of collectability is
diminished, we will return these loans to full accrual status.
While a loan is on non-accrual status, any cash receipts are
applied against the outstanding principal balance.
Fair
Value of Derivative Instruments
The valuation of derivative instruments requires us to make
estimates and judgments that affect the fair value of the
instruments. Fair values for our derivatives are estimated by
utilizing pricing models that consider forward yield curves and
discount rates. Such amounts and the recognition of such amounts
are subject to significant estimates that may change in the
future. See Note 10 for additional information.
Federal
Income Tax
No provision has been made for federal income taxes since we
have elected to be treated as a real estate investment trust
under the applicable provisions of the Internal Revenue Code,
and we believe that we have met the
78
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
requirements for qualification as such for each taxable year.
Our taxable REIT subsidiaries are subject to federal, state and
local income taxes. See Note 14 for additional information.
Earnings
Per Share
Basic earnings per share is computed by dividing net income
available to common stockholders by the weighted-average number
of shares outstanding for the period adjusted for non-vested
shares of restricted stock. The computation of diluted earnings
per share is similar to basic earnings per share, except that
the number of shares is increased to include the number of
additional common shares that would have been outstanding if the
potentially dilutive common shares had been issued.
Segment
Reporting
We report consolidated financial statements in accordance with
Financial Accounting Standards Board Statement No. 131,
Disclosure about Segments of an Enterprise and Related
Information. Segments are based on our method of internal
reporting which classifies operations by leasing activities. Our
segments include investment properties and medical office
buildings. See Note 19 for additional information.
New
Accounting Standards
In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 141(R), Business Combinations
(SFAS 141(R)) and Statement of Financial
Accounting Standards No. 160, Non-controlling Interests in
Consolidated Financial Statements, an amendment of ARB
No. 51 (SFAS 160). SFAS 141(R) will
change how business acquisitions are accounted for and will
impact financial statements both on the acquisition date and in
subsequent periods. SFAS 160 will change the accounting and
reporting for minority interests, which will be re-characterized
as non-controlling interests and classified as a component of
equity. Early adoption is prohibited for both standards. The
provisions of SFAS 141(R) and SFAS 160, effective on
January 1, 2009, are to be applied prospectively; however,
the disclosure provisions of SFAS 160 are to be applied
retrospectively. In accordance with SFAS 141(R), we have
elected to expense all development costs for projects in
progress when it was determined they would not be completed
prior to the adoption of SFAS 141(R). The amount expensed
during the three months ended December 31, 2008 was de
minimis.
In March 2008, the FASB issued Statement of Financial Accounting
Standards No. 161, Disclosures About Derivative Instruments
and Hedging Activities an amendment of FASB
Statement No. 133 (SFAS 161).
SFAS 161 expands quarterly disclosure requirements in
SFAS 133 concerning an entitys derivative instruments
and hedging activities. SFAS 161 is effective for fiscal
years beginning after November 15, 2008. Adoption of
SFAS 161 is not expected to have a material impact on our
consolidated financial position, although additional disclosures
may be required.
In May 2008, the FASB issued FASB Staff Position
14-1
(FSP), which provides guidance on accounting for
debt that may be settled in cash upon conversion. The FSP
requires bifurcation of the convertible debt instrument into a
debt component and an equity component. The value of the debt
component is based upon the estimated fair value of a similar
debt instrument without the conversion feature. The difference
between the contractual principal on the debt and the value
allocated to the debt is recorded as an equity component and
represents the conversion feature of the instrument. The excess
of the contractual principal amount of the debt over its
estimated fair value is amortized to interest expense using the
effective interest method over the life of the debt. The equity
component remains on the balance sheet until it is derecognized
through either the payoff or conversion. The FSP is effective
for fiscal years beginning after December 16, 2008, and
interim periods within those fiscal years. Earlier application
is not permitted. Retroactive application is required for all
periods presented in the annual financial statements for
79
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
instruments that were outstanding during any periods presented
in the annual financial statements. The following is a summary
of expected restatement impact for the periods presented (in
thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Additional interest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
November 2006 issuance
|
|
$
|
1,280
|
|
|
$
|
1,280
|
|
|
$
|
107
|
|
July 2007 issuance
|
|
$
|
3,532
|
|
|
$
|
1,766
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,812
|
|
|
$
|
3,046
|
|
|
$
|
107
|
|
Fully diluted weighted-average shares
|
|
|
94,309
|
|
|
|
79,409
|
|
|
|
62,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount per share
|
|
|
0.05
|
|
|
$
|
0.04
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of fully diluted per share impacts:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported
|
|
|
2.81
|
|
|
$
|
1.46
|
|
|
$
|
1.31
|
|
Convertible debt adjustment
|
|
|
(0.05
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restated
|
|
|
2.76
|
|
|
$
|
1.42
|
|
|
$
|
1.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassifications
Certain amounts in prior years have been reclassified to conform
to the current year presentation.
Windrose
Medical Properties Trust Merger
We completed our merger with Windrose Medical Properties Trust
on December 20, 2006. These operations are the principal
component of our medical office building segment (see
Note 19). During the year ended December 31, 2007, we
finalized the purchase price allocation for the Windrose merger,
as required by Statement of Financial Accounting Standards
No. 141, Business Combinations. The purchase price
allocation reflects reallocations between identifiable tangible
and intangible assets. However, these adjustments did not have a
significant impact on our consolidated results of operations.
80
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table presents the purchase price calculation and
the allocation to assets acquired and liabilities assumed, based
upon their estimated fair values (in thousands):
|
|
|
|
|
Common stock
|
|
$
|
396,846
|
|
Preferred stock
|
|
|
62,118
|
|
Cash consideration
|
|
|
183,139
|
|
Assumed debt
|
|
|
301,641
|
|
Assumed liabilities and minority interests
|
|
|
26,034
|
|
Acquisition costs
|
|
|
29,139
|
|
|
|
|
|
|
Purchase price
|
|
|
998,917
|
|
Merger-related expenses
|
|
|
5,213
|
|
Capitalized equity issuance costs
|
|
|
912
|
|
|
|
|
|
|
Net purchase price
|
|
$
|
992,792
|
|
|
|
|
|
|
Land and land improvements
|
|
$
|
126,079
|
|
Buildings and improvements
|
|
|
774,634
|
|
Acquired lease intangibles
|
|
|
42,595
|
|
Above market lease intangibles
|
|
|
32,352
|
|
Cash and cash equivalents
|
|
|
15,587
|
|
Receivables and other assets
|
|
|
22,526
|
|
|
|
|
|
|
Total assets acquired
|
|
|
1,013,773
|
|
Below market lease intangibles
|
|
|
20,981
|
|
|
|
|
|
|
Net purchase price
|
|
|
992,792
|
|
Secured debt
|
|
|
249,424
|
|
Liability to subsidiary trust issuing preferred securities
|
|
|
52,217
|
|
Accrued expenses and other liabilities
|
|
|
19,044
|
|
|
|
|
|
|
Total liabilities assumed
|
|
|
320,685
|
|
Minority interests
|
|
|
6,989
|
|
|
|
|
|
|
Net assets acquired
|
|
$
|
665,118
|
|
|
|
|
|
|
The following pro forma consolidated results of operations have
been prepared as if the acquisition of Windrose had occurred as
of January 1, 2005 (in thousands, except per share):
|
|
|
|
|
|
|
Year Ended December 31, 2006
|
|
|
|
(Unaudited)
|
|
|
Revenues
|
|
$
|
416,311
|
|
Income from continuing operations available to common
stockholders
|
|
|
62,481
|
|
Income from continuing operations available to common
stockholders per share basic
|
|
|
0.88
|
|
Income from continuing operations available to common
stockholders per share diluted
|
|
|
0.87
|
|
81
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following is a summary of our real property investment
activity for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31, 2008
|
|
|
December 31, 2007
|
|
|
December 31, 2006
|
|
|
|
|
|
|
Medical
|
|
|
|
|
|
|
|
|
Medical
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
|
|
|
Office
|
|
|
|
|
|
Investment
|
|
|
Office
|
|
|
|
|
|
Investment
|
|
|
|
|
|
|
Properties
|
|
|
Buildings
|
|
|
Totals
|
|
|
Properties
|
|
|
Buildings
|
|
|
Totals(2)
|
|
|
Properties
|
|
|
Totals(1)
|
|
|
Real property acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent living/CCRCs
|
|
$
|
68,300
|
|
|
|
|
|
|
$
|
68,300
|
|
|
$
|
43,000
|
|
|
|
|
|
|
$
|
43,000
|
|
|
$
|
56,417
|
|
|
$
|
56,417
|
|
Assisted living facilities
|
|
|
45,490
|
|
|
|
|
|
|
|
45,490
|
|
|
|
36,233
|
|
|
|
|
|
|
|
36,233
|
|
|
|
77,600
|
|
|
|
77,600
|
|
Skilled nursing facilities
|
|
|
11,360
|
|
|
|
|
|
|
|
11,360
|
|
|
|
122,875
|
|
|
|
|
|
|
|
122,875
|
|
|
|
148,955
|
|
|
|
148,955
|
|
Specialty care facilities
|
|
|
196,303
|
|
|
|
|
|
|
|
196,303
|
|
|
|
11,923
|
|
|
|
|
|
|
|
11,923
|
|
|
|
|
|
|
|
0
|
|
Medical office buildings
|
|
|
|
|
|
$
|
121,809
|
|
|
|
121,809
|
|
|
|
|
|
|
$
|
381,134
|
|
|
|
381,134
|
|
|
|
|
|
|
|
0
|
|
Land parcels
|
|
|
10,000
|
|
|
|
|
|
|
|
10,000
|
|
|
|
8,928
|
|
|
|
|
|
|
|
8,928
|
|
|
|
10,250
|
|
|
|
10,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisitions
|
|
|
331,453
|
|
|
|
121,809
|
|
|
|
453,262
|
|
|
|
222,959
|
|
|
|
381,134
|
|
|
|
604,093
|
|
|
|
293,222
|
|
|
|
293,222
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumed debt
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
(166,188
|
)
|
|
|
(166,188
|
)
|
|
|
(25,049
|
)
|
|
|
(25,049
|
)
|
Assumed other assets/(liabilities)
|
|
|
|
|
|
|
(1,899
|
)
|
|
|
(1,899
|
)
|
|
|
|
|
|
|
(2,432
|
)
|
|
|
(2,432
|
)
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash disbursed for acquisitions
|
|
|
331,453
|
|
|
|
119,910
|
|
|
|
451,363
|
|
|
|
222,959
|
|
|
|
212,514
|
|
|
|
435,473
|
|
|
|
268,173
|
|
|
|
268,173
|
|
Construction in progress additions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent living/CCRCs
|
|
|
272,136
|
|
|
|
|
|
|
|
272,136
|
|
|
|
154,648
|
|
|
|
|
|
|
|
154,648
|
|
|
|
58,335
|
|
|
|
58,335
|
|
Assisted living facilities
|
|
|
147,486
|
|
|
|
|
|
|
|
147,486
|
|
|
|
55,929
|
|
|
|
|
|
|
|
55,929
|
|
|
|
69,218
|
|
|
|
69,218
|
|
Skilled nursing facilities
|
|
|
29,429
|
|
|
|
|
|
|
|
29,429
|
|
|
|
21,924
|
|
|
|
|
|
|
|
21,924
|
|
|
|
20,270
|
|
|
|
20,270
|
|
Specialty care facilities
|
|
|
77,642
|
|
|
|
|
|
|
|
77,642
|
|
|
|
60,326
|
|
|
|
|
|
|
|
60,326
|
|
|
|
6,464
|
|
|
|
6,464
|
|
Medical office buildings
|
|
|
|
|
|
|
93,907
|
|
|
|
93,907
|
|
|
|
|
|
|
|
14,688
|
|
|
|
14,688
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total CIP additions
|
|
|
526,693
|
|
|
|
93,907
|
|
|
|
620,600
|
|
|
|
292,827
|
|
|
|
14,688
|
|
|
|
307,515
|
|
|
|
154,287
|
|
|
|
154,287
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized interest
|
|
|
(22,716
|
)
|
|
|
(2,313
|
)
|
|
|
(25,029
|
)
|
|
|
(12,134
|
)
|
|
|
(279
|
)
|
|
|
(12,413
|
)
|
|
|
(4,444
|
)
|
|
|
(4,444
|
)
|
Capitalized other
|
|
|
(119
|
)
|
|
|
|
|
|
|
(119
|
)
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash disbursed for CIP
|
|
|
503,858
|
|
|
|
91,594
|
|
|
|
595,452
|
|
|
|
280,693
|
|
|
|
14,409
|
|
|
|
295,102
|
|
|
|
149,843
|
|
|
|
149,843
|
|
Capital improvements
|
|
|
17,468
|
|
|
|
8,093
|
|
|
|
25,561
|
|
|
|
34,680
|
|
|
|
5,296
|
|
|
|
39,976
|
|
|
|
11,167
|
|
|
|
11,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash invested in real property
|
|
$
|
852,779
|
|
|
$
|
219,597
|
|
|
$
|
1,072,376
|
|
|
$
|
538,332
|
|
|
$
|
232,219
|
|
|
$
|
770,551
|
|
|
$
|
429,183
|
|
|
$
|
429,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
2006 excludes the Windrose merger.
|
|
(2)
|
|
2007 includes the Rendina/Paramount
acquisition.
|
The following is a summary of the development projects that were
placed into service and began earning rent during the periods
presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31, 2008
|
|
|
December 31, 2007
|
|
|
December 31, 2006
|
|
|
|
|
|
|
Medical
|
|
|
|
|
|
|
|
|
Medical
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
|
|
|
Office
|
|
|
|
|
|
Investment
|
|
|
Office
|
|
|
|
|
|
Investment
|
|
|
|
|
|
|
Properties
|
|
|
Buildings
|
|
|
Totals
|
|
|
Properties
|
|
|
Buildings
|
|
|
Totals
|
|
|
Properties
|
|
|
Totals
|
|
|
Construction in progress conversions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development projects:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent living/CCRCs
|
|
$
|
144,088
|
|
|
|
|
|
|
$
|
144,088
|
|
|
$
|
22,601
|
|
|
|
|
|
|
$
|
22,601
|
|
|
|
|
|
|
$
|
0
|
|
Assisted living facilities
|
|
|
45,956
|
|
|
|
|
|
|
|
45,956
|
|
|
|
56,599
|
|
|
|
|
|
|
|
56,599
|
|
|
$
|
15,813
|
|
|
|
15,813
|
|
Skilled nursing facilities
|
|
|
16,918
|
|
|
|
|
|
|
|
16,918
|
|
|
|
16,568
|
|
|
|
|
|
|
|
16,568
|
|
|
|
6,330
|
|
|
|
6,330
|
|
Medical office buildings
|
|
|
|
|
|
$
|
11,823
|
|
|
|
11,823
|
|
|
|
|
|
|
$
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
Specialty care facilities
|
|
|
35,151
|
|
|
|
|
|
|
|
35,151
|
|
|
|
33,771
|
|
|
|
|
|
|
|
33,771
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total development projects
|
|
|
242,113
|
|
|
|
11,823
|
|
|
|
253,936
|
|
|
|
129,539
|
|
|
|
0
|
|
|
|
129,539
|
|
|
|
22,143
|
|
|
|
22,143
|
|
Expansion projects
|
|
|
40,954
|
|
|
|
|
|
|
|
40,954
|
|
|
|
2,489
|
|
|
|
|
|
|
|
2,489
|
|
|
|
2,187
|
|
|
|
2,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total construction conversions
|
|
$
|
283,067
|
|
|
$
|
11,823
|
|
|
$
|
294,890
|
|
|
$
|
132,028
|
|
|
$
|
0
|
|
|
$
|
132,028
|
|
|
$
|
24,330
|
|
|
$
|
24,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table summarizes certain information about our
real property owned as of December 31, 2008 (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building,
|
|
|
|
|
|
Accumulated
|
|
|
|
Number of
|
|
|
|
|
|
Intangibles &
|
|
|
Gross
|
|
|
Depreciation
|
|
|
|
Properties
|
|
|
Land
|
|
|
Improvements
|
|
|
Investment
|
|
|
and Amortization
|
|
|
Assisted Living Facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona
|
|
|
3
|
|
|
$
|
3,060
|
|
|
$
|
10,493
|
|
|
$
|
13,553
|
|
|
$
|
1,836
|
|
California
|
|
|
8
|
|
|
|
8,390
|
|
|
|
50,629
|
|
|
|
59,019
|
|
|
|
10,036
|
|
Colorado
|
|
|
1
|
|
|
|
940
|
|
|
|
3,721
|
|
|
|
4,661
|
|
|
|
711
|
|
Connecticut
|
|
|
5
|
|
|
|
8,030
|
|
|
|
36,799
|
|
|
|
44,829
|
|
|
|
6,565
|
|
Delaware
|
|
|
1
|
|
|
|
560
|
|
|
|
21,220
|
|
|
|
21,780
|
|
|
|
2,347
|
|
Florida
|
|
|
10
|
|
|
|
3,877
|
|
|
|
47,260
|
|
|
|
51,137
|
|
|
|
16,074
|
|
Georgia
|
|
|
2
|
|
|
|
1,080
|
|
|
|
3,688
|
|
|
|
4,768
|
|
|
|
670
|
|
Illinois
|
|
|
5
|
|
|
|
8,817
|
|
|
|
37,147
|
|
|
|
45,964
|
|
|
|
929
|
|
Indiana
|
|
|
2
|
|
|
|
220
|
|
|
|
5,520
|
|
|
|
5,740
|
|
|
|
1,155
|
|
Kansas
|
|
|
1
|
|
|
|
600
|
|
|
|
10,590
|
|
|
|
11,190
|
|
|
|
1,192
|
|
Louisiana
|
|
|
1
|
|
|
|
1,100
|
|
|
|
10,161
|
|
|
|
11,261
|
|
|
|
4,592
|
|
Massachusetts
|
|
|
5
|
|
|
|
5,590
|
|
|
|
49,051
|
|
|
|
54,641
|
|
|
|
6,296
|
|
Mississippi
|
|
|
1
|
|
|
|
520
|
|
|
|
7,675
|
|
|
|
8,195
|
|
|
|
1,089
|
|
Montana
|
|
|
3
|
|
|
|
1,460
|
|
|
|
14,772
|
|
|
|
16,232
|
|
|
|
2,480
|
|
Nevada
|
|
|
3
|
|
|
|
1,820
|
|
|
|
25,126
|
|
|
|
26,946
|
|
|
|
4,727
|
|
New Jersey
|
|
|
2
|
|
|
|
740
|
|
|
|
7,447
|
|
|
|
8,187
|
|
|
|
1,407
|
|
New York
|
|
|
3
|
|
|
|
1,930
|
|
|
|
31,917
|
|
|
|
33,847
|
|
|
|
2,126
|
|
North Carolina
|
|
|
40
|
|
|
|
15,514
|
|
|
|
181,381
|
|
|
|
196,895
|
|
|
|
34,100
|
|
Ohio
|
|
|
7
|
|
|
|
3,294
|
|
|
|
30,984
|
|
|
|
34,278
|
|
|
|
8,844
|
|
Oklahoma
|
|
|
16
|
|
|
|
2,374
|
|
|
|
30,403
|
|
|
|
32,777
|
|
|
|
8,113
|
|
Oregon
|
|
|
2
|
|
|
|
1,077
|
|
|
|
8,989
|
|
|
|
10,066
|
|
|
|
2,431
|
|
Pennsylvania
|
|
|
2
|
|
|
|
2,234
|
|
|
|
13,409
|
|
|
|
15,643
|
|
|
|
2,229
|
|
South Carolina
|
|
|
2
|
|
|
|
642
|
|
|
|
7,308
|
|
|
|
7,950
|
|
|
|
1,312
|
|
Tennessee
|
|
|
5
|
|
|
|
6,436
|
|
|
|
41,579
|
|
|
|
48,015
|
|
|
|
2,623
|
|
Texas
|
|
|
23
|
|
|
|
9,282
|
|
|
|
93,366
|
|
|
|
102,648
|
|
|
|
14,483
|
|
Utah
|
|
|
2
|
|
|
|
1,420
|
|
|
|
12,842
|
|
|
|
14,262
|
|
|
|
2,152
|
|
Virginia
|
|
|
4
|
|
|
|
2,509
|
|
|
|
32,425
|
|
|
|
34,934
|
|
|
|
3,732
|
|
Washington
|
|
|
5
|
|
|
|
5,010
|
|
|
|
35,051
|
|
|
|
40,061
|
|
|
|
2,887
|
|
Wisconsin
|
|
|
7
|
|
|
|
5,010
|
|
|
|
54,633
|
|
|
|
59,643
|
|
|
|
3,534
|
|
Construction in progress
|
|
|
13
|
|
|
|
0
|
|
|
|
0
|
|
|
|
163,106
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184
|
|
|
|
103,536
|
|
|
|
915,586
|
|
|
|
1,182,228
|
|
|
|
150,672
|
|
Independent Living/CCRC Facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona
|
|
|
1
|
|
|
$
|
950
|
|
|
$
|
9,086
|
|
|
$
|
10,036
|
|
|
$
|
2,104
|
|
California
|
|
|
8
|
|
|
|
20,174
|
|
|
|
156,951
|
|
|
|
177,125
|
|
|
|
10,137
|
|
Colorado
|
|
|
3
|
|
|
|
8,690
|
|
|
|
57,179
|
|
|
|
65,869
|
|
|
|
1,895
|
|
Florida
|
|
|
4
|
|
|
|
9,772
|
|
|
|
127,059
|
|
|
|
136,831
|
|
|
|
16,217
|
|
Georgia
|
|
|
4
|
|
|
|
9,696
|
|
|
|
74,819
|
|
|
|
84,515
|
|
|
|
11,818
|
|
Idaho
|
|
|
1
|
|
|
|
550
|
|
|
|
14,740
|
|
|
|
15,290
|
|
|
|
2,512
|
|
Indiana
|
|
|
3
|
|
|
|
3,120
|
|
|
|
100,623
|
|
|
|
103,743
|
|
|
|
2,666
|
|
Kansas
|
|
|
1
|
|
|
|
1,400
|
|
|
|
11,000
|
|
|
|
12,400
|
|
|
|
563
|
|
Missouri
|
|
|
1
|
|
|
|
510
|
|
|
|
5,490
|
|
|
|
6,000
|
|
|
|
287
|
|
Nevada
|
|
|
1
|
|
|
|
1,144
|
|
|
|
10,831
|
|
|
|
11,975
|
|
|
|
5,226
|
|
North Carolina
|
|
|
3
|
|
|
|
15,970
|
|
|
|
32,195
|
|
|
|
48,165
|
|
|
|
1,814
|
|
South Carolina
|
|
|
4
|
|
|
|
8,200
|
|
|
|
71,062
|
|
|
|
79,262
|
|
|
|
5,906
|
|
Texas
|
|
|
2
|
|
|
|
5,670
|
|
|
|
16,620
|
|
|
|
22,290
|
|
|
|
4,174
|
|
Washington
|
|
|
1
|
|
|
|
620
|
|
|
|
4,780
|
|
|
|
5,400
|
|
|
|
664
|
|
Wisconsin
|
|
|
1
|
|
|
|
400
|
|
|
|
23,237
|
|
|
|
23,637
|
|
|
|
0
|
|
Construction in progress
|
|
|
7
|
|
|
|
0
|
|
|
|
0
|
|
|
|
281,927
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45
|
|
|
|
86,866
|
|
|
|
715,672
|
|
|
|
1,084,465
|
|
|
|
65,983
|
|
83
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building,
|
|
|
|
|
|
Accumulated
|
|
|
|
Number of
|
|
|
|
|
|
Intangibles &
|
|
|
Gross
|
|
|
Depreciation
|
|
|
|
Properties
|
|
|
Land
|
|
|
Improvements
|
|
|
Investment
|
|
|
and Amortization
|
|
|
Skilled Nursing Facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alabama
|
|
|
7
|
|
|
$
|
2,520
|
|
|
$
|
36,990
|
|
|
$
|
39,510
|
|
|
$
|
6,392
|
|
Arizona
|
|
|
2
|
|
|
|
1,870
|
|
|
|
15,978
|
|
|
|
17,848
|
|
|
|
1,503
|
|
Colorado
|
|
|
4
|
|
|
|
3,460
|
|
|
|
31,246
|
|
|
|
34,706
|
|
|
|
4,493
|
|
Connecticut
|
|
|
6
|
|
|
|
2,700
|
|
|
|
22,738
|
|
|
|
25,438
|
|
|
|
4,583
|
|
Florida
|
|
|
42
|
|
|
|
23,312
|
|
|
|
280,503
|
|
|
|
303,815
|
|
|
|
50,313
|
|
Georgia
|
|
|
3
|
|
|
|
2,650
|
|
|
|
14,932
|
|
|
|
17,582
|
|
|
|
2,330
|
|
Idaho
|
|
|
3
|
|
|
|
4,110
|
|
|
|
27,496
|
|
|
|
31,606
|
|
|
|
4,333
|
|
Illinois
|
|
|
4
|
|
|
|
1,110
|
|
|
|
24,700
|
|
|
|
25,810
|
|
|
|
10,955
|
|
Indiana
|
|
|
6
|
|
|
|
1,959
|
|
|
|
36,904
|
|
|
|
38,863
|
|
|
|
7,811
|
|
Kansas
|
|
|
1
|
|
|
|
1,120
|
|
|
|
8,360
|
|
|
|
9,480
|
|
|
|
755
|
|
Kentucky
|
|
|
10
|
|
|
|
3,015
|
|
|
|
65,433
|
|
|
|
68,448
|
|
|
|
8,556
|
|
Louisiana
|
|
|
7
|
|
|
|
784
|
|
|
|
34,717
|
|
|
|
35,501
|
|
|
|
3,491
|
|
Maryland
|
|
|
2
|
|
|
|
840
|
|
|
|
14,760
|
|
|
|
15,600
|
|
|
|
1,303
|
|
Massachusetts
|
|
|
21
|
|
|
|
19,690
|
|
|
|
221,388
|
|
|
|
241,078
|
|
|
|
36,798
|
|
Mississippi
|
|
|
11
|
|
|
|
1,625
|
|
|
|
52,651
|
|
|
|
54,276
|
|
|
|
11,189
|
|
Missouri
|
|
|
3
|
|
|
|
1,247
|
|
|
|
23,827
|
|
|
|
25,074
|
|
|
|
8,295
|
|
New Hampshire
|
|
|
1
|
|
|
|
340
|
|
|
|
4,360
|
|
|
|
4,700
|
|
|
|
434
|
|
New Jersey
|
|
|
1
|
|
|
|
1,850
|
|
|
|
3,050
|
|
|
|
4,900
|
|
|
|
504
|
|
Ohio
|
|
|
20
|
|
|
|
11,785
|
|
|
|
192,144
|
|
|
|
203,929
|
|
|
|
23,800
|
|
Oklahoma
|
|
|
3
|
|
|
|
1,464
|
|
|
|
21,883
|
|
|
|
23,347
|
|
|
|
3,951
|
|
Oregon
|
|
|
1
|
|
|
|
300
|
|
|
|
5,316
|
|
|
|
5,616
|
|
|
|
1,779
|
|
Pennsylvania
|
|
|
3
|
|
|
|
2,979
|
|
|
|
19,839
|
|
|
|
22,818
|
|
|
|
6,010
|
|
Tennessee
|
|
|
22
|
|
|
|
8,730
|
|
|
|
122,604
|
|
|
|
131,334
|
|
|
|
25,545
|
|
Texas
|
|
|
19
|
|
|
|
11,222
|
|
|
|
145,770
|
|
|
|
156,992
|
|
|
|
13,272
|
|
Utah
|
|
|
1
|
|
|
|
991
|
|
|
|
6,850
|
|
|
|
7,841
|
|
|
|
624
|
|
Virginia
|
|
|
10
|
|
|
|
7,121
|
|
|
|
58,779
|
|
|
|
65,900
|
|
|
|
3,098
|
|
Construction in progress
|
|
|
2
|
|
|
|
0
|
|
|
|
0
|
|
|
|
22,105
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
215
|
|
|
|
118,794
|
|
|
|
1,493,218
|
|
|
|
1,634,117
|
|
|
|
242,117
|
|
Specialty Care Facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California
|
|
|
3
|
|
|
$
|
6,200
|
|
|
$
|
72,103
|
|
|
$
|
78,303
|
|
|
$
|
903
|
|
Idaho
|
|
|
1
|
|
|
|
3,600
|
|
|
|
20,802
|
|
|
|
24,402
|
|
|
|
473
|
|
Illinois
|
|
|
1
|
|
|
|
3,650
|
|
|
|
19,915
|
|
|
|
23,565
|
|
|
|
6,343
|
|
Indiana
|
|
|
2
|
|
|
|
870
|
|
|
|
19,931
|
|
|
|
20,801
|
|
|
|
428
|
|
Kentucky
|
|
|
1
|
|
|
|
3,800
|
|
|
|
26,700
|
|
|
|
30,500
|
|
|
|
390
|
|
Louisiana
|
|
|
1
|
|
|
|
1,928
|
|
|
|
10,509
|
|
|
|
12,437
|
|
|
|
821
|
|
Massachusetts
|
|
|
2
|
|
|
|
3,075
|
|
|
|
48,320
|
|
|
|
51,395
|
|
|
|
21,495
|
|
New Jersey
|
|
|
1
|
|
|
|
0
|
|
|
|
38,300
|
|
|
|
38,300
|
|
|
|
560
|
|
Ohio
|
|
|
1
|
|
|
|
1,200
|
|
|
|
12,800
|
|
|
|
14,000
|
|
|
|
0
|
|
Oklahoma
|
|
|
2
|
|
|
|
3,149
|
|
|
|
9,898
|
|
|
|
13,047
|
|
|
|
1,057
|
|
Texas
|
|
|
8
|
|
|
|
9,825
|
|
|
|
156,711
|
|
|
|
166,536
|
|
|
|
10,075
|
|
Wisconsin
|
|
|
1
|
|
|
|
4,700
|
|
|
|
20,669
|
|
|
|
25,369
|
|
|
|
791
|
|
Construction in progress
|
|
|
3
|
|
|
|
0
|
|
|
|
0
|
|
|
|
75,509
|
|
|
|
0
|
|
Assets held for sale
|
|
|
1
|
|
|
|
0
|
|
|
|
0
|
|
|
|
26,211
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
|
|
|
|
41,997
|
|
|
|
456,658
|
|
|
|
600,375
|
|
|
|
43,336
|
|
84
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building,
|
|
|
|
|
|
Accumulated
|
|
|
|
Number of
|
|
|
|
|
|
Intangibles &
|
|
|
Gross
|
|
|
Depreciation
|
|
|
|
Properties
|
|
|
Land
|
|
|
Improvements
|
|
|
Investment
|
|
|
and Amortization
|
|
|
Medical Office Buildings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alabama
|
|
|
5
|
|
|
$
|
2,902
|
|
|
$
|
44,542
|
|
|
$
|
47,444
|
|
|
$
|
3,729
|
|
Alaska
|
|
|
1
|
|
|
|
217
|
|
|
|
30,492
|
|
|
|
30,709
|
|
|
|
2,036
|
|
Arizona
|
|
|
6
|
|
|
|
17,456
|
|
|
|
92,064
|
|
|
|
109,520
|
|
|
|
8,953
|
|
California
|
|
|
7
|
|
|
|
7,560
|
|
|
|
125,407
|
|
|
|
132,967
|
|
|
|
10,601
|
|
Colorado
|
|
|
1
|
|
|
|
877
|
|
|
|
6,708
|
|
|
|
7,585
|
|
|
|
363
|
|
Florida
|
|
|
25
|
|
|
|
39,686
|
|
|
|
246,041
|
|
|
|
285,727
|
|
|
|
22,313
|
|
Georgia
|
|
|
7
|
|
|
|
13,264
|
|
|
|
61,212
|
|
|
|
74,476
|
|
|
|
6,462
|
|
Illinois
|
|
|
3
|
|
|
|
4,762
|
|
|
|
13,624
|
|
|
|
18,386
|
|
|
|
1,405
|
|
Indiana
|
|
|
1
|
|
|
|
0
|
|
|
|
22,134
|
|
|
|
22,134
|
|
|
|
181
|
|
Missouri
|
|
|
1
|
|
|
|
336
|
|
|
|
17,247
|
|
|
|
17,583
|
|
|
|
1,177
|
|
Nevada
|
|
|
9
|
|
|
|
16,804
|
|
|
|
104,108
|
|
|
|
120,912
|
|
|
|
8,372
|
|
New Jersey
|
|
|
4
|
|
|
|
9,804
|
|
|
|
46,653
|
|
|
|
56,457
|
|
|
|
2,119
|
|
New York
|
|
|
7
|
|
|
|
4,173
|
|
|
|
60,782
|
|
|
|
64,955
|
|
|
|
5,109
|
|
North Carolina
|
|
|
10
|
|
|
|
7,816
|
|
|
|
19,149
|
|
|
|
26,965
|
|
|
|
3,111
|
|
Ohio
|
|
|
1
|
|
|
|
610
|
|
|
|
7,420
|
|
|
|
8,030
|
|
|
|
677
|
|
Oklahoma
|
|
|
1
|
|
|
|
132
|
|
|
|
13,008
|
|
|
|
13,140
|
|
|
|
767
|
|
Pennsylvania
|
|
|
1
|
|
|
|
86
|
|
|
|
23,230
|
|
|
|
23,316
|
|
|
|
1,219
|
|
South Carolina
|
|
|
1
|
|
|
|
171
|
|
|
|
18,362
|
|
|
|
18,533
|
|
|
|
1,546
|
|
Tennessee
|
|
|
5
|
|
|
|
9,266
|
|
|
|
60,500
|
|
|
|
69,766
|
|
|
|
4,460
|
|
Texas
|
|
|
14
|
|
|
|
17,792
|
|
|
|
193,378
|
|
|
|
211,170
|
|
|
|
14,073
|
|
Construction in progress
|
|
|
4
|
|
|
|
0
|
|
|
|
0
|
|
|
|
96,772
|
|
|
|
0
|
|
Assets held for sale
|
|
|
14
|
|
|
|
0
|
|
|
|
0
|
|
|
|
21,843
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128
|
|
|
|
153,714
|
|
|
|
1,206,061
|
|
|
|
1,478,390
|
|
|
|
98,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Real Property Owned
|
|
|
600
|
|
|
$
|
504,907
|
|
|
$
|
4,787,195
|
|
|
$
|
5,979,575
|
|
|
$
|
600,781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following is a summary of our real estate intangibles as of
the dates indicated (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
December 31, 2007
|
|
|
Assets:
|
In place lease intangibles
|
|
$
|
81,500
|
|
|
$
|
81,068
|
|
Above market tenant leases
|
|
|
9,658
|
|
|
|
9,592
|
|
Below market ground leases
|
|
|
39,806
|
|
|
|
40,652
|
|
Lease commissions
|
|
|
2,360
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Gross historical cost
|
|
|
133,324
|
|
|
|
131,312
|
|
Accumulated amortization
|
|
|
(31,452
|
)
|
|
|
(18,289
|
)
|
|
|
|
|
|
|
|
|
|
Net book value
|
|
$
|
101,872
|
|
|
$
|
113,023
|
|
|
|
|
|
|
|
|
|
|
Weighted-average amortization period in years
|
|
|
28.9
|
|
|
|
28.4
|
|
Liabilities:
|
Below market tenant leases
|
|
$
|
25,265
|
|
|
$
|
25,186
|
|
Above market ground leases
|
|
|
3,419
|
|
|
|
3,499
|
|
|
|
|
|
|
|
|
|
|
Gross historical cost
|
|
|
28,684
|
|
|
|
28,685
|
|
Accumulated amortization
|
|
|
(8,671
|
)
|
|
|
(4,446
|
)
|
|
|
|
|
|
|
|
|
|
Net book value
|
|
$
|
20,013
|
|
|
$
|
24,239
|
|
|
|
|
|
|
|
|
|
|
Weighted-average amortization period in years
|
|
|
8.9
|
|
|
|
10.0
|
|
At December 31, 2008, future minimum lease payments
receivable under operating leases are as follows (in thousands):
|
|
|
|
|
2009
|
|
$
|
479,984
|
|
2010
|
|
|
473,333
|
|
2011
|
|
|
464,948
|
|
2012
|
|
|
453,132
|
|
2013
|
|
|
438,081
|
|
Thereafter
|
|
|
2,835,888
|
|
|
|
|
|
|
Totals
|
|
$
|
5,145,366
|
|
|
|
|
|
|
We purchased $23,097,000 and $11,204,000 of real property that
had previously been financed by the Company with loans in 2008
and 2006, respectively. We acquired properties, which included
the assumption of debt totaling $166,188,000 and $326,690,000 in
2007 and 2006, respectively. Certain of our acquisitions
included deferred acquisition payments totaling $2,000,000 for
2006. These non-cash activities are appropriately not reflected
in the accompanying statements of cash flows. See Note 18
for non-cash investing activity related to the Windrose merger.
|
|
4.
|
Dispositions,
Assets Held for Sale and Discontinued Operations
|
During the year ended December 31, 2008, we completed the
sale of 38 properties and recognized $163,933,000 of net gains
on sales. At December 31, 2008, we had one specialty care
facility and 14 medical office buildings that satisfied the
requirements of Statement of Financial Accounting Standards
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets (SFAS 144) for held for sale
treatment. We did not recognize any impairment loss on the
specialty care facility as the fair value less estimated costs
to sell exceeded our carrying value. The fair value was
estimated based on a third party offer to purchase. In
determining the fair value of
86
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
the medical office buildings, we used a combination of third
party appraisals based on market comparable transactions, other
market listings and asset quality as well as management
calculations based on projected net operating income and
published capitalization rates. Managements estimates
projected that the carrying value of the assets was greater than
the estimated fair value and an impairment charge of $32,648,000
was recorded to reduce the properties to their estimated fair
value less costs to sell. The following is a summary of our real
property disposition activity for the periods presented (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31, 2008
|
|
|
December 31, 2007
|
|
|
December 31, 2006
|
|
|
|
|
|
|
Medical
|
|
|
|
|
|
|
|
|
Medical
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
|
|
|
Office
|
|
|
|
|
|
Investment
|
|
|
Office
|
|
|
|
|
|
Investment
|
|
|
|
|
|
|
Properties
|
|
|
Buildings
|
|
|
Totals
|
|
|
Properties
|
|
|
Buildings
|
|
|
Totals
|
|
|
Properties
|
|
|
Totals
|
|
|
Real property dispositions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent living/CCRCs
|
|
$
|
15,547
|
|
|
|
|
|
|
$
|
15,547
|
|
|
$
|
5,346
|
|
|
|
|
|
|
$
|
5,346
|
|
|
$
|
12,745
|
|
|
$
|
12,745
|
|
Assisted living facilities
|
|
|
148,075
|
|
|
|
|
|
|
|
148,075
|
|
|
|
57,351
|
|
|
|
|
|
|
|
57,351
|
|
|
|
52,541
|
|
|
|
52,541
|
|
Skilled nursing facilities
|
|
|
6,290
|
|
|
|
|
|
|
|
6,290
|
|
|
|
18,107
|
|
|
|
|
|
|
|
18,107
|
|
|
|
10,079
|
|
|
|
10,079
|
|
Medical office buildings
|
|
|
|
|
|
$
|
6,781
|
|
|
|
6,781
|
|
|
|
|
|
|
$
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
Specialty care facilities
|
|
|
8,735
|
|
|
|
|
|
|
|
8,735
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
Land parcels
|
|
|
73
|
|
|
|
|
|
|
|
73
|
|
|
|
3,073
|
|
|
|
|
|
|
|
3,073
|
|
|
|
423
|
|
|
|
423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dispositions
|
|
|
178,720
|
|
|
|
6,781
|
|
|
|
185,501
|
|
|
|
83,877
|
|
|
|
0
|
|
|
|
83,877
|
|
|
|
75,788
|
|
|
|
75,788
|
|
Adjusted for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain/(loss) on sales
|
|
|
164,994
|
|
|
|
(1,061
|
)
|
|
|
163,933
|
|
|
|
14,437
|
|
|
|
|
|
|
|
14,437
|
|
|
|
1,267
|
|
|
|
1,267
|
|
LandAmerica settlement
|
|
|
2,500
|
|
|
|
|
|
|
|
2,500
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
Other assets/(liabilities) disposal
|
|
|
|
|
|
|
(116
|
)
|
|
|
(116
|
)
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
Seller financing
|
|
|
(59,649
|
)
|
|
|
(5,122
|
)
|
|
|
(64,771
|
)
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
(7,168
|
)
|
|
|
(7,168
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from real property sales
|
|
$
|
286,565
|
|
|
$
|
482
|
|
|
$
|
287,047
|
|
|
$
|
98,314
|
|
|
$
|
0
|
|
|
$
|
98,314
|
|
|
$
|
69,887
|
|
|
$
|
69,887
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the year ended December 31, 2008, we completed the
sale of 29 properties to Emeritus Corporation for $299,413,000,
consisting of $249,413,000 in cash proceeds and $50,000,000 of
seller financing, and we recognized a gain on sale of
$145,646,000. Total funds of $299,413,000 were held in escrow
for use in an Internal Revenue Code Section 1031 exchange,
of which $162,558,000 was utilized during the year ended
December 31, 2008. Please see Note 21 for additional
information.
