UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
For the quarterly period ended March 31, 2004.
OR
| ¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission file number 1-8895
HEALTH CARE PROPERTY INVESTORS, INC.
(Exact name of registrant as specified in its charter)
| Maryland | 33-0091377 | |
| (State or other jurisdiction of incorporation of organization) |
(I.R.S. Employer Identification No.) |
3760 Kilroy Airport Way, Suite 300
Long Beach, CA 90806
(Address of principal executive offices)
(562) 733-5100
(Registrant’s telephone number, including area code)
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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No ¨
As of May 3, 2004, there were 132,020,011 shares of $1.00 par value common stock outstanding.
HEALTH CARE PROPERTY INVESTORS, INC.
INDEX
PART I. FINANCIAL INFORMATION
Health Care Property Investors, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
| March 31, 2004 |
December 31, 2003 |
|||||||
| (Unaudited) | ||||||||
| Assets |
||||||||
| Real estate investments: |
||||||||
| Buildings and improvements |
$ | 2,621,365 | $ | 2,682,206 | ||||
| Accumulated depreciation |
(494,274 | ) | (486,421 | ) | ||||
| 2,127,091 | 2,195,785 | |||||||
| Construction in progress |
73,438 | 64,303 | ||||||
| Land |
274,385 | 283,352 | ||||||
| 2,474,914 | 2,543,440 | |||||||
| Loans receivable, net |
176,657 | 184,360 | ||||||
| Loans to joint venture partners |
80,791 | 83,253 | ||||||
| Investments in and advances to unconsolidated joint ventures |
61,973 | 172,450 | ||||||
| Accounts receivable, net of allowance of $1,315 and $1,580, respectively |
16,417 | 16,471 | ||||||
| Cash and cash equivalents |
28,132 | 17,768 | ||||||
| Other assets |
18,578 | 18,215 | ||||||
| Total assets |
$ | 2,857,462 | $ | 3,035,957 | ||||
| Liabilities and stockholders’ equity |
||||||||
| Bank notes payable |
$ | 90,000 | $ | 198,000 | ||||
| Senior notes payable |
1,000,689 | 1,050,476 | ||||||
| Mortgage notes payable |
126,282 | 158,808 | ||||||
| Accounts payable and accrued expenses |
57,350 | 55,055 | ||||||
| Deferred revenue |
20,272 | 16,080 | ||||||
| Minority interests in joint ventures |
13,871 | 12,931 | ||||||
| Minority interests convertible into common stock |
103,484 | 103,990 | ||||||
| Stockholders’ equity: |
||||||||
| Preferred stock |
285,173 | 285,173 | ||||||
| Common stock |
131,952 | 131,040 | ||||||
| Additional paid-in capital |
1,372,663 | 1,355,299 | ||||||
| Cumulative net income |
1,225,884 | 1,179,049 | ||||||
| Cumulative dividends |
(1,557,786 | ) | (1,497,727 | ) | ||||
| Other equity |
(12,372 | ) | (12,217 | ) | ||||
| Total stockholders’ equity |
1,445,514 | 1,440,617 | ||||||
| Total liabilities and stockholders’ equity |
$ | 2,857,462 | $ | 3,035,957 | ||||
See accompanying Notes to Condensed Consolidated Financial Statements.