87
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In accordance with SFAS 144, we have reclassified the
income and expenses attributable to all properties sold prior to
or held for sale at December 31, 2008 to discontinued
operations. Expenses include an allocation of interest expense
based on property carrying values and our weighted average cost
of debt. The following illustrates the reclassification impact
of SFAS 144 as a result of classifying properties as
discontinued operations for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental Income
|
|
$
|
21,551
|
|
|
$
|
39,624
|
|
|
$
|
40,146
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
5,434
|
|
|
|
10,386
|
|
|
|
11,706
|
|
Property operating expenses
|
|
|
2,639
|
|
|
|
2,768
|
|
|
|
76
|
|
Depreciation and amortization
|
|
|
6,891
|
|
|
|
14,402
|
|
|
|
15,736
|
|
General and adminstrative
|
|
|
0
|
|
|
|
0
|
|
|
|
1,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, net
|
|
$
|
6,587
|
|
|
$
|
12,068
|
|
|
$
|
11,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.
|
Real
Estate Loans Receivable
|
The following is a summary of real estate loans receivable (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
Mortgage loans
|
|
$
|
137,292
|
|
|
$
|
143,091
|
|
Other real estate loans
|
|
|
345,593
|
|
|
|
238,303
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
482,885
|
|
|
$
|
381,394
|
|
|
|
|
|
|
|
|
|
|
All real estate loans receivable are in our investment property
segment. The following is a summary of our real estate loan
activity for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Amount
|
|
|
Amount
|
|
|
Amount
|
|
|
Advances on real estate loans receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in new loans
|
|
$
|
121,493
|
|
|
$
|
205,770
|
|
|
$
|
75,209
|
|
Draws on existing loans
|
|
|
21,265
|
|
|
|
30,124
|
|
|
|
11,781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross investments in real estate loans
|
|
|
142,758
|
|
|
|
235,894
|
|
|
|
86,990
|
|
Less: Seller financing on sales of real property
|
|
|
(59,649
|
)
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash advances on real estate loans receivable
|
|
|
83,109
|
|
|
|
235,894
|
|
|
|
86,990
|
|
Receipts on real estate loans receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan payoffs
|
|
|
8,815
|
|
|
|
42,028
|
|
|
|
65,002
|
|
Principal payments on loans
|
|
|
9,354
|
|
|
|
10,318
|
|
|
|
17,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total principal receipts on real estate loans
|
|
|
18,169
|
|
|
|
52,346
|
|
|
|
82,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash advances (receipts) on real estate loans receivable
|
|
$
|
64,940
|
|
|
$
|
183,548
|
|
|
$
|
4,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following is a summary of mortgage loans at
December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Final
|
|
Number
|
|
|
|
|
Principal
|
|
|
|
|
Payment
|
|
of
|
|
|
|
|
Amount at
|
|
|
Carrying
|
|
Due
|
|
Loans
|
|
|
Payment Terms
|
|
Inception
|
|
|
Amount
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
2009
|
|
|
12
|
|
|
Monthly payments from $8,099 to $83,355,
including interest from 4.46% to 19.26%
|
|
$
|
59,099
|
|
|
$
|
49,599
|
|
2010
|
|
|
1
|
|
|
Monthly payments of $20,310,
including interest of 9.25%
|
|
|
2,635
|
|
|
|
2,635
|
|
2011
|
|
|
3
|
|
|
Monthly payments from $2,960 to $26,072,
including interest from 11.84% to 19.26%
|
|
|
6,127
|
|
|
|
6,702
|
|
2012
|
|
|
3
|
|
|
Monthly payments from $26,278 to $132,889,
including interest from 7.00% to 19.26%
|
|
|
28,741
|
|
|
|
18,506
|
|
2013
|
|
|
2
|
|
|
Monthly payments from $18,403 to $114,960,
including interest from 5.32% to 7.60%
|
|
|
22,300
|
|
|
|
21,951
|
|
2015
|
|
|
1
|
|
|
Monthly payments of $2,734,
including interest of 9.00%
|
|
|
65
|
|
|
|
365
|
|
2020
|
|
|
2
|
|
|
Monthly payments from $37,493 to $317,978,
including interest of 10.39%
|
|
|
38,500
|
|
|
|
37,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
157,467
|
|
|
$
|
137,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.
|
Allowance
for Losses on Loans Receivable
|
The following is a summary of the allowance for losses on loans
receivable (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Balance at beginning of year
|
|
$
|
7,406
|
|
|
$
|
7,406
|
|
|
$
|
6,461
|
|
Provision for loan losses
|
|
|
94
|
|
|
|
0
|
|
|
|
1,000
|
|
Charge-offs
|
|
|
0
|
|
|
|
0
|
|
|
|
(55
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
7,500
|
|
|
$
|
7,406
|
|
|
$
|
7,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a summary of our loan impairments (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Balance of impaired loans at year end
|
|
$
|
72,770
|
|
|
$
|
799
|
|
|
$
|
10,529
|
|
Allowance for loan losses
|
|
|
7,500
|
|
|
|
7,406
|
|
|
|
7,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance of impaired loans not reserved(1)
|
|
$
|
65,270
|
|
|
$
|
0
|
|
|
$
|
3,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average impaired loans for the year
|
|
$
|
36,785
|
|
|
$
|
5,664
|
|
|
$
|
13,650
|
|
Interest recognized on impaired loans(2)
|
|
|
3,288
|
|
|
|
0
|
|
|
|
2,495
|
|
|
|
|
(1)
|
|
At December 31, 2007, the
allowance for losses on loans receivable exceeds the balance of
impaired loans. See Note 1 for additional information.
|
|
(2)
|
|
Represents interest recognized
prior to placement on non-accrual status.
|
89
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
As of December 31, 2008, long-term care facilities, which
include skilled nursing, independent living/continuing care
retirement communities and assisted living facilities, comprised
66% (68% at December 31, 2007) of our real estate
investments and were located in 39 states. The following
table summarizes certain information about our customer
concentration as of December 31, 2008 (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Total
|
|
|
Percent of
|
|
|
|
Properties
|
|
|
Investment
|
|
|
Investment(1)
|
|
|
Concentration by investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Living Communities, LLC
|
|
|
10
|
|
|
$
|
345,974
|
|
|
|
6
|
%
|
Signature Healthcare LLC
|
|
|
34
|
|
|
|
317,284
|
|
|
|
5
|
%
|
Brookdale Senior Living, Inc
|
|
|
86
|
|
|
|
298,143
|
|
|
|
5
|
%
|
Life Care Centers of America, Inc.
|
|
|
25
|
|
|
|
264,578
|
|
|
|
5
|
%
|
Emeritus Corporation
|
|
|
21
|
|
|
|
245,741
|
|
|
|
4
|
%
|
Remaining portfolio
|
|
|
457
|
|
|
|
4,389,959
|
|
|
|
75
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
633
|
|
|
$
|
5,861,679
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Total
|
|
|
Percent of
|
|
|
|
Properties
|
|
|
Revenue(2)
|
|
|
Revenue(3)
|
|
Concentration by revenue(4):
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature Healthcare LLC
|
|
|
34
|
|
|
$
|
41,291
|
|
|
|
7
|
%
|
Emeritus Corporation
|
|
|
21
|
|
|
|
40,553
|
|
|
|
7
|
%
|
Brookdale Senior Living, Inc
|
|
|
86
|
|
|
|
38,065
|
|
|
|
7
|
%
|
Life Care Centers of America, Inc.
|
|
|
25
|
|
|
|
27,671
|
|
|
|
5
|
%
|
Merrill Gardens LLC
|
|
|
13
|
|
|
|
19,816
|
|
|
|
3
|
%
|
Remaining portfolio
|
|
|
454
|
|
|
|
394,848
|
|
|
|
69
|
%
|
Other income
|
|
|
n/a
|
|
|
|
10,521
|
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
633
|
|
|
$
|
572,765
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Investments with top five customers
comprised 27% of total investments at December 31, 2007.
|
|
(2)
|
|
Revenues include gross revenues and
revenues from discontinued operations for the year ended
December 31, 2008.
|
|
(3)
|
|
Revenues from top five customers
were 30% and 43% for the years ended December 31, 2007 and
2006, respectively.
|
|
(4)
|
|
All of our top five customers are
in our investment properties segment.
|
|
|
8.
|
Borrowings
Under Line of Credit Arrangement and Related Items
|
At December 31, 2008, we had an unsecured credit
arrangement with a consortium of sixteen banks providing for a
revolving line of credit in the amount of $1,150,000,000, which
is scheduled to expire on August 5, 2011 (with the ability
to extend for one year at our discretion if we are in compliance
with all covenants). Borrowings under the agreement are subject
to interest payable in periods no longer than three months at
either the agent banks prime rate of interest or the
applicable margin over LIBOR interest rate, at our option (1.07%
at December 31, 2008). The applicable margin is based on
our ratings with Moodys Investors Service and
Standard & Poors Ratings Services and was 0.6%
at December 31, 2008. In addition, we pay a facility fee
annually to each bank based on the banks commitment under
the revolving credit facility. The facility fee depends on our
ratings with Moodys Investors Service and
Standard & Poors Ratings Services and was 0.15%
at December 31, 2008. We also pay an annual agents
fee of $50,000. Principal is due upon expiration of the
agreement.
90
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following information relates to aggregate borrowings under
the unsecured lines of credit arrangements (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Balance outstanding at December 31
|
|
$
|
570,000
|
|
|
$
|
307,000
|
|
|
$
|
225,000
|
|
Maximum amount outstanding at any month end
|
|
$
|
744,000
|
|
|
$
|
434,000
|
|
|
$
|
276,000
|
|
Average amount outstanding (total of daily principal balances
divided by days in year)
|
|
$
|
500,561
|
|
|
$
|
234,392
|
|
|
$
|
164,905
|
|
Weighted average interest rate (actual interest expense divided
by average borrowings outstanding)
|
|
|
3.77
|
%
|
|
|
6.68
|
%
|
|
|
6.91
|
%
|
|
|
9.
|
Senior
Unsecured Notes and Secured Debt
|
We have $1,847,247,000 of senior unsecured notes with annual
interest rates ranging from 4.75% to 8.00%. The carrying amounts
of the senior unsecured notes represent the par value of
$1,845,000,000 adjusted for any unamortized premiums or
discounts and other basis adjustments related to hedging the
debt with derivative instruments. See Note 1 for further
discussion regarding derivative instruments.
In November and December 2006, we issued $345,000,000 of
4.75% senior unsecured convertible notes due December 2026,
generating net proceeds of $337,517,000. The notes are
convertible, in certain circumstances, into cash and, if
applicable, shares of common stock at an initial conversion rate
of 20.8833 shares per $1,000 principal amount of notes,
which represents an initial conversion price of approximately
$47.89 per share. In general, upon conversion, the holder of
each note would receive, in respect of the conversion value of
such note, cash up to the principal amount of such note and
common stock for the notes conversion value in excess of
such principal amount. In addition, on each of December 1,
2011, December 1, 2016 and December 1, 2021, holders
may require us to purchase all or a portion of their notes at a
purchase price in cash equal to 100% of the principal amount of
the notes to be purchased, plus any accrued and unpaid interest.
In July 2007, we issued $400,000,000 of 4.75% senior
unsecured convertible notes due July 2027, generating net
proceeds of $388,943,000. The notes are convertible, in certain
circumstances, into cash and, if applicable, shares of our
common stock at an initial conversion rate of
20.0000 shares per $1,000 principal amount of notes, which
represents an initial conversion price of approximately $50.00
per share. In general, upon conversion, the holder of each note
would receive, in respect of the conversion value of such note,
cash up to the principal amount of such note and common stock
for the notes conversion value in excess of such principal
amount. In addition, on each of July 15, 2012,
July 15, 2017 and July 15, 2022, holders may require
us to purchase all or a portion of their notes at a purchase
price in cash equal to 100% of the principal amount of the notes
to be purchased, plus any accrued and unpaid interest.
We have mortgage loans totaling $446,525,000, collateralized by
owned properties, with annual interest rates ranging from 4.89%
to 8.08%. The carrying amounts of the mortgages represent the
par value of $448,378,000 adjusted for any unamortized fair
value adjustments. The carrying values of the properties
securing the mortgage loans totaled $773,673,000 at
December 31, 2008.
Our debt agreements contain various covenants, restrictions and
events of default. Among other things, these provisions require
us to maintain certain financial ratios and minimum net worth
and impose certain limits on our ability to incur indebtedness,
create liens and make investments or acquisitions. As of
December 31, 2008, we were in compliance with all of the
covenants under our debt agreements.
91
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
At December 31, 2008, the annual principal payments on
these debt obligations are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior
|
|
|
Secured
|
|
|
|
|
|
|
Unsecured Notes(1)
|
|
|
Debt(1)
|
|
|
Totals
|
|
|
2009
|
|
$
|
0
|
|
|
$
|
39,657
|
|
|
$
|
39,657
|
|
2010
|
|
|
0
|
|
|
|
15,120
|
|
|
|
15,120
|
|
2011
|
|
|
0
|
|
|
|
52,314
|
|
|
|
52,314
|
|
2012
|
|
|
250,000
|
|
|
|
13,710
|
|
|
|
263,710
|
|
2013
|
|
|
300,000
|
|
|
|
62,198
|
|
|
|
362,198
|
|
Thereafter
|
|
|
1,295,000
|
|
|
|
265,379
|
|
|
|
1,560,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
1,845,000
|
|
|
$
|
448,378
|
|
|
$
|
2,293,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Amounts above represent principal
amounts due and do not include unamortized premiums/discounts or
other fair value adjustments as reflected on the balance sheet.
|
|
|
10.
|
Derivative
Instruments
|
We are exposed to various market risks, including the potential
loss arising from adverse changes in interest rates. We may
elect to use financial derivative instruments to hedge interest
rate exposure. These decisions are principally based on our
policy to match our variable rate investments with comparable
borrowings, but are also based on the general trend in interest
rates at the applicable dates and our perception of the future
volatility of interest rates. Derivatives are recorded at fair
market value on the balance sheet as assets or liabilities.
On May 6, 2004, we entered into two interest rate swap
agreements (the 2004 Swaps) for a total notional
amount of $100,000,000 to hedge changes in fair value
attributable to changes in the LIBOR swap rate of $100,000,000
of fixed rate debt with a maturity date of November 15,
2013. The 2004 Swaps were treated as fair-value hedges for
accounting purposes and we utilized the short-cut method to
assess effectiveness. The 2004 Swaps were with highly rated
counterparties in which we received a fixed rate of 6.0% and
paid a variable rate based on six-month LIBOR plus a spread. For
the year ended December 31, 2006, we incurred $197,000 of
losses related to the 2004 Swaps that was recorded as an
addition to interest expense. For the year ended
December 31, 2007, we generated $89,000 of savings related
to the 2004 Swaps that was recorded as a reduction of interest
expense. On September 12, 2007, we terminated the 2004
Swaps and we received a $2,125,000 cash settlement. The
unamortized amount of this settlement at December 31, 2008
was $1,634,000 ($1,973,000 at December 31, 2007) and
is recorded as an adjustment to the hedged item. This amount
will be amortized to interest expense over the life of the
hedged debt using the effective interest method. For the year
ended December 31, 2008, $339,000 of amortization was
recognized as a reduction to senior unsecured notes interest
expense.
On July 2, 2007, we entered into two forward-starting
interest rate swaps (the July 2007 Swaps), with an
aggregate notional amount of $200,000,000 that were designated
as cash flow hedges of the variability in forecasted interest
payments attributable to changes in the LIBOR swap rate, on
long-term fixed rate debt forecasted to be issued in 2007. The
July 2007 Swaps had the economic effect of fixing $200,000,000
of our debt at 4.913% for five years. The July 2007 Swaps were
settled on July 17, 2007, which was the date that the
forecasted debt was priced. The cash settlement value of these
contracts at July 17, 2007 was $733,000. This amount
represented the effective portion of the hedges as there was no
hedge ineffectiveness. Therefore, the $733,000 settlement value
was deferred in accumulated other comprehensive income
(AOCI) and will be amortized to interest expense
using the effective interest method. The unamortized amount of
AOCI related to these contracts at December 31, 2008 is
$521,000 ($668,000 at December 31, 2007). For the years
ended December 31, 2008 and 2007, we reclassified $147,000
and $65,000, respectively, out of AOCI as a reduction of
interest expense.
On September 12, 2007, we entered into two forward-starting
interest rate swaps (the September 2007 Swaps) for a
total notional amount of $250,000,000 to hedge 10 years of
interest payments associated with a long-
92
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
term borrowing that was expected to occur in 2008. The September
2007 Swaps each had an effective date of September 12, 2008
and a maturity date of September 12, 2018. We expected to
settle the 2007 Swaps when the debt was to be priced. The
September 2007 Swaps were to have the economic effect of fixing
$250,000,000 of our future debt at 4.469% plus a credit spread
for 10 years. The September 2007 Swaps had been designated
as cash flow hedges and we expected the 2007 Swaps to be highly
effective at offsetting changes in cash flows of interest
payments on $250,000,000 of our future debt due to changes in
the LIBOR swap rate. Therefore, effective changes in the fair
value of the September 2007 Swaps were recorded in AOCI and were
to be reclassified to interest expense when the hedged
forecasted transactions affected earnings (as interest payments
are made on the expected debt issuance). The ineffective portion
of the changes in fair value was to be recorded directly in
earnings.
At December 31, 2007, the September 2007 Swaps were
reported at their fair value of $7,990,000 and were included in
other liabilities and AOCI. During the year ended
December 31, 2008, as a result of the severe dislocation in
the credit markets, we terminated plans to issue debt and also
terminated the September 2007 Swaps for $23,393,000. Amounts
previously recorded in AOCI were reclassified to realized loss
on derivatives resulting in $23,393,000 of expense as the
forecasted transaction was no longer probable to occur.
The valuation of derivative instruments requires us to make
estimates and judgments that affect the fair value of the
instruments. Fair values for our derivatives are estimated by
utilizing pricing models that consider forward yield curves and
discount rates. Such amounts and the recognition of such amounts
are subject to significant estimates that may change in the
future.
|
|
11.
|
Commitments
and Contingencies
|
We have an outstanding letter of credit issued for the benefit
of certain insurance companies that provide workers
compensation insurance to one of our tenants. Our obligation to
provide the letter of credit terminates in 2009. At
December 31, 2008, our obligation under the of credit was
$2,450,000.
We have an outstanding letter of credit issued for the benefit
of certain insurance companies that provide liability and
property insurance to one of our tenants. Our obligation to
provide the letter of credit terminates in 2013. At
December 31, 2008, our obligation under the letter of
credit was $1,000,000.
We have an outstanding letter of credit issued for the benefit
of a village in Illinois that secures the completion and
installation of certain public improvements by one of our
tenants in connection with the development of a facility. Our
obligation to provide the letter of credit terminates in 2010.
At December 31, 2008, our obligation under the letter of
credit was $679,320.
We have an outstanding letter of credit issued for the benefit
of a municipality in Pennsylvania in connection with the
completion and installation of certain facility improvements by
one of our subsidiaries. The improvements are expected to be
completed in 2009. At December 31, 2008, our obligation
under the letter of credit was $485,810.
At December 31, 2008, we had outstanding construction
financings of $639,419,000 for leased properties and were
committed to providing additional financing of approximately
$729,278,000 to complete construction. At December 31,
2008, we had contingent purchase obligations totaling
$15,278,000. These contingent purchase obligations primarily
relate to deferred acquisition fundings and capital
improvements. Deferred acquisition fundings are contingent upon
an operator satisfying certain conditions such as payment
coverage and value tests. Amounts due from the tenant are
increased to reflect the additional investment in the property.
At December 31, 2008, we had operating lease obligations of
$163,978,000 relating to certain ground leases and Company
office space. We incurred rental expense relating to our Company
office space of $1,452,000, $678,000 and $939,000 for the years
ended December 31, 2008, 2007 and 2006, respectively.
Regarding the property leases, we have sublease agreements with
certain of our operators that require the operators to reimburse
us for our monthly operating lease obligations. At
December 31, 2008, aggregate future minimum rentals to be
received under these noncancelable subleases totaled $31,234,000.
93
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
At December 31, 2008, future minimum lease payments due
under operating leases are as follows (in thousands):
|
|
|
|
|
2009
|
|
$
|
4,220
|
|
2010
|
|
|
4,123
|
|
2011
|
|
|
4,229
|
|
2012
|
|
|
3,910
|
|
2013
|
|
|
3,921
|
|
Thereafter
|
|
|
143,575
|
|
|
|
|
|
|
Totals
|
|
$
|
163,978
|
|
|
|
|
|
|
Preferred
Stock
In July 2003, we closed a public offering of
4,000,000 shares of 7.875% Series D Cumulative
Redeemable Preferred Stock. These shares have a liquidation
value of $25.00 per share. Dividends are payable quarterly in
arrears. The preferred stock, which has no stated maturity, may
be redeemed by us at a redemption price of $25.00 per share,
plus accrued and unpaid dividends on such shares to the
redemption date, on or after July 9, 2008.
In September 2003, we issued 1,060,000 shares of 6%
Series E Cumulative Convertible and Redeemable Preferred
Stock as partial consideration for an acquisition of assets by
the Company, with the shares valued at $26,500,000 for such
purposes. The shares were issued to Southern Assisted Living,
Inc. and certain of its stockholders without registration in
reliance upon the federal statutory exemption of
Section 4(2) of the Securities Act of 1933, as amended. The
shares have a liquidation value of $25.00 per share. Dividends
are payable quarterly in arrears. The preferred stock, which has
no stated maturity, may be redeemed by us at a redemption price
of $25.00 per share, plus accrued and unpaid dividends on such
shares to the redemption date, on or after August 15, 2008.
The preferred shares are convertible into common stock at a
conversion price of $32.66 per share at any time. At
December 31, 2008 and 2007, there were 74,989 of such
shares outstanding.
In September 2004, we closed a public offering of
7,000,000 shares of 7.625% Series F Cumulative
Redeemable Preferred Stock. These shares have a liquidation
value of $25.00 per share. Dividends are payable quarterly in
arrears. The preferred stock, which has no stated maturity, may
be redeemed by us at a redemption price of $25.00 per share,
plus accrued and unpaid dividends on such shares to the
redemption date, on or after September 14, 2009.
In conjunction with the acquisition of Windrose Medical
Properties Trust in December 2006, we issued
2,100,000 shares of 7.5% Series G Cumulative
Convertible Preferred Stock. These shares have a liquidation
value of $25.00 per share. Dividends are payable quarterly in
arrears. The preferred stock, which has no stated maturity, may
be redeemed by us at a redemption price of $25.00 per share,
plus accrued and unpaid dividends on such shares to the
redemption date, on or after June 30, 2010. Each
Series G Preferred Share is convertible by the holder into
our common stock at a conversion price of $34.93, equivalent to
a conversion rate of 0.7157 common shares per Series G
Preferred Share. The Series G Preferred Shares require
cumulative distributions. During the year ended
December 31, 2007, certain holders of our Series G
Preferred Stock converted 295,800 shares into
211,702 shares of our common stock, leaving 1,804,200 of
such shares outstanding at December 31, 2007. During the
year ended December 31, 2008, certain holders of our
Series G Preferred Stock converted 1,362,887 shares
into 975,397 shares of our common stock, leaving 441,313 of
such shares outstanding at December 31, 2008.
94
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Common
Stock
The following is a summary of our common stock issuances for the
years presented (dollars in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date Issued
|
|
Shares Issued
|
|
|
Average Price
|
|
|
Gross Proceeds
|
|
|
Net Proceeds
|
|
|
April 2006 public issuance
|
|
|
3,222,800
|
|
|
$
|
36.00
|
|
|
$
|
116,021
|
|
|
$
|
109,748
|
|
2006 Dividend reinvestment plan issuances
|
|
|
1,876,377
|
|
|
|
36.34
|
|
|
|
68,184
|
|
|
|
68,184
|
|
2006 Option exercises
|
|
|
226,961
|
|
|
|
22.62
|
|
|
|
5,133
|
|
|
|
5,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 Totals(1)
|
|
|
5,326,138
|
|
|
|
|
|
|
$
|
189,338
|
|
|
$
|
182,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 2007 public issuance
|
|
|
6,325,000
|
|
|
$
|
44.01
|
|
|
$
|
278,363
|
|
|
$
|
265,294
|
|
December 2007 public issuance
|
|
|
3,500,000
|
|
|
|
42.14
|
|
|
|
147,490
|
|
|
|
147,139
|
|
2007 Dividend reinvestment plan issuances
|
|
|
1,626,000
|
|
|
|
41.81
|
|
|
|
67,985
|
|
|
|
67,985
|
|
2007 Option exercises
|
|
|
401,630
|
|
|
|
27.82
|
|
|
|
11,175
|
|
|
|
11,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 Totals
|
|
|
11,852,630
|
|
|
|
|
|
|
$
|
505,013
|
|
|
$
|
491,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 2008 public issuance
|
|
|
3,000,000
|
|
|
$
|
41.44
|
|
|
$
|
124,320
|
|
|
$
|
118,555
|
|
July 2008 public issuance
|
|
|
4,600,000
|
|
|
|
44.50
|
|
|
|
204,700
|
|
|
|
193,157
|
|
September 2008 public issuance
|
|
|
8,050,000
|
|
|
|
48.00
|
|
|
|
386,400
|
|
|
|
369,699
|
|
2008 Dividend reinvestment plan issuances
|
|
|
1,546,074
|
|
|
|
43.37
|
|
|
|
67,055
|
|
|
|
67,055
|
|
2008 Equity shelf program issuances
|
|
|
794,221
|
|
|
|
39.28
|
|
|
|
31,196
|
|
|
|
30,272
|
|
2008 Option exercises
|
|
|
118,895
|
|
|
|
29.83
|
|
|
|
3,547
|
|
|
|
3,547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 Totals
|
|
|
18,109,190
|
|
|
|
|
|
|
$
|
817,218
|
|
|
$
|
782,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
2006 excludes $912,000 of costs
related to the Windrose merger.
|
Accumulated
Other Comprehensive Income
The following is a summary of accumulated other comprehensive
income (loss) as of the dates indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
Fair value of cash flow hedges
|
|
$
|
635
|
|
|
$
|
(7,194
|
)
|
Unrecognized gains (losses) on equity investments
|
|
|
(1,038
|
)
|
|
|
(192
|
)
|
Unrecognized actuarial gains (losses)
|
|
|
(710
|
)
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
(1,113
|
)
|
|
$
|
(7,381
|
)
|
|
|
|
|
|
|
|
|
|
Please see Note 10 for a discussion of cash flow hedge
activity. For the years ended December 31, 2008 and 2007,
we recognized $846,000 and $192,000, respectively, of unrealized
losses on equity investments. Additionally, for the years ended
December 31, 2008 and 2007, we recognized $715,000 of
unrealized actuarial losses and $140,000 of unrealized actuarial
gains, respectively.
Other
Equity
Other equity consists of accumulated option compensation expense
which represents the amount of amortized compensation costs
related to stock options awarded to employees and directors
subsequent to January 1, 2003.
95
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Expense, which is recognized as the options vest based on the
market value at the date of the award, totaled $1,503,000,
$1,106,000 and $1,066,000 for the years ended December 31,
2008, 2007 and 2006, respectively.
|
|
13.
|
Stock
Incentive Plans
|
Our 2005 Long-Term Incentive Plan authorizes up to
2,200,000 shares of common stock to be issued at the
discretion of the Compensation Committee of the Board of
Directors. The 2005 Plan replaced the 1995 Stock Incentive Plan
and the Stock Plan for Non-Employee Directors. The options
granted to officers and key employees under the 1995 Plan
continue to vest through 2010 and expire ten years from the date
of grant. Our non-employee directors, officers and key employees
are eligible to participate in the 2005 Plan. The 2005 Plan
allows for the issuance of, among other things, stock options,
restricted stock, deferred stock units and dividend equivalent
rights. Vesting periods for options, deferred stock units and
restricted shares generally range from three years for
non-employee directors to five years for officers and key
employees. Options expire ten years from the date of grant. We
granted 161,101, 272,057 and 97,815 restricted shares during
2008, 2007 and 2006, respectively, including 14,504, 10,717 and
13,426 shares to non-employee directors in 2008, 2007 and
2006, respectively.
Option
Valuation Assumptions
The fair value of each option grant is estimated on the date of
grant using a Black-Scholes-Merton option pricing model with the
following weighted-average assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Dividend yield(1)
|
|
|
6.47
|
%
|
|
|
5.60
|
%
|
|
|
6.79
|
%
|
Expected volatility
|
|
|
20.5
|
%
|
|
|
19.9
|
%
|
|
|
20.3
|
%
|
Risk-free interest rate
|
|
|
3.42
|
%
|
|
|
4.74
|
%
|
|
|
4.35
|
%
|
Expected life (in years)
|
|
|
6.5
|
|
|
|
5.0
|
|
|
|
5.0
|
|
Weighted-average fair value(1)
|
|
$
|
6.25
|
|
|
$
|
8.31
|
|
|
$
|
5.26
|
|
|
|
|
(1)
|
|
Certain options granted to
employees include dividend equivalent rights. The fair value of
options with DERs also includes the net present value of
projected future dividend payments over the expected life of the
option discounted at the dividend yield rate.
|
The dividend yield represented the dividend yield of our common
stock on the dates of grant. Our computation of expected
volatility was based on historical volatility. The risk-free
interest rates used were the
7-year
U.S. Treasury Notes yield on the date of grant for the 2008
grants and the
5-year
U.S. Treasury Notes yield on the date of grant for the 2007
and 2006 grants. The expected life was based on historical
experience of similar awards, giving consideration to the
contractual terms, vesting schedules and expectations regarding
future employee behavior.
96
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Option
Award Activity
The following table summarizes information about stock option
activity for the periods indicated (shares in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Number
|
|
|
Weighted Average
|
|
|
Number
|
|
|
Weighted Average
|
|
|
Number
|
|
|
Weighted Average
|
|
Stock Options
|
|
of Shares
|
|
|
Exercise Price
|
|
|
of Shares
|
|
|
Exercise Price
|
|
|
of Shares
|
|
|
Exercise Price
|
|
|
Options at beginning of year
|
|
|
637
|
|
|
$
|
35.54
|
|
|
|
917
|
|
|
$
|
30.79
|
|
|
|
685
|
|
|
$
|
26.87
|
|
Options granted
|
|
|
307
|
|
|
|
40.83
|
|
|
|
124
|
|
|
|
45.73
|
|
|
|
460
|
|
|
|
32.42
|
|
Options exercised
|
|
|
(119
|
)
|
|
|
29.83
|
|
|
|
(402
|
)
|
|
|
27.82
|
|
|
|
(227
|
)
|
|
|
22.24
|
|
Options terminated
|
|
|
(8
|
)
|
|
|
42.00
|
|
|
|
(2
|
)
|
|
|
39.72
|
|
|
|
(1
|
)
|
|
|
36.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options at end of year
|
|
|
817
|
|
|
$
|
38.29
|
|
|
|
637
|
|
|
$
|
35.54
|
|
|
|
917
|
|
|
$
|
30.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at end of year
|
|
|
281
|
|
|
$
|
33.94
|
|
|
|
256
|
|
|
$
|
32.26
|
|
|
|
462
|
|
|
$
|
28.83
|
|
Weighted average fair value of options granted during the year
|
|
|
|
|
|
$
|
6.25
|
|
|
|
|
|
|
$
|
8.31
|
|
|
|
|
|
|
$
|
5.26
|
|
The following table summarizes information about stock options
outstanding at December 31, 2008 (options in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
|
|
Options Exercisable
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Range of Per
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
Weighted
|
|
Share Exercise
|
|
Number
|
|
|
Average
|
|
|
Remaining
|
|
|
Number
|
|
|
Average
|
|
Prices
|
|
Outstanding
|
|
|
Exercise Price
|
|
|
Contract Life
|
|
|
Exercisable
|
|
|
Exercise Price
|
|
|
$16-$20
|
|
|
8
|
|
|
$
|
16.81
|
|
|
|
2.0
|
|
|
|
8
|
|
|
$
|
16.81
|
|
$20-$30
|
|
|
66
|
|
|
|
25.63
|
|
|
|
4.7
|
|
|
|
66
|
|
|
|
25.63
|
|
$30-$40
|
|
|
321
|
|
|
|
36.28
|
|
|
|
7.1
|
|
|
|
185
|
|
|
|
36.27
|
|
$40 +
|
|
|
422
|
|
|
|
42.22
|
|
|
|
9.7
|
|
|
|
22
|
|
|
|
45.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
817
|
|
|
$
|
38.29
|
|
|
|
8.2
|
|
|
|
281
|
|
|
$
|
33.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The aggregate intrinsic value is calculated as the difference
between the exercise price of the underlying options and the
quoted price of our common stock for the options that were
in-the-money at December 31, 2008. During the years ended
December 31, 2008, 2007 and 2006, the aggregate intrinsic
value of options exercised under our stock incentive plans was
$2,042,000, $6,600,000 and $3,140,000, respectively, determined
as of the date of option exercise. Cash received from option
exercises under our stock incentive plans for the years ended
December 31, 2008, 2007 and 2006 was $3,547,000,
$17,775,000 and $4,872,000, respectively.
As of December 31, 2008, there was approximately $2,091,000
of total unrecognized compensation cost related to unvested
stock options granted under our stock incentive plans. That cost
is expected to be recognized over a weighted average period of
three years. As of December 31, 2008, there was
approximately $8,869,000 of total unrecognized compensation cost
related to unvested restricted stock granted under our stock
incentive plans. That cost is expected to be recognized over a
weighted average period of three years.
97
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table summarizes information about non-vested
stock incentive awards as of December 31, 2008 and changes
for the year ended December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
Restricted Stock
|
|
|
|
Number of
|
|
|
Weighted Average
|
|
|
Number of
|
|
|
Weighted Average
|
|
|
|
Shares
|
|
|
Grant Date
|
|
|
Shares
|
|
|
Grant Date
|
|
|
|
(000s)
|
|
|
Fair Value
|
|
|
(000s)
|
|
|
Fair Value
|
|
|
Non-vested at December 31, 2007
|
|
|
382
|
|
|
$
|
7.20
|
|
|
|
398
|
|
|
$
|
40.94
|
|
Vested
|
|
|
(147
|
)
|
|
|
6.02
|
|
|
|
(112
|
)
|
|
|
37.03
|
|
Granted
|
|
|
307
|
|
|
|
6.25
|
|
|
|
161
|
|
|
|
41.05
|
|
Terminated
|
|
|
(8
|
)
|
|
|
7.04
|
|
|
|
(4
|
)
|
|
|
42.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-vested at December 31, 2008
|
|
|
534
|
|
|
$
|
6.98
|
|
|
|
443
|
|
|
$
|
41.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We adopted the fair value-based method of accounting for
share-based payments effective January 1, 2003 using the
prospective method described in Statement of Financial
Accounting Standards No. 148, Accounting for Stock-Based
Compensation Transition and Disclosure. Currently,
we use the Black-Scholes-Merton option pricing model to estimate
the value of stock option grants and expect to continue to use
this acceptable option valuation model. Because we adopted
Statement No. 123 using the prospective transition method
(which applied only to awards granted, modified or settled after
the adoption date of Statement No. 123), compensation cost
for some previously granted awards that were not recognized
under Statement No. 123 will now be recognized effective
with the adoption of Statement No. 123(R) on
January 1, 2006. In addition, we previously amortized
compensation cost for share-based payments to the date that the
awards became fully vested or to the expected retirement date,
if sooner. Effective with the adoption of Statement
No. 123(R), we began recognizing compensation cost to the
date the awards become fully vested or to the retirement
eligible date, if sooner. Compensation cost totaled $8,530,000,
$7,050,000 and $6,980,000 for the years ended December 31,
2008, 2007 and 2006, respectively.
|
|
14.
|
Income
Taxes and Distributions
|
To qualify as a real estate investment trust for federal income
tax purposes, 90% of taxable income (including 100% of capital
gains) must be distributed to stockholders. Real estate
investment trusts that do not distribute a certain amount of
current year taxable income in the current year are also subject
to a 4% federal excise tax. The main differences between
undistributed net income for federal income tax purposes and
financial statement purposes are the recognition of
straight-line rent for reporting purposes, differing useful
lives and depreciation and amortization methods for real
property and the provision for loan losses for reporting
purposes versus bad debt expense for tax purposes. At
December 31, 2008, we had U.S. federal tax losses of
$17,182,000, as well as apportioned state tax losses of
$17,260,000 available for carryforward. Valuation allowances
have been provided for those items for which, based upon an
assessment, it is more likely than not that some portion may not
be realized. The U.S. federal and state tax loss
carryforwards expire from 2009 through 2029.
Cash distributions paid to common stockholders, for federal
income tax purposes, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
$
|
1.6196
|
|
|
$
|
1.8295
|
|
|
$
|
1.7461
|
|
Return of capital
|
|
|
0.8904
|
|
|
|
0.3596
|
|
|
|
1.1348
|
|
1250 gains
|
|
|
0.1900
|
|
|
|
0.0900
|
|
|
|
0.0000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
2.7000
|
|
|
$
|
2.2791
|
|
|
$
|
2.8809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
During the three months ended December 31, 2007, we
recognized $3,900,000 of additional other income related to the
payoff of a warrant equity investment. During the three months
ended March 31, 2008, we determined that $1,325,000 of
income taxes were due in connection with that investment gain.
The following table sets forth the computation of basic and
diluted earnings per share (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Numerator for basic and diluted earnings per share
net income available to common stockholders
|
|
$
|
264,910
|
|
|
$
|
116,272
|
|
|
$
|
81,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic earnings per share weighted
average shares
|
|
|
93,732
|
|
|
|
78,861
|
|
|
|
61,661
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee stock options
|
|
|
82
|
|
|
|
150
|
|
|
|
136
|
|
Non-vested restricted shares
|
|
|
443
|
|
|
|
398
|
|
|
|
248
|
|
Convertible senior unsecured notes
|
|
|
52
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potentially dilutive common shares
|
|
|
577
|
|
|
|
548
|
|
|
|
384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for diluted earnings per share adjusted
weighted average shares
|
|
|
94,309
|
|
|
|
79,409
|
|
|
|
62,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
2.83
|
|
|
$
|
1.47
|
|
|
$
|
1.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
2.81
|
|
|
$
|
1.46
|
|
|
$
|
1.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The diluted earnings per share calculation excludes the dilutive
effect of 123,000 options for 2007 because the exercise price
was greater than the average market price. The Series E
Cumulative Convertible and Redeemable Preferred Stock and the
Series G Cumulative Convertible Preferred Stock were not
included in the calculations for 2008, 2007 and 2006 as the
effect of the conversions was anti-dilutive to income from
continuing operations available to common stockholders (the
control number as defined by Statement of Financial
Accounting Standards No. 128). The $345,000,000 Convertible
Senior Notes due December 2026 were not included in the
calculation for 2007 and 2006 as the effect of the conversion
was anti-dilutive. The $400,000,000 Convertible Senior Notes due
July 2027 were not included in the calculation for 2008 and 2007
as the effect of the conversion was anti-dilutive.
|
|
16.
|
Disclosure
about Fair Value of Financial Instruments
|
The following methods and assumptions were used to estimate the
fair value of each class of financial instruments for which it
is practicable to estimate that value.
Mortgage Loans and Other Real Estate Loan
Receivable The fair value of mortgage loans and
other real estate loans receivable is generally estimated by
discounting the estimated future cash flows using the current
rates at which similar loans would be made to borrowers with
similar credit ratings and for the same remaining maturities.
Cash and Cash Equivalents The carrying amount
approximates fair value.
Equity Investments Equity investments are
recorded at their fair market value.
Borrowings Under Unsecured Lines of Credit
Arrangements The carrying amount of the
unsecured line of credit arrangement approximates fair value
because the borrowings are interest rate adjustable.
99
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Senior Unsecured Notes The fair value of the
senior unsecured notes payable was estimated based on publicly
available trading prices.
Secured Debt The fair value of all secured
debt is estimated by discounting the estimated future cash flows
using the current rates at which similar loans would be made to
borrowers with similar credit ratings and for the same remaining
maturities.
Interest Rate Swap Agreements Interest rate
swap agreements, if any, are recorded as assets or liabilities
on the balance sheet at fair market value. Fair market value is
estimated by a third party consultant, which utilizes pricing
models that consider forward yield curves and discount rates.
The carrying amounts and estimated fair values of our financial
instruments are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
December 31, 2007
|
|
|
|
Carrying
|
|
|
Fair
|
|
|
Carrying
|
|
|
Fair
|
|
|
|
Amount
|
|
|
Value
|
|
|
Amount
|
|
|
Value
|
|
|
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans receivable
|
|
$
|
137,292
|
|
|
$
|
143,285
|
|
|
$
|
143,091
|
|
|
$
|
149,144
|
|
Other real estate loans receivable
|
|
|
345,593
|
|
|
|
302,584
|
|
|
|
238,303
|
|
|
|
239,951
|
|
Equity investments
|
|
|
1,030
|
|
|
|
1,030
|
|
|
|
1,408
|
|
|
|
1,408
|
|
Cash and cash equivalents
|
|
|
23,370
|
|
|
|
23,370
|
|
|
|
30,269
|
|
|
|
30,269
|
|
Interest rate swap agreements
|
|
|
0
|
|
|
|
0
|
|
|
|
(7,990
|
)
|
|
|
(7,990
|
)
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings under unsecured lines of credit arrangements
|
|
$
|
570,000
|
|
|
$
|
570,000
|
|
|
$
|
307,000
|
|
|
$
|
307,000
|
|
Senior unsecured notes
|
|
|
1,847,247
|
|
|
|
1,605,770
|
|
|
|
1,890,192
|
|
|
|
1,902,031
|
|
Secured debt
|
|
|
446,525
|
|
|
|
452,262
|
|
|
|
507,476
|
|
|
|
515,989
|
|
In September 2006, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting
Standards No. 157, Fair Value Measurements
(SFAS 157). SFAS 157 introduces a
framework for measuring fair value and expands required
disclosure about fair value measurements of assets and
liabilities. SFAS 157 for financial assets and liabilities
is effective for fiscal years beginning after November 15,
2007, and was adopted as the standard for those assets and
liabilities as of January 1, 2008. The impact of adoption
was not significant. SFAS 157 defines fair value as the
exchange price that would be received for an asset or paid to
transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date.
SFAS 157 also establishes a fair value hierarchy which
requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair
value. The standard describes three levels of inputs that may be
used to measure fair value:
Level 1 Quoted prices in active markets for
identical assets or liabilities.
Level 2 Observable inputs other than
Level 1 prices such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or
other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the
assets or liabilities. Interest rate swap agreements are valued
using models that assume a hypothetical transaction to sell the
asset or transfer the liability in the principal market for the
asset or liability based on market data derived from interest
rates and yield curves observable at commonly quoted intervals,
volatilities, prepayment timing, loss severities, credit risks
and default rates.
Level 3 Unobservable inputs that are supported
by little or no market activity and that are significant to the
fair value of the assets or liabilities.
100
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The market approach is utilized to measure fair value for our
financial assets and liabilities. The market approach uses
prices and other relevant information generated by market
transactions involving identical or comparable assets or
liabilities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements as of December 31, 2008
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Equity investments(1)
|
|
$
|
561
|
|
|
$
|
561
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
561
|
|
|
$
|
561
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Unrealized gains or losses on
equity investments are recorded in accumulated other
comprehensive income (loss) at each measurement date.
|
|
|
17.
|
Retirement
Arrangements
|
Under the retirement plan and trust (the 401(k)
Plan), eligible employees may make contributions, and we
may make matching contributions and a profit sharing
contribution. Our contributions to the 401(k) Plan totaled
$864,000, $441,000 and $413,000 in 2008, 2007 and 2006,
respectively.
We have a Supplemental Executive Retirement Plan
(SERP), a non-qualified defined benefit pension
plan, which provides certain executive officers with
supplemental deferred retirement benefits. The SERP provides an
opportunity for participants to receive retirement benefits that
cannot be paid under our tax-qualified plans because of the
restrictions imposed by ERISA and the Internal Revenue Code of
1986, as amended. Benefits are based on compensation and length
of service and the SERP is unfunded. No contributions by the
Company are anticipated for the 2009 fiscal year. Benefit
payments are expected to total $4,003,000 during the next five
fiscal years and no benefit payments are expected to occur
during the succeeding five fiscal years. We use a December 31
measurement date for the SERP. The accrued liability on our
balance sheet for the SERP was $3,109,000 at December 31,
2008 ($1,915,000 at December 31, 2007).
The following tables provide a reconciliation of the changes in
the SERPs benefit obligations and a statement of the
funded status for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
Reconciliation of benefit obligation:
|
|
|
|
|
|
|
|
|
Obligation at January 1
|
|
$
|
1,915
|
|
|
$
|
1,597
|
|
Service cost
|
|
|
364
|
|
|
|
362
|
|
Interest cost
|
|
|
115
|
|
|
|
96
|
|
Actuarial (gain)/loss
|
|
|
715
|
|
|
|
(140
|
)
|
|
|
|
|
|
|
|
|
|
Obligation at December 31
|
|
$
|
3,109
|
|
|
$
|
1,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
Funded status:
|
|
|
|
|
|
|
|
|
Funded status at December 31
|
|
$
|
(3,109
|
)
|
|
$
|
(1,915
|
)
|
Unrecognized (gain)/loss
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Prepaid/(accrued) benefit cost
|
|
$
|
(3,109
|
)
|
|
$
|
(1,915
|
)
|
|
|
|
|
|
|
|
|
|
101
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table shows the components of net periodic benefit
costs for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
Service cost
|
|
$
|
364
|
|
|
$
|
362
|
|
Interest cost
|
|
|
115
|
|
|
|
96
|
|
Net actuarial loss
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
479
|
|
|
$
|
458
|
|
|
|
|
|
|
|
|
|
|
The following table provides information for the SERP, which has
an accumulated benefit in excess of plan assets (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
Projected benefit obligation
|
|
$
|
3,109
|
|
|
$
|
1,915
|
|
Accumulated benefit obligation
|
|
|
2,026
|
|
|
|
1,420
|
|
Fair value of assets
|
|
|
n/a
|
|
|
|
n/a
|
|
The following table reflects the weighted-average assumptions
used to determine the benefit obligations and net periodic
benefit cost for the SERP:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
|
Net Periodic Benefit Cost
|
|
|
|
Obligations
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
Discount rate
|
|
|
6.25
|
%
|
|
|
6.00
|
%
|
|
|
6.00
|
%
|
|
|
6.00
|
%
|
Rate of compensation increase
|
|
|
4.50
|
%
|
|
|
4.25
|
%
|
|
|
4.25
|
%
|
|
|
4.25
|
%
|
Expected long-term return on plan assets
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
102
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
18.
|
Supplemental
Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(In thousands)
|
|
|
Supplemental cash flow information interest paid
|
|
$
|
156,914
|
|
|
$
|
140,166
|
|
|
$
|
98,890
|
|
Supplemental cash flow information taxes paid
|
|
|
1,789
|
|
|
|
238
|
|
|
|
126
|
|
Supplemental schedule of non-cash activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets and liabilities assumed from real property acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured debt
|
|
$
|
0
|
|
|
$
|
19,731
|
|
|
$
|
25,049
|
|
Other liabilities
|
|
|
1,899
|
|
|
|
3,597
|
|
|
|
0
|
|
Other assets
|
|
|
0
|
|
|
|
712
|
|
|
|
0
|
|
Assets and liabilities assumed from business combinations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate investments
|
|
$
|
0
|
|
|
$
|
285,302
|
|
|
$
|
975,660
|
|
Other assets acquired
|
|
|
0
|
|
|
|
10,050
|
|
|
|
22,526
|
|
Secured debt
|
|
|
0
|
|
|
|
146,457
|
|
|
|
249,424
|
|
Liability to subsidiary trust issuing preferred securities
|
|
|
0
|
|
|
|
0
|
|
|
|
52,217
|
|
Other liabilities
|
|
|
0
|
|
|
|
6,932
|
|
|
|
40,025
|
|
Minority interests
|
|
|
0
|
|
|
|
0
|
|
|
|
6,989
|
|
Issuance of common stock
|
|
|
0
|
|
|
|
0
|
|
|
|
396,846
|
|
Issuance of preferred stock
|
|
|
0
|
|
|
|
0
|
|
|
|
62,118
|
|
We invest in senior housing and health care real estate. We
evaluate our business and make resource allocations on our two
business segments investment properties and medical
office buildings. Under the investment property segment, we
invest in senior housing and health care real estate through
acquisition and financing of primarily single tenant properties.
Properties acquired are primarily leased under
triple-net
leases and we are not involved in the management of the
property. Our primary investment property types include skilled
nursing facilities, assisted living facilities, independent
living/continuing care retirement communities and specialty care
facilities. Under the medical office building segment, our
properties are typically leased under gross leases, modified
gross leases or
triple-net
leases, to multiple tenants, and generally require a certain
level of property management. The accounting policies of the
segments are the same as those described in the summary of
significant accounting policies in Note 1. There are no
intersegment sales or transfers. We evaluate performance based
upon net operating income of the combined properties in each
segment.
Non-segment revenue consists mainly of interest income on
non-real estate investments and other income. Non-segment assets
consist of corporate assets including cash, deferred loan
expenses and corporate office equipment among others.
Non-property specific revenues and expenses are not allocated to
individual segments in determining net operating income.
During the year ended December 31, 2008, we changed the
name of the operating properties segment to medical office
buildings and reclassified certain assets and related revenues.
Four specialty care facilities that were formerly classified as
operating properties have been reclassified to investment
properties. Accordingly, we have reclassified the following 2007
amounts to be consistent with the current year classification:
(i) rental income of $7,673,000; (ii) real estate
depreciation/amortization of $2,604,000; and (iii) total
assets of $83,283,000. We have also reclassified the following
2006 amounts to be consistent with the current year
classification: (i) rental income of $227,000;
(ii) real estate depreciation/amortization of $101,000; and
(iii) other income of $2,911,000.
103
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Additionally, we have restated the following 2007
non-segment/corporate assets and revenues to be included in the
related business segments to be consistent with the current year
classification: (i) $5,597,000 of other income has been
reclassified to investment properties; (ii) $76,324,000 of
total assets has been reclassified to investment properties; and
(iii) $51,682,000 of total assets has been reclassified to
medical office buildings.
Summary information for the reportable segments is as follows
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
|
|
|
Net
|
|
|
Real Estate
|
|
|
|
|
|
|
|
|
|
Rental
|
|
|
Interest
|
|
|
Other
|
|
|
Total
|
|
|
Operating
|
|
|
Operating
|
|
|
Depreciation/
|
|
|
Interest
|
|
|
Total
|
|
|
|
Income(1)
|
|
|
Income
|
|
|
Income
|
|
|
Revenues
|
|
|
Expenses(1)
|
|
|
Income(2)
|
|
|
Amortization(1)
|
|
|
Expense(1)
|
|
|
Assets
|
|
|
Year ended December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment properties
|
|
$
|
388,849
|
|
|
$
|
40,063
|
|
|
$
|
7,899
|
|
|
$
|
436,811
|
|
|
$
|
0
|
|
|
$
|
436,811
|
|
|
$
|
111,809
|
|
|
$
|
7,176
|
|
|
$
|
4,698,807
|
|
Medical office buildings
|
|
|
133,332
|
|
|
|
0
|
|
|
|
930
|
|
|
|
134,262
|
|
|
|
46,629
|
|
|
|
87,633
|
|
|
|
51,236
|
|
|
|
21,828
|
|
|
|
1,421,548
|
|
Non-segment/corporate
|
|
|
0
|
|
|
|
0
|
|
|
|
1,692
|
|
|
|
1,692
|
|
|
|
0
|
|
|
|
1,692
|
|
|
|
0
|
|
|
|
107,243
|
|
|
|
72,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
522,181
|
|
|
$
|
40,063
|
|
|
$
|
10,521
|
|
|
$
|
572,765
|
|
|
$
|
46,629
|
|
|
$
|
526,136
|
|
|
$
|
163,045
|
|
|
$
|
136,247
|
|
|
$
|
6,193,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
|
|
|
Net
|
|
|
Real Estate
|
|
|
|
|
|
|
|
|
|
Rental
|
|
|
Interest
|
|
|
Other
|
|
|
Total
|
|
|
Operating
|
|
|
Operating
|
|
|
Depreciation/
|
|
|
Interest
|
|
|
Total
|
|
|
|
Income(1)
|
|
|
Income
|
|
|
Income
|
|
|
Revenues
|
|
|
Expenses(1)
|
|
|
Income(2)
|
|
|
Amortization(1)
|
|
|
Expense(1)
|
|
|
Assets
|
|
|
Year ended December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment properties
|
|
$
|
345,683
|
|
|
$
|
25,823
|
|
|
$
|
8,010
|
|
|
$
|
379,516
|
|
|
$
|
0
|
|
|
$
|
379,516
|
|
|
$
|
103,236
|
|
|
$
|
8,763
|
|
|
$
|
3,864,296
|
|
Medical office buildings
|
|
|
111,614
|
|
|
|
0
|
|
|
|
497
|
|
|
|
112,111
|
|
|
|
37,475
|
|
|
|
74,636
|
|
|
|
46,390
|
|
|
|
23,278
|
|
|
|
1,276,330
|
|
Non-segment/corporate
|
|
|
0
|
|
|
|
0
|
|
|
|
1,528
|
|
|
|
1,528
|
|
|
|
0
|
|
|
|
1,528
|
|
|
|
0
|
|
|
|
110,238
|
|
|
|
73,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
457,297
|
|
|
$
|
25,823
|
|
|
$
|
10,035
|
|
|
$
|
493,155
|
|
|
$
|
37,475
|
|
|
$
|
455,680
|
|
|
$
|
149,626
|
|
|
$
|
142,279
|
|
|
$
|
5,213,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
|
|
|
Net
|
|
|
Real Estate
|
|
|
|
|
|
|
|
|
|
Rental
|
|
|
Interest
|
|
|
Other
|
|
|
Total
|
|
|
Operating
|
|
|
Operating
|
|
|
Depreciation/
|
|
|
Interest
|
|
|
|
|
|
|
Income(1)
|
|
|
Income
|
|
|
Income
|
|
|
Revenues
|
|
|
Expenses(1)
|
|
|
Income(2)
|
|
|
Amortization(1)
|
|
|
Expense(1)
|
|
|
|
|
|
Year ended December 31, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment properties
|
|
$
|
302,388
|
|
|
$
|
18,829
|
|
|
$
|
3,262
|
|
|
$
|
324,479
|
|
|
$
|
0
|
|
|
$
|
324,479
|
|
|
$
|
96,452
|
|
|
$
|
9,042
|
|
|
|
|
|
Medical office buildings
|
|
|
3,247
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,247
|
|
|
|
1,115
|
|
|
|
2,132
|
|
|
|
1,112
|
|
|
|
610
|
|
|
|
|
|
Non-segment/corporate
|
|
|
0
|
|
|
|
0
|
|
|
|
662
|
|
|
|
662
|
|
|
|
0
|
|
|
|
662
|
|
|
|
0
|
|
|
|
90,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
305,635
|
|
|
$
|
18,829
|
|
|
$
|
3,924
|
|
|
$
|
328,388
|
|
|
$
|
1,115
|
|
|
$
|
327,273
|
|
|
$
|
97,564
|
|
|
$
|
100,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes amounts from discontinued
operations.
|
|
(2)
|
|
Net operating income
(NOI) is used to evaluate the operating performance
of our properties. We define NOI as total revenues, including
tenant reimbursements, less property level operating expenses,
which exclude depreciation and amortization, general and
administrative expenses, impairments and interest expense. We
believe NOI provides investors relevant and useful information
because it measures the operating performance of our properties
at the property level on an unleveraged basis. We use NOI to
make decisions about resource allocations and to assess the
property level performance of our properties.
|
104
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
20.
|
Quarterly
Results of Operations (Unaudited)
|
The following is a summary of our unaudited quarterly results of
operations for the years ended December 31, 2008 and 2007
(in thousands, except per share data). The sum of individual
quarterly amounts may not agree to the annual amounts per the
consolidated statements of income due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2008
|
|
|
|
1st Quarter
|
|
|
2nd Quarter(2)
|
|
|
3rd Quarter
|
|
|
4th Quarter(3)
|
|
|
Revenues as reported
|
|
$
|
135,852
|
|
|
$
|
135,888
|
|
|
$
|
145,096
|
|
|
$
|
147,123
|
|
Discontinued operations
|
|
|
(8,084
|
)
|
|
|
(2,809
|
)
|
|
|
(1,853
|
)
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues as adjusted(1)
|
|
$
|
127,768
|
|
|
$
|
133,079
|
|
|
$
|
143,243
|
|
|
$
|
147,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
30,452
|
|
|
$
|
156,613
|
|
|
$
|
54,792
|
|
|
$
|
23,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.35
|
|
|
$
|
1.75
|
|
|
$
|
0.57
|
|
|
$
|
0.22
|
|
Diluted
|
|
|
0.35
|
|
|
|
1.74
|
|
|
|
0.57
|
|
|
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2007
|
|
|
|
1st Quarter
|
|
|
2nd Quarter
|
|
|
3rd Quarter
|
|
|
4th Quarter(4)
|
|
|
Revenues as reported
|
|
$
|
112,645
|
|
|
$
|
119,252
|
|
|
$
|
125,076
|
|
|
$
|
133,532
|
|
Discontinued operations
|
|
|
(10,427
|
)
|
|
|
(9,610
|
)
|
|
|
(8,691
|
)
|
|
|
(8,246
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues as adjusted(1)
|
|
$
|
102,218
|
|
|
$
|
109,642
|
|
|
$
|
116,385
|
|
|
$
|
125,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
23,356
|
|
|
$
|
25,620
|
|
|
$
|
24,529
|
|
|
$
|
42,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.32
|
|
|
$
|
0.32
|
|
|
$
|
0.30
|
|
|
$
|
0.52
|
|
Diluted
|
|
|
0.32
|
|
|
|
0.32
|
|
|
|
0.30
|
|
|
|
0.52
|
|
|
|
|
(1)
|
|
In accordance with FASB Statement
No. 144, we have reclassified the income attributable to
the properties sold subsequent to January 1, 2002 and
attributable to the properties held for sale at
December 31, 2008 to discontinued operations. See
Note 4.
|
|
(2)
|
|
The increases in net income and
amounts per share are primarily attributable to gains on sales
of real property ($118,168,000).
|
|
(3)
|
|
The decreases in net income and
amounts per share are primarily attributable to impairment
charges ($32,648,000) and realized loss on derivatives
($23,393,000) offset by gains on sales of real property
($33,120,000).
|
|
(4)
|
|
The increases in net income and
amounts per share are primarily attributable to gains on sales
of real property ($11,662,000), additional other income related
to the payoff of a warrant equity investment ($3,900,000) and
gains on extinguishment of debt ($1,081,000).
|
Management Changes. On January 29, 2009, we
announced that Raymond W. Braun entered into a consulting
agreement with the Company effective February 1, 2009.
Mr. Braun no longer serves as President of the Company and
has resigned from the Board of Directors. Mr. Braun has
agreed to provide consulting services through December 31,
2009 and will receive a base consulting fee of $800,000 during
the term of the agreement. Additionally, we expect to recognize
$3,909,000 of non-recurring expenses during the three months
ended March 31, 2009 in connection with the departure of
Mr. Braun.
105
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
S&P 500 Inclusion Offering. On February 3,
2009, we completed an offering of 5,816,870 shares of
common stock for $214,352,000 of gross proceeds. The offering
was made in connection with the Companys inclusion in the
S&P 500 Index at the close of trading on January 29,
2009.
LandAmerica Settlement. During 2008, we engaged in two
Internal Revenue Code section 1031 like kind exchange
transactions, and we retained LandAmerica 1031 Exchange
Services, Inc. (LES) to act as a qualified
intermediary. On November 26, 2008, LES and its parent,
LandAmerica Financial Group, filed for bankruptcy protection. At
that time, we had approximately $136,855,000 in two segregated
escrow accounts (the Exchange Funds) held by
Centennial Bank, an affiliate of LES. Although the terms of our
agreements with LES required that the Exchange Funds be returned
to us, the return of the Exchange Funds was stayed by the
bankruptcy proceedings. On February 23, 2009, the United
States Bankruptcy Court for the Eastern District of Virginia,
Richmond Division, entered an order approving the stipulation
and settlement agreement among LES, the unsecured creditors
committees and us. Pursuant to the terms of that settlement
agreement, the Exchange Funds plus $918,000 of interest were
returned to us on February 23, 2009, and we made a
settlement payment of $2,000,000 to the LES bankruptcy estate.
In connection with these proceedings, we incurred approximately
$500,000 in expenses. The settlement payment and expenses were
recorded as reductions of gains on sales in 2008.
106
|
|
Item 9.
|
Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure
|
Not applicable.
|
|
Item 9A.
|
Controls
and Procedures
|
Disclosure
Controls and Procedures
An evaluation was carried out under the supervision and with the
participation of our management, including our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the
disclosure controls and procedures (as defined in
Rule 13a-15(e)
of the Securities Exchange Act of 1934, as amended) as of the
end of the period covered by this report. Based on that
evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the disclosure controls and procedures
were effective as of the end of the period covered by this
report.
Managements
Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined
in
Rule 13a-15(f)
of the Securities Exchange Act of 1934, as amended). The
Companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
U.S. generally accepted accounting principles. The
Companys internal control over financial reporting
includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions
of the assets of the Company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with
U.S. generally accepted accounting principles, and that
receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of
the Company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use,
or disposition of the Companys assets that could have a
material effect on the financial statements. Because of its
inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management has assessed the effectiveness of the Companys
internal control over financial reporting as of
December 31, 2008 based on the criteria established by the
Committee of Sponsoring Organizations of the Treadway Commission
in a report entitled Internal Control Integrated
Framework. Based on this assessment, using the criteria above,
management concluded that the Companys system of internal
control over financial reporting was effective as of
December 31, 2008.
The independent registered public accounting firm of
Ernst & Young LLP, as auditors of the Companys
consolidated financial statements, has issued an attestation
report on the Companys internal control over financial
reporting.
Changes
in Internal Control over Financial Reporting
No change in our internal control over financial reporting (as
defined in
Rule 13a-15(f)
of the Securities Exchange Act of 1934, as amended) occurred
during the fourth quarter of the one-year period covered by this
report that materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
107
Report of
Independent Registered Public Accounting Firm on Internal
Control over Financial Reporting
The Board of Directors and Shareholders of Health Care REIT, Inc.
We have audited Health Care REIT, Inc.s internal control
over financial reporting as of December 31, 2008, based on
criteria established in Internal Control Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (the COSO criteria). Health Care REIT,
Inc.s management is responsible for maintaining effective
internal control over financial reporting, and for its
assessment of the effectiveness of internal control over
financial reporting included in the accompanying Management
Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Companys
internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, Health Care REIT, Inc. maintained, in all
material respects, effective internal control over financial
reporting as of December 31, 2008, based on the COSO
criteria.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Health Care REIT, Inc. as of
December 31, 2008 and 2007, and the related consolidated
statements of income, stockholders equity, and cash flows
for each of the three years in the period ended
December 31, 2008 of Health Care REIT, Inc. and our report
dated February 27, 2009 expressed an unqualified opinion
thereon.
Toledo, Ohio
February 27, 2009
108
|
|
Item 9B.
|
Other
Information
|
None.
PART III
|
|
Item 10.
|
Directors,
Executive Officers and Corporate Governance
|
The information required by this Item is incorporated herein by
reference to the information under the headings Election
of Directors, Executive Officers, Board
and Committees, Communications with the Board
and Security Ownership of Directors and Management and
Certain Beneficial Owners Section 16(a)
Compliance in our definitive proxy statement, which will
be filed with the Securities and Exchange Commission
(Commission) prior to April 30, 2009.
We have adopted a Code of Business Conduct & Ethics
that applies to our directors, officers and employees. The code
is posted on the Internet at www.hcreit.com and is available
from the Company upon written request to the Senior Vice
President Administration and Corporate Secretary,
Health Care REIT, Inc., One SeaGate, Suite 1500,
P.O. Box 1475, Toledo, Ohio
43603-1475.
Any amendment to, or waivers from, the code that relate to any
officer or director of the Company will be promptly disclosed on
the Internet at www.hcreit.com.
In addition, the Board has adopted charters for the Audit,
Compensation and Nominating/Corporate Governance Committees.
These charters are posted on the Internet at www.hcreit.com and
are available from the Company upon written request to the
Senior Vice President Administration and Corporate
Secretary, Health Care REIT, Inc., One SeaGate, Suite 1500,
P.O. Box 1475, Toledo, Ohio
43603-1475.
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Item 11.
|
Executive
Compensation
|
The information required by this Item is incorporated herein by
reference to the information under the headings Executive
Compensation, Compensation Committee Report
and Director Compensation in our definitive proxy
statement, which will be filed with the Commission prior to
April 30, 2009.
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Item 12.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
The information required by this Item is incorporated herein by
reference to the information under the headings Security
Ownership of Directors and Management and Certain Beneficial
Owners and Equity Compensation Plan
Information in our definitive proxy statement, which will
be filed with the Commission prior to April 30, 2009.
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Item 13.
|
Certain
Relationships and Related Transactions and Director
Independence
|
The information required by this Item is incorporated herein by
reference to the information under the headings Board and
Committees Independence and Meetings and
Certain Relationships and Related Transactions in
our definitive proxy statement, which will be filed with the
Commission prior to April 30, 2009.
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Item 14.
|
Principal
Accountant Fees and Services
|
The information required by this Item is incorporated herein by
reference to the information under the heading
Ratification of the Appointment of the Independent
Registered Public Accounting Firm and Pre-Approval
Policies and Procedures in our definitive proxy statement,
which will be filed with the Commission prior to April 30,
2009.
109
PART IV
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Item 15.
|
Exhibits
and Financial Statement Schedules
|
(a) 1. Our Consolidated Financial Statements are
included in Part II, Item 8:
2. The following Financial Statement Schedules are
included in Item 15(c):
III Real Estate and Accumulated Depreciation
IV Mortgage Loans on Real Estate
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and Exchange
Commission are not required under the related instructions or
are inapplicable and therefore have been omitted.
3. Exhibit Index:
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|
|
|
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1
|
.1
|
|
Equity Distribution Agreement, dated as of November 6,
2008, by and among the Company and UBS Securities LLC (filed
with the Commission as Exhibit 1.1 to the Companys
Form 8-K
filed November 6, 2008, and incorporated herein by
reference thereto).
|
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2
|
.1(a)
|
|
Agreement and Plan of Merger, dated as of September 12,
2006, by and among the Company, Heat Merger Sub, LLC, Heat OP
Merger Sub, L.P., Windrose Medical Properties Trust and Windrose
Medical Properties, L.P. (filed with the Commission as
Exhibit 2.1 to the Companys
Form 8-K
filed September 15, 2006, and incorporated herein by
reference thereto).
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2
|
.1(b)
|
|
Amendment No. 1 to Agreement and Plan of Merger, dated as
of October 12, 2006, by and among the Company, Heat Merger
Sub, LLC, Heat OP Merger Sub, L.P., Windrose Medical Properties
Trust and Windrose Medical Properties, L.P. (filed with the
Commission as Exhibit 2.1 to the Companys
Form 8-K
filed October 13, 2006, and incorporated herein by
reference thereto).
|
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3
|
.1(a)
|
|
Second Restated Certificate of Incorporation of the Company
(filed with the Commission as Exhibit 3.1 to the
Companys
Form 10-K
filed March 20, 2000, and incorporated herein by reference
thereto).
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3
|
.1(b)
|
|
Certificate of Designation, Preferences and Rights of Junior
Participating Preferred Stock, Series A, of the Company
(filed with the Commission as Exhibit 3.1 to the
Companys
Form 10-K
filed March 20, 2000, and incorporated herein by reference
thereto).
|
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3
|
.1(c)
|
|
Certificate of Amendment of Second Restated Certificate of
Incorporation of the Company (filed with the Commission as
Exhibit 3.1 to the Companys
Form 10-K
filed March 20, 2000, and incorporated herein by reference
thereto).
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3
|
.1(d)
|
|
Certificate of Amendment of Second Restated Certificate of
Incorporation of the Company (filed with the Commission as
Exhibit 3.1 to the Companys
Form 8-K
filed June 13, 2003, and incorporated herein by reference
thereto).
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3
|
.1(e)
|
|
Certificate of Designation of
77/8%
Series D Cumulative Redeemable Preferred Stock of the
Company (filed with the Commission as Exhibit 2.5 to the
Companys
Form 8-A/A
filed July 8, 2003, and incorporated herein by reference
thereto).
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3
|
.1(f)
|
|
Certificate of Designation of 6% Series E Cumulative
Convertible and Redeemable Preferred Stock of the Company (filed
with the Commission as Exhibit 3.1 to the Companys
Form 8-K
filed October 1, 2003, and incorporated herein by reference
thereto).
|
110
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|
|
|
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3
|
.1(g)
|
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Certificate of Designation of
75/8%
Series F Cumulative Redeemable Preferred Stock of the
Company (filed with the Commission as Exhibit 2.5 to the
Companys
Form 8-A
filed September 10, 2004, and incorporated herein by
reference thereto).
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3
|
.1(h)
|
|
Certificate of Designation of 7.5% Series G Cumulative
Convertible Preferred Stock of the Company (filed with the
Commission as Exhibit 3.1 to the Companys
Form 8-K
filed December 20, 2006, and incorporated herein by
reference thereto).
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3
|
.1(i)
|
|
Certificate of Amendment of Second Restated Certificate of
Incorporation of the Company (filed with the Commission as
Exhibit 3.9 to the Companys
Form 10-Q
filed August 9, 2007, and incorporated herein by reference
thereto).
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3
|
.2
|
|
Second Amended and Restated By-Laws of the Company (filed with
the Commission as Exhibit 3.1 to the Companys
Form 8-K
filed October 29, 2007, and incorporated herein by
reference thereto).
|
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4
|
.1
|
|
The Company, by signing this Report, agrees to furnish the
Securities and Exchange Commission upon its request a copy of
any instrument that defines the rights of holders of long-term
debt of the Company and authorizes a total amount of securities
not in excess of 10% of the total assets of the Company.
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4
|
.2(a)
|
|
Indenture dated as of April 17, 1997 between the Company
and Fifth Third Bank (filed with the Commission as
Exhibit 4.1 to the Companys
Form 8-K
filed April 21, 1997, and incorporated herein by reference
thereto).
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4
|
.2(b)
|
|
First Supplemental Indenture, dated as of April 17, 1997,
to Indenture dated as of April 17, 1997, between the
Company and Fifth Third Bank (filed with the Commission as
Exhibit 4.2 to the Companys
Form 8-K
filed April 21, 1997, and incorporated herein by reference
thereto).
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4
|
.2(c)
|
|
Second Supplemental Indenture, dated as of March 13, 1998,
to Indenture dated as of April 17, 1997, between the
Company and Fifth Third Bank (filed with the Commission as
Exhibit 4.2 to the Companys
Form 8-K
filed March 11, 1998, and incorporated herein by reference
thereto).
|
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4
|
.2(d)
|
|
Third Supplemental Indenture, dated as of March 18, 1999,
to Indenture dated as of April 17, 1997, between the
Company and Fifth Third Bank (filed with the Commission as
Exhibit 4.2 to the Companys
Form 8-K
filed March 17, 1999, and incorporated herein by reference
thereto).
|
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4
|
.2(e)
|
|
Fourth Supplemental Indenture, dated as of August 10, 2001,
to Indenture dated as of April 17, 1997, between the
Company and Fifth Third Bank (filed with the Commission as
Exhibit 4.2 to the Companys
Form 8-K
filed August 9, 2001, and incorporated herein by reference
thereto).
|
|
4
|
.2(f)
|
|
Supplemental Indenture No. 5, dated September 10,
2003, to Indenture dated as of April 17, 1997, between the
Company and Fifth Third Bank (filed with the Commission as
Exhibit 4.1 to the Companys
Form 8-K
filed September 24, 2003, and incorporated herein by
reference thereto).
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4
|
.2(g)
|
|
Amendment No. 1, dated September 16, 2003, to
Supplemental Indenture No. 5, dated September 10,
2003, to Indenture dated as of April 17, 1997, between the
Company and Fifth Third Bank (filed with the Commission as
Exhibit 4.3 to the Companys
Form 8-K
filed September 24, 2003, and incorporated herein by
reference thereto).
|
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4
|
.3(a)
|
|
Indenture for Senior Debt Securities, dated as of
September 6, 2002, between the Company and Fifth Third Bank
(filed with the Commission as Exhibit 4.1 to the
Companys
Form 8-K
filed September 9, 2002, and incorporated herein by
reference thereto).
|
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4
|
.3(b)
|
|
Supplemental Indenture No. 1, dated as of September 6,
2002, to Indenture for Senior Debt Securities, dated as of
September 6, 2002, between the Company and Fifth Third Bank
(filed with the Commission as Exhibit 4.2 to the
Companys
Form 8-K
filed September 9, 2002, and incorporated herein by
reference thereto).
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4
|
.3(c)
|
|
Amendment No. 1, dated March 12, 2003, to Supplemental
Indenture No. 1, dated as of September 6, 2002, to
Indenture for Senior Debt Securities, dated as of
September 6, 2002, between the Company and Fifth Third Bank
(filed with the Commission as Exhibit 4.1 to the
Companys
Form 8-K
filed March 14, 2003, and incorporated herein by reference
thereto).
|
|
4
|
.3(d)
|
|
Supplemental Indenture No. 2, dated as of
September 10, 2003, to Indenture for Senior Debt
Securities, dated as of September 6, 2002, between the
Company and Fifth Third Bank (filed with the Commission as
Exhibit 4.2 to the Companys
Form 8-K
filed September 24, 2003, and incorporated herein by
reference thereto).
|
111
|
|
|
|
|
|
4
|
.3(e)
|
|
Amendment No. 1, dated September 16, 2003, to
Supplemental Indenture No. 2, dated as of
September 10, 2003, to Indenture for Senior Debt
Securities, dated as of September 6, 2002, between the
Company and Fifth Third Bank (filed with the Commission as
Exhibit 4.4 to the Companys
Form 8-K
filed September 24, 2003, and incorporated herein by
reference thereto).
|
|
4
|
.3(f)
|
|
Supplemental Indenture No. 3, dated as of October 29,
2003, to Indenture for Senior Debt Securities, dated as of
September 6, 2002, between the Company and Fifth Third Bank
(filed with the Commission as Exhibit 4.1 to the
Companys
Form 8-K
filed October 30, 2003, and incorporated herein by
reference thereto).
|
|
4
|
.3(g)
|
|
Amendment No. 1, dated September 13, 2004, to
Supplemental Indenture No. 3, dated as of October 29,
2003, to Indenture for Senior Debt Securities, dated as of
September 6, 2002, between the Company and The Bank of New
York Trust Company, N.A., as successor to Fifth Third Bank
(filed with the Commission as Exhibit 4.1 to the
Companys
Form 8-K
filed September 13, 2004, and incorporated herein by
reference thereto).
|
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4
|
.3(h)
|
|
Supplemental Indenture No. 4, dated as of April 27,
2005, to Indenture for Senior Debt Securities, dated as of
September 6, 2002, between the Company and The Bank of New
York Trust Company, N.A. (filed with the Commission as
Exhibit 4.1 to the Companys
Form 8-K
filed April 28, 2005, and incorporated herein by reference
thereto).
|
|
4
|
.3(i)
|
|
Supplemental Indenture No. 5, dated as of November 30,
2005, to Indenture for Senior Debt Securities, dated as of
September 6, 2002, between the Company and The Bank of New
York Trust Company, N.A. (filed with the Commission as
Exhibit 4.1 to the Companys
Form 8-K
filed November 30, 2005, and incorporated herein by
reference thereto).
|
|
4
|
.4(a)
|
|
Indenture, dated as of November 20, 2006, between the
Company and The Bank of New York Trust Company, N.A. (filed
with the Commission as Exhibit 4.1 to the Companys
Form 8-K
filed November 20, 2006, and incorporated herein by
reference thereto).
|
|
4
|
.4(b)
|
|
Supplemental Indenture No. 1, dated as of November 20,
2006, between the Company and The Bank of New York
Trust Company, N.A. (filed with the Commission as
Exhibit 4.2 to the Companys
Form 8-K
filed November 20, 2006, and incorporated herein by
reference thereto).
|
|
4
|
.4(c)
|
|
Supplemental Indenture No. 2, dated as of July 20,
2007, between the Company and The Bank of New York
Trust Company, N.A. (filed with the SEC as Exhibit 4.1
to the Companys
Form 8-K
filed July 20, 2007, and incorporated herein by reference
thereto).
|
|
4
|
.5
|
|
Form of Indenture for Senior Subordinated Debt Securities (filed
with the Commission as Exhibit 4.9 to the Companys
Form S-3
(File
No. 333-73936)
filed November 21, 2001, and incorporated herein by
reference thereto).
|
|
4
|
.6
|
|
Form of Indenture for Junior Subordinated Debt Securities (filed
with the Commission as Exhibit 4.10 to the Companys
Form S-3
(File
No. 333-73936)
filed November 21, 2001, and incorporated herein by
reference thereto).
|
|
10
|
.1
|
|
Fourth Amended and Restated Loan Agreement, dated as of
August 6, 2007, by and among the Company and certain of its
subsidiaries, the banks signatory thereto, KeyBank National
Association, as administrative agent, Deutsche Bank Securities
Inc., as syndication agent, and UBS Securities LLC, Bank of
America, N.A., JPMorgan Chase Bank, N.A., Barclays Bank PLC,
Calyon New York Branch and Fifth Third Bank, as documentation
agents (filed with the SEC as Exhibit 10.2 to the
Companys
Form 10-Q
filed August 9, 2007, and incorporated herein by reference
thereto).
|
|
10
|
.2
|
|
Health Care REIT, Inc. Interest Rate & Currency Risk
Management Policy adopted on May 6, 2004 (filed with the
Commission as Exhibit 10.6 to the Companys
Form 10-Q
filed July 23, 2004, and incorporated herein by reference
thereto).
|
|
10
|
.3(a)
|
|
The 1995 Stock Incentive Plan of Health Care REIT, Inc. (filed
with the Commission as Appendix II to the Companys
Proxy Statement for the 1995 Annual Meeting of Stockholders,
filed September 29, 1995, and incorporated herein by
reference thereto).*
|
|
10
|
.3(b)
|
|
First Amendment to the 1995 Stock Incentive Plan of Health Care
REIT, Inc. (filed with the Commission as Exhibit 4.2 to the
Companys
Form S-8
(File
No. 333-40771)
filed November 21, 1997, and incorporated herein by
reference thereto).*
|
|
10
|
.3(c)
|
|
Second Amendment to the 1995 Stock Incentive Plan of Health Care
REIT, Inc. (filed with the Commission as Exhibit 4.3 to the
Companys
Form S-8
(File
No. 333-73916)
filed November 21, 2001, and incorporated herein by
reference thereto).*
|
112
|
|
|
|
|
|
10
|
.3(d)
|
|
Third Amendment to the 1995 Stock Incentive Plan of Health Care
REIT, Inc. (filed with the Commission as Exhibit 10.15 to
the Companys
Form 10-K
filed March 12, 2004, and incorporated herein by reference
thereto).*
|
|
10
|
.3(e)
|
|
Form of Stock Option Agreement for Executive Officers under the
1995 Stock Incentive Plan (filed with the Commission as
Exhibit 10.17 to the Companys
Form 10-K
filed March 16, 2005, and incorporated herein by reference
thereto).*
|
|
10
|
.3(f)
|
|
Form of Restricted Stock Agreement for Executive Officers under
the 1995 Stock Incentive Plan (filed with the Commission as
Exhibit 10.18 to the Companys
Form 10-K
filed March 16, 2005, and incorporated herein by reference
thereto).*
|
|
10
|
.4(a)
|
|
Stock Plan for Non-Employee Directors of Health Care REIT, Inc.