3
Health Care Property Investors, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Revenues: |
||||||||
| Rental income |
$ | 63,113 | $ | 55,413 | ||||
| Medical office building rental income |
24,588 | 20,352 | ||||||
| Equity income from unconsolidated joint ventures |
1,237 | 142 | ||||||
| Interest and other income |
9,154 | 10,000 | ||||||
| 98,092 | 85,907 | |||||||
| Expenses: |
||||||||
| Interest |
22,021 | 21,541 | ||||||
| Real estate depreciation and amortization |
20,584 | 18,321 | ||||||
| Operating expenses for medical office buildings |
9,049 | 7,320 | ||||||
| General and administrative |
7,302 | 5,242 | ||||||
| 58,956 | 52,424 | |||||||
| Income from operations |
39,136 | 33,483 | ||||||
| Minority interests |
(2,865 | ) | (1,995 | ) | ||||
| Income from continuing operations |
36,271 | 31,488 | ||||||
| Discontinued operations: |
||||||||
| Operating income from discontinued operations |
1,556 | 2,439 | ||||||
| Gain (loss) on real estate dispositions and impairments |
9,008 | (6,263 | ) | |||||
| 10,564 | (3,824 | ) | ||||||
| Net income |
46,835 | 27,664 | ||||||
| Dividends to preferred stockholders |
(5,283 | ) | (6,225 | ) | ||||
| Net income applicable to common shares |
$ | 41,552 | $ | 21,439 | ||||
| Basic earnings per common share: |
||||||||
| Income from continuing operations applicable to common shares |
$ | 0.24 | $ | 0.21 | ||||
| Discontinued operations |
0.08 | (0.03 | ) | |||||
| Net income applicable to common shares |
$ | 0.32 | $ | 0.18 | ||||
| Diluted earnings per common share: |
||||||||
| Income from continuing operations applicable to common shares |
$ | 0.23 | $ | 0.21 | ||||
| Discontinued operations |
0.08 | (0.03 | ) | |||||
| Net income applicable to common shares |
$ | 0.31 | $ | 0.18 | ||||
| Shares used to calculate earnings per share: |
||||||||
| Basic |
130,739 | 119,158 | ||||||
| Diluted |
132,700 | 120,044 | ||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
4
Health Care Property Investors, Inc.
Condensed Consolidated Statement of Stockholders’ Equity
(Unaudited)
(In thousands)
| Preferred stock |
Common stock |
|||||||||||||||||||||||||||
| Number of shares |
Amount |
Number shares |
Par value |
Additional paid-in capital |
Cumulative net income |
Cumulative dividends |
Other equity |
Total equity |
||||||||||||||||||||
| Balance, December 31, 2003 |
11,820 | $ | 285,173 | 131,040 | $ | 131,040 | $ | 1,355,299 | $ | 1,179,049 | $ | (1,497,727 | ) | $ | (12,217 | ) | $ | 1,440,617 | ||||||||||
| Exercise of stock options |
— | — | 621 | 621 | 9,244 | — | — | — | 9,865 | |||||||||||||||||||
| Issuance of restricted stock, net |
— | — | 26 | 26 | 1,283 | — | — | (1,309 | ) | — | ||||||||||||||||||
| Other issuances of stock |
— | — | 265 | 265 | 6,701 | — | — | — | 6,966 | |||||||||||||||||||
| Net income |
— | — | — | — | — | 46,835 | — | — | 46,835 | |||||||||||||||||||
| Preferred stock dividends |
— | — | — | — | — | — | (5,283 | ) | — | (5,283 | ) | |||||||||||||||||
| Common stock dividends |
— | — | — | — | — | — | (54,776 | ) | — | (54,776 | ) | |||||||||||||||||
| Amortization of deferred compensation |
— | — | — | — | 136 | — | — | 873 | 1,009 | |||||||||||||||||||
| Other comprehensive income |
— | — | — | — | — | — | — | 281 | 281 | |||||||||||||||||||
| Balance, March 31, 2004 |
11,820 | $ | 285,173 | 131,952 | $ | 131,952 | $ | 1,372,663 | $ | 1,225,884 | $ | (1,557,786 | ) | $ | (12,372 | ) | $ | 1,445,514 | ||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
5
Health Care Property Investors, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 46,835 | $ | 27,664 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Real estate depreciation and amortization |
20,584 | 18,321 | ||||||
| Real estate depreciation in discontinued operations |
715 | 1,442 | ||||||
| Amortization of deferred compensation and debt issuance costs |
1,673 | 1,508 | ||||||
| Joint venture adjustments |
496 | 241 | ||||||
| Gain on real estate dispositions |
||||||||