(filed with the Commission as Exhibit 10.1 to the
Companys
Form 10-Q
filed May 10, 2004, and incorporated herein by reference
thereto).*
|
|
10
|
.4(b)
|
|
First Amendment to the Stock Plan for Non-Employee Directors of
Health Care REIT, Inc. effective April 21, 1998 (filed with
the Commission as Exhibit 10.2 to the Companys
Form 10-Q
filed May 10, 2004, and incorporated herein by reference
thereto).*
|
|
10
|
.4(c)
|
|
Form of Stock Option Agreement under the Stock Plan for
Non-Employee Directors (filed with the Commission as
Exhibit 10.3 to the Companys
Form 10-Q/A
filed October 27, 2004, and incorporated herein by
reference thereto).*
|
|
10
|
.4(d)
|
|
Form of Restricted Stock Agreement under the Stock Plan for
Non-Employee Directors (filed with the Commission as
Exhibit 10.20 to the Companys
Form 10-K
filed March 16, 2005, and incorporated herein by reference
thereto).*
|
|
10
|
.5(a)
|
|
Health Care REIT, Inc. 2005 Long-Term Incentive Plan (filed with
the Commission as Appendix A to the Companys Proxy
Statement for the 2005 Annual Meeting of Stockholders, filed
March 28, 2005, and incorporated herein by reference
thereto).*
|
|
10
|
.5(b)
|
|
Form of Stock Option Agreement (with Dividend Equivalent Rights)
for the Chief Executive Officer under the 2005 Long-Term
Incentive Plan (filed with the Commission as Exhibit 10.18
to the Companys
Form 10-K
filed March 10, 2006, and incorporated herein by reference
thereto).*
|
|
10
|
.5(c)
|
|
Form of Amendment to Stock Option Agreements (with Dividend
Equivalent Rights) for the Chief Executive Officer under the
2005 Long-Term Incentive Plan (filed with the Commission as
Exhibit 10.6 to the Companys
Form 8-K
filed January 5, 2009, and incorporated herein by reference
thereto).*
|
|
10
|
.5(d)
|
|
Form of Stock Option Agreement (with Dividend Equivalent Rights)
for the Chief Executive Officer under the 2005 Long-Term
Incentive Plan (filed with the Commission as Exhibit 10.8
to the Companys
Form 8-K
filed January 5, 2009, and incorporated herein by reference
thereto).*
|
|
10
|
.5(e)
|
|
Form of Stock Option Agreement (with Dividend Equivalent Rights)
for Executive Officers under the 2005 Long-Term Incentive Plan
(filed with the Commission as Exhibit 10.19 to the
Companys
Form 10-K
filed March 10, 2006, and incorporated herein by reference
thereto).*
|
|
10
|
.5(f)
|
|
Form of Amendment to Stock Option Agreements (with Dividend
Equivalent Rights) for Executive Officers under the 2005
Long-Term Incentive Plan (filed with the Commission as
Exhibit 10.7 to the Companys
Form 8-K
filed January 5, 2009, and incorporated herein by reference
thereto).*
|
|
10
|
.5(g)
|
|
Form of Stock Option Agreement (with Dividend Equivalent Rights)
for Executive Officers under the 2005 Long-Term Incentive Plan
(filed with the Commission as Exhibit 10.9 to the
Companys
Form 8-K
filed January 5, 2009, and incorporated herein by reference
thereto).*
|
|
10
|
.5(h)
|
|
Form of Stock Option Agreement (without Dividend Equivalent
Rights) for the Chief Executive Officer under the 2005 Long-Term
Incentive Plan (filed with the Commission as Exhibit 10.20
to the Companys
Form 10-K
filed March 10, 2006, and incorporated herein by reference
thereto).*
|
|
10
|
.5(i)
|
|
Form of Stock Option Agreement (without Dividend Equivalent
Rights) for Executive Officers under the 2005 Long-Term
Incentive Plan (filed with the Commission as Exhibit 10.21
to the Companys
Form 10-K
filed March 10, 2006, and incorporated herein by reference
thereto).*
|
|
10
|
.5(j)
|
|
Form of Restricted Stock Agreement for the Chief Executive
Officer under the 2005 Long-Term Incentive Plan (filed with the
Commission as Exhibit 10.22 to the Companys
Form 10-K
filed March 10, 2006, and incorporated herein by reference
thereto).*
|
113
|
|
|
|
|
|
10
|
.5(k)
|
|
Form of Restricted Stock Agreement for Executive Officers under
the 2005 Long-Term Incentive Plan (filed with the Commission as
Exhibit 10.23 to the Companys
Form 10-K
filed March 10, 2006, and incorporated herein by reference
thereto).*
|
|
10
|
.5(l)
|
|
Form of Deferred Stock Unit Grant Agreement for Non-Employee
Directors under the 2005 Long-Term Incentive Plan (filed with
the Commission as Exhibit 10.24 to the Companys
Form 10-K
filed March 10, 2006, and incorporated herein by reference
thereto).*
|
|
10
|
.5(m)
|
|
Form of Amendment to Deferred Stock Unit Grant Agreements for
Non-Employee Directors under the 2005 Long-Term Incentive Plan
(filed with the Commission as Exhibit 10.10 to the
Companys
Form 8-K
filed January 5, 2009, and incorporated herein by reference
thereto).*
|
|
10
|
.5(n)
|
|
Form of Deferred Stock Unit Grant Agreement for Non-Employee
Directors under the 2005 Long-Term Incentive Plan (filed with
the Commission as Exhibit 10.11 to the Companys
Form 8-K
filed January 5, 2009, and incorporated herein by reference
thereto).*
|
|
10
|
.5(o)
|
|
Stock Option Agreement, dated December 20, 2006, between
the Company and Daniel R. Loftus (filed with the Commission as
Exhibit 10.4 to the Companys
Form 10-Q
filed May 10, 2007, and incorporated herein by reference
thereto).*
|
|
10
|
.5(p)
|
|
Restricted Stock Agreement, dated January 22, 2007, by and
between the Company and Raymond W. Braun (filed with the
Commission as Exhibit 10.2 to the Companys
Form 8-K
filed January 25, 2007, and incorporated herein by
reference thereto).*
|
|
10
|
.5(q)
|
|
Stock Option Agreement (with Dividend Equivalent Rights), dated
as of January 21, 2008, by and between the Company and
Frederick L. Farrar (filed with the Commission as
Exhibit 10.1 to the Companys
Form 10-Q
filed August 6, 2008, and incorporated herein by reference
thereto).*
|
|
10
|
.5(r)
|
|
Stock Option Agreement (without Dividend Equivalent Rights),
dated as of January 21, 2008, by and between the Company
and Frederick L. Farrar (filed with the Commission as
Exhibit 10.2 to the Companys
Form 10-Q
filed August 6, 2008, and incorporated herein by reference
thereto).*
|
|
10
|
.5(s)
|
|
Restricted Stock Agreement, dated as of January 21, 2008,
by and between the Company and Frederick L. Farrar (filed
with the Commission as Exhibit 10.3 to the Companys
Form 10-Q
filed August 6, 2008, and incorporated herein by reference
thereto).*
|
|
10
|
.6
|
|
Fourth Amended and Restated Employment Agreement, dated
December 29, 2008, between the Company and George L.
Chapman.*
|
|
10
|
.7
|
|
Second Amended and Restated Employment Agreement, dated
December 29, 2008, between the Company and Charles J.
Herman, Jr. (filed with the Commission as Exhibit 10.3 to
the Companys
Form 8-K
filed January 5, 2009, and incorporated herein by reference
thereto).*
|
|
10
|
.8
|
|
Amended and Restated Employment Agreement, dated
December 29, 2008, between the Company and Jeffrey H.
Miller.*
|
|
10
|
.9
|
|
Second Amended and Restated Employment Agreement, dated
December 29, 2008, between the Company and Scott A. Estes
(filed with the Commission as Exhibit 10.4 to the
Companys
Form 8-K
filed January 5, 2009, and incorporated herein by reference
thereto).*
|
|
10
|
.10
|
|
Employment Agreement, dated January 19, 2009, between the
Company and John T. Thomas.*
|
|
10
|
.11
|
|
Third Amended and Restated Employment Agreement, dated
December 29, 2008, between the Company and Erin C. Ibele.*
|
|
10
|
.12
|
|
Second Amended and Restated Employment Agreement, dated
December 29, 2008, between the Company and Daniel R.
Loftus.*
|
|
10
|
.13
|
|
Amended and Restated Consulting Agreement, dated
December 29, 2008, between the Company and Fred S. Klipsch
(filed with the Commission as Exhibit 10.5 to the
Companys
Form 8-K
filed January 5, 2009, and incorporated herein by reference
thereto).*
|
|
10
|
.14
|
|
Amended and Restated Consulting Agreement, dated
December 29, 2008, between the Company and Frederick L.
Farrar.*
|
|
10
|
.15(a)
|
|
Consulting Agreement, dated February 1, 2009, between the
Company and Raymond W. Braun.*
|
|
10
|
.15(b)
|
|
Third Amended and Restated Employment Agreement, dated
December 29, 2008, between the Company and Raymond W. Braun
(filed with the Commission as Exhibit 10.2 to the
Companys
Form 8-K
filed January 5, 2009, and incorporated herein by reference
thereto).*
|
114
|
|
|
|
|
|
10
|
.16
|
|
Amended and Restated Health Care REIT, Inc. Supplemental
Executive Retirement Plan, dated December 29, 2008 (filed
with the Commission as Exhibit 10.12 to the Companys
Form 8-K
filed January 5, 2009, and incorporated herein by reference
thereto).*
|
|
10
|
.17
|
|
Health Care REIT, Inc. Executive Loan Program, effective as of
August 1999 (filed with the Commission as Exhibit 10.20 to
the Companys
Form 10-K
filed March 10, 2003, and incorporated herein by reference
thereto).*
|
|
10
|
.18
|
|
Form of Indemnification Agreement between the Company and each
director, executive officer and officer of the Company (filed
with the Commission as Exhibit 10.1 to the Companys
Form 8-K
filed February 18, 2005, and incorporated herein by
reference thereto).*
|
|
10
|
.19
|
|
Summary of Director Compensation (filed with the Commission as
Exhibit 10.1 to the Companys
Form 10-Q
filed May 9, 2008, and incorporated herein by reference
thereto).*
|
|
14
|
|
|
Code of Business Conduct and Ethics (filed with the Commission
as Exhibit 14 to the Companys
Form 10-K
filed March 12, 2004, and incorporated herein by reference
thereto).
|
|
21
|
|
|
Subsidiaries of the Company.
|
|
23
|
|
|
Consent of Ernst & Young LLP, independent registered
public accounting firm.
|
|
24
|
.1
|
|
Power of Attorney executed by William C. Ballard, Jr. (Director).
|
|
24
|
.2
|
|
Power of Attorney executed by Pier C. Borra (Director).
|
|
24
|
.3
|
|
Power of Attorney executed by Thomas J. DeRosa (Director).
|
|
24
|
.4
|
|
Power of Attorney executed by Jeffrey H. Donahue (Director).
|
|
24
|
.5
|
|
Power of Attorney executed by Peter J. Grua (Director).
|
|
24
|
.6
|
|
Power of Attorney executed by Fred S. Klipsch (Director).
|
|
24
|
.7
|
|
Power of Attorney executed by Sharon M. Oster (Director).
|
|
24
|
.8
|
|
Power of Attorney executed by Jeffrey R. Otten (Director).
|
|
24
|
.9
|
|
Power of Attorney executed by R. Scott Trumbull (Director).
|
|
24
|
.10
|
|
Power of Attorney executed by George L. Chapman (Director,
Chairman of the Board, President and Chief Executive Officer and
Principal Executive Officer).
|
|
24
|
.11
|
|
Power of Attorney executed by Scott A. Estes (Executive Vice
President and Chief Financial Officer and Principal Financial
Officer).
|
|
24
|
.12
|
|
Power of Attorney executed by Paul D. Nungester, Jr. (Vice
President and Controller and Principal Accounting Officer).
|
|
31
|
.1
|
|
Rule 13a-14(a)/15d-14(a)
Certification of Chief Executive Officer.
|
|
31
|
.2
|
|
Rule 13a-14(a)/15d-14(a)
Certification of Chief Financial Officer.
|
|
32
|
.1
|
|
Certification pursuant to 18 U.S.C. Section 1350 by
Chief Executive Officer.
|
|
32
|
.2
|
|
Certification pursuant to 18 U.S.C. Section 1350 by
Chief Financial Officer.
|
|
|
|
* |
|
Management Contract or Compensatory Plan or Arrangement. |
(b) Exhibits:
The exhibits listed in Item 15(a)(3) above are either filed
with this Form
10-K or
incorporated by reference in accordance with
Rule 12b-32
of the Securities Exchange Act of 1934.
(c) Financial Statement Schedules:
Financial statement schedules are included on pages 117 through
128.
115
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused
this report to be signed on its behalf by the undersigned
hereunto duly authorized.
HEALTH CARE REIT, INC.
|
|
|
|
By:
|
/s/ George
L. Chapman
|
Chairman, Chief Executive Officer, President and Director
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below on March 2, 2009,
by the following person on behalf of the Company and in the
capacities indicated.
|
|
|
/s/ William
C. Ballard, Jr.**
William
C. Ballard, Jr., Director
|
|
/s/ Sharon
M. Oster**
Sharon
M. Oster, Director
|
|
|
|
/s/ Pier
C. Borra**
Pier
C. Borra, Director
|
|
/s/ Jeffrey
R. Otten**
Jeffrey
R. Otten, Director
|
|
|
|
/s/ Thomas
J. Derosa**
Thomas
J. DeRosa, Director
|
|
/s/ R.
Scott Trumbull**
R.
Scott Trumbull, Director
|
|
|
|
/s/ Jeffrey
H. Donahue**
Jeffrey
H. Donahue, Director
|
|
/s/ George
L. Chapman
George
L. Chapman, Chairman, Chief Executive Officer, President and
Director
(Principal Executive Officer)
|
|
|
|
/s/ Peter
J. Grua**
Peter
J. Grua, Director
|
|
/s/ Scott
A. Estes**
Scott
A. Estes, Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
/s/ Fred
S. Klipsch**
Fred
S. Klipsch, Vice Chairman
|
|
/s/ Paul
D. Nungester, Jr.**
Paul
D. Nungester, Jr., Vice President and Controller (Principal
Accounting Officer)
|
|
|
|
|
|
**By: /s/ George
L. Chapman
George
L. Chapman,
Attorney-in-Fact
|
116
HEALTH
CARE REIT, INC.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount at Which
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Cost to Company
|
|
|
Cost Capitalized
|
|
|
Carried at Close of Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings &
|
|
|
Subsequent to
|
|
|
|
|
|
Buildings &
|
|
|
Accumulated
|
|
|
Year
|
|
|
Year
|
|
Description
|
|
Encumbrances
|
|
|
Land
|
|
|
Improvements
|
|
|
Acquisition
|
|
|
Land
|
|
|
Improvements
|
|
|
Depreciation
|
|
|
Acquired
|
|
|
Built
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assisted Living Facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alhambra, CA
|
|
$
|
0
|
|
|
$
|
420
|
|
|
$
|
2,534
|
|
|
$
|
0
|
|
|
$
|
420
|
|
|
$
|
2,534
|
|
|
$
|
552
|
|
|
|
1999
|
|
|
|
1999
|
|
Asheboro, NC(2)
|
|
|
3,397
|
|
|
|
290
|
|
|
|
5,032
|
|
|
|
165
|
|
|
|
290
|
|
|
|
5,197
|
|
|
|
754
|
|
|
|
2003
|
|
|
|
1998
|
|
Asheville, NC
|
|
|
0
|
|
|
|
204
|
|
|
|
3,489
|
|
|
|
0
|
|
|
|
204
|
|
|
|
3,489
|
|
|
|
1,002
|
|
|
|
1999
|
|
|
|
1999
|
|
Asheville, NC
|
|
|
0
|
|
|
|
280
|
|
|
|
1,955
|
|
|
|
351
|
|
|
|
280
|
|
|
|
2,306
|
|
|
|
379
|
|
|
|
2003
|
|
|
|
1992
|
|
Azusa, CA
|
|
|
0
|
|
|
|
570
|
|
|
|
3,141
|
|
|
|
0
|
|
|
|
570
|
|
|
|
3,141
|
|
|
|
716
|
|
|
|
1998
|
|
|
|
1988
|
|
Bartlesville, OK
|
|
|
0
|
|
|
|
100
|
|
|
|
1,380
|
|
|
|
0
|
|
|
|
100
|
|
|
|
1,380
|
|
|
|
505
|
|
|
|
1996
|
|
|
|
1995
|
|
Bellevue, WI
|
|
|
0
|
|
|
|
1,740
|
|
|
|
18,260
|
|
|
|
0
|
|
|
|
1,740
|
|
|
|
18,260
|
|
|
|
1,215
|
|
|
|
2006
|
|
|
|
2004
|
|
Bradenton, FL
|
|
|
0
|
|
|
|
252
|
|
|
|
3,298
|
|
|
|
0
|
|
|
|
252
|
|
|
|
3,298
|
|
|
|
1,225
|
|
|
|
1996
|
|
|
|
1995
|
|
Bradenton, FL
|
|
|
0
|
|
|
|
100
|
|
|
|
1,700
|
|
|
|
942
|
|
|
|
100
|
|
|
|
2,642
|
|
|
|
1,215
|
|
|
|
1999
|
|
|
|
1996
|
|
Bremerton, WA
|
|
|
0
|
|
|
|
390
|
|
|
|
2,210
|
|
|
|
123
|
|
|
|
390
|
|
|
|
2,333
|
|
|
|
119
|
|
|
|
2006
|
|
|
|
1999
|
|
Burlington, NC
|
|
|
0
|
|
|
|
280
|
|
|
|
4,297
|
|
|
|
707
|
|
|
|
280
|
|
|
|
5,004
|
|
|
|
720
|
|
|
|
2003
|
|
|
|
2000
|
|
Burlington, NC
|
|
|
0
|
|
|
|
460
|
|
|
|
5,467
|
|
|
|
0
|
|
|
|
460
|
|
|
|
5,467
|
|
|
|
812
|
|
|
|
2003
|
|
|
|
1997
|
|
Butte, MT
|
|
|
0
|
|
|
|
550
|
|
|
|
3,957
|
|
|
|
43
|
|
|
|
550
|
|
|
|
4,000
|
|
|
|
890
|
|
|
|
1998
|
|
|
|
1999
|
|
Canton, OH
|
|
|
0
|
|
|
|
300
|
|
|
|
2,098
|
|
|
|
0
|
|
|
|
300
|
|
|
|
2,098
|
|
|
|
602
|
|
|
|
1998
|
|
|
|
1998
|
|
Cape Coral, FL
|
|
|
0
|
|
|
|
530
|
|
|
|
3,281
|
|
|
|
0
|
|
|
|
530
|
|
|
|
3,281
|
|
|
|
621
|
|
|
|
2002
|
|
|
|
2000
|
|
Cary, NC
|
|
|
0
|
|
|
|
1,500
|
|
|
|
4,350
|
|
|
|
986
|
|
|
|
1,500
|
|
|
|
5,336
|
|
|
|
1,389
|
|
|
|
1998
|
|
|
|
1996
|
|
Cedar Hill, TX
|
|
|
0
|
|
|
|
171
|
|
|
|
1,490
|
|
|
|
0
|
|
|
|
171
|
|
|
|
1,490
|
|
|
|
525
|
|
|
|
1997
|
|
|
|
1996
|
|
Chapel Hill, NC
|
|
|
0
|
|
|
|
354
|
|
|
|
2,646
|
|
|
|
783
|
|
|
|
354
|
|
|
|
3,429
|
|
|
|
595
|
|
|
|
2002
|
|
|
|
1997
|
|
Chelmsford, MA(1)
|
|
|
8,514
|
|
|
|
1,040
|
|
|
|
10,951
|
|
|
|
0
|
|
|
|
1,040
|
|
|
|
10,951
|
|
|
|
1,525
|
|
|
|
2003
|
|
|
|
1997
|
|
Chickasha, OK
|
|
|
0
|
|
|
|
85
|
|
|
|
1,395
|
|
|
|
0
|
|
|
|
85
|
|
|
|
1,395
|
|
|
|
505
|
|
|
|
1996
|
|
|
|
1996
|
|
Claremore, OK
|
|
|
0
|
|
|
|
155
|
|
|
|
1,428
|
|
|
|
0
|
|
|
|
155
|
|
|
|
1,428
|
|
|
|
496
|
|
|
|
1996
|
|
|
|
1996
|
|
Clarksville, TN
|
|
|
0
|
|
|
|
330
|
|
|
|
2,292
|
|
|
|
0
|
|
|
|
330
|
|
|
|
2,292
|
|
|
|
651
|
|
|
|
1998
|
|
|
|
1998
|
|
Cleburne, TX
|
|
|
0
|
|
|
|
520
|
|
|
|
5,369
|
|
|
|
0
|
|
|
|
520
|
|
|
|
5,369
|
|
|
|
219
|
|
|
|
2006
|
|
|
|
2007
|
|
Columbia, TN
|
|
|
0
|
|
|
|
341
|
|
|
|
2,295
|
|
|
|
0
|
|
|
|
341
|
|
|
|
2,295
|
|
|
|
654
|
|
|
|
1999
|
|
|
|
1999
|
|
Concord, NC(2)
|
|
|
4,478
|
|
|
|
550
|
|
|
|
3,921
|
|
|
|
55
|
|
|
|
550
|
|
|
|
3,976
|
|
|
|
654
|
|
|
|
2003
|
|
|
|
1997
|
|
Corpus Christi, TX
|
|
|
0
|
|
|
|
155
|
|
|
|
2,935
|
|
|
|
15
|
|
|
|
155
|
|
|
|
2,950
|
|
|
|
1,806
|
|
|
|
1997
|
|
|
|
1996
|
|
Corpus Christi, TX
|
|
|
0
|
|
|
|
420
|
|
|
|
4,796
|
|
|
|
139
|
|
|
|
420
|
|
|
|
4,935
|
|
|
|
3,405
|
|
|
|
1996
|
|
|
|
1997
|
|
Crystal Lake, IL
|
|
|
0
|
|
|
|
840
|
|
|
|
7,290
|
|
|
|
0
|
|
|
|
840
|
|
|
|
7,290
|
|
|
|
51
|
|
|
|
2007
|
|
|
|
2008
|
|
Danville, VA
|
|
|
0
|
|
|
|
410
|
|
|
|
3,954
|
|
|
|
722
|
|
|
|
410
|
|
|
|
4,676
|
|
|
|
701
|
|
|
|
2003
|
|
|
|
1998
|
|
Dayton, OH
|
|
|
0
|
|
|
|
690
|
|
|
|
2,970
|
|
|
|
1,428
|
|
|
|
690
|
|
|
|
4,398
|
|
|
|
1,271
|
|
|
|
2003
|
|
|
|
1994
|
|
DeForest, WI
|
|
|
0
|
|
|
|
250
|
|
|
|
5,350
|
|
|
|
0
|
|
|
|
250
|
|
|
|
5,350
|
|
|
|
247
|
|
|
|
2007
|
|
|
|
2006
|
|
Desoto, TX
|
|
|
0
|
|
|
|
205
|
|
|
|
1,383
|
|
|
|
0
|
|
|
|
205
|
|
|
|
1,383
|
|
|
|
474
|
|
|
|
1996
|
|
|
|
1996
|
|
Duncan, OK
|
|
|
0
|
|
|
|
103
|
|
|
|
1,347
|
|
|
|
0
|
|
|
|
103
|
|
|
|
1,347
|
|
|
|
482
|
|
|
|
1995
|
|
|
|
1996
|
|
Durham, NC
|
|
|
0
|
|
|
|
1,476
|
|
|
|
10,659
|
|
|
|
2,196
|
|
|
|
1,476
|
|
|
|
12,855
|
|
|
|
5,747
|
|
|
|
1997
|
|
|
|
1999
|
|
Eden, NC(2)
|
|
|
2,904
|
|
|
|
390
|
|
|
|
4,877
|
|
|
|
0
|
|
|
|
390
|
|
|
|
4,877
|
|
|
|
743
|
|
|
|
2003
|
|
|
|
1998
|
|
Edmond, OK
|
|
|
0
|
|
|
|
175
|
|
|
|
1,564
|
|
|
|
0
|
|
|
|
175
|
|
|
|
1,564
|
|
|
|
550
|
|
|
|
1995
|
|
|
|
1996
|
|
Elizabeth City, NC
|
|
|
0
|
|
|
|
200
|
|
|
|
2,760
|
|
|
|
2,011
|
|
|
|
200
|
|
|
|
4,771
|
|
|
|
1,086
|
|
|
|
1998
|
|
|
|
1999
|
|
Encinitas, CA
|
|
|
0
|
|
|
|
1,460
|
|
|
|
7,721
|
|
|
|
0
|
|
|
|
1,460
|
|
|
|
7,721
|
|
|
|
1,883
|
|
|
|
2000
|
|
|
|
2000
|
|
Enid, OK
|
|
|
0
|
|
|
|
90
|
|
|
|
1,390
|
|
|
|
0
|
|
|
|
90
|
|
|
|
1,390
|
|
|
|
508
|
|
|
|
1995
|
|
|
|
1995
|
|
Everett, WA
|
|
|
0
|
|
|
|
1,400
|
|
|
|
5,476
|
|
|
|
0
|
|
|
|
1,400
|
|
|
|
5,476
|
|
|
|
1,464
|
|
|
|
1999
|
|
|
|
1999
|
|
Fairfield, CA
|
|
|
0
|
|
|
|
1,460
|
|
|
|
14,040
|
|
|
|
0
|
|
|
|
1,460
|
|
|
|
14,040
|
|
|
|
2,708
|
|
|
|
2002
|
|
|
|
1998
|
|
Fairhaven, MA
|
|
|
0
|
|
|
|
770
|
|
|
|
6,230
|
|
|
|
0
|
|
|
|
770
|
|
|
|
6,230
|
|
|
|
786
|
|
|
|
2004
|
|
|
|
1999
|
|
Fayetteville, NY
|
|
|
0
|
|
|
|
410
|
|
|
|
3,962
|
|
|
|
500
|
|
|
|
410
|
|
|
|
4,462
|
|
|
|
826
|
|
|
|
2001
|
|
|
|
1997
|
|
Findlay, OH
|
|
|
0
|
|
|
|
200
|
|
|
|
1,800
|
|
|
|
0
|
|
|
|
200
|
|
|
|
1,800
|
|
|
|
589
|
|
|
|
1997
|
|
|
|
1997
|
|
Florence, NJ
|
|
|
0
|
|
|
|
300
|
|
|
|
2,978
|
|
|
|
0
|
|
|
|
300
|
|
|
|
2,978
|
|
|
|
560
|
|
|
|
2002
|
|
|
|
1999
|
|
Forest City, NC(2)
|
|
|
2,977
|
|
|
|
320
|
|
|
|
4,497
|
|
|
|
0
|
|
|
|
320
|
|
|
|
4,497
|
|
|
|
689
|
|
|
|
2003
|
|
|
|
1999
|
|
Fredericksburg, VA(4)
|
|
|
6,882
|
|
|
|
1,000
|
|
|
|
20,000
|
|
|
|
303
|
|
|
|
1,000
|
|
|
|
20,303
|
|
|
|
1,976
|
|
|
|
2005
|
|
|
|
1999
|
|
Gastonia, NC
|
|
|
0
|
|
|
|
310
|
|
|
|
3,096
|
|
|
|
22
|
|
|
|
310
|
|
|
|
3,118
|
|
|
|
492
|
|
|
|
2003
|
|
|
|
1994
|
|
Gastonia, NC(2)
|
|
|
3,959
|
|
|
|
470
|
|
|
|
6,129
|
|
|
|
0
|
|
|
|
470
|
|
|
|
6,129
|
|
|
|
903
|
|
|
|
2003
|
|
|
|
1998
|
|
Gastonia, NC(2)
|
|
|
3,790
|
|
|
|
400
|
|
|
|
5,029
|
|
|
|
120
|
|
|
|
400
|
|
|
|
5,149
|
|
|
|
759
|
|
|
|
2003
|
|
|
|
1996
|
|
Georgetown, TX
|
|
|
0
|
|
|
|
200
|
|
|
|
2,100
|
|
|
|
0
|
|
|
|
200
|
|
|
|
2,100
|
|
|
|
672
|
|
|
|
1997
|
|
|
|
1997
|
|
Greenfield, WI
|
|
|
0
|
|
|
|
600
|
|
|
|
6,626
|
|
|
|
0
|
|
|
|
600
|
|
|
|
6,626
|
|
|
|
252
|
|
|
|
2006
|
|
|
|
2006
|
|
Greensboro, NC
|
|
|
0
|
|
|
|
330
|
|
|
|
2,970
|
|
|
|
554
|
|
|
|
330
|
|
|
|
3,524
|
|
|
|
542
|
|
|
|
2003
|
|
|
|
1996
|
|
Greensboro, NC
|
|
|
0
|
|
|
|
560
|
|
|
|
5,507
|
|
|
|
1,013
|
|
|
|
560
|
|
|
|
6,520
|
|
|
|
994
|
|
|
|
2003
|
|
|
|
1997
|
|
Greenville, NC(2)
|
|
|
3,484
|
|
|
|
290
|
|
|
|
4,393
|
|
|
|
168
|
|
|
|
290
|
|
|
|
4,561
|
|
|
|
662
|
|
|
|
2003
|
|
|
|
1998
|
|
Greenville, SC
|
|
|
0
|
|
|
|
310
|
|
|
|
4,750
|
|
|
|
0
|
|
|
|
310
|
|
|
|
4,750
|
|
|
|
594
|
|
|
|
2004
|
|
|
|
1997
|
|
Hamden, CT
|
|
|
0
|
|
|
|
1,470
|
|
|
|
4,530
|
|
|
|
0
|
|
|
|
1,470
|
|
|
|
4,530
|
|
|
|
1,009
|
|
|
|
2002
|
|
|
|
1998
|
|
Hamilton, NJ
|
|
|
0
|
|
|
|
440
|
|
|
|
4,469
|
|
|
|
0
|
|
|
|
440
|
|
|
|
4,469
|
|
|
|
846
|
|
|
|
2001
|
|
|
|
1998
|
|
Harlingen, TX
|
|
|
0
|
|
|
|
92
|
|
|
|
2,057
|
|
|
|
127
|
|
|
|
92
|
|
|
|
2,184
|
|
|
|
1,304
|
|
|
|
1997
|
|
|
|
1989
|
|
Hemet, CA
|
|
|
0
|
|
|
|
870
|
|
|
|
3,405
|
|
|
|
0
|
|
|
|
870
|
|
|
|
3,405
|
|
|
|
152
|
|
|
|
2007
|
|
|
|
1996
|
|
Henderson, NV
|
|
|
0
|
|
|
|
380
|
|
|
|
9,220
|
|
|
|
65
|
|
|
|
380
|
|
|
|
9,285
|
|
|
|
2,450
|
|
|
|
1998
|
|
|
|
1998
|
|
Henderson, NV
|
|
|
0
|
|
|
|
380
|
|
|
|
4,360
|
|
|
|
41
|
|
|
|
380
|
|
|
|
4,401
|
|
|
|
964
|
|
|
|
1999
|
|
|
|
2000
|
|
Hickory, NC
|
|
|
0
|
|
|
|
290
|
|
|
|
987
|
|
|
|
232
|
|
|
|
290
|
|
|
|
1,219
|
|
|
|
251
|
|
|
|
2003
|
|
|
|
1994
|
|
117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount at Which
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Cost to Company
|
|
|
Cost Capitalized
|
|
|
Carried at Close of Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings &
|
|
|
Subsequent to
|
|
|
|
|
|
Buildings &
|
|
|
Accumulated
|
|
|
Year
|
|
|
Year
|
|
Description
|
|
Encumbrances
|
|
|
Land
|
|
|
Improvements
|
|
|
Acquisition
|
|
|
Land
|
|
|
Improvements
|
|
|
Depreciation
|
|
|
Acquired
|
|
|
Built
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highlands Ranch, CO
|
|
$
|
0
|
|
|
$
|
940
|
|
|
$
|
3,721
|
|
|
$
|
0
|
|
|
$
|
940
|
|
|
$
|
3,721
|
|
|
$
|
711
|
|
|
|
2002
|
|
|
|
1999
|
|
High Point, NC
|
|
|
0
|
|
|
|
560
|
|
|
|
4,443
|
|
|
|
793
|
|
|
|
560
|
|
|
|
5,236
|
|
|
|
790
|
|
|
|
2003
|
|
|
|
2000
|
|
High Point, NC
|
|
|
0
|
|
|
|
370
|
|
|
|
2,185
|
|
|
|
410
|
|
|
|
370
|
|
|
|
2,595
|
|
|
|
419
|
|
|
|
2003
|
|
|
|
1999
|
|
High Point, NC(2)
|
|
|
2,531
|
|
|
|
330
|
|
|
|
3,395
|
|
|
|
28
|
|
|
|
330
|
|
|
|
3,423
|
|
|
|
521
|
|
|
|
2003
|
|
|
|
1994
|
|
High Point, NC(2)
|
|
|
2,856
|
|
|
|
430
|
|
|
|
4,143
|
|
|
|
0
|
|
|
|
430
|
|
|
|
4,143
|
|
|
|
625
|
|
|
|
2003
|
|
|
|
1998
|
|
Hopedale, MA
|
|
|
0
|
|
|
|
130
|
|
|
|
8,170
|
|
|
|
0
|
|
|
|
130
|
|
|
|
8,170
|
|
|
|
850
|
|
|
|
2005
|
|
|
|
1999
|
|
Houston, TX
|
|
|
0
|
|
|
|
360
|
|
|
|
2,640
|
|
|
|
0
|
|
|
|
360
|
|
|
|
2,640
|
|
|
|
481
|
|
|
|
2002
|
|
|
|
1999
|
|
Houston, TX
|
|
|
0
|
|
|
|
360
|
|
|
|
2,640
|
|
|
|
0
|
|
|
|
360
|
|
|
|
2,640
|
|
|
|
475
|
|
|
|
2002
|
|
|
|
1999
|
|
Hutchinson, KS
|
|
|
0
|
|
|
|
600
|
|
|
|
10,590
|
|
|
|
0
|
|
|
|
600
|
|
|
|
10,590
|
|
|
|
1,192
|
|
|
|
2004
|
|
|
|
1997
|
|
Irving, TX
|
|
|
0
|
|
|
|
1,030
|
|
|
|
6,823
|
|
|
|
0
|
|
|
|
1,030
|
|
|
|
6,823
|
|
|
|
48
|
|
|
|
2007
|
|
|
|
2008
|
|
Jackson, TN
|
|
|
0
|
|
|
|
540
|
|
|
|
1,633
|
|
|
|
3,015
|
|
|
|
540
|
|
|
|
4,648
|
|
|
|
443
|
|
|
|
2003
|
|
|
|
1998
|
|
Jonesboro, GA
|
|
|
0
|
|
|
|
460
|
|
|
|
1,304
|
|
|
|
0
|
|
|
|
460
|
|
|
|
1,304
|
|
|
|
206
|
|
|
|
2003
|
|
|
|
1992
|
|
Kalispell, MT
|
|
|
0
|
|
|
|
360
|
|
|
|
3,282
|
|
|
|
0
|
|
|
|
360
|
|
|
|
3,282
|
|
|
|
919
|
|
|
|
1998
|
|
|
|
1998
|
|
Kenner, LA
|
|
|
0
|
|
|
|
1,100
|
|
|
|
10,036
|
|
|
|
125
|
|
|
|
1,100
|
|
|
|
10,161
|
|
|
|
4,592
|
|
|
|
1998
|
|
|
|
2000
|
|
Kent, WA
|
|
|
0
|
|
|
|
940
|
|
|
|
20,318
|
|
|
|
253
|
|
|
|
940
|
|
|
|
20,571
|
|
|
|
542
|
|
|
|
2007
|
|
|
|
2000
|
|
Kirkland, WA(1)
|
|
|
4,660
|
|
|
|
1,880
|
|
|
|
4,315
|
|
|
|
0
|
|
|
|
1,880
|
|
|
|
4,315
|
|
|
|
639
|
|
|
|
2003
|
|
|
|
1996
|
|
Knoxville, TN
|
|
|
0
|
|
|
|
315
|
|
|
|
2,754
|
|
|
|
0
|
|
|
|
315
|
|
|
|
2,754
|
|
|
|
476
|
|
|
|
2002
|
|
|
|
1998
|
|
Lake Havasu City, AZ
|
|
|
0
|
|
|
|
450
|
|
|
|
4,223
|
|
|
|
0
|
|
|
|
450
|
|
|
|
4,223
|
|
|
|
1,109
|
|
|
|
1998
|
|
|
|
1999
|
|
Lake Havasu City, AZ
|
|
|
0
|
|
|
|
110
|
|
|
|
2,244
|
|
|
|
136
|
|
|
|
110
|
|
|
|
2,380
|
|
|
|
665
|
|
|
|
1998
|
|
|
|
1994
|
|
Lecanto, FL
|
|
|
0
|
|
|
|
200
|
|
|
|
6,900
|
|
|
|
0
|
|
|
|
200
|
|
|
|
6,900
|
|
|
|
828
|
|
|
|
2004
|
|
|
|
1986
|
|
Lenoir, NC
|
|
|
0
|
|
|
|
190
|
|
|
|
3,748
|
|
|
|
641
|
|
|
|
190
|
|
|
|
4,389
|
|
|
|
658
|
|
|
|
2003
|
|
|
|
1998
|
|
Lexington, NC
|
|
|
0
|
|
|
|
200
|
|
|
|
3,900
|
|
|
|
1,015
|
|
|
|
200
|
|
|
|
4,915
|
|
|
|
832
|
|
|
|
2002
|
|
|
|
1997
|
|
Longview, TX
|
|
|
0
|
|
|
|
610
|
|
|
|
5,520
|
|
|
|
0
|
|
|
|
610
|
|
|
|
5,520
|
|
|
|
236
|
|
|
|
2006
|
|
|
|
2007
|
|
Manassas, VA(1)
|
|
|
3,547
|
|
|
|
750
|
|
|
|
7,446
|
|
|
|
0
|
|
|
|
750
|
|
|
|
7,446
|
|
|
|
1,055
|
|
|
|
2003
|
|
|
|
1996
|
|
Mansfield, TX
|
|
|
0
|
|
|
|
660
|
|
|
|
5,251
|
|
|
|
0
|
|
|
|
660
|
|
|
|
5,251
|
|
|
|
227
|
|
|
|
2006
|
|
|
|
2007
|
|
Margate, FL
|
|
|
0
|
|
|
|
500
|
|
|
|
7,303
|
|
|
|
2,459
|
|
|
|
500
|
|
|
|
9,762
|
|
|
|
5,426
|
|
|
|
1998
|
|
|
|
1972
|
|
Martinsville, NC
|
|
|
0
|
|
|
|
349
|
|
|
|
0
|
|
|
|
0
|
|
|
|
349
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2003
|
|
|
|
|
|
Marysville, CA
|
|
|
0
|
|
|
|
450
|
|
|
|
4,172
|
|
|
|
44
|
|
|
|
450
|
|
|
|
4,216
|
|
|
|
941
|
|
|
|
1998
|
|
|
|
1999
|
|
Matthews, NC(2)
|
|
|
3,630
|
|
|
|
560
|
|
|
|
4,738
|
|
|
|
0
|
|
|
|
560
|
|
|
|
4,738
|
|
|
|
747
|
|
|
|
2003
|
|
|
|
1998
|
|
McHenry, IL
|
|
|
0
|
|
|
|
1,632
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,632
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2006
|
|
|
|
|
|
McHenry, IL
|
|
|
0
|
|
|
|
3,550
|
|
|
|
15,300
|
|
|
|
6,510
|
|
|
|
3,550
|
|
|
|
21,810
|
|
|
|
822
|
|
|
|
2006
|
|
|
|
2004
|
|
Menomonee Falls, WI
|
|
|
0
|
|
|
|
1,020
|
|
|
|
6,984
|
|
|
|
0
|
|
|
|
1,020
|
|
|
|
6,984
|
|
|
|
234
|
|
|
|
2006
|
|
|
|
2007
|
|
Miami, FL
|
|
|
0
|
|
|
|
960
|
|
|
|
4,037
|
|
|
|
0
|
|
|
|
960
|
|
|
|
4,037
|
|
|
|
91
|
|
|
|
2008
|
|
|
|
1987
|
|
Middleburg Heights, OH
|
|
|
0
|
|
|
|
960
|
|
|
|
7,780
|
|
|
|
0
|
|
|
|
960
|
|
|
|
7,780
|
|
|
|
894
|
|
|
|
2004
|
|
|
|
1998
|
|
Middleton, WI
|
|
|
0
|
|
|
|
420
|
|
|
|
4,006
|
|
|
|
600
|
|
|
|
420
|
|
|
|
4,606
|
|
|
|
750
|
|
|
|
2001
|
|
|
|
1991
|
|
Midwest City, OK
|
|
|
0
|
|
|
|
95
|
|
|
|
1,385
|
|
|
|
0
|
|
|
|
95
|
|
|
|
1,385
|
|
|
|
507
|
|
|
|
1996
|
|
|
|
1995
|
|
Missoula, MT(3)
|
|
|
6,218
|
|
|
|
550
|
|
|
|
7,490
|
|
|
|
0
|
|
|
|
550
|
|
|
|
7,490
|
|
|
|
671
|
|
|
|
2005
|
|
|
|
1998
|
|
Monroe, NC
|
|
|
0
|
|
|
|
470
|
|
|
|
3,681
|
|
|
|
648
|
|
|
|
470
|
|
|
|
4,329
|
|
|
|
666
|
|
|
|
2003
|
|
|
|
2001
|
|
Monroe, NC
|
|
|
0
|
|
|
|
310
|
|
|
|
4,799
|
|
|
|
857
|
|
|
|
310
|
|
|
|
5,656
|
|
|
|
819
|
|
|
|
2003
|
|
|
|
2000
|
|
Monroe, NC(2)
|
|
|
3,248
|
|
|
|
450
|
|
|
|
4,021
|
|
|
|
114
|
|
|
|
450
|
|
|
|
4,135
|
|
|
|
630
|
|
|
|
2003
|
|
|
|
1997
|
|
Morehead City, NC
|
|
|
0
|
|
|
|
200
|
|
|
|
3,104
|
|
|
|
1,648
|
|
|
|
200
|
|
|
|
4,752
|
|
|
|
1,072
|
|
|
|
1999
|
|
|
|
1999
|
|
Mt. Vernon, WA
|
|
|
0
|
|
|
|
400
|
|
|
|
2,200
|
|
|
|
156
|
|
|
|
400
|
|
|
|
2,356
|
|
|
|
123
|
|
|
|
2006
|
|
|
|
2001
|
|
Nacogdoches, TX
|
|
|
0
|
|
|
|
390
|
|
|
|
5,754
|
|
|
|
0
|
|
|
|
390
|
|
|
|
5,754
|
|
|
|
234
|
|
|
|
2006
|
|
|
|
2007
|
|
Nashville, TN
|
|
|
0
|
|
|
|
4,910
|
|
|
|
29,590
|
|
|
|
0
|
|
|
|
4,910
|
|
|
|
29,590
|
|
|
|
398
|
|
|
|
2008
|
|
|
|
2007
|
|
New York, NY
|
|
|
0
|
|
|
|
1,440
|
|
|
|
21,460
|
|
|
|
975
|
|
|
|
1,440
|
|
|
|
22,435
|
|
|
|
1,130
|
|
|
|
2006
|
|
|
|
1959
|
|
Newark, DE
|
|
|
0
|
|
|
|
560
|
|
|
|
21,220
|
|
|
|
0
|
|
|
|
560
|
|
|
|
21,220
|
|
|
|
2,347
|
|
|
|
2004
|
|
|
|
1998
|
|
Newburyport, MA
|
|
|
0
|
|
|
|
960
|
|
|
|
8,290
|
|
|
|
0
|
|
|
|
960
|
|
|
|
8,290
|
|
|
|
1,511
|
|
|
|
2002
|
|
|
|
1999
|
|
Norman, OK
|
|
|
0
|
|
|
|
55
|
|
|
|
1,484
|
|
|
|
0
|
|
|
|
55
|
|
|
|
1,484
|
|
|
|
626
|
|
|
|
1995
|
|
|
|
1995
|
|
North Augusta, SC
|
|
|
0
|
|
|
|
332
|
|
|
|
2,558
|
|
|
|
0
|
|
|
|
332
|
|
|
|
2,558
|
|
|
|
718
|
|
|
|
1999
|
|
|
|
1998
|
|
North Miami Beach, FL
|
|
|
0
|
|
|
|
300
|
|
|
|
5,709
|
|
|
|
2,006
|
|
|
|
300
|
|
|
|
7,715
|
|
|
|
4,161
|
|
|
|
1998
|
|
|
|
1987
|
|
North Oklahoma City, OK
|
|
|
0
|
|
|
|
87
|
|
|
|
1,508
|
|
|
|
0
|
|
|
|
87
|
|
|
|
1,508
|
|
|
|
518
|
|
|
|
1996
|
|
|
|
1996
|
|
Ogden, UT
|
|
|
0
|
|
|
|
360
|
|
|
|
6,700
|
|
|
|
0
|
|
|
|
360
|
|
|
|
6,700
|
|
|
|
778
|
|
|
|
2004
|
|
|
|
1998
|
|
Oklahoma City, OK
|
|
|
0
|
|
|
|
130
|
|
|
|
1,350
|
|
|
|
0
|
|
|
|
130
|
|
|
|
1,350
|
|
|
|
484
|
|
|
|
1995
|
|
|
|
1996
|
|
Oklahoma City, OK
|
|
|
0
|
|
|
|
220
|
|
|
|
2,943
|
|
|
|
0
|
|
|
|
220
|
|
|
|
2,943
|
|
|
|
770
|
|
|
|
1999
|
|
|
|
1999
|
|
Oklahoma City, OK
|
|
|
0
|
|
|
|
590
|
|
|
|
7,513
|
|
|
|
0
|
|
|
|
590
|
|
|
|
7,513
|
|
|
|
104
|
|
|
|
2007
|
|
|
|
2008
|
|
Oneonta, NY
|
|
|
0
|
|
|
|
80
|
|
|
|
5,020
|
|
|
|
0
|
|
|
|
80
|
|
|
|
5,020
|
|
|
|
170
|
|
|
|
2007
|
|
|
|
1996
|
|
Oshkosh, WI
|
|
|
0
|
|
|
|
900
|
|
|
|
3,800
|
|
|
|
3,687
|
|
|
|
900
|
|
|
|
7,487
|
|
|
|
472
|
|
|
|
2006
|
|
|
|
2005
|
|
Oswego, IL
|
|
|
0
|
|
|
|
900
|
|
|
|
8,047
|
|
|
|
0
|
|
|
|
900
|
|
|
|
8,047
|
|
|
|
56
|
|
|
|
2006
|
|
|
|
2008
|
|
Owasso, OK
|
|
|
0
|
|
|
|
215
|
|
|
|
1,380
|
|
|
|
0
|
|
|
|
215
|
|
|
|
1,380
|
|
|
|
479
|
|
|
|
1996
|
|
|
|
1996
|
|
Palestine, TX
|
|
|
0
|
|
|
|
173
|
|
|
|
1,410
|
|
|
|
0
|
|
|
|
173
|
|
|
|
1,410
|
|
|
|
491
|
|
|
|
1996
|
|
|
|
1996
|
|
Palestine, TX
|
|
|
0
|
|
|
|
180
|
|
|
|
4,320
|
|
|
|
0
|
|
|
|
180
|
|
|
|
4,320
|
|
|
|
297
|
|
|
|
2006
|
|
|
|
2005
|
|
Paris, TX
|
|
|
0
|
|
|
|
490
|
|
|
|
5,452
|
|
|
|
0
|
|
|
|
490
|
|
|
|
5,452
|
|
|
|
786
|
|
|
|
2005
|
|
|
|
2006
|
|
Paso Robles, CA
|
|
|
0
|
|
|
|
1,770
|
|
|
|
8,630
|
|
|
|
0
|
|
|
|
1,770
|
|
|
|
8,630
|
|
|
|
1,654
|
|
|
|
2002
|
|
|
|
1998
|
|
Pinehurst, NC
|
|
|
0
|
|
|
|
290
|
|
|
|
2,690
|
|
|
|
484
|
|
|
|
290
|
|
|
|
3,174
|
|
|
|
506
|
|
|
|
2003
|
|
|
|
1998
|
|
Piqua, OH
|
|
|
0
|
|
|
|
204
|
|
|
|
1,885
|
|
|
|
0
|
|
|
|
204
|
|
|
|
1,885
|
|
|
|
566
|
|
|
|
1997
|
|
|
|
1997
|
|
Pittsburgh, PA
|
|
|
0
|
|
|
|
1,750
|
|
|
|
8,572
|
|
|
|
115
|
|
|
|
1,750
|
|
|
|
8,687
|
|
|
|
917
|
|
|
|
2005
|
|
|
|
1998
|
|
Ponca City, OK
|
|
|
0
|
|
|
|
114
|
|
|
|
1,536
|
|
|
|
0
|
|
|
|
114
|
|
|
|
1,536
|
|
|
|
557
|
|
|
|
1995
|
|
|
|
1995
|
|
Portland, OR
|
|
|
0
|
|
|
|
628
|
|
|
|
3,585
|
|
|
|
232
|
|
|
|
628
|
|
|
|
3,817
|
|
|
|
1,000
|
|
|
|
1998
|
|
|
|
1999
|
|
Quincy, MA
|
|
|
0
|
|
|
|
2,690
|
|
|
|
15,410
|
|
|
|
0
|
|
|
|
2,690
|
|
|
|
15,410
|
|
|
|
1,624
|
|
|
|
2004
|
|
|
|
1999
|
|
Reidsville, NC
|
|
|
0
|
|
|
|
170
|
|
|
|
3,830
|
|
|
|
857
|
|
|
|
170
|
|
|
|
4,687
|
|
|
|
805
|
|
|
|
2002
|
|
|
|
1998
|
|
Reno, NV
|
|
|
0
|
|
|
|
1,060
|
|
|
|
11,440
|
|
|
|
0
|
|
|
|
1,060
|
|
|
|
11,440
|
|
|
|
1,313
|
|
|
|
2004
|
|
|
|
1998
|
|
118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount at Which
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Cost to Company
|
|
|
Cost Capitalized
|
|
|
Carried at Close of Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings &
|
|
|
Subsequent to
|
|
|
|
|
|
Buildings &
|
|
|
Accumulated
|
|
|
Year
|
|
|
Year
|
|
Description
|
|
Encumbrances
|
|
|
Land
|
|
|
Improvements
|
|
|
Acquisition
|
|
|
Land
|
|
|
Improvements
|
|
|
Depreciation
|
|
|
Acquired
|
|
|
Built
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ridgeland, MS(1)
|
|
$
|
4,505
|
|
|
$
|
520
|
|
|
$
|
7,675
|
|
|
$
|
0
|
|
|
$
|
520
|
|
|
$
|
7,675
|
|
|
$
|
1,089
|
|
|
|
2003
|
|
|
|
1997
|
|
Rocky Hill, CT
|
|
|
0
|
|
|
|
1,460
|
|
|
|
7,040
|
|
|
|
0
|
|
|
|
1,460
|
|
|
|
7,040
|
|
|
|
1,420
|
|
|
|
2002
|
|
|
|
1998
|
|
Rocky Hill, CT
|
|
|
0
|
|
|
|
1,090
|
|
|
|
6,710
|
|
|
|
0
|
|
|
|
1,090
|
|
|
|
6,710
|
|
|
|
1,001
|
|
|
|
2003
|
|
|
|
1996
|
|
Romeroville, IL
|
|
|
0
|
|
|
|
1,895
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,895
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2006
|
|
|
|
|
|
Roswell, GA
|
|
|
0
|
|
|
|
620
|
|
|
|
2,200
|
|
|
|
184
|
|
|
|
620
|
|
|
|
2,384
|
|
|
|
464
|
|
|
|
2002
|
|
|
|
1997
|
|
Salem, OR
|
|
|
0
|
|
|
|
449
|
|
|
|
5,172
|
|
|
|
0
|
|
|
|
449
|
|
|
|
5,172
|
|
|
|
1,432
|
|
|
|
1999
|
|
|
|
1998
|
|
Salisbury, NC(2)
|
|
|
3,519
|
|
|
|
370
|
|
|
|
5,697
|
|
|
|
168
|
|
|
|
370
|
|
|
|
5,865
|
|
|
|
856
|
|
|
|
2003
|
|
|
|
1997
|
|
Salt Lake City, UT
|
|
|
0
|
|
|
|
1,060
|
|
|
|
6,142
|
|
|
|
0
|
|
|
|
1,060
|
|
|
|
6,142
|
|
|
|
1,374
|
|
|
|
1999
|
|
|
|
1986
|
|
San Angelo, TX
|
|
|
0
|
|
|
|
260
|
|
|
|
8,800
|
|
|
|
0
|
|
|
|
260
|
|
|
|
8,800
|
|
|
|
990
|
|
|
|
2004
|
|
|
|
1997
|
|
San Juan Capistrano, CA
|
|
|
0
|
|
|
|
1,390
|
|
|
|
6,942
|
|
|
|
0
|
|
|
|
1,390
|
|
|
|
6,942
|
|
|
|
1,430
|
|
|
|
2000
|
|
|
|
2001
|
|
Sarasota, FL
|
|
|
0
|
|
|
|
475
|
|
|
|
3,175
|
|
|
|
0
|
|
|
|
475
|
|
|
|
3,175
|
|
|
|
1,179
|
|
|
|
1996
|
|
|
|
1995
|
|
Scottsdale, AZ
|
|
|
0
|
|
|
|
2,500
|
|
|
|
3,890
|
|
|
|
0
|
|
|
|
2,500
|
|
|
|
3,890
|
|
|
|
62
|
|
|
|
2008
|
|
|
|
1999
|
|
Seven Fields, PA
|
|
|
0
|
|
|
|
484
|
|
|
|
4,663
|
|
|
|
59
|
|
|
|
484
|
|
|
|
4,722
|
|
|
|
1,313
|
|
|
|
1999
|
|
|
|
1999
|
|
Shawnee, OK
|
|
|
0
|
|
|
|
80
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
80
|
|
|
|
1,400
|
|
|
|
508
|
|
|
|
1996
|
|
|
|
1995
|
|
Sheboygan, WI
|
|
|
0
|
|
|
|
80
|
|
|
|
5,320
|
|
|
|
0
|
|
|
|
80
|
|
|
|
5,320
|
|
|
|
364
|
|
|
|
2006
|
|
|
|
2006
|
|
Sherman, TX
|
|
|
0
|
|
|
|
700
|
|
|
|
5,221
|
|
|
|
0
|
|
|
|
700
|
|
|
|
5,221
|
|
|
|
283
|
|
|
|
2005
|
|
|
|
2006
|
|
Smithfield, NC(2)
|
|
|
3,389
|
|
|
|
290
|
|
|
|
5,680
|
|
|
|
0
|
|
|
|
290
|
|
|
|
5,680
|
|
|
|
850
|
|
|
|
2003
|
|
|
|
1998
|
|
Statesville, NC
|
|
|
0
|
|
|
|
150
|
|
|
|
1,447
|
|
|
|
266
|
|
|
|
150
|
|
|
|
1,713
|
|
|
|
272
|
|
|
|
2003
|
|
|
|
1990
|
|
Statesville, NC
|
|
|
0
|
|
|
|
310
|
|
|
|
6,183
|
|
|
|
8
|
|
|
|
310
|
|
|
|
6,191
|
|
|
|
890
|
|
|
|
2003
|
|
|
|
1996
|
|
Statesville, NC(2)
|
|
|
2,376
|
|
|
|
140
|
|
|
|
3,627
|
|
|
|
0
|
|
|
|
140
|
|
|
|
3,627
|
|
|
|
545
|
|
|
|
2003
|
|
|
|
1999
|
|
Stillwater, OK
|
|
|
0
|
|
|
|
80
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
80
|
|
|
|
1,400
|
|
|
|
512
|
|
|
|
1995
|
|
|
|
1995
|
|
Texarkana, TX
|
|
|
0
|
|
|
|
192
|
|
|
|
1,403
|
|
|
|
0
|
|
|
|
192
|
|
|
|
1,403
|
|
|
|
486
|
|
|
|
1996
|
|
|
|
1996
|
|
Troy, OH
|
|
|
0
|
|
|
|
200
|
|
|
|
2,000
|
|
|
|
0
|
|
|
|
200
|
|
|
|
2,000
|
|
|
|
643
|
|
|
|
1997
|
|
|
|
1997
|
|
Tyler, TX
|
|
|
0
|
|
|
|
650
|
|
|
|
5,268
|
|
|
|
0
|
|
|
|
650
|
|
|
|
5,268
|
|
|
|
226
|
|
|
|
2006
|
|
|
|
2007
|
|
Valparaiso, IN
|
|
|
0
|
|
|
|
112
|
|
|
|
2,557
|
|
|
|
1
|
|
|
|
112
|
|
|
|
2,558
|
|
|
|
541
|
|
|
|
2001
|
|
|
|
1998
|
|
Valparaiso, IN
|
|
|
0
|
|
|
|
108
|
|
|
|
2,962
|
|
|
|
0
|
|
|
|
108
|
|
|
|
2,962
|
|
|
|
614
|
|
|
|
2001
|
|
|
|
1999
|
|
Vero Beach, FL
|
|
|
0
|
|
|
|
263
|
|
|
|
3,187
|
|
|
|
0
|
|
|
|
263
|
|
|
|
3,187
|
|
|
|
654
|
|
|
|
2001
|
|
|
|
1999
|
|
Vero Beach, FL
|
|
|
0
|
|
|
|
297
|
|
|
|
3,263
|
|
|
|
0
|
|
|
|
297
|
|
|
|
3,263
|
|
|
|
676
|
|
|
|
2001
|
|
|
|
1996
|
|
W. Hartford, CT
|
|
|
0
|
|
|
|
2,650
|
|
|
|
5,980
|
|
|
|
0
|
|
|
|
2,650
|
|
|
|
5,980
|
|
|
|
807
|
|
|
|
2004
|
|
|
|
1905
|
|
Wake Forest, NC
|
|
|
0
|
|
|
|
200
|
|
|
|
3,003
|
|
|
|
1,742
|
|
|
|
200
|
|
|
|
4,745
|
|
|
|
1,146
|
|
|
|
1998
|
|
|
|
1999
|
|
Waterford, CT
|
|
|
0
|
|
|
|
1,360
|
|
|
|
12,539
|
|
|
|
0
|
|
|
|
1,360
|
|
|
|
12,539
|
|
|
|
2,328
|
|
|
|
2002
|
|
|
|
2000
|
|
Waxahachie, TX
|
|
|
0
|
|
|
|
154
|
|
|
|
1,429
|
|
|
|
0
|
|
|
|
154
|
|
|
|
1,429
|
|
|
|
497
|
|
|
|
1996
|
|
|
|
1996
|
|
Waxahachie, TX
|
|
|
0
|
|
|
|
650
|
|
|
|
5,763
|
|
|
|
0
|
|
|
|
650
|
|
|
|
5,763
|
|
|
|
93
|
|
|
|
2007
|
|
|
|
2008
|
|
Weatherford, TX
|
|
|
0
|
|
|
|
660
|
|
|
|
5,261
|
|
|
|
0
|
|
|
|
660
|
|
|
|
5,261
|
|
|
|
228
|
|
|
|
2006
|
|
|
|
2007
|
|
Westerville, OH
|
|
|
0
|
|
|
|
740
|
|
|
|
8,287
|
|
|
|
2,736
|
|
|
|
740
|
|
|
|
11,023
|
|
|
|
4,280
|
|
|
|
1998
|
|
|
|
2001
|
|
Wilmington, NC
|
|
|
0
|
|
|
|
210
|
|
|
|
2,991
|
|
|
|
0
|
|
|
|
210
|
|
|
|
2,991
|
|
|
|
821
|
|
|
|
1999
|
|
|
|
1999
|
|
Winston-Salem, NC
|
|
|
0
|
|
|
|
360
|
|
|
|
2,514
|
|
|
|
459
|
|
|
|
360
|
|
|
|
2,973
|
|
|
|
456
|
|
|
|
2003
|
|
|
|
1996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assisted Living Facilities
|
|
|
80,864
|
|
|
|
103,536
|
|
|
|
868,344
|
|
|
|
47,242
|
|
|
|
103,536
|
|
|
|
915,586
|
|
|
|
150,672
|
|
|
|
|
|
|
|
|
|
Skilled Nuring Facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agawam, MA
|
|
|
0
|
|
|
|
880
|
|
|
|
16,112
|
|
|
|
2,134
|
|
|
|
880
|
|
|
|
18,246
|
|
|
|
3,121
|
|
|
|
2002
|
|
|
|
1993
|
|
Akron, OH
|
|
|
0
|
|
|
|
290
|
|
|
|
8,219
|
|
|
|
491
|
|
|
|
290
|
|
|
|
8,710
|
|
|
|
772
|
|
|
|
2005
|
|
|
|
1961
|
|
Akron, OH
|
|
|
0
|
|
|
|
630
|
|
|
|
7,535
|
|
|
|
184
|
|
|
|
630
|
|
|
|
7,719
|
|
|
|
540
|
|
|
|
2006
|
|
|
|
1915
|
|
Alexandria, VA
|
|
|
0
|
|
|
|
1,330
|
|
|
|
7,820
|
|
|
|
0
|
|
|
|
1,330
|
|
|
|
7,820
|
|
|
|
0
|
|
|
|
2008
|
|
|
|
1955
|
|
Alliance, OH(5)
|
|
|
4,856
|
|
|
|
270
|
|
|
|
7,723
|
|
|
|
107
|
|
|
|
270
|
|
|
|
7,830
|
|
|
|
627
|
|
|
|
2006
|
|
|
|
1982
|
|
Amarillo, TX
|
|
|
0
|
|
|
|
540
|
|
|
|
7,260
|
|
|
|
0
|
|
|
|
540
|
|
|
|
7,260
|
|
|
|
745
|
|
|
|
2005
|
|
|
|
1986
|
|
Arcadia, LA
|
|
|
0
|
|
|
|
240
|
|
|
|
5,460
|
|
|
|
0
|
|
|
|
240
|
|
|
|
5,460
|
|
|
|
504
|
|
|
|
2006
|
|
|
|
2006
|
|
Atlanta, GA
|
|
|
0
|
|
|
|
460
|
|
|
|
5,540
|
|
|
|
0
|
|
|
|
460
|
|
|
|
5,540
|
|
|
|
618
|
|
|
|
2005
|
|
|
|
1972
|
|
Auburndale, FL
|
|
|
0
|
|
|
|
750
|
|
|
|
5,950
|
|
|
|
0
|
|
|
|
750
|
|
|
|
5,950
|
|
|
|
631
|
|
|
|
2005
|
|
|
|
1983
|
|
Austin, TX
|
|
|
0
|
|
|
|
730
|
|
|
|
18,970
|
|
|
|
0
|
|
|
|
730
|
|
|
|
18,970
|
|
|
|
893
|
|
|
|
2007
|
|
|
|
2006
|
|
Baltic, OH(5)
|
|
|
3,980
|
|
|
|
50
|
|
|
|
8,709
|
|
|
|
189
|
|
|
|
50
|
|
|
|
8,898
|
|
|
|
694
|
|
|
|
2006
|
|
|
|
1983
|
|
Baytown, TX
|
|
|
0
|
|
|
|
450
|
|
|
|
6,150
|
|
|
|
0
|
|
|
|
450
|
|
|
|
6,150
|
|
|
|
1,148
|
|
|
|
2002
|
|
|
|
2000
|
|
Beachwood, OH
|
|
|
0
|
|
|
|
1,260
|
|
|
|
23,478
|
|
|
|
0
|
|
|
|
1,260
|
|
|
|
23,478
|
|
|
|
4,570
|
|
|
|
2001
|
|
|
|
1990
|
|
Beattyville, KY
|
|
|
0
|
|
|
|
100
|
|
|
|
6,900
|
|
|
|
0
|
|
|
|
100
|
|
|
|
6,900
|
|
|
|
654
|
|
|
|
2005
|
|
|
|
1972
|
|
Bernice, LA
|
|
|
0
|
|
|
|
16
|
|
|
|
1,017
|
|
|
|
0
|
|
|
|
16
|
|
|
|
1,017
|
|
|
|
197
|
|
|
|
2005
|
|
|
|
1969
|
|
Birmingham, AL
|
|
|
0
|
|
|
|
390
|
|
|
|
4,902
|
|
|
|
0
|
|
|
|
390
|
|
|
|
4,902
|
|
|
|
852
|
|
|
|
2003
|
|
|
|
1977
|
|
Birmingham, AL
|
|
|
0
|
|
|
|
340
|
|
|
|
5,734
|
|
|
|
0
|
|
|
|
340
|
|
|
|
5,734
|
|
|
|
937
|
|
|
|
2003
|
|
|
|
1974
|
|
Boise, ID
|
|
|
0
|
|
|
|
810
|
|
|
|
5,401
|
|
|
|
0
|
|
|
|
810
|
|
|
|
5,401
|
|
|
|
1,903
|
|
|
|
1998
|
|
|
|
1966
|
|
Boonville, IN
|
|
|
0
|
|
|
|
190
|
|
|
|
5,510
|
|
|
|
0
|
|
|
|
190
|
|
|
|
5,510
|
|
|
|
1,034
|
|
|
|
2002
|
|
|
|
2000
|
|
Bountiful, UT
|
|
|
0
|
|
|
|
991
|
|
|
|
6,850
|
|
|
|
0
|
|
|
|
991
|
|
|
|
6,850
|
|
|
|
624
|
|
|
|
2005
|
|
|
|
1987
|
|
Boynton Beach, FL
|
|
|
0
|
|
|
|
980
|
|
|
|
8,112
|
|
|
|
0
|
|
|
|
980
|
|
|
|
8,112
|
|
|
|
1,040
|
|
|
|
2004
|
|
|
|
1999
|
|
Braintree, MA
|
|
|
0
|
|
|
|
170
|
|
|
|
7,157
|
|
|
|
1,290
|
|
|
|
170
|
|
|
|
8,447
|
|
|
|
4,906
|
|
|
|
1997
|
|
|
|
1968
|
|
Brandon, MS
|
|
|
0
|
|
|
|
115
|
|
|
|
9,549
|
|
|
|
0
|
|
|
|
115
|
|
|
|
9,549
|
|
|
|
1,571
|
|
|
|
2003
|
|
|
|
1963
|
|
Bridgewater, NJ
|
|
|
0
|
|
|
|
1,850
|
|
|
|
3,050
|
|
|
|
0
|
|
|
|
1,850
|
|
|
|
3,050
|
|
|
|
504
|
|
|
|
2004
|
|
|
|
1970
|
|
Brighton, MA
|
|
|
0
|
|
|
|
240
|
|
|
|
3,859
|
|
|
|
2,126
|
|
|
|
240
|
|
|
|
5,985
|
|
|
|
591
|
|
|
|
2005
|
|
|
|
1982
|
|
Broadview Heights, OH
|
|
|
0
|
|
|
|
920
|
|
|
|
12,400
|
|
|
|
0
|
|
|
|
920
|
|
|
|
12,400
|
|
|
|
2,420
|
|
|
|
2001
|
|
|
|
1984
|
|
Bunnell, FL
|
|
|
0
|
|
|
|
260
|
|
|
|
7,118
|
|
|
|
0
|
|
|
|
260
|
|
|
|
7,118
|
|
|
|
966
|
|
|
|
2004
|
|
|
|
1985
|
|
Butler, AL
|
|
|
0
|
|
|
|
90
|
|
|
|
3,510
|
|
|
|
0
|
|
|
|
90
|
|
|
|
3,510
|
|
|
|
516
|
|
|
|
2004
|
|
|
|
1960
|
|
Byrdstown, TN
|
|
|
0
|
|
|
|
0
|
|
|
|
2,414
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,414
|
|
|
|
764
|
|
|
|
2004
|
|
|
|
1982
|
|
Canton, MA
|
|
|
0
|
|
|
|
820
|
|
|
|
8,201
|
|
|
|
263
|
|
|
|
820
|
|
|
|
8,464
|
|
|
|
1,674
|
|
|
|
2002
|
|
|
|
1993
|
|
119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount at Which
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Cost to Company
|
|
|
Cost Capitalized
|
|
|
Carried at Close of Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings &
|
|
|
Subsequent to
|
|
|
|
|
|
Buildings &
|
|
|
Accumulated
|
|
|
Year
|
|
|
Year
|
|
Description
|
|
Encumbrances
|
|
|
Land
|
|
|
Improvements
|
|
|
Acquisition
|
|
|
Land
|
|
|
Improvements
|
|
|
Depreciation
|
|
|
Acquired
|
|
|
Built
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrollton, TX
|
|
$
|
0
|
|
|
$
|
730
|
|
|
$
|
2,770
|
|
|
$
|
0
|
|
|
$
|
730
|
|
|
$
|
2,770
|
|
|
$
|
356
|
|
|
|
2005
|
|
|
|
1976
|
|
Centerville, MA
|
|
|
0
|
|
|
|
1,490
|
|
|
|
9,650
|
|
|
|
8,443
|
|
|
|
1,490
|
|
|
|
18,093
|
|
|
|
1,363
|
|
|
|
2004
|
|
|
|
1982
|
|
Cheswick, PA
|
|
|
0
|
|
|
|
384
|
|
|
|
6,041
|
|
|
|
1,293
|
|
|
|
384
|
|
|
|
7,334
|
|
|
|
2,225
|
|
|
|
1998
|
|
|
|
1933
|
|
Clarksville, TN
|
|
|
0
|
|
|
|
480
|
|
|
|
5,020
|
|
|
|
0
|
|
|
|
480
|
|
|
|
5,020
|
|
|
|
374
|
|
|
|
2006
|
|
|
|
1989
|
|
Clearwater, FL
|
|
|
0
|
|
|
|
160
|
|
|
|
7,218
|
|
|
|
0
|
|
|
|
160
|
|
|
|
7,218
|
|
|
|
887
|
|
|
|
2004
|
|
|
|
1961
|
|
Clearwater, FL
|
|
|
0
|
|
|
|
1,260
|
|
|
|
2,740
|
|
|
|
0
|
|
|
|
1,260
|
|
|
|
2,740
|
|
|
|
378
|
|
|
|
2005
|
|
|
|
1983
|
|
Cleveland, MS
|
|
|
0
|
|
|
|
0
|
|
|
|
1,850
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,850
|
|
|
|
1,018
|
|
|
|
2003
|
|
|
|
1977
|
|
Cleveland, TN
|
|
|
0
|
|
|
|
350
|
|
|
|
5,000
|
|
|
|
122
|
|
|
|
350
|
|
|
|
5,122
|
|
|
|
1,073
|
|
|
|
2001
|
|
|
|
1987
|
|
Coeur dAlene, ID
|
|
|
0
|
|
|
|
600
|
|
|
|
7,878
|
|
|
|
0
|
|
|
|
600
|
|
|
|
7,878
|
|
|
|
2,430
|
|
|
|
1998
|
|
|
|
1996
|
|
Colorado Springs, CO
|
|
|
0
|
|
|
|
310
|
|
|
|
6,290
|
|
|
|
0
|
|
|
|
310
|
|
|
|
6,290
|
|
|
|
685
|
|
|
|
2005
|
|
|
|
1985
|
|
Columbia, TN
|
|
|
0
|
|
|
|
590
|
|
|
|
3,787
|
|
|
|
0
|
|
|
|
590
|
|
|
|
3,787
|
|
|
|
735
|
|
|
|
2003
|
|
|
|
1974
|
|
Columbus, IN
|
|
|
0
|
|
|
|
530
|
|
|
|
5,170
|
|
|
|
1,540
|
|
|
|
530
|
|
|
|
6,710
|
|
|
|
1,122
|
|
|
|
2002
|
|
|
|
2001
|
|
Columbus, OH
|
|
|
0
|
|
|
|
1,070
|
|
|
|
11,726
|
|
|
|
1,204
|
|
|
|
1,070
|
|
|
|
12,930
|
|
|
|
1,062
|
|
|
|
2005
|
|
|
|
1968
|
|
Columbus, OH
|
|
|
0
|
|
|
|
1,860
|
|
|
|
16,624
|
|
|
|
1,077
|
|
|
|
1,860
|
|
|
|
17,701
|
|
|
|
1,366
|
|
|
|
2006
|
|
|
|
1978
|
|
Columbus, OH(5)
|
|
|
4,533
|
|
|
|
1,010
|
|
|
|
4,931
|
|
|
|
91
|
|
|
|
1,010
|
|
|
|
5,022
|
|
|
|
441
|
|
|
|
2006
|
|
|
|
1983
|
|
Corpus Christi, TX
|
|
|
0
|
|
|
|
307
|
|
|
|
443
|
|
|
|
0
|
|
|
|
307
|
|
|
|
443
|
|
|
|
129
|
|
|
|
2005
|
|
|
|
1985
|
|
Corpus Christi, TX
|
|
|
0
|
|
|
|
400
|
|
|
|
1,916
|
|
|
|
0
|
|
|
|
400
|
|
|
|
1,916
|
|
|
|
259
|
|
|
|
2005
|
|
|
|
1985
|
|
Dade City, FL
|
|
|
0
|
|
|
|
250
|
|
|
|
7,150
|
|
|
|
0
|
|
|
|
250
|
|
|
|
7,150
|
|
|
|
905
|
|
|
|
2004
|
|
|
|
1975
|
|
Daytona Beach, FL
|
|
|
0
|
|
|
|
470
|
|
|
|
5,930
|
|
|
|
0
|
|
|
|
470
|
|
|
|
5,930
|
|
|
|
817
|
|
|
|
2004
|
|
|
|
1986
|
|
Daytona Beach, FL
|
|
|
0
|
|
|
|
490
|
|
|
|
5,710
|
|
|
|
0
|
|
|
|
490
|
|
|
|
5,710
|
|
|
|
816
|
|
|
|
2004
|
|
|
|
1961
|
|
Daytona Beach, FL
|
|
|
0
|
|
|
|
1,850
|
|
|
|
2,650
|
|
|
|
0
|
|
|
|
1,850
|
|
|
|
2,650
|
|
|
|
379
|
|
|
|
2005
|
|
|
|
1964
|
|
DeBary, FL
|
|
|
0
|
|
|
|
440
|
|
|
|
7,460
|
|
|
|
0
|
|
|
|
440
|
|
|
|
7,460
|
|
|
|
940
|
|
|
|
2004
|
|
|
|
1965
|
|
Dedham, MA
|
|
|
0
|
|
|
|
1,360
|
|
|
|
9,830
|
|
|
|
0
|
|
|
|
1,360
|
|
|
|
9,830
|
|
|
|
2,008
|
|
|
|
2002
|
|
|
|
1996
|
|
Defuniak Springs, FL
|
|
|
0
|
|
|
|
1,350
|
|
|
|
10,250
|
|
|
|
0
|
|
|
|
1,350
|
|
|
|
10,250
|
|
|
|
688
|
|
|
|
2006
|
|
|
|
1980
|
|
DeLand, FL
|
|
|
0
|
|
|
|
220
|
|
|
|
7,080
|
|
|
|
0
|
|
|
|
220
|
|
|
|
7,080
|
|
|
|
900
|
|
|
|
2004
|
|
|
|
1967
|
|
Denton, MD
|
|
|
0
|
|
|
|
390
|
|
|
|
4,010
|
|
|
|
0
|
|
|
|
390
|
|
|
|
4,010
|
|
|
|
778
|
|
|
|
2003
|
|
|
|
1982
|
|
Denver, CO
|
|
|
0
|
|
|
|
2,530
|
|
|
|
9,514
|
|
|
|
0
|
|
|
|
2,530
|
|
|
|
9,514
|
|
|
|
842
|
|
|
|
2005
|
|
|
|
1986
|
|
Douglasville, GA
|
|
|
0
|
|
|
|
1,350
|
|
|
|
7,471
|
|
|
|
0
|
|
|
|
1,350
|
|
|
|
7,471
|
|
|
|
1,304
|
|
|
|
2003
|
|
|
|
1975
|
|
Easton, PA
|
|
|
0
|
|
|
|
285
|
|
|
|
6,315
|
|
|
|
0
|
|
|
|
285
|
|
|
|
6,315
|
|
|
|
3,023
|
|
|
|
1993
|
|
|
|
1959
|
|
Eight Mile, AL
|
|
|
0
|
|
|
|
410
|
|
|
|
6,110
|
|
|
|
0
|
|
|
|
410
|
|
|
|
6,110
|
|
|
|
1,111
|
|
|
|
2003
|
|
|
|
1973
|
|
El Paso, TX
|
|
|
0
|
|
|
|
539
|
|
|
|
8,961
|
|
|
|
0
|
|
|
|
539
|
|
|
|
8,961
|
|
|
|
926
|
|
|
|
2005
|
|
|
|
1970
|
|
El Paso, TX
|
|
|
0
|
|
|
|
642
|
|
|
|
3,958
|
|
|
|
1,100
|
|
|
|
642
|
|
|
|
5,058
|
|
|
|
496
|
|
|
|
2005
|
|
|
|
1969
|
|
Elizabethton, TN
|
|
|
0
|
|
|
|
310
|
|
|
|
4,604
|
|
|
|
336
|
|
|
|
310
|
|
|
|
4,940
|
|
|
|
1,082
|
|
|
|
2001
|
|
|
|
1980
|
|
Erin, TN
|
|
|
0
|
|
|
|
440
|
|
|
|
8,060
|
|
|
|
134
|
|
|
|
440
|
|
|
|
8,194
|
|
|
|
1,647
|
|
|
|
2001
|
|
|
|
1981
|
|
Eugene, OR
|
|
|
0
|
|
|
|
300
|
|
|
|
5,316
|
|
|
|
0
|
|
|
|
300
|
|
|
|
5,316
|
|
|
|
1,779
|
|
|
|
1998
|
|
|
|
1972
|
|
Fairfield, AL
|
|
|
0
|
|
|
|
530
|
|
|
|
9,134
|
|
|
|
0
|
|
|
|
530
|
|
|
|
9,134
|
|
|
|
1,512
|
|
|
|
2003
|
|
|
|
1965
|
|
Fall River, MA
|
|
|
0
|
|
|
|
620
|
|
|
|
5,829
|
|
|
|
4,856
|
|
|
|
620
|
|
|
|
10,685
|
|
|
|
2,937
|
|
|
|
1996
|
|
|
|
1973
|
|
Farmerville, LA
|
|
|
0
|
|
|
|
147
|
|
|
|
4,087
|
|
|
|
0
|
|
|
|
147
|
|
|
|
4,087
|
|
|
|
457
|
|
|
|
2005
|
|
|
|
1984
|
|
Florence, AL
|
|
|
0
|
|
|
|
320
|
|
|
|
3,975
|
|
|
|
0
|
|
|
|
320
|
|
|
|
3,975
|
|
|
|
778
|
|
|
|
2003
|
|
|
|
1972
|
|
Fork Union, VA
|
|
|
0
|
|
|
|
310
|
|
|
|
2,490
|
|
|
|
0
|
|
|
|
310
|
|
|
|
2,490
|
|
|
|
0
|
|
|
|
2008
|
|
|
|
1990
|
|
Fort Myers, FL
|
|
|
0
|
|
|
|
636
|
|
|
|
6,026
|
|
|
|
0
|
|
|
|
636
|
|
|
|
6,026
|
|
|
|
2,785
|
|
|
|
1998
|
|
|
|
1984
|
|
Fort Pierce, FL
|
|
|
0
|
|
|
|
440
|
|
|
|
3,560
|
|
|
|
0
|
|
|
|
440
|
|
|
|
3,560
|
|
|
|
365
|
|
|
|
2005
|
|
|
|
1973
|
|
Goochland, VA
|
|
|
0
|
|
|
|
350
|
|
|
|
3,697
|
|
|
|
0
|
|
|
|
350
|
|
|
|
3,697
|
|
|
|
0
|
|
|
|
2008
|
|
|
|
1991
|
|
Goshen, IN
|
|
|
0
|
|
|
|
210
|
|
|
|
6,120
|
|
|
|
0
|
|
|
|
210
|
|
|
|
6,120
|
|
|
|
473
|
|
|
|
2005
|
|
|
|
2006
|
|
Graceville, FL
|
|
|
0
|
|
|
|
150
|
|
|
|
13,000
|
|
|
|
0
|
|
|
|
150
|
|
|
|
13,000
|
|
|
|
848
|
|
|
|
2006
|
|
|
|
1980
|
|
Grand Prairie, TX
|
|
|
0
|
|
|
|
574
|
|
|
|
3,426
|
|
|
|
0
|
|
|
|
574
|
|
|
|
3,426
|
|
|
|
425
|
|
|
|
2005
|
|
|
|
1982
|
|
Granite City, IL
|
|
|
0
|
|
|
|
610
|
|
|
|
7,143
|
|
|
|
842
|
|
|
|
610
|
|
|
|
7,985
|
|
|
|
3,792
|
|
|
|
1998
|
|
|
|
1973
|
|
Granite City, IL
|
|
|
0
|
|
|
|
400
|
|
|
|
4,303
|
|
|
|
707
|
|
|
|
400
|
|
|
|
5,010
|
|
|
|
2,325
|
|
|
|
1999
|
|
|
|
1964
|
|
Greeneville, TN
|
|
|
0
|
|
|
|
400
|
|
|
|
8,290
|
|
|
|
0
|
|
|
|
400
|
|
|
|
8,290
|
|
|
|
1,145
|
|
|
|
2004
|
|
|
|
1979
|
|
Hanover, IN
|
|
|
0
|
|
|
|
210
|
|
|
|
4,430
|
|
|
|
0
|
|
|
|
210
|
|
|
|
4,430
|
|
|
|
587
|
|
|
|
2004
|
|
|
|
2000
|
|
Hardin, IL
|
|
|
0
|
|
|
|
50
|
|
|
|
5,350
|
|
|
|
135
|
|
|
|
50
|
|
|
|
5,485
|
|
|
|
2,290
|
|
|
|
2002
|
|
|
|
1996
|
|
Harriman, TN
|
|
|
0
|
|
|
|
590
|
|
|
|
8,060
|
|
|
|
158
|
|
|
|
590
|
|
|
|
8,218
|
|
|
|
1,759
|
|
|
|
2001
|
|
|
|
1972
|
|
Herculaneum, MO
|
|
|
0
|
|
|
|
127
|
|
|
|
10,373
|
|
|
|
393
|
|
|
|
127
|
|
|
|
10,766
|
|
|
|
4,367
|
|
|
|
2002
|
|
|
|
1984
|
|
Hilliard, FL
|
|
|
0
|
|
|
|
150
|
|
|
|
6,990
|
|
|
|
0
|
|
|
|
150
|
|
|
|
6,990
|
|
|
|
2,078
|
|
|
|
1999
|
|
|
|
1990
|
|
Homestead, FL
|
|
|
0
|
|
|
|
2,750
|
|
|
|
11,750
|
|
|
|
0
|
|
|
|
2,750
|
|
|
|
11,750
|
|
|
|
784
|
|
|
|
2006
|
|
|
|
1994
|
|
Houston, TX
|
|
|
0
|
|
|
|
600
|
|
|
|
2,700
|
|
|
|
0
|
|
|
|
600
|
|
|
|
2,700
|
|
|
|
351
|
|
|
|
2005
|
|
|
|
1974
|
|
Houston, TX
|
|
|
0
|
|
|
|
860
|
|
|
|
18,715
|
|
|
|
0
|
|
|
|
860
|
|
|
|
18,715
|
|
|
|
630
|
|
|
|
2007
|
|
|
|
2006
|
|
Houston, TX
|
|
|
0
|
|
|
|
630
|
|
|
|
5,970
|
|
|
|
750
|
|
|
|
630
|
|
|
|
6,720
|
|
|
|
1,204
|
|
|
|
2002
|
|
|
|
1995
|
|
Huron, OH
|
|
|
0
|
|
|
|
160
|
|
|
|
6,088
|
|
|
|
252
|
|
|
|
160
|
|
|
|
6,340
|
|
|
|
543
|
|
|
|
2005
|
|
|
|
1983
|
|
Jackson, MS
|
|
|
0
|
|
|
|
410
|
|
|
|
1,814
|
|
|
|
0
|
|
|
|
410
|
|
|
|
1,814
|
|
|
|
367
|
|
|
|
2003
|
|
|
|
1968
|
|
Jackson, MS
|
|
|
0
|
|
|
|
0
|
|
|
|
4,400
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,400
|
|
|
|
2,420
|
|
|
|
2003
|
|
|
|
1980
|
|
Jackson, MS
|
|
|
0
|
|
|
|
0
|
|
|
|
2,150
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,150
|
|
|
|
1,183
|
|
|
|
2003
|
|
|
|
1970
|
|
Jamestown, TN
|
|
|
0
|
|
|
|
0
|
|
|
|
6,707
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,707
|
|
|
|
2,124
|
|
|
|
2004
|
|
|
|
1966
|
|
Jefferson, OH
|
|
|
0
|
|
|
|
80
|
|
|
|
9,120
|
|
|
|
0
|
|
|
|
80
|
|
|
|
9,120
|
|
|
|
783
|
|
|
|
2006
|
|
|
|
1984
|
|
Jefferson City, MO
|
|
|
0
|
|
|
|
370
|
|
|
|
6,730
|
|
|
|
301
|
|
|
|
370
|
|
|
|
7,031
|
|
|
|
2,840
|
|
|
|
2002
|
|
|
|
1982
|
|
Jonesboro, GA
|
|
|
0
|
|
|
|
840
|
|
|
|
1,921
|
|
|
|
0
|
|
|
|
840
|
|
|
|
1,921
|
|
|
|
409
|
|
|
|
2003
|
|
|
|
1992
|
|
Kalida, OH
|
|
|
0
|
|
|
|
480
|
|
|
|
8,173
|
|
|
|
0
|
|
|
|
480
|
|
|
|
8,173
|
|
|
|
306
|
|
|
|
2006
|
|
|
|
2007
|
|
Kissimmee, FL
|
|
|
0
|
|
|
|
230
|
|
|
|
3,854
|
|
|
|
0
|
|
|
|
230
|
|
|
|
3,854
|
|
|
|
492
|
|
|
|
2004
|
|
|
|
1972
|
|
LaBelle, FL
|
|
|
0
|
|
|
|
60
|
|
|
|
4,946
|
|
|
|
0
|
|
|
|
60
|
|
|
|
4,946
|
|
|
|
685
|
|
|
|
2004
|
|
|
|
1986
|
|
Lake Placid, FL
|
|
|
0
|
|
|
|
150
|
|
|
|
12,850
|
|
|
|
0
|
|
|
|
150
|
|
|
|
12,850
|
|
|
|
1,662
|
|
|
|
2004
|
|
|
|
1984
|
|
Lakeland, FL
|
|
|
0
|
|
|
|
696
|
|
|
|
4,843
|
|
|
|
0
|
|
|
|
696
|
|
|
|
4,843
|
|
|
|
2,254
|
|
|
|
1998
|
|
|
|
1984
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount at Which
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Cost to Company
|
|
|
Cost Capitalized
|
|
|
Carried at Close of Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings &
|
|
|
Subsequent to
|
|
|
|
|
|
Buildings &
|
|
|
Accumulated
|
|
|
Year
|
|
|
Year
|
|
Description
|
|
Encumbrances
|
|
|
Land
|
|
|
Improvements
|
|
|
Acquisition
|
|
|
Land
|
|
|
Improvements
|
|
|
Depreciation
|
|
|
Acquired
|
|
|
Built
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrenceville, VA
|
|
$
|
0
|
|
|
$
|
170
|
|
|
$
|
4,780
|
|
|
$
|
0
|
|
|
$
|
170
|
|
|
$
|
4,780
|
|
|
$
|
0
|
|
|
|
2008
|
|
|
|
1989
|
|
Lee, MA
|
|
|
0
|
|
|
|
290
|
|
|
|
18,135
|
|
|
|
927
|
|
|
|
290
|
|
|
|
19,062
|
|
|
|
3,486
|
|
|
|
2002
|
|
|
|
1998
|
|
Littleton, MA
|
|
|
0
|
|
|
|
1,240
|
|
|
|
2,910
|
|
|
|
0
|
|
|
|
1,240
|
|
|
|
2,910
|
|
|
|
654
|
|
|
|
1996
|
|
|
|
1975
|
|
Longview, TX
|
|
|
0
|
|
|
|
293
|
|
|
|
1,707
|
|
|
|
0
|
|
|
|
293
|
|
|
|
1,707
|
|
|
|
246
|
|
|
|
2005
|
|
|
|
1971
|
|
Longwood, FL
|
|
|
0
|
|
|
|
480
|
|
|
|
7,520
|
|
|
|
0
|
|
|
|
480
|
|
|
|
7,520
|
|
|
|
969
|
|
|
|
2004
|
|
|
|
1980
|
|
Louisville, KY
|
|
|
0
|
|
|
|
490
|
|
|
|
10,010
|
|
|
|
0
|
|
|
|
490
|
|
|
|
10,010
|
|
|
|
1,237
|
|
|
|
2005
|
|
|
|
1978
|
|
Louisville, KY
|
|
|
0
|
|
|
|
430
|
|
|
|
7,135
|
|
|
|
163
|
|
|
|
430
|
|
|
|
7,298
|
|
|
|
1,538
|
|
|
|
2002
|
|
|
|
1974
|
|
Louisville, KY
|
|
|
0
|
|
|
|
350
|
|
|
|
4,675
|
|
|
|
110
|
|
|
|
350
|
|
|
|
4,785
|
|
|
|
1,029
|
|
|
|
2002
|
|
|
|
1975
|
|
Lowell, MA
|
|
|
0
|
|
|
|
370
|
|
|
|
7,450
|
|
|
|
1,550
|
|
|
|
370
|
|
|
|
9,000
|
|
|
|
850
|
|
|
|
2004
|
|
|
|
1977
|
|
Lufkin, TX
|
|
|
0
|
|
|
|
416
|
|
|
|
1,184
|
|
|
|
(74
|
)
|
|
|
342
|
|
|
|
1,184
|
|
|
|
248
|
|
|
|
2005
|
|
|
|
1919
|
|
Manchester, NH
|
|
|
0
|
|
|
|
340
|
|
|
|
4,360
|
|
|
|
0
|
|
|
|
340
|
|
|
|
4,360
|
|
|
|
434
|
|
|
|
2005
|
|
|
|
1984
|
|
Marianna, FL
|
|
|
0
|
|
|
|
340
|
|
|
|
8,910
|
|
|
|
0
|
|
|
|
340
|
|
|
|
8,910
|
|
|
|
580
|
|
|
|
2006
|
|
|
|
1997
|
|
McComb, MS
|
|
|
0
|
|
|
|
120
|
|
|
|
5,786
|
|
|
|
0
|
|
|
|
120
|
|
|
|
5,786
|
|
|
|
930
|
|
|
|
2003
|
|
|
|
1973
|
|
Memphis, TN
|
|
|
0
|
|
|
|
970
|
|
|
|
4,246
|
|
|
|
0
|
|
|
|
970
|
|
|
|
4,246
|
|
|
|
795
|
|
|
|
2003
|
|
|
|
1981
|
|
Memphis, TN
|
|
|
0
|
|
|
|
480
|
|
|
|
5,656
|
|
|
|
0
|
|
|
|
480
|
|
|
|
5,656
|
|
|
|
980
|
|
|
|
2003
|
|
|
|
1982
|
|
Memphis, TN
|
|
|
0
|
|
|
|
940
|
|
|
|
5,963
|
|
|
|
0
|
|
|
|
940
|
|
|
|
5,963
|
|
|
|
941
|
|
|
|
2004
|
|
|
|
1951
|
|
Merrillville, IN
|
|
|
0
|
|
|
|
643
|
|
|
|
7,084
|
|
|
|
3,526
|
|
|
|
643
|
|
|
|
10,610
|
|
|
|
4,068
|
|
|
|
1997
|
|
|
|
1999
|
|
Mesa, AZ
|
|
|
0
|
|
|
|
940
|
|
|
|
2,579
|
|
|
|
0
|
|
|
|
940
|
|
|
|
2,579
|
|
|
|
350
|
|
|
|
2005
|
|
|
|
1985
|
|
Midwest City, OK
|
|
|
0
|
|
|
|
470
|
|
|
|
5,673
|
|
|
|
0
|
|
|
|
470
|
|
|
|
5,673
|
|
|
|
2,554
|
|
|
|
1998
|
|
|
|
1958
|
|
Midwest City, OK
|
|
|
0
|
|
|
|
484
|
|
|
|
5,516
|
|
|
|
0
|
|
|
|
484
|
|
|
|
5,516
|
|
|
|
596
|
|
|
|
2005
|
|
|
|
1987
|
|
Millbury, MA
|
|
|
0
|
|
|
|
930
|
|
|
|
4,570
|
|
|
|
0
|
|
|
|
930
|
|
|
|
4,570
|
|
|
|
681
|
|
|
|
2004
|
|
|
|
1972
|
|
Mobile, AL
|
|
|
0
|
|
|
|
440
|
|
|
|
3,625
|
|
|
|
0
|
|
|
|
440
|
|
|
|
3,625
|
|
|
|
687
|
|
|
|
2003
|
|
|
|
1982
|
|
Monteagle, TN
|
|
|
0
|
|
|
|
310
|
|
|
|
3,318
|
|
|
|
0
|
|
|
|
310
|
|
|
|
3,318
|
|
|
|
598
|
|
|
|
2003
|
|
|
|
1980
|
|
Monterey, TN
|
|
|
0
|
|
|
|
0
|
|
|
|
4,195
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,195
|
|
|
|
1,328
|
|
|
|
2004
|
|
|
|
1977
|
|
Monticello, FL
|
|
|
0
|
|
|
|
140
|
|
|
|
4,471
|
|
|
|
0
|
|
|
|
140
|
|
|
|
4,471
|
|
|
|
637
|
|
|
|
2004
|
|
|
|
1986
|
|
Morgantown, KY
|
|
|
0
|
|
|
|
380
|
|
|
|
3,705
|
|
|
|
0
|
|
|
|
380
|
|
|
|
3,705
|
|
|
|
631
|
|
|
|
2003
|
|
|
|
1965
|
|
Moss Point, MS
|
|
|
0
|
|
|
|
120
|
|
|
|
7,280
|
|
|
|
0
|
|
|
|
120
|
|
|
|
7,280
|
|
|
|
958
|
|
|
|
2004
|
|
|
|
1933
|
|
Mountain City, TN
|
|
|
0
|
|
|
|
220
|
|
|
|
5,896
|
|
|
|
660
|
|
|
|
220
|
|
|
|
6,556
|
|
|
|
2,318
|
|
|
|
2001
|
|
|
|
1976
|
|
Naples, FL
|
|
|
0
|
|
|
|
550
|
|
|
|
5,450
|
|
|
|
0
|
|
|
|
550
|
|
|
|
5,450
|
|
|
|
688
|
|
|
|
2004
|
|
|
|
1968
|
|
Natchitoches, LA
|
|
|
0
|
|
|
|
190
|
|
|
|
4,096
|
|
|
|
0
|
|
|
|
190
|
|
|
|
4,096
|
|
|
|
435
|
|
|
|
2005
|
|
|
|
1975
|
|
Needham, MA
|
|
|
0
|
|
|
|
1,610
|
|
|
|
13,715
|
|
|
|
366
|
|
|
|
1,610
|
|
|
|
14,081
|
|
|
|
2,838
|
|
|
|
2002
|
|
|
|
1994
|
|
New Haven, CT
|
|
|
0
|
|
|
|
160
|
|
|
|
4,778
|
|
|
|
1,266
|
|
|
|
160
|
|
|
|
6,044
|
|
|
|
1,046
|
|
|
|
2006
|
|
|
|
1958
|
|
New Haven, IN
|
|
|
0
|
|
|
|
176
|
|
|
|
3,524
|
|
|
|
0
|
|
|
|
176
|
|
|
|
3,524
|
|
|
|
528
|
|
|
|
2004
|
|
|
|
1981
|
|
New Port Richey, FL
|
|
|
0
|
|
|
|
624
|
|
|
|
7,307
|
|
|
|
0
|
|
|
|
624
|
|
|
|
7,307
|
|
|
|
3,361
|
|
|
|
1998
|
|
|
|
1984
|
|
North Miami, FL
|
|
|
0
|
|
|
|
430
|
|
|
|
3,918
|
|
|
|
0
|
|
|
|
430
|
|
|
|
3,918
|
|
|
|
682
|
|
|
|
2004
|
|
|
|
1968
|
|
North Miami, FL
|
|
|
0
|
|
|
|
440
|
|
|
|
4,830
|
|
|
|
0
|
|
|
|
440
|
|
|
|
4,830
|
|
|
|
687
|
|
|
|
2004
|
|
|
|
1963
|
|
Norwalk, CT
|
|
|
0
|
|
|
|
410
|
|
|
|
2,118
|
|
|
|
2,201
|
|
|
|
410
|
|
|
|
4,319
|
|
|
|
981
|
|
|
|
2004
|
|
|
|
1971
|
|
Oklahoma City, OK
|
|
|
0
|
|
|
|
510
|
|
|
|
10,694
|
|
|
|
0
|
|
|
|
510
|
|
|
|
10,694
|
|
|
|
800
|
|
|
|
1998
|
|
|
|
1979
|
|
Ormond Beach, FL
|
|
|
0
|
|
|
|
0
|
|
|
|
2,739
|
|
|
|
73
|
|
|
|
0
|
|
|
|
2,812
|
|
|
|
932
|
|
|
|
2002
|
|
|
|
1983
|
|
Overland Park, KS
|
|
|
0
|
|
|
|
1,120
|
|
|
|
8,360
|
|
|
|
0
|
|
|
|
1,120
|
|
|
|
8,360
|
|
|
|
755
|
|
|
|
2005
|
|
|
|
1970
|
|
Owensboro, KY
|
|
|
0
|
|
|
|
240
|
|
|
|
6,760
|
|
|
|
0
|
|
|
|
240
|
|
|
|
6,760
|
|
|
|
739
|
|
|
|
1993
|
|
|
|
1966
|
|
Owensboro, KY
|
|
|
0
|
|
|
|
225
|
|
|
|
13,275
|
|
|
|
0
|
|
|
|
225
|
|
|
|
13,275
|
|
|
|
1,359
|
|
|
|
2005
|
|
|
|
1964
|
|
Owenton, KY
|
|
|
0
|
|
|
|
100
|
|
|
|
2,400
|
|
|
|
0
|
|
|
|
100
|
|
|
|
2,400
|
|
|
|
302
|
|
|
|
2005
|
|
|
|
1979
|
|
Panama City, FL
|
|
|
0
|
|
|
|
300
|
|
|
|
9,200
|
|
|
|
0
|
|
|
|
300
|
|
|
|
9,200
|
|
|
|
1,194
|
|
|
|
2004
|
|
|
|
1992
|
|
Pasadena, TX
|
|
|
0
|
|
|
|
720
|
|
|
|
24,080
|
|
|
|
0
|
|
|
|
720
|
|
|
|
24,080
|
|
|
|
1,117
|
|
|
|
2007
|
|
|
|
2005
|
|
Pigeon Forge, TN
|
|
|
0
|
|
|
|
320
|
|
|
|
4,180
|
|
|
|
117
|
|
|
|
320
|
|
|
|
4,297
|
|
|
|
963
|
|
|
|
2001
|
|
|
|
1986
|
|
Pikesville, MD
|
|
|
0
|
|
|
|
450
|
|
|
|
10,750
|
|
|
|
0
|
|
|
|
450
|
|
|
|
10,750
|
|
|
|
525
|
|
|
|
2007
|
|
|
|
1983
|
|
Plano, TX
|
|
|
0
|
|
|
|
1,305
|
|
|
|
9,095
|
|
|
|
0
|
|
|
|
1,305
|
|
|
|
9,095
|
|
|
|
962
|
|
|
|
2005
|
|
|
|
1977
|
|
Plymouth, MA
|
|
|
0
|
|
|
|
440
|
|
|
|
6,220
|
|
|
|
2,330
|
|
|
|
440
|
|
|
|
8,550
|
|
|
|
756
|
|
|
|
2004
|
|
|
|
1968
|
|
Port St. Joe, FL
|
|
|
0
|
|
|
|
370
|
|
|
|
2,055
|
|
|
|
0
|
|
|
|
370
|
|
|
|
2,055
|
|
|
|
468
|
|
|
|
2004
|
|
|
|
1982
|
|
Post Falls, ID
|
|
|
0
|
|
|
|
2,700
|
|
|
|
14,217
|
|
|
|
0
|
|
|
|
2,700
|
|
|
|
14,217
|
|
|
|
0
|
|
|
|
2007
|
|
|
|
2008
|
|
Prospect, CT
|
|
|
0
|
|
|
|
820
|
|
|
|
1,441
|
|
|
|
2,407
|
|
|
|
820
|
|
|
|
3,848
|
|
|
|
835
|
|
|
|
2004
|
|
|
|
1970
|
|
Pueblo, CO
|
|
|
0
|
|
|
|
370
|
|
|
|
6,051
|
|
|
|
0
|
|
|
|
370
|
|
|
|
6,051
|
|
|
|
2,099
|
|
|
|
1998
|
|
|
|
1989
|
|
Pueblo, CO
|
|
|
0
|
|
|
|
250
|
|
|
|
9,391
|
|
|
|
0
|
|
|
|
250
|
|
|
|
9,391
|
|
|
|
867
|
|
|
|
2005
|
|
|
|
1985
|
|
Quincy, FL
|
|
|
0
|
|
|
|
200
|
|
|
|
5,333
|
|
|
|
0
|
|
|
|
200
|
|
|
|
5,333
|
|
|
|
765
|
|
|
|
2004
|
|
|
|
1983
|
|
Quitman, MS
|
|
|
0
|
|
|
|
60
|
|
|
|
10,340
|
|
|
|
0
|
|
|
|
60
|
|
|
|
10,340
|
|
|
|
1,281
|
|
|
|
2004
|
|
|
|
1976
|
|
Richmond, VA
|
|
|
0
|
|
|
|
1,211
|
|
|
|
2,889
|
|
|
|
0
|
|
|
|
1,211
|
|
|
|
2,889
|
|
|
|
665
|
|
|
|
2003
|
|
|
|
1995
|
|
Richmond, VA
|
|
|
0
|
|
|
|
760
|
|
|
|
12,640
|
|
|
|
0
|
|
|
|
760
|
|
|
|
12,640
|
|
|
|
630
|
|
|
|
2007
|
|
|
|
1969
|
|
Ridgely, TN
|
|
|
0
|
|
|
|
300
|
|
|
|
5,700
|
|
|
|
97
|
|
|
|
300
|
|
|
|
5,797
|
|
|
|
1,195
|
|
|
|
2001
|
|
|
|
1990
|
|
Ringgold, LA
|
|
|
0
|
|
|
|
30
|
|
|
|
4,174
|
|
|
|
0
|
|
|
|
30
|
|
|
|
4,174
|
|
|
|
428
|
|
|
|
2005
|
|
|
|
1984
|
|
Rochdale, MA
|
|
|
0
|
|
|
|
675
|
|
|
|
11,847
|
|
|
|
2,024
|
|
|
|
800
|
|
|
|
13,746
|
|
|
|
2,341
|
|
|
|
2002
|
|
|
|
1995
|
|
Rockledge, FL
|
|
|
0
|
|
|
|
360
|
|
|
|
4,117
|
|
|
|
0
|
|
|
|
360
|
|
|
|
4,117
|
|
|
|
1,102
|
|
|
|
2001
|
|
|
|
1970
|
|
Rockwood, TN
|
|
|
0
|
|
|
|
500
|
|
|
|
7,116
|
|
|
|
741
|
|
|
|
500
|
|
|
|
7,857
|
|
|
|
1,643
|
|
|
|
2001
|
|
|
|
1979
|
|
Rogersville, TN
|
|
|
0
|
|
|
|
350
|
|
|
|
3,278
|
|
|
|
0
|
|
|
|
350
|
|
|
|
3,278
|
|
|
|
593
|
|
|
|
2003
|
|
|
|
1980
|
|
Royal Palm Beach, FL
|
|
|
0
|
|
|
|
980
|
|
|
|
8,320
|
|
|
|
0
|
|
|
|
980
|
|
|
|
8,320
|
|
|
|
1,104
|
|
|
|
2004
|
|
|
|
1984
|
|
Ruleville, MS
|
|
|
0
|
|
|
|
0
|
|
|
|
50
|
|
|
|
0
|
|
|
|
0
|
|
|
|
50
|
|
|
|
28
|
|
|
|
2003
|
|
|
|
1978
|
|
Ruston, LA
|
|
|
0
|
|
|
|
130
|
|
|
|
9,403
|
|
|
|
0
|
|
|
|
130
|
|
|
|
9,403
|
|
|
|
854
|
|
|
|
2005
|
|
|
|
1965
|
|
San Antonio, TX
|
|
|
0
|
|
|
|
560
|
|
|
|
7,315
|
|
|
|
0
|
|
|
|
560
|
|
|
|
7,315
|
|
|
|
1,377
|
|
|
|
2002
|
|
|
|
2000
|
|
San Antonio, TX
|
|
|
0
|
|
|
|
640
|
|
|
|
13,360
|
|
|
|
0
|
|
|
|
640
|
|
|
|
13,360
|
|
|
|
647
|
|
|
|
2007
|
|
|
|
2004
|
|
Sandwich, MA
|
|
|
0
|
|
|
|
1,140
|
|
|
|
11,190
|
|
|
|
335
|
|
|
|
1,140
|
|
|
|
11,525
|
|
|
|
1,154
|
|
|
|
2004
|
|
|
|
1987
|
|
Sarasota, FL
|
|
|
0
|
|
|
|
560
|
|
|
|
8,474
|
|
|
|
0
|
|
|
|
560
|
|
|
|
8,474
|
|
|
|
2,194
|
|
|
|
1999
|
|
|
|
2000
|
|
121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount at Which
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Cost to Company
|
|
|
Cost Capitalized
|
|
|
Carried at Close of Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings &
|
|
|
Subsequent to
|
|
|
|
|
|
Buildings &
|
|
|
Accumulated
|
|
|
Year
|
|
|
Year
|
|
Description
|
|
Encumbrances
|
|
|
Land
|
|
|
Improvements
|
|
|
Acquisition
|
|
|
Land
|
|
|
Improvements
|
|
|
Depreciation
|
|
|
Acquired
|
|
|
Built
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sarasota, FL
|
|
$
|
0
|
|
|
$
|
600
|
|
|
$
|
3,400
|
|
|
$
|
0
|
|
|
$
|
600
|
|
|
$
|
3,400
|
|
|
$
|
478
|
|
|
|
2004
|
|
|
|
1982
|
|
Scituate, MA
|
|
|
0
|
|
|
|
1,740
|
|
|
|
10,640
|
|
|
|
0
|
|
|
|
1,740
|
|
|
|
10,640
|
|
|
|
890
|
|
|
|
2005
|
|
|
|
1976
|
|
Seville, OH
|
|
|
0
|
|
|
|
230
|
|
|
|
1,770
|
|
|
|
0
|
|
|
|
230
|
|
|
|
1,770
|
|
|
|
246
|
|
|
|
2005
|
|
|
|
1981
|
|
Shelby, MS
|
|
|
0
|
|
|
|
60
|
|
|
|
5,340
|
|
|
|
0
|
|
|
|
60
|
|
|
|
5,340
|
|
|
|
682
|
|
|
|
2004
|
|
|
|
1979
|
|
Shelbyville, KY
|
|
|
0
|
|
|
|
630
|
|
|
|
3,870
|
|
|
|
0
|
|
|
|
630
|
|
|
|
3,870
|
|
|
|
401
|
|
|
|
2005
|
|
|
|
1965
|
|
South Boston, MA
|
|
|
0
|
|
|
|
385
|
|
|
|
2,002
|
|
|
|
5,218
|
|
|
|
385
|
|
|
|
7,220
|
|
|
|
2,064
|
|
|
|
1995
|
|
|
|
1961
|
|
South Pittsburg, TN
|
|
|
0
|
|
|
|
430
|
|
|
|
5,628
|
|
|
|
0
|
|
|
|
430
|
|
|
|
5,628
|
|
|
|
840
|
|
|
|
2004
|
|
|
|
1979
|
|
Southbridge, MA
|
|
|
0
|
|
|
|
890
|
|
|
|
8,110
|
|
|
|
3,000
|
|
|
|
890
|
|
|
|
11,110
|
|
|
|
1,267
|
|
|
|
2004
|
|
|
|
1976
|
|
Spring City, TN
|
|
|
0
|
|
|
|
420
|
|
|
|
6,085
|
|
|
|
2,580
|
|
|
|
420
|
|
|
|
8,665
|
|
|
|
1,704
|
|
|
|
2001
|
|
|
|
1987
|
|
St. Louis, MO
|
|
|
0
|
|
|
|
750
|
|
|
|
6,030
|
|
|
|
0
|
|
|
|
750
|
|
|
|
6,030
|
|
|
|
1,088
|
|
|
|
1995
|
|
|
|
1994
|
|
Starke, FL
|
|
|
0
|
|
|
|
120
|
|
|
|
10,180
|
|
|
|
0
|
|
|
|
120
|
|
|
|
10,180
|
|
|
|
1,310
|
|
|
|
2004
|
|
|
|
1990
|
|
Staunton, VA
|
|
|
0
|
|
|
|
310
|
|
|
|
11,090
|
|
|
|
0
|
|
|
|
310
|
|
|
|
11,090
|
|
|
|
559
|
|
|
|
2007
|
|
|
|
1959
|
|
Stuart, FL
|
|
|
0
|
|
|
|
390
|
|
|
|
8,110
|
|
|
|
0
|
|
|
|
390
|
|
|
|
8,110
|
|
|
|
1,035
|
|
|
|
2004
|
|
|
|
1985
|
|
Swanton, OH
|
|
|
0
|
|
|
|
330
|
|
|
|
6,370
|
|
|
|
0
|
|
|
|
330
|
|
|
|
6,370
|
|
|
|
760
|
|
|
|
2004
|
|
|
|
1950
|
|
Tampa, FL
|
|
|
0
|
|
|
|
830
|
|
|
|
6,370
|
|
|
|
0
|
|
|
|
830
|
|
|
|
6,370
|
|
|
|
1,012
|
|
|
|
2004
|
|
|
|
1968
|
|
Torrington, CT
|
|
|
0
|
|
|
|
360
|
|
|
|
1,261
|
|
|
|
829
|
|
|
|
360
|
|
|
|
2,090
|
|
|
|
469
|
|
|
|
2004
|
|
|
|
1966
|
|
Troy, OH
|
|
|
0
|
|
|
|
470
|
|
|
|
16,730
|
|
|
|
0
|
|
|
|
470
|
|
|
|
16,730
|
|
|
|
1,921
|
|
|
|
2004
|
|
|
|
1971
|
|
Tucson, AZ
|
|
|
0
|
|
|
|
930
|
|
|
|
13,399
|
|
|
|
0
|
|
|
|
930
|
|
|
|
13,399
|
|
|
|
1,154
|
|
|
|
2005
|
|
|
|
1985
|
|
Tupelo, MS
|
|
|
0
|
|
|
|
740
|
|
|
|
4,092
|
|
|
|
0
|
|
|
|
740
|
|
|
|
4,092
|
|
|
|
751
|
|
|
|
2003
|
|
|
|
1980
|
|
Uhrichsville, OH
|
|
|
0
|
|
|
|
24
|
|
|
|
6,716
|
|
|
|
0
|
|
|
|
24
|
|
|
|
6,716
|
|
|
|
542
|
|
|
|
2006
|
|
|
|
1977
|
|
Venice, FL
|
|
|
0
|
|
|
|
500
|
|
|
|
6,000
|
|
|
|
0
|
|
|
|
500
|
|
|
|
6,000
|
|
|
|
744
|
|
|
|
2004
|
|
|
|
1987
|
|
Vero Beach, FL
|
|
|
0
|
|
|
|
660
|
|
|
|
9,040
|
|
|
|
1,462
|
|
|
|
660
|
|
|
|
10,502
|
|
|
|
4,725
|
|
|
|
1998
|
|
|
|
1984
|
|
Wareham, MA
|
|
|
0
|
|
|
|
875
|
|
|
|
10,313
|
|
|
|
1,701
|
|
|
|
875
|
|
|
|
12,014
|
|
|
|
2,183
|
|
|
|
2002
|
|
|
|
1989
|
|
Warren, OH
|
|
|
0
|
|
|
|
240
|
|
|
|
3,810
|
|
|
|
0
|
|
|
|
240
|
|
|
|
3,810
|
|
|
|
420
|
|
|
|
2005
|
|
|
|
1973
|
|
Waterbury, CT
|
|
|
0
|
|
|
|
370
|
|
|
|
2,166
|
|
|
|
1,416
|
|
|
|
370
|
|
|
|
3,582
|
|
|
|
621
|
|
|
|
2006
|
|
|
|
1972
|
|
Webster, TX
|
|
|
0
|
|
|
|
360
|
|
|
|
5,940
|
|
|
|
0
|
|
|
|
360
|
|
|
|
5,940
|
|
|
|
1,114
|
|
|
|
2002
|
|
|
|
2000
|
|
West Haven, CT
|
|
|
0
|
|
|
|
580
|
|
|
|
1,620
|
|
|
|
1,235
|
|
|
|
580
|
|
|
|
2,855
|
|
|
|
629
|
|
|
|
2004
|
|
|
|
1971
|
|
West Palm Beach, FL
|
|
|
0
|
|
|
|
696
|
|
|
|
8,037
|
|
|
|
0
|
|
|
|
696
|
|
|
|
8,037
|
|
|
|
4,346
|
|
|
|
1998
|
|
|
|
1984
|
|
West Worthington, OH
|
|
|
0
|
|
|
|
510
|
|
|
|
5,090
|
|
|
|
0
|
|
|
|
510
|
|
|
|
5,090
|
|
|
|
434
|
|
|
|
2006
|
|
|
|
1980
|
|
Westlake, OH
|
|
|
0
|
|
|
|
1,330
|
|
|
|
17,926
|
|
|
|
0
|
|
|
|
1,330
|
|
|
|
17,926
|
|
|
|
3,545
|
|
|
|
2001
|
|
|
|
1985
|
|
Westlake, OH
|
|
|
0
|
|
|
|
571
|
|
|
|
5,411
|
|
|
|
0
|
|
|
|
571
|
|
|
|
5,411
|
|
|
|
1,807
|
|
|
|
1998
|
|
|
|
1957
|
|
Westmoreland, TN
|
|
|
0
|
|
|
|
330
|
|
|
|
1,822
|
|
|
|
2,634
|
|
|
|
330
|
|
|
|
4,456
|
|
|
|
944
|
|
|
|
2001
|
|
|
|
1994
|
|
White Hall, IL
|
|
|
0
|
|
|
|
50
|
|
|
|
5,550
|
|
|
|
670
|
|
|
|
50
|
|
|
|
6,220
|
|
|
|
2,549
|
|
|
|
2002
|
|
|
|
1971
|
|
Whitemarsh, PA
|
|
|
0
|
|
|
|
2,310
|
|
|
|
6,190
|
|
|
|
0
|
|
|
|
2,310
|
|
|
|
6,190
|
|
|
|
762
|
|
|
|
2005
|
|
|
|
1967
|
|
Williamsburg, VA
|
|
|
0
|
|
|
|
1,360
|
|
|
|
7,440
|
|
|
|
0
|
|
|
|
1,360
|
|
|
|
7,440
|
|
|
|
376
|
|
|
|
2007
|
|
|
|
1970
|
|
Williamstown, KY
|
|
|
0
|
|
|
|
70
|
|
|
|
6,430
|
|
|
|
0
|
|
|
|
70
|
|
|
|
6,430
|
|
|
|
665
|
|
|
|
2005
|
|
|
|
1987
|
|
Winchester, VA
|
|
|
0
|
|
|
|
640
|
|
|
|
1,510
|
|
|
|
0
|
|
|
|
640
|
|
|
|
1,510
|
|
|
|
0
|
|
|
|
2008
|
|
|
|
1964
|
|
Winnfield, LA
|
|
|
0
|
|
|
|
31
|
|
|
|
6,480
|
|
|
|
0
|
|
|
|
31
|
|
|
|
6,480
|
|
|
|
617
|
|
|
|
2005
|
|
|
|
1964
|
|
Woodbridge, VA
|
|
|
0
|
|
|
|
680
|
|
|
|
4,423
|
|
|
|
0
|
|
|
|
680
|
|
|
|
4,423
|
|
|
|
868
|
|
|
|
2002
|
|
|
|
1977
|
|
Worcester, MA
|
|
|
0
|
|
|
|
1,100
|
|
|
|
5,400
|
|
|
|
2,750
|
|
|
|
1,100
|
|
|
|
8,150
|
|
|
|
968
|
|
|
|
2004
|
|
|
|
1962
|
|
Worcester, MA
|
|
|
0
|
|
|
|
2,300
|
|
|
|
9,060
|
|
|
|
0
|
|
|
|
2,300
|
|
|
|
9,060
|
|
|
|
64
|
|
|
|
2008
|
|
|
|
1993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Skilled Nursing Facilities
|
|
|
13,369
|
|
|
|
118,743
|
|
|
|
1,420,437
|
|
|
|
72,832
|
|
|
|
118,794
|
|
|
|
1,493,218
|
|
|
|
242,117
|
|
|
|
|
|
|
|
|
|
Independent Living Facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amelia Island, FL
|
|
|
0
|
|
|
|
3,290
|
|
|
|
24,310
|
|
|
|
18,195
|
|
|
|
3,290
|
|
|
|
42,505
|
|
|
|
2,071
|
|
|
|
2005
|
|
|
|
1998
|
|
Anderson, SC
|
|
|
0
|
|
|
|
710
|
|
|
|
6,290
|
|
|
|
0
|
|
|
|
710
|
|
|
|
6,290
|
|
|
|
951
|
|
|
|
2003
|
|
|
|
1986
|
|
Atlanta, GA
|
|
|
0
|
|
|
|
2,059
|
|
|
|
14,914
|
|
|
|
0
|
|
|
|
2,059
|
|
|
|
14,914
|
|
|
|
6,444
|
|
|
|
1997
|
|
|
|
1999
|
|
Aurora, CO
|
|
|
0
|
|
|
|
2,600
|
|
|
|
5,906
|
|
|
|
7,915
|
|
|
|
2,600
|
|
|
|
13,821
|
|
|
|
818
|
|
|
|
2006
|
|
|
|
1988
|
|
Aurora, CO
|
|
|
0
|
|
|
|
1,379
|
|
|
|
0
|
|
|
|
29,233
|
|
|
|
2,440
|
|
|
|
28,172
|
|
|
|
189
|
|
|
|
2006
|
|
|
|
2006
|
|
Austin, TX
|
|
|
0
|
|
|
|
880
|
|
|
|
9,520
|
|
|
|
0
|
|
|
|
880
|
|
|
|
9,520
|
|
|
|
2,695
|
|
|
|
1999
|
|
|
|
1998
|
|
Carmel, IN
|
|
|
0
|
|
|
|
2,370
|
|
|
|
57,175
|
|
|
|
0
|
|
|
|
2,370
|
|
|
|
57,175
|
|
|
|
854
|
|
|
|
2006
|
|
|
|
2007
|
|
Columbia, SC
|
|
|
0
|
|
|
|
2,120
|
|
|
|
4,860
|
|
|
|
2,185
|
|
|
|
2,120
|
|
|
|
7,045
|
|
|
|
1,002
|
|
|
|
2003
|
|
|
|
2000
|
|
Denver, CO
|
|
|
0
|
|
|
|
3,650
|
|
|
|
14,906
|
|
|
|
280
|
|
|
|
3,650
|
|
|
|
15,186
|
|
|
|
888
|
|
|
|
2006
|
|
|
|
1987
|
|
Douglasville, GA
|
|
|
0
|
|
|
|
90
|
|
|
|
217
|
|
|
|
0
|
|
|
|
90
|
|
|
|
217
|
|
|
|
39
|
|
|
|
2003
|
|
|
|
1985
|
|
Fremont, CA
|
|
|
0
|
|
|
|
3,400
|
|
|
|
25,300
|
|
|
|
0
|
|
|
|
3,400
|
|
|
|
25,300
|
|
|
|
2,003
|
|
|
|
2005
|
|
|
|
1987
|
|
Gardnerville, NV
|
|
|
0
|
|
|
|
1,144
|
|
|
|
10,831
|
|
|
|
0
|
|
|
|
1,144
|
|
|
|
10,831
|
|
|
|
5,226
|
|
|
|
1998
|
|
|
|
1999
|
|
Gilroy, CA
|
|
|
0
|
|
|
|
760
|
|
|
|
13,880
|
|
|
|
23,860
|
|
|
|
760
|
|
|
|
37,740
|
|
|
|
1,179
|
|
|
|
2006
|
|
|
|
2007
|
|
Houston, TX
|
|
|
0
|
|
|
|
4,790
|
|
|
|
7,100
|
|
|
|
0
|
|
|
|
4,790
|
|
|
|
7,100
|
|
|
|
1,479
|
|
|
|
2003
|
|
|
|
1974
|
|
Indianapolis, IN
|
|
|
0
|
|
|
|
495
|
|
|
|
6,287
|
|
|
|
22,565
|
|
|
|
495
|
|
|
|
28,852
|
|
|
|
1,381
|
|
|
|
2006
|
|
|
|
1981
|
|
Indianapolis, IN
|
|
|
0
|
|
|
|
255
|
|
|
|
2,473
|
|
|
|
12,123
|
|
|
|
255
|
|
|
|
14,596
|
|
|
|
431
|
|
|
|
2006
|
|
|
|
1981
|
|
Lauderhill, FL
|
|
|
0
|
|
|
|
1,836
|
|
|
|
25,216
|
|
|
|
0
|
|
|
|
1,836
|
|
|
|
25,216
|
|
|
|
2,372
|
|
|
|
2002
|
|
|
|
1976
|
|
Loma Linda, CA
|
|
|
0
|
|
|
|
2,214
|
|
|
|
9,586
|
|
|
|
0
|
|
|
|
2,214
|
|
|
|
9,586
|
|
|
|
190
|
|
|
|
2008
|
|
|
|
1976
|
|
Manteca, CA
|
|
|
0
|
|
|
|
1,300
|
|
|
|
12,125
|
|
|
|
0
|
|
|
|
1,300
|
|
|
|
12,125
|
|
|
|
986
|
|
|
|
2005
|
|
|
|
1985
|
|
Marysville, WA
|
|
|
0
|
|
|
|
620
|
|
|
|
4,780
|
|
|
|
0
|
|
|
|
620
|
|
|
|
4,780
|
|
|
|
664
|
|
|
|
2003
|
|
|
|
1998
|
|
Mesa, AZ
|
|
|
0
|
|
|
|
950
|
|
|
|
9,087
|
|
|
|
0
|
|
|
|
950
|
|
|
|
9,087
|
|
|
|
2,104
|
|
|
|
1999
|
|
|
|
2000
|
|
Mount Airy, NC
|
|
|
0
|
|
|
|
270
|
|
|
|
6,430
|
|
|
|
0
|
|
|
|
270
|
|
|
|
6,430
|
|
|
|
510
|
|
|
|
2005
|
|
|
|
1998
|
|
Naples, FL
|
|
|
0
|
|
|
|
1,716
|
|
|
|
17,306
|
|
|
|
0
|
|
|
|
1,716
|
|
|
|
17,306
|
|
|
|
10,283
|
|
|
|
1997
|
|
|
|
1999
|
|
Oshkosh, WI
|
|
|
0
|
|
|
|
400
|
|
|
|
23,237
|
|
|
|
0
|
|
|
|
400
|
|
|
|
23,237
|
|
|
|
0
|
|
|
|
2007
|
|
|
|
2008
|
|
Pawleys Island, SC
|
|
|
0
|
|
|
|
1,010
|
|
|
|
32,590
|
|
|
|
5,421
|
|
|
|
2,020
|
|
|
|
37,001
|
|
|
|
2,650
|
|
|
|
2005
|
|
|
|
1997
|
|
122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount at Which
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Cost to Company
|
|
|
Cost Capitalized
|
|
|
Carried at Close of Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings &
|
|
|
Subsequent to
|
|
|
|
|
|
Buildings &
|
|
|
Accumulated
|
|
|
Year
|
|
|
Year
|
|
Description
|
|
Encumbrances
|
|
|
Land
|
|
|
Improvements
|
|
|
Acquisition
|
|
|
Land
|
|
|
Improvements
|
|
|
Depreciation
|
|
|
Acquired
|
|
|
Built
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raleigh, NC
|
|
$
|
0
|
|
|
$
|
10,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
10,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
2008
|
|
|
|
|
|
Raytown, MO
|
|
|
0
|
|
|
|
510
|
|
|
|
5,490
|
|
|
|
0
|
|
|
|
510
|
|
|
|
5,490
|
|
|
|
287
|
|
|
|
2006
|
|
|
|
2000
|
|
Rohnert Park, CA
|
|
|
0
|
|
|
|
6,500
|
|
|
|
18,700
|
|
|
|
0
|
|
|
|
6,500
|
|
|
|
18,700
|
|
|
|
1,501
|
|
|
|
2005
|
|
|
|
1985
|
|
Roswell, GA
|
|
|
0
|
|
|
|
1,107
|
|
|
|
9,627
|
|
|
|
0
|
|
|
|
1,107
|
|
|
|
9,627
|
|
|
|
4,695
|
|
|
|
1997
|
|
|
|
1999
|
|
Sonoma, CA
|
|
|
0
|
|
|
|
1,100
|
|
|
|
18,400
|
|
|
|
0
|
|
|
|
1,100
|
|
|
|
18,400
|
|
|
|
1,468
|
|
|
|
2005
|
|
|
|
1988
|
|
Spartanburg, SC
|
|
|
0
|
|
|
|
3,350
|
|
|
|
15,750
|
|
|
|
4,975
|
|
|
|
3,350
|
|
|
|
20,725
|
|
|
|
1,303
|
|
|
|
2005
|
|
|
|
1997
|
|
St. Simons Island, GA
|
|
|
0
|
|
|
|
6,440
|
|
|
|
50,060
|
|
|
|
0
|
|
|
|
6,440
|
|
|
|
50,060
|
|
|
|
640
|
|
|
|
2008
|
|
|
|
2007
|
|
Twin Falls, ID
|
|
|
0
|
|
|
|
550
|
|
|
|
14,740
|
|
|
|
0
|
|
|
|
550
|
|
|
|
14,740
|
|
|
|
2,512
|
|
|
|
2002
|
|
|
|
1991
|
|
Vacaville, CA
|
|
|
0
|
|
|
|
900
|
|
|
|
17,100
|
|
|
|
0
|
|
|
|
900
|
|
|
|
17,100
|
|
|
|
1,372
|
|
|
|
2005
|
|
|
|
1986
|
|
Vallejo, CA
|
|
|
0
|
|
|
|
4,000
|
|
|
|
18,000
|
|
|
|
0
|
|
|
|
4,000
|
|
|
|
18,000
|
|
|
|
1,438
|
|
|
|
2005
|
|
|
|
1989
|
|
Vero Beach, FL
|
|
|
0
|
|
|
|
2,930
|
|
|
|
40,070
|
|
|
|
1,963
|
|
|
|
2,930
|
|
|
|
42,033
|
|
|
|
1,491
|
|
|
|
2007
|
|
|
|
2003
|
|
Wichita, KS
|
|
|
0
|
|
|
|
1,400
|
|
|
|
11,000
|
|
|
|
0
|
|
|
|
1,400
|
|
|
|
11,000
|
|
|
|
563
|
|
|
|
2006
|
|
|
|
1997
|
|
Winston-Salem, NC
|
|
|
0
|
|
|
|
2,850
|
|
|
|
13,550
|
|
|
|
15,065
|
|
|
|
5,700
|
|
|
|
25,765
|
|
|
|
1,304
|
|
|
|
2005
|
|
|
|
1997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Independent Living Facilities
|
|
|
0
|
|
|
|
81,945
|
|
|
|
576,813
|
|
|
|
143,780
|
|
|
|
86,866
|
|
|
|
715,672
|
|
|
|
65,983
|
|
|
|
|
|
|
|
|
|
Specialty Care Facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amarillo, TX
|
|
|
0
|
|
|
|
72
|
|
|
|
11,928
|
|
|
|
1,399
|
|
|
|
72
|
|
|
|
13,327
|
|
|
|
1,100
|
|
|
|
2005
|
|
|
|
1986
|
|
Bellaire, TX
|
|
|
0
|
|
|
|
4,028
|
|
|
|
45,900
|
|
|
|
205
|
|
|
|
4,551
|
|
|
|
46,105
|
|
|
|
2,656
|
|
|
|
2006
|
|
|
|
2005
|
|
Boardman, OH
|
|
|
0
|
|
|
|
1,200
|
|
|
|
12,800
|
|
|
|
0
|
|
|
|
1,200
|
|
|
|
12,800
|
|
|
|
0
|
|
|
|
2008
|
|
|
|
2008
|
|
Bowling Green, KY
|
|
|
0
|
|
|
|
3,800
|
|
|
|
26,700
|
|
|
|
0
|
|
|
|
3,800
|
|
|
|
26,700
|
|
|
|
390
|
|
|
|
2008
|
|
|
|
1992
|
|
Chicago, IL
|
|
|
0
|
|
|
|
3,650
|
|
|
|
7,505
|
|
|
|
12,410
|
|
|
|
3,650
|
|
|
|
19,915
|
|
|
|
6,343
|
|
|
|
2002
|
|
|
|
1979
|
|
Corpus Christi, TX
|
|
|
0
|
|
|
|
77
|
|
|
|
3,923
|
|
|
|
0
|
|
|
|
77
|
|
|
|
3,923
|
|
|
|
415
|
|
|
|
2005
|
|
|
|
1968
|
|
Crown Point, IN
|
|
|
0
|
|
|
|
700
|
|
|
|
11,699
|
|
|
|
0
|
|
|
|
700
|
|
|
|
11,699
|
|
|
|
187
|
|
|
|
2007
|
|
|
|
2008
|
|
El Paso, TX
|
|
|
0
|
|
|
|
112
|
|
|
|
15,888
|
|
|
|
0
|
|
|
|
112
|
|
|
|
15,888
|
|
|
|
1,437
|
|
|
|
2005
|
|
|
|
1994
|
|
El Paso, TX
|
|
|
0
|
|
|
|
2,400
|
|
|
|
32,800
|
|
|
|
0
|
|
|
|
2,400
|
|
|
|
32,800
|
|
|
|
1,056
|
|
|
|
2008
|
|
|
|
2003
|
|
Fresno, CA
|
|
|
0
|
|
|
|
2,500
|
|
|
|
35,800
|
|
|
|
0
|
|
|
|
2,500
|
|
|
|
35,800
|
|
|
|
523
|
|
|
|
2008
|
|
|
|
1991
|
|
Ft. Wayne, IN
|
|
|
0
|
|
|
|
170
|
|
|
|
8,232
|
|
|
|
0
|
|
|
|
170
|
|
|
|
8,232
|
|
|
|
241
|
|
|
|
2006
|
|
|
|
2006
|
|
Lafayette, LA
|
|
|
0
|
|
|
|
1,928
|
|
|
|
10,483
|
|
|
|
26
|
|
|
|
1,928
|
|
|
|
10,509
|
|
|
|
821
|
|
|
|
2006
|
|
|
|
1993
|
|
Marlton, NJ
|
|
|
0
|
|
|
|
0
|
|
|
|
38,300
|
|
|
|
0
|
|
|
|
0
|
|
|
|
38,300
|
|
|
|
560
|
|
|
|
2008
|
|
|
|
1994
|
|
Meridian, ID
|
|
|
0
|
|
|
|
3,600
|
|
|
|
20,802
|
|
|
|
0
|
|
|
|
3,600
|
|
|
|
20,802
|
|
|
|
473
|
|
|
|
2006
|
|
|
|
2008
|
|
Midwest City, OK
|
|
|
0
|
|
|
|
146
|
|
|
|
3,854
|
|
|
|
0
|
|
|
|
146
|
|
|
|
3,854
|
|
|
|
398
|
|
|
|
2005
|
|
|
|
1996
|
|
Plano, TX
|
|
|
0
|
|
|
|
195
|
|
|
|
14,805
|
|
|
|
500
|
|
|
|
195
|
|
|
|
15,305
|
|
|
|
1,343
|
|
|
|
2005
|
|
|
|
1995
|
|
San Antonio, TX
|
|
|
0
|
|
|
|
0
|
|
|
|
17,303
|
|
|
|
0
|
|
|
|
0
|
|
|
|
17,303
|
|
|
|
1,038
|
|
|
|
2007
|
|
|
|
2007
|
|
San Bernardino, CA
|
|
|
0
|
|
|
|
3,700
|
|
|
|
14,300
|
|
|
|
0
|
|
|
|
3,700
|
|
|
|
14,300
|
|
|
|
149
|
|
|
|
2008
|
|
|
|
1993
|
|
San Diego, CA
|
|
|
0
|
|
|
|
0
|
|
|
|
22,003
|
|
|
|
0
|
|
|
|
0
|
|
|
|
22,003
|
|
|
|
230
|
|
|
|
2008
|
|
|
|
1992
|
|
Springfield, MA
|
|
|
0
|
|
|
|
2,100
|
|
|
|
22,913
|
|
|
|
160
|
|
|
|
2,100
|
|
|
|
23,073
|
|
|
|
10,178
|
|
|
|
1996
|
|
|
|
1952
|
|
Stoughton, MA
|
|
|
0
|
|
|
|
975
|
|
|
|
25,247
|
|
|
|
0
|
|
|
|
975
|
|
|
|
25,247
|
|
|
|
11,318
|
|
|
|
1996
|
|
|
|
1958
|
|
Tulsa, OK
|
|
|
0
|
|
|
|
3,003
|
|
|
|
6,025
|
|
|
|
19
|
|
|
|
3,003
|
|
|
|
6,044
|
|
|
|
659
|
|
|
|
2006
|
|
|
|
1992
|
|
Waukesha, WI
|
|
|
0
|
|
|
|
4,700
|
|
|
|
20,669
|
|
|
|
0
|
|
|
|
4,700
|
|
|
|
20,669
|
|
|
|
791
|
|
|
|
2007
|
|
|
|
2007
|
|
Webster, TX
|
|
|
0
|
|
|
|
2,418
|
|
|
|
12,028
|
|
|
|
32
|
|
|
|
2,418
|
|
|
|
12,060
|
|
|
|
1,030
|
|
|
|
2006
|
|
|
|
1991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Specialty Care Facilitiies
|
|
|
0
|
|
|
|
41,474
|
|
|
|
441,907
|
|
|
|
14,751
|
|
|
|
41,997
|
|
|
|
456,658
|
|
|
|
43,336
|
|
|
|
|
|
|
|
|
|
Medical Office Buildings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arcadia, CA(6)
|
|
|
10,513
|
|
|
|
5,408
|
|
|
|
23,219
|
|
|
|
563
|
|
|
|
5,618
|
|
|
|
23,782
|
|
|
|
2,235
|
|
|
|
2006
|
|
|
|
1984
|
|
Atlanta, GA
|
|
|
0
|
|
|
|
4,931
|
|
|
|
18,720
|
|
|
|
491
|
|
|
|
4,983
|
|
|
|
19,211
|
|
|
|
2,026
|
|
|
|
2006
|
|
|
|
1992
|
|
Aurora, IL
|
|
|
0
|
|
|
|
540
|
|
|
|
9,023
|
|
|
|
17
|
|
|
|
540
|
|
|
|
9,040
|
|
|
|
661
|
|
|
|
2006
|
|
|
|
1996
|
|
Aurora, IL
|
|
|
0
|
|
|
|
2,803
|
|
|
|
1,711
|
|
|
|
34
|
|
|
|
2,803
|
|
|
|
1,745
|
|
|
|
434
|
|
|
|
2006
|
|
|
|
1989
|
|
Austell, GA(6)
|
|
|
4,433
|
|
|
|
2,223
|
|
|
|
8,362
|
|
|
|
12
|
|
|
|
2,223
|
|
|
|
8,374
|
|
|
|
1,446
|
|
|
|
2006
|
|
|
|
1999
|
|
Bartlett, TN(7)
|
|
|
8,747
|
|
|
|
0
|
|
|
|
15,015
|
|
|
|
152
|
|
|
|
187
|
|
|
|
15,167
|
|
|
|
1,082
|
|
|
|
2007
|
|
|
|
2004
|
|
Bellaire, TX
|
|
|
0
|
|
|
|
2,972
|
|
|
|
33,445
|
|
|
|
181
|
|
|
|
2,972
|
|
|
|
33,626
|
|
|
|
2,202
|
|
|
|
2006
|
|
|
|
2005
|
|
Birmingham, AL
|
|
|
0
|
|
|
|
651
|
|
|
|
39,552
|
|
|
|
1,316
|
|
|
|
651
|
|
|
|
40,868
|
|
|
|
3,074
|
|
|
|
2006
|
|
|
|
1971
|
|
Boca Raton, FL(6)
|
|
|
14,298
|
|
|
|
109
|
|
|
|
34,002
|
|
|
|
481
|
|
|
|
109
|
|
|
|
34,483
|
|
|
|
2,622
|
|
|
|
2006
|
|
|
|
1995
|
|
Boynton Beach, FL(6)
|
|
|
4,349
|
|
|
|
0
|
|
|
|
6,574
|
|
|
|
143
|
|
|
|
214
|
|
|
|
6,717
|
|
|
|
421
|
|
|
|
2007
|
|
|
|
2004
|
|
Boynton Beach, FL(6)
|
|
|
4,766
|
|
|
|
2,048
|
|
|
|
7,692
|
|
|
|
21
|
|
|
|
2,048
|
|
|
|
7,713
|
|
|
|
839
|
|
|
|
2006
|
|
|
|
1995
|
|
Boynton Beach, FL(7)
|
|
|
4,275
|
|
|
|
2,048
|
|
|
|
7,403
|
|
|
|
174
|
|
|
|
2,048
|
|
|
|
7,577
|
|
|
|
636
|
|
|
|
2006
|
|
|
|
1997
|
|
Boynton Beach, FL(7)
|
|
|
6,384
|
|
|
|
0
|
|
|
|
11,235
|
|
|
|
291
|
|
|
|
109
|
|
|
|
11,526
|
|
|
|
919
|
|
|
|
2007
|
|
|
|
1996
|
|
Claremore, OK(7)
|
|
|
8,557
|
|
|
|
0
|
|
|
|
12,829
|
|
|
|
179
|
|
|
|
132
|
|
|
|
13,008
|
|
|
|
767
|
|
|
|
2007
|
|
|
|
2005
|
|
Coral Springs, FL
|
|
|
0
|
|
|
|
1,598
|
|
|
|
10,627
|
|
|
|
136
|
|
|
|
1,600
|
|
|
|
10,763
|
|
|
|
1,127
|
|
|
|
2006
|
|
|
|
1993
|
|
Dallas, TX(6)
|
|
|
16,081
|
|
|
|
137
|
|
|
|
29,357
|
|
|
|
232
|
|
|
|
137
|
|
|
|
29,589
|
|
|
|
3,400
|
|
|
|
2006
|
|
|
|
1995
|
|
Decatur, GA
|
|
|
0
|
|
|
|
934
|
|
|
|
1,837
|
|
|
|
83
|
|
|
|
934
|
|
|
|
1,920
|
|
|
|
621
|
|
|
|
2006
|
|
|
|
1971
|
|
Delray Beach, FL
|
|
|
0
|
|
|
|
1,882
|
|
|
|
34,767
|
|
|
|
996
|
|
|
|
1,941
|
|
|
|
35,763
|
|
|
|
3,351
|
|
|
|
2006
|
|
|
|
1985
|
|
Denton, TX(7)
|
|
|
12,623
|
|
|
|
0
|
|
|
|
19,407
|
|
|
|
0
|
|
|
|
0
|
|
|
|
19,407
|
|
|
|
955
|
|
|
|
2007
|
|
|
|
2005
|
|
Durham, NC
|
|
|
0
|
|
|
|
6,814
|
|
|
|
10,825
|
|
|
|
926
|
|
|
|
6,854
|
|
|
|
11,751
|
|
|
|
2,236
|
|
|
|
2006
|
|
|
|
1980
|
|
Durham, NC
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
39
|
|
|
|
1
|
|
|
|
39
|
|
|
|
5
|
|
|
|
2006
|
|
|
|
1980
|
|
El Paso, TX
|
|
|
0
|
|
|
|
600
|
|
|
|
6,700
|
|
|
|
0
|
|
|
|
600
|
|
|
|
6,700
|
|
|
|
0
|
|
|
|
2008
|
|
|
|
2003
|
|
El Paso, TX(6)
|
|
|
10,765
|
|
|
|
677
|
|
|
|
17,075
|
|
|
|
217
|
|
|
|
677
|
|
|
|
17,292
|
|
|
|
1,389
|
|
|
|
2006
|
|
|
|
1997
|
|
Fayetteville, GA(6)
|
|
|
3,438
|
|
|
|
959
|
|
|
|
7,540
|
|
|
|
269
|
|
|
|
959
|
|
|
|
7,809
|
|
|
|
678
|
|
|
|
2006
|
|
|
|
1999
|
|
Franklin, TN
|
|
|
0
|
|
|
|
2,338
|
|
|
|
12,138
|
|
|
|
0
|
|
|
|
2,338
|
|
|
|
12,138
|
|
|
|
822
|
|
|
|
2007
|
|
|
|
1988
|
|
Frisco, TX
|
|
|
0
|
|
|
|
0
|
|
|
|
15,309
|
|
|
|
308
|
|
|
|
0
|
|
|
|
15,617
|
|
|
|
900
|
|
|
|
2007
|
|
|
|
2004
|
|
Frisco, TX(7)
|
|
|
9,587
|
|
|
|
0
|
|
|
|
18,635
|
|
|
|
0
|
|
|
|
0
|
|
|
|
18,635
|
|
|
|
1,088
|
|
|
|
2007
|
|
|
|
2004
|
|
123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount at Which
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Cost to Company
|
|
|
Cost Capitalized
|
|
|
Carried at Close of Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings &
|
|
|
Subsequent to
|
|
|
|
|
|
Buildings &
|
|
|
Accumulated
|
|
|
Year
|
|
|
Year
|
|
Description
|
|
Encumbrances
|
|
|
Land
|
|
|
Improvements
|
|
|
Acquisition
|
|
|
Land
|
|
|
Improvements
|
|
|
Depreciation
|
|
|
Acquired
|
|
|
Built
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germantown, TN
|
|
$
|
0
|
|
|
$
|
3,049
|
|
|
$
|
12,456
|
|
|
$
|
561
|
|
|
$
|
3,049
|
|
|
$
|
13,017
|
|
|
$
|
898
|
|
|
|
2006
|
|
|
|
2002
|
|
Glendale, CA(7)
|
|
|
8,627
|
|
|
|
0
|
|
|
|
18,558
|
|
|
|
0
|
|
|
|
37
|
|
|
|
18,558
|
|
|
|
1,188
|
|
|
|
2007
|
|
|
|
2002
|
|
Greeley, CO
|
|
|
0
|
|
|
|
877
|
|
|
|
6,711
|
|
|
|
0
|
|
|
|
877
|
|
|
|
6,711
|
|
|
|
365
|
|
|
|
2007
|
|
|
|
1997
|
|
Jupiter, FL(6)
|
|
|
7,511
|
|
|
|
2,252
|
|
|
|
11,415
|
|
|
|
22
|
|
|
|
2,252
|
|
|
|
11,437
|
|
|
|
977
|
|
|
|
2006
|
|
|
|
2001
|
|
Jupiter, FL(7)
|
|
|
4,681
|
|
|
|
0
|
|
|
|
5,858
|
|
|
|
0
|
|
|
|
2,825
|
|
|
|
5,858
|
|
|
|
430
|
|
|
|
2007
|
|
|
|
2004
|
|
Lakeway, TX
|
|
|
0
|
|
|
|
2,801
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,801
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2007
|
|
|
|
|
|
Lakewood, CA
|
|
|
0
|
|
|
|
146
|
|
|
|
14,885
|
|
|
|
62
|
|
|
|
146
|
|
|
|
14,947
|
|
|
|
1,137
|
|
|
|
2006
|
|
|
|
1993
|
|
Las Vegas , NV(6)
|
|
|
6,287
|
|
|
|
74
|
|
|
|
15,287
|
|
|
|
69
|
|
|
|
74
|
|
|
|
15,356
|
|
|
|
1,416
|
|
|
|
2006
|
|
|
|
2000
|
|
Las Vegas, NV
|
|
|
0
|
|
|
|
6,127
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,127
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2007
|
|
|
|
|
|
Las Vegas, NV
|
|
|
0
|
|
|
|
6,734
|
|
|
|
54,886
|
|
|
|
89
|
|
|
|
6,734
|
|
|
|
54,975
|
|
|
|
3,614
|
|
|
|
2006
|
|
|
|
1991
|
|
Las Vegas, NV(6)
|
|
|
4,663
|
|
|
|
2,319
|
|
|
|
4,612
|
|
|
|
55
|
|
|
|
2,319
|
|
|
|
4,667
|
|
|
|
493
|
|
|
|
2006
|
|
|
|
1991
|
|
Las Vegas, NV(7)
|
|
|
3,215
|
|
|
|
0
|
|
|
|
6,921
|
|
|
|
0
|
|
|
|
433
|
|
|
|
6,921
|
|
|
|
439
|
|
|
|
2007
|
|
|
|
1997
|
|
Lawrenceville, GA
|
|
|
0
|
|
|
|
2,279
|
|
|
|
10,732
|
|
|
|
20
|
|
|
|
2,279
|
|
|
|
10,752
|
|
|
|
859
|
|
|
|
2006
|
|
|
|
2001
|
|
Lawrenceville, GA(6)
|
|
|
2,437
|
|
|
|
1,054
|
|
|
|
4,974
|
|
|
|
9
|
|
|
|
1,054
|
|
|
|
4,983
|
|
|
|
414
|
|
|
|
2006
|
|
|
|
2002
|
|
Los Alamitos, CA(7)
|
|
|
8,763
|
|
|
|
0
|
|
|
|
18,635
|
|
|
|
28
|
|
|
|
39
|
|
|
|
18,663
|
|
|
|
1,116
|
|
|
|
2007
|
|
|
|
2003
|
|
Los Gatos, CA
|
|
|
0
|
|
|
|
488
|
|
|
|
22,832
|
|
|
|
170
|
|
|
|
488
|
|
|
|
23,002
|
|
|
|
2,646
|
|
|
|
2006
|
|
|
|
1993
|
|
Loxahatchee, FL
|
|
|
0
|
|
|
|
1,340
|
|
|
|
6,509
|
|
|
|
6
|
|
|
|
1,340
|
|
|
|
6,515
|
|
|
|
503
|
|
|
|
2006
|
|
|
|
1993
|
|
Loxahatchee, FL
|
|
|
0
|
|
|
|
1,637
|
|
|
|
5,048
|
|
|
|
170
|
|
|
|
1,646
|
|
|
|
5,218
|
|
|
|
329
|
|
|
|
2006
|
|
|
|
1997
|
|
Loxahatchee, FL(6)
|
|
|
2,804
|
|
|
|
1,553
|
|
|
|
4,694
|
|
|
|
109
|
|
|
|
1,562
|
|
|
|
4,803
|
|
|
|
322
|
|
|
|
2006
|
|
|
|
1994
|
|
Merrillville, IN
|
|
|
0
|
|
|
|
0
|
|
|
|
22,134
|
|
|
|
0
|
|
|
|
0
|
|
|
|
22,134
|
|
|
|
181
|
|
|
|
2008
|
|
|
|
2006
|
|
Mesa, AZ
|
|
|
0
|
|
|
|
1,558
|
|
|
|
9,561
|
|
|
|
0
|
|
|
|
1,558
|
|
|
|
9,561
|
|
|
|
428
|
|
|
|
2008
|
|
|
|
1989
|
|
Middletown, NY
|
|
|
0
|
|
|
|
1,756
|
|
|
|
20,364
|
|
|
|
71
|
|
|
|
1,756
|
|
|
|
20,435
|
|
|
|
2,493
|
|
|
|
2006
|
|
|
|
1998
|
|
Morrow, GA
|
|
|
0
|
|
|
|
818
|
|
|
|
8,064
|
|
|
|
99
|
|
|
|
833
|
|
|
|
8,163
|
|
|
|
417
|
|
|
|
2007
|
|
|
|
1990
|
|
Mount Juliet, TN(9)
|
|
|
6,032
|
|
|
|
1,566
|
|
|
|
12,885
|
|
|
|
0
|
|
|
|
1,566
|
|
|
|
12,885
|
|
|
|
824
|
|
|
|
2007
|
|
|
|
2005
|
|
Nashville , TN
|
|
|
0
|
|
|
|
1,806
|
|
|
|
7,165
|
|
|
|
128
|
|
|
|
1,806
|
|
|
|
7,293
|
|
|
|
833
|
|
|
|
2006
|
|
|
|
1986
|
|
Niagra Falls, NY
|
|
|
0
|
|
|
|
1,335
|
|
|
|
17,702
|
|
|
|
164
|
|
|
|
1,335
|
|
|
|
17,866
|
|
|
|
1,368
|
|
|
|
2007
|
|
|
|
1990
|
|
Ocala, FL
|
|
|
0
|
|
|
|
885
|
|
|
|
4,982
|
|
|
|
37
|
|
|
|
885
|
|
|
|
5,019
|
|
|
|
670
|
|
|
|
2006
|
|
|
|
1991
|
|
Okatie, SC(7)
|
|
|
8,271
|
|
|
|
0
|
|
|
|
18,282
|
|
|
|
80
|
|
|
|
171
|
|
|
|
18,362
|
|
|
|
1,546
|
|
|
|
2007
|
|
|
|
1998
|
|
Orange Village, OH
|
|
|
0
|
|
|
|
610
|
|
|
|
7,419
|
|
|
|
0
|
|
|
|
610
|
|
|
|
7,419
|
|
|
|
677
|
|
|
|
2007
|
|
|
|
1985
|
|
Palm Springs , CA
|
|
|
0
|
|
|
|
365
|
|
|
|
12,396
|
|
|
|
951
|
|
|
|
365
|
|
|
|
13,347
|
|
|
|
1,323
|
|
|
|
2006
|
|
|
|
1998
|
|
Palm Springs, FL
|
|
|
0
|
|
|
|
1,174
|
|
|
|
7,834
|
|
|
|
71
|
|
|
|
1,182
|
|
|
|
7,905
|
|
|
|
930
|
|
|
|
2006
|
|
|
|
1997
|
|
Palm Springs, FL(6)
|
|
|
2,872
|
|
|
|
733
|
|
|
|
4,078
|
|
|
|
7
|
|
|
|
739
|
|
|
|
4,085
|
|
|
|
372
|
|
|
|
2006
|
|
|
|
1993
|
|
Palmer, AK(7)
|
|
|
19,980
|
|
|
|
0
|
|
|
|
29,705
|
|
|
|
787
|
|
|
|
217
|
|
|
|
30,492
|
|
|
|
2,036
|
|
|
|
2007
|
|
|
|
2006
|
|
Pearland, TX(6)
|
|
|
2,477
|
|
|
|
781
|
|
|
|
5,522
|
|
|
|
5
|
|
|
|
781
|
|
|
|
5,527
|
|
|
|
524
|
|
|
|
2006
|
|
|
|
2000
|
|
Pearland, TX(6)
|
|
|
1,523
|
|
|
|
948
|
|
|
|
4,599
|
|
|
|
19
|
|
|
|
948
|
|
|
|
4,618
|
|
|
|
450
|
|
|
|
2006
|
|
|
|
2002
|
|
Pelham, AL
|
|
|
0
|
|
|
|
915
|
|
|
|
1,455
|
|
|
|
23
|
|
|
|
915
|
|
|
|
1,478
|
|
|
|
247
|
|
|
|
2006
|
|
|
|
1990
|
|
Phoenix, AZ
|
|
|
0
|
|
|
|
11,872
|
|
|
|
0
|
|
|
|
0
|
|
|
|
11,872
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2007
|
|
|
|
|
|
Phoenix, AZ(6)
|
|
|
30,348
|
|
|
|
1,149
|
|
|
|
49,586
|
|
|
|
142
|
|
|
|
1,150
|
|
|
|
49,728
|
|
|
|
6,447
|
|
|
|
2006
|
|
|
|
1998
|
|
Pineville, NC
|
|
|
0
|
|
|
|
961
|
|
|
|
6,974
|
|
|
|
385
|
|
|
|
961
|
|
|
|
7,359
|
|
|
|
871
|
|
|
|
2006
|
|
|
|
1988
|
|
Plano, TX
|
|
|
0
|
|
|
|
5,423
|
|
|
|
20,752
|
|
|
|
0
|
|
|
|
5,423
|
|
|
|
20,752
|
|
|
|
346
|
|
|
|
2008
|
|
|
|
2007
|
|
Plantation, FL(6)
|
|
|
10,182
|
|
|
|
8,563
|
|
|
|
10,666
|
|
|
|
459
|
|
|
|
8,563
|
|
|
|
11,125
|
|
|
|
1,184
|
|
|
|
2006
|
|
|
|
1997
|
|
Plantation, FL(6)
|
|
|
9,494
|
|
|
|
8,848
|
|
|
|
9,423
|
|
|
|
47
|
|
|
|
8,896
|
|
|
|
9,470
|
|
|
|
2,117
|
|
|
|
2006
|
|
|
|
1996
|
|
Reno, NV
|
|
|
0
|
|
|
|
1,117
|
|
|
|
22,090
|
|
|
|
103
|
|
|
|
1,117
|
|
|
|
22,193
|
|
|
|
2,410
|
|
|
|
2006
|
|
|
|
1991
|
|
Sacramento, CA(6)
|
|
|
5,086
|
|
|
|
866
|
|
|
|
12,756
|
|
|
|
352
|
|
|
|
866
|
|
|
|
13,108
|
|
|
|
955
|
|
|
|
2006
|
|
|
|
1990
|
|
San Antonio, TX(6)
|
|
|
6,690
|
|
|
|
2,050
|
|
|
|
16,251
|
|
|
|
194
|
|
|
|
2,050
|
|
|
|
16,445
|
|
|
|
1,935
|
|
|
|
2006
|
|
|
|
1999
|
|
Somerville, NJ
|
|
|
0
|
|
|
|
3,400
|
|
|
|
22,244
|
|
|
|
0
|
|
|
|
3,400
|
|
|
|
22,244
|
|
|
|
232
|
|
|
|
2008
|
|
|
|
2007
|
|
St. Louis, MO(7)
|
|
|
7,892
|
|
|
|
0
|
|
|
|
17,247
|
|
|
|
0
|
|
|
|
336
|
|
|
|
17,247
|
|
|
|
1,177
|
|
|
|
2007
|
|
|
|
2001
|
|
Tempe, AZ(7)
|
|
|
5,715
|
|
|
|
0
|
|
|
|
9,112
|
|
|
|
84
|
|
|
|
1,486
|
|
|
|
9,196
|
|
|
|
832
|
|
|
|
2007
|
|
|
|
1996
|
|
Tomball, TX(6)
|
|
|
3,030
|
|
|
|
1,404
|
|
|
|
5,142
|
|
|
|
25
|
|
|
|
1,404
|
|
|
|
5,167
|
|
|
|
884
|
|
|
|
2006
|
|
|
|
1982
|
|
Trussville, AL
|
|
|
0
|
|
|
|
1,336
|
|
|
|
2,177
|
|
|
|
19
|
|
|
|
1,336
|
|
|
|
2,196
|
|
|
|
408
|
|
|
|
2006
|
|
|
|
1990
|
|
Tucson, AZ
|
|
|
0
|
|
|
|
1,302
|
|
|
|
4,925
|
|
|
|
0
|
|
|
|
1,302
|
|
|
|
4,925
|
|
|
|
176
|
|
|
|
2008
|
|
|
|
1995
|
|
Tucson, AZ(7)
|
|
|
10,673
|
|
|
|
89
|
|
|
|
18,339
|
|
|
|
314
|
|
|
|
89
|
|
|
|
18,653
|
|
|
|
1,069
|
|
|
|
2007
|
|
|
|
2004
|
|
Union City, TN
|
|
|
0
|
|
|
|
320
|
|
|
|
0
|
|
|
|
0
|
|
|
|
320
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2006
|
|
|
|
1999
|
|
Voorhees, NJ
|
|
|
0
|
|
|
|
6,404
|
|
|
|
24,251
|
|
|
|
158
|
|
|
|
6,404
|
|
|
|
24,409
|
|
|
|
1,887
|
|
|
|
2006
|
|
|
|
1997
|
|
Warrington, PA
|
|
|
0
|
|
|
|
85
|
|
|
|
23,231
|
|
|
|
0
|
|
|
|
85
|
|
|
|
23,231
|
|
|
|
1,219
|
|
|
|
2008
|
|
|
|
2001
|
|
Wellington , FL(7)
|
|
|
6,579
|
|
|
|
0
|
|
|
|
13,697
|
|
|
|
0
|
|
|
|
381
|
|
|
|
13,697
|
|
|
|
783
|
|
|
|
2007
|
|
|
|
2003
|
|
Wellington, FL(6)
|
|
|
7,335
|
|
|
|
107
|
|
|
|
16,933
|
|
|
|
14
|
|
|
|
107
|
|
|
|
16,947
|
|
|
|
1,319
|
|
|
|
2006
|
|
|
|
2000
|
|
West Palm Beach, FL(6)
|
|
|
6,900
|
|
|
|
610
|
|
|
|
14,618
|
|
|
|
9
|
|
|
|
610
|
|
|
|
14,627
|
|
|
|
1,351
|
|
|
|
2006
|
|
|
|
1991
|
|
West Palm Beach, FL(6)
|
|
|
7,472
|
|
|
|
628
|
|
|
|
14,740
|
|
|
|
52
|
|
|
|
628
|
|
|
|
14,792
|
|
|
|
1,112
|
|
|
|
2006
|
|
|
|
1993
|
|
West Seneca, NY(8)
|
|
|
13,276
|
|
|
|
917
|
|
|
|
22,435
|
|
|
|
44
|
|
|
|
1,082
|
|
|
|
22,479
|
|
|
|
1,248
|
|
|
|
2007
|
|
|
|
1990
|
|
Yorkville, IL
|
|
|
0
|
|
|
|
1,419
|
|
|
|
2,816
|
|
|
|
23
|
|
|
|
1,419
|
|
|
|
2,839
|
|
|
|
310
|
|
|
|
2006
|
|
|
|
1980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Medical Office Buildings
|
|
|
339,631
|
|
|
|
146,522
|
|
|
|
1,192,564
|
|
|
|
13,497
|
|
|
|
153,714
|
|
|
|
1,206,061
|
|
|
|
98,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction in Progress
|
|
|
0
|
|
|
|
0
|
|
|
|
639,419
|
|
|
|
0
|
|
|
|
0
|
|
|
|
639,419
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
433,864
|
|
|
|
492,220
|
|
|
|
5,139,484
|
|
|
|
292,102
|
|
|
|
504,907
|
|
|
|
5,426,614
|
|
|
|
600,781
|
|
|
|
|
|
|
|
|
|
Assets Held For Sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edinburg, TX(6),(10)
|
|
|
6,204
|
|
|
|
431
|
|
|
|
3,517
|
|
|
|
0
|
|
|
|
431
|
|
|
|
3,517
|
|
|
|
0
|
|
|
|
2006
|
|
|
|
1996
|
|
Lewisville, TX(10)
|
|
|
0
|
|
|
|
142
|
|
|
|
2,484
|
|
|
|
0
|
|
|
|
142
|
|
|
|
2,484
|
|
|
|
0
|
|
|
|
2006
|
|
|
|
1997
|
|
New Albany, OH
|
|
|
0
|
|
|
|
3,020
|
|
|
|
27,445
|
|
|
|
0
|
|
|
|
3,020
|
|
|
|
27,445
|
|
|
|
4,254
|
|
|
|
2002
|
|
|
|
2003
|
|
124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount at Which
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Cost to Company
|
|
|
Cost Capitalized
|
|
|
Carried at Close of Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings &
|
|
|
Subsequent to
|
|
|
|
|
|
Buildings &
|
|
|
Accumulated
|
|
|
Year
|
|
|
Year
|
|
Description
|
|
Encumbrances
|
|
|
Land
|
|
|
Improvements
|
|
|
Acquisition
|
|
|
Land
|
|
|
Improvements
|
|
|
Depreciation
|
|
|
Acquired
|
|
|
Built
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Palm Bay, FL(6),(10)
|
|
$
|
2,002
|
|
|
$
|
790
|
|
|
$
|
1,075
|
|
|
$
|
0
|
|
|
$
|
790
|
|
|
$
|
1,075
|
|
|
$
|
0
|
|
|
|
2006
|
|
|
|
1997
|
|
Suwanee, GA(10)
|
|
|
0
|
|
|
|
1,776
|
|
|
|
469
|
|
|
|
0
|
|
|
|
1,776
|
|
|
|
469
|
|
|
|
0
|
|
|
|
2006
|
|
|
|
1998
|
|
Suwanee, GA(10)
|
|
|
0
|
|
|
|
1,437
|
|
|
|
2,042
|
|
|
|
0
|
|
|
|
1,437
|
|
|
|
2,042
|
|
|
|
0
|
|
|
|
2006
|
|
|
|
2001
|
|
Suwanee, GA(10)
|
|
|
0
|
|
|
|
1,046
|
|
|
|
1,199
|
|
|
|
0
|
|
|
|
1,046
|
|
|
|
1,199
|
|
|
|
0
|
|
|
|
2006
|
|
|
|
2003
|
|
Union City, TN(10)
|
|
|
0
|
|
|
|
130
|
|
|
|
1,735
|
|
|
|
0
|
|
|
|
130
|
|
|
|
1,735
|
|
|
|
0
|
|
|
|
2006
|
|
|
|
1999
|
|
West Palm Beach, FL(6),(10)
|
|
|
6,308
|
|
|
|
780
|
|
|
|
2,790
|
|
|
|
0
|
|
|
|
780
|
|
|
|
2,790
|
|
|
|
0
|
|
|
|
2006
|
|
|
|
1995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets Held For Sale
|
|
|
14,514
|
|
|
|
9,552
|
|
|
|
42,756
|
|
|
|
0
|
|
|
|
9,552
|
|
|
|
42,756
|
|
|
|
4,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment in Real Property Owned
|
|
$
|
448,378
|
|
|
$
|
501,772
|
|
|
$
|
5,182,240
|
|
|
$
|
292,102
|
|
|
$
|
514,459
|
|
|
$
|
5,469,370
|
|
|
$
|
605,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
In September 2003, four
wholly-owned subsidiaries of the Company completed the
acquisitions of four assisted living facilities from Emeritus
Corporation. The properties were subject to existing mortgage
debt of $24,291,000. The four wholly-owned subsidiaries are
included in the Companys consolidated financial
statements. Notwithstanding consolidation for financial
statement purposes, it is the Companys intention that the
subsidiaries be separate legal entities wherein the assets and
liabilities are not available to pay other debts or obligations
of the consolidated Company.
|
|
(2)
|
|
In September 2003, 15 wholly-owned
subsidiaries of the Company completed the acquisitions of 15
assisted living facilities from Southern Assisted Living, Inc.
The properties were subject to existing mortgage debt of
$54,492,000. The 15 wholly-owned subsidiaries are included in
the Companys consolidated financial statements.
Notwithstanding consolidation for financial statement purposes,
it is the Companys intention that the subsidiaries be
separate legal entities wherein the assets and liabilities are
not available to pay other debts or obligations of the
consolidated Company.
|
|
(3)
|
|
In September 2005, one wholly-owned
subsidiary of the Company completed the acquisition of one
assisted living facility from Emeritus Corporation. The property
was subject to existing mortgage debt of $6,705,000. The
wholly-owned subsidiary is included in the Companys
consolidated financial statements. Notwithstanding consolidation
for financial statement purposes, it is the Companys
intention that the subsidiary be a separate legal entity wherein
the assets and liabilities are not available to pay other debts
or obligations of the consolidated Company.
|
|
(4)
|
|
In January 2005, one wholly-owned
subsidiary of the Company completed the acquisition of one
assisted living facility from Emeritus Corporation. The property
was subject to existing mortgage debt of $7,875,000. The
wholly-owned subsidiary is included in the Companys
consolidated financial statements. Notwithstanding consolidation
for financial statement purposes, it is the Companys
intention that the subsidiary be a separate legal entity wherein
the assets and liabilities are not available to pay other debts
or obligations of the consolidated Company.
|
|
(5)
|
|
In March 2006, three wholly-owned
subsidiaries of the Company completed the acquisition of three
skilled nursing facilities from Provider Services, Inc. The
properties were subject to existing mortgage debt of
$14,193,000. The wholly-owned subsidiaries are included in the
Companys consolidated financial statements.
Notwithstanding consolidation for financial statement purposes,
it is the Companys intention that the subsidiaries be
separate legal entities wherein the assets and liabilities are
not available to pay other debts or obligations of the
consolidated Company.
|
|
(6)
|
|
In December 2006, the Company
completed the acquisition of Windrose Medical Properties Trust.
Certain of the properties were subject to existing mortgage debt
of $248,844,000. Notwithstanding consolidation for financial
statement purposes, it is the Companys intention that the
subsidiaries related to the aforementioned properties be
separate legal entities wherein the assets and liabilities are
not available to pay other debts or obligations of the
consolidated Company.
|
|
(7)
|
|
In May 2007, a wholly-owned
subsidiary of the Company completed the acquisition of 17
medical office buildings from Rendina Companies. Certain of the
properties were subject to existing mortgage debt of
$146,335,000. Notwithstanding consolidation for financial
statement purposes, it is the Companys intention that the
subsidiaries related to the aforementioned properties be
separate legal entities wherein the assets and liabilities are
not available to pay other debts or obligations of the
consolidated Company.
|
|
(8)
|
|
In August 2007, a wholly-owned
subsidiary of the Company completed the acquisition of a medical
office building from C06 Holdings, LLC. The property was subject
to existing mortgage debt of $13,623,000. The wholly-owned
subsidiary is included in the Companys consolidated
financial statements. Notwithstanding consolidation for
financial statement purposes, it is the Companys intention
that the subsidiary be a separate legal entity wherein the
assets and liabilities are not available to pay other debts or
obligations of the consolidated Company.
|
|
(9)
|
|
In December 2007, a wholly-owned
subsidiary of the Company completed the acquisition of a medical
office building from Sports Docs, L.L.C. The property was
subject to existing mortgage debt of $6,374,000. The
wholly-owned subsidiary is included in the Companys
consolidated financial statements. Notwithstanding consolidation
for financial statement purposes, it is the Companys
intention that the subsidiary be a separate legal entity wherein
the assets and liabilities are not available to pay other debts
or obligations of the consolidated Company.
|
|
|
|
(10)
|
|
In December 2008, the Company
recognized $32,648,000 of impairment charges related to medical
office buildings that it intends to sell. This charge was
treated as a reduction of the initial cost to the Company.
|
125
HEALTH
CARE REIT, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(In thousands)
|
|
|
Investment in real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
$
|
5,117,005
|
|
|
$
|
4,282,858
|
|
|
$
|
2,936,800
|
|
Additions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions
|
|
|
451,363
|
|
|
|
435,473
|
|
|
|
913,160
|
|
Improvements
|
|
|
646,161
|
|
|
|
333,520
|
|
|
|
169,811
|
|
Conversions from loans receivable
|
|
|
23,097
|
|
|
|
0
|
|
|
|
11,204
|
|
Deferred acquisition payments
|
|
|
0
|
|
|
|
0
|
|
|
|
2,000
|
|
Assumed other assets/(liabilities), net
|
|
|
1,899
|
|
|
|
2,432
|
|
|
|
24,488
|
|
Assumed debt
|
|
|
0
|
|
|
|
166,188
|
|
|
|
326,690
|
|
SFAS 141 adjustments
|
|
|
0
|
|
|
|
2,189
|
|
|
|
0
|
|
Reclassification of lease commissions
|
|
|
2,359
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total additions
|
|
|
1,124,879
|
|
|
|
939,802
|
|
|
|
1,447,353
|
|
Deductions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of real estate sold
|
|
|
(219,079
|
)
|
|
|
(105,655
|
)
|
|
|
(94,466
|
)
|
Reclassification of accumulated depreciation for assets held for
sale
|
|
|
(10,582
|
)
|
|
|
0
|
|
|
|
(6,829
|
)
|
Impairment of assets
|
|
|
(32,648
|
)
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deductions
|
|
|
(262,309
|
)
|
|
|
(105,655
|
)
|
|
|
(101,295
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year(1)
|
|
$
|
5,979,575
|
|
|
$
|
5,117,005
|
|
|
$
|
4,282,858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
$
|
478,373
|
|
|
$
|
347,007
|
|
|
$
|
274,875
|
|
Additions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expenses
|
|
|
163,045
|
|
|
|
149,626
|
|
|
|
97,638
|
|
Amortization of above market leases
|
|
|
3,477
|
|
|
|
3,518
|
|
|
|
0
|
|
Reclassification of lease commissions
|
|
|
423
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total additions
|
|
|
166,945
|
|
|
|
153,144
|
|
|
|
97,638
|
|
Deductions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of properties
|
|
|
(33,578
|
)
|
|
|
(21,778
|
)
|
|
|
(18,677
|
)
|
Reclassification of accumulated depreciation for assets held for
sale
|
|
|
(10,959
|
)
|
|
|
0
|
|
|
|
(6,829
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deductions
|
|
|
(44,537
|
)
|
|
|
(21,778
|
)
|
|
|
(25,506
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
600,781
|
|
|
$
|
478,373
|
|
|
$
|
347,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The aggregate cost for tax purposes
for real property equals $5,977,346,000, $5,110,696,000 and
$4,049,675,000 at December 31, 2008, 2007 and 2006,
respectively.
|
126
HEALTH
CARE REIT, INC.
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE
December 31,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Loans Subject
|
|
|
|
|
|
|
Final
|
|
|
Periodic
|
|
|
|
|
|
|
|
Carrying
|
|
|
to Delinquent
|
|
|
|
Interest
|
|
|
Maturity
|
|
|
Payment
|
|
Prior
|
|
|
Face Amount
|
|
|
Amount of
|
|
|
Principal or
|
|
Description
|
|
Rate
|
|
|
Date
|
|
|
Terms
|
|
Liens
|
|
|
of Mortgages
|
|
|
Mortgages
|
|
|
Interest(1)
|
|
|
First mortgage loan relating to
|
|
|
10.39%
|
|
|
|
09/30/20
|
|
|
Monthly Payments
|
|
$
|
0
|
|
|
$
|
34,000
|
|
|
$
|
33,205
|
|
|
$
|
0
|
|
two skilled nursing facilities in Florida
|
|
|
|
|
|
|
|
|
|
$317,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First mortgage loan relating to
|
|
|
7.600%
|
|
|
|
06/30/13
|
|
|
Monthly Payments
|
|
|
0
|
|
|
|
40,000
|
|
|
|
17,800
|
|
|
|
0
|
|
one assisted living facility in New York
|
|
|
|
|
|
|
|
|
|
$114,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First mortgage loan relating to
|
|
|
11.95%
|
|
|
|
09/01/12
|
|
|
Monthly Payments
|
|
|
0
|
|
|
|
12,700
|
|
|
|
12,201
|
|
|
|
0
|
|
one skilled nursing facility in Florida
|
|
|
|
|
|
|
|
|
|
$132,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First mortgage loan relating to
|
|
|
4.46%
|
|
|
|
09/07/09
|
|
|
Monthly Payments
|
|
|
0
|
|
|
|
12,000
|
|
|
|
11,550
|
|
|
|
0
|
|
one specialty care facility in Massachusetts
|
|
|
|
|
|
|
|
|
|
$42,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First mortgage loan relating to
|
|
|
15.21%
|
|
|
|
07/01/09
|
|
|
Monthly Payments
|
|
|
0
|
|
|
|
7,400
|
|
|
|
7,145
|
|
|
|
0
|
|
one skilled nursing facility in Pennsylvania
|
|
|
|
|
|
|
|
|
|
$83,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second mortgage loan realting to
|
|
|
19.26%
|
|
|
|
09/09/09
|
|
|
Monthly Payments
|
|
|
13,764
|
|
|
|
5,700
|
|
|
|
5,700
|
|
|
|
1,165
|
|
one independent living facility in Massachusetts
|
|
|
|
|
|
|
|
|
|
$48,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First mortgage loan relating to
|
|
|
9.63%
|
|
|
|
05/01/09
|
|
|
Monthly Payments
|
|
|
0
|
|
|
|
18,800
|
|
|
|
5,518
|
|
|
|
500
|
|
one specialty care facility in California
|
|
|
|
|
|
|
|
|
|
$44,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First mortgage loan realting to
|
|
|
19.26%
|
|
|
|
03/31/09
|
|
|
Monthly Payments
|
|
|
0
|
|
|
|
5,410
|
|
|
|
5,410
|
|
|
|
1,106
|
|
one independent living facility in Massachusetts
|
|
|
|
|
|
|
|
|
|
$45,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First mortgage loan realting to
|
|
|
10.39%
|
|
|
|
07/01/20
|
|
|
Monthly Payments
|
|
|
0
|
|
|
|
4,500
|
|
|
|
4,329
|
|
|
|
0
|
|
one skilled nursing facility in Michigan
|
|
|
|
|
|
|
|
|
|
$37,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First mortgage loan realting to
|
|
|
5.32%
|
|
|
|
01/01/13
|
|
|
Monthly Payments
|
|
|
0
|
|
|
|
4,500
|
|
|
|
4,151
|
|
|
|
0
|
|
one independent living facility in Arizona
|
|
|
|
|
|
|
|
|
|
$18,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Four first mortgage loans
|
|
|
From
|
|
|
|
From
|
|
|
Monthly Payments
|
|
|
0
|
|
|
|
21,087
|
|
|
|
8,862
|
|
|
|
79
|
|
relating to one independent
|
|
|
7.00% to
|
|
|
|
09/1/09 to
|
|
|
from $2,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
living facility, one assisted living facility, and seven skilled
nursing facilities
|
|
|
19.00%
|
|
|
|
12/01/15
|
|
|
to $76,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eight second mortgage loans
|
|
|
From
|
|
|
|
From
|
|
|
Monthly Payments
|
|
|
15,881
|
|
|
|
20,741
|
|
|
|
18,407
|
|
|
|
1,560
|
|
relating to six independent
|
|
|
11.84% to
|
|
|
|
04/08/09 to
|
|
|
from $2,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
living facilities, one skilled nursing facility and one
specialty care facility
|
|
|
19.26%
|
|
|
|
01/31/12
|
|
|
to $26,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two third mortgage loans
|
|
|
From
|
|
|
|
From
|
|
|
Monthly Payments
|
|
|
3,945
|
|
|
|
3,109
|
|
|
|
3,014
|
|
|
|
352
|
|
relating to two independent
|
|
|
19.00% to
|
|
|
|
06/30/09 to
|
|
|
from $10,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
living facilities
|
|
|
19.26%
|
|
|
|
12/31/09
|
|
|
to $12,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
$
|
33,590
|
|
|
$
|
189,947
|
|
|
$
|
137,292
|
|
|
$
|
4,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents allocation of allowance
for losses on loans receivable, if applicable.
|
127
HEALTH
CARE REIT, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(In thousands)
|
|
|
Reconciliation of mortgage loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
$
|
143,091
|
|
|
$
|
177,615
|
|
|
$
|
141,467
|
|
Additions:
|
|
|
|
|
|
|
|
|
|
|
|
|
New mortgage loans
|
|
|
22,142
|
|
|
|
55,692
|
|
|
|
87,563
|
|
Reclass from non real estate loans
|
|
|
0
|
|
|
|
1,607
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total additions
|
|
|
22,142
|
|
|
|
57,299
|
|
|
|
87,563
|
|
Deductions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Collections of principal(1)
|
|
|
(4,844
|
)
|
|
|
(19,296
|
)
|
|
|
(40,155
|
)
|
Conversions to real property
|
|
|
(23,097
|
)
|
|
|
0
|
|
|
|
(11,204
|
)
|
Charge-offs
|
|
|
0
|
|
|
|
0
|
|
|
|
(56
|
)
|
Reclass to other real estate loans(2)
|
|
|
0
|
|
|
|
(72,527
|
)
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deductions
|
|
|
(27,941
|
)
|
|
|
(91,823
|
)
|
|
|
(51,415
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
137,292
|
|
|
$
|
143,091
|
|
|
$
|
177,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes collection of negative
principal amortization.
|
|
(2)
|
|
In 2007, the Company reclassified
all loans that did not have a first, second or third mortgage
lien to other real estate loans.
|
128
EXHIBIT INDEX
|
|
|
|
|
|
1
|
.1
|
|
Equity Distribution Agreement, dated as of November 6, 2008, by
and among the Company and UBS Securities LLC (filed with the
Commission as Exhibit 1.1 to the Companys Form 8-K filed
November 6, 2008, and incorporated herein by reference thereto).
|
|
2
|
.1(a)
|
|
Agreement and Plan of Merger, dated as of September 12, 2006, by
and among the Company, Heat Merger Sub, LLC, Heat OP Merger Sub,
L.P., Windrose Medical Properties Trust and Windrose Medical
Properties, L.P. (filed with the Commission as Exhibit 2.1 to
the Companys Form 8-K filed September 15, 2006, and
incorporated herein by reference thereto).
|
|
2
|
.1(b)
|
|
Amendment No. 1 to Agreement and Plan of Merger, dated as of
October 12, 2006, by and among the Company, Heat Merger Sub,
LLC, Heat OP Merger Sub, L.P., Windrose Medical Properties Trust
and Windrose Medical Properties, L.P. (filed with the Commission
as Exhibit 2.1 to the Companys
Form 8-K
filed October 13, 2006, and incorporated herein by reference
thereto).
|
|
3
|
.1(a)
|
|
Second Restated Certificate of Incorporation of the Company
(filed with the Commission as Exhibit 3.1 to the Companys
Form 10-K
filed March 20, 2000, and incorporated herein by reference
thereto).
|
|
3
|
.1(b)
|
|
Certificate of Designation, Preferences and Rights of Junior
Participating Preferred Stock, Series A, of the Company (filed
with the Commission as Exhibit 3.1 to the Companys
Form 10-K
filed March 20, 2000, and incorporated herein by reference
thereto).
|
|
3
|
.1(c)
|
|
Certificate of Amendment of Second Restated Certificate of
Incorporation of the Company (filed with the Commission as
Exhibit 3.1 to the Companys
Form 10-K
filed March 20, 2000, and incorporated herein by reference
thereto).
|
|
3
|
.1(d)
|
|
Certificate of Amendment of Second Restated Certificate of
Incorporation of the Company (filed with the Commission as
Exhibit 3.1 to the Companys Form 8-K filed June 13, 2003,
and incorporated herein by reference thereto).
|
|
3
|
.1(e)
|
|
Certificate of Designation of
77/8%
Series D Cumulative Redeemable Preferred Stock of the Company
(filed with the Commission as Exhibit 2.5 to the Companys
Form 8-A/A filed July 8, 2003, and incorporated herein by
reference thereto).
|
|
3
|
.1(f)
|
|
Certificate of Designation of 6% Series E Cumulative Convertible
and Redeemable Preferred Stock of the Company (filed with the
Commission as Exhibit 3.1 to the Companys Form 8-K filed
October 1, 2003, and incorporated herein by reference thereto).
|
|
3
|
.1(g)
|
|
Certificate of Designation of
75/8%
Series F Cumulative Redeemable Preferred Stock of the Company
(filed with the Commission as Exhibit 2.5 to the Companys
Form 8-A filed September 10, 2004, and incorporated herein by
reference thereto).
|
|
3
|
.1(h)
|
|
Certificate of Designation of 7.5% Series G Cumulative
Convertible Preferred Stock of the Company (filed with the
Commission as Exhibit 3.1 to the Companys Form 8-K filed
December 20, 2006, and incorporated herein by reference thereto).
|
|
3
|
.1(i)
|
|
Certificate of Amendment of Second Restated Certificate of
Incorporation of the Company (filed with the Commission as
Exhibit 3.9 to the Companys Form 10-Q filed August 9,
2007, and incorporated herein by reference thereto).
|
|
3
|
.2
|
|
Second Amended and Restated By-Laws of the Company (filed with
the Commission as Exhibit 3.1 to the Companys Form 8-K
filed October 29, 2007, and incorporated herein by reference
thereto).
|
|
4
|
.1
|
|
The Company, by signing this Report, agrees to furnish the
Securities and Exchange Commission upon its request a copy of
any instrument that defines the rights of holders of long-term
debt of the Company and authorizes a total amount of securities
not in excess of 10% of the total assets of the Company.
|
|
4
|
.2(a)
|
|
Indenture dated as of April 17, 1997 between the Company and
Fifth Third Bank (filed with the Commission as Exhibit 4.1 to
the Companys Form 8-K filed April 21, 1997, and
incorporated herein by reference thereto).
|
|
4
|
.2(b)
|
|
First Supplemental Indenture, dated as of April 17, 1997, to
Indenture dated as of April 17, 1997, between the Company and
Fifth Third Bank (filed with the Commission as Exhibit 4.2 to
the Companys Form 8-K filed April 21, 1997, and
incorporated herein by reference thereto).
|
|
4
|
.2(c)
|
|
Second Supplemental Indenture, dated as of March 13, 1998, to
Indenture dated as of April 17, 1997, between the Company and
Fifth Third Bank (filed with the Commission as Exhibit 4.2 to
the Companys Form 8-K filed March 11, 1998, and
incorporated herein by reference thereto).
|
|
4
|
.2(d)
|
|
Third Supplemental Indenture, dated as of March 18, 1999, to
Indenture dated as of April 17, 1997, between the Company and
Fifth Third Bank (filed with the Commission as Exhibit 4.2 to
the Companys Form 8-K filed March 17, 1999, and
incorporated herein by reference thereto).
|
129
|
|
|
|
|
|
4
|
.2(e)
|
|
Fourth Supplemental Indenture, dated as of August 10, 2001, to
Indenture dated as of April 17, 1997, between the Company and
Fifth Third Bank (filed with the Commission as Exhibit 4.2 to
the Companys Form 8-K filed August 9, 2001, and
incorporated herein by reference thereto).
|
|
4
|
.2(f)
|
|
Supplemental Indenture No. 5, dated September 10, 2003, to
Indenture dated as of April 17, 1997, between the Company and
Fifth Third Bank (filed with the Commission as Exhibit 4.1 to
the Companys Form 8-K filed September 24, 2003, and
incorporated herein by reference thereto).
|
|
4
|
.2(g)
|
|
Amendment No. 1, dated September 16, 2003, to Supplemental
Indenture No. 5, dated September 10, 2003, to Indenture dated as
of April 17, 1997, between the Company and Fifth Third Bank
(filed with the Commission as Exhibit 4.3 to the Companys
Form 8-K filed September 24, 2003, and incorporated herein by
reference thereto).
|
|
4
|
.3(a)
|
|
Indenture for Senior Debt Securities, dated as of September 6,
2002, between the Company and Fifth Third Bank (filed with the
Commission as Exhibit 4.1 to the Companys Form 8-K filed
September 9, 2002, and incorporated herein by reference thereto).
|
|
4
|
.3(b)
|
|
Supplemental Indenture No. 1, dated as of September 6, 2002, to
Indenture for Senior Debt Securities, dated as of September 6,
2002, between the Company and Fifth Third Bank (filed with the
Commission as Exhibit 4.2 to the Companys Form 8-K filed
September 9, 2002, and incorporated herein by reference thereto).
|
|
4
|
.3(c)
|
|
Amendment No. 1, dated March 12, 2003, to Supplemental Indenture
No. 1, dated as of September 6, 2002, to Indenture for Senior
Debt Securities, dated as of September 6, 2002, between the
Company and Fifth Third Bank (filed with the Commission as
Exhibit 4.1 to the Companys Form 8-K filed March 14, 2003,
and incorporated herein by reference thereto).
|
|
4
|
.3(d)
|
|
Supplemental Indenture No. 2, dated as of September 10, 2003, to
Indenture for Senior Debt Securities, dated as of September 6,
2002, between the Company and Fifth Third Bank (filed with the
Commission as Exhibit 4.2 to the Companys Form 8-K filed
September 24, 2003, and incorporated herein by reference
thereto).
|
|
4
|
.3(e)
|
|
Amendment No. 1, dated September 16, 2003, to Supplemental
Indenture No. 2, dated as of September 10, 2003, to Indenture
for Senior Debt Securities, dated as of September 6, 2002,
between the Company and Fifth Third Bank (filed with the
Commission as Exhibit 4.4 to the Companys Form 8-K filed
September 24, 2003, and incorporated herein by reference
thereto).
|
|
4
|
.3(f)
|
|
Supplemental Indenture No. 3, dated as of October 29, 2003, to
Indenture for Senior Debt Securities, dated as of September 6,
2002, between the Company and Fifth Third Bank (filed with the
Commission as Exhibit 4.1 to the Companys Form 8-K filed
October 30, 2003, and incorporated herein by reference thereto).
|
|
4
|
.3(g)
|
|
Amendment No. 1, dated September 13, 2004, to Supplemental
Indenture No. 3, dated as of October 29, 2003, to Indenture for
Senior Debt Securities, dated as of September 6, 2002, between
the Company and The Bank of New York Trust Company, N.A., as
successor to Fifth Third Bank (filed with the Commission as
Exhibit 4.1 to the Companys Form 8-K filed September 13,
2004, and incorporated herein by reference thereto).
|
|
4
|
.3(h)
|
|
Supplemental Indenture No. 4, dated as of April 27, 2005, to
Indenture for Senior Debt Securities, dated as of September 6,
2002, between the Company and The Bank of New York Trust
Company, N.A. (filed with the Commission as Exhibit 4.1 to the
Companys Form 8-K filed April 28, 2005, and incorporated
herein by reference thereto).
|
|
4
|
.3(i)
|
|
Supplemental Indenture No. 5, dated as of November 30, 2005, to
Indenture for Senior Debt Securities, dated as of September 6,
2002, between the Company and The Bank of New York Trust
Company, N.A. (filed with the Commission as Exhibit 4.1 to the
Companys Form 8-K filed November 30, 2005, and
incorporated herein by reference thereto).
|
|
4
|
.4(a)
|
|
Indenture, dated as of November 20, 2006, between the Company
and The Bank of New York Trust Company, N.A. (filed with the
Commission as Exhibit 4.1 to the Companys Form 8-K filed
November 20, 2006, and incorporated herein by reference
thereto).
|
|
4
|
.4(b)
|
|
Supplemental Indenture No. 1, dated as of November 20, 2006,
between the Company and The Bank of New York Trust Company, N.A.
(filed with the Commission as Exhibit 4.2 to the Companys
Form 8-K filed November 20, 2006, and incorporated herein by
reference thereto).
|
|
4
|
.4(c)
|
|
Supplemental Indenture No. 2, dated as of July 20, 2007, between
the Company and The Bank of New York Trust Company, N.A.
(filed with the SEC as Exhibit 4.1 to the Companys Form
8-K filed July 20, 2007, and incorporated herein by
reference thereto).
|
130
|
|
|
|
|
|
4
|
.5
|
|
Form of Indenture for Senior Subordinated Debt Securities (filed
with the Commission as Exhibit 4.9 to the Companys Form
S-3 (File No. 333-73936) filed November 21, 2001, and
incorporated herein by reference thereto).
|
|
4
|
.6
|
|
Form of Indenture for Junior Subordinated Debt Securities (filed
with the Commission as Exhibit 4.10 to the Companys Form
S-3 (File No. 333-73936) filed November 21, 2001, and
incorporated herein by reference thereto).
|
|
10
|
.1
|
|
Fourth Amended and Restated Loan Agreement, dated as of August
6, 2007, by and among the Company and certain of its
subsidiaries, the banks signatory thereto, KeyBank National
Association, as administrative agent, Deutsche Bank Securities
Inc., as syndication agent, and UBS Securities LLC, Bank of
America, N.A., JPMorgan Chase Bank, N.A., Barclays Bank PLC,
Calyon New York Branch and Fifth Third Bank, as documentation
agents (filed with the SEC as Exhibit 10.2 to the Companys
Form 10-Q filed August 9, 2007, and incorporated herein by
reference thereto).
|
|
10
|
.2
|
|
Health Care REIT, Inc. Interest Rate & Currency Risk
Management Policy adopted on May 6, 2004 (filed with the
Commission as Exhibit 10.6 to the Companys Form 10-Q filed
July 23, 2004, and incorporated herein by reference thereto).
|
|
10
|
.3(a)
|
|
The 1995 Stock Incentive Plan of Health Care REIT, Inc. (filed
with the Commission as Appendix II to the Companys
Proxy Statement for the 1995 Annual Meeting of Stockholders,
filed September 29, 1995, and incorporated herein by reference
thereto).*
|
|
10
|
.3(b)
|
|
First Amendment to the 1995 Stock Incentive Plan of Health Care
REIT, Inc. (filed with the Commission as Exhibit 4.2 to the
Companys Form S-8 (File No. 333-40771) filed November 21,
1997, and incorporated herein by reference thereto).*
|
|
10
|
.3(c)
|
|
Second Amendment to the 1995 Stock Incentive Plan of Health Care
REIT, Inc. (filed with the Commission as Exhibit 4.3 to the
Companys Form S-8 (File No. 333-73916) filed November 21,
2001, and incorporated herein by reference thereto).*
|
|
10
|
.3(d)
|
|
Third Amendment to the 1995 Stock Incentive Plan of Health Care
REIT, Inc. (filed with the Commission as Exhibit 10.15 to the
Companys
Form 10-K
filed March 12, 2004, and incorporated herein by reference
thereto).*
|
|
10
|
.3(e)
|
|
Form of Stock Option Agreement for Executive Officers under the
1995 Stock Incentive Plan (filed with the Commission as Exhibit
10.17 to the Companys
Form 10-K
filed March 16, 2005, and incorporated herein by reference
thereto).*
|
|
10
|
.3(f)
|
|
Form of Restricted Stock Agreement for Executive Officers under
the 1995 Stock Incentive Plan (filed with the Commission as
Exhibit 10.18 to the Companys
Form 10-K
filed March 16, 2005, and incorporated herein by reference
thereto).*
|
|
10
|
.4(a)
|
|
Stock Plan for Non-Employee Directors of Health Care REIT, Inc.
(filed with the Commission as Exhibit 10.1 to the
Companys Form 10-Q filed May 10, 2004, and incorporated
herein by reference thereto).*
|
|
10
|
.4(b)
|
|
First Amendment to the Stock Plan for Non-Employee Directors of
Health Care REIT, Inc. effective April 21, 1998 (filed with the
Commission as Exhibit 10.2 to the Companys Form 10-Q filed
May 10, 2004, and incorporated herein by reference thereto).*
|
|
10
|
.4(c)
|
|
Form of Stock Option Agreement under the Stock Plan for
Non-Employee Directors (filed with the Commission as Exhibit
10.3 to the Companys Form 10-Q/A filed October 27, 2004,
and incorporated herein by reference thereto).*
|
|
10
|
.4(d)
|
|
Form of Restricted Stock Agreement under the Stock Plan for
Non-Employee Directors (filed with the Commission as Exhibit
10.20 to the Companys
Form 10-K
filed March 16, 2005, and incorporated herein by reference
thereto).*
|
|
10
|
.5(a)
|
|
Health Care REIT, Inc. 2005 Long-Term Incentive Plan (filed with
the Commission as Appendix A to the Companys Proxy
Statement for the 2005 Annual Meeting of Stockholders, filed
March 28, 2005, and incorporated herein by reference thereto).*
|
|
10
|
.5(b)
|
|
Form of Stock Option Agreement (with Dividend Equivalent Rights)
for the Chief Executive Officer under the 2005 Long-Term
Incentive Plan (filed with the Commission as Exhibit 10.18 to
the Companys
Form 10-K
filed March 10, 2006, and incorporated herein by reference
thereto).*
|
|
10
|
.5(c)
|
|
Form of Amendment to Stock Option Agreements (with Dividend
Equivalent Rights) for the Chief Executive Officer under the
2005 Long-Term Incentive Plan (filed with the Commission as
Exhibit 10.6 to the Companys Form 8-K filed January 5,
2009, and incorporated herein by reference thereto).*
|
131
|
|
|
|
|
|
10
|
.5(d)
|
|
Form of Stock Option Agreement (with Dividend Equivalent Rights)
for the Chief Executive Officer under the 2005 Long-Term
Incentive Plan (filed with the Commission as Exhibit 10.8 to the
Companys Form 8-K filed January 5, 2009, and incorporated
herein by reference thereto).*
|
|
10
|
.5(e)
|
|
Form of Stock Option Agreement (with Dividend Equivalent Rights)
for Executive Officers under the 2005 Long-Term Incentive Plan
(filed with the Commission as Exhibit 10.19 to the
Companys
Form 8-K
filed January 5, 2009, and incorporated herein by reference
thereto).*
|
|
10
|
.5(f)
|
|
Form of Amendment to Stock Option Agreements (with Dividend
Equivalent Rights) for Executive Officers under the 2005
Long-Term Incentive Plan (filed with the Commission as Exhibit
10.7 to the Companys Form 8-K filed January 5, 2009, and
incorporated herein by reference thereto).*
|
|
10
|
.5(g)
|
|
Form of Stock Option Agreement (with Dividend Equivalent Rights)
for Executive Officers under the 2005 Long-Term Incentive Plan
(filed with the Commission as Exhibit 10.9 to the Companys
Form 8-K filed January 5, 2009, and incorporated herein by
reference thereto).*
|
|
10
|
.5(h)
|
|
Form of Stock Option Agreement (with Dividend Equivalent Rights)
for the Chief Executive Officer under the 2005 Long-Term
Incentive Plan (filed with the Commission as Exhibit 10.20 to
the Companys Form 8-K filed January 5, 2009, and
incorporated herein by reference thereto).*
|
|
10
|
.5(i)
|
|
Form of Stock Option Agreement (without Dividend Equivalent
Rights) for Executive Officers under the 2005 Long-Term
Incentive Plan (filed with the Commission as Exhibit 10.21 to
the Companys
Form 10-K
filed March 10, 2006, and incorporated herein by reference
thereto).*
|
|
10
|
.5(j)
|
|
Form of Restricted Stock Agreement for the Chief Executive
Officer under the 2005 Long-Term Incentive Plan (filed with the
Commission as Exhibit 10.22 to the Companys
Form 10-K
filed March 10, 2006, and incorporated herein by reference
thereto).*
|
|
10
|
.5(k)
|
|
Form of Restricted Stock Agreement for Executive Officers under
the 2005 Long-Term Incentive Plan (filed with the Commission as
Exhibit 10.23 to the Companys
Form 10-K
filed March 10, 2006, and incorporated herein by reference
thereto).*
|
|
10
|
.5(l)
|
|
Form of Deferred Stock Unit Grant Agreement for Non-Employee
Directors under the 2005 Long-Term Incentive Plan (filed with
the Commission as Exhibit 10.24 to the Companys
Form 10-K
filed March 10, 2006, and incorporated herein by reference
thereto).*
|
|
10
|
.5(m)
|
|
Form of Amendment to Deferred Stock Unit Grant Agreements for
Non-Employee Directors under the 2005 Long-Term Incentive Plan
(filed with the Commission as Exhibit 10.10 to the
Companys
Form 8-K
filed January 5, 2009, and incorporated herein by reference
thereto).*
|
|
10
|
.5(n)
|
|
Form of Deferred Stock Unit Grant Agreement for Non-Employee
Directors under the 2005 Long-Term Incentive Plan (filed with
the Commission as Exhibit 10.11 to the Companys Form 8-K
filed January 5, 2009, and incorporated herein by reference
thereto).*
|
|
10
|
.5(o)
|
|
Stock Option Agreement, dated December 20, 2006, between the
Company and Daniel R. Loftus (filed with the Commission as
Exhibit 10.4 to the Companys Form 10-Q filed May 10, 2007,
and incorporated herein by reference thereto).*
|
|
10
|
.5(p)
|
|
Restricted Stock Agreement, dated January 22, 2007, by and
between the Company and Raymond W. Braun (filed with the
Commission as Exhibit 10.2 to the Companys Form 8-K filed
January 25, 2007, and incorporated herein by reference thereto).*
|
|
10
|
.5(q)
|
|
Stock Option Agreement (with Dividend Equivalent Rights), dated
as of January 21, 2008, by and between the Company and Frederick
L. Farrar (filed with the Commission as Exhibit 10.1 to the
Companys Form 10-Q filed August 6, 2008, and incorporated
herein by reference thereto).*
|
|
10
|
.5(r)
|
|
Stock Option Agreement (without Dividend Equivalent Rights),
dated as of January 21, 2008, by and between the Company and
Frederick L. Farrar (filed with the Commission as Exhibit 10.2
to the Companys Form 10-Q filed August 6, 2008, and
incorporated herein by reference thereto).*
|
|
10
|
.5(s)
|
|
Restricted Stock Agreement, dated as of January 21, 2008, by and
between the Company and Frederick L. Farrar (filed with the
Commission as Exhibit 10.3 to the Companys Form 10-Q filed
August 6, 2008, and incorporated herein by reference thereto).*
|
|
10
|
.6
|
|
Fourth Amended and Restated Employment Agreement, dated December
29, 2008, between the Company and George L. Chapman.*
|
|
10
|
.7
|
|
Second Amended and Restated Employment Agreement, dated December
29, 2008, between the Company and Charles J. Herman, Jr. (filed
with the Commission as Exhibit 10.3 to the Companys
Form 8-K filed January 5, 2009, and incorporated herein by
reference thereto).*
|
|
10
|
.8
|
|
Amended and Restated Employment Agreement, dated December 29,
2008, between the Company and Jeffrey H. Miller.*
|
132
|
|
|
|
|
|
10
|
.9
|
|
Second Amended and Restated Employment Agreement, dated December
29, 2008, between the Company and Scott A. Estes (filed with the
Commission as Exhibit 10.4 to the Companys Form 8-K filed
January 5, 2009, and incorporated herein by reference thereto).*
|
|
10
|
.10
|
|
Employment Agreement, dated January 19, 2009, between the
Company and John T. Thomas.*
|
|
10
|
.11
|
|
Third Amended and Restated Employment Agreement, dated December
29, 2008, between the Company and Erin C. Ibele.*
|
|
10
|
.12
|
|
Second Amended and Restated Employment Agreement, dated December
29, 2008, between the Company and Daniel R. Loftus.*
|
|
10
|
.13
|
|
Amended and Restated Consulting Agreement, dated December 29,
2008, between the Company and Fred S. Klipsch (filed with the
Commission as Exhibit 10.5 to the Companys Form 8-K filed
January 5, 2009, and incorporated herein by reference thereto).*
|
|
10
|
.14
|
|
Amended and Restated Consulting Agreement, dated December 29,
2008, between the Company and Frederick L. Farrar.*
|
|
10
|
.15(a)
|
|
Consulting Agreement, dated February 1, 2009, between the
Company and Raymond W. Braun.*
|
|
10
|
.15(b)
|
|
Third Amended and Restated Employment Agreement, dated December
29, 2008, between the Company and Raymond W. Braun (filed with
the Commission as Exhibit 10.2 to the Companys Form 8-K
filed January 5, 2009, and incorporated herein by reference
thereto).*
|
|
10
|
.16
|
|
Amended and Restated Health Care REIT, Inc. Supplemental
Executive Retirement Plan, dated December 29, 2008 (filed with
the Commission as Exhibit 10.12 to the Companys Form 8-K
filed January 5, 2009, and incorporated herein by reference
thereto).*
|
|
10
|
.17
|
|
Health Care REIT, Inc. Executive Loan Program, effective as of
August 1999 (filed with the Commission as Exhibit 10.20 to the
Companys
Form 10-K
filed March 10, 2003, and incorporated herein by reference
thereto).*
|
|
10
|
.18
|
|
Form of Indemnification Agreement between the Company and each
director, executive officer and officer of the Company (filed
with the Commission as Exhibit 10.1 to the Companys Form
8-K filed February 18, 2005, and incorporated herein by
reference thereto).*
|
|
10
|
.19
|
|
Summary of Director Compensation (filed with the Commission as
Exhibit 10.1 to the Companys Form 10-Q filed May 9,
2008, and incorporated herein by reference thereto).*
|
|
14
|
|
|
Code of Business Conduct and Ethics (filed with the Commission
as Exhibit 14 to the Companys
Form 10-K
filed March 12, 2004, and incorporated herein by reference
thereto).
|
|
21
|
|
|
Subsidiaries of the Company.
|
|
23
|
|
|
Consent of Ernst & Young LLP, independent registered public
accounting firm.
|
|
24
|
.1
|
|
Power of Attorney executed by William C. Ballard, Jr. (Director).
|
|
24
|
.2
|
|
Power of Attorney executed by Pier C. Borra (Director).
|
|
24
|
.3
|
|
Power of Attorney executed by Thomas J. DeRosa (Director).
|
|
24
|
.4
|
|
Power of Attorney executed by Jeffrey H. Donahue (Director).
|
|
24
|
.5
|
|
Power of Attorney executed by Peter J. Grua (Director).
|
|
24
|
.6
|
|
Power of Attorney executed by Fred S. Klipsch (Director).
|
|
24
|
.7
|
|
Power of Attorney executed by Sharon M. Oster (Director).
|
|
24
|
.8
|
|
Power of Attorney executed by Jeffrey R. Otten (Director).
|
|
24
|
.9
|
|
Power of Attorney executed by R. Scott Trumbull (Director).
|
|
24
|
.10
|
|
Power of Attorney executed by George L. Chapman (Director,
Chairman of the Board, President and Chief Executive Officer and
Principal Executive Officer).
|
|
24
|
.11
|
|
Power of Attorney executed by Scott A. Estes (Executive Vice
President and Chief Financial Officer and Principal Financial
Officer).
|
|
24
|
.12
|
|
Power of Attorney executed by Paul D. Nungester, Jr. (Vice
President and Controller and Principal Accounting Officer).
|
|
31
|
.1
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive
Officer.
|
|
31
|
.2
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial
Officer.
|
|
32
|
.1
|
|
Certification pursuant to 18 U.S.C. Section 1350 by Chief
Executive Officer.
|
|
32
|
.2
|
|
Certification pursuant to 18 U.S.C. Section 1350 by Chief
Financial Officer.
|
|
|
|
* |
|
Management Contract or Compensatory Plan or Arrangement. |
